-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, BWAOViUlWp1agFolNwwVPRAtN5FXsB8zvfF0e7hEQJfaGY2bILuEZ5xbJ5ryP4GY 2+rFBB3MY8CcODdZWCIx7A== 0000950134-97-006036.txt : 19970814 0000950134-97-006036.hdr.sgml : 19970814 ACCESSION NUMBER: 0000950134-97-006036 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970630 FILED AS OF DATE: 19970813 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: CARBO CERAMICS INC CENTRAL INDEX KEY: 0001009672 STANDARD INDUSTRIAL CLASSIFICATION: ABRASIVE ASBESTOS & MISC NONMETALLIC MINERAL PRODUCTS [3290] IRS NUMBER: 721100013 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-28178 FILM NUMBER: 97657981 BUSINESS ADDRESS: STREET 1: 600 EAST LAS COLINAS BLVD STREET 2: STE 1520 CITY: IRVING STATE: TX ZIP: 75039 BUSINESS PHONE: 2144010090 MAIL ADDRESS: STREET 1: 600 E LAS COLINAS BLVD STREET 2: STE 1520 CITY: IRVING STATE: TX ZIP: 75039 10-Q 1 FORM 10-Q FOR QUARTER ENDED JUNE 30, 1997 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) - --------- OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1997 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 NO. 0-28178 CARBO CERAMICS INC. (Exact name of registrant as specified in its charter) DELAWARE 72-1100013 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) 600 E. LAS COLINAS BOULEVARD SUITE 1520 IRVING, TEXAS 75039 (Address of principal executive offices) (972) 401-0090 (Registrant's telephone number) 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 --- --- As of August 1, 1997, 14,602,000 shares of the registrant's Common Stock, par value $.01 per share, were outstanding. 2 CARBO CERAMICS INC. INDEX TO QUARTERLY REPORT ON FORM 10-Q
PART I. FINANCIAL INFORMATION PAGE Item 1. Financial Statements Consolidated Balance Sheets - 3 June 30, 1997 (Unaudited), and December 31, 1996 Consolidated Statements of Income 4 (Unaudited) - Three months and six months ended June 30, 1997 and 1996 Consolidated Statements of Cash Flows 5 (Unaudited) - Six months ended June 30, 1997 and 1996 Notes to Consolidated Financial Statements - June 30, 1997 6-7 (Unaudited) Item 2. Management's Discussion and Analysis of Financial 8-9 Condition and Results of Operations PART II. OTHER INFORMATION Item 1. Legal proceedings 10 Item 2. Changes in securities 10 Item 3. Defaults upon senior securities 10 Item 4. Submission of matters to a vote of security-holders 10 Item 5. Other information 10 Item 6. Exhibits and reports on Form 8-K 11 Signatures 11
2 3 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS CARBO CERAMICS INC. CONSOLIDATED BALANCE SHEETS
JUNE 30, 1997 DECEMBER 31, (UNAUDITED) 1996 ------------- ------------ ($ in thousands) ASSETS Current assets: Cash and cash equivalents $ 20,271 $ 17,414 Trade accounts receivable 12,541 10,902 Inventories: Finished goods 5,338 4,478 Raw materials and supplies 4,386 3,907 ------------- ------------ Total inventories 9,724 8,385 Prepaid expenses and other current assets 1,212 608 Deferred income taxes 740 849 ------------- ------------ Total current assets 44,488 38,158 Property, plant and equipment: Land and land improvements 57 57 Buildings 4,536 4,536 Machinery and equipment 25,276 25,112 Construction in progress 2,651 401 ------------- ------------ Total 32,520 30,106 Less accumulated depreciation 8,820 7,859 ------------- ------------ Net property, plant and equipment 23,700 22,247 ------------- ------------ Total assets $ 68,188 $ 60,405 ============= ============ LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 1,502 $ 1,423 Accrued payroll and benefits 1,547 1,837 Accrued freight 1,005 659 Accrued utilities 400 326 Accrued income taxes 480 609 Other accrued expenses 223 350 ------------- ------------ Total current liabilities 5,157 5,204 Deferred income taxes 1,952 1,967 Shareholders' equity: Preferred Stock, par value $0.01 per share, 5,000 shares authorized, none outstanding - - Common Stock, par value $0.01 per share, 40,000,000 shares authorized: 14,602,000 shares issued and outstanding 146 146 Additional paid-in capital 42,919 42,919 Retained earnings 18,014 10,169 ------------- ------------ Total shareholders' equity 61,079 53,234 ------------- ------------ Total liabilities and shareholders' equity $ 68,188 $ 60,405 ============= =============
The accompanying notes are an integral part of these statements. 3 4 CARBO CERAMICS INC. CONSOLIDATED STATEMENTS OF INCOME ($ in thousands, except per share data) (UNAUDITED)
