-----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, JMaZjnBZM3w5tC1pybJgP/ovcQhwDXgiqjvTcxLCQ22HxJ2mEmCtChunsYHavQZC bKS4q3kp3c3GcJqXziXAUw== 0000950134-98-004063.txt : 19980513 0000950134-98-004063.hdr.sgml : 19980513 ACCESSION NUMBER: 0000950134-98-004063 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19980331 FILED AS OF DATE: 19980512 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: 98616228 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 MARCH 31, 1998 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 MARCH 31, 1998 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 May 8, 1998, 14,602,000 shares of the registrant's Common Stock, par value $.01 per share, were outstanding. 2 CARBO CERAMICS INC. INDEX TO QUARTERLY REPORT ON FORM 10-Q
PART I. FINANCIAL INFORMATION PAGE Item 1. Financial Statements Consolidated Balance Sheets - 3 March 31, 1998 (Unaudited) and December 31, 1997 Consolidated Statements of Income 4 (Unaudited) - Three months ended March 31, 1998 and 1997 Consolidated Statements of Cash Flows 5 (Unaudited) - Three months ended March 31, 1998 and 1997 Notes to Consolidated Financial Statements 6-7 (Unaudited) - March 31, 1998 Item 2. Management's Discussion and Analysis of Financial 8 Condition and Results of Operations PART II. OTHER INFORMATION Item 1. Legal proceedings 9 Item 2. Changes in securities 9 Item 3. Defaults upon senior securities 9 Item 4. Submission of matters to a vote of security-holders 9 Item 5. Other information 9 Item 6. Exhibits and reports on Form 8-K 9 Signatures 10
2 3 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS CARBO CERAMICS INC. CONSOLIDATED BALANCE SHEETS
MARCH 31, 1998 DECEMBER 31, (UNAUDITED) 1997 ------------ ----------- ($ in thousands) ASSETS Current assets: Cash and cash equivalents $11,035 $ 8,899 Investment securities 10,910 13,905 Trade accounts receivable 16,389 14,243 Inventories: Finished goods 4,249 4,347 Raw materials and supplies 4,474 4,034 ------- ------- Total inventories 8,723 8,381 Prepaid expenses and other current assets 1,002 661 Deferred income taxes 822 772 ------- ------- Total current assets 48,881 46,861 Property, plant and equipment: Land and land improvements 214 214 Buildings 4,613 4,536 Machinery and equipment 27,843 27,773 Construction in progress 17,516 11,382 ------- ------- Total 50,186 43,905 Less accumulated depreciation 10,336 9,812 ------- ------- Net property, plant and equipment 39,850 34,093 ------- ------- Total assets $88,731 $80,954 ======= ======= LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 2,447 $ 2,131 Accrued payroll and benefits 1,485 2,448 Accrued freight 969 851 Accrued utilities 395 422 Accrued income taxes 3,980 1,018 Other accrued expenses 1,027 746 ------- ------- Total current liabilities 10,303 7,616 Deferred income taxes 2,789 2,396 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 32,574 27,877 ------- ------- Total shareholders' equity 75,639 70,942 ------- ------- Total liabilities and shareholders' equity $88,731 $80,954 ======= =======
The accompanying notes are an integral part of these statements. 3 4 CARBO CERAMICS INC. CONSOLIDATED STATEMENTS OF INCOME ($ in thousands, except per share data) (UNAUDITED)
THREE MONTHS ENDED MARCH 31, ---------------------- 1998 1997 --------- --------- Revenues $22,617 $17,840 Cost of goods sold 11,100 8,847 ------- ------- Gross profit 11,517 8,993 Selling, general and administrative expenses 2,508 2,021 ------- ------- Operating profit 9,009 6,972 Other income (expense): Interest income, net 317 187 Other income, net 29 11 ------- ------- 346 198 ------- ------- Income before income taxes 9,355 7,170 Income taxes 3,563 2,584 ------- ------- Net income $ 5,792 $ 4,586 ======= ======= Earnings per share: Basic $ 0.40 $ 0.31 ======= ======= Diluted $ 0.39 $ 0.31 ======= =======
The accompanying notes are an integral part of these statements. 4 5 CARBO CERAMICS INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
THREE MONTHS ENDED MARCH 31, ------------------------ 1998 1997 --------- --------- ($ IN THOUSANDS) OPERATING ACTIVITIES Net income $ 5,792 $ 4,586 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 524 481 Deferred income taxes 343 (15) Changes in operating assets and liabilities: Trade accounts receivable (2,146) (1,964) Inventories (342) (729) Prepaid expenses and other current assets (341) (611) Accounts payable 316 (247) Accrued payroll and benefits (963) (711) Accrued freight 118 198 Accrued utilities (27) 65 Accrued income taxes 2,962 1,940 Other accrued expenses 281 72 -------- -------- Net cash provided by operating activities 6,517 3,065 INVESTING ACTIVITIES Maturities of investment securities 2,995 -- Purchases of property, plant and equipment (6,281) (165) -------- -------- Net cash used in investing activities (3,286) (165) FINANCING ACTIVITIES Dividends paid (1,095) (1,095) -------- -------- Net cash used in financing activities (1,095) (1,095) -------- -------- Net increase in cash and cash equivalents 2,136 1,805 Cash and cash equivalents at beginning of period 8,899 17,414 -------- -------- Cash and cash equivalents at end of period $ 11,035 $ 19,219 ======== ======== SUPPLEMENTAL CASH FLOW INFORMATION Interest paid $ -- $ -- ======== ======== Income taxes paid $ 258 $ -- ======== ========
