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, 2013

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 No. 1-2960

 

Newpark Resources, Inc.

(Exact name of registrant as specified in its charter)

 

Delaware	72-1123385
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)
2700 Research Forest Drive, Suite 100
The Woodlands, Texas	77381
(Address of principal executive offices)	(Zip Code)

 

(281) 362-6800

(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          √          No                

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

 

Yes          √          No                

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definitions of “large accelerated filer”, “accelerated filer” and “small reporting company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer   √              Accelerated filer       

 

Non-accelerated filer          (Do not check if a smaller reporting company) Smaller reporting company       

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes                    No           √          

 

As of October 17, 2013, a total of 87,370,515 shares of common stock, $0.01 par value per share, were outstanding.

---

---

 

NEWPARK RESOURCES, INC.

 

INDEX TO QUARTERLY REPORT ON FORM 10-Q
FOR THE THREE AND NINE MONTHS ENDED

SEPTEMBER 30, 2013

 

PART I	FINANCIAL INFORMATION	2
ITEM 1.	Financial Statements	2
	Condensed Consolidated Balance Sheets as of September 30, 2013 and December 31, 2012	2
	Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2013 and 2012	3
	Condensed Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended September 30, 2013 and 2012	4
	Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2013 and 2012	5
	Notes to Unaudited Condensed Consolidated Financial Statements	6
ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	11
ITEM 3.	Quantitative and Qualitative Disclosures about Market Risk	22
ITEM 4.	Controls and Procedures	23
PART II	OTHER INFORMATION	23
ITEM 1.	Legal Proceedings	23
ITEM 1A.	Risk Factors	23
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	23
ITEM 3.	Defaults Upon Senior Securities	23
ITEM 4.	Mine Safety Disclosures	24
ITEM 5.	Other Information	24
ITEM 6.	Exhibits	25
	Signatures	26

 

CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS

 

This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995, as amended. We also may provide oral or written forward-looking statements in other materials we release to the public. The words “anticipates,” “believes,” “estimates,” “expects,” “plans,” “intends,” and similar expressions are intended to identify these forward-looking statements but are not the exclusive means of identifying them. These forward-looking statements reflect the current views of our management; however, various risks, uncertainties and contingencies, including the risks identified in Item 1A, “Risk Factors,” in Part I of our Annual Report on Form 10-K for the year ended December 31, 2012, and those set forth from time to time in our filings with the Securities and Exchange Commission, could cause our actual results, performance or achievements to differ materially from those expressed in, or implied by, these statements, including the success or failure of our efforts to implement our business strategy.

 

We assume no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by securities laws. In light of these risks, uncertainties and assumptions, the forward-looking events discussed in this Quarterly Report on Form 10-Q might not occur.

 

For further information regarding these and other factors, risks and uncertainties affecting us, we refer you to the risk factors set forth in Item 1A, “Risk Factors”, in Part I of our Annual Report on Form 10-K for the year ended December 31, 2012.

 

 

PART I

FINANCIAL INFORMATION

 

ITEM 1.

Financial Statements

 

Newpark Resources, Inc.
Condensed Consolidated Balance Sheets
(Unaudited) 

 

(In thousands, except share data)		September 30, 2013				December 31, 2012
ASSETS
Cash and cash equivalents		$	69,409			$	46,846
Receivables, net			316,276				323,439
Inventories			203,926				209,734
Deferred tax asset			9,972				11,596
Prepaid expenses and other current assets			11,889				12,441
Total current assets			611,472				604,056
Property, plant and equipment, net			279,298				253,990
Goodwill			89,360				87,388
Other intangible assets, net			30,771				41,018
Other assets			6,985				8,089
Total assets		$	1,017,886			$	994,541
LIABILITIES AND STOCKHOLDERS’ EQUITY
Short-term debt		$	12,242			$	2,599
Accounts payable			99,863				114,377
Accrued liabilities			50,603				42,620
Total current liabilities			162,708				159,596
Long-term debt, less current portion			219,795				256,832
Deferred tax liability			44,115				46,348
Other noncurrent liabilities			20,805				18,187
Total liabilities			447,423				480,963
Commitments and contingencies (Note 8)
Common stock, $0.01 par value, 200,000,000 shares authorized and 97,777,995 and 95,733,677 shares issued, respectively			978				957
Paid-in capital			501,319				484,962
Accumulated other comprehensive loss			(8,247	)			(734	)
Retained earnings			146,814				95,015
Treasury stock, at cost; 10,413,402 and 10,115,951 shares, respectively			(70,401	)			(66,622	)
Total stockholders’ equity			570,463				513,578
Total liabilities and stockholders' equity		$	1,017,886			$	994,541

 

See Accompanying Notes to Unaudited Condensed Consolidated Financial Statements

 

 

Newpark Resources, Inc.
Condensed Consolidated Statements of Operations
(Unaudited)

 

		Three Months Ended September 30,								Nine Months Ended September 30,
(In thousands, except per share data)		2013				2012				2013				2012
Revenues		$	285,708			$	259,599			$	844,848			$	767,691
Cost of revenues			230,206				210,276				685,856				626,712
Selling, general and administrative expenses			25,433				20,878				74,277				62,135
Other operating income, net			(232	)			(311	)			(872	)			(802	)
Operating income			30,301				28,756				85,587				79,646
Foreign currency exchange loss			975				185				1,082				416
Interest expense, net			2,728				2,416				8,050				7,337
Income from operations before income taxes			26,598				26,155				76,455				71,893
Provision for income taxes			7,838				7,413				24,656				23,054
Net income		$	18,760			$	18,742			$	51,799			$	48,839
Income per common share -basic:		$	0.22			$	0.22			$	0.61			$	0.55
Income per common share -diluted:		$	0.20			$	0.20			$	0.54			$	0.50

 

See Accompanying Notes to Unaudited Condensed Consolidated Financial Statements

 

 

Newpark Resources, Inc.
Condensed Consolidated Statements of Comprehensive Income
(Unaudited)

 

		Three Months Ended September 30,								Nine Months Ended September 30,
(In thousands)		2013				2012				2013				2012
Net income		$	18,760			$	18,742			$	51,799			$	48,839
Foreign currency translation adjustments			2,806				91				(7,513	)			(3,831	)
Comprehensive income		$	21,566			$	18,833			$	44,286			$	45,008

 

See Accompanying Notes to Unaudited Condensed Consolidated Financial Statements

 

