UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1996Commission 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.)
3850 N. Causeway, Suite 1770
Metairie, Louisiana 70002
(Address of principal executive offices) (Zip Code)
(504) 838-8222
(Registrant's telephone number)
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 the number of shares outstanding of each of the issuer's
classes of common stock as of the latest practicable date.
Common Stock, $0.01 par value: 10,790,542 shares at May 10, 1996
Page 1 of 12
NEWPARK RESOURCES, INC.
INDEX TO FORM 10-Q
FOR THE THREE MONTH PERIOD ENDED
MARCH 31, 1996
Item Page
Number Description Number
PART I
1 Unaudited Financial Statements:
Balance Sheets -
March 31, 1996 and December 31, 1995 .......3
Statements of Income for the
Three Month Periods Ended March 31,
1996 and 1995...............................4
Statements of Cash Flows for the
Three Month Periods Ended March 31,
1996 and 1995...............................5
Notes to Consolidated Financial Statements....6
2 Management's Discussion and Analysis of
Financial Condition and Results of
Operations....................................8
PART II
6 Exhibits and Reports on Form 8-K...............11
2
Newpark Resources, Inc.
Consolidated Balance Sheets
As of March 31, 1996 and December 31, 1995
(Unaudited) March 31, December 31,
_______________________________________________________________________________
(In thousands, except share data) 1996 1995
_______________________________________________________________________________
ASSETS
Current assets:
Cash and cash equivalents $ 1,063 $ 1,018
Accounts and notes receivable, less allowance
of $762 in 1996 and $768 in 1995 39,091 39,208
Inventories 8,923 11,996
Other current assets 4,189 4,088
_______ _______
Total current assets 53,266 56,310
Property, plant and equipment, at cost, net of
accumulated depreciation 90,996 85,461
Cost in excess of net assets of purchased
businesses, net of accumulated amortization 4,325 4,340
Investment in joint venture 1,609 1,094
Other assets 5,844 5,542
_______ ______
$ 156,040 $ 152,747
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Notes payable $ 119 $ 169
Current maturities of long-term debt 9,994 7,742
Accounts payable 7,828 11,664
Accrued liabilities 3,599 3,462
Current taxes payable 700 1,165
_______ ______
Total current liabilities 22,240 24,202
Long-term debt 46,907 46,724
Other non-current liabilities 285 285
Deferred taxes payable 5,164 4,018
Commitments and contingencies (See Note 8) 0 0
Shareholders' equity:
Preferred Stock, $.01 par value, 1,000,000 shares
authorized, no shares outstanding 0 0
Common Stock, $.01 par value, 20,000,000 shares
authorized, 10,694,974 shares outstanding in 1996
and 10,634,177 in 1995 106 105
Paid-in capital 145,162 144,553
Retained earnings (deficit) (63,824) (67,140)
_______ ______
Total shareholders' equity 81,444 77,518
_______ ______
$ 156,040 $ 152,747
======= =======
See accompanying Notes to Consolidate
3
Newpark Resources, Inc.
Consolidated Statements of Income
For the Three Month Periods Ended March 31,
(Unaudited)
___________________________________________________________________
(In thousands, except per share data) 1996 1995
___________________________________________________________________
Revenues $ 26,767 $ 22,209
Operating costs and expenses:
Cost of services provided 17,599 15,532
Operating costs 2,359 2,288
_______ _______
19,958 17,820
General and administrative expenses 717 648
Provision for uncollectible accounts
and notes receivable 0 30
_______ _______
Operating income 6,092 3,711
Interest income (30) (91)
Interest expense 907 889
_______ _______
Income from operations
before provision for income taxes 5,215 2,913
Provision for income taxes 1,899 423
_______ _______
Net income $ 3,316 $ 2,490
======= =======
Weighted average shares outstanding 10,650 10,375
======= =======
Net income per common share $ 0.31 $ 0.24
======= =======
See accompanying Notes to Consolidated Financial Statements.
4
Newpark Resources, Inc.
