-----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, VXgR0V8yikuRGcvW1AHZKebdAV2DJJK5lEqvfAonLv/u4QwqOEf6pH34NNRBI5cY sTZ4JRzXqR+cY3zWbdMR/g== 0000950134-97-003429.txt : 19970505 0000950134-97-003429.hdr.sgml : 19970505 ACCESSION NUMBER: 0000950134-97-003429 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970502 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: 97594785 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 ENDING MARCH 31, 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 MARCH 31, 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 April 29, 1997, 14,602,000 shares of the registrant's Common Stock, par value $.01 per share, were outstanding. 2 CARBO CERAMICS INC. INDEX TO QUARTERLY REPORT ON FORM 10-Q
PART I. FINANCIAL INFORMATION PAGE Item 1. Financial Statements Consolidated Balance Sheets - 3 March 31, 1997 (Unaudited) and December 31, 1996 Consolidated Statements of Income 4 (Unaudited) - Three months ended March 31, 1997 and 1996 Consolidated Statements of Cash Flows 5 (Unaudited) - Three months ended March 31, 1997 and 1996 Notes to Consolidated Financial Statements - March 31, 1997 6-7 (Unaudited) Item 2. Management's Discussion and Analysis of Financial 8 Condition and Results of Operations PART II. OTHER INFORMATION Item 1. Legal proceedings 9 Item 2. Changes in securities 9 Item 3. Defaults upon senior securities 9 Item 4. Submission of matters to a vote of security-holders 9 Item 5. Other information 9 Item 6. Exhibits and reports on Form 8-K 9 Signatures 10
2 3 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS CARBO CERAMICS INC. CONSOLIDATED BALANCE SHEETS
MARCH 31, 1997 DECEMBER 31, (UNAUDITED) 1996 ---------- ---------- ($ in thousands) ASSETS Current assets: Cash and cash equivalents $ 19,219 $ 17,414 Trade accounts receivable 12,866 10,902 Inventories: Finished goods 4,858 4,478 Raw materials and supplies 4,256 3,907 ---------- ---------- Total inventories 9,114 8,385 Prepaid expenses and other current assets 1,219 608 Deferred income taxes 725 849 ---------- ---------- Total current assets 43,143 38,158 Property, plant and equipment: Land and land improvements 57 57 Buildings 4,536 4,536 Machinery and equipment 25,112 25,112 Construction in progress 566 401 ---------- ---------- Total 30,271 30,106 Less accumulated depreciation 8,340 7,859 ---------- ---------- Net property, plant and equipment 21,931 22,247 ---------- ---------- $ 65,074 $ 60,405 ========== ========== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 1,176 $ 1,423 Accrued payroll and benefits 1,126 1,837 Accrued freight 857 659 Accrued utilities 391 326 Accrued income taxes 2,549 609 Other accrued expenses 422 350 ---------- ---------- Total current liabilities 6,521 5,204 Deferred income taxes 1,828 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 13,660 10,169 ---------- ---------- Total shareholders' equity 56,725 53,234 ---------- ---------- $ 65,074 $ 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 MARCH 31, --------------------------- 1997 1996 ------------ ------------ Sales $ 17,840 $ 13,033 Cost of goods sold 8,847 6,893 ------------ ------------ Gross profit 8,993 6,140 Selling, general and administrative expenses 2,021 1,771 ------------ ------------ Operating profit 6,972 4,369 Other income (expense): Interest income 187 2 Interest expense -- (20) Other, net 11 24 ------------ ------------ 198 6 ------------ ------------ Income before income taxes 7,170 4,375 Income taxes 2,584 -- ------------ ------------ Net income $ 4,586 $ 4,375 ------------ ------------ Pro forma data: Income before income taxes $ 4,375 Income taxes 1,663 ------------ Net income $ 2,712 ------------ ------------ Net income per share (pro forma in 1996) $ 0.31 $ 0.19 ------------ ------------ Weighted average number of shares (pro forma in 1996) 14,711,136 14,602,000 ------------ ------------
The accompanying notes are an integral part of these statements. 4 5 CARBO CERAMICS INC. CONSOLIDATED STATEMENTS OF CASH FLOWS ($ in thousands) (UNAUDITED)
THREE MONTHS ENDED MARCH 31, -------------------- 1997 1996 -------- -------- OPERATING ACTIVITIES Net income $ 4,586 $ 4,375 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 481 395 Amortization -- 110 Deferred income taxes (15) -- Changes in operating assets and liabilities: Trade accounts receivable (1,964) 786 Inventories (729) (944) Prepaid expenses and other current assets (611) (169) Accounts payable (247) (732) Accrued payroll and benefits (711) (467) Accrued freight 198 415 Accrued utilities 65 16 Accrued income taxes 1,940 -- Other accrued expenses 72 (67) -------- -------- Net cash provided by operating activities 3,065 3,718 INVESTING ACTIVITIES Purchase of property, plant and equipment (165) (1,153) -------- -------- Net cash used in investing activities (165) (1,153) FINANCING ACTIVITIES Net proceeds from bank borrowings -- 624 Cash distributions -- (3,743) Cash dividends (1,095) -- -------- -------- Net cash used in financing activities (1,095) (3,119) -------- -------- Net increase (decrease) in cash and cash equivalents 1,805 (554) Cash and cash equivalents at beginning of period 17,414 201 -------- -------- Cash and cash equivalents (overdraft) at end of period $ 19,219 $ (353) ======== ======== SUPPLEMENTAL CASH FLOW INFORMATION Interest paid $ -- $ 22 ======== ========
