-----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, KML6ylIlvjZeZklbjSVhk5RsyS4tHlfgTtSomX+JSeM0zgSNeBdUnS8+CpEiOjt2 IJG6V1DhI7gDAKrkdyMIFg== 0000950134-97-008143.txt : 19971111 0000950134-97-008143.hdr.sgml : 19971111 ACCESSION NUMBER: 0000950134-97-008143 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19971110 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: SEC FILE NUMBER: 000-28178 FILM NUMBER: 97711220 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 SEPTEMBER 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 SEPTEMBER 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 November 5, 1997, 14,602,000 shares of the registrant's Common Stock, par value $.01 per share, were outstanding. 2 CARBO CERAMICS INC. INDEX TO QUARTERLY REPORT ON FORM 10-Q
PART I. FINANCIAL INFORMATION PAGE Item 1. Financial Statements Consolidated Balance Sheets - 3 September 30, 1997 (Unaudited), and December 31, 1996 Consolidated Statements of Income 4 (Unaudited) - Three and nine months ended September 30, 1997 and 1996 Consolidated Statements of Cash Flows 5 (Unaudited) - Nine months ended September 30, 1997 and 1996 Notes to Consolidated Financial Statements - September 30, 1997 6-7 (Unaudited) Item 2. Management's Discussion and Analysis of Financial 8-9 Condition and Results of Operations PART II. OTHER INFORMATION Item 1. Legal proceedings 10 Item 2. Changes in securities 10 Item 3. Defaults upon senior securities 10 Item 4. Submission of matters to a vote of security-holders 10 Item 5. Other information 10 Item 6. Exhibits and reports on Form 8-K 10 Signatures 11
2 3 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS CARBO CERAMICS INC. CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 1997 DECEMBER 31, (UNAUDITED) 1996 ------------ ------------ ($ in thousands) ASSETS Current assets: Cash and cash equivalents $ 25,011 $ 17,414 Trade accounts receivable 13,655 10,902 Inventories: Finished goods 4,414 4,478 Raw materials and supplies 4,719 3,907 ------------ ------------ Total inventories 9,133 8,385 Prepaid expenses and other current assets 1,241 608 Deferred income taxes 796 849 ------------ ------------ Total current assets 49,836 38,158 Property, plant and equipment: Land and land improvements 214 57 Buildings 4,536 4,536 Machinery and equipment 26,901 25,112 Construction in progress 3,421 401 ------------ ------------ Total 35,072 30,106 Less accumulated depreciation 9,306 7,859 ------------ ------------ Net property, plant and equipment 25,766 22,247 ------------ ------------ Total assets $ 75,602 $ 60,405 ============ ============ LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 2,554 $ 1,423 Accrued payroll and benefits 1,869 1,837 Accrued freight 1,310 659 Accrued utilities 440 326 Accrued income taxes 758 609 Other accrued expenses 558 350 ------------ ------------ Total current liabilities 7,489 5,204 Deferred income taxes 2,190 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 22,858 10,169 ------------ ------------ Total shareholders' equity 65,923 53,234 ------------ ------------ Total liabilities and shareholders' equity $ 75,602 $ 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 NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, --------------------------- --------------------------- 1997 1996 1997 1996 ------------ ------------ ------------ ------------ Revenues $ 23,062 $ 17,898 $ 61,795 $ 48,330 Cost of goods sold 11,593 9,432 30,986 25,707 ------------ ------------ ------------ ------------ Gross profit 11,469 8,466 30,809 22,623 Selling, general and administrative expenses 2,255 1,585 6,356 6,321 ------------ ------------ ------------ ------------ Operating profit 9,214 6,881 24,453 16,302 Other income (expense): Interest income 230 97 672 146 Interest expense -- -- -- (86) Other, net 22 (34) 31 (18) ------------ ------------ ------------ ------------ 252 63 703 42 ------------ ------------ ------------ ------------ Income before income taxes 9,466 6,944 25,156 16,344 Income taxes 3,527 2,595 9,182 3,598 ------------ ------------ ------------ ------------ Net income $ 5,939 $ 4,349 $ 15,974 $ 12,746 ============ ============ ============ ============ Pro forma data: Income before income taxes $ 16,344 Income taxes 6,108 ------------ Net income $ 10,236 ============ Net income per share (pro forma for nine months 1996) $ 0.40 $ 0.30 $ 1.08 $ 0.70 ============ ============ ============ ============ Weighted average number of shares (pro forma for nine months 1996) 14,894,186 14,715,448 14,801,369 14,681,660 ============ ============ ============ ============
The accompanying notes are an integral part of these statements. 4 5 CARBO CERAMICS INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
NINE MONTHS ENDED SEPTEMBER 30, ---------------------------- 1997 1996 ------------ ------------ ($ IN THOUSANDS) OPERATING ACTIVITIES Net income $ 15,974 $ 12,746 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 1,447 1,401 Amortization -- 1,316 Deferred income taxes 276 3,599 Changes in operating assets and liabilities: Trade accounts receivable (2,753) (3,467) Inventories (748) (462) Prepaid expenses and other current assets (633) (449) Accounts payable 1,131 (503) Accrued payroll and benefits 32 (65) Accrued freight 651 170 Accrued utilities 114 4 Accrued income taxes 149 -- Other accrued expenses 208 (301) ------------ ------------ Net cash provided by operating activities 15,848 13,989 INVESTING ACTIVITIES Purchase of property, plant and equipment (4,966) (1,962) ------------ ------------ Net cash used in investing activities (4,966) (1,962) FINANCING ACTIVITIES Net payments on bank borrowings -- (2,780) Net proceeds from initial public offering -- 35,285 Cash distributions -- (32,844) Cash dividends (3,285) (1,095) ------------ ------------ Net cash used in financing activities (3,285) (1,434) ------------ ------------ Net increase in cash and cash equivalents 7,597 10,593 Cash and cash equivalents at beginning of period 17,414 201 ------------ ------------ Cash and cash equivalents at end of period $ 25,011 $ 10,794 ============ ============ SUPPLEMENTAL CASH FLOW INFORMATION Interest paid $ -- $ 92 ============ ============ Income taxes paid $ 8,758 $ -- ============ ============
