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 March 31, 2004
OR
¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission file number: 001-14003
OMEGA PROTEIN CORPORATION
(Exact name of Registrant as specified in its charter)
| State of Nevada | 76-0562134 | |
| (State or other jurisdiction of | (I.R.S. Employer | |
| incorporation or organization) | Identification No.) | |
| 1717 St. James Place, Suite 550 | ||
| Houston, Texas | 77056 | |
| (Address of principal executive offices) | (Zip Code) | |
Registrant’s telephone number, including area code: (713) 623-0060
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.
Number of shares outstanding of the Registrant’s Common Stock, par value $0.01 per share, on April 29, 2004: 24,413,677
TABLE OF CONTENTS
2
OMEGA PROTEIN CORPORATION
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEET
(Dollars in thousands, except per share amounts)
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements and Notes
| March 31, 2004 |
December 31, 2003 |
|||||||
| (in thousands) | ||||||||
| ASSETS |
||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ | 47,097 | $ | 35,374 | ||||
| Receivables, net |
11,952 | 19,860 | ||||||
| Amounts due from majority owner |
109 | 108 | ||||||
| Inventories |
33,123 | 40,405 | ||||||
| Deferred tax assets, net |
178 | 178 | ||||||
| Prepaid expenses and other current assets |
813 | 1,520 | ||||||
| Total current assets |
93,272 | 97,445 | ||||||
| Other assets |
2,576 | 3,087 | ||||||
| Deferred tax assets, net |
107 | 405 | ||||||
| Property and equipment, net |
86,957 | 85,231 | ||||||
| Total assets |
$ | 182,912 | $ | 186,168 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY |
||||||||
| Current liabilities: |
||||||||
| Current maturities of long-term debt |
$ | 1,603 | $ | 1,566 | ||||
| Accounts payable |
1,585 | 3,384 | ||||||
| Accrued liabilities |
9,573 | 11,558 | ||||||
| Total current liabilities |
12,761 | 16,508 | ||||||
| Long-term debt |
17,196 | 17,605 | ||||||
| Pension liabilities, net |
7,012 | 6,838 | ||||||
| Total liabilities |
36,969 | 40,951 | ||||||
| Commitments and contingencies |
||||||||
| Stockholders’ equity: |
||||||||
| Preferred stock, $0.01 par value; authorized 10,000,000 shares; none issued |
– | – | ||||||
| Common stock, $0.01 par value; authorized 80,000,000 shares; 24,825,533 shares and 24,801,549 shares issued and outstanding, respectively |
248 | 248 | ||||||
| Capital in excess of par value |
113,769 | 113,690 | ||||||
| Retained earnings |
39,883 | 39,237 | ||||||
| Accumulated other comprehensive loss |
(5,922 | ) | (5,923 | ) | ||||
| Common stock in treasury, at cost – 413,100 shares |
(2,035 | ) | (2,035 | ) | ||||
| Total stockholders’ equity |
145,943 | 145,217 | ||||||
| Total liabilities and stockholders’ equity |
$ | 182,912 | $ | 186,168 | ||||
The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.
3
OMEGA PROTEIN CORPORATION
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(Dollars in thousands, except per share amounts)
| Three Months Ended March 31, |
||||||||
| 2004 |
2003 |
|||||||
| (in thousands, except per share amount) |
||||||||
| Revenues |
$ | 25,056 | $ | 25,101 | ||||
| Cost of sales |
21,382 | 18,679 | ||||||
| Gross profit |
3,674 | 6,422 | ||||||
| Selling, general, and administrative expense |
2,462 | 2,196 | ||||||
| Operating income |
1,212 | 4,226 | ||||||
| Interest expense, net |
(187 | ) | (154 | ) | ||||
| Other income (expense), net |
(56 | ) | 21 | |||||
| Income before income taxes |
969 | 4,093 | ||||||
| Provision for income taxes |
323 | 1,446 | ||||||
| Net income |
$ | 646 | $ | 2,647 | ||||
| Basic earnings per share |
$ | 0.03 | $ | 0.11 | ||||
| Weighted average common shares outstanding |
24,405 | 23,983 | ||||||
| Diluted earnings per share |
$ | 0.02 | $ | 0.10 | ||||
| Weighted average common shares and potential common shares outstanding |
26,343 | 25,433 | ||||||
The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.
