Colorado | 75-2811855 | |
(State or other jurisdiction of | (I.R.S. Employer | |
incorporation or organization) | Identification No.) |
Yes x | No o |
Yes x | No o |
Large accelerated filer o | Accelerated filer x | Non-accelerated filer o | Smaller reporting company o |
(Do not check if smaller reporting company) |
Yes o | No x |
Class | Outstanding at August 8, 2011 | |
Common Stock, $0.01 par value | 12,226,499 |
Part I - FINANCIAL INFORMATION | ||
Item 1. Financial Statements | ||
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Part II - OTHER INFORMATION | ||
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NATURAL GAS SERVICES GROUP, INC. CONDENSED BALANCE SHEETS (in thousands, except per share amounts) (unaudited) | |||||||
December 31, | June 30, | ||||||
2010 | 2011 | ||||||
ASSETS | |||||||
Current Assets: | |||||||
Cash and cash equivalents | $ | 19,137 | $ | 16,861 | |||
Trade accounts receivable, net of allowance for doubtful accounts of $171 and $212, respectively | 5,279 | 4,780 | |||||
Inventory, net of allowance for obsolescence of $250 and $785, respectively | 21,489 | 22,765 | |||||
Prepaid income taxes | 2,103 | 273 | |||||
Prepaid expenses and other | 330 | 405 | |||||
Total current assets | 48,338 | 45,084 | |||||
Rental equipment, net of accumulated depreciation of $44,245 and $50,135, respectively | 120,755 | 133,715 | |||||
Property and equipment, net of accumulated depreciation of $7,899 and $7,941, respectively | 7,149 | 6,746 | |||||
Goodwill, net of accumulated amortization of $325, both periods | 10,039 | 10,039 | |||||
Intangibles, net of accumulated amortization of $1,757 and $1,846, respectively | 2,461 | 2,371 | |||||
Other assets | 27 | 27 | |||||
Total assets | $ | 188,769 | $ | 197,982 | |||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||
Current Liabilities: | |||||||
Line of credit | $ | 2,000 | $ | 2,000 | |||
Accounts payable | 3,364 | 2,651 | |||||
Accrued liabilities | 2,151 | 3,120 | |||||
Current income tax liability | — | 29 | |||||
Deferred income | 389 | 1,515 | |||||
Total current liabilities | 7,904 | 9,315 | |||||
Deferred income tax payable | 29,746 | 32,394 | |||||
Other long-term liabilities | 528 | 528 | |||||
Total liabilities | 38,178 | 42,237 | |||||
Stockholders’ Equity: | |||||||
Preferred stock, 5,000 shares authorized, no shares issued or outstanding | — | — | |||||
Common stock, 30,000 shares authorized, par value $0.01; 12,148 and 12,179 shares issued and outstanding, respectively | 122 | 122 | |||||
Additional paid-in capital | 86,034 | 86,683 | |||||
Retained earnings | 64,435 | 68,940 | |||||
Total stockholders' equity | 150,591 | 155,745 | |||||
Total liabilities and stockholders' equity | $ | 188,769 | $ | 197,982 |
NATURAL GAS SERVICES GROUP, INC. CONDENSED INCOME STATEMENTS (in thousands, except earnings per share) (unaudited) | |||||||||||||||
Three months ended | Six months ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2010 | 2011 | 2010 | 2011 | ||||||||||||
Revenue: | |||||||||||||||
Sales, net | $ | 1,779 | $ | 1,901 | $ | 3,241 | $ | 5,778 | |||||||
Rental income | 9,902 | 11,601 | 19,777 | 22,482 | |||||||||||
Service and maintenance income | 220 | 256 | 433 | 552 | |||||||||||
Total revenue | 11,901 | 13,758 | 23,451 | 28,812 | |||||||||||
Operating costs and expenses: | |||||||||||||||
Cost of sales, exclusive of depreciation stated separately below | 1,137 | 638 | 2,128 | 3,186 | |||||||||||
Cost of rentals, exclusive of depreciation stated separately below | 3,792 | 4,909 | 7,596 | 9,271 | |||||||||||
Cost of service and maintenance, exclusive of depreciation stated separately below | 152 | 93 | 306 | 231 | |||||||||||
Selling, general, and administrative expense | 1,522 | 1,462 | 3,020 | 2,848 | |||||||||||
Depreciation and amortization | 2,905 | 3,434 | 5,779 | 6,725 | |||||||||||
Total operating costs and expenses | 9,508 | 10,536 | 18,829 | 22,261 | |||||||||||
Operating income | 2,393 | 3,222 | 4,622 | 6,551 | |||||||||||
Other income (expense): | |||||||||||||||
Interest expense | (53 | ) | (28 | ) | (127 | ) | (37 | ) | |||||||
Other income (expense) | 66 | 45 | 43 | 753 | |||||||||||
Total other income (expense) | 13 | 17 | (84 | ) | 716 | ||||||||||
Income before provision for income taxes | 2,406 | 3,239 | 4,538 | 7,267 | |||||||||||
Provision for income taxes | 862 | 1,231 | 1,630 | 2,762 | |||||||||||
Net income | $ | 1,544 | $ | 2,008 | $ | 2,908 | $ | 4,505 | |||||||
Earnings per share: | |||||||||||||||
Basic | $ | 0.13 | $ | 0.16 | $ | 0.24 | $ | 0.37 | |||||||
Diluted | $ | 0.13 | $ | 0.16 | $ | 0.24 | $ | 0.37 | |||||||
Weighted average shares outstanding: | |||||||||||||||
Basic | 12,104 | 12,179 | 12,103 | 12,157 | |||||||||||
Diluted | 12,205 | 12,288 | 12,203 | 12,265 |
NATURAL GAS SERVICES GROUP, INC. CONDENSED STATEMENTS OF CASH FLOWS (in thousands) (unaudited) | |||||||
Six months ended | |||||||
June 30, | |||||||
2010 | 2011 | ||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||
Net income | $ | 2,908 | $ | 4,505 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and amortization | 5,779 | 6,725 | |||||
Deferred taxes | 863 | 2,649 | |||||
Stock options and restricted stock expense | 592 | 450 | |||||
Gain on disposal of assets | (36 | ) | (702 | ) | |||
Changes in current assets and liabilities: | |||||||
Trade accounts receivables, net | 4,100 | 499 | |||||
Inventory, net | 946 | (1,265 | ) | ||||
Prepaid income taxes and prepaid expenses | (1,186 | ) | 1,755 | ||||
Accounts payable and accrued liabilities | 144 | 256 | |||||
Current income tax liability | 767 | 29 | |||||
Deferred income | 82 | 1,126 | |||||
Other | (7 | ) | — | ||||
NET CASH PROVIDED BY OPERATING ACTIVITIES | 14,952 | 16,027 | |||||
CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||
Purchase of property and equipment | (6,030 | ) | (19,481 | ) | |||
Proceeds from sale of property and equipment | 36 | 980 | |||||
