-----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, EvbRQ9auY1nEyEkTCRJTwwr/b2FSd5eovKAYn5b6QaIe+8BDWavQ1b8k6gYK0pSB iz7wtOLXC0YWgpLDUlIREw== 0000950129-96-002454.txt : 19961011 0000950129-96-002454.hdr.sgml : 19961011 ACCESSION NUMBER: 0000950129-96-002454 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960831 FILED AS OF DATE: 19961010 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: TEAM INC CENTRAL INDEX KEY: 0000318833 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-MISCELLANEOUS REPAIR SERVICES [7600] IRS NUMBER: 741765729 STATE OF INCORPORATION: TX FISCAL YEAR END: 0531 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-09950 FILM NUMBER: 96641684 BUSINESS ADDRESS: STREET 1: 1001 FANNIN STE 4656 CITY: HOUSTON STATE: TX ZIP: 77002 BUSINESS PHONE: 7136593600 10-Q 1 TEAM, INC. - FORM 10-Q - 08/31/96 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 August 31, 1996 ---------------------------- 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 1-8604 ------------- TEAM, INC. ---------------------------------------------------- (Exact name of registrant as specified in its charter) Texas 74-1765729 ----- ---------- (State or other jurisdiction (I.R.S. Employer of incorporation Identification Number) or organization) 1019 South Hood Street, Alvin, Texas 77511 -------------------------------------- ----- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (713) 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 1, 1996, there were 5,159,842 shares of the Registrant's common stock outstanding. 2 TEAM, INC. INDEX PART I. FINANCIAL INFORMATION Page No. -------- Item 1. Financial Statements Consolidated Balance Sheets -- 3 August 31, 1996 and May 31, 1996 Consolidated Statements of Earnings -- 4 Three Months Ended August 31, 1996 and 1995 Consolidated Statements of Cash Flows -- 5 Three Months Ended August 31, 1996 and 1995 Notes to Consolidated Financial Statements 6 Item 2. Management's Discussion and Analysis 7 of Financial Condition and Results of Operations PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K 9 3 ITEM 1. FINANCIAL STATEMENTS TEAM, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
August 31, May 31, 1996 1996 (Restated) ------------- ------------- ASSETS Current Assets: Cash and cash equivalents $ 1,288,000 $ 2,037,000 Accounts receivable, net of allowance for doubtful accounts of $162,000 and $171,000 7,566,000 8,140,000 Materials and supplies 5,834,000 5,748,000 Prepaid expenses and other current assets 834,000 846,000 ------------- ------------- Total Current Assets 15,522,000 16,771,000 Net Assets of Discontinued Operations, Net of Reserve for Future Losses of $461,000 and $0 2,954,000 3,503,000 Property, Plant and Equipment: Land and buildings 6,594,000 6,874,000 Machinery and equipment 11,149,000 11,088,000 ------------- ------------- 17,743,000 17,962,000 Less accumulated depreciation and amortization 11,874,000 12,197,000 ------------- ------------- 5,869,000 5,765,000 Other Assets 2,829,000 2,887,000 ------------- ------------- $ 27,174,000 $ 28,926,000 ============= ============= LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Current portion of long-term debt $ 1,733,000 $ 1,735,000 Accounts payable 706,000 846,000 Other accrued liabilities 2,868,000 3,546,000 Current income taxes payable 14,000 -- ------------- ------------- Total Current Liabilities 5,321,000 6,127,000 Long-term Debt and Other Obligations 10,797,000 11,754,000 Stockholders' Equity: Preferred stock, cumulative, par value $100 per share, 500,000 shares authorized, none issued -- -- Common stock, par value $.30 per share, 10,000,000 shares authorized and 5,169,542 shares issued 1,551,000 1,551,000 Additional paid-in capital 24,992,000 24,992,000 Accumulated deficit (15,390,000) (15,401,000) Treasury stock at cost, 9,700 shares (97,000) (97,000) ------------- ------------- 11,056,000 11,045,000 ------------- ------------- $ 27,174,000 $ 28,926,000 ============= =============
See notes to consolidated financial statements 3 4 TEAM, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EARNINGS
Three Months Ended August 31, --------------------------- 1996 1995 (Restated) ------------- ------------- Revenues $ 10,155,000 $ 12,117,000 Operating expenses 5,716,000 6,590,000 Selling, general and administrative expenses 4,170,000 4,840,000 Interest 245,000 325,000 ------------- ------------- Earnings from continuing operations before income taxes 24,000 362,000 Provision for income taxes 14,000 203,000 ------------- ------------- Earnings from continuing operations, net of income taxes 10,000 159,000 Earnings (loss) from Military Housing projects discontinued operations, net 182,000 (126,000) Estimated loss on sale of Military Housing projects discontinued operations, net (181,000) -- ------------- ------------- Net earnings $ 11,000 $ 33,000 ============= ============= Net earnings (loss) per common share Net earnings from continuing operations $ 0.00 $ 0.03 Net earnings (loss) from Military Housing projects discontinued operations 0.04 (0.02) Net estimated loss on sale of Military Housing projects discontinued operations (0.04) 0.00 ------------- ------------- Net earnings $ 0.00 $ 0.01 ============= ============= Weighted average number of shares outstanding 5,160,000 5,160,000 ============= =============
