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 March 31, 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: 0-23335

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 April 30, 2004, 10,708,707 shares of the issuer’s common stock, without par value, were outstanding.

MPW INDUSTRIAL SERVICES GROUP, INC.

INDEX


		PAGE
PART I.	FINANCIAL INFORMATION

Item 1.	Financial Statements

	Consolidated Balance Sheets as of March 31, 2004 (unaudited) and June 30, 2003	3

	Consolidated Statements of Operations for the three and nine months ended March 31, 2004 and 2003 (unaudited)	4

	Consolidated Statements of Cash Flows for the nine months ended March 31, 2004 and 2003 (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	16

Item 4.	Controls and Procedures	16

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)


	March 31, 2004			June 30, 2003
	(unaudited)
ASSETS
Cash	$	358		$	2,726
Accounts receivable, net		15,253			17,201
Inventories		2,296			2,294
Deferred income taxes		1,512			1,461
Prepaid expenses		798			1,197
Other current assets		2			16

Total current assets		20,219			24,895

Property and equipment, net		31,382			35,120
Goodwill		6,044			6,044
Other intangibles, net		6,427			6,889
Other assets		96			122

Total assets	$	64,168		$	73,070

LIABILITIES
Accounts payable	$	3,383		$	8,218
Accrued compensation and related taxes		2,152			2,373
Current maturities of long-term debt		1,281			1,322
Other accrued liabilities		4,265			6,153

Total current liabilities		11,081			18,066

Long-term debt		18,912			18,892
Deferred income taxes		3,643			3,400
Other long-term liabilities		321			469

Total liabilities		33,957			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; 10,708,707 and 10,939,957 shares issued and outstanding at March 31, 2004 and June 30, 2003, respectively		107			109
Additional paid-in capital		40,921			41,507
Accumulated deficit		(10,575	)		(9,027	)
Accumulated other comprehensive loss		(242	)		(346	)

Total shareholders’ equity		30,211			32,243

Total liabilities and shareholders’ equity	$	64,168		$	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 March 31,					Nine Months Ended March 31,
	2004		2003			2004			2003
	(unaudited)					(unaudited)
Revenues	$	22,833	$	24,144		$	64,808		$	72,150
Cost of services (including depreciation)		18,171		18,127			53,278			56,061

Gross profit		4,662		6,017			11,530			16,089
Selling, general and administrative expenses		3,724		4,052			12,852			12,751

Income (loss) from operations		938		1,965			(1,322	)		3,338
Interest expense, net		296		457			857			1,470

Income (loss) from continuing operations before income taxes (benefit) and equity in loss of affiliate		642		1,508			(2,179	)		1,868
Provision (benefit) for income taxes		187		634			(631	)		785

Income (loss) from continuing operations before equity in loss of affiliate		455		874			(1,548	)		1,083
Equity in loss of affiliate		—		(315	)		—			(499	)

Income (loss) from continuing operations		455		559			(1,548	)		584
Income from discontinued operations, net of tax		—		41			—			84

Income (loss) before cumulative effect of change in accounting principle		455		600			(1,548	)		668
Cumulative effect of change in accounting principle		—		—			—			(2,845	)

Net income (loss)	$	455	$	600		$	(1,548	)	$	(2,177	)

Net income (loss) per share, basic and diluted:
Income (loss) from continuing operations	$	0.04	$	0.05		$	(0.14	)	$	0.05
Income from discontinued operations, net of tax		—		—			—			—

Income (loss) before cumulative effect of change in accounting principle		0.04		0.05			(0.14	)		0.05
Cumulative effect of change in accounting principle		—		—			—			(0.26	)

Net income (loss) per share	$	0.04	$	0.05		$	(0.14	)	$	(0.21	)

Weighted average shares outstanding		10,747		10,940			10,881			10,940
Weighted average shares outstanding, assuming dilution		10,857		10,941			10,881			10,965

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)


	Nine Months Ended March 31,
	2004			2003
	(unaudited)
Cash flows from operating activities:
Net loss	$	(1,548	)	$	(2,177	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation		6,201			6,802
Amortization		462			510
Equity in loss of affiliate		—			499
Loss on disposal of assets		51			46
Change in deferred income taxes		132			132
Cumulative effect of change in accounting principle		—			2,845
Changes in operating assets and liabilities:
Accounts receivable		1,948			(758	)
Inventories		(2	)		(282	)
Prepaid expenses and other assets		439			988
Accounts payable		(4,819	)		(501	)
Other accrued liabilities		(2,018	)		24

Net cash provided by operating activities		846			8,128

Cash flows from investing activities:
Purchases of property and equipment		(2,838	)		(5,074	)
Investment in affiliate		—			(365	)
Proceeds from the disposal of property and equipment		233			15

Net cash used in investing activities		(2,605	)		(5,424	)

Cash flows from financing activities:
Proceeds from exercise of stock options		37			—
Repurchase of common stock		(625	)		—
Proceeds from revolving credit facility		11,200			24,549
Payments on revolving credit facility		(11,130	)		(27,082	)
Issuance of notes payable		—			128
Payments on notes payable		(91	)		(177	)

Net cash used in financing activities		(609	)		(2,582	)

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