NET CASH USED IN INVESTING ACTIVITIES | (5,994 | ) | (18,501 | ) | |||
CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||
Proceeds from other long-term liabilities, net | (7 | ) | — | ||||
Repayments of long-term debt | (1,690 | ) | — | ||||
Repayments of line of credit | (6,500 | ) | — | ||||
Proceeds from exercise of stock options | 53 | 198 | |||||
NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES | (8,144 | ) | 198 | ||||
NET CHANGE IN CASH | 814 | (2,276 | ) | ||||
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | 23,017 | 19,137 | |||||
CASH AND CASH EQUIVALENTS AT END OF PERIOD | $ | 23,831 | $ | 16,861 | |||
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | |||||||
Interest paid | $ | 157 | $ | 43 | |||
Income taxes paid | $ | 1,118 | $ | — | |||
NON-CASH TRANSACTIONS | |||||||
Transfer of rental equipment to inventory | $ | 225 | $ | — |
Number of Stock Options | Weighted Average Exercise Price | Weighted Average Remaining Contractual Life (years) | Aggregate Intrinsic Value (in thousands) | ||||||||||
Outstanding, December 31, 2010 | 423,206 | $ | 14.76 | 7.33 | $ | 1,858 | |||||||
Granted | 30,000 | 17.60 | 8.00 | — | |||||||||
Exercised | (18,571 | ) | 10.66 | — | 127 | ||||||||
Cancelled/Forfeited | (3,333 | ) | 17.51 | — | 4 | ||||||||
Outstanding, June 30, 2011 | 431,302 | $ | 15.12 | 7.01 | $ | 1,043 | |||||||
Exercisable, June 30, 2011 | 318,302 | $ | 14.32 | 6.47 | $ | 980 |
Range of Exercise Prices | Options Outstanding | Options Exercisable | |||||||||||||||
Shares | Weighted Average Remaining Contractual Life (years) | Weighted Average Exercise Price | Shares | Weighted Average Exercise Price | |||||||||||||
0.01 - 5.58 | 7,500 | 2.17 | $ | 4.99 | 7,500 | $ | 4.99 | ||||||||||
5.59 – 9.43 | 94,239 | 5.49 | 8.63 | 94,239 | 8.63 | ||||||||||||
9.44 – 15.60 | 65,000 | 6.49 | 12.34 | 55,000 | 12.77 | ||||||||||||
15.61 – 20.48 | 264,563 | 7.82 | 18.40 | 161,563 | 18.60 | ||||||||||||
0.01 – 20.48 | 431,302 | 7.01 | $ | 15.12 | 318,302 | $ | 14.32 |
Unvested stock options: | Shares | Weighted Average Grant Date Fair Value | ||||
Unvested at December 31, 2010 | 116,333 | $ | 8.18 | |||
Granted | 30,000 | 10.01 | ||||
Vested | (33,333 | ) | 8.25 | |||
Unvested at June 30, 2011 | 113,000 | $ | 8.65 |
December 31, 2010 | June 30, 2011 | ||||||
(in thousands) | |||||||
Raw materials | $ | 17,770 | $ | 18,273 | |||
Work in process | 3,719 | 4,492 | |||||
$ | 21,489 | $ | 22,765 |
Three months ended | Six months ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
(in thousands, except per share data) | (in thousands, except per share data) | ||||||||||||||
2010 | 2011 | 2010 | 2011 | ||||||||||||
Numerator: | |||||||||||||||
Net income | $ | 1,544 | $ | 2,008 | $ | 2,908 | $ | 4,505 | |||||||
Denominator for basic net income per common share: | |||||||||||||||
Weighted average common shares outstanding | 12,104 | 12,179 | 12,103 | 12,157 | |||||||||||
Denominator for diluted net income per share: | |||||||||||||||
Weighted average common shares outstanding | 12,104 | 12,179 | 12,103 | 12,157 | |||||||||||
Dilutive effect of stock options and restricted stock | 101 | 109 | 100 | 108 | |||||||||||
Diluted weighted average shares | 12,205 | 12,288 | 12,203 | 12,265 | |||||||||||
Earnings per common share: | |||||||||||||||
Basic | $ | 0.13 | $ | 0.16 | $ | 0.24 | $ | 0.37 | |||||||
Diluted | $ | 0.13 | $ | 0.16 | $ | 0.24 | $ | 0.37 |
For the three months ended June 30, 2011 (in thousands): | |||||||||||||||||||
Sales | Rental | Service & Maintenance | Corporate | Total | |||||||||||||||
Revenue | $ | 1,901 | $ | 11,601 | $ | 256 | $ | — | $ | 13,758 | |||||||||
Operating costs and expenses | 638 | 4,909 | 93 | 4,896 | 10,536 | ||||||||||||||
Other income/(expense) | — | — | — | 17 | 17 | ||||||||||||||
Income before provision for income taxes | $ | 1,263 | $ | 6,692 | $ | 163 | $ | (4,879 | ) | $ | 3,239 |
For the three months ended June 30, 2010 (in thousands): | |||||||||||||||||||
Sales | Rental | Service & Maintenance | Corporate | Total | |||||||||||||||
Revenue | $ | 1,779 | $ | 9,902 | $ | 220 | $ | — | $ | 11,901 | |||||||||
Operating costs and expenses | 1,137 | 3,792 | 152 | 4,427 | 9,508 | ||||||||||||||
Other income/(expense) | — | — | — | 13 | 13 | ||||||||||||||
Income before provision for income taxes | $ | 642 | $ | 6,110 | $ | 68 | $ | (4,414 | ) | $ | 2,406 |
For the six months ended June 30, 2011 (in thousands): | |||||||||||||||||||
Sales | Rental | Service & Maintenance | Corporate | Total | |||||||||||||||
Revenue | $ | 5,778 | $ | 22,482 | $ | 552 | $ | — | $ | 28,812 | |||||||||
Operating costs and expenses | 3,186 | 9,271 | 231 | 9,573 | 22,261 | ||||||||||||||
Other income/(expense) | — | — | — | 716 | 716 | ||||||||||||||
Income before provision for income taxes | $ | 2,592 | $ | 13,211 | $ | 321 | $ | (8,857 | ) | $ | 7,267 |
For the six months ended June 30, 2010 (in thousands): | |||||||||||||||||||
Sales | Rental | Service & Maintenance | Corporate | Total | |||||||||||||||
Revenue | $ | 3,241 | $ | 19,777 | $ | 433 | $ | — | $ | 23,451 | |||||||||
Operating costs and expenses | 2,128 | 7,596 | 306 | 8,799 | 18,829 | ||||||||||||||
Other income/(expense) | — | — | — | (84 | ) | (84 | ) | ||||||||||||
Income before provision for income taxes | $ | 1,113 | $ | 12,181 | $ | 127 | $ | (8,883 | ) | $ | 4,538 |
Revenue (in thousands) Three months ended June 30, | |||||||||||||
2010 | 2011 | ||||||||||||
Sales | $ | 1,779 | 15 | % | $ | 1,901 | 14 | % | |||||
Rental | 9,902 | 83 | % | 11,601 | 84 | % | |||||||
Service and Maintenance | 220 | 2 | % | 256 | 2 | % | |||||||
Total | $ | 11,901 | $ | 13,758 |
Revenue (in thousands) Six months ended June 30, | |||||||||||||
2010 | 2011 | ||||||||||||
Sales | $ | 3,241 | 14 | % | $ | 5,778 | 20 | % | |||||
Rental | 19,777 | 84 | % | 22,482 | 78 | % | |||||||
Service and Maintenance | 433 | 2 | % | 552 | 2 | % | |||||||
