UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2004
[ ] 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 0-18335
TETRA Technologies, Inc.
(Exact name of registrant as specified in its charter)
|
Delaware |
74-2148293 |
|
(State
of incorporation) |
(I.R.S.
Employer Identification No.) |
25025 Interstate 45 North, Suite 600
The Woodlands, Texas 77380
(Address of principal executive offices and zip code)
(281) 367-1983
(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 TWELVE 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 BY CHECK MARK WHETHER THE REGISTRANT IS AN ACCELERATED FILER (AS DEFINED IN RULE 12b-2 OF THE EXCHANGE ACT). YES [ X ] NO [ ]
AS OF NOVEMBER 1, 2004, THERE WERE 22,392,376 SHARES OUTSTANDING OF THE COMPANY'S COMMON STOCK, $0.01 PAR VALUE PER SHARE.
PART I
FINANCIAL INFORMATION
Item 1. Financial Statements.
TETRA Technologies, Inc. and Subsidiaries
Consolidated Statements of Operations
(In Thousands, Except Per Share Amounts)
(Unaudited)
Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||
|
2004 |
2003 |
2004 |
2003 |
|||||
|
Revenues: |
||||||||
|
Product sales |
$43,887 |
$34,315 |
$125,776 |
$105,660 |
||||
|
Services |
46,036 |
58,494 |
118,206 |
137,858 |
||||
|
Total revenues |
89,923 |
92,809 |
243,982 |
243,518 |
||||
|
|
||||||||
|
Cost of revenues: |
||||||||
|
Cost of product sales |
33,617 |
28,348 |
98,211 |
81,438 |
||||
|
Cost of services |
34,113 |
45,089 |
89,762 |
105,431 |
||||
|
Total cost of revenues |
67,730 |
73,437 |
187,973 |
186,869 |
||||
|
Gross profit |
22,193 |
19,372 |
56,009 |
56,649 |
||||
|
|
||||||||
|
General and administrative expense |
14,417 |
9,646 |
38,233 |
33,707 |
||||
|
Operating income |
7,776 |
9,726 |
17,776 |
22,942 |
||||
|
|
||||||||
|
Interest (income) expense, net |
403 |
99 |
219 |
376 |
||||
|
Other (income) expense |
(8 |
) |
(34 |
) |
(339 |
) |
(501 |
) |
|
Income before taxes, discontinued operations and cumulative effect of change in accounting principle |
7,381 |
9,661 |
17,896 |
23,067 |
||||
|
Provision for income taxes |
2,258 |
3,198 |
5,780 |
7,940 |
||||
|
Income before discontinued operations and cumulative effect of change in accounting principle |
5,123 |
6,463 |
12,116 |
15,127 |
||||
|
Income (loss) from discontinued operations, net of taxes |
(3 |
) |
697 |
(349 |
) |
183 |
||
|
Net gain on disposal of discontinued operations, net of taxes |
– |
3,585 |
– |
3,585 |
||||
|
Income (loss) from discontinued operations |
(3 |
) |
4,282 |
(349 |
) |
3,768 |
||
|
Net income before cumulative effect of change in accounting principle |
5,120 |
10,745 |
11,767 |
18,895 |
||||
|
Cumulative effect of change in accounting principle, net of taxes |
– |
– |
– |
(1,464 |
) |
|||
|
Net income |
$5,120 |
$10,745 |
$11,767 |
$17,431 |
||||
|
|
||||||||
|
Basic net income per common share: |
||||||||
|
Income before discontinued operations and cumulative effect of change in accounting principle |
$0.23 |
$.30 |
$0.54 |
$0.70 |
||||
|
Income (loss) from discontinued operations |
(0.00 |
) |
0.03 |
(0.01 |
) |
0.01 |
||
|
Net gain on disposal of discontinued operations |
– |
0.16 |
– |
0.16 |
||||
|
Cumulative effect of change in accounting principle |
– |
– |
– |
(0.07 |
) |
|||
|
Net income |
$0.23 |
$0.49 |
$0.53 |
$0.80 |
||||
|
Average shares outstanding |
22,375 |
21,904 |
22,322 |
21,763 |
||||
|
|
||||||||
|
Diluted net income per common share: |
||||||||
|
Income before discontinued operations and cumulative effect of change in accounting principle |
$0.22 |
$0.28 |
$0.51 |
$0.66 |
||||
|
Income (loss) from discontinued operations |
(0.00 |
) |
0.03 |
(0.01 |
) |
0.01 |
||
|
Net gain on disposal of discontinued operations |
– |
0.15 |
– |
0.16 |
||||
|
Cumulative effect of change in accounting principle |
– |
– |
– |
(0.07 |
) |
|||
|
Net income |
$0.22 |
$0.46 |
$0.50 |
$0.76 |
||||
|
Average diluted shares outstanding |
23,728 |
23,326 |
23,664 |
22,853 |
||||
|
|
||||||||
See Notes to Consolidated Financial Statements
1
TETRA Technologies, Inc. and Subsidiaries
Consolidated Balance Sheets
(In Thousands)
September 30, 2004 |
December 31, 2003 |
|||
(Unaudited) |
||||
ASSETS |
||||
Current assets: |
||||
Cash and cash equivalents |
$3,412 |
$16,677 |
||
Restricted cash |
– |
248 |
||
Trade accounts receivable, net of allowance for doubtful accounts of $823 in 2004 and $1,323 in 2003 |
75,449 |
70,769 |
||
Inventories |
53,749 |
35,116 |
||
Deferred tax assets |
3,575 |
4,123 |
||
Assets of discontinued operations |
837 |
1,800 |
||
