-----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, Cz8ylaIoo9q4jHo0VmGjPkjqIj2LUOX/IuxbZ9EIhAbVLZpxvsRI33kzsrOo1mS7 GUgfXqyytw2CKOSolj7Eog== /in/edgar/work/0000950129-00-004922/0000950129-00-004922.txt : 20001011 0000950129-00-004922.hdr.sgml : 20001011 ACCESSION NUMBER: 0000950129-00-004922 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000831 FILED AS OF DATE: 20001010 FILER: COMPANY DATA: COMPANY CONFORMED NAME: TEAM INC CENTRAL INDEX KEY: 0000318833 STANDARD INDUSTRIAL CLASSIFICATION: [7600 ] IRS NUMBER: 741765729 STATE OF INCORPORATION: TX FISCAL YEAR END: 0531 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-08604 FILM NUMBER: 737385 BUSINESS ADDRESS: STREET 1: 200 HERMANN DRIVE CITY: ALVIN STATE: TX ZIP: 77056 BUSINESS PHONE: 2813316154 MAIL ADDRESS: STREET 1: 1019 SOUTH HOOD STREET CITY: ALVIN STATE: TX ZIP: 77551 10-Q 1 h80840e10-q.txt TEAM, INC. - DATED AUGUST 31, 2000 1 UNITED STATES 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 AUGUST 31, 2000 ----------------------------------------- OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period to -------------------- --------------------- Commission file number 0-9950 ------------------------------------------------- TEAM, INC. - ------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Texas 74-1765729 - ------------------------------------------- ------------------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) 200 Hermann Drive, Alvin, Texas 77511 - ------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (281) 331-6154 -------------------------- -------------------- 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 --- --- On October 6, 2000, there were 8,110,054 shares of the Registrant's common stock outstanding. 2 TEAM, INC. INDEX
Page No. -------- PART I. FINANCIAL INFORMATION Item 1. Financial Statements Consolidated Condensed Balance Sheets -- August 31, 2000 (Unaudited) and May 31, 2000 1 Consolidated Condensed Statements of Operations (Unaudited) -- Three Months Ended August 31, 2000 and 1999 2 Consolidated Condensed Statements of Cash Flows (Unaudited) -- Three Months Ended August 31, 2000 and 1999 3 Notes to Unaudited Consolidated Condensed Financial Statements 4 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 8 Item 3. Quantitative and Qualitative Disclosure about Market Risk 9 PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K 10
3 PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS TEAM, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED BALANCE SHEETS
AUGUST 31, MAY 31, 2000 2000 ------------ ------------ (Unaudited) ASSETS Current Assets: Cash and cash equivalents $ 839,000 $ 327,000 Accounts receivable, net of allowance for doubtful accounts of $264,000 and $251,000 13,818,000 13,580,000 Inventories 8,304,000 7,821,000 Prepaid expenses and other current assets 1,562,000 1,017,000 ------------ ------------ Total Current Assets 24,523,000 22,745,000 Property, Plant and Equipment, net of accumulated depreciation of $14,777,000 and $15,076,000 13,299,000 13,249,000 Goodwill, net of accumulated amortization of $440,000 and $373,000 10,547,000 10,616,000 Other Assets 1,755,000 1,878,000 ------------ ------------ Total Assets $ 50,124,000 $ 48,488,000 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Current portion of long-term debt $ 1,595,000 $ 1,611,000 Accounts payable 2,376,000 1,979,000 Other accrued liabilities 2,942,000 3,040,000 Income taxes payable 775,000 1,102,000 ------------ ------------ Total Current Liabilities 7,688,000 7,732,000 Long-term debt 17,774,000 15,728,000 Other long-term liabilities 1,808,000 2,060,000 Stockholders' Equity: Preferred stock, 500,000 shares authorized, none issued Common stock, par value $.30 per share, 30,000,000 shares authorized, 8,281,954 and 8,256,954 shares issued at August 31 and May 31, 2000, respectively 2,485,000 2,477,000 Additional paid-in capital 32,146,000 32,103,000 Accumulated deficit (11,269,000) (11,488,000) Unearned compensation (21,000) (27,000) Treasury stock at cost, 147,550 and 9,700 shares (487,000) (97,000) ------------ ------------ Total Stockholders' Equity 22,854,000 22,968,000 ------------ ------------ Total Liabilities and Stockholders' Equity $ 50,124,000 $ 48,488,000 ============ ============
See notes to unaudited consolidated condensed financial statements. -1- 4 TEAM, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED)