The accompanying notes are an integral part of these statements. 5 6 CARBO CERAMICS INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) MARCH 31, 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 months ended March 31, 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 January 14, 1997, the Board of Directors declared a cash dividend of $0.075 per common share payable to shareholders of record on January 24, 1997. The dividend was paid on February 5, 1997. 3. NET INCOME PER SHARE Net income per share for the three months ended March 31, 1997, is based on 14,602,000 shares of Common Stock outstanding during the period, increased by 109,136 average common stock equivalent shares for the assumed exercise of options. In February 1997, the Financial Accounting Standards Board issued Statement No. 128, Earnings per Share, which is required to be adopted on December 31, 1997. At that time, the Company will be required to change the method currently used to compute earnings per share and to restate all prior periods. Under the new requirements for calculating primary earnings per share, the dilutive effect of stock options will be excluded. The effect of Statement 128 on the calculation of primary and fully diluted earnings per share for the quarters ended March 31, 1997, and March 31, 1996, is not expected to be material. 6 7 4. PRO FORMA INFORMATION Pro Forma Net Income: Pro forma net income for the three months ended March 31, 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. Pro Forma Net Income Per Share: For the three months ended March 31, 1996, pro forma net income per share is based on 12,302,000 shares of Common Stock outstanding during the period, increased by the assumed issuance of 2,300,000 shares of Common Stock as issued in the initial public offering of the Company's Common Stock on April 26, 1996. 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 March 31, 1997, are as follows:
DEFERRED TAX ASSETS: ($ in thousands) Employee benefits ............................ $ 282 Inventories .................................. 357 Other ........................................ 86 -------------- Total deferred tax assets .................... 725 DEFERRED TAX LIABILITIES: Depreciation ................................. 1,764 Other ........................................ 64 -------------- Total deferred tax liabilities ............... 1,828 -------------- Net deferred liabilities ..................... $ (1,103) ==============
7 8 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS Three Months Ended March 31, 1997 Revenues. Revenues for the first quarter 1997 were a record $17.8 million, an increase of 37% over the first quarter 1996. The increase was due to a 29% 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 volume increased for each of the Company's products. However, the largest percentage volume increases were in the Company's highest margin product lines, CarboLite and Carbo HSP. Domestic and export sales volumes each increased by 29%. While average natural gas prices declined by 7% from the first quarter 1996, natural gas drilling activity in the first quarter 1997 actually increased by 21% versus the same period a year earlier. The Company believes that the increased activity was due to the industry's focus on the long term demand for natural gas and the increasing need to drill new wells to meet increased demand and replace reserves. Gross Profit. Gross profit for the quarter was $9.0 million or 50% of sales as compared to $6.1 million or 47% of sales for the first quarter 1996. The increase in gross profit margins was due to the price increase that went into effect in January 1997 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 increased demand for the Company's high-strength proppants which are manufactured in the New Iberia facility and the fact that the facility experienced reduced throughput in the first quarter 1996 due to a maintenance shutdown. Selling, General and Administrative Expenses (SG&A). SG&A was $2.0 million for the first quarter 1997 and $1.8 million for the corresponding period in 1996. Expenses as a percentage of sales declined from 13.6% in the first quarter 1996 to 11.3% for the same period in 1997. The reduction was primarily due to the elimination of consulting fees that had been paid to the Chairman of the Board of Directors prior to the initial public offering of the Company's stock in April 1996 and the amortization of unearned compensation that was recorded to recognize the value of stock granted to the Company's president prior to the initial public offering. These reductions were partially offset by new costs incurred in connection with filing costs and shareholder communication costs associated with being a publicly traded company. Other SG&A components that increased were those that vary with sales volume or profitability including warehouse and shipping expenses, commissions expense and incentive compensation. LIQUIDITY AND CAPITAL RESOURCES Cash and cash equivalents totaled $19.2 million as of March 31, 1997, an increase of $1.8 million from December 31, 1996. The increase in cash and cash equivalents was due to cash generated from operations of $3.1 million net of capital spending of $.2 million and cash dividends of $1.1 million. The Company has announced that it will significantly increase its capital expenditures in 1997 and 1998. In 1997, the Company expects that, in addition to maintenance capital spending of approximately $2.0 million, it will spend $4.0 million to expand its distribution capabilities and up to $12.0 million to begin the construction of a new manufacturing facility in Georgia. In addition, the Company expects to spend approximately $22.0 million in 1998 to complete the 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. 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, 1997. (b) Exhibits 27.1 Financial Data Schedule 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. By:/s/ JESSE P. ORSINI ------------------------------------ Jesse P. Orsini President & Chief Executive Officer By:/s/ PAUL G. VITEK ------------------------------------ Paul G. Vitek Vice President, Finance & Chief Financial Officer Date: April 29, 1997 10 11 INDEX TO EXHIBITS EXHIBIT NUMBER 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 MAR-31-1997 19,219 0 12,866 0 9,114 43,143 30,271 (8,340) 65,074 6,521 0 0 0 146 56,579 65,074 17,840 17,840 8,847 8,847 0 0 0 7,170 2,584 4,586 0 0 0 4,586 .31 .31
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