The accompanying notes are an integral part of these statements. 5 6 CARBO CERAMICS INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) MARCH 31, 1998 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, 1997 included in the Company's Form 10-K Annual Report for the year ended December 31, 1997. The consolidated financial statements include the accounts of CARBO Ceramics Inc. and its wholly owned subsidiaries, CARBO Ceramics Sales Corporation and CARBO Ceramics (U.K. Limited). CARBO Ceramics Sales Corporation was formed on July 31, 1996 under the laws of Barbados. CARBO Ceramics (U.K. Limited) was formed on December 19, 1997 under the laws of Scotland. All significant intercompany transactions have been eliminated. 2. DIVIDENDS PAID On January 14, 1998, the Board of Directors declared a cash dividend of $0.075 per common share payable to shareholders of record on January 30, 1998. The dividend was paid on February 15, 1998. 3. EARNINGS PER SHARE The following table sets forth the computation of basic and diluted earnings per share for the three months ended March 31, 1998 and 1997 ($ in thousands, except per share data):
1998 1997 ----------- ----------- Numerator for basic and diluted earnings per share: Net income ........................................ $ 5,792 $ 4,586 Denominator: Denominator for basic earnings per share-- weighted-average shares ......................... 14,602,000 14,602,000 Effect of dilutive securities: Employee stock options .......................... 177,885 66,713 ----------- ----------- Dilutive potential common shares .................. 177,885 66,713 ----------- ----------- Denominator for diluted earnings per share-- adjusted weighted-average shares ................ 14,779,885 14,668,713 =========== =========== Basic earnings per share ............................ $ 0.40 $ 0.31 =========== =========== Diluted earnings per share .......................... $ 0.39 $ 0.31 =========== ===========
4. 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 March 31, 1998 and December 31, 1997 are as follows: 6 7 4. INCOME TAXES -- (CONTINUED)
March 31, December 31, 1998 1997 --------- ------------ Deferred tax assets: ($ in thousands) Employee benefits ............................. $ 315 $ 271 Inventories ................................... 371 377 Other ......................................... 136 124 ------ ------ Total deferred tax assets ..................... 822 772 Deferred tax liabilities: Depreciation .................................. 2,717 2,356 Other ......................................... 72 40 ------ ------ Total deferred tax liabilities ................ 2,789 2,396 ------ ------ Net deferred liabilities ...................... $1,967 $1,624 ====== ======
5. COMMITMENTS Construction in progress of $17.5 million at March 31, 1998 includes $13.6 million related to construction of the Company's new manufacturing facility in McIntyre Georgia. The new facility is scheduled to be fully operational in the fourth quarter of 1998 at a total estimated cost of $40 million. 7 8 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS Three Months Ended March 31, 1998 Revenues. Revenues for the first quarter 1998 were $22.6 million, an increase of 27% over the first quarter 1997. The increase was due to an 18% 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 1998. Sales volumes increased for each of the Company's products, except for CARBOHSP(R), which decreased slightly. Domestic sales volume increased by 10%, while export sales volume increased by 33% - with significant increases in sales to Canada, Mexico and Australia. While average natural gas prices declined by 25% from the first quarter 1997, natural gas drilling activity in the first quarter 1998 increased by 20% versus the same period a year earlier. The Company believes that the increased activity was due to the industry's continued focus on long-term demand for natural gas and the need to replace reserves. Gross Profit. Gross profit for the quarter was $11.5 million or 51% of sales as compared