-----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, FC7OhYkSyH0uMbhtH9hTZBI/QakovHPPnhrvHhmgNti5S7rbubV4q5eREMyVqS4t 8EEH304L2WEC9GW6WmwJRQ== 0000950134-02-009747.txt : 20020813 0000950134-02-009747.hdr.sgml : 20020813 20020813162642 ACCESSION NUMBER: 0000950134-02-009747 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20020630 FILED AS OF DATE: 20020813 FILER: COMPANY DATA: COMPANY CONFORMED NAME: UNITED STATES LIME & MINERALS INC CENTRAL INDEX KEY: 0000082020 STANDARD INDUSTRIAL CLASSIFICATION: MINING, QUARRYING OF NONMETALLIC MINERALS (NO FUELS) [1400] IRS NUMBER: 750789226 STATE OF INCORPORATION: TX FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-04197 FILM NUMBER: 02730054 BUSINESS ADDRESS: STREET 1: 13800 MONTFORT DR STREET 2: SUITE 330 CITY: DALLAS STATE: TX ZIP: 75240 BUSINESS PHONE: 9729918400 MAIL ADDRESS: STREET 1: 13800 MONTDORT DR STREET 2: SUITE 330 CITY: DALLAS STATE: TX ZIP: 75240 FORMER COMPANY: FORMER CONFORMED NAME: RANGAIRE CORP DATE OF NAME CHANGE: 19900405 FORMER COMPANY: FORMER CONFORMED NAME: ROBERTS MANUFACTURING CO INC DATE OF NAME CHANGE: 19690311 FORMER COMPANY: FORMER CONFORMED NAME: SCOTTISH HERITABLE INC DATE OF NAME CHANGE: 19920703 10-Q 1 d99057e10vq.txt FORM 10-Q FOR QUARTER ENDED JUNE 30, 2002 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 JUNE 30, 2002 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ........ to ........ Commission file number is 000-4197 UNITED STATES LIME & MINERALS, INC. ----------------------------------- (Exact name of registrant as specified in its charter) TEXAS 75-0789226 -------------------------------- ------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 13800 MONTFORT DRIVE, SUITE 330, DALLAS, TX 75240 - -------------------------------------------- ------------------- (Address of principal executive offices) (Zip Code) (972) 991-8400 -------------- (Registrant's telephone number, including area code) 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 [ ] Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: As of August 13, 2002, 5,799,845 shares of common stock, $0.10 par value, were outstanding. Page 1 of 13 PART I. FINANCIAL INFORMATION ITEM 1: FINANCIAL STATEMENTS UNITED STATES LIME & MINERALS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands of dollars) (Unaudited)
JUNE 30, DECEMBER 31, 2002 2001 ------------- ------------- ASSETS Current Assets: Cash and cash equivalents $ 841 $ 606 Trade receivables, net 7,651 5,699 Inventories 4,012 5,057 Prepaid expenses and other assets 163 796 ------------- ------------- Total current assets 12,667 12,158 Property, plant and equipment, at cost: 113,166 115,949 Less accumulated depreciation (40,925) (42,636) ------------- ------------- Property, plant and equipment, net 72,241 73,313 Deferred tax assets, net 2,453 2,453 Other assets, net 1,393 1,485 ------------- ------------- Total assets $ 88,754 $ 89,409 ============= ============= LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Current installments of debt $ 6,908 $ 5,658 Accounts payable 2,476 2,543 Accrued expenses 1,537 1,400 ------------- ------------- Total current liabilities 10,921 9,601 Debt, excluding current installments 39,167 40,833 Other liabilities 406 468 ------------- ------------- Total liabilities 50,493 50,902 Stockholders' Equity: Common stock 580 580 Additional paid-in capital 10,392 10,392 Retained earnings 27,288 27,535 ------------- ------------- Total stockholders' equity 38,260 38,507 ------------- ------------- Total liabilities and stockholders' equity $ 88,754 $ 89,409 ============= =============
See accompanying notes to condensed consolidated financial statements. Page 2 of 13 UNITED STATES LIME & MINERALS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands of dollars, except per share data) (Unaudited)
THREE MONTHS ENDED SIX MONTHS ENDED JUNE 30, JUNE 30, 2002 2001 2002 2001 AS RESTATED AS RESTATED --------------------------------------------- --------------------------------------------- REVENUES $ 10,961 100.0% $ 10,812 100.0% $ 19,938 100.0% $ 19,503 100.0% Cost of revenues: Labor and other operating expenses 6,467 59.0% 6,030 55.8% 12,069 60.5% 12,056 61.8% Depreciation, depletion and amortization 1,513 13.8% 1,484 13.7% 3,051 15.3% 2,698 13.8% --------- --------- --------- --------- --------- --------- --------- --------- 7,980 72.8% 7,514 69.5% 15,120 75.8% 14,754 75.6% --------- --------- --------- --------- --------- --------- --------- --------- GROSS PROFIT 2,981 27.2% 3,298 30.5% 4,818 24.2% 4,749 24.4% Selling, general and administrative expenses 1,015 9.3% 918 8.5% 1,973 9.9% 1,970 10.1% --------- --------- --------- --------- --------- --------- --------- --------- OPERATING PROFIT 1,966 17.9% 2,380 22.0% 2,845 14.3% 2,779 14.2% --------- --------- --------- --------- --------- --------- --------- --------- Other expenses: Interest expense 1,102 10.1% 955 8.8% 2,215 11.1% 1,571 8.1% Other, net 195 1.8% 160 1.5% 573 2.9% 566 2.9% --------- --------- --------- --------- --------- --------- --------- --------- 1,297 11.8% 1,115 10.3% 2,788 14.0% 2,137 11.0% --------- --------- --------- --------- --------- --------- --------- --------- INCOME BEFORE INCOME TAXES 669 6.1% 1,265 11.7% 57 0.3% 642 3.3% --------- --------- --------- --------- --------- --------- --------- --------- Income tax expense 153 1.4% 324 3.0% 11 0.1% 193 1.0% --------- --------- --------- --------- --------- --------- --------- --------- NET INCOME $ 516 4.7% $ 941 8.7% $ 46 0.2% $ 449 2.3% ========= ========= ========= ========= ========= ========= ========= ========= INCOME PER SHARE OF COMMON STOCK: Basic $ 0.09 $ 0.16 $ 0.01 $ 0.08 Diluted $ 0.09 $ 0.16 $ 0.01 $ 0.08