Total | $ | 23,451 | $ | 28,812 |
December 31, 2010 | June 30, 2011 | ||||||
(in thousands) | |||||||
Current Assets: | |||||||
Cash and cash equivalents | $ | 19,137 | $ | 16,861 | |||
Trade accounts receivable, net | 5,279 | 4,780 | |||||
Inventory, net | 21,489 | 22,765 | |||||
Prepaid income taxes | 2,103 | 273 | |||||
Prepaid expenses and other | 330 | 405 | |||||
Total current assets | 48,338 | 45,084 | |||||
Current Liabilities: | |||||||
Line of credit | 2,000 | 2,000 | |||||
Accounts payable | 3,364 | 2,651 | |||||
Accrued liabilities | 2,151 | 3,120 | |||||
Current portion of tax liability | — | 29 | |||||
Deferred income | 389 | 1,515 | |||||
Total current liabilities | 7,904 | 9,315 | |||||
Total working capital | $ | 40,434 | $ | 35,769 |
Obligation Due in Period (in thousands of dollars) | ||||||||||||||||||||||||||||
Cash Contractual Obligations | 2011(1) | 2012 | 2013 | 2014 | 2015 | Thereafter | Total | |||||||||||||||||||||
Line of credit (secured) | $ | 2,000 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 2,000 | ||||||||||||||
Interest on line of credit(2) | 18 | — | — | — | — | — | 18 | |||||||||||||||||||||
Purchase obligations | 956 | 956 | 956 | 956 | 436 | — | 4,260 | |||||||||||||||||||||
Other long-term liabilities | — | — | — | 528 | — | — | 528 | |||||||||||||||||||||
Facilities and office leases | 159 | 244 | 167 | 17 | — | — | 587 | |||||||||||||||||||||
Total | $ | 3,133 | $ | 1,200 | $ | 1,123 | $ | 1,501 | $ | 436 | $ | — | $ | 7,393 |
(1) | For the six months remaining in 2011. |
(2) | Assumes an interest rate of 4.0%. |
Exhibit No. | Description |
3.1 | Articles of Incorporation, as amended (Incorporated by reference to Exhibit 3.1 of the 10-QSB filed and dated November 10, 2004) |
3.2 | Bylaws (Incorporated by reference to Exhibit 3.4 of the Registrant's Registration Statement on Form SB-2, No. 333-88314) |
4.1 | Non-Statutory Stock Option Agreement (Incorporated by reference to Exhibit 10.2 to Form 8-K filed with the SEC on August 30, 2005) |
4.2 | Form of Senior Indenture (Incorporated by reference to Exhibit 4.1 of the Registrant’s Registration Statement on Form S-3 (No. 333-161346) and filed on August 14, 2009) |
4.3 | Form of Senior Note (Incorporated by reference to Exhibit 4.2 of the Registrant’s Registration Statement on Form S-3 (No. 333-161346) and filed on August 14, 2009) |
4.4 | Form of Subordinated Indenture (Incorporated by reference to Exhibit 4.3 of the Registrant’s Registration Statement on Form S-3 (No. 333-161346) and filed on August 14, 2009) |
4.5 | Form of Subordinated Note (Incorporated by reference to Exhibit 4.4 of the Registrant’s Registration Statement on Form S-3 (No. 333-161346) and filed on August 14, 2009) |
4.6 | Form of Deposit Agreement, including Form of Depositary Share (Incorporated by reference to Exhibit 4.5 of the Registrant’s Registration Statement on Form S-3 (No. 333-161346) and filed on August 14, 2009) |
4.7 | Form of Warrant Agreement, including Form of Warrant Certificate (Incorporated by reference to Exhibit 4.6 of the Registrant’s Registration Statement on Form S-3 (No. 333-161346) and filed on August 14, 2009) |
4.8 | Form of Unit Agreement (Incorporated by reference to Exhibit 4.7 of the Registrant’s Registration Statement on Form S-3 (No. 333-161346) and filed on August 14, 2009) |
4.9 | Form of Preferred Stock Certificate (Incorporated by reference to Exhibit 4.8 of the Registrant’s Registration Statement on Form S-3 (No. 333-161346) and filed on August 14, 2009) |
4.10 | Form of Certificate of Designation with respect to Preferred Stock (Incorporated by reference to Exhibit 4.9 of the Registrant’s Registration Statement on Form S-3 (No. 333-161346) and filed on August 14, 2009) |
4.11 | Form of Rights Agreement, including Form of Rights Certificate (Incorporated by reference to Exhibit 4.10 of the Registrant’s Registration Statement on Form S-3 (No. 333-161346) and filed on August 14, 2009) |
10.1 | Employment Agreement between Natural Gas Services Group, Inc. and Stephen C. Taylor dated October 25, 2008 (Incorporated by reference to Exhibit 10.1 of the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on October 30, 2008) |
10.2 | Lease Agreement, dated March 26, 2008, between WNB Tower, LTD and Natural Gas Services Group, Inc. (Incorporated by reference to Exhibit 10.15 of the Registrant’s Form 10-K for the fiscal year ended December 31, 2008 and filed with the Securities and Exchange Commission on March 9, 2009) |
10.3 | 2009 Restricted Stock/Unit Plan (Incorporated by reference to Exhibit 10.1 of the Registrant’s Current Report on Form 8-K dated September 18, 2009 and filed with the Securities and Exchange Commission on September 18, 2009.) |
10.4 | 1998 Stock Option Plan, as amended (Incorporated by reference to Exhibit 10.2 of the Registrant’s Current Report on Form 8-K dated September 18, 2009 and filed with the Securities and Exchange Commission on September 18, 2009.) |
10.5 | Lease Agreement, dated December 11, 2008, between Klement-Wes Partnership, LTD and Natural Gas Services Group, Inc. and commencing on January 1, 2009 |
10.6 | Credit Agreement between Natural Gas Services Group, Inc. and JPMorgan Chase Bank, N.A., dated December 10, 2010 (Incorporated by reference to Exhibit 10.1 of the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on December 16, 2010.) |
10.7 | Security Agreement between Natural Gas Services Group, Inc. and JPMorgan Chase Bank, N.A., dated December 10, 2010 (Incorporated by reference to Exhibit 10.2 of the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on December 16, 2010.) |
10.8 | Promissory Note in the aggregate amount of $20,000,000 issued to JPMorgan Chase Bank, N.A., dated December 10, 2010, in connection with the revolving credit line under the Credit Agreement with JPMorgan Chase Bank, N.A. (Incorporated by reference to Exhibit 10.3 of the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on December 16, 2010.) |