THREE MONTHS ENDED SIX MONTHS ENDED JUNE 30, JUNE 30, ----------------------------- ----------------------------- 1997 1996 1997 1996 ----------- ----------- ----------- ----------- Revenues $ 20,893 $ 17,399 $ 38,733 $ 30,432 Cost of goods sold 10,546 9,382 19,393 16,275 ----------- ----------- ----------- ----------- Gross profit 10,347 8,017 19,340 14,157 Selling, general and administrative expenses 2,080 2,965 4,101 4,736 ----------- ----------- ----------- ----------- Operating profit 8,267 5,052 15,239 9,421 Other income (expense): Interest income 255 47 442 49 Interest expense - (66) - (86) Other, net (2) (8) 9 16 ----------- ----------- ----------- ----------- 253 (27) 451 (21) ----------- ----------- ----------- ------------ Income before income taxes 8,520 5,025 15,690 9,400 Income taxes 3,071 1,003 5,655 1,003 ----------- ----------- ----------- ----------- Net income $ 5,449 $ 4,022 $ 10,035 $ 8,397 =========== =========== =========== =========== Pro forma data: Income before income taxes $ 5,025 $ 9,400 Income taxes 1,910 3,572 ----------- ----------- Net income $ 3,115 $ 5,828 =========== =========== Net income per share (pro forma in 1996) $ 0.37 $ 0.21 $ 0.68 $ 0.40 =========== =========== =========== =========== Weighted average number of shares (pro forma in 1996) 14,865,303 14,729,863 14,865,303 14,665,932
The accompanying notes are an integral part of these statements. 4 5 CARBO CERAMICS INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
SIX MONTHS ENDED JUNE 30, ----------------------------------- 1997 1996 --------------- -------------- ($ IN THOUSANDS) OPERATING ACTIVITIES Net income $ 10,035 $ 8,397 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 961 897 Amortization - 1,316 Deferred income taxes 94 1,003 Changes in operating assets and liabilities: Trade accounts receivable (1,639) (3,756) Inventories (1,339) (1,041) Prepaid expenses and other current assets (604) (454) Accounts payable 79 (512) Accrued payroll and benefits (290) (220) Accrued freight 346 188 Accrued utilities 74 83 Accrued income taxes (129) - Other accrued expenses (127) (129) ---------------- ----------------- Net cash provided by operating activities 7,461 5,772 INVESTING ACTIVITIES Purchase of property, plant and equipment (2,414) (1,825) --------------- ---------------- Net cash used in investing activities (2,414) (1,825) FINANCING ACTIVITIES Net payments on bank borrowings - (2,780) Net proceeds from initial public offering - 35,285 Cash distributions - (32,844) Cash dividends (2,190) - --------------- ---------------- Net cash used in financing activities (2,190) (339) --------------- ---------------- Net increase in cash and cash equivalents 2,857 3,608 Cash and cash equivalents at beginning of period 17,414 201 --------------- ---------------- Cash and cash equivalents at end of period $ 20,271 $ 3,809 =============== ================ SUPPLEMENTAL CASH FLOW INFORMATION Interest paid $ - $ 86 =============== ================
The accompanying notes are an integral part of these statements. 5 6 CARBO CERAMICS INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) JUNE 30, 1997 1. BASIS OF PRESENTATION The accompanying unaudited consolidated financial statements of Carbo Ceramics Inc. have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments, consisting only of normal recurring adjustments, considered necessary for a fair presentation have been included. The results of the interim periods presented herein are not necessarily indicative of the results to be expected for any other interim period or the full year. These financial statements should be read in conjunction with the consolidated financial statements and notes thereto for the year ended December 31, 1996 included in the Company's Form 10-K Annual Report for the year ended December 31, 1996. On April 17, 1996, the Company filed an Amended and Restated Certificate of Incorporation with the Secretary of State of the State of Delaware authorizing 5,000 shares of Preferred Stock with a par value of $0.01 per share, a 2,000 for 1 split of the Company's Common Stock and the conversion of all previously issued and outstanding shares of Class B Common Stock into voting shares of Common Stock. All share and per share data for the three and six months ended June 30, 1996 in the accompanying financial statements have been retroactively restated to reflect the stock split. The consolidated financial statements include the accounts of CARBO Ceramics Inc. and its wholly owned subsidiary, CARBO Ceramics Sales Corporation. CARBO Ceramics Sales Corporation was formed on July 31, 1996 under the laws of Barbados. All significant intercompany transactions have been eliminated. 2. DIVIDENDS PAID On April 15, 1997, the Board of Directors declared a cash dividend of $0.075 per common share payable to shareholders of record on April 28, 1997. The dividend was paid on May 9, 1997. 