 

Newpark Resources, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited) 

 

		Nine Months Ended September 30,
(In thousands)		2013				2012
Cash flows from operating activities:
Net income		$	51,799			$	48,839
Adjustments to reconcile net income to net cash provided by operations:
Depreciation and amortization			33,138				24,406
Stock-based compensation expense			6,954				5,027
Provision for deferred income taxes			(311	)			(4,654	)
Net provision for doubtful accounts			221				1,282
(Gain) loss on sale of assets			(437	)			512
Excess tax benefit from stock-based compensation			(2,020	)			-
Change in assets and liabilities:
Decrease in receivables			1,210				11,964
Decrease (increase) in inventories			2,964				(6,446	)
Decrease (increase) in other assets			828				(98	)
(Decrease) increase in accounts payable			(11,832	)			2,905
Increase (decrease) in accrued liabilities and other			13,175				(3,085	)
Net cash provided by operating activities			95,689				80,652
Cash flows from investing activities:
Capital expenditures			(52,550	)			(34,858	)
Proceeds from sale of property, plant and equipment			1,248				823
Net cash used in investing activities			(51,302	)			(34,035	)
Cash flows from financing activities:
Borrowings on lines of credit			215,994				222,868
Payments on lines of credit			(243,141	)			(213,221	)
Proceeds from employee stock plans			8,102				1,007
Post-closing payment for business acquisition			-				(11,892	)
Purchase of treasury stock			(4,227	)			(35,698	)
Excess tax benefit from stock-based compensation			2,020				-
Other financing activities			(25	)			(48	)
Net cash used in financing activities			(21,277	)			(36,984	)
Effect of exchange rate changes on cash			(547	)			577
Net increase in cash and cash equivalents			22,563				10,210
Cash and cash equivalents at beginning of year			46,846				25,247
Cash and cash equivalents at end of period		$	69,409			$	35,457
Cash paid for:
Income taxes (net of refunds)		$	21,637			$	17,370
Interest		$	5,047			$	4,665

 

 

 

 

 

See Accompanying Notes to Unaudited Condensed Consolidated Financial Statements

 

 

NEWPARK RESOURCES, INC.

 

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

Note 1 – Basis of Presentation and Significant Accounting Policies

 

The accompanying unaudited condensed consolidated financial statements of Newpark Resources, Inc. and our wholly-owned subsidiaries, which we refer to as “we,” “our” or “us,” have been prepared in accordance with Rule 10-01 of Regulation S-X for interim financial statements required to be filed with the Securities and Exchange Commission (“SEC”), and do not include all information and footnotes required by the accounting principles generally accepted in the United States (“U.S. GAAP”) for complete financial statements. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2012. Our fiscal year end is December 31, our third quarter represents the three month period ended September 30 and our first nine months represents the nine month period ended September 30. The results of operations for the third quarter and first nine months of 2013 are not necessarily indicative of the results to be expected for the entire year. Unless otherwise stated, all currency amounts are stated in U.S. dollars.

 

In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments necessary to present fairly our financial position as of September 30, 2013, the results of our operations for the third quarter and first nine months of 2013 and 2012, and our cash flows for the first nine months of 2013 and 2012. All adjustments are of a normal recurring nature. Our balance sheet at December 31, 2012 is derived from the audited consolidated financial statements at that date.

 

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. For further information, see Note 1 in our Annual Report on Form 10-K for the year ended December 31, 2012.

 

New Accounting Standards

 

In February 2013, the Financial Accounting Standards Board issued additional guidance on disclosure requirements for items reclassified out of accumulated other comprehensive income which was effective for us beginning in the first quarter of 2013. This new guidance requires entities to present (either on the face of the income statement or in the notes) the effects on the line items of the income statement for amounts reclassified out of accumulated other comprehensive income. During the third quarter and first nine months of 2013, we had no reclassifications out of accumulated other comprehensive income, the only changes relate to foreign currency translation adjustments.

 

 

 

Note 2 – Earnings per Share

 

The following table presents the reconciliation of the numerator and denominator for calculating earnings per share:

 

		Third Quarter								First Nine Months
(In thousands, except per share data)		2013				2012				2013				2012
Basic EPS:
Net income		$	18,760			$	18,742			$	51,799			$	48,839
Weighted average number of common shares outstanding			85,775				86,423				84,902				88,491
Basic income per common share		$	0.22			$	0.22			$	0.61			$	0.55
Diluted EPS:
Net income		$	18,760			$	18,742			$	51,799			$	48,839
Assumed conversions of Senior Notes			1,374				1,396				3,921				3,944
Adjusted net income		$	20,134			$	20,138			$	55,720			$	52,783
Weighted average number of common shares outstanding-basic			85,775				86,423				84,902				88,491
Add:   Dilutive effect of stock options and restricted stock awards			1,503				695				1,718				756
Dilutive effect of Senior Notes			15,682				15,682				15,682				15,682
Diluted weighted average number of common shares outstanding			102,960				102,800				102,302				104,929
Diluted income per common share		$	0.20			$	0.20			$	0.54			$	0.50
Stock options and restricted stock excluded from calculation of diluted earnings per share because anti-dilutive for the period			591				3,377				565				2,503

 

Weighted average dilutive stock options and restricted stock outstanding totaled approximately 4.9 million and 3.1 million shares for the third quarter of 2013 and 2012, respectively, and 5.2 million and 3.0 million for the first nine months of 2013 and 2012, respectively. The resulting net effect of stock options and restricted stock were used in calculating diluted earnings per share for the period.

 

Note 3 – Stock-Based Compensation

 

During the second quarter of 2013, the Compensation Committee of our Board of Directors approved equity-based compensation to executive officers and other key employees. These awards included a grant of 714,879 shares of time-vesting restricted stock and restricted stock units, which vest equally over a three-year period. Non-employee directors received shares of restricted stock totaling 67,365 shares, which will vest in full on the first anniversary of the grant date. The fair value on the date of grant for both of these awards was $11.43 per share.

 

Additionally, 497,658 stock options were granted to executive officers and other key employees at an exercise price of $11.43, which provides for equal vesting over a three-year period with a term of ten years. The estimated fair value of the stock options on the grant date using the Black-Scholes option-pricing model was $5.42. The assumptions used in the Black-Scholes model included a risk free interest rate of 1.02%, expected life of 5.22 years and expected volatility of 53.7%.

