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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): JUNE 26, 2006
NEWPARK RESOURCES, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 1-2960 72-1123385
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
3850 NORTH CAUSEWAY, SUITE 1770
METAIRIE, LOUISIANA 70002
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (504) 838-8222
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(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities
Act (17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange
Act (17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13a-4(c))
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ITEM 2.06 MATERIAL IMPAIRMENTS.
SEE THE DISCUSSION UNDER ITEM 4.02 BELOW.
ITEM 4.02 NON-RELIANCE ON PREVIOUSLY ISSUED FINANCIAL STATEMENTS OR A RELATED
AUDIT REPORT OR COMPLETED INTERIM REVIEW.
As disclosed in the Current Report on Form 8-K filed by Newpark Resources,
Inc. with the Securities and Exchange Commission on April 17, 2006, the Audit
Committee of the Board of Directors commissioned an internal investigation, led
by independent counsel, regarding potential irregularities involving the
processing and payment of invoices by Soloco Texas, LP, ("Soloco") one of
Newpark's smaller subsidiaries, and other transactions. Based on evidence
obtained during the course of the investigation, the Audit Committee has
determined that certain transactions between Soloco and a supplier with which
Soloco had a significant commercial relationship were not properly accounted
for, and that certain payments of invoices by Soloco to such supplier were
improperly paid. In addition, the Audit Committee concluded that certain
intangible assets that had been recorded in connection with a series of license
arrangements and certain other transactions that had been entered into between
Soloco and the same supplier during the 1990s and through 2002 had either become
impaired or had not received proper accounting treatment at the time the
intangibles had been recorded.
After analyzing the pertinent quantitative and qualitative factors
surrounding these transactions, on June 26, 2006, the Audit Committee of the
Board of Directors of Newpark Resources, Inc., in consultation with and upon the
recommendation of Newpark's management, and after consultation with the
Company's independent registered public accounting firm, concluded that its
previously issued audited financial statements for the fiscal years ended
December 31, 2001 through 2005, and its interim unaudited financial statements
for the fiscal quarters within 2004 and 2005, should be restated. Accordingly,
these financial statements and the independent registered public accounting
firm's reports related to the financial statements contained in Newpark's prior
filings with the Securities and Exchange Commission should no longer be relied
upon. Newpark will amend its Annual Report on Form 10-K for the year ended
December 31, 2005 and its quarterly reports on Form 10-Q for the periods within
that year to make the necessary adjustments to its financial statements.
As disclosed in Newpark's Current Report on Form 8-K filed with the
Securities and Exchange Commission on May 9, 2006, Newpark had expected the
results of the investigation to conclude that there would be charges related to
asset impairments and other adjustments not exceeding $10 million on a pretax
basis, subject to possible recovery from third parties. Excluding the effects of
improper granting of stock options on previously issued financial statements
noted below under the caption Item 8.01 Other Events, which remains the subject
of an investigation not yet concluded, the Audit Committee presently expects the
total impact of the restatement of the financial statements for the periods
referenced above to not be in excess of the original $10 million estimate, with
a substantial portion of the charges, all of which are non-cash charges, being
attributed to the fiscal years ended December 31, 2002 and 2003, and earlier
periods.
While the initial investigation related to matters at Soloco is now
complete, and the investigation of improper option granting practices noted
below is nearing completion, Newpark cannot predict with certainty when it will
be able to file its amended reports or its Quarterly Report on Form 10-Q for the
quarter ended March 31, 2006. However, Newpark will make the necessary filings
as soon as practical.
2
ITEM 8.01 OTHER EVENTS.
During the course of the internal investigation, the Audit Committee also
requested a review of the Company's past practices regarding the awarding of
stock options, which was deemed an appropriate line of inquiry of the originally
commissioned investigation given the recent focus by the Securities and Exchange
Commission and others on stock option grant practices by publicly traded
companies. This review is ongoing, but the preliminary findings of the
investigation are that certain stock options granted prior to June 2003 were
dated on a date other than the date their issuance was approved, and the
exercise price of such options was determined by reference to sales prices of
the Company's common stock other than the fair market vale of the stock as of
the date of grant, in contravention of the Company's stock option plan. For
periods thereafter, all stock options granted by the Company appear to have
conformed to the requirements of the plan.
While the investigation of the improper option granting practices is not
yet complete and the related financial statement impact has not been fully
evaluated, preliminary estimates indicate that the reduction in pretax income
for the fiscal years 2003 through 2005 is not expected to exceed $2 million in
the aggregate, depending on final determination of the actual date of grant. The
reduction in pre-tax income for the referenced periods, however, is not expected
to reduce total stockholders' equity.
The Audit Committee and management have discussed the matters disclosed
under Items 2.06, 4.02 and 8.01 with Newpark's independent registered public
accounting firm.
ITEM 5.02 DEPARTURE OF DIRECTORS OR PRINCIPAL OFFICERS; ELECTION OF DIRECTORS;
APPOINTMENT OF PRINCIPAL OFFICERS.
The Company's chief executive officer, with approval of the Board of
Directors, decided to terminate the employment of Mr. James Cole, the Company's
former chief executive officer and current chairman of Newpark Environmental
Water Solutions and Mr. Matt Hardey, the Company's chief financial officer. Mr.
Cole and Mr. Hardey had previously been placed on administrative leave by the
Board of Directors at the time of the commencement of the previously announced
internal investigation commissioned by the Audit Committee. In the case of
Messrs. Cole and Hardey, the Board found, based on the findings of the internal
investigation, that cause existed for their termination given their
responsibility for many of the actions uncovered by the investigation that have
led to the Company's determination that a restatement of prior period financial
statements is required. Mr. Cole previously elected voluntarily not to stand for
re-election as a member of Newpark's board of directors at the next annual
meeting of stockholders.