THREE MONTHS ENDED AUGUST 31, 2000 1999 ------------ ------------ Revenues $ 16,776,000 $ 15,410,000 Operating expenses 10,184,000 8,915,000 ------------ ------------ Gross Margin 6,592,000 6,495,000 Selling, general and administrative expenses 5,809,000 6,045,000 Earnings before interest and taxes 783,000 450,000 Interest 416,000 377,000 ------------ ------------ Earnings before income taxes 367,000 73,000 Provision for income taxes 147,000 27,000 ------------ ------------ Net income $ 220,000 $ 46,000 ============ ============ Net income per common share: Basic $ 0.03 $ 0.01 ============ ============ Diluted $ 0.03 $ 0.01 ============ ============ Weighted average number of shares outstanding: Basic 8,231,000 8,221,000 ============ ============ Diluted 8,284,000 8,351,000 ============ ============
See notes to unaudited consolidated condensed financial statements. -2- 5 TEAM, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
THREE MONTHS ENDED AUGUST 31, 2000 1999 ------------ ------------ Cash Flows from Operating Activities: Net income (loss) $ 220,000 $ 46,000 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation, amortization and other 762,000 771,000 Change in assets and liabilities (Increase) decrease: Accounts receivable (238,000) (794,000) Inventories (483,000) 145,000 Prepaid expenses and other current assets (545,000) (311,000) Increase (decrease): Accounts payable 397,000 (482,000) Accrued liabilities (98,000) (240,000) Income taxes payable (327,000) -- ------------ ------------ Net cash provided by operating activities (312,000) (865,000) ------------ ------------ Cash Flows From Investing Activities: Capital expenditures (419,000) (242,000) Additions to Rental and Demo Machines (219,000) -- Other 39,000 (165,000) ------------ ------------ Net cash used in investing activities (599,000) (407,000) ------------ ------------ Cash Flows From Financing Activities: Payments under debt agreements and other long-term obligations (678,000) (212,000) Proceeds from issuance of long-term debt 2,440,000 910,000 Repurchase of common stock (390,000) -- Issuance of common stock 51,000 98,000 ------------ ------------ Net cash provided by (used in) financing activities 1,423,000 796,000 ------------ ------------ Net decrease in cash and cash equivalents 512,000 (476,000) Cash and cash equivalents at beginning of year 327,000 1,035,000 ------------ ------------ Cash and cash equivalents at end of period $ 839,000 $ 559,000 ============ ============ Supplemental disclosure of cash flow information: Cash paid during the period for interest $ 371,000 $ 356,000 ============ ============ Income taxes paid $ 482,000 $ 8,000 ============ ============
See notes to unaudited consolidated condensed financial statements. -3- 6 TEAM, INC. AND SUBSIDIARIES NOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS 1. Method of Presentation General The interim financial statements are unaudited, but in the opinion of management, reflect all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of results for such periods. The consolidated condensed balance sheet at May 31, 2000 is derived from the May 31, 2000 audited consolidated financial statements. The results of operations for any interim period are not necessarily indicative of results for the full year. These financial statements should be read in conjunction with the financial statements and notes thereto contained in the Company's annual report for the fiscal year ended May 31, 2000. New Accounting Standards In June 1999, the Financial Accounting Standards Board ("FASB") issued SFAS No. 137, "Accounting for Derivative Instruments and Hedging Activities-Deferral of the Effective Date of FASB Statement No. 133-an amendment of FASB No. 133", which effectively delays the application of SFAS No. 133 for one year, to fiscal years beginning after June 15, 2000. In June 2000, the FASB issued SFAS No. 138, "Accounting for Certain Derivative Instruments and Certain Hedging Activities - an amendment of FASB Statement No. 133" which amends and supercedes various sections of SFAS No. 133. Management is currently studying SFAS No. 133 and its amendments for their possible impact on the consolidated financial statements when they are adopted in June 2001. 2. Dividends and Stock Repurchases No dividends were paid during the three months ended August 31, 2000 or 1999. Pursuant to the Company's Credit Agreement, the Company may not pay quarterly dividends without the consent of its senior lender. Future dividend payments will depend upon the Company's financial condition and other relevant matters. On July 13, 2000, the Board of Directors approved a stock repurchase plan of up to 10% of the outstanding common stock of the Company. Stock repurchases (which will be limited to a maximum of $2,000,000) must be made on the open market and are subject to certain regulatory restrictions which, generally, limit the number of shares that can be acquired on a daily basis and limits the price per share that can be paid. As of August 31, 2000, 137,850 shares of common stock had been reacquired at an average price of $2.83 per share. 