Consolidated Statements of Cash Flows
For the Three Month Periods Ended March 31,
(Unaudited)
________________________________________________________________________
(In thousands ) 1996 1995
________________________________________________________________________
Cash flows from operating activities:
Net income $ 3,316 $ 2,490
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 2,818 2,335
Provision for doubtful accounts 0 30
Provision for deferred income taxes 1,146 423
Gain on sales of assets (41) (2)
Change in assets and liabilities, net of
effects of acquisitions and dispositions:
Decrease (increase) in accounts and notes
receivable 42 (4,137)
Decrease in inventories 2,575 907
Increase in other assets (403) (1,068)
(Decrease) increase in accounts payable (4,807) 1,222
Decrease in accrued liabilities and other (397) (298)
_______ _______
Net cash provided by operating activities 4,249 1,902
_______ _______
Cash flows from investing activities:
Capital expenditures (7,544) (2,597)
Proceeds from disposal of property, plant
and equipment 1,136 11
Investment in joint venture (515) 0
Payments received on notes receivable 75 0
_______ _______
Net cash used in investing activities (6,848) (2,586)
_______ _______
Cash flows from financing activities:
Net borrowings on lines of credit 3,201 2,866
Principal payments on notes payable,
capital lease obligations and
long-term debt (2,525) (3,337)
Proceeds from issuance of debt 1,358 223
Proceeds from conversion of stock options 610 299
_______ _______
Net cash provided by financing activities 2,644 51
_______ _______
Net increase (decrease) in cash and cash
equivalents 45 (633)
Cash and cash equivalents at beginning of
year 1,018 1,404
_______ _______
Cash and cash equivalents at end of the
period $ 1,063 $ 771
======= =======
Included in accounts payable and accrued liabilities at March 31, 1996 and
1995 were equipment purchases of $1,040,000 and $419,000 respectively. Also
included are notes payable for equipment purchases in the amount of $351,000
at March 31, 1996.
Interest of $986,000 and $892,000 was paid during the three months ending
March 31, 1996 and 1995, respectively. Income taxes of $1,218,000 were paid
during the three months ended March 31, 1996. No income taxes were paid
during 1995 quarter.
See accompanying Notes to Consolidated Financial Statements.
5
NEWPARK RESOURCES, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
Note 1 In the opinion of management the accompanying
unaudited consolidated financial statements reflect
all adjustments necessary to present fairly the
financial position of Newpark Resources, Inc.
("Newpark" or the "Company") as of March 31, 1996,
and the results of operations for the three month
periods ended March 31, 1996 and 1995 and cash flows
for the three month periods ended March 31, 1996 and
1995. All such adjustments are of a normal
recurring nature. These interim financial
statements should be read in conjunction with the
December 31, 1995 audited financial statements and
related notes filed on Form 10-K at December 31,
1995.
Note 2 The consolidated financial statements include the
accounts of Newpark and its wholly-owned
subsidiaries. All material intercompany
transactions are eliminated in consolidation.
Note 3 The results of operations for the three month period
ended March 31, 1996 are not necessarily indicative
of the results to be expected for the entire year.
Note 4 Included in accounts and notes receivable at March
31, 1996 and December 31, 1995 (in thousands) are:
1996 1995
Trade receivables $27,144 $27,714
Unbilled revenues 9,182 8,600
______ ______
Gross trade receivables 36,326 36,314
Allowance for doubtful
accounts (762) (768)
______ ______
Net trade receivables 35,564 35,546
Notes and other
receivables 3,527 3,662
______ ______
Total $39,091 $39,208
====== ======
Note 5 Inventories at March 31, 1996 and December
31, 1995 consisted principally of raw materials.
Note 6 Interest of $218,000 and $56,000 was capitalized
during the three months ended March 31, 1996
and 1995, respectively.
Note 7 The Company maintains a $60.0 million bank credit
facility with $25.0 million in the form of a
revolving line of credit commitment and the
remaining $35.0 million in a term note. The line of
credit is secured by a pledge of accounts receivable
and certain inventory. It bears interest at either
a specified prime rate (8.25% at March 31, 1996) or
the LIBOR rate (5.44% at March 31, 1996) plus a
spread which is determined quarterly based upon the
ratio of the Company's funded debt to cash flow.