*31.1 | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
*31.2 | Certification of Principal Accounting Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
*32.1 | Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
*32.2 | Certification of Principal Accounting Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
101.INS | XBRL Instance Document |
101.SCH | XBRL Taxonomy Extension Schema Document |
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document |
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document |
101.LAB | XBRL Taxonomy Extension Label Linkbase Document |
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document |
* Filed herewith. |
/s/ Stephen C. Taylor | /s/ G. Larry Lawrence | ||
Stephen C. Taylor | G. Larry Lawrence | ||
President and Chief Executive Officer | Vice President and Chief Financial Officer | ||
(Principal Executive Officer) | (Principal Accounting Officer) |
Exhibit No. | Description |
3.1 | Articles of Incorporation, as amended (Incorporated by reference to Exhibit 3.1 of the 10-QSB filed and dated November 10, 2004) |
3.2 | Bylaws (Incorporated by reference to Exhibit 3.4 of the Registrant's Registration Statement on Form SB-2, No. 333-88314) |
4.1 | Non-Statutory Stock Option Agreement (Incorporated by reference to Exhibit 10.2 to Form 8-K filed with the SEC on August 30, 2005) |
4.2 | Form of Senior Indenture (Incorporated by reference to Exhibit 4.1 of the Registrant’s Registration Statement on Form S-3 (No. 333-161346) and filed on August 14, 2009) |
4.3 | Form of Senior Note (Incorporated by reference to Exhibit 4.2 of the Registrant’s Registration Statement on Form S-3 (No. 333-161346) and filed on August 14, 2009) |
4.4 | Form of Subordinated Indenture (Incorporated by reference to Exhibit 4.3 of the Registrant’s Registration Statement on Form S-3 (No. 333-161346) and filed on August 14, 2009) |
4.5 | Form of Subordinated Note (Incorporated by reference to Exhibit 4.4 of the Registrant’s Registration Statement on Form S-3 (No. 333-161346) and filed on August 14, 2009) |
4.6 | Form of Deposit Agreement, including Form of Depositary Share (Incorporated by reference to Exhibit 4.5 of the Registrant’s Registration Statement on Form S-3 (No. 333-161346) and filed on August 14, 2009) |
4.7 | Form of Warrant Agreement, including Form of Warrant Certificate (Incorporated by reference to Exhibit 4.6 of the Registrant’s Registration Statement on Form S-3 (No. 333-161346) and filed on August 14, 2009) |
4.8 | Form of Unit Agreement (Incorporated by reference to Exhibit 4.7 of the Registrant’s Registration Statement on Form S-3 (No. 333-161346) and filed on August 14, 2009) |
4.9 | Form of Preferred Stock Certificate (Incorporated by reference to Exhibit 4.8 of the Registrant’s Registration Statement on Form S-3 (No. 333-161346) and filed on August 14, 2009) |
4.10 | Form of Certificate of Designation with respect to Preferred Stock (Incorporated by reference to Exhibit 4.9 of the Registrant’s Registration Statement on Form S-3 (No. 333-161346) and filed on August 14, 2009) |
4.11 | Form of Rights Agreement, including Form of Rights Certificate (Incorporated by reference to Exhibit 4.10 of the Registrant’s Registration Statement on Form S-3 (No. 333-161346) and filed on August 14, 2009) |
10.1 | Employment Agreement between Natural Gas Services Group, Inc. and Stephen C. Taylor dated October 25, 2008 (Incorporated by reference to Exhibit 10.1 of the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on October 30, 2008) |
10.2 | Lease Agreement, dated March 26, 2008, between WNB Tower, LTD and Natural Gas Services Group, Inc. (Incorporated by reference to Exhibit 10.15 of the Registrant’s Form 10-K for the fiscal year ended December 31, 2008 and filed with the Securities and Exchange Commission on March 9, 2009) |
10.3 | 2009 Restricted Stock/Unit Plan (Incorporated by reference to Exhibit 10.1 of the Registrant’s Current Report on Form 8-K dated September 18, 2009 and filed with the Securities and Exchange Commission on September 18, 2009.) |
10.4 | 1998 Stock Option Plan, as amended (Incorporated by reference to Exhibit 10.2 of the Registrant’s Current Report on Form 8-K dated September 18, 2009 and filed with the Securities and Exchange Commission on September 18, 2009.) |
10.5 | Lease Agreement, dated December 11, 2008, between Klement-Wes Partnership, LTD and Natural Gas Services Group, Inc. and commencing on January 1, 2009 |
10.6 | Credit Agreement between Natural Gas Services Group, Inc. and JPMorgan Chase Bank, N.A., dated December 10, 2010 (Incorporated by reference to Exhibit 10.1 of the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on December 16, 2010.) |
10.7 | Security Agreement between Natural Gas Services Group, Inc. and JPMorgan Chase Bank, N.A., dated December 10, 2010 (Incorporated by reference to Exhibit 10.2 of the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on December 16, 2010.) |
10.8 | Promissory Note in the aggregate amount of $20,000,000 issued to JPMorgan Chase Bank, N.A., dated December 10, 2010, in connection with the revolving credit line under the Credit Agreement with JPMorgan Chase Bank, N.A. (Incorporated by reference to Exhibit 10.3 of the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on December 16, 2010.) |
*31.1 | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
*31.2 | Certification of Principal Accounting Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
*32.1 | Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
*32.2 | Certification of Principal Accounting Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
101.INS | XBRL Instance Document |
101.SCH | XBRL Taxonomy Extension Schema Document |
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document |
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document |
101.LAB | XBRL Taxonomy Extension Label Linkbase Document |