3. Earnings Per Share In 1998 the Company adopted Statement of Financial Accounting Standard ("SFAS") No. 128, "Earnings per Share," which specifies the computation, presentation and disclosure requirements for earnings per share ("EPS"). There is no difference, for either of the periods presented, in the amount of net income (numerator) used in the computation of basic and diluted earnings per share. With respect to the number of weighted average shares outstanding (denominator), diluted shares reflects only the pro forma exercise of options to acquire common stock to the extent that the options' exercise prices are less than the average market price of common shares during the period. -4- 7 4. Inventories Inventories consist of:
August 31, May 31, 2000 2000 ------------ ------------ Raw materials $ 809,000 $ 947,000 Finished goods and work in progress 7,495,000 6,874,000 ------------ ------------ Total $ 8,304,000 $ 7,821,000 ============ ============
5. Long-Term Debt Long-term debt consists of:
August 31, May 31, 2000 2000 ------------ ------------ Revolving loan $ 9,060,000 $ 6,620,000 Team and mortgage notes 10,134,000 10,504,000 Capital lease obligations 175,000 215,000 ------------ ------------ 19,369,000 17,339,000 Less current portion 1,595,000 1,611,000 ------------ ------------ Total $ 17,774,000 $ 15,728,000 ============ ============
6. Industry Segment Information The Company adopted SFAS No. 131, "Disclosure about Segments of an Enterprise and Related Information," in fiscal 1999. SFAS No. 131 requires that the Company disclose certain information about its operating segments where operating segments are defined as "components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance." Generally, financial information is required to be reported on the basis that is used internally for evaluating segment performance and deciding how to allocate resources to segments. Pursuant to SFAS No. 131, the Company has two reportable segments: industrial services and equipment sales and rentals. The industrial services segment includes services consisting of leak repair, hot tapping, emissions control monitoring, field machining, and mechanical inspection. The equipment sales and rental segment consists of the Climax business. -5- 8 The Company evaluates performance based on earnings before interest and income taxes. Inter-segment sales are eliminated in the operating measure used by the company to evaluate segment performance and has been eliminated in the following schedule. Interest is not allocated to the segments. THREE MONTHS ENDED AUGUST 31, 2000
Industrial Equipment Corporate Services Sales & Rentals & Other Total ------------ --------------- ------------ ------------ Revenues $ 14,697,000 $ 2,079,000 $ 0 $ 16,776,000 ============ ============ ============ ============ Earnings before interest & taxes 1,801,000 (242,000) (776,000) 783,000 Interest 0 0 416,000 416,000 ------------ ------------ ------------ ------------ Earnings before income taxes 1,801,000 (242,000) (1,192,000) 367,000 ============ ============ ============ ============ Depreciation and amortization 406,000 189,000 127,000 722,000 ============ ============ ============ ============ Capital expenditures 283,000 131,000 5,000 419,000 ============ ============ ============ ============ Identifiable assets $ 31,802,000 $ 12,379,000 $ 5,943,000 $ 50,124,000 ============ ============ ============ ============
THREE MONTHS ENDED AUGUST 31, 1999
Industrial Equipment Corporate Services Sales & Rentals & Other Total ------------ --------------- ------------ ------------ Revenues $ 12,915,000 $ 2,495,000 $ 0 $ 15,410,000 ============ ============ ============ ============ Earnings before interest & taxes 1,226,000 86,000 (862,000) 450,000 Interest 0 0 377,000 377,000 ------------ ------------ ------------ ------------ Earnings before income taxes 1,226,000 86,000 (1,239,000) 73,000 ============ ============ ============ ============ Depreciation and amortization 433,000 226,000 112,000 771,000 ============ ============ ============ ============ Capital expenditures 220,000 17,000 5,000 242,000 ============ ============ ============ ============ Identifiable assets $ 30,482,000 $ 11,691,000 $ 5,824,000 $ 47,997,000 ============ ============ ============ ============