See accompanying notes to condensed consolidated financial statements. Page 3 of 13 UNITED STATES LIME & MINERALS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands of dollars) (Unaudited)
SIX MONTHS ENDED JUNE 30, 2002 2001 AS RESTATED ------------ ------------ OPERATING ACTIVITIES: Net income $ 46 $ 449 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation, depletion and amortization 3,163 2,824 Amortization of financing costs 115 115 Loss (gain) on sale of property, plant and equipment (3) 3 Net (increase) decrease in: Trade receivables (1,952) (3,102) Inventories 1,045 (348) Prepaid expenses 633 50 Other assets (23) 149 Accounts payable and accrued expenses 70 (2,850) Other liabilities (62) (10) ------------ ------------ Net cash provided by (used in) operating activities $ 3,032 $ (2,720) INVESTING ACTIVITIES: Purchase of property, plant and equipment $ (2,132) $ (3,478) Proceeds from sale of property, plant and equipment 44 278 ------------ ------------ Net cash used in investing activities $ (2,088) $ (3,200) FINANCING ACTIVITIES: Payment of common stock dividends $ (293) $ (290) Proceeds from borrowings 1,750 2,825 Repayment of debt (2,166) (10,492) Proceeds from rights offering, net -- 9,551 ------------ ------------ Net cash provided by (used in) financing activities $ (709) $ 1,594 ------------ ------------ Net increase (decrease) in cash and cash equivalents 235 (4,326) Cash and cash equivalents at beginning of period 606 5,072 ------------ ------------ Cash and cash equivalents at end of period $ 841 $ 746 ============ ============ Supplemental cash flow information: Interest paid $ 2,101 $ 2,534 Income taxes paid $ 442 $ 291
See accompanying notes to condensed consolidated financial statements. Page 4 of 13 UNITED STATES LIME & MINERALS, INC. AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements (Unaudited) 1. Basis of Presentation The condensed consolidated financial statements included herein have been prepared by the Company without independent audit. In the opinion of the Company's management, all adjustments of a normal and recurring nature necessary to present fairly the financial position, results of operations and cash flows for the periods presented have been made. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. It is suggested that these condensed consolidated financial statements be read in conjunction with the consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the period ended December 31, 2001. The results of operations for the three-month and six-month periods ended June 30, 2002 are not necessarily indicative of operating results for the full year. 2. Embezzlement Matter and Restatements and Reclassification of Previously Reported Amounts On January 31, 2002, the Company announced that it had discovered that an employee who had recently left the Company may have improperly diverted Company funds without authorization. Trading in the Company's common stock on the Nasdaq National Market(R) ("Nasdaq") was halted, and the Audit Committee of the Company's Board of Directors retained outside counsel to conduct a special investigation into the matter. The Audit Committee also retained an independent accounting firm to review the Company's internal controls and to make recommendations for improvement, and the Company has implemented the recommended improvements. The Company also contacted the Securities and Exchange Commission (the "SEC"), as well as criminal authorities, and is cooperating with the SEC, Nasdaq, and criminal authorities with respect to their investigations into this matter. The Company's former Vice President - Finance, Controller, Treasurer, and Secretary, Larry Ohms (the "Former VP Finance"), over a period of four years beginning in 1998, embezzled approximately $2,179,000 from the Company. The Former VP Finance voluntarily resigned from the Company on January 22, 2002, approximately one week before the Company discovered the defalcations. The Company has since filed suit against the Former VP Finance. The Former VP Finance has stated that no one else at the Company was involved in perpetrating the embezzlements. From the results of the special investigation, the Company believes this statement to be accurate. On March 14, 2002, the Company received $500,000 in insurance proceeds from the Company's insurance policies covering employee theft. The $500,000 had been recorded on the Consolidated Balance Sheet at December 31, 2001 in prepaid expenses and other assets, and recognized in the Consolidated Statement of Operations in other income in the fourth quarter 2001. In addition, the Company has retained counsel for assistance in its efforts to recover the embezzled funds from the Former VP Finance, and to pursue possible civil actions on behalf of the Company against third parties. The Former VP Finance has claimed not to have any funds. At this time, it is too early to determine if any additional recoveries beyond the insurance proceeds will be realized. During the first six months 2002, no additional recoveries were realized. Any future recoveries will be recognized in the quarters in which the recoveries are realized. The costs of the Company's special investigation, the Company's cooperation with the SEC, Nasdaq, and criminal authorities Page 5 of 13 in their investigations, and the Company's ongoing recovery efforts will be recognized as incurred. During the first six months 2002, the Company recognized $622,000 of such embezzlement-related costs. Of the total amount embezzled, $126,000 was embezzled