6
The line of credit requires monthly interest
payments and matures on December 31, 1998. At March
31, 1996, $5.8 million of letters of credit were
issued and outstanding, leaving a net of $19.2
million available for cash advances under the line
of credit, against which $11.6 million had been
borrowed. The term loan was used to refinance
existing debt and requires monthly interest
installments and seventeen equal quarterly principal
payments which commenced March 31, 1996. The term
loan bears interest at the Company's option of
either a specified prime rate or LIBOR rate, plus a
spread which is determined quarterly based upon the
ratio of the Company's funded debt to cash flow.
The credit facility requires that the Company
maintain certain specified financial ratios and
comply with other usual and customary requirements.
The Company was in compliance with the agreement at
March 31, 1996.
Note 8 Newpark and its subsidiaries are involved in litiga-
tion and other claims or assessments on matters
arising in the normal course of business. In the
opinion of management, any recovery or liability
in these matters will not have a material adverse
effect on Newpark's consolidated financial
statements.
During 1992, the State of Texas assessed additional
sales taxes for the years 1988-1991. The Company
has filed a petition for redetermination with the
Comptroller of Public Accounts. The Company
believes that the ultimate resolution of this matter
will not have a material adverse effect on the
consolidated financial statements.
In the normal course of business, in conjunction
with its insurance programs, the Company has
established letters of credit in favor of certain
insurance companies in the amount of $2,000,000 at
March 31, 1996. At March 31, 1996, the Company had
outstanding a letter of credit in the amount of
$3,816,000 in connection with facility closure
obligations.
7
ITEM 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Results of Operations
The following table represents revenue by product line,
for the three month periods ended March 31, 1996 and 1995.
The product line data has been reclassified from prior
periods' presentation in order to more effectively
distinguish the offsite waste processing and mat rental
services, in which the Company maintains certain proprietary
advantages, from its other service offerings.
Three Month Periods Ended March 31,
(Dollars in thousands)
1996 1995
_______________ ______________
Revenues by product line:
Offsite waste processing $ 7,833 29.3% $7,391 33.3%
Mat rental services 7,901 29.5 6,632 29.9
General oilfield services 4,003 14.9 3,032 13.6
Wood product sales 3,956 14.8 2,624 11.8
Onsite environmental
management 2,564 9.6 2,130 9.6
Other 510 1.9 400 1.8
Total revenues $26,767 100.0% $22,209 100.0%
Three Month Period Ended March 31, 1996 Compared to Three
Month Period ended March 31, 1995
Revenues
Total revenues increased to $26.8 million in the 1996
period from $22.2 million in the 1995 period, an increase of
$4.6 million or 20.5%. The major components of the increase
by product line included: (i) $1.3 million of increased
revenue from wood product sales due to increased sales of
wood chips produced by additional capacity added during
1995; (ii) an increase of $1.3 million, or 19.1% in mat
rental revenue due to a 17.7% increase in volume on pricing
similar to the 1995 period; (iii) an increase of $971,000 or
32.0% in general oilfield service revenue which resulted
primarily from site preparation services related to the
increased volume of mat rental services provided during the
period; (iv) an increase of $442,000 in offsite waste
processing revenues derived primarily from NORM disposal
operations. NORM processing volume during the period
increased to 37,200 barrels, compared to 12,600 in the 1995
period. The effect of the volume increase was offset in
part by a decrease in the average revenue per barrel from
$111.00 in the 1995 period to $48.00 in the recent quarter.
The change in average prices reflects the lower level of
radium contamination in waste received from site remediation
8
projects, which represent a majority of current volume. NOW
disposal revenue increased $57,000 to $6,048,000 in the
recent quarter compared to $5,991,000 in the 1995 period.
Total volume increased 8% to 745,000 barrels compared to
690,000 barrels in the year-ago quarter, but was offset by a
decline in the average revenue per barrel to $8.12 in the
1996 quarter from $8.68 in the prior period. The decline
resulted from changes in mix, with lower priced remediation
volume of 123,000 barrels in the 1996 quarter representing
16.5% of total volume compared to 13.0% in the 1995 quarter;
and (v) an increase of $434,000 in onsite environmental
management services related to the increased site
remediation activity in the 1996 period.