The accompanying notes are an integral part of these statements. 5 6 CARBO CERAMICS INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) SEPTEMBER 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. 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 July 9, 1997, the Board of Directors declared a cash dividend of $0.075 per common share payable to shareholders of record on July 31, 1997. The dividend was paid on August 15, 1997. 3. NET INCOME PER SHARE Net income per share for the three months ended September 30, 1997 and 1996 and the nine months ended September 30, 1997 is based on 14,602,000 shares of Common Stock outstanding during each period, increased by 292,186, 113,448 and 199,369 average common stock equivalent shares, respectively, for the assumed exercise of options. 4. PRO FORMA INFORMATION Pro Forma Net Income: Pro forma net income for the nine months ended September 30, 1996 reflects a provision for income taxes at the Company's historical effective tax rate 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. Pro Forma Net Income Per Share: Pro forma net income per share for the nine months ended September 30, 1996 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 79,660 average common stock equivalent shares for the assumed exercise of options. 6 7 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 September 30, 1997 are as follows: DEFERRED TAX ASSETS: ($ in thousands) Employee benefits...................................... $ 328 Inventories............................................ 377 Other.................................................. 91 ------- Total deferred tax assets.............................. 796 DEFERRED TAX LIABILITIES: Depreciation........................................... 2,141 Other.................................................. 49 ------- Total deferred tax liabilities......................... 2,190 ------- Net deferred liabilities............................... $(1,394) =======
7 8 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS Three Months Ended September 30, 1997 Revenues. Revenues for the third quarter 1997 were $23.1 million, an increase of 29% over the third quarter 1996. The increase was due to a 27% 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 significantly for the company's lightweight products, particularly in the export markets. The sales volume of our high strength products decreased from an unusually high demand for these products during the third quarter 1996 - a result of production problems experienced by our competitor during this period. Domestic sales volume for the quarter increased by 18% and export sales increased by 49%. Natural gas prices increased approximately 19% from the third quarter 1996. In addition, natural gas drilling activity continued to increase over 1996 with the third quarter 1997 approximately 19% ahead of the same period of 1996. As of September 30, 1997 over 61% of the total rig count was devoted to natural gas drilling. Gross Profit. Gross profit for the quarter was $11.5 million or 50% of sales compared to $8.5 million or 47% of sales for the third 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 both the Eufaula and New Iberia facilities during the third quarter of 1997 compared to the same period in 1996. The improvement in cost performance at both facilities was due to higher production rates in 1997 to meet increased sales requirements. Selling, General and Administrative Expenses (SG&A). SG&A was $2.3 million for the third quarter of 1997 and $1.6 million for the comparable period in 1996. The increase in costs is due to an increase in those costs that vary with sales volume and profitability including warehouse and shipping expenses, commission expenses and incentive compensation, as well as expenses associated with being a publicly traded company. Nine Months Ended September 30, 1997 Revenues. Revenues for the nine months ended September 30, 1997 were $61.8 million, up 28% from the same period in 1996. The increase was the result of a 24% increase in sales volume and the 5% price increase effective January 1997. Sales volumes increased for each of the company's products, with the company's lightweight products increasing by 32%. Domestic sales increased by 21% and export sales increased by 33% over 1996. Gross Profit. Gross profit for the nine months ended September 30,1997 was $30.8 million or 50% of sales compared to $22.6 million or 47% of sales for the same period in 1996. The increase in gross profit margins is due to the price increase that went into effect in January 1997, and lower manufacturing costs, primarily at the New Iberia facility which resulted from higher throughput achieved through improved grinding operations. Selling, General and Administrative Expenses (SG&A). SG&A expenses were $6.4 million for the first nine months of 1997 compared to $6.3 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 is offset by an increase in 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. 8 9 LIQUIDITY AND CAPITAL RESOURCES Cash and cash equivalents totaled $25.0 million as of September 30, 1997, an increase of $7.6 million from December 31, 1996. The increase in cash and cash equivalents was due to cash generated from operations of $15.9 million net of capital spending of $5.0 million and cash dividends of $3.3 million. Capital spending in the first nine months of 1997 was primarily related to expansion of our San Antonio storage facility, expansion of our Eufaula manufacturing facility, and initial spending related to the construction of a new manufacturing facility in McIntyre, Georgia. The company will continue to increase its capital expenditures in 1997 and 1998. Up to $40 million will be spent in the 4th quarter of 1997 and throughout 1998 to complete the construction of the new facility in Georgia. 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 None ITEM 5. OTHER INFORMATION None ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K a. There were no reports filed on Form 8-K during the three months ended September 30, 1997. b. Exhibits 27.1. Financial Data Schedule 10 11 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. /s/ JESSE P. ORSINI --------------------------------- Jesse P. Orsini President & Chief Executive Officer /s/ PAUL G. VITEK --------------------------------- Paul G. Vitek Vice President, Finance Date: November 6, 1997 11 12 EXHIBIT INDEX
EXHIBIT NUMBER DESCRIPTION - ------ ----------- 27.1 Financial Data Schedule
EX-27.1 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 SEP-30-1997 25,011 0 13,655 0 9,133 49,836 35,072 (9,306) 75,602 7,489 0 0 0 146 65,777 75,602 23,062 23,062 11,593 11,593 0 0 0 9,466 3,527 5,939 0 0 0 5,939 .40 .40
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