during 1998, $282,000 was embezzled during 1999, $791,000 was embezzled during 2000, and $980,000 was embezzled during 2001. The Former VP Finance used a variety of methods to hide the embezzlements. Funds embezzled during 1998 were improperly expensed to selling, general and administrative expenses. Funds embezzled during 1999 were improperly expensed to labor and other operating expenses. Of the $791,000 that was embezzled in 2000, $328,000 was improperly expensed to labor and other operating expenses, and $463,000 was improperly recorded as prepaid financing costs within other assets, net. Funds embezzled during 2001 totaling $980,000 were also improperly recorded as prepaid financing costs in other assets, net. As a result of the fraudulent entries in other assets, net during 2000 ($463,000) and 2001 ($980,000), the Company improperly recognized excess amortization of its prepaid financing costs, as a component of interest expense, of $19,000 for the year ended December 31, 2000 and $166,000 for the nine months ended September 30, 2001. As a result of the embezzlements, the Company has reclassified to other expenses $126,000 in 1998, and $282,000 in 1999, removing those amounts from selling, general and administrative expenses, and labor and other operating expenses, respectively. The embezzlements had a material effect on the Company's financial statements for fiscal year 2000 and the first three quarters 2001. Therefore, the Company has restated its financial statements for 2000 and the first three quarters 2001. As a result of the correction for the overstated prepaid financing costs for 2000 and the first three quarters 2001, and the reclassification of excess interest expense to other expenses, the Company's restatements reflected an additional loss of $344,000 ($0.09 per share) net of income tax benefits ($444,000 gross) in 2000, and a reduction in net income of $525,000 ($0.10 per share) net of income tax benefits ($647,000 gross) for the nine months ended September 30, 2001. The Company's Consolidated Statement of Operations for first six months 2001 has been restated to eliminate excess amortization of prepaid financing costs, as a component of interest expense, of $100,000, and to recognize in other expenses $620,000 of embezzlement expense. The Company's restatement resulted in an additional loss of $422,000 ($0.08 per share) net of income tax benefits ($520,000 gross) for the six months ended June 30, 2001. 3. Inventories Inventories consisted of the following at:
(In thousands of dollars) JUNE 30, DECEMBER 31, 2002 2001 ------------- ------------- Lime and limestone inventories: Raw materials $ 1,490 $ 1,983 Finished goods 422 927 ------------- ------------- 1,912 2,910 Service parts 2,100 2,147 ------------- ------------- Total inventories $ 4,012 $ 5,057 ============= =============
Page 6 of 13 4. Banking Facilities and Other Debt On April 22, 1999, the Company entered into a new credit agreement with a consortium of commercial banks for a $50,000,000 Senior Secured Term Loan (the "Loan"). The Loan is repayable over a period of approximately 8 years, maturing on March 30, 2007, and requires monthly principal payments of $278,000, which began April 30, 2000, with a final principal payment of $26,944,000 on March 30, 2007, which equates to a 15-year amortization. The Company paid a fee equivalent to 2.50% of the Loan value to the placement agent. The interest rate on the first $30,000,000 of the Loan is 8.875%. The subsequent installments bear interest from the date they were funded at 3.52% above the secondary market yield of the United States Treasury obligation maturing May 15, 2005. The blended rate for the additional $20,000,000 is 9.84%. The Loan is secured by a first lien on substantially all of the Company's assets, with the exception of accounts receivable and inventories which have been used to secure the Company's revolving credit facility. The Loan agreement contains covenants that restrict the incurrence of debt, guaranties and liens, and places certain restrictions on the payment of dividends and the sale of significant assets. The Company is also required to meet minimum debt service coverage ratios on an on-going basis and maintain a minimum level of tangible net worth. As of April 26, 2001, the Company renewed its revolving credit facility, extending it through May 31, 2002. The revolving credit facility was increased from $4,000,000 to $5,000,000 and bears interest at LIBOR plus 1.40%, which rate will increase to a maximum of LIBOR plus 3.55% in accordance with a defined rate spread based upon the Company's then-current ratio of total funded debt to earnings before interest, taxes, depreciation and amortization (EBITDA). Further, on December 31, 2001, the Company amended the revolving credit facility to extend the maturity date to July 31, 2002, and to allow for a contractual overadvance above the borrowing base limitation as previously stated in the facility in an amount not to exceed $750,000 that expired on July 31, 2002. The $5,000,000 revolving credit facility was further amended on May 31, 2002 to extend the maturity date to January 31, 2003. As of July 31, 2002, the Company's outstanding balance was $2,825,000, and the average interest rate for the first six months 2002 was 4.23%. The revolving credit facility is secured by the Company's accounts receivable and inventory. On December 27, 2000, the Company obtained a $5,000,000 bridge loan under normal commercial terms from Inberdon Enterprise, Ltd. ("Inberdon"), evidenced by a subordinated promissory note. Inberdon owned approximately 51% of the outstanding common stock of the Company at the time. The bridge loan was unsecured, bore interest at 9.75%, and had to be repaid by March 27, 2001. The bridge loan was repaid with a portion of the proceeds of the Company's rights offering that closed on February 8, 2001. See Note 5. Page 7 of 13 A summary of outstanding debt at the dates indicated is as follows: (In thousands of dollars)