 

 

 

The Compensation Committee also approved performance-based awards during the second quarter of 2013 to executive officers. The performance-based restricted stock units will be settled in shares of common stock and will be based on the relative ranking of the Company’s total shareholder return (“TSR”) as compared to the TSR of the Company’s designated peer group for 2013. The performance period began May 3, 2013 and ends June 1, 2016, with the ending TSR price being equal to the average closing price of our shares over the 30-calendar days ending June 1, 2016. A total of 149,532 performance restricted stock units were granted with the payout of shares for each executive ranging from 0%-150% of target. The estimated fair value of each restricted stock unit at the date of grant using the Monte Carlo valuation model was $13.11. The valuation was done as of June 3, 2013, which included a risk free interest rate of 0.52%, the average closing price of our shares over the 30-calendar days ending June 3, 2013 of $11.33 and expected volatility of 53.58%.

 

Note 4 – Treasury Stock

 

In April 2013, our Board of Directors approved a share repurchase program that authorizes the Company to purchase up to $50.0 million of its outstanding shares of common stock. These purchases are funded with a combination of cash generated from operations and borrowings under the Company’s revolving credit facility, and the repurchase program has no specific term. The Company may repurchase shares in the open market or as otherwise determined by management, subject to market conditions, business opportunities and other factors. As part of the share repurchase program, the Company’s management has been authorized to establish trading plans under Rule 10b5-1 of the Securities Exchange Act of 1934. As of September 30, 2013, 189,536 shares were repurchased for an average price of approximately $11.69 per share, including commissions. All of the shares repurchased are held as treasury stock. We record treasury stock purchases under the cost method whereby the entire cost of the acquired stock is recorded as treasury stock.

 

Note 5 – Acquisition

 

In December 2012, we completed the acquisition of substantially all assets and operations of Alliance Drilling Fluids, LLC (“Alliance”), a provider of drilling fluids, proppant distribution, and related services headquartered in Midland, Texas. Total cash consideration at closing was approximately $53 million, which was funded through borrowings on our revolving credit facility. The purchase price is subject to further adjustments, based upon actual working capital conveyed. Additional consideration up to $4.3 million may be payable based on the profitability of the proppant distribution business over the two-year period following the acquisition.

 

The transaction has been recorded using the acquisition method of accounting and accordingly, assets acquired and liabilities assumed were recorded at their fair values as of the acquisition date. The excess of the total consideration, including projected additional consideration, was recorded as goodwill and includes the value of the assembled workforce. While the initial purchase price allocation has been completed, the allocation of the purchase price is subject to change for a period of one year following the acquisition. The following table summarizes the amounts recognized for assets acquired and liabilities assumed as of the December 31, 2012 acquisition date.

 

 

(In thousands)
Receivables, net		$	22,822
Inventories			5,779
Property, plant and equipment, net			4,932
Goodwill			13,775
Customer relationships			17,370
Tradename			2,020
Employment contracts			1,625
Deferred tax asset			203
Total assets acquired		$	68,526
Accounts payable		$	7,002
Accrued liabilities			4,149
Other noncurrent liabilities			4,300
Total liabilities assumed		$	15,451
Total cash conveyed at closing		$	53,075

 

 

The other non-current liabilities balance above includes $4.3 million of post-closing payments due to the seller, reflecting the expected contingent consideration described above.

 

Note 6 – Receivables and Inventories

 

Receivables - Receivables consist of the following:

 

 

(In thousands)		September 30, 2013				December 31, 2012
Gross trade receivables		$	298,009			$	307,276
Allowance for doubtful accounts			(4,101	)			(4,078	)
Net trade receivables			293,908				303,198
Other receivables			22,368				20,241
Total receivables, net		$	316,276			$	323,439

 

 

Inventories - Our inventories include $202.6 million and $208.6 million for our drilling fluids systems at September 30, 2013 and December 31, 2012, respectively. The remaining balance consists primarily of composite mat finished goods.

 

Note 7 – Financing Arrangements and Fair Value of Financial Instruments

 

Our financing arrangements include $172.5 million of unsecured convertible senior notes (“Senior Notes”) and a $125.0 million revolving credit facility which can be increased by $75.0 million for a maximum $200.0 million of capacity. At September 30, 2013, $47.0 million was outstanding under the revolving credit facility. The Senior Notes bear interest at a rate of 4.0% per year, payable semi-annually in arrears on April 1 and October 1 of each year, beginning April 1, 2011. Holders may convert the Senior Notes at their option at any time prior to the close of business on the business day immediately preceding the October 1, 2017 maturity date. The conversion rate is initially 90.8893 shares of our common stock per $1,000 principal amount of Senior Notes (equivalent to an initial conversion price of $11.00 per share of common stock), subject to adjustment in certain circumstances. Upon conversion, the Senior Notes will be settled in shares of our common stock. We may not redeem the Senior Notes prior to their maturity date.

 

 

 

Our financial instruments include cash and cash equivalents, receivables, payables and debt. We believe the carrying values of these instruments, with the exception of our Senior Notes, approximated their fair values at September 30, 2013 and December 31, 2012. The estimated fair value of our Senior Notes is $234.6 million at September 30, 2013 and $176.0 million at December 31, 2012, based on quoted market prices at these respective dates.

 

Note 8 – Commitments and Contingencies

 

In the ordinary course of conducting our business, we become involved in litigation and other claims from private party actions, as well as judicial and administrative proceedings involving governmental authorities at the federal, state and local levels. In the opinion of management, any liability in these matters should not have a material effect on our consolidated financial statements.

 

Note 9 – Segment Data

 

Summarized operating results for our reportable segments is shown in the following table (net of inter-segment transfers):

 

		Third Quarter								First Nine Months
(In thousands)		2013				2012				2013				2012
Revenues
Fluids Systems & Engineering		$	233,020			$	211,457			$	714,323			$	632,341
Mats & Integrated Services			35,112				35,067				81,108				95,671
Environmental Services			17,576				13,075				49,417				39,679
Total Revenues		$	285,708			$	259,599			$	844,848			$	767,691
Operating Income (loss)
Fluids Systems & Engineering		$	17,140			$	14,798			$	57,446			$	42,273
Mats & Integrated Services			15,345				15,992				34,166				43,406
Environmental Services			4,656				3,089				13,485				10,178
Corporate Office			(6,840	)			(5,123	)			(19,510	)			(16,211	)
Operating Income		$	30,301			$	28,756			$	85,587			$	79,646

 

 

ITEM 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

 

The following discussion of our financial condition, results of operations, liquidity and capital resources should be read together with our unaudited condensed consolidated financial statements and notes to unaudited condensed consolidated financial statements contained in this report as well as our Annual Report on Form 10-K for the year ended December 31, 2012. Our third quarter represents the three month period ended September 30, 2013, and our first nine months represents the nine month period ended September 30, 2013. Unless otherwise stated, all currency amounts are stated in U.S. dollars.

