MPW INDUSTRIAL SERVICES GROUP INC - 10-Q Quarterly Report

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

ACT OF 1934

For the quarterly period ended December 31, 2003

¨	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: 0-23335

MPW INDUSTRIAL SERVICES GROUP, INC.

(Exact name of registrant as specified in its charter)


Ohio		31-1567260
(State or other jurisdiction of incorporation or organization)		(I.R.S. employer identification no.)

9711 Lancaster Road, S.E., Hebron, Ohio		43025
(Address of principal executive offices)		(Zip code)

(740) 927-8790

(Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

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 by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding of the issuer’s classes of common stock, as of the latest practicable date.

As of January 31, 2004, 10,708,707 shares of the issuer’s common stock, without par value, were outstanding.

MPW INDUSTRIAL SERVICES GROUP, INC.

INDEX


PART I.	FINANCIAL INFORMATION	PAGE

Item 1.	Financial Statements

	Consolidated Balance Sheets as of December 31, 2003 (unaudited) and June 30, 2003	3

	Consolidated Statements of Operations for the three and six months ended December 31, 2003 and 2002 (unaudited)	4

	Consolidated Statements of Cash Flows for the six months ended December 31, 2003 and 2002 (unaudited)	5

	Notes to Consolidated Financial Statements (unaudited)	6

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	12

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	15

Item 4.	Controls and Procedures	15

PART II.	OTHER INFORMATION

Item 1.	Legal Proceedings	17

Item 2.	Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities	17

Item 3.	Defaults Upon Senior Securities	17

Item 4.	Submission of Matters to a Vote of Security Holders	17

Item 5.	Other Information	17

Item 6.	Exhibits and Reports on Form 8-K	17

SIGNATURES		19

EXHIBIT INDEX		20

PART I.—FINANCIAL INFORMATION

Item 1.

Financial Statements

MPW INDUSTRIAL SERVICES GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)


	December 31, 2003			June 30, 2003
	(unaudited)
ASSETS
Cash	$	691		$	2,726
Accounts receivable, net		13,566			17,201
Inventories		2,346			2,294
Deferred income taxes		1,560			1,461
Prepaid expenses		839			1,197
Other current assets		17			16

Total current assets		19,019			24,895

Property and equipment, net		33,071			35,120
Goodwill		6,044			6,044
Other intangibles, net		6,581			6,889
Other assets		104			122

Total assets	$	64,819		$	73,070


LIABILITIES
Accounts payable	$	5,149		$	8,218
Accrued compensation and related taxes		1,645			2,373
Current maturities of long-term debt		1,298			1,322
Other accrued liabilities		4,228			6,153

Total current liabilities		12,320			18,066

Long-term debt		18,254			18,892
Deferred income taxes		3,603			3,400
Other long-term liabilities		158			469

Total liabilities		34,335			40,827


SHAREHOLDERS’ EQUITY
Preferred stock, $0.01 par value; 5,000,000 shares authorized; no shares issued and outstanding		—			—
Common stock, no par value; 30,000,000 shares authorized; 10,958,707 and 10,939,957 shares issued and outstanding at December 31, 2003 and June 30, 2003, respectively		109			109
Additional paid-in capital		41,544			41,507
Accumulated deficit		(11,030	)		(9,027	)
Accumulated other comprehensive loss		(139	)		(346	)

Total shareholders’ equity		30,484			32,243

Total liabilities and shareholders’ equity	$	64,819		$	73,070

The accompanying notes are an integral part of these consolidated financial statements.

MPW INDUSTRIAL SERVICES GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except share data)


	Three Months Ended December 31,						Six Months Ended December 31,
	2003			2002			2003			2002
	(unaudited)						(unaudited)
Revenues	$	22,315		$	23,982		$	41,975		$	48,006
Cost of services (including depreciation)		18,090			18,735			35,107			37,934

Gross profit		4,225			5,247			6,868			10,072
Selling, general and administrative expenses		4,254			4,065			9,128			8,699

Income (loss) from operations		(29	)		1,182			(2,260	)		1,373
Interest expense, net		278			512			561			1,013

Income (loss) from continuing operations before income taxes (benefit) and equity in loss of affiliate		(307	)		670			(2,821	)		360
Provision (benefit) for income taxes		263			281			(818	)		151

Income (loss) from continuing operations before equity in loss of affiliate		(570	)		389			(2,003	)		209
Equity in loss of affiliate		—			(149	)		—			(184	)

Income (loss) from continuing operations		(570	)		240			(2,003	)		25
Income from discontinued operations, net of tax		—			31			—			43

Income (loss) before cumulative effect of change in accounting principle		(570	)		271			(2,003	)		68
Cumulative effect of change in accounting principle		—			—			—			(2,845	)

Net income (loss)	$	(570	)	$	271		$	(2,003	)	$	(2,777	)


Net income (loss) per share, basic and diluted:
Income (loss) from continuing operations	$	(0.05	)	$	0.02		$	(0.18	)	$	—
Income from discontinued operations, net of tax		—			—			—			—

Income (loss) before cumulative effect of change in accounting principle		(0.05	)		0.02			(0.18	)		—
Cumulative effect of change in accounting principle		—			—			—			(0.26	)

Net income (loss) per share	$	(0.05	)	$	0.02		$	(0.18	)	$	(0.26	)


Weighted average shares outstanding		10,951			10,940			10,947			10,940
Weighted average shares outstanding, assuming dilution		10,951			10,958			10,947			10,976

The accompanying notes are an integral part of these consolidated financial statements.

MPW INDUSTRIAL SERVICES GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)


	Six Months Ended December 31,
	2003			2002
	(unaudited)
Cash flows from operating activities:
Net loss	$	(2,003	)	$	(2,777	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation		4,221			4,482
Amortization		308			340
Equity in loss of affiliate		—			184
Loss on disposal of assets		44			46
Change in deferred income taxes		(20	)		225
Cumulative effect of change in accounting principle		—			2,845
Changes in operating assets and liabilities:
Accounts receivable		3,635			(2,909	)
Inventories		(52	)		(335	)
Prepaid expenses and other assets		375			374
Accounts payable		(3,049	)		478
Other accrued liabilities		(2,562	)		(1,186	)

Net cash provided by operating activities		897			1,767


Cash flows from investing activities:
Purchases of property and equipment		(2,336	)		(4,092	)
Investment in affiliate		—			(365	)
Proceeds from the disposal of property and equipment		29			15

Net cash used in investing activities		(2,307	)		(4,442	)


Cash flows from financing activities:
Proceeds from exercise of stock options		37			—
Proceeds from revolving credit facility		3,850			17,349
Payments on revolving credit facility		(4,450	)		(14,497	)
Issuance of notes payable		—		</

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