JUNE 30, DECEMBER 31, 2002 2001 ------------- ------------- Term loan $ 42,500 $ 44,166 Revolving credit facility 3,575 2,325 ------------- ------------- Subtotal 46,075 46,491 Less current installments 6,908 5,658 ------------- ------------- Debt, excluding current installments $ 39,167 $ 40,833 ============= =============
The carrying amount of the Company's long-term debt approximates its fair value. 5. Rights Offering On December 26, 2000, the Company initiated a rights offering for $10,000,000. The rights offering allowed each shareholder to receive 0.4566 non-transferable subscription rights for each share of the Company's common stock owned on December 26, 2000. The purchase price for the subscription was $5.50 per share, and the rights offering expired on February 5, 2001. As a result of the rights offering, the Company received $10,000,000 ($9,551,000 net of offering costs) and issued an additional 1,818,181 shares effective February 8, 2001. In the rights offering, the Company honored the over subscription requests of its shareholders in full. The Company's majority shareholder, Inberdon, subscribed for its full pro-rata amount, and in addition purchased 461,005 shares not purchased by other shareholders in the rights offering. Immediately following the rights offering, Inberdon owned approximately 59% of the Company's common stock. ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS LIQUIDITY AND CAPITAL RESOURCES Net cash provided by operating activities was $3,032,000 for the six months ended June 30, 2002, compared to net cash used in operating activities of $2,720,000 for the six months ended June 30, 2001. The $5,752,000 improvement in first half 2002 was primarily the result of changes in working capital. The most significant changes in working capital resulted from $2,920,000 less cash being required to pay for accounts payable and accrued expenses in the first half 2002, compared to the same period in 2001. The 2001 decrease in accounts payable and accrued expenses primarily reflected payments for costs incurred related to the Phase I of the modernization and expansion project at the Arkansas facility that was completed in the first half 2001. In addition, the Company reduced its inventories by $1,045,000 in the 2002 period, compared to a $348,000 increase in the 2001 period, and accounts receivable increased $1,952,000 during the 2002 period, compared to a $3,102,000 increase in the 2001 period. The Company invested $2,132,000 in capital expenditures in the first six months 2002, compared to $3,478,000 in the same period last year. In the first six months 2001, capital expenditures of approximately $1,506,000 were related to Phase I of the modernization and expansion project at the Arkansas facility. Page 8 of 13 Net cash used in financing activities was $709,000 in the first six months 2002, primarily from $2,166,000 repayment of debt and $293,000 payment of cash dividends, partially offset by $1,750,000 of draws on the Company's revolving credit facility. Financing activities provided $1,594,000 net cash in the first six months 2001, as explained below. During the fourth quarter 2000, the Company required additional capital because the costs to complete both Phase I of the Arkansas modernization and expansion project and the new pulverized limestone production line at Texas were significantly higher than originally anticipated and because the Company's cash flow and operating profits were lower than expected. To meet its short-term liquidity demands, the Company determined to make a pro-rata rights offering to its existing shareholders to raise $10,000,000 in additional equity capital. On December 27, 2000, the Company obtained a $5,000,000 bridge loan ("Bridge Loan") under normal commercial terms from Inberdon Enterprise, Ltd. ("Inberdon"), its majority shareholder. Inberdon owned approximately 51% of the outstanding common stock of the Company at the time the Bridge Loan was made. The Bridge Loan was unsecured, carried interest at 9.75%, and matured on March 27, 2001. The Company commenced the rights offering on December 26, 2000, and it closed on February 8, 2001. In the rights offering, the Company raised an additional $10,000,000 ($9,551,000 net of offering costs) in equity capital and issued 1,818,181 shares of common stock at the subscription price of $5.50 per share. The Company was able to honor in full all over-subscription requests from its shareholders. The Company's majority shareholder, Inberdon, subscribed for its full pro rata amount and also purchased, at the $5.50 per share subscription price, 461,005 additional shares not purchased by other shareholders in the rights offering, for a total investment of approximately $7,630,000. Immediately following the rights offering, Inberdon owned approximately 59% of the Company's outstanding common stock. The proceeds of the rights offering were used to repay the $5,000,000 Bridge Loan from Inberdon, to repay the Company's then-outstanding $4,000,000 revolving credit facility, and for working capital. Accordingly, the Company has fully utilized the proceeds of the rights offering. As a result of repaying the revolving credit facility, however, the Company continued to have