 

Overview

 

We are a diversified oil and gas industry supplier providing products and services primarily to the oil and gas exploration and production (“E&P”) industry. We operate our business through three reportable segments: Fluids Systems and Engineering, Mats and Integrated Services, and Environmental Services.

 

Our Fluids Systems and Engineering segment, which generated 85% of consolidated revenues in the first nine months of 2013, provides customized drilling fluids solutions to E&P customers globally, operating through four geographic regions: North America, Europe, the Middle East and Africa (“EMEA”), Latin America, and Asia Pacific.

 

In December 2012, we completed the acquisition of substantially all assets and operations of Alliance Drilling Fluids, LLC (“Alliance”), a provider of drilling fluids, proppant distribution, and related services headquartered in Midland, Texas. Total cash consideration at closing was approximately $53 million, which was funded through borrowings on our revolving credit facility. The purchase price is subject to further adjustments, based upon actual working capital conveyed. Additional consideration up to $4.3 million may be payable based on the profitability of the proppant distribution business over the two year period following the acquisition.

 

In the second quarter of 2013, we announced three international contract awards, including two in the deepwater market.  In Brazil, we were awarded a two-year contract from a subsidiary of Total S.A., to provide drilling fluids and related services for a series of wells planned in the Campos Basin.  In our EMEA region, we were awarded a contract by another customer to provide drilling fluids and related services for a series of wells to be drilled in the Black Sea.  In addition, we were awarded a five year contract by the Kuwait Oil company to provide drilling fluids and related services for land operations. Work under all three contracts is expected to begin in early 2014.

 

We are continuing the roll-out of Evolution^®, our high performance water-based drilling fluid system launched in 2010, which we believe provides superior performance and environmental benefits to our customers, as compared to traditional fluids systems used in the industry. After completing the roll-out of the system into most major North American drilling basins in 2011 and 2012, we are seeking to further penetrate markets in North America, while expanding into key international markets. The system was first used in our EMEA region during the fourth quarter of 2012 and in the Asia Pacific region during the third quarter of 2013. Revenues from wells using the Evolution system were approximately $86 million in the first nine months of 2013, compared to $79 million in the first nine months of 2012.

 

During 2013, we continued to experience declines in our completion services and equipment rental business, a unit within our Fluids Systems and Engineering Segment. Through the first nine months of 2013, this business unit generated $13.4 million of revenues and a $1.7 million operating loss. As a result of these continued declines, we have decided to exit this business.

 

Our Mats and Integrated Services segment, which generated 10% of consolidated revenues through the third quarter 2013, provides composite mat rentals, well site construction and related site services to oil and gas customers and mat rentals to the petrochemicals industry in the U.S. and the utility industry in the U.K. We also sell composite mats to E&P customers outside of the U.S., and to domestic customers outside of the oil and gas industry.

 

During the later part of 2012, we began development of a spill containment system using our manufactured composite mat products, which provides our customers with a sealed work surface and enhanced environmental protection on the well site. Field testing of this system began in the fourth quarter of 2012 and we continue to make system refinements based upon the results of field testing. In order to meet ongoing demand from our rental business including anticipated demand from the forthcoming launch of the new spill containment system, we allocated the majority of our composite mat production in the first nine months of 2013 toward the expansion of our rental fleet, leaving fewer mats available for sale to customers. Mat sales through the first nine months of 2013 were $29.5 million, a 40% decline from the first nine months of 2012.

 

 

 

In October 2013, we announced plans to expand our mat manufacturing facility, located in Carencro, Louisiana. The $40 million expansion project is expected to be completed in early 2015. Upon completion, the project will significantly increase our production capacity and support expansion into new markets, both domestically and internationally. The new facility will also include a research and development center, intended to drive continued new product development efforts.

 

In May 2013, our Board of Directors approved commencement of a process to sell our Environmental Services business. While sales efforts are ongoing, there can be no assurances given that a sale will ultimately be completed.

 

Rig count data is the most widely accepted indicator of drilling activity. Average North American rig count data for the third quarter and first nine months of 2013, as compared to the third and first nine months of 2012 is as follows:

 

		Third Quarter								2013 vs 2012
		2013				2012				Count				%
U.S. Rig Count			1,770				1,906				(136	)			(7%)
Canadian Rig Count			350				325				25				(8%)
North America			2,120				2,231				(111	)			(5%)

 

 

		First Nine Months								2013 vs 2012
		2013				2012				Count				%
U.S. Rig Count			1,763				1,955				(192	)			(10%)
Canadian Rig Count			344				362				(18	)			(5%)
North America			2,107				2,317				(210	)			(9%)

 

---

 

Source: Baker Hughes Incorporated

 

 

Third Quarter of 2013 Compared to Third Quarter of 2012

 

Consolidated Results of Operations

 

Summarized results of operations for the third quarter of 2013 compared to the third quarter of 2012 are as follows:

 

		Third Quarter								2013 vs 2012
(In thousands)		2013				2012				$				%
Revenues		$	285,708			$	259,599			$	26,109				10%
Cost of revenues			230,206				210,276				19,930				9%
Selling, general and administrative expenses			25,433				20,878				4,555				22%
Other operating income, net			(232	)			(311	)			79				(25%)
Operating income			30,301				28,756				1,545				5%
Foreign currency exchange loss			975				185				790				427%
Interest expense, net			2,728				2,416				312				13%
Income from operations before income taxes			26,598				26,155				443				2%
Provision for income taxes			7,838				7,413				425				6%
Net income		$	18,760			$	18,742			$	18				0%

 

 

Revenues

 

Revenues increased 10% to $285.7 million in the third quarter of 2013, compared to $259.6 million in the third quarter of 2012. This $26.1 million increase includes an $18.5 million (9%) increase in revenues in North America, largely driven by the December 2012 acquisition of Alliance as described above. Revenues from our international operations increased by $7.6 million (12%), including gains in EMEA and Brazil, partially offset by a decline in Asia Pacific. Additional information regarding the change in revenues is provided within the operating segment results below.