4
OMEGA PROTEIN CORPORATION
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Dollars in thousands, except per share amounts)
| Three Months Ended March 31, |
||||||||
| 2004 |
2003 |
|||||||
| (in thousands) | ||||||||
| Cash flows provided by operating activities: |
||||||||
| Net income |
$ | 646 | $ | 2,647 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||
| Gain on disposal of assets, net |
– | (77 | ) | |||||
| Provision for losses on receivables |
8 | 44 | ||||||
| Depreciation and amortization |
3,039 | 2,963 | ||||||
| Deferred income taxes |
323 | 1,446 | ||||||
| Changes in assets and liabilities: |
||||||||
| Receivables |
7,900 | 3,311 | ||||||
| Amounts due from majority owner |
(1 | ) | 2 | |||||
| Inventories |
7,282 | 3,703 | ||||||
| Accounts payable and accrued liabilities |
(3,784 | ) | (962 | ) | ||||
| Other, net |
958 | (1,333 | ) | |||||
| Total adjustments |
15,725 | 9,097 | ||||||
| Net cash provided by operating activities |
16,371 | 11,744 | ||||||
| Cash flows used in investing activities: |
||||||||
| Proceeds from sale of assets, net |
– | 83 | ||||||
| Capital expenditures |
(4,338 | ) | (3,526 | ) | ||||
| Net cash used in investing activities |
(4,338 | ) | (3,443 | ) | ||||
| Cash flows used in financing activities: |
||||||||
| Principal payments of short and long-term debt obligations |
(372 | ) | (309 | ) | ||||
| Proceeds from stock options exercised |
61 | 210 | ||||||
| Net cash used in financing activities |
(311 | ) | (99 | ) | ||||
| Effect of exchange rate changes on cash and cash equivalents |
1 | – | ||||||
| Net increase in cash and cash equivalents |
11,723 | 8,202 | ||||||
| Cash and cash equivalents at beginning of year |
35,374 | 33,450 | ||||||
| Cash and cash equivalents at end of period |
$ | 47,097 | $ | 41,652 | ||||
The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.
5
OMEGA PROTEIN CORPORATION
UNAUDITED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(Dollars in thousands, except per share amounts)
| Common Stock |
Capital Excess of Par Value |
Retained Earnings |
Accumulated Other Comprehensive Loss |
Treasury Stock Amount |
Total Stockholders’ Equity | |||||||||||||||||
| Shares |
Amount |
|||||||||||||||||||||
| Balance at December 31, 2003 |
24,802 | $ | 248 | $ | 113,690 | $ | 39,237 | $ | (5,923 | ) | $ | (2,035 | ) | $ | 145,217 | |||||||
| Issuance of common stock |
24 | — | 79 | — | — | 79 | ||||||||||||||||
| Comprehensive income: |
||||||||||||||||||||||
| Net income |
— | — | — | 646 | — | — | 646 | |||||||||||||||
| Other comprehensive income: |
||||||||||||||||||||||
| Foreign currency translation adjustment, net of tax benefit |
— | — | — | — | 1 | — | 1 | |||||||||||||||
| Total comprehensive income |
— | — | — | 646 | 1 | — | 647 | |||||||||||||||
| Balance at March 31, 2004 |
24,826 | $ | 248 | $ | 113,769 | $ | 39,883 | $ | (5,922 | ) | $ | (2,035 | ) | $ | 145,943 | |||||||
The accompanying notes are in integral part of the consolidated financial statements.
6
OMEGA PROTEIN CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
| NOTE 1. | Significant Accounting Policies |
Summary Of Operations And Basis Of Presentation
Business Description
Omega Protein Corporation (“Omega” or the “Company”) produces and markets a variety of products produced from menhaden (a herring-like species of fish found in commercial quantities in the U.S. coastal waters of the Atlantic Ocean and Gulf of Mexico), including regular grade and value-added specialty fish meals, crude and refined fish oils and fish solubles. The Company’s fish meal products are primarily used as a protein ingredient in animal feed for swine, cattle, aquaculture and household pets. Fish oil is utilized for animal and aquaculture feeds, industrial applications, as well as for additives to human food products. The Company’s fish solubles are sold primarily to livestock feed manufacturers, aquaculture feed manufacturers and for use as an organic fertilizer.
Basis of Presentation
These interim financial statements of Omega Protein Corporation have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information, the instructions to Quarterly Report on Form
10-Q and Rule 10-01 of Regulation S-X. The interim financial statements should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2003. Accordingly, certain information and footnote disclosures normally provided have been omitted since such items are disclosed therein.
In the opinion of management the accompanying unaudited condensed consolidated financial statements reflect all adjustments (including normal recurring adjustments) necessary to present fairly the Company’s consolidated financial position as of March 31, 2004, and the results of its operations and its cash flows for the three-month periods ended March 31, 2004 and 2003. Operating results for the three-month periods ended March 31, 2004 are not necessarily indicative of the results that may be expected for the year ending December 31, 2004.
Consolidation
The consolidated financial statements include the accounts of Omega and its wholly and majority owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. The Company has reclassified certain amounts previously reported to conform with the presentation at March 31, 2004.
Revenue Recognition
The Company recognizes revenue for the sale of its products when title and rewards of ownership to its products are transferred to the customer, which typically occurs upon shipment.
7
OMEGA PROTEIN CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (continued)
(Dollars in thousands, except per share amounts)
Cash and Cash Equivalents
The Company considers cash in banks and short-term investments with original maturities of three months or less