-----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, HdnzQAZoKCZ7d1VfYitEwhrofAQ4GDqe3V5JStZ3zqSQvJaaAQUpvYaK+o+8b38U GpHbXM88Jvgd5uL6UMvVtg== 0001009672-98-000003.txt : 19980810 0001009672-98-000003.hdr.sgml : 19980810 ACCESSION NUMBER: 0001009672-98-000003 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980630 FILED AS OF DATE: 19980807 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: 98679760 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 JUNE 30, 1998 1 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 JUNE 30, 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 August 3, 1998, 14,602,000 shares of the registrant's Common Stock, par value $.01 per share, were outstanding. 2 CARBO CERAMICS INC. INDEX TO QUARTERLY REPORT ON FORM 10-Q
PART I. FINANCIAL INFORMATION PAGE Item 1. Financial Statements Consolidated Balance Sheets - 3 June 30, 1998 (Unaudited) and December 31, 1997 Consolidated Statements of Income 4 (Unaudited) - Three and six months ended June 30, 1998 and 1997 Consolidated Statements of Cash Flows 5 (Unaudited) - Six months ended June 30, 1998 and 1997 Notes to Consolidated Financial Statements 6-7 (Unaudited) - June 30, 1998 Item 2. Management's Discussion and Analysis of Financial 8-9 Condition and Results of Operations PART II. OTHER INFORMATION Item 1. Legal proceedings 10 Item 2. Changes in securities 10 Item 3. Defaults upon senior securities 10 Item 4. Submission of matters to a vote of security-holders 10 Item 5. Other information 10 Item 6. Exhibits and reports on Form 8-K 11 Signatures 12
2 3 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS CARBO CERAMICS INC. CONSOLIDATED BALANCE SHEETS
JUNE 30, 1998 DECEMBER 31, (UNAUDITED) 1997 ------------ ------------ ($ in thousands) ASSETS Current assets: Cash and cash equivalents $ 14,677 $ 8,899 Investment securities 1,950 13,905 Trade accounts receivable 17,361 14,243 Inventories: Finished goods 3,669 4,347 Raw materials and supplies 3,833 4,034 ------------ ------------ Total inventories 7,502 8,381 Prepaid expenses and other current assets 1,260 661 Deferred income taxes 872 772 ------------ ------------ Total current assets 43,622 46,861 Property, plant and equipment: Land and land improvements 270 214 Buildings 4,613 4,536 Machinery and equipment 29,292 27,773 Construction in progress 25,929 11,382 ------------ ------------ Total 60,104 43,905 Less accumulated depreciation 10,797 9,812 ------------ ------------ Net property, plant and equipment 49,307 34,093 ------------ ------------ Total assets $ 92,929 $ 80,954 ============ ============ LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 2,131 $ 2,131 Accrued payroll and benefits 1,931 2,448 Accrued freight 2,192 851 Accrued utilities 421 422 Accrued income taxes 1,338 1,018 Other accrued expenses 1,037 746 ------------ ------------ Total current liabilities 9,050 7,616 Deferred income taxes 3,153 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 37,661 27,877 ------------ ------------ Total shareholders' equity 80,726 70,942 ------------ ------------ Total liabilities and shareholders' equity $ 92,929 $ 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 SIX MONTHS ENDED JUNE 30, JUNE 30, ----------------------------- ----------------------------- 1998 1997 1998 1997 ----------- ----------- ----------- ----------- Revenues $ 23,764 $ 20,893 $ 46,381 $ 38,733 Cost of goods sold 11,885 10,546 22,985 19,393 ----------- ----------- ----------- ----------- Gross profit 11,879 10,347 23,396 19,340 Selling, general and administrative expenses 2,349 2,080 4,857 4,101 ----------- ----------- ----------- ----------- Operating profit 9,530 8,267 18,539 15,239 Other income (expense): Interest income, net 260 255 577 442 Other, net 188 (2) 217 9 ----------- ----------- ----------- ----------- 448 253 794 451 ----------- ----------- ----------- ----------- Income before income taxes 9,978 8,520 19,333 15,690 Income taxes 3,796 3,071 7,359 5,655 ----------- ----------- ----------- ----------- Net income $ 6,182 $ 5,449 $ 11,974 $ 10,035 =========== =========== =========== =========== Earnings per share: Basic $ 0.42 $ 0.37 $ 0.82 $ 0.69 =========== =========== =========== =========== Diluted $ 0.42 $ 0.37 $ 0.81 $ 0.68 =========== =========== =========== ===========