 

Cost of revenues

 

Cost of revenues increased 9% to $230.2 million in the third quarter of 2013, compared to $210.3 million in the third quarter of 2012. The increase is primarily driven by the increase in revenues. Additional information regarding the change in cost of revenues is provided within the operating segment results below.

 

Selling, general and administrative expenses

 

Selling, general and administrative expenses increased $4.6 million to $25.4 million in the third quarter of 2013 from $20.9 million in the third quarter of 2012. The increase is primarily attributable to increases in personnel and administrative costs related to company growth as well as costs associated with strategic planning projects.

 

Foreign currency exchange

 

Foreign currency exchange was a $1.0 million loss in the third quarter of 2013, compared to a $0.2 million loss in the third quarter of 2012, and primarily reflects the impact of currency translations on assets and liabilities held in our international operations that are denominated in currencies other than functional currencies.

 

 

 

Interest expense, net

 

Interest expense totaled $2.7 million for the third quarter of 2013 compared to $2.4 million for the third quarter of 2012. The $0.3 million increase primarily reflects the impact of increased borrowings under our revolving credit facility following the Alliance acquisition described above.

 

Provision for income taxes

 

The provision for income taxes for the third quarter of 2013 was $7.8 million, reflecting an effective tax rate of 29.5%, compared to $7.4 million in the third quarter of 2012, reflecting an effective tax rate of 28.3%. The provision for income taxes in the third quarter of 2013 and 2012, included a tax benefit of $1.2 million and $1.0 million, respectively, associated with increased deductions and other benefits identified with the completion of U.S. tax filings. The full year 2013 tax rate is anticipated to be approximately 33%.

 

Operating Segment Results

 

Summarized financial information for our reportable segments is shown in the following table (net of inter-segment transfers):

 

		Third Quarter								2013 vs 2012
(In thousands)		2013				2012				$				%
Revenues
Fluids systems and engineering		$	233,020			$	211,457			$	21,563				10%
Mats and integrated services			35,112				35,067				45				0%
Environmental services			17,576				13,075				4,501				34%
Total revenues		$	285,708			$	259,599			$	26,109				10%
Operating income (loss)
Fluids systems and engineering		$	17,140			$	14,798			$	2,342
Mats and integrated services			15,345				15,992				(647	)
Environmental services			4,656				3,089				1,567
Corporate office			(6,840	)			(5,123	)			(1,717	)
Operating income		$	30,301			$	28,756			$	1,545
Segment operating margin
Fluids systems and engineering			7.4	%			7.0	%
Mats and integrated services			43.7	%			45.6	%
Environmental services			26.5	%			23.6	%

 

 

 

Fluids Systems and Engineering

 

Revenues

 

Total revenues for this segment consisted of the following:

 

		Third Quarter								2013 vs 2012
(In thousands)		2013				2012				$				%
United States		$	153,560			$	140,441			$	13,119				9%
Canada			10,683				10,218				465				5%
Total North America			164,243				150,659				13,584				9%
EMEA			34,634				27,652				6,982				25%
Latin America			26,919				21,850				5,069				23%
Asia Pacific			7,224				11,296				(4,072	)			(36%)
Total		$	233,020			$	211,457			$	21,563				10%

 

 

North American revenues increased 9% to $164.2 million in the third quarter of 2013, compared to $150.7 million in the third quarter of 2012. While the North American rig count declined 5% over this period, the increase is largely attributable to market share gains in South and West Texas, benefitting from our December 2012 acquisition of Alliance.

 

Internationally, revenues were up 13% to $68.8 million in the third quarter of 2013, as compared to $60.8 million in third quarter 2012. This increase is primarily attributable to increased activity in Eastern Europe, as well as a $5.1 million increase in Brazil, primarily due to increasing activity with Petrobras. Revenues in Asia Pacific declined $4.1 million from the prior year, as the third quarter of 2013 was negatively impacted by a temporary shutdown by our largest customer in the region.

 

Operating Income

 

Operating income increased $2.3 million in the third quarter of 2013, as compared to the third quarter of 2012, primarily due to improvements in our North American operations. Profitability in the prior year quarter was negatively impacted by the significant regional shift in U.S. customer drilling activity, moving from dry gas regions to oil and liquid-rich regions.  During this period of regional transition, operating expenses were elevated due to operating cost inefficiencies as we re-deployed personnel and assets among regions and modified our regional business unit infrastructures to meet the changing activity levels.  Following the period of transition, we executed a series of cost reduction and other profit improvement initiatives, which have contributed to the operating income improvement in the third quarter of 2013. The improvements were partially offset by a $1.9 million increase in depreciation and amortization expense, following the acquisition of Alliance.

 

Our international operating income decreased $0.4 million in the third quarter of 2013 compared to the third quarter of 2012, primarily driven by decreases in our Asia Pacific region.

 

 

 

Mats and Integrated Services

 

Revenues

 

Total revenues for this segment consisted of the following:

 

		Third Quarter								2013 vs 2012
(In thousands)		2013				2012				$				%
Mat rental and services		$	18,858			$	14,543			$	4,315				30%
Mat sales			16,254				20,524				(4,270	)			(21%)
Total		$	35,112			$	35,067			$	45				0%

 

 

Mat rental and services revenues increased $4.3 million compared to the third quarter of 2012, primarily due to increasing demand for our composite mat products, particularly in the Northeast U.S. region. Mat sales decreased by $4.3 million from the prior year period as quarterly revenues from mat sales typically fluctuate based on timing of mat orders from customers, as well as management's allocation of plant capacity. The third quarter of 2012 also benefitted from a large sale for an infrastructure project in the utility industry.

 

Operating Income

 

Segment operating income decreased by $0.7 million, as compared to the third quarter of 2012. The decrease in operating income is primarily attributable to a lower margin on mat sales in the third quarter of 2013, as compared to the third quarter of 2012.

 

The levels of mats sales in a given quarter are determined by several factors, including customer demand, as well as our allocation of mat production between sales and deployment into our rental fleet. The allocation of our production between additions to our rental fleet and sales in any given quarter is driven by a number of factors including commitments to meeting customer schedules, ability of our customers to take delivery of mats, timing of large mat rental projects/events, and plant capacity/efficiencies.