to $9 million or 50% of sales for the first quarter 1997. The increase in gross profit margins was due to the price increase that went into effect in January 1998 and a reduction in manufacturing costs at the Company's New Iberia manufacturing facility. The cost reduction was due to increased operating efficiency brought about by a reduction in maintenance downtime. These two factors were partially offset by increased freight and packaging costs - a direct result of the increase in export sales volume. Selling, General and Administrative Expenses (SG&A). SG&A expenses were $2.5 million for the first quarter 1998 and $2 million for the corresponding period in 1997. Expenses as a percentage of sales declined from 11.3% in the first quarter 1997 to 11.1% for the same period in 1998. The largest increases were in those expenses that vary with sales volume or profitability including warehouse and shipping expenses, commissions expense and incentive compensation. Increases in these expenses from year to year were offset by an even larger percentage increase in sales revenue. LIQUIDITY AND CAPITAL RESOURCES Cash and cash equivalents totaled $11 million as of March 31, 1998, an increase of $2.1 million from December 31, 1997. The increase in cash and cash equivalents was due to cash generated from operations of $6.5 million and $3 million from maturities of U.S. government securities, net of capital spending of $6.3 million and cash dividends of $1.1 million. As of March 31, 1998, the Company held $10.9 million in investments expected to be held to maturity. Capital spending of $6.3 million during the first quarter 1998 included $5.8 million related to continuing construction of a new manufacturing facility in McIntyre, Georgia. The Company plans to spend an additional $26 million for the completion of the new facility, with funding expected to be provided by 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. 8 9 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 March 31, 1998. b. Exhibits 27.1 Financial Data Schedule for the interim year to date period ended March 31, 1998 27.2 Financial Data Schedule, as restated, for the year ended December 31, 1996 and the interim year to date periods ended March 31, 1996, June 30, 1996 and September 30, 1996. 27.3 Financial Data Schedule, as restated, for the interim year to date periods ended March 31, 1997, June 30, 1997 and September 30, 1997. 9 10 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: May 8, 1998 10 11 INDEX TO EXHIBITS EXHIBITS DESCRIPTION - -------- ----------- 27.1 Financial Data Schedule for the interim year to date period ended March 31, 1998 27.2 Financial Data Schedule, as restated, for the year ended December 31, 1996 and the interim year to date periods ended March 31, 1996, June 30, 1996 and September 30, 1996. 27.3 Financial Data Schedule, as restated, for the interim year to date periods ended March 31, 1997, June 30, 1997 and September 30, 1997. 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-31-1998 MAR-31-1998 11,035 10,910 16,389 0 8,723 48,881 50,186 10,336 88,731 10,303 0 0 0 146 75,493 88,731 22,617 22,617 11,100 11,100 0 0 0 9,355 3,563 5,792 0 0 0 5,792 .40 .39
EX-27.2 3 RESTATED 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 12-MOS 3-MOS 6-MOS 9-MOS DEC-31-1996 DEC-31-1996 DEC-31-1996 DEC-31-1996 DEC-31-1996 MAR-31-1996 JUN-30-1996 SEP-30-1996 17,414 (353) 3,809 10,794 0 0 0 0 10,902 7,997 12,539 12,250 0 0 0 0 8,385 8,775 8,872 8,293 38,158 16,858 29,694 33,577 30,106 29,115 29,787 29,924 7,859 6,353 6,855 7,359 60,405 39,620 52,626 56,142 5,204 7,497 4,338 4,233 0 0 0 0 0 0 0 0 0 0 0 0 146 123 146 146 53,088 32,000 46,875 50,129 60,405 39,620 52,626 56,142 65,151 13,033 30,432 48,330 65,151 13,033 30,432 48,330 34,517 6,893 16,275 25,707 34,517 6,893 16,275 25,707 0 0 0 0 0 0 0 0 86 20 86 86 22,683 4,375 9,400 16,344 5,883 0 1,003 3,598 16,800 4,375 8,397 12,746 0 0 0 0 0 0 0 0 0 0 0 0 16,800 4,375 8,397 12,746 .98 .19 .40 .70 .97 .19 .40 .70
EX-27.3 4 RESTATED 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 6-MOS 9-MOS DEC-31-1997 DEC-31-1997 DEC-31-1997 MAR-31-1997 JUN-30-1997 SEP-30-1997 19,219 20,271 25,011 0 0 0 12,866 12,541 13,655 0 0 0 9,114 9,724 9,133 43,143 44,488 49,836 30,271 32,520 35,072 8,340 8,820 9,306 65,074 68,188 75,602 6,521 5,157 7,489 0 0 0 0 0 0 0 0 0 146 146 146 56,579 60,933 65,777 65,074 68,188 75,602 17,840 38,733 61,795 17,840 38,733 61,795 8,847 19,393 30,986 8,847 19,393 30,986 0 0 0 0 0 0 0 0 0 7,170 15,690 25,156 2,584 5,655 9,182 4,586 10,035 15,974 0 0 0 0 0 0 0 0 0 4,586 10,035 15,974 .31 .68 1.09 .31 .69 1.09
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