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document |
* Filed herewith. |
1. | I have reviewed this Quarterly Report on Form 10-Q of Natural Gas Services Group, Inc; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
Dated: | August 9, 2011 | Natural Gas Services Group, Inc. | ||
By: | /s/ Stephen C. Taylor | |||
Stephen C. Taylor, | ||||
President, CEO and Chairman of the Board of Directors | ||||
(Principal Executive Officer) |
1. | I have reviewed this Quarterly Report on Form 10-Q of Natural Gas Services Group, Inc; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
Dated: | August 9, 2011 | Natural Gas Services Group, Inc. | ||
By: | /s/ G. Larry Lawrence | |||
G. Larry Lawrence | ||||
Vice President and Chief Financial Officer | ||||
(Principal Accounting Officer) |
1. | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and |
2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: | August 9, 2011 | Natural Gas Services Group, Inc. |
By: | /s/ Stephen C. Taylor | |
Stephen C. Taylor | ||
President, CEO and Chairman of the Board of Directors | ||
(Principal Executive Officer) |
1. | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and |
2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: | August 9, 2011 | Natural Gas Services Group, Inc. |
By: | /s/ G. Larry Lawrence | |
G. Larry Lawrence | ||
Vice President and Chief Financial Officer | ||
(Principal Accounting Officer) |
Condensed Balance Sheets Parenthetical (USD $)
In Thousands, except Per Share data |
Jun. 30, 2011
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Dec. 31, 2010
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Current Assets: | Â | Â |
Allowance for doubtful accounts | $ 212 | $ 171 |
Allowance for inventory obsolescence | 785 | 250 |
Noncurrent Assets: | Â | Â |
Accumulated depreciation, rental equipment | 50,135 | 44,245 |
Accumulated depreciation, property and equipment | 7,941 | 7,899 |
Accumulated amortization, goodwill | 325 | 325 |
Accumulated amortization, intangibles | $ 1,846 | $ 1,757 |
Stockholders' Equity: | Â | Â |
Preferred stock, shares authorized | 5,000 | 5,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 30,000 | 30,000 |
Common stock, shares issued | 12,179 | 12,148 |
Common stock, shares outstanding | 12,179 | 12,148 |
Income Statements (USD $)
In Thousands, except Per Share data |
3 Months Ended | 6 Months Ended | ||
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Jun. 30, 2011
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Jun. 30, 2010
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Jun. 30, 2011
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Jun. 30, 2010
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Revenue: | Â | Â | Â | Â |
Sales, net | $ 1,901 | $ 1,779 | $ 5,778 | $ 3,241 |
Rental income | 11,601 | 9,902 | 22,482 | 19,777 |
Service and maintenance income | 256 | 220 | 552 | 433 |
Total revenue | 13,758 | 11,901 | 28,812 | 23,451 |
Operating costs and expenses: | Â | Â | Â | Â |
Cost of sales, exclusive of depreciation stated separately below | 638 | 1,137 | 3,186 | 2,128 |
Cost of rentals, exclusive of depreciation stated separately below | 4,909 | 3,792 | 9,271 | 7,596 |
Cost of service and maintenance, exclusive of depreciation stated separately below | 93 | 152 | 231 | 306 |
Selling, general, and administrative expense | 1,462 | 1,522 | 2,848 | 3,020 |
Depreciation and amortization | 3,434 | 2,905 | 6,725 | 5,779 |
Total operating costs and expenses | 10,536 | 9,508 | 22,261 | 18,829 |
Operating income | 3,222 | 2,393 | 6,551 | 4,622 |
Other income (expense): | Â | Â | Â | Â |
Interest expense | (28) | (53) | (37) | (127) |
Other income (expense) | 45 | 66 | 753 | 43 |
Total other income (expense) | 17 | 13 | 716 | (84) |
Income before provision for income taxes | 3,239 | 2,406 | 7,267 | 4,538 |
Provision for income taxes | 1,231 | 862 | 2,762 | 1,630 |
Net income | $ 2,008 | $ 1,544 | $ 4,505 | $ 2,908 |
Earnings per share: | Â | Â | Â | Â |
Basic | $ 0.16 | $ 0.13 | $ 0.37 | $ 0.24 |
Diluted | $ 0.16 | $ 0.13 | $ 0.37 | $ 0.24 |
Weighted average shares outstanding: | Â | Â | Â | Â |
Basic | 12,179 | 12,104 | 12,157 | 12,103 |
Diluted | 12,288 | 12,205 | 12,265 | 12,203 |
Document and Entity Information
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6 Months Ended | |
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Jun. 30, 2011
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Aug. 08, 2011
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Entity Information [Line Items] | Â | Â |
Entity Registrant Name | NATURAL GAS SERVICES GROUP INC | Â |
Entity Central Index Key | 0001084991 | Â |
Current Fiscal Year End Date | --12-31 | Â |
Entity Filer Category | Accelerated Filer | Â |
Document Type | 10-Q | Â |
Document Period End Date | Jun. 30, 2011 | |
Document Fiscal Year Focus | 2011 | Â |
Document Fiscal Period Focus | Q2 | Â |
Amendment Flag | false | Â |
Entity Common Stock, Shares Outstanding | Â | 12,226,499 |
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Segment Information
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Jun. 30, 2011
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Segment Information [Abstract] | Â | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting Disclosure [Text Block] | Segment Information FASB ASC 280, Segment Reporting, establishes standards for public companies relating to the reporting of financial and descriptive information about their operating segments in financial statements. Operating segments are components of an enterprise about which separate financial information is available that is evaluated regularly by chief operating decision makers in the allocation of resources and the assessment of performance. Our management identifies segments based upon major revenue sources as shown in the tables below. However, management does not track assets by segment.