A copy of the press release regarding the matters disclosed herein is
attached to this Form 8-K as Exhibit 99.1 and is incorporated herein by
reference.
3
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS.
(d) Exhibits.
99.1 Press release issued by Newpark Resources, Inc. on June 29, 2006.
4
SIGNATURE
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 hereunto duly authorized.
NEWPARK RESOURCES, INC.
Dated: June 29, 2006 By: /s/ Eric M. Wingerter
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Eric M. Wingerter,
Vice President, Corporate Controller and
Acting Chief Financial Officer
(Principal Financial and
Accounting Officer)
5
Exhibit 99.1
NEWPARK UPDATES STATUS OF INTERNAL INVESTIGATION
METAIRIE, La., June 29 /PRNewswire-FirstCall/ -- Newpark Resources, Inc.
(NYSE: NR) today announced that the Audit Committee of the Board of Directors
of Newpark Resources, Inc. has completed its initial internal investigation
which began on April 17, 2006. As a result of the findings of the
investigation, the Company will restate its financial statements for the
fiscal years ended December 31, 2001 through 2005, and for the fiscal quarters
within 2004 and 2005.
Excluding the impact of improper option granting practices on previously
issued financial statements discussed below, which has not yet been completely
determined, the aggregate impact of the error corrections over the restatement
periods will reduce previously reported pretax income by less than
$10 million, the maximum amount previously disclosed by the Company. All of
the charges to be recorded as a result of the restatements are non-cash
charges. A substantial portion of the charges will be attributed to the
fiscal years ended December 31, 2002 and 2003, and earlier periods.
As previously announced in the Company's press release dated
April 17, 2006, the Audit Committee of the Board of Directors had commissioned
an internal investigation, with the assistance of independent counsel,
regarding potential irregularities involving the processing and payment of
invoices by Soloco Texas, LP, (Soloco) one of Newpark's smaller subsidiaries,
and other transactions. The investigation concluded that certain transactions
were not properly accounted for, resulting in the restatement. The Company
analyzed all the pertinent quantitative and qualitative factors surrounding
these transactions in making its determination regarding the restatement.
During the course of the internal investigation, the Audit Committee also
requested a review of the Company's past practices regarding the awarding of
stock options, which was deemed an appropriate line of inquiry of the
originally commissioned investigation given the recent focus by the Securities
and Exchange Commission and others on stock option grant practices by publicly
traded companies. This review is ongoing, but the preliminary findings of the
investigation are that a portion of the stock options granted prior to
June 2003 were dated on a date other than the date their issuance was
approved, and the exercise price of such options was determined in advance of
their approval by the appropriate board committee, all in contravention of the
Company's stock option plan. For periods thereafter, all stock options
granted by the Company appear to have conformed to the requirements of the
plan.
While the investigation of the improper option granting practices is not
yet complete and the related financial statement impact has not been fully
evaluated, preliminary estimates indicate that the reduction in pretax income
for the fiscal years 2003 through 2005 is expected not to exceed $2 million in
the aggregate, depending on final determination of the actual date of grant.
The adjustments to pretax income related to the improper option granting
practices is not expected to have any impact on total stockholders' equity.
While the initial investigation related to matters at Soloco is now
complete and the investigation of improper option granting practices is
nearing completion, Newpark cannot predict with certainty when it will be able
to file its amended reports or its Quarterly Report on Form 10-Q for the
quarter ended March 31, 2006. However, Newpark will make the necessary
filings as soon as practical.
The Company also announced that Newpark's chief executive officer, with
approval from the Board of Directors, has terminated the employment of
Mr. James Cole, the Company's former chief executive officer and current
Chairman of Newpark Environmental Water Solutions and Mr. Matt Hardey, the
Company's Chief Financial Officer. Mr. Cole and Mr. Hardey had previously
been placed on administrative leave by the Board of Directors at the time of
the commencement of the previously announced internal investigation
commissioned by the Audit Committee. In the case of Messrs. Cole and Hardey,
the Board found, based on the findings of the internal investigation, that
cause existed for their termination given their responsibility for many of the
actions uncovered by the investigation that have led to the Company's
determination that a restatement of prior period financial statements is
required.
Newpark Resources, Inc. provides integrated fluids management,
environmental and oilfield services to the exploration and production
industry.
Forward-looking Statements
This news release contains forward-looking statements based on
management's current expectations, estimates and projections. All statements
that address expectations or projections about the future, including
statements about the company's strategy for growth, product development,
market position, expected expenditures and financial results are
forward-looking statements. Some of the forward-looking statements may be
identified by words like "expects," "anticipates," "plans," "intends,"
"projects," "indicates," and similar expressions. These statements are not
guarantees of future performance and involve a number of risks, uncertainties
and assumptions. Many factors, including those discussed more fully elsewhere
in this release and in documents filed with the Securities and Exchange
Commission by Newpark Resources, particularly its latest annual report on Form
10-K, as well as others, could cause results to differ materially from those
stated. These factors include, but are not limited to changes in the laws,
regulations, policies and economic conditions, including inflation, interest
and foreign currency exchange rates, of countries in which the company does
business; competitive pressures; successful integration of structural changes,
including restructuring plans, acquisitions, divestitures and alliances; cost
of raw materials, research and development of new products, including
regulatory approval and market acceptance; and seasonality of sales of
agricultural products.
SOURCE Newpark Resources, Inc.
-0- 06/29/2006
/CONTACT: Eric M. Wingerter, V.P. and Corporate Controller of Newpark
Resources, Inc., +1-504-838-8222/
/Web site: www.newpark.com /
(NR)