Prepaid expenses and other current assets |
5,024 |
8,068 |
||
Total current assets |
142,046 |
136,801 |
||
|
||||
Property, plant and equipment: |
||||
Land and building |
16,708 |
14,637 |
||
Machinery and equipment |
215,360 |
157,521 |
||
Automobiles and trucks |
15,015 |
12,814 |
||
Chemical plants |
47,820 |
37,108 |
||
Oil and gas properties |
52,424 |
39,886 |
||
Construction in progress |
7,557 |
822 |
||
|
354,884 |
262,788 |
||
Less accumulated depreciation and depletion |
(136,864 |
) |
(118,690 |
) |
Net property, plant and equipment |
218,020 |
144,098 |
||
|
||||
Other assets: |
||||
|
Cost in excess of net assets acquired, net of accumulated amortization of $2,494 |
105,946 |
18,326 |
||
Patents, trademarks and other intangible assets, net of accumulated amortization of $6,776 in 2004 and $5,975 in 2003 |
8,215 |
5,686 |
||
Other assets |
11,123 |
4,688 |
||
Total other assets |
125,284 |
28,700 |
||
|
$485,350 |
$309,599 |
See Notes to Consolidated Financial Statements
2
TETRA Technologies, Inc. and Subsidiaries
Consolidated Balance Sheets
(In Thousands)
September 30, 2004 |
December 31, 2003 |
|||
(Unaudited) |
||||
LIABILITIES AND STOCKHOLDERS' EQUITY |
||||
Current liabilities: |
||||
Trade accounts payable |
$27,770 |
$18,316 |
||
Accrued liabilities |
34,863 |
25,142 |
||
Liabilities of discontinued operations |
805 |
1,223 |
||
| Current portion of capital lease obligations |
6 |
8 |
||
Total current liabilities |
63,444 |
44,689 |
||
|
||||
Capital lease obligation, less current portion |
– |
4 |
||
Long-term debt, less current portion |
136,159 |
– |
||
Deferred income taxes |
23,311 |
21,614 |
||
Decommissioning liabilities |
32,753 |
27,936 |
||
Other liabilities |
5,443 |
4,587 |
||
Total long-term and other liabilities |
197,666 |
54,141 |
||
|
||||
Commitments and contingencies |
||||
|
||||
Stockholders' equity: |
||||
Common stock, par value $0.01 per share; 70,000,000 shares authorized; 23,109,511 shares issued at September 30, 2004 and 22,743,530 shares issued at December 31, 2003 |
231 |
227 |
||
Additional paid-in capital |
103,650 |
98,256 |
||
Treasury stock, at cost; 734,054 shares held at September 30, 2004 and 635,332 shares held at December 31, 2003 |
(10,343 |
) |
(7,153 |
) |
Accumulated other comprehensive income (loss) |
(1,538 |
) |
(1,034 |
) |
Retained earnings |
132,240 |
120,473 |
||
Total stockholders' equity |
224,240 |
210,769 |
||
|
$485,350 |
$309,599 |
See Notes to Consolidated Financial Statements
3
TETRA Technologies, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(In Thousands)
(Unaudited)
Nine Months Ended September 30, |
||||
| 2004 |
2003 |
|||
| Operating activities: |
||||
| Net income |
$11,767 |
$17,431 |
||
| Adjustments to reconcile net income to cash provided by operating activities: |
||||
| Depreciation, depletion, accretion and amortization |
22,646 |
22,523 |
||
| Loss on relinquishment of property |
– |
1,745 |
||
| Provision for deferred income taxes |
800 |
6,123 |
||
| Provision for doubtful accounts |
(138 |
) |
(175 |
) |
| Gain on sale of property, plant and equipment |
(520 |
) |
(727 |
) |
| Cost of compressor units sold |
1,006 |
|
– |
|
| Net gain on disposal of discontinued operations |
– |
|
(3,585 |
) |
| Other non-cash charges and credits |
129 |
|
(425 |
) |
| Cumulative effect of accounting change |
– |
|
1,464 |
|
| Changes in operating assets and liabilities, net of assets acquired: |
||||
| Trade accounts receivable |
2,202 |
(28,060 |
) |
|
| Inventories |
(7,048 |
) |
2,696 |
|
| Prepaid expenses and other current assets |
3,357 |
500 |
||
| Trade accounts payable and accrued liabilities |
14,956 |
14,700 |
||
| Decommissioning liabilities |
(3,140 |
) |
346 |
|
| Discontinued operations: non-cash charges and working capital changes |
545 |
(611 |
) |
|
| Other |
(437 |
) |
15 |
|
| Net cash provided by operating activities |
46,125 |
33,960 |
||
|
|
||||
| Investing activities: |
||||
| Purchases of property, plant and equipment |
(45,175 |
) |
(8,490 |
) |
| Acquisition of businesses, net of cash acquired |
(151,091 |
) |
– |
|
| Change in restricted cash |
248 |
1,506 |
||
| Decrease (increase) in other assets |
(125 |
) |
417 |
|
| Proceeds from sale of subsidiary |
– |
17,902 |
||
| Proceeds from sale of property, plant and equipment |
356 |
2,063 |
||
| Investing activities of discontinued operations |
– |
(169 |
) |
|
| Net cash provided by (used in) investing activities |
(195,787 |
) |
13,229 |
|
|
|
||||
| Financing activities: |
||||