access to the funds available under the facility. On December 31, 2001, the Company amended the revolving credit facility to extend the maturity date to July 31, 2002, and to allow for a contractual overadvance above the borrowing base limitation as previously stated in the facility in an amount not to exceed $750,000 that expired on July 31, 2002. The $5,000,000 revolving credit facility was further amended on May 31, 2002 to extend the maturity date to January 31, 2003. As of July 31, 2002, the Company's outstanding balance on the revolving credit facility was $2,825,000. The Company believes that funds generated from operations and available under the revolving credit facility will be sufficient to meet the Company's liquidity and capital needs for the year. The Arkansas modernization and expansion project commenced with ground breaking in November 1999 and is expected to be completed in two phases: Phase I involved the redevelopment of the quarry plant, rebuilding of the railroad to standard gauge, the purchase of a facility to establish an out-of-state terminal in Shreveport, Louisiana, the installation of a rotary kiln with preheater, and increased product storage and loading capacity. The kiln in Phase I produced its first lime on October 22, 2000, which is of excellent quality and has been well received by customers. Phase I of the Page 9 of 13 modernization and expansion project for the Arkansas plant required additional work in order to be fully operational and efficient. The Company completed this work in the second quarter 2001. After final resolution of all outstanding matters with a contractor, the total cost of Phase I was approximately $33,000,000. The $33,000,000 included $1,800,000 of costs associated with the pre-building of certain facilities for Phase II of the Arkansas project and the purchase of, but not all of the improvements to, the out-of-state terminal in Shreveport, Louisiana. Phase II of the Arkansas project will further expand the plant capacity through the installation of a second kiln with additional storage capacity, and includes the completion of the out-of-state terminal in Shreveport, Louisiana for distribution of the Company's products. The Company may complete the terminal before proceeding with Phase II. Arkansas Phase II is estimated to cost approximately $16,000,000, not including the $1,800,000 spent as part of Phase I. The Company plans to proceed with Phase II and will continue to review the optimum time to start the project based on its future operating results, market demand, and ability to secure competitive construction bids and financing. The Company is not contractually committed to any planned capital expenditures until actual orders are placed for equipment. As of June 30, 2002, the Company had no material open orders. As of July 31, 2002, the Company had $45,047,000 in total debt outstanding. RESULTS OF OPERATIONS Revenues increased to $10,961,000 in the second quarter 2002 from $10,812,000 in the second quarter 2001, an increase of $149,000, or 1.4%. This resulted from a 2.7% increase in sales volume and a 1.3% decrease in prices. Revenues increased to $19,938,000 in the first half 2002 from $19,503,000 for the first half 2001, an increase of $435,000, or 2.2%. This resulted from a 1.5% increase in sales volume and a 0.7% increase in prices. The market for the Company's products continues to be very competitive. There was also a reduction in the amount of Texas highway construction work let in the first half of the year, as compared to the first half of last year. Recently, there has been an upturn in the letting of contracts for highway construction work which the Company believes should approach prior years' levels. The Company's gross profit was $2,981,000 for the second quarter 2002, compared to $3,298,000 for the second quarter 2001, a 9.6% decrease. Gross profit margin as a percentage of revenues for the first quarter 2002 decreased to 27.2% from 30.5% in second quarter 2001. Gross profit and gross profit margins declined due to reduced lime production of approximately 15% during the second quarter at the Company's Texas plant caused by various operational problems, partially the result of unseasonably wet weather that continued into the beginning of the third quarter. This reduced production resulted in the depletion of finished goods inventories and increased costs through the purchase of lime from alternative sources to fulfill the Company's sales commitments. These operational problems are being resolved and production is returning to normal. The Company's gross profit was $4,818,000 for the first half 2002, compared to $4,749,000 for the first half 2001, a 1.5% increase. Gross profit margin as a percentage of revenues for the first half 2002 was 24.2% compared to 24.4% in first half 2001. The increase in gross profit during the first half 2002 is due to increased production and sales at the Arkansas facility. These improvements in the first half 2002 more than offset the $353,000 increase in depreciation expense and the operational problems at the Company's Texas plant in the second quarter. The increase in depreciation resulted from the completion of the Company's Arkansas Phase I modernization and expansion project in the second quarter 2001. Page 10 of 13 Selling, general and administrative expenses ("SG&A") increased by $97,000, or 10.6%, to $1,015,000 in the second quarter 2002, as compared to $918,000 in the second quarter 2001, and increased by $3,000, or 0.2%, to $1,973,000 in the first half 2002, as compared to $1,970,000 in the first half 2001. As a percentage of