3. NET INCOME PER SHARE Net income per share for the three and six months ended June 30, 1997 is based on 14,602,000 shares of Common Stock outstanding during each period, increased by 263,303 average Common Stock equivalent shares for the assumed exercise of options. 4. PRO FORMA INFORMATION Pro Forma Net Income: Pro forma net income for the three and six months ended June 30, 1996 reflects a provision for income taxes at an effective rate of 38% to illustrate how historical net income might have been affected if the Company had not been an S Corporation for income tax purposes. The Company elected to be treated as an S Corporation pursuant to the Internal Revenue Code from June 23, 1987 through April 23, 1996, immediately after which it terminated its S Corporation election in conjunction with its initial public offering. As a result, the Company was not subject to federal income taxes during this period. By election of the shareholders, S Corporation status was also applicable to the state jurisdictions where the Company had significant operations during this period. 6 7 Pro Forma Net Income Per Share: Pro forma net income per share is based on 14,602,000 shares of Common Stock outstanding, including 2,300,000 shares issued in the initial public offering of the Company's Common Stock on April 26, 1996, increased by 127,863 and 63,932 average common stock equivalent shares for the three and six months ended June 30, 1996, respectively, for the assumed exercise of options. 5. INCOME TAXES Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company's deferred tax assets and liabilities as of June 30, 1997 are as follows:
DEFERRED TAX ASSETS: ($ in thousands) Employee benefits................................................................ $ 297 Inventories...................................................................... 357 Other............................................................................ 86 ------- Total deferred tax assets........................................................ 740 DEFERRED TAX LIABILITIES: Depreciation..................................................................... 1,896 Other............................................................................ 56 ------- Total deferred tax liabilities................................................... 1,952 ------- Net deferred liabilities......................................................... $(1,212) =======
7 8 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS Three Months Ended June 30, 1997 Revenues. Revenues for the second quarter 1997 were a record $20.9 million, an increase of 20% over the second quarter 1996. The increase was due to a 17% increase in sales volume and an increase in the average selling price due to a price increase of approximately 5% which was effective in January 1997. Sales volumes increased for each of the Company's products, except for CARBOLITE(R), which showed a slight decrease. The largest percentage volume increases were in CARBOECONOPROP and CARBOHSP(R). Domestic and export sales volumes each increased by approximately 17% over the comparable period in 1996. Natural gas prices declined slightly from the second quarter 1996. However, natural gas drilling activity continued its increase over 1996 with the second quarter of 1997 about 18% ahead of the comparable period in 1996. The industry's focus on the long-term demand for natural gas is evidenced by the fact that almost 60% of the total rig count is devoted to drilling for natural gas. Gross Profit. Gross profit for the quarter was $10.3 million or 50% of sales compared to $8.0 million or 46% of sales for the second quarter 1996. The increase in gross profit margins was due to the price increase that went into effect in January 1997 and lower manufacturing costs at the Eufaula facility. The cost reduction in Eufaula was due to higher production rates in 1997. Selling, General and Administrative Expenses (SG&A). SG&A was $2.1 million for the second quarter of 1997 and $3.0 million for the comparable period in 1996. The significant decrease is almost entirely attributable to a $1.1 million non-recurring, non-cash charge incurred in connection with the vesting of restricted stock at the time of the Company's initial public offering which occurred in the second quarter of 1996. Excluding these costs, expenses increased approximately $200,000 due to costs associated with being a publicly traded company as well as costs that vary with sales volume and profitability including warehouse and shipping expenses, commission expenses, and incentive compensation. Six Months Ended June 30, 1997 Revenues. Revenues for the six months ended June 30, 