 

Environmental Services

 

Revenues

 

Total revenues for this segment consisted of the following:

 

		Third Quarter								2013 vs 2012
(In thousands)		2013				2012				$				%
E&P waste		$	14,430			$	10,674			$	3,756				35%
NORM and industrial waste			3,146				2,401				745				31%
Total		$	17,576			$	13,075			$	4,501				34%

 

 

Environmental services revenues increased 34% to $17.6 million in the third quarter of 2013, compared to the third quarter of 2012, primarily due to increases in offshore activity in the U.S. Gulf Coast.

 

Operating Income

 

Operating income for this segment increased by $1.6 million in the third quarter of 2013, compared to the third quarter of 2012, reflecting an incremental margin of 36%. The increase in operating income is primarily attributable to the $4.5 million increase in revenues, offset by higher operating expenses, including a $1.8 million increase in transportation costs resulting from the higher waste volume and $0.5 million increase in personnel expense.

 

 

 

Corporate Office

 

Corporate office expenses increased $1.7 million to $6.8 million in the third quarter of 2013, compared to $5.1 million in the third quarter of 2012.  The increase is primarily attributable to increases in personnel and administrative costs related to company growth, including a $1.0 million increase in personnel expense.

 

First Nine Months of 2013 Compared to First Nine Months of 2012

 

Consolidated Results of Operations

 

Summarized results of operations for the first nine months of 2013 compared to the first nine months of 2012 are as follows:

 

		First Nine Months								2013 vs 2012
(In thousands)		2013				2012				$				%
Revenues		$	844,848			$	767,691			$	77,157				10%
Cost of revenues			685,856				626,712				59,144				9%
Selling, general and administrative expenses			74,277				62,135				12,142				20%
Other operating income, net			(872	)			(802	)			(70	)			9%
Operating income			85,587				79,646				5,941				7%
Foreign currency exchange loss			1,082				416				666				160%
Interest expense, net			8,050				7,337				713				10%
Income from operations before income taxes			76,455				71,893				4,562				6%
Provision for income taxes			24,656				23,054				1,602				7%
Net income		$	51,799			$	48,839			$	2,960				6%

 

 

Revenues

 

Revenues increased 10% to $844.8 million in the first nine months of 2013, compared to $767.7 million in the first nine months of 2012. This $77.2 million increase includes a $36.9 million increase in revenues in North America, largely driven by the December 2012 acquisition of Alliance as described above. Revenues from our international operations increased by $40.2 million (23%), including gains in EMEA and Brazil. Additional information regarding the change in revenues is provided within the operating segment results below.

 

Cost of revenues

 

Cost of revenues increased 9% to $685.9 million in the first nine months of 2013, compared to $626.7 million in the first nine months of 2012. The increase is primarily driven by the increase in revenues. Additional information regarding the change in cost of revenues is provided within the operating segment results below.

 

 

 

Selling, general and administrative expenses

 

Selling, general and administrative expenses increased $12.1 million to $74.3 million in the first nine months of 2013 from $62.1 million in the first nine months of 2012. The increase is primarily attributable to increases in personnel and administrative costs related to company growth as well as costs associated with strategic planning projects.

 

Foreign currency exchange

 

Foreign currency exchange was a $1.1 million loss in the first nine months of 2013, compared to a $0.4 million loss in the first nine months of 2012, and primarily reflects the impact of currency translations on assets and liabilities held in our international operations that are denominated in currencies other than functional currencies.

 

Interest expense, net

 

Interest expense totaled $8.1 million for the first nine months of 2013 compared to $7.3 million for the first nine months of 2012. The $0.7 million increase is primarily due to the impact of increased borrowings under our revolving credit facility following the Alliance acquisition described above.

 

Provision for income taxes

 

The provision for income taxes for the first nine months of 2013 was $24.7 million, reflecting an effective tax rate of 32.2%, compared to $23.1 million in the first nine months of 2012, reflecting an effective tax rate of 32.1%.

 

Operating Segment Results

 

Summarized financial information for our reportable segments is shown in the following table (net of inter-segment transfers):

 

		First Nine Months								2013 vs 2012
(In thousands)		2013				2012				$				%
Revenues
Fluids systems and engineering		$	714,323			$	632,341			$	81,982				13%
Mats and integrated services			81,108				95,671				(14,563	)			(15%)
Environmental services			49,417				39,679				9,738				25%
Total revenues		$	844,848			$	767,691			$	77,157				10%
Operating (loss) income
Fluids systems and engineering		$	57,446			$	42,273				15,173
Mats and integrated services			34,166				43,406				(9,240	)
Environmental services			13,485				10,178				3,307
Corporate office			(19,510	)			(16,211	)			(3,299	)
Operating income		$	85,587			$	79,646			$	5,941
Segment operating margin
Fluids systems and engineering			8.0	%			6.7	%
Mats and integrated services			42.1	%			45.4	%
Environmental services			27.3	%			25.7	%

 

 

 

 

Fluids Systems and Engineering

 

Revenues

 

Total revenues for this segment consisted of the following:

 

		First Nine Months								2013 vs 2012
(In thousands)		2013				2012				$				%
United States		$	470,278			$	425,280			$	44,998				11%
Canada			33,120				36,168				(3,048	)			(8%)
Total North America			503,398				461,448				41,950				9%
EMEA			108,194				82,955				25,239				30%
Latin America			74,372				58,606				15,766				27%
Asia Pacific			28,359				29,332				(973	)			(3%)
Total		$	714,323			$	632,341			$	81,982				13%

 

 

North American revenues increased 9% to $503.4 million in the first nine months of 2013, compared to $461.4 million in the first nine months of 2012. While the North American rig count declined 9% over this period, the increase is largely attributable to market share gains in West Texas, benefitting from our December 2012 acquisition of Alliance.

 

Internationally, revenues were up 23% to $210.9 million in the first nine months of 2013, as compared to $170.9 million in first nine months of 2012. This increase is primarily attributable to continued market expansion in our EMEA region, along with increased activity with Petrobras in Brazil.