sales, SG&A was 9.3% in the second quarter 2002, as compared to 8.5% in the comparable 2001 period, and 9.9% for the 2002 six-month period, as compared to 10.1% in the first six months 2001. Interest expense in the second quarter 2002 was $1,102,000. This compares to $955,000, net for the second quarter 2001, after $211,000 had been capitalized as part of the Arkansas Phase I project costs during the 2001 quarter. Interest expense in the first half 2002 was $2,215,000. This compares to $1,571,000, net for the comparable 2001 period, after $845,000 had been capitalized as part of the Arkansas Phase I project costs during the first half 2001. Other, net increased by $35,000 to $195,000 in the second quarter 2002, as compared to the restated $160,000 in the second quarter 2001. Other, net in the 2002 quarter consisted of $247,000 for embezzlement-related costs, partially offset by interest and other income. In the second quarter 2001 as restated, $172,000 of embezzlement expense was the primary other expense, partially offset by interest income. Other, net increased by $7,000 to $573,000 in the first half 2002, as compared to the restated $566,000 in the first half 2001. Other, net in the 2002 period consisted of $622,000 for embezzlement-related costs partially offset by interest and other income. In the first half 2001 as restated, $620,000 of embezzlement expense was the primary other expense, partially offset by interest income. (See Note 2 to Condensed Consolidated Financial Statements.) The Company reported net income of $516,000 ($0.09 per share) during the second quarter 2002, compared to a restated net income of $941,000 ($0.16 per share) during the second quarter 2001. The Company reported a net income of $46,000 ($0.01 per share) during the fist half 2002, compared to a restated net income of $449,000 ($0.08 per share) during the first half 2001. EBITDA (earnings before interest, taxes, depreciation and amortization) was $3,338,000 for the second quarter 2002, a decrease of 11.3% from the restated second quarter 2001 EBITDA of $3,764,000. This $426,000 decrease was primarily due to the operational problems at the Company's Texas plant during the second quarter. EBITDA was $5,433,000 for the first half 2002, an increase of 7.9% from the restated first half 2001 EBITDA of $5,037,000. This $396,000 improvement was primarily due to the $435,000 increase in revenues for the six-month period. FORWARD-LOOKING STATEMENTS. Any statements contained in this Quarterly Report that are not statements of historical fact are forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements in this Report, including without limitation, statements relating to the Company's plans, strategies, objectives, expectations, intentions, and adequacy of resources, are identified by such words as "will," "could," "should," "believe," "expect," "intend," "plan," "schedule," "estimate," "anticipate," and "project." The Company undertakes no obligation to publicly update or revise any forward-looking statements. Investors are cautioned that forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from expectations, including without limitation the following: (i) the Company's plans, strategies, objectives, expectations, and intentions are subject to change at any time at the discretion of the Company; (ii) the Company's plans and results of operations will be affected by the Company's ability to manage its growth and modernization; and (iii) other risks and uncertainties, including without limitation those risks and uncertainties indicated from time to time in the Company's filings with the Securities and Exchange Commission, including the Company's Form 10-K for the fiscal year ended December 31, 2001. Page 11 of 13 ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK Not Applicable. PART II. OTHER INFORMATION ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS The Annual Meeting of Shareholders was held May 3, 2002 in Dallas, Texas. The table below shows the proposal submitted to shareholders in the Company's Proxy Statement, dated April 3, 2002. Election of Directors
FOR WITHHELD --- -------- John J. Brown 4,970,125 54,995 Timothy W. Byrne 4,993,316 31,804 Richard W. Cardin 4,971,501 53,619 Antoine M. Doumet 4,992,112 33,008 Wallace G. Irmscher 4,971,625 53,495 Edward A. Odishaw 4,911,401 113,719
There were no broker non-votes. ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K a. Exhibits: 10 Fifth Amendment to Amended and Restated Loan and Security Agreement dated as of May 31, 2002 among United States Lime and Minerals, Inc., Arkansas Lime Company, Texas Lime Company and First Union National Bank 11 Statement re computation of per share earnings 99(a) Section 906 Certification by the Chief Executive Officer 99(b) Section 906 Certification by the Chief Financial Officer b. Reports on Form 8-K: None Page 12 of 13 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. UNITED STATES LIME & MINERALS, INC. August 13, 2002 By: /s/ Timothy W. Byrne -------------------------------------------- Timothy W. Byrne President and Chief Executive Officer (Principal Executive Officer) August 13, 2002 By: /s/ M. Michael Owens -------------------------------------------- M. Michael Owens Vice President and Chief Financial Officer (Principal Financial and Accounting Officer) Page 13 of 13 UNITED STATES LIME & MINERALS, INC. Quarterly Report on Form 10-Q Quarter Ended June 30, 2002 Index to Exhibits