Operating Income
Operating income increased by $2.4 million or 64.2% to
total $6.1 million in the 1996 period compared to $3.7
million in the prior period, representing an improvement in
operating margin to 22.8% in the 1996 period compared to
16.7% in the 1995 period. Primary components of the
increase included: (i) $1.9 million resulting from the
increase in the volume of mats rented; and (ii)
approximately $470,000 increased operating profit from wood
product sales.
General and administrative expenses remained relatively
unchanged decreasing as a proportion of revenue to 2.7% from
2.9% in the 1995 period, and increasing in absolute amount
by $69,000.
Interest Expense
Interest expense was substantially unchanged at
approximately $900,000 for both periods, although average
outstanding borrowings increased approximately 43.9% from
the prior period. This resulted from decreased net interest
cost under the current credit agreement, which became
effective as of June 29, 1995, and interest capitalization
related to construction in progress in the current quarter.
Provision for Income Taxes
For the 1996 period, the Company recorded an income tax
provision of $1.9 million equal to 36.4% of pre-tax income.
The net provision for the 1995 period of $423,000, equal to
a 15% effective rate, was comprised of a provision for
federal income taxes net of the recognition of certain state
income tax carryforwards available to offset estimated
future earnings.
9
Net Income
Net income increased by $826,000 or 33.2% to $3.3
million in the 1996 compared to $2.5 million in the 1995
period.
Liquidity and Capital Resources
The Company's working capital position decreased by
$1.1 million during the three months ended March 31, 1996.
Key working capital data is provided below:
March 31, 1996 December 31, 1995
______________ _________________
Working Capital (000's) $ 31,026 $ 32,108
Current Ratio 2.4 2.3
To date during 1996, the Company's working capital
needs have been met primarily from operating cash flow.
Total cash generated from operations of $4.2 million were
supplemented by $2.6 million from financing activities to
provide for cash used of $6.8 million in investing
activities.
On June 29, 1995, Newpark entered into a new credit
agreement with a group of three banks, providing a total of
up to $50 million of term financing consisting of a $25
million term loan to be amortized over five years and a $25
million revolving line of credit. At Newpark's option,
these borrowings bear interest at either a specified prime
rate or LIBOR rate, plus a spread which is determined
quarterly based upon the ratio of Newpark's funded debt to
cash flow. The credit agreement requires that Newpark
maintain certain specified financial ratios and comply with
other usual and customary requirements. Newpark was in
compliance with all of the convenants in the credit
agreement at March 31, 1996.
The term loan was used to refinance existing debt and
is being amortized over a five year term. In March 1996,
the term loan was increased to $35 million, and the $10
million increase was used initially to reduce borrowings on
the revolving line of credit portion of the facility.
The revolving line of credit matures December 31, 1998.
Availability of borrowings under the line of credit is tied
to the level of Newpark's accounts receivable and certain
inventory. At March 31, 1996, $5.8 million of letters of
credit were issued and outstanding under the line and an
additional $11.6 million had been borrowed and was
outstanding thereunder. Effective April 24, 1996, Newpark
replaced $3.8 million of outstanding letters of credit with
a corporate guaranty, leaving $2 million of letters of
credit outstanding.
Potential sources of additional funds, if required by
the Company, would include additional borrowings and the
sale of equity securities. The Company presently has no
commitments beyond its bank lines of credit by which it
could obtain additional funds for current operations;
however, it regularly evaluates potential borrowing
10
arrangements which may be utilized to fund future expansion
plans.
Inflation has not materially impacted the Company's
revenues or income.
PART II
ITEM 6. Exhibit and Reports on Form 8-K
(a) Exhibits
27. Financial Data Schedule
(b) The registrant did not file a report on Form 8-K
for the quarter ended March 31, 1996.
11
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: March 14, 1996
NEWPARK RESOURCES, INC.
By:/s/Matthew W. Hardey
Matthew W. Hardey, Vice President
and Chief Financial Officer
12
5
3-MOS
DEC-31-1996
MAR-31-1996
1,063
0
39,853
(762)
8,923
53,266
134,965
(43,969)
156,040
(22,240)
0
(106)
0
0
63,824
(156,040)
26,767
26,767
19,958
19,958
717
0
907
5,215
1,899
3,316
0
0
0
3,316
0.31
0.00