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Inventory
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Jun. 30, 2011
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Inventory [Abstract] | Â | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory Disclosure [Text Block] | Inventory Our inventory, net of allowance for obsolescence of $250,000 at December 31, 2010 and $785,195 at June 30, 2011, consisted of the following amounts:
During the six months ended June 30, 2011, there was no write off of obsolete inventory against the allowance for obsolescence. |
Subsequent Events
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6 Months Ended |
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Jun. 30, 2011
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Subsequent Events [Abstract] | Â |
Subsequent Events [Text Block] | Subsequent Events On July 25, 2011, we closed on the acquisition of an office and service complex in Bloomfield, New Mexico. The facility will serve as the company location for our Farmington branch (it was previously used for the same purpose under a rental agreement). The building was acquired for $775,000 utilizing funds held in escrow from the sale of our former Midland headquarters and fabrication facility. The transaction completes the terms of a like-kind exchange under Section 1031 of the Internal Revenue code providing for a deferral of taxable gain realized on the sale of the Midland facility. |
Legal Proceedings
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6 Months Ended |
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Jun. 30, 2011
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Legal Proceedings [Abstract] | Â |
Legal Matters and Contingencies [Text Block] | Legal Proceedings From time to time, we are a party to various other legal proceedings in the ordinary course of our business. While management is unable to predict the ultimate outcome of these actions, it believes that any ultimate liability arising from these actions will not have a material adverse effect on our financial position, results of operations or cash flow. We are not currently a party to any material legal proceedings and we are not aware of any other threatened litigation. |
Basis of Presentation and Summary of Significant Accounting Policies
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6 Months Ended |
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Jun. 30, 2011
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Basis of Presentation and Summary of Significant Accounting Policies [Abstract] | Â |
Basis of Presentation and Significant Accounting Policies [Text Block] | Basis of Presentation and Summary of Significant Accounting Policies These notes apply to the condensed financial statements of Natural Gas Services Group, Inc. (the "Company", “NGSG”, "Natural Gas Services Group", "we" or "our") (a Colorado corporation). We were formed on December 17, 1998 for the purposes of combining the operations of certain manufacturing, service and leasing entities. The accompanying unaudited condensed financial statements present the condensed results of our Company taken from our books and records. In our opinion, such information includes all adjustments, consisting of only normal recurring adjustments, which are necessary to make our financial position at June 30, 2011 and the results of our operations for the three and six months ended June 30, 2010 and 2011 not misleading. As permitted by the rules and regulations of the Securities and Exchange Commission (SEC) the accompanying condensed financial statements do not include all disclosures normally required by generally accepted accounting principles in the United States of America (GAAP). These financial statements should be read in conjunction with the financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2010 on file with the SEC. In our opinion, the condensed financial statements are a fair presentation of the financial position, results of operations and cash flows for the periods presented. The results of operations for the six months ended June 30, 2011 are not necessarily indicative of the results of operations to be expected for the full fiscal year ending December 31, 2011. Revenue recognition Revenue from the sales of custom and fabricated compressors, and flare systems is recognized upon shipment of the equipment to customers or when all conditions have been met or title is transferred to the customer. Exchange and rebuild compressor revenue is recognized when both the replacement compressor has been delivered and the rebuild assessment has been completed. Revenue from compressor services is recognized upon providing services to the customer. Maintenance agreement revenue is recognized as services are rendered. Rental revenue is recognized over the terms of the respective rental agreements based upon the classification of the rental agreement. Deferred income represents payments received before a product is shipped. Revenue from the sale of rental units is included in sales revenue when equipment is shipped or title is transferred to the customer. Fair Value of Financial Instruments Our financial instruments consist principally of cash and cash equivalents, accounts receivable, accounts payable and our line of credit. Pursuant to ASC 820 (Accounting Standards Codification), the fair value of our cash equivalents is determined based on “Level 1” inputs, which consist of quoted prices in active markets for identical assets. We believe that the recorded values of all of our other financial instruments approximate their current fair values because of their nature and respective relatively short maturity dates or durations. Recently Issued Accounting Pronouncements In January 2010, the FASB (Financial Accounting Standards Board) issued authoritative guidance intended to improve disclosures about fair value measurements. The