EXHIBIT NUMBER DESCRIPTION ------ ----------- 10 Fifth Amendment to Amended and Restated Loan and Security Agreement dated as of May 31, 2002 among United States Lime and Minerals, Inc., Arkansas Lime Company, Texas Lime Company and First Union National Bank 11 Statement re computation of per share earnings 99(a) Section 906 Certification by the Chief Executive Officer 99(b) Section 906 Certification by the Chief Financial Officer
EX-10 3 d99057exv10.txt AMENDMENT TO AMENDED/RESTATED LOAN & SECURITY AGMT EXHIBIT 10 FIFTH AMENDMENT TO AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT This Fifth Amendment to Amended and Restated Loan and Security Agreement (this "Fifth Amendment") dated as of May 31, 2002 by and among United States Lime & Minerals, Inc., a Texas corporation ("U.S. Lime"), Texas Lime Company, a Texas corporation ("TLC"), and Arkansas Lime Company, an Arkansas corporation ("ALC," and together with U.S. Lime and TLC, collectively referred to as the "Borrowers" and individually as a "Borrower"), and Wachovia Bank, National Association, formerly known as First Union National Bank, as successor to CoreStates Bank, N.A. ("Bank"). BACKGROUND A. Borrowers and Bank are parties to an Amended and Restated Loan and Security Agreement dated December 30, 1997, as amended by (i) the First Amendment to Amended and Restated Loan and Security Agreement, (ii) the Second Amendment to Amended and Restated Loan and Security Agreement, (iii) a letter agreement dated as of April 21, 2000, (iv) the Third Amendment to Amended and Restated Loan and Security Agreement dated as of April 26, 2001, and (v) the Fourth Amendment to Amended and Restated Loan and Security Agreement dated as of December 31, 2001 (as the same has been amended and may hereafter amended, restated, supplemented or otherwise modified and in effect from time to time, the "Loan Agreement"), pursuant to which Bank continued and restated certain credit facilities for the benefit of Borrowers under the terms and conditions set forth therein. All initially capitalized terms used in this Fifth Amendment, unless otherwise specifically defined herein, shall have the meanings ascribed to them in the Loan Agreement. B. Bank and Borrowers desire to further amend the Loan Agreement to extend the maturity date of the Revolving Credit according to the terms hereof. NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants set forth herein, the parties hereto, intending to be legally bound hereby, agree as follows: 1. Ratification. This Fifth Amendment is a modification of the Loan Agreement pursuant to Section 9.2 thereof. Except as expressly set forth herein, or in any amendment to any of the documents referred to herein, Borrowers and Bank acknowledge and agree that each and every term, condition and provision of the Loan Agreement is hereby ratified and confirmed in full. 2. Revolving Credit Termination Date Extended. The defined term "Revolving Credit Termination Date" is hereby amended and restated in its entirety as of the date hereof as follows: "Revolving Credit Termination Date" means January 31, 2003, or such later date as Borrowers and Bank may agree in writing. 3. Outstanding Indebtedness. Borrowers hereby unconditionally acknowledge that, as of the date hereof, the outstanding principal balance under the Revolving Credit is $4,075,000, and the aggregate face amount of outstanding undrawn Letters of Credit is $133,000. Borrowers acknowledge and agree that the foregoing balance of the Revolving Credit (including the amount of all draws under outstanding Letters of Credit), together with interest, which shall accrue from the date hereof at the rates set forth in the Loan Agreement, is owing to Bank without claim, counterclaim, recoupment, defense or setoff of any kind. 4. Representations and Warranties. To induce Bank to enter into this Fifth Amendment, Borrowers jointly and severally represent and warrant to Bank as follows: 4.1 After giving effect to the modifications contained herein, all representations, warranties and covenants made by Borrowers to Bank in the Loan Agreement (except those relating to a specific date) are true and correct in all material respects as of the date hereof, with the same force and effect as though made as of the date hereof; 4.2 No Event of Default or Unmatured Event of Default has occurred and is continuing under the Loan Agreement as of the date hereof; 4.3 Each Borrower is a corporation validly subsisting under the laws of the state of its incorporation; the execution, delivery and performance of this Fifth Amendment and any other documents and instruments executed and delivered to Bank in connection herewith (i) are within each Borrower's corporate powers, (ii) have been duly authorized by each Borrower's Board of Directors, (iii) do not contravene any provision of law or any indenture, agreement or undertaking to which any Borrower is a party or is otherwise bound, any Borrower's Certificate of Incorporation or bylaws, or any resolution of the Board of Directors of any Borrower, and (iv) require no consent or approval of any governmental authority or any third party; and 4.4 This Fifth Amendment and any other documents and instruments executed by a Borrower and delivered to Bank in connection herewith have been validly executed and are enforceable against the Borrower or Borrowers party thereto in accordance with their respective terms. Any failure of any of the representations and warranties made by Borrowers in this Fifth Amendment to be true and correct in all material respects when made shall constitute an Event of Default under the Loan Agreement. 