-----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, WpNk2m3a1KlvkLzgob2tDxByECC7M7ahRV1f49OQMDlwHjpoRcByk3w7jUk6uarY l+5Hk0nrVNcxIRXUwoZ7iw== 0001157523-06-009682.txt : 20061005 0001157523-06-009682.hdr.sgml : 20061005 20061005091623 ACCESSION NUMBER: 0001157523-06-009682 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20061004 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20061005 DATE AS OF CHANGE: 20061005 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: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-08604 FILM NUMBER: 061129897 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 8-K 1 a5242479.txt TEAM, INC. 8-K UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 ---------------- FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of report (Date of earliest event reported): October 4, 2006 ------------------------------- Team, Inc. - -------------------------------------------------------------------------------- (Exact Name of Registrant as Specified in Charter) Texas 001-08604 74-1765729 - -------------------------------------------------------------------------------- (State or Other Jurisdiction (Commission File Number) (IRS Employer of Incorporation) Identification No.) 200 Hermann Drive Alvin, Texas 77511 - -------------------------------------------------------------------------------- (Address of Principal Executive Offices and Zip Code) Registrant's telephone number, including area code: (281) 331-6154 ----------------------------- Not Applicable - -------------------------------------------------------------------------------- (Former name or former address, if changed since last report) Check the appropriate line below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: ___ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) ___ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) ___ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) ___ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) Item 2.02. Results of Operations and Financial Condition --------------------------------------------- On October 4, 2006, Team, Inc. disseminated a press release announcing its financial results for the first quarter of the 2007 fiscal year. A copy of such press release is furnished herewith as Exhibit 99.1. The information furnished in this Current Report on Form 8-K, including Exhibit 99.1, is being furnished pursuant to Item 2.02 of Form 8-K and shall not be deemed "filed" with the Securities and Exchange Commission and will not be incorporated by reference into any registration statement filed under the Securities Act of 1933, as amended, unless specifically identified therein as being incorporated by reference. Item 9.01. Financial Statements and Exhibits --------------------------------- (c) Exhibits. The following exhibit is furnished as part of Item 2.02 of this Current Report on Form 8-K: Exhibit number Description -------------- ----------- 99.1 Team, Inc.'s Press Release dated October 4, 2006 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. TEAM, INC. By: /s/ Ted W. Owen --------------------- Ted W. Owen Senior Vice President Dated: October 4, 2006 EXHIBIT INDEX Exhibit number Description -------------- ----------- 99.1 Team, Inc.'s Press Release dated October 4, 2006 EX-99.1 2 a5242479ex991.txt TEAM, INC. EXHIBIT 99.1 Exhibit 99.1 Team, Inc. Reports Strong First Quarter Results ALVIN, Texas--(BUSINESS WIRE)--Oct. 4, 2006--Team, Inc. (AMEX:TMI) today reported earnings of $0.16 per share (diluted) for the first quarter of fiscal 2007, versus $0.06 in the corresponding prior year period. Revenues increased 21% to $65.7 million, compared to $54.2 million for the corresponding prior year period. For the quarter, Team's operating income improved 120% to $3.7 million and net income improved 177% to $1.5 million. Operating profit, net income and earnings per share in the current year were impacted by $245,000 of non-cash compensation expense, not reflected in prior periods, relating to the expensing of stock options as a result of new accounting principles. "We are pleased with the continued strong performance in the first quarter and maintain our positive outlook and reaffirm our guidance for the full year," said Phil Hawk, Team's Chairman and CEO. Discussion of First Quarter Performance Team's results reflect broad based growth across the majority of geographic regions and service lines making up Team's two divisions. Revenues for the TCM division in the period ended August 31, 2006 were $33.6 million compared to $29.7 million in the period ended August 31, 2005, an increase of $3.9 million or 13%. Revenues for the TMS division in the current quarter were $32.1 million compared to $24.4 million in the prior year quarter, an increase of $7.7 million, or 32%. Gross margin from continuing operations in the period ended August 31, 2006 was $21.8 million compared to $17.3 million in the period ended August 31, 2005, an increase of $4.5 million or 26%. Gross margin as a percentage of sales was 33% in the current period as opposed to 32% in the prior period. The improvement in gross margin as a percentage of sales was equally attributable to both divisions and resulted from improved pricing and productivity that more than offset increased labor expenses in this tighter labor environment. SG&A in the period ended August 31, 2006 was $18.1 million compared to $15.6 million in the period ended August 31, 2005, an increase of $2.5 million or 16%. SG&A attributable to field operations was $14.5 million and SG&A attributable to corporate administration was $3.6 million, which includes non-cash compensation expense of $245,000. Operating profit as a percent of revenue was 6% versus 