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, -------------------------- 1998 1997 ---------- ---------- ($ IN THOUSANDS) OPERATING ACTIVITIES Net income $ 11,974 $ 10,035 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 1,043 961 Deferred income taxes 657 94 Changes in operating assets and liabilities: Trade accounts receivable (3,118) (1,639) Inventories 879 (1,339) Prepaid expenses and other current assets (599) (604) Accounts payable - 79 Accrued payroll and benefits (517) (290) Accrued freight 1,341 346 Accrued utilities (1) 74 Accrued income taxes 320 (129) Other accrued expenses 291 (127) ---------- ---------- Net cash provided by operating activities 12,270 7,461 INVESTING ACTIVITIES Maturities of investment securities 11,955 - Purchases of property, plant and equipment (16,257) (2,414) ---------- ---------- Net cash used in investing activities (4,302) (2,414) FINANCING ACTIVITIES Dividends paid (2,190) (2,190) ---------- ---------- Net cash used in financing activities (2,190) (2,190) ---------- ---------- Net increase in cash and cash equivalents 5,778 2,857 Cash and cash equivalents at beginning of period 8,899 17,414 ---------- ---------- Cash and cash equivalents at end of period $ 14,677 $ 20,271 ========== ========== SUPPLEMENTAL CASH FLOW INFORMATION Income taxes paid $ 6,382 $ 5,690 ========== ==========
The accompanying notes are an integral part of these statements. 5 6 CARBO CERAMICS INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) JUNE 30, 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 (UK) Limited. CARBO Ceramics Sales Corporation was formed on July 31, 1996 under the laws of Barbados. CARBO Ceramics (UK) Limited was formed on December 19, 1997 under the laws of Scotland. All significant intercompany transactions have been eliminated. 2. DIVIDENDS PAID On April 14, 1998, the Board of Directors declared a cash dividend of $0.075 per common share payable to shareholders of record on April 30, 1998. The dividend was paid on May 15, 1998. 3. EARNINGS PER SHARE The following table sets forth the computation of basic and diluted earnings per share ($ in thousands, except per share data):
Three months ended Six months ended June 30, June 30, ----------------------------- ----------------------------- 1998 1997 1998 1997 ----------- ----------- ----------- ----------- Numerator for basic and diluted earnings per share: Net income ........................................ $ 6,182 $ 5,449 $ 11,974 $ 10,035 Denominator: Denominator for basic earnings per share-- weighted-average shares ......................... 14,602,000 14,602,000 14,602,000 14,602,000 Effect of dilutive securities: Employee stock options .......................... 224,536 92,024 201,211 79,369 ----------- ----------- ----------- ----------- Dilutive potential common shares .................. 224,536 92,024 201,211 79,369 ----------- ----------- ----------- ----------- Denominator for diluted earnings per share-- adjusted weighted-average shares ................ 14,826,536 14,694,024 14,803,211 14,681,369 =========== =========== =========== =========== Basic earnings per share ............................. $ 0.42 $ 0.37 $ 0.82 $ 0.69 =========== =========== =========== =========== Diluted earnings per share ........................... $ 0.42 $ 0.37 $ 0.81 $ 0.68 =========== =========== =========== ===========
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 June 30, 1998 and December 31, 1997 are as follows: 6 7 4. INCOME TAXES -- (CONTINUED)
June 30, December 31, 1998 1997 ------------ ------------ Deferred tax assets: ($ in thousands) Employee benefits ............................ $ 358 $ 271 Inventories .................................. 366 377 Other ........................................ 148 124 ------------ ------------ Total deferred tax assets .................... 872 772 Deferred tax liabilities: Depreciation ................................. 3,078 2,356 Other ........................................ 75 40 ------------ ------------ Total deferred tax liabilities ............... 3,153 2,396 ------------ ------------ Net deferred liabilities ..................... $ 2,281 $ 1,624 ============ ============
5. COMMITMENTS Construction in progress of $25.9 million at June 30, 1998 includes $23.1 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 $41 million. 7 8 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS Three Months Ended June 30, 1998 Revenues. Revenues for the second quarter 1998 were $23.8 million, an increase of 14 percent over the second quarter 1997. The increase was due to a five percent increase in sales volume, a slight switch in product mix favoring the higher-priced, high strength products, and an increase in the average selling price due to a price increase which was effective in January 1998. Domestic sales volume was essentially unchanged from the previous year, while export sales volume increased by 18 percent - with significant increases in Canada and Mexico. The strength in natural gas drilling in North America continues to be the driving force behind the increased sales of the Company. Natural gas prices increased approximately six percent from the second quarter 1997. Natural gas drilling activity