 

Operating Income

 

Operating income increased $15.2 million in the first nine months of 2013, as compared to the first nine months of 2012, primarily due to improvements in our North American operations. Profitability in the prior year was negatively impacted by several factors, including declines in our completion services and equipment rental business, along with the significant regional shift in U.S. customer drilling activity, moving from dry gas regions to oil and liquid-rich regions.  During this period of regional transition, operating expenses were elevated due to operating cost inefficiencies as we re-deployed personnel and assets among regions and modified our regional business unit infrastructures to meet the changing activity levels.  Following the period of transition, we have executed a series of cost reduction and other profit improvement initiatives, which have contributed to the operating income improvement in the first nine months of 2013. In addition, the first nine months of 2013 operating income benefitted from the $82.0 million increase in revenues, including revenues from the Alliance acquisition described above.

 

 

 

Mats and Integrated Services

 

Revenues

 

Total revenues for this segment consisted of the following:

 

 

		First Nine Months								2013 vs 2012
(In thousands)		2013				2012				$				%
Mat rental and services		$	51,614			$	46,433			$	5,181				11%
Mat sales			29,494				49,238				(19,744	)			(40%)
Total		$	81,108			$	95,671			$	(14,563	)			(15%)

 

 

Mat rental and services revenues increased $5.2 million as compared to the first nine months of 2012, primarily due to increasing demand for our composite mat products, particularly in the Northeast U.S. region. Revenues from mat sales declined by $19.7 million from the prior year period as we allocated the majority of our composite mat production toward the expansion of our rental fleet and the launch of our new spill containment system, as described above.

 

Operating Income

 

Segment operating income decreased by $9.2 million on the $14.6 million decrease in revenues. The decrease in operating income is primarily attributable to the decrease in mat sales in the first nine months of 2013, partially offset by higher income from rental activities.

 

Environmental Services

 

Revenues

 

Total revenues for this segment consisted of the following:

 

		First Nine Months								2013 vs 2012
(In thousands)		2013				2012				$				%
E&P waste		$	39,886			$	32,426			$	7,460				23%
NORM and industrial waste			9,531				7,253				2,278				31%
Total		$	49,417			$	39,679			$	9,738				25%

 

 

Environmental services revenues increased 25% to $49.4 million in the first nine months of 2013, compared to $39.7 million in the first nine months of 2012, primarily due to increases in offshore activity in the U.S. Gulf Coast.

 

Operating Income

 

Operating income for this segment increased $3.3 million in the first nine months of 2013, compared to the first nine months of 2012, reflecting an incremental margin of 34%. The increase in operating income is primarily attributable to the $9.7 million increase in revenues, offset by higher operating expenses, including a $3.2 million increase in transportation costs resulting from the higher waste volume and a $1.3 million increase in personnel expenses.

 

 

 

Corporate Office

 

Corporate office expenses increased $3.3 million to $19.5 million in the first nine months of 2013, compared to $16.2 million in the first nine months of 2012.  The increase is primarily attributable to increases in personnel and administrative costs related to company growth.

 

Liquidity and Capital Resources

 

Net cash provided by operating activities during the first nine months of 2013 totaled $95.7 million. Net income adjusted for non-cash items provided $89.3 million of cash during the period, while changes in operating assets and liabilities provided $6.3 million of cash.

 

Net cash used in investing activities during the first nine months of 2013 was $51.3 million, primarily consisting of expenditures associated with the construction of a new technology center in our fluids systems and engineering segment and expansion of our mat rental fleet in our mats and integrated services segment.

 

We anticipate that our working capital requirements for our operations will decline in the near term due to continued efforts to reduce accounts receivable and inventory from the levels at September 30, 2013. We expect total 2013 capital expenditures to range between $65 million to $75 million. As of September 30, 2013, our $69.4 million of cash on-hand resides primarily within our foreign subsidiaries which we intend to leave permanently reinvested abroad. We expect our subsidiary cash on-hand, along with cash generated by operations and availability under our existing credit agreement to be adequate to fund our anticipated capital needs during the next 12 months.

 

Our capitalization is as follows:

 

(In thousands)		September 30, 2013				December 31, 2012
Senior Notes		$	172,500			$	172,500
Revolving credit facility			47,000				84,000
Other			12,537				2,931
Total			232,037				259,431
Stockholder's equity			570,463				513,578
Total capitalization		$	802,500			$	773,009
Total debt to capitalization			28.9	%			33.6	%

 

Our financing arrangements include $172.5 million of Senior Notes and a $125.0 million revolving credit facility. The Senior Notes bear interest at a rate of 4.0% per year, payable semi-annually in arrears on April 1 and October 1 of each year, beginning April 1, 2011. Holders may convert the Senior Notes at their option at any time prior to the close of business on the business day immediately preceding the October 1, 2017 maturity date. The conversion rate is initially 90.8893 shares of our common stock per $1,000 principal amount of Senior Notes (equivalent to an initial conversion price of $11.00 per share of common stock), subject to adjustment in certain circumstances. Upon conversion, the Senior Notes will be settled in shares of our common stock. We may not redeem the Senior Notes prior to their maturity date.

 

Our revolving credit facility (the "Credit Agreement") provides for a $125.0 million revolving loan facility available for borrowings and letters of credit and expires in November 2016. The Credit Agreement can be increased by $75.0 million for a maximum $200.0 million of capacity. Under the terms of the Credit Agreement, we can elect to borrow at an interest rate either based on LIBOR plus a margin based on our consolidated leverage ratio, ranging from 175 to 300 basis points, or at an interest rate based on the greatest of: (a) prime rate, (b) the federal funds rate in effect plus 50 basis points, or (c) the Eurodollar rate for a Eurodollar Loan with a one-month interest period plus 100 basis points, in each case plus a margin ranging from 75 to 200 basis points. The applicable margin on LIBOR borrowings on September 30, 2013 was 225 basis points. In addition, we are required to pay a commitment fee on the unused portion of the Credit Agreement of 37.5 basis points. The Credit Agreement contains customary financial and operating covenants, including a consolidated leverage ratio, a senior secured leverage ratio and an interest coverage ratio. We were in compliance with these covenants as of September 30, 2013.

 

 

 

At September 30, 2013, $47.0 million was outstanding under the Credit Agreement, and $23.0 million in letters of credit were issued and outstanding under the Credit Agreement, leaving $55.0 million of availability at September 30, 2013. Additionally, our foreign operations had $12.5 million outstanding under lines of credit and other borrowings, as well as $0.4 million outstanding in letters of credit.