4 5 TEAM, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended --------------------------- August 31, August 31, 1996 1995 (Restated) ------------- ------------- Cash Flows From Operating Activities: Net earnings from continuing operations $ 10,000 $ 159,000 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization 374,000 547,000 (Gain) loss on sale of assets (21,000) 3,000 Change in assets and liabilities: (Increase) decrease: Accounts receivable 574,000 (744,000) Materials and supplies (86,000) 179,000 Prepaid expenses and other assets 12,000 509,000 Increase (decrease): Accounts payable (140,000) (142,000) Other accrued liabilities (678,000) 244,000 Income taxes payable 14,000 126,000 ------------- ------------- Net cash provided by operating activities 59,000 881,000 Cash Flows from Investing Activities: Capital expenditures (575,000) (145,000) Disposal of property and equipment 176,000 4,000 Decrease (increase) in other assets 1,000 (121,000) (Increase) decrease in net assets of discontinued operations 549,000 (180,000) ------------- ------------- Net cash provided by (used in) investing activities 151,000 (442,000) Cash Flows From Financing Activities: Payments under debt agreements and capital lease obligations (959,000) (1,283,000) ------------- ------------- Net cash used in financing activities (959,000) (1,283,000) ------------- ------------- Net decrease in cash and cash equivalents (749,000) (844,000) Cash and cash equivalents at beginning of year 2,037,000 3,139,000 ------------- ------------- Cash and cash equivalents at end of period $ 1,288,000 $ 2,295,000 ============= ============= Supplemental disclosure of cash flow information: Cash paid during the period for: Interest $ 250,000 $ 292,000 ============= ============= Income taxes $ 7,000 $ 13,000 ============= =============
See notes to consolidated financial statements 5 6 TEAM, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED 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 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, 1996. The prior period financial statements have been restated to reflect the Military Housing projects segment as discontinued operations. 2. Dividends No dividends were paid during the first three months of fiscal 1997 or 1996. 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. 3. Discontinued Operation - Military Housing Projects The Company has entered into an Agreement of Purchase and Sale with respect to the sale of the Company's 801 Military Housing projects. The closing of the sale is subject to certain conditions but is anticipated to occur no later than December 5, 1996. A summary of the discontinued Military Housing projects' assets and liabilities as of August 31, 1996 and May 31, 1996 follows: August 31, May 31, 1996 1996 --------------- --------------- Assets: Current assets............... $ 1,730,000 $ 2,890,000 Land and buildings, net...... 40,758,000 41,123,000 --------------- --------------- $ 42,488,000 $ 44,013,000 Liabilities: Current liabilities.......... $ 818,000 $ 1,745,000 Long-term debt............... 38,255,000 38,765,000 --------------- --------------- $ 39,073,000 $ 40,510,000 --------------- --------------- Net Assets................... $ 3,415,000 $ 3,503,000 =============== =============== 6 7 A summary of the results of the discontinued Military Housing projects' operations for the period ended August 31, 1996 and 1995 follows: Three Months Ended August 31, -------------------------------------- 1996 1995 ---------------- ---------------- Revenues $ 1,263,000 $ 1,257,000 Operating expenses................... (561,000) (556,000) General and administrative expenses.. (20,000) (90,000) Interest expense..................... (818,000) (839,000) Estimated future losses.............. (180,000) -- Other income......................... 592,000 37,000 --------------- --------------- Earnings (loss) before income taxes.. 276,000 (191,000) (Provision) benefit for income taxes. (94,000) 65,000 ---------------- --------------- Net earnings.........................$ 182,000 $ (126,000) =============== =============== During the quarter, $180,000 was accrued for estimated future losses of the Military Housing projects' operations through the expected date of disposition. In addition, $281,000 was accrued for the estimated loss on the sale of the projects. Also, as previously reported, during the quarter Team received $559,000 from the Armed Services Board of Contract Appeals in settlement of the Ft. Stewart claim for costs and expenses associated with the termination of the Agreement with the United States Army Corps of Engineers to construct a Federal housing project. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Results of Operations Three Months Ended August 31, 1996 Compared to Three Months Ended August 31, 1995 For the three month period ended August 31, 1996, revenues from the Company's industrial repair services business totaled $10.2 million, 16 percent lower than revenues of $12.1 million reported in the same period of the prior fiscal year. This decline in revenues is primarily a result of the sale in May 1996 of the consulting and engineering division and lower demand for emission monitoring services, as a result of reduced reporting requirements by many of the Company's customers, due to slowdown in environmental regulatory activity. In addition, some of the Company's customers have implemented internal reporting for emissions control services. As a percent of sales, operating expenses in the Company's operations increased by 2 percent from the first quarter of fiscal 1996. Gross profit margins declined from 45.6 percent to 43.7 percent as the Company was not able to reduce costs sufficiently to offset the decline in revenues. Selling, general and administrative expenses of $4.2 million in the first quarter of fiscal 1997 were $670,000 7 8 or 14 percent lower than in the prior year. The continuing impact of cost reduction programs implemented during the prior fiscal year has resulted in lower personnel, insurance and general expenses. Interest expense of $245,000 in the first three months of fiscal 1997 was 25 percent lower than in the same period of fiscal 1996 due to reduced average borrowing levels. Pre-tax earnings of $24,000 for the first quarter decreased from 1996 first quarter pre-tax earnings of $362,000. Liquidity and Capital Resources At August 31, 1996, the Company's working capital totaled $10.2 million, a decrease of $443,000 from working capital of $10.6 million at May 31, 1996. The Company has been able to finance its working capital requirements through its internally generated cash flow. As of August 31, 1996, cash and cash equivalents totaled $1.3 million, decreasing $749,000 in the first quarter. This cash decrease resulted mainly from $959,000 used in the Company's financing activities offset by $151,000 provided in the Company's investing activities and by $59,000 provided by the Company's operating activities. See "Consolidated Statements of Cash Flows" for additional detail. Management expects that capital expenditures for fiscal 1997 will be approximately $1.5 million, as the Company plans to replace, upgrade and expand its data collection, computer and other operating equipment. All planned capital expenditures are discretionary and will be made based on available funds. During the first quarter of fiscal 1997, capital expenditures totaled $575,000, primarily for the purchase of LeakTrackers(registered trademark) used in expanding the Company's emissions control services data handling programs as well as the purchase of equipment used in hot tapping line repairs. The Company's current and long-term debt and other obligations were $12.5 million compared to $13.4 million at May 31, 1996. Of this amount, $8.5 million was owed to the Company's primary bank lender. The Company paid down the term note in the amount of $900,000 during the quarter. The Company has entered into an Agreement of Purchase and Sale with respect to the sale of the Company's 801 Military Housing projects. The closing of the sale is subject to certain conditions, but is anticipated to occur no later than December 5, 1996. Although there can be no assurance that any potential transaction will be completed, management intends to utilize the proceeds of such a sale, if any, to further reduce bank debt and to increase available working capital. (See Note 3 of Notes to Consolidated Financial Statements.) LeakTracker(registered trademark) is a registered trademark of Tracker Technologies, Inc. 8 9 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 There were no Form 8-K Reports filed during the quarter ended August 31, 1996. 9 10 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, 1996 WILLIAM A. RYAN --------------------------------------- William A. Ryan, Chairman of the Board, President and Chief Executive Officer MARGIE E. ROGERS --------------------------------------- Margie E. Rogers, Treasurer and Chief Accounting Officer 11 EXHIBIT INDEX 27 -- Financial Data Schedule EX-27 2 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, 1996 and is qualified in its entirety by reference to such financial statements. 3-MOS MAY-31-1997 AUG-31-1996 1,228,000 0 7,728,000 162,000 5,834,000 15,522,000 17,743,000 11,874,000 27,174,000 5,321,000 10,797,000 0 0 1,551,000 9,505,000 27,174,000 0 10,155,000 0 5,716,000 4,170,000 0 245,000 24,000 14,000 10,000 1,000 0 0 11,000 .00 .00 Includes $1,680,000 for compensation accruals of former employees.
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