1997 were $38.7 million, up 27% from the same period in 1996. The increase was due to a 22% increase in sales volume and the 5% price increase effective January 1997. Sales volume increased for each of the Company's products, with the largest percentage increase in CARBOHSP(R). Domestic and export sales volumes each increased by approximately 22% over the comparable period in 1996. Gross Profit. Gross profit for the six months ended June 30, 1997 was $19.3 million or 50% of sales compared to $14.2 million or 47% of sales for the same period in 1996. The increase in gross profit margins was due to the price increase that went into effect in January 1997, and lower manufacturing costs at the New Iberia facility as a result of higher throughput achieved through improving grinding operations. Selling, General and Administrative Expenses (SG&A). SG&A expenses were $4.1 million for the first six months of 1997 compared to $4.7 million for the same period in 1996. Included in the 1996 costs is a $1.1 million non-recurring, non-cash charge incurred in connection with the vesting of restricted stock at the time of the Company's initial public offering. This was partially off-set by an increase in costs of $.5 million for those expenses associated with being a publicly traded company as well as costs that vary with sales volume and profitability including warehouse and shipping expenses, commission expenses and incentive compensation. 8 9 LIQUIDITY AND CAPITAL RESOURCES Cash and cash equivalents totaled $20.3 million as of June 30, 1997, an increase of $2.9 million from December 31, 1996. The increase in cash and cash equivalents was due to cash generated from operations of $7.5 million net of capital spending of $2.4 million and cash dividends of $2.2 million. Capital spending in the first six months of 1997 was primarily related to expansion of the Company's San Antonio storage and Eufaula manufacturing facilities, and preliminary spending related to the construction of a new manufacturing facility in Georgia. The Company will continue to increase its capital expenditures through the remainder of 1997 and in 1998. The Company expects to spend $4.0 million to expand its distribution capabilities and up to $12.0 million to begin construction of the new manufacturing facility in Georgia in 1997, and an additional $22.0 million in 1998 to complete construction of its new manufacturing facility. The Company expects to fund its capital spending requirements from existing cash balances and cash generated from operations. The Company believes that its existing credit agreement is sufficient to fund a portion of its capital spending program if necessary. 9 10 PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS None ITEM 2. CHANGES IN SECURITIES None ITEM 3. DEFAULTS UPON SENIOR SECURITIES None ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS a. The Annual Meeting of Shareholder's of Carbo Ceramics Inc. was held on April 15, 1997. b. The following matters were submitted to a vote at the meeting: (1) the election of the following nominees as directors of Carbo Ceramics Inc. The vote with respect to each nominee was as follows:
Nominee For Withheld ------- --- -------- Dr. Claude E. Cooke, Jr. 13,737,592 100 William A. Griffin, Jr. 13,737,592 100 William C. Morris 13,737,592 100 John J. Murphy 13,737,592 100 Jesse P. Orsini 13,737,592 100
(2) a recommendation of the Board of Directors that the shareholders appoint the firm of Ernst & Young LLP as independent accountants to audit the consolidated financial statements of Carbo Ceramics Inc. for the year 1997. The vote on this matter was as follows:
For Against Abstentions --- ------- ----------- 13,737,592 0 100
ITEM 5. OTHER INFORMATION None 10 11 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K a. There were no reports filed on Form 8-K during the three months ended June 30, 1997. b. Exhibits 27.1 Financial Data Schedule 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. CARBO CERAMICS INC. By: /S/Jesse P. Orsini ------------------------- Jesse P. Orsini President & Chief Executive Officer By: /S/Paul G. Vitek ------------------------- Paul G. Vitek Vice President, Finance Date: August 12, 1997 11 12 INDEX TO EXHIBITS
EXHIBIT NO. DESCRIPTION - -------- ----------- 27 Financial Data Schedule
EX-27 2 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CONSOLIDATED FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 3-MOS DEC-31-1997 JUN-30-1997 20,271 0 12,541 0 9,724 44,488 32,520 (8,820) 68,188 5,157 0 0 0 146 60,933 68,188 20,893 20,893 10,546 10,546 0 0 0 8,520 3,071 5,449 0 0 0 5,449 .37 .37
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