5. Conditions Precedent. The effectiveness of this Fifth Amendment, and the performance by Bank of its obligations described herein, are subject to the conditions precedent that 2 Bank shall have received, in form and substance satisfactory to Bank: 5.1 resolutions of the Boards of Directors of each Borrower authorizing the execution, delivery and performance of this Fifth Amendment and the other documents and instruments executed and delivered to Bank in connection herewith, certified by such Borrower's Secretary that the same are true and complete copies of the originals thereof and remain in full force and effect, not having been modified or rescinded; 5.2 a completed and executed Borrowing Base Certificate for the month ended April 30, 2002; and 5.3 an amendment fee payable to Bank equal to $3,250. 6. Miscellaneous. 6.1 Entire Agreement. The Loan Agreement, as amended by this Fifth Amendment, and the other Loan Documents, embody the entire agreement and understanding between Bank and Borrowers. The Loan Agreement, together with this Fifth Amendment, and all documents executed and delivered in connection herewith, supersede all prior agreements and understandings relating to subject matter hereof. This Fifth Amendment together with the Loan Agreement, and the documents executed and delivered in connection herewith and therewith shall be construed as one agreement, and in the event of any inconsistency, the provisions of any promissory note evidencing a portion of the Indebtedness shall control over the provisions of this Fifth Amendment. 6.2 Counterparts. This Fifth Amendment may be executed in any number of counterparts and by different parties on separate counterparts, each of which counterparts, when so executed and delivered, shall be deemed to be an original and all of which counterparts, taken together, shall constitute but one and the same agreement. This Fifth Amendment shall be effective upon the execution and delivery of a counterpart hereof by each of the parties hereto. 6.3 Captions. The captions or headings in this Fifth Amendment are for convenience of reference only and in no way define, limit, or describe the scope or intent of any provision of this Fifth Amendment. 6.4 Successors and Assigns; Governing Law. This Fifth Amendment shall be binding upon and inure to the benefit of the respective parties hereto and their successors and assigns and shall be governed by, and construed and enforced in accordance with, the internal laws of the Commonwealth of Pennsylvania without regard to its principles of conflicts of laws. [signature page follows] 3 IN WITNESS WHEREOF, the undersigned have executed this Fifth Amendment as of the day and year first written above. BANK: WACHOVIA BANK, NATIONAL ASSOCIATION, f/k/a First Union National Bank (successor to CoreStates Bank, N.A.) By: --------------------------------- Alex A. Diffey, Jr., Senior Vice President BORROWERS: UNITED STATES LIME & MINERALS, INC. Attest: By: By: -------------------- --------------------------------- Timothy W. Byrne, President and Chief Executive Officer TEXAS LIME COMPANY By: By: -------------------- --------------------------------- Timothy W. Byrne, President ARKANSAS LIME COMPANY By: By: -------------------- --------------------------------- Timothy W. Byrne, President 4 EX-11 4 d99057exv11.txt STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS EXHIBIT 11 STATEMENT RE COMPUTATION OF PER SHARE EARNINGS
THREE MONTHS ENDED SIX MONTHS ENDED JUNE 30, JUNE 30, ------------------------------------- ------------------------------------- 2002 2001 AS RESTATED 2002 2001 AS RESTATED ----------------- ----------------- ----------------- ----------------- Numerator: $ 516,000 $ 941,000 $ 46,000 $ 449,000 Denominator: Denominator for basic income per common share - weighted-average shares 5,799,845 5,799,845 5,799,845 5,408,082 Effect of dilutive securities: Employee stock options -- -- -- -- ----------------- ----------------- ----------------- ----------------- Denominator for diluted income per common share - weighted-average shares 5,799,845 5,799,845 5,799,845 5,408,082 ================= ================= ================= ================= Basic income per common share $ 0.09 $ 0.16 $ 0.01 $ 0.08 ================= ================= ================= ================= Diluted income per common share $ 0.09 $ 0.16 $ 0.01 $ 0.08 ================= ================= ================= =================
EX-99.(A) 5 d99057exv99wxay.txt SECTION 906 CERTIFICATION BY THE CEO EXHIBIT 99(a) SECTION 906 CERTIFICATION BY THE CHIEF EXECUTIVE OFFICER I, Timothy W. Byrne, Chief Executive Officer of United States Lime & Minerals, Inc. (the "Company"), hereby certify that to my knowledge: (1) The Company's periodic report on Form 10-Q for the quarterly period ended June 30, 2002 (the "Form 10-Q") 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 Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company. Dated: August 13, 2002 /s/ Timothy W. Byrne -------------------- ------------------------ Timothy W. Byrne EX-99.(B) 6 d99057exv99wxby.txt SECTION 906 CERTIFICATION BY THE CFO EXHIBIT 99(b) SECTION 906 CERTIFICATION BY THE CHIEF FINANCIAL OFFICER I, M. Michael Owens, Chief Financial Officer of United States Lime & Minerals, Inc. (the "Company"), hereby certify that to my knowledge: (3) The Company's periodic report on Form 10-Q for the quarterly period ended June 30, 2002 (the "Form 10-Q") fully complies with the requirements of Section 13 (a) or 15(d) of the Securities Exchange Act of 1934, as amended; and (4) The information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company. Dated: August 13, 2002 /s/ M. Michael Owens -------------------- ------------------------ M. Michael Owens -----END PRIVACY-ENHANCED MESSAGE-----