3% in last year's quarter, reflecting the continuing operating leverage of the business. Operating profit attributable to field operations was 11%, compared to 8% in last year's quarter. Business Outlook/Guidance for Fiscal Year 2007 "We are comfortable reaffirming our earlier guidance that strong organic growth will lead to net income for fiscal year 2007 of $1.35 to $1.50 per diluted share, which reflects expected FAS 123R stock option expense of $0.15 per share," continued Mr. Hawk. "With over $31 million of unused borrowing capacity on our existing credit facilities, we also remain well positioned financially." Effective with the first quarter of fiscal 2007, Team adopted the provisions of SFAS 123R "Share-Based Payment". Under this standard, the cost of employee services received in exchange for equity instruments, including employee stock options, are measured on the grant-date of those instruments recognized as compensation expense over the service period, which would normally be the vesting period. Team has elected to use the modified prospective transition method permitted under the new accounting pronouncement, which requires no charges to prior periods. As a result, the net impact of implementing FAS 123R in the current period was a non-cash compensation charge of $245,000. While many factors can affect the future expense attributable to various forms of share-based compensation, Team expects share-based compensation expense of approximately $1.5 million for fiscal 2007. That amount includes the cost associated with outstanding options at May 31, 2006 plus expected new grants of options for 2007, which are expected to be approximately 3% of outstanding shares. Most of the fiscal year 2007 grants are expected to occur in the quarter ending November 30, 2006. Earnings Conference Call In connection with this earnings release, the Company will hold its quarterly conference call on Thursday, October 5, 2006 at 10:00 a.m. Central Time (11:00 a.m. Eastern). The call will be broadcast over the Web and can be accessed on Team's Website, www.teamindustrialservices.com. Individuals wishing to participate in the conference call by phone can call 1-877-318-5455, conference code 7877075. About Team, Inc. Headquartered in Alvin, Texas, Team, Inc. is a leading provider of specialty and construction services required in maintaining high-temperature and high-pressure piping systems and vessels that are utilized extensively in the refining, petrochemical, power, pipeline and other heavy industries. The Company's inspection services also serve a broader customer base that includes the aerospace and automotive industries. Team offers these services in over 70 locations throughout the United States, Aruba, Canada, Singapore, Trinidad and Venezuela. The Company licenses its proprietary techniques and materials to various companies outside the United States and receives royalties based upon revenues earned by its licensees. Team, Inc. common stock is traded on the American Stock Exchange under the ticker symbol "TMI". Certain 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 the forward-looking statements contained herein. Such factors include domestic and international economic activity, interest rates and 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 the forward-looking statements contained herein will occur or that objectives will be achieved. TEAM, INC. AND SUBSIDIARIES SUMMARY OF OPERATING RESULTS (in thousands, except per share data) Three Months Ended August 31, ----------------------- 2006 2005 ----------- ----------- (unaudited) (unaudited) Revenues $65,739 $54,152 Operating expenses 43,947 36,869 ----------- ----------- Gross Margin 21,792 17,283 Selling, general and administrative expenses 18,090 15,598 Operating income--continuing operations 3,702 1,685 Interest expense, net 1,050 837 ----------- ----------- Earnings from continuing operations before income taxes 2,652 848 Provision for income taxes 1,130 331 ----------- ----------- Income from continuing operations 1,522 517 ----------- ----------- Income from discontinued operations, net of tax - 32 ----------- ----------- Net income $1,522 $549 =========== =========== Earnings per common share: Continuing operations Basic $0.18 $0.07 =========== =========== Diluted $0.16 $0.06 =========== =========== Discontinued operations Basic $- $0.00 =========== =========== Diluted $- $0.00 =========== =========== Net income Basic $0.18 $0.07 =========== =========== Diluted $0.16 $0.06 =========== =========== Weighted average number of shares outstanding: Basic 8,649 8,266 =========== =========== Diluted 9,292 9,122 =========== =========== Revenues comprised of: TCM Division $33,653 $29,745 TMS Division 32,086 24,407 ----------- ----------- $65,739 $54,152 =========== =========== Operating income of continuing operations comprised of: Industrial services $7,294 $4,520 Corporate costs (3,592) (2,835) ----------- ----------- $3,702 $1,685 =========== =========== TEAM, INC. AND SUBSIDIARIES SUMMARY CONSOLIDATED BALANCE SHEET INFORMATION AUGUST 31 AND MAY 31, 2006 (in thousands) August 31 May 31 2006 2006 ----------- ----------- (unaudited) Current assets $83,466 $84,831 Net property, plant and equipment 27,660 26,448 Other non-current assets 28,417 28,692 ----------- ----------- Total assets $139,543 $139,971 =========== =========== Current liabilities $31,404 $35,612 Long term debt 40,783 39,804 Other non-current liabilities and taxes 961 670 Stockholders' equity 66,395 63,885 ----------- ----------- Total liabilities and stockholders' equity $139,543 $139,971 =========== =========== CONTACT: Team, Inc., Alvin Ted W. Owen, 281-331-6154 -----END PRIVACY-ENHANCED MESSAGE-----