guidance requires entities to disclose significant transfers in and out of fair value hierarchy levels and the reasons for the transfers and to present information about purchases, sales, issuances and settlements separately in the reconciliation of fair value measurements using significant unobservable inputs (Level 3). Additionally, the guidance clarifies that a reporting entity should provide fair value measurements for each class of assets and liabilities and disclose the inputs and valuation techniques used for fair value measurements using significant other observable inputs (Level 2) and significant unobservable inputs (Level 3). This guidance was effective for us on January 1, 2010 except for the disclosures about purchases, sales, issuances and settlements in the Level 3 reconciliation; this portion became effective on January 1, 2011. As this guidance provides only disclosure requirements, the adoption of this standard did not impact our results of operations, cash flows or financial position. In March 2010, the FASB issued authoritative guidance intended to clarify the scope exception related to embedded credit derivative features related to the transfer of credit risk in the form of subordination of one financial instrument to another. The guidance addresses how to determine which embedded credit derivative features, including those in collateralized debt obligations and synthetic collateralized debt obligations, are considered to be embedded derivatives that should not be analyzed under Accounting Standards Codification Topic 815, “Derivatives and Hedging” Subtopic 15-25 for potential bifurcation and separate accounting. This guidance is effective for each reporting entity at the beginning of its fiscal quarter beginning after September 15, 2010. We do not have any embedded credit derivative features with respect to our financial instruments; therefore, this standard did not have any impact on our financial statements. |
Credit Facility
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6 Months Ended |
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Jun. 30, 2011
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Credit Facility [Abstract] | Â |
Short-term Debt [Text Block] | Credit Facility Line of Credit On December 10, 2010, we paid off our existing term loan and line of credit at WNB and established a new $20 million senior secured revolving credit facility (subject to a right, on an uncommitted basis, to increase the commitments there under up to $40 million) with JPMorgan Chase Bank, N.A. (the “Credit Agreement”). The Credit Agreement provides us with an aggregate initial commitment amount of $20 million, subject to collateral availability. The terms of the Credit Agreement also include: Borrowing Base. At any time before the maturity of the facility, we may draw, repay and re-borrow amounts available under the borrowing base up to the maximum aggregate availability discussed above. Generally, the borrowing base equals the sum of (a) 80% of our eligible accounts receivable plus (b) 50% of the book value of our eligible general inventory (not to exceed 50% of the commitment amount at the time) plus (c) 75% of the book value of our eligible equipment inventory. JPMorgan Chase Bank (the “Lender”) may adjust the borrowing base components if material deviations in the collateral are discovered in future audits of the collateral. The borrowing base was $20 million at June 30, 2011. Interest and Fees. Under the terms of the Credit Agreement, we have the option of selecting the applicable variable rate for each revolving loan, or portion thereof, of either (a) LIBOR multiplied by the Statutory Reserve Rate (as defined in the Credit Agreement) to which the Lender is subject, with respect to this rate, for Eurocurrency funding, plus the Applicable Margin (“LIBOR-based”), or (b) CB Floating Rate, which is the Lender’s Prime Rate less the Applicable Margin; provided, however, that no more than three LIBOR-based borrowings under the facility may be outstanding at any one time. The “Applicable Margin” is based on our leverage ratio (debt-to-EBITDA). For purposes of the LIBOR-based interest rate, the Applicable Margin ranges from 2.25% if our leverage ratio exceeds 2.00x to 1.75% if our leverage ratio is less than 1.00x. For purposes of the CB Floating Rate, the Applicable Margin ranges from 0.50% if our leverage ratio exceeds 2.00x to 1.00% if our leverage ratio is less than 1.00x. The interest rate was 1.954% at June 30, 2011. Accrued interest is payable monthly on outstanding principal amounts, provided that accrued interest on LIBOR-based loans is payable at the end of each interest period, but in no event less frequently than quarterly. In addition, fees and expenses are payable in connection with our requests for letters of credit (generally equal to the Applicable Margin for LIBOR-related borrowings multiplied by the face amount of the requested letter of credit) and administrative and legal costs. Maturity. The maturity date of the secured revolving credit facility under the Credit Agreement is December 31, 2011, at which time all amounts borrowed under the facility will be due and outstanding letters of credit must be cash collateralized. The facility may be terminated early upon our request or the occurrence of an event of default. Security. The obligations under the Credit Agreement are secured by a first priority lien equal to approximately two times the loan commitment as represented by our rental fleet equipment. Covenants. The Credit Agreement contains customary representations and warranties, as well as covenants which, among other things, limit our ability to incur additional indebtedness and liens; enter into transactions with affiliates; make acquisitions in excess of certain amounts; pay dividends; redeem or repurchase capital stock or senior notes; make investments or loans; make negative