 

The Credit Agreement is a senior secured obligation, secured by first liens on all of our U.S. tangible and intangible assets, including our accounts receivable and inventory. Additionally, a portion of the capital stock of our non-U.S. subsidiaries has also been pledged as collateral.

 

Critical Accounting Estimates

 

Our consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America, which requires us to make assumptions, estimates and judgments that affect the amounts reported. We periodically evaluate our estimates and judgments related to uncollectible accounts and notes receivable, customer returns, reserves for obsolete and slow moving inventory, impairments of long-lived assets, including goodwill and other intangibles and our valuation allowance for deferred tax assets. Our estimates are based on historical experience and on our future expectations that we believe to be reasonable. The combination of these factors forms the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from our current estimates and those differences may be material.

 

For additional discussion of our critical accounting estimates and policies, see “Management's Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual Report on Form 10-K for the year ended December 31, 2012. Our critical accounting policies have not changed materially since December 31, 2012.

 

ITEM 3.

Quantitative and Qualitative Disclosures about Market Risk

 

We are exposed to market risk from changes in interest rates and changes in foreign currency rates. A discussion of our primary market risk exposure in financial instruments is presented below.

 

Interest Rate Risk

 

At September 30, 2013, we had total debt outstanding of $232.0 million, including $172.5 million of Senior Notes, bearing interest at a fixed rate of 4.0%. Variable rate debt totaled $59.5 million which included $47.0 million outstanding under our revolving credit facility and $12.5 million in our foreign operations under lines of credit and other borrowings. At the September 30, 2013 balance, a 200 basis point increase in market interest rates during 2013 would cause our annual interest expense to increase approximately $0.8 million resulting in a $0.01 per diluted share reduction in annual net earnings.

 

Foreign Currency

 

Our principal foreign operations are conducted in certain areas of EMEA, Latin America, Asia Pacific, Canada and UK. We have foreign currency exchange risks associated with these operations, which are conducted principally in the foreign currency of the jurisdictions in which we operate which include European Euros, Australian dollars, Canadian dollars and Brazilian Reais. Historically, we have not used off-balance sheet financial hedging instruments to manage foreign currency risks when we enter into a transaction denominated in a currency other than our local currencies because the dollar amount of these transactions has not warranted our using hedging instruments.

 

 

 

ITEM 4.

Controls and Procedures

 

Evaluation of disclosure controls and procedures

 

Based on their evaluation of our disclosure controls and procedures as of the end of the period covered by this report, our Chief Executive Officer and Chief Financial Officer have concluded that the disclosure controls and procedures were effective as of September 30, 2013, the end of the period covered by this quarterly report.

 

Changes in internal control over financial reporting

 

There has been no change in internal control over financial reporting during the quarter ended September 30, 2013 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

 

PART II

OTHER INFORMATION

 

ITEM 1.

Legal Proceedings

 

The information set forth in the legal proceedings section of “Note 8, Commitments and Contingencies,” to our condensed consolidated financial statements included in this Quarterly Report on Form 10-Q is incorporated by reference into this Item 1.

 

ITEM 1A.

Risk Factors

 

There have been no material changes during the period ended September 30, 2013 in our “Risk Factors” as discussed in Item 1A to our Annual Report on Form 10-K for the year ended December 31, 2012.

 

ITEM 2.

Unregistered Sales of Equity Securities and Use of Proceeds

 

(a)

Not applicable

 

(b)

Not applicable

 

(c)

The following table details our repurchases of shares of our common stock, for the three months ended September 30, 2013:

 

Period				Total Number of Shares Purchased				Average Price per Share				Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs			Maximum Approximate Dollar Value of Shares that May Yet be Purchased Under Plans or Programs
July 1	-	31, 2013			-			$	-				-		$50.0 million
August 1	-	31, 2013			-				-				-		$50.0 million
September 1	-	30, 2013			189,536				11.69				189,536		$47.8 million
Total					189,536			$	11.69				189,536

 

ITEM 3.

Defaults Upon Senior Securities

 

Not applicable.

 

 

 

ITEM 4.

Mine Safety Disclosures

 

The information concerning mine safety violations and other regulatory matters required by section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 104 of Regulation S-K is included in Exhibit 95.1 of this Quarterly Report on Form 10-Q, which is incorporated by reference.

 

ITEM 5.

Other Information

 

None

 

 

ITEM 6.

Exhibits

 

*10.1

Amendment No. 1 Newpark Resources, Inc. 2008 Employee Stock Purchase Plan.

 

*31.1

Certification of Paul L. Howes pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

 

*31.2

Certification of Gregg S. Piontek pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

 

*32.1

Certification of Paul L. Howes pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

 

*32.2

Certification of Gregg S. Piontek pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

 

*95.1

Reporting requirements under the Mine Safety and Health Administration.

 

*101.INS

XBRL Instance Document

 

*101.SCH

XBRL Schema Document

 

*101.CAL

XBRL Calculation Linkbase Document

 

*101.LAB

XBRL Label Linkbase Document

 

*101.PRE

XBRL Presentation Linkbase Document

 

*101.DEF

XBRL Definition Linkbase Document

 

 

---

*  Filed herewith.

 

 

NEWPARK RESOURCES, INC.

 

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.

 

 

 

Date: October 25, 2013

 

 

	NEWPARK RESOURCES, INC.
	By:	/s/ Paul L. Howes
		Paul L. Howes, President and
		Chief Executive Officer
		(Principal Executive Officer)
	By:	/s/ Gregg S. Piontek
		Gregg S. Piontek, Vice President and
		Chief Financial Officer
		(Principal Financial and Accounting Officer)

 

 

EXHIBIT INDEX

 

*10.1

Amendment No. 1 Newpark Resources, Inc. 2008 Employee Stock Purchase Plan.

 

*31.1

Certification of Paul L. Howes pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

 

*31.2

Certification of Gregg S. Piontek pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

 

*32.1

Certification of Paul L. Howes pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

 

*32.2

Certification of Gregg S. Piontek pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

 

*95.1

Reporting requirements under the Mine Safety and Health Administration.

 

*101.INS

XBRL Instance Document

 

*101.SCH

XBRL Schema Document

 

*101.CAL

XBRL Calculation Linkbase Document

 

*101.LAB

XBRL Label Linkbase Document

 

*101.PRE

XBRL Presentation Linkbase Document

 

*101.DEF

XBRL Definition Linkbase Document

 

 

---

*  Filed herewith.

 

 

27