continued its increase over prior year levels - with the second quarter 1998 about seven percent ahead of the comparable period of 1997. Gross Profit. Gross profit for the quarter was $11.9 million or 50 percent of revenues as compared to $10.3 million or 50 percent of revenues for the second quarter 1997. The effect of a price increase in January 1998 combined with a reduction in manufacturing costs at the Company's New Iberia manufacturing facility was offset by increased freight and packaging costs during the second quarter 1998. The decrease in manufacturing costs was the result of a five percent increase in throughput at New Iberia and lower maintenance costs. The increase in freight and packaging is a direct result of the increase in export sales volume and increased transportation costs due to Union Pacific railroad traffic congestion related to movement of finished goods from the Eufaula manufacturing facility to remote storage in San Antonio, Texas. The additional costs related to railroad congestion are expected to continue throughout 1998. Selling, General and Administrative Expenses (SG&A). SG&A expenses were $2.3 million for the second quarter 1998 and $2.1 million for the comparable period in 1997. Expenses as a percentage of revenues were 10 percent for both periods. Increases in actual expenses were primarily those associated with increased sales volume - warehouse and shipping expenses, commission expenses, and marketing expenses. Six Months Ended June 30, 1998 Revenues. Revenues for the six months ended June 30, 1998 were $46.4 million, an increase of 20 percent over the same period in 1997. The increase was due to an 11 percent increase in sales volume, a shift in product mix towards more of the higher-priced, high strength products, and the price increase effective January 1998. Sales volume increased eight percent for the Company's lightweight products and 19 percent for high strength products. Domestic sales volume increased by four percent and export volume by 25 percent over the comparable period in 1997. Gross Profit. Gross profit for the six months ended June 30, 1998 was $23.4 million or 50 percent of revenues compared to $19.3 million or 50 percent of revenues for the same period in 1997. The effect of the January 1998 price increase combined with lower manufacturing costs at the New Iberia facility were offset by higher freight and packaging costs on export sales and increased transportation costs due to Union Pacific railroad traffic congestion. Selling, General and Administrative Expenses (SG&A). SG&A expenses were $4.9 million for the first six months of 1998 compared to $4.1 million for the same period in 1997. Expenses as a percentage of revenues were approximately 10.5 percent for both periods. Increases in actual expenses were those related to increased sales volume - warehouse and shipping expenses, commission expenses, and marketing expenses. 8 9 LIQUIDITY AND CAPITAL RESOURCES Cash and cash equivalents totaled $14.7 million as of June 30, 1998, an increase of $5.8 million from December 31, 1997. The increase in cash and cash equivalents was due to cash generated from operations of $12.3 million and $12 million from maturities of U.S. government securities, net of capital spending of $16.3 million and cash dividends of $2.2 million. As of June 30, 1998, the Company held $2 million in investments expected to be held to maturity. Capital spending of $16.3 million during the first six months of 1998 included $15.2 million related to continuing construction of a new manufacturing facility in McIntyre, Georgia. The Company plans to spend an additional $18 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. 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 Shareholders of Carbo Ceramics Inc. was held on April 14, 1998. 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. 12,898,929 11,100 William A. Griffin, Jr. 12,899,029 11,000 William C. Morris 12,899,029 11,000 John J. Murphy 12,898,929 11,100 Jesse P. Orsini 12,899,029 11,000 Robert S. Rubin 12,898,729 11,300
(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 1998. The vote on this matter was as follows:
For Against Abstentions --- ------- ----------- 12,899,029 700 11,000
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, 1998. b. Exhibits 27.1 Financial Data Schedule for the interim year to date period ended June 30, 1998. 11 12 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 7, 1998 12 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 6-MOS DEC-31-1998 JUN-30-1998 14,677 1,950 17,361 0 7,502 43,622 60,104 10,797 92,929 9,050 0 0 0 146 80,580 92,929 46,381 46,381 22,985 22,985 0 0 0 19,333 7,359 11,974 0 0 0 11,974 .82 .81
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