-6- 9 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS THREE MONTHS ENDED AUGUST 31, 2000 COMPARED TO THREE MONTHS ENDED AUGUST 31, 1999 Revenues for the quarter ended August 31, 2000 were $16.8 million compared to $15.4 million for the corresponding period of the preceding year. Revenues of the industrial services segment increased by $1.8 million (13.8%), while equipment sales and rental revenues declined by $416 thousand (16.7%). Revenue growth in the services segment was primarily a result of improved business conditions as compared to the 1999 quarter, as well as the addition of significant new customers. Management believes that the decline in equipment sales is temporary in nature, but has taken actions to strengthen sales and rental efforts while reducing operating costs. Earnings before interest and taxes, ("EBIT"), were $783 thousand in the 2000 quarter, an increase of $333 thousand from the 1999 quarter. EBIT in the services segment increased by $575 thousand (47%) over the 1999 quarter, while EBIT in the equipment segment declined by $328 thousand compared to the 1999 quarter. Additionally, corporate costs were $86 thousand less than the 1999 quarter. The increase in industrial services EBIT is a result of the growth in revenue and its associated operating leverage. The decline in equipment segment EBIT is due to the significant downturn in revenues while overall production costs were increasing. Management expects to see profit improvements for that segment in the second quarter as a result of actions taken to strengthen sales efforts and rebalance costs. LIQUIDITY AND CAPITAL RESOURCES At August 31, 2000, the Company's liquid working capital (cash and accounts receivable, less current liabilities) totaled $7.0 million, an increase of approximately $800 thousand since May 31, 2000. The Company utilizes excess operating funds to automatically reduce the amount outstanding under the revolving credit facility. At August 31, 2000, the outstanding balance under the revolving credit facility was $9.1 million and approximately $2.7 million was available to borrow under the facility. In the opinion of management, cash flow from operations, cash balances and available borrowings will be sufficient for the foreseeable future to finance anticipated working capital requirements, capital expenditures and debt service requirements. DISCLOSURE REGARDING FORWARD LOOKING STATEMENTS Any forward-looking information contained herein is being provided in accordance with the provisions of the Private Securities Litigation Reform Act. Such information is subject to certain assumptions and beliefs based on current information known to the Company and is subject to factors that could result in actual results differing materially from those anticipated in any forward-looking statements contained herein. Such factors include domestic and international economic activity, interest rates, market conditions for the Company's customers, regulatory changes and legal proceedings, and the Company's successful implementation of its internal operating plans. Accordingly, there can be no assurance that any forward-looking statements contained herein will occur or those objectives will be achieved. -7- 10 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK The Company holds certain floating-rate obligations. The exposure of these obligations to increase in short-term interest rates is limited by interest rate swap agreements entered into by the Company. There were no material quantitative or qualitative changes during the first three months of fiscal 2001 in the Company's market risk sensitive instruments. PART II - OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits (27) Financial Data Schedule (b) Reports on Form 8-K No reports on Form 8-K were filed this quarter. SIGNATURE 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 thereto duly authorized. TEAM, INC (Registrant) Date: October 10, 2000 /s/ PHILIP J. HAWK --------------------------------------- Philip J. Hawk Chief Executive Officer and Director /s/ TED W. OWEN --------------------------------------- Ted W. Owen, Vice President and Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) -8- 11 INDEX TO EXHIBITS
EXHIBIT NUMBER DESCRIPTION - ------- ----------- (27) Financial Data Schedule.
EX-27 2 h80840ex27.txt FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED FINANCIAL STATEMENTS AND RELATED NOTES OF TEAM, INC. AND SUBSIDIARIES FOR THE THREE MONTHS ENDED AUGUST 31, 2000 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 3-MOS MAY-31-2001 AUG-31-2000 839,000 0 14,082,000 264,000 8,304,000 24,523,000 28,076,000 14,777,000 50,124,000 7,688,000 17,774,000 0 0 2,485,000 20,369,000 50,124,000 0 16,776,000 0 10,184,000 5,809,000 0 416,000 367,000 147,000 220,000 0 0 0 220,000 0.03 0.03
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