pledges; consolidate, merge or effect asset sales; or change the nature of our business. In addition, we have certain financial covenants that require us to maintain on a consolidated basis a Leverage Ratio less than or equal to 2.50 to 1.00 as of the last day of each fiscal quarter. Events of Default and Acceleration. The secured revolving credit facility contains customary events of default for credit facilities of this size and type, and includes, without limitation, payment defaults; defaults in performance of covenants or other agreements contained in the transaction documents; inaccuracies in representations and warranties; certain defaults, termination events or similar events; certain defaults with respect to any other Company indebtedness in excess of $50,000; certain bankruptcy or insolvency events; the rendering of certain judgments in excess of $150,000; certain ERISA events; certain change in control events and the defectiveness of any liens under the secured revolving credit facility. Obligations under the secured revolving credit facility may be accelerated upon the occurrence of an event of default. In connection with establishing the credit facility, we paid $2,816,106 to WNB which represented payment in full of the principal and interest owed under our term loan with WNB. In making this payment, we drew $2,000,000 on the line of credit under the Credit Agreement described above. As of June 30, 2011, we were in compliance with all covenants in our loan agreement. A default under our bank credit facility could trigger the acceleration of our bank debt so that it is immediately due and payable. Such default would likely limit our ability to access credit |
Other Long-term Liabilities
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6 Months Ended |
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Jun. 30, 2011
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Other Long-term Liabilities [Abstract] | Â |
Other Liabilities Disclosure [Text Block] | Other Long-term Liabilities As of June 30, 2011, we had a long-term liability of $275,000 to Midland Development Corporation. This amount is to be recognized as income contingent upon certain staffing requirements in the future. In addition, we entered into a purchase agreement with a vendor on July 30, 2008 pursuant to which we agreed to purchase up to $4.8 million of our paint and coating requirements exclusively from the vendor. In connection with the execution of the agreement, the vendor paid us a $300,000 fee which is considered to be a discount toward future purchases from the vendor. Based on our historical paint and coating requirements, we estimate meeting the $4.8 million purchase obligation within five years. The $300,000 payment we received is recorded as a long-term liability and will decrease as the purchase commitment is fulfilled. The long-term liability remaining as of June 30, 2011 was $253,000. |
Earnings per Share
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Earnings Per Share [Abstract] | Â | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Text Block] | Earnings per Share The following table reconciles the numerators and denominators of the basic and diluted earnings per share computation.
A total of 104,653 stock options for the six months ended June 30, 2010 and a total of 59,680 stock options for the six months ended June 30, 2011 were excluded from the diluted weighted average shares, as their effect would be anti-dilutive. |
Stock Based Compensation
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Stock-Based Compensation [Abstract] | Â | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Text Block] | Stock-Based Compensation Stock Options: A summary of option activity under our 1998 Stock Option plan for the six months ended June 30, 2011 is presented below.
We granted an option to purchase 10,000 shares to our Vice President of Technical Services and 17,000 shares to our non-executive employees on January 24, 2011 at an exercise price of $17.81 with a three year vesting period. We also granted additional options to purchase 3,000 shares to non-executive employees on June 14, 2011 at an exercise price of $15.70 with a three year vesting period. The following table summarizes information about the stock options outstanding at June 30, 2011:
The summary of the status of our unvested stock options as of December 31, 2010 and changes during the six months ended June 30, 2011 is presented below.
As of June 30, 2011, there was $598,460 of unrecognized compensation cost related to unvested options. Such cost is expected to be recognized over a weighted-average period of 1.78 years. Total compensation expense for stock options was $469,000 and $234,150 for the six months ended June 30, 2010 and 2011, respectively. Restricted Stock: On January 24, 2011, we awarded and issued 5,985 shares of restricted stock to two executive officers. The restricted stock awarded vests one year from the date of grant. On January 27, 2011, we awarded and issued 20,000 shares of restricted stock to our Chief Executive Officer pursuant to the terms of his employment agreement. The restricted stock vests one year from the date of the grant. On June 15, 2011, we awarded and issued 10,000 shares of restricted stock to two executive officers. The restricted stock vests in annual one-third installments beginning on the first anniversary date of the award. On April 11, 2011, we awarded and issued 12,500 shares of restricted stock to our Board of Directors as part payment for 2011 Director fees. The restricted stock vests in quarterly installments beginning in 2012. Total compensation expense related to restricted stock awards was $123,000 and $215,868 for the six months ended June 30, 2010 and 2011, respectively. As of June 30, 2011, there was a total of $583,761 of unrecognized compensation expenses related to these shares of restricted stock. |