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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 September 30, 1997 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.)
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: 64,046,088 shares at November 10, 1997, after
giving effect to the 2-for-1 stock split, approved by the registrant's board of
directors on October 27, 1997.
Page 1 of 17
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NEWPARK RESOURCES, INC.
INDEX TO FORM 10-Q
FOR THE NINE MONTH PERIOD ENDED
SEPTEMBER 30, 1997
Item Page
Number Description Number
------ ----------- ------
PART I
1 Unaudited Consolidated Financial Statements:
Balance Sheets -
September 30, 1997 and December 31, 1996 .....................................3
Statements of Income for the Three Month and Nine Month
Periods Ended September 30, 1997 and 1996.....................................4
Statements of Cash Flows for the
Nine Month Periods Ended September 30, 1997 and 1996..........................5
Notes to Consolidated Financial Statements ........................................6
2 Management's Discussion and Analysis of Financial
Condition and Results of Operations...............................................10
PART II
6 Exhibits and Reports on Form 8-K......................................................16
2
3
NEWPARK RESOURCES, INC.
CONSOLIDATED BALANCE SHEETS
AS OF SEPTEMBER 30, 1997 AND DECEMBER 31, 1996
(Unaudited) September 30, December 31,
- ----------------------------------------------------------------------------------------------
(In thousands, except share data) 1997 1996
- ----------------------------------------------------------------------------------------------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 6,179 $ 1,945
Accounts and notes receivable, less allowance
of $1,925 in 1997 and $1,695 in 1996 58,167 48,369
Inventories 18,305 7,470
Deferred tax asset 3,149 8,144
Other current assets 2,457 2,727
--------- ---------
TOTAL CURRENT ASSETS 88,257 68,655
Property, plant and equipment, at cost, net of
accumulated depreciation 164,351 114,670
Cost in excess of net assets of purchased businesses and
identifiable intangibles, net of accumulated amortization 97,579 83,512
Other assets 26,541 23,047
--------- ---------
$ 376,728 $ 289,884
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes payable $ 67 $ 647
Current maturities of long-term debt 1,583 11,736
Accounts payable 18,975 15,091
Accrued liabilities 7,566 9,835
Current taxes payable 2,243 1,465
--------- ---------
TOTAL CURRENT LIABILITIES 30,434 38,774
Long-term debt 76,392 34,918
Other non-current liabilities 2,077 2,644
Deferred taxes payable 10,373 10,107
Commitments and contingencies -- --
SHAREHOLDERS' EQUITY:
Preferred Stock, $.01 par value, 1,000,000 shares
authorized, no shares outstanding -- --
Common Stock, $.01 par value, 80,000,000 shares
authorized, 63,997,888 shares outstanding in 1997
and 60,438,464 in 1996 634 600
Paid-in capital 282,574 253,829
Retained earnings (deficit) (25,756) (50,988)
--------- ---------
TOTAL SHAREHOLDERS' EQUITY 257,452 203,441
--------- ---------
$ 376,728 $ 289,884
========= =========
See accompanying Notes to Consolidated Financial Statements.
3
4
NEWPARK RESOURCES, INC.
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE AND NINE MONTH PERIODS ENDED SEPTEMBER 30,
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
- --------------------------------------------------------------------------------------------------
(In thousands, except per share data) 1997 1996 1997 1996
- --------------------------------------------------------------------------------------------------
Revenues $ 57,908 $ 33,172 $ 148,782 $ 90,636
Operating costs and expenses:
Cost of services provided 34,661 19,881 89,769 58,039
Operating costs 5,491 2,913 13,763 7,707
-------- --------- --------- --------
40,152 22,794 103,532 65,746
General and administrative expenses 883 719 2,465 2,168
Restructure expense -- 2,432 -- 2,432
Provision for uncollectible accounts
and notes receivable -- -- -- 6
-------- --------- --------- --------
Operating income 16,873 7,227 42,785 20,284
Interest income (59) (20) (154) (86)
Interest expense 858 927 2,703 2,854
-------- --------- --------- --------
Income before provision
for income taxes 16,074 6,320 40,236 17,516
Provision for income taxes 5,945 2,304 14,723 6,210
-------- --------- --------- --------
Net income $ 10,129 $ 4,016 $ 25,513 $ 11,306
======== ========= ========= ========
Weighted average common and common
equivalent shares outstanding:
Primary 65,950 55,768 64,160 49,892
======== ========= ========= ========
Fully diluted 66,122 55,792 64,636 50,112
======== ========= ========= ========
Net income per common and common
equivalent share:
Primary $ 0.15 $ 0.07 $ 0.40 $ 0.23
======== ========= ========= ========
Fully diluted $ 0.15 $ 0.07 $ 0.39 $ 0.23
======== ========= ========= ========
See accompanying Notes to Consolidated Financial Statements.
4
5
NEWPARK RESOURCES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTH PERIODS ENDED SEPTEMBER 30,
(Unaudited)
- -----------------------------------------------------------------------------------------------
(In thousands) 1997 1996
- -----------------------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 25,513 $ 11,306
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization 18,514 10,357
Provision for deferred income taxes 10,460 3,165
Loss on sales of assets 19 56
Provision for doubtful accounts -- 6
Change in assets and liabilities, net of effects of acquisitions:
(Increase) decrease in accounts and notes receivable (5,289) 4,789
(Increase) decrease in inventories (10,667) 113
Increase in other assets (1,141) (29)
Decrease in accounts payable (2,497) (1,099)
Decrease in accrued liabilities and other (6,786) (3,523)
-------- ---------
NET CASH PROVIDED BY OPERATING ACTIVITIES 28,126 25,141
-------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (58,413) (37,947)
Investment in joint venture (376) --
Net cash acquired in connection with acquisitions 2,411 --
Proceeds from disposal of property, plant and equipment 95 1,557
Purchase of Campbell Wells assets -- (70,500)
Purchase of patents -- (5,700)
Purchase of partner's joint venture interests -- (1,170)
-------- ---------
NET CASH USED IN INVESTING ACTIVITIES (56,283) (113,760)
-------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings on lines of credit 40,103 9,103
Principal payments on notes payable, capital lease
obligations and long-term debt (11,694) (22,623)
Proceeds from conversion of stock options 3,832 2,193
Proceeds from issuance of stock -- 103,500
Offering costs on stock issuance -- (5,434)
Proceeds from issuance of debt -- 2,190
-------- ---------
NET CASH PROVIDED BY FINANCING ACTIVITIES 32,241 88,929
-------- ---------
NET INCREASE IN CASH AND CASH EQUIVALENTS 4,084 310
NET INCREASE IN CASH FOR POOLED ACQUISITION FOR THE
TWO MONTHS ENDED DECEMBER 31, 1996 150 --
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 1,945 1,500
-------- ---------
CASH AND CASH EQUIVALENTS AT END OF THE PERIOD $ 6,179 $ 1,810
======== =========
See accompanying Notes to Consolidated Financial Statements.
5
6
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 September 30, 1997, and the results of operations for
the three and nine month periods ended September 30, 1997 and 1996 and
cash flows for the nine month periods ended September 30, 1997 and 1996.
All such adjustments are of a normal recurring nature. These interim
financial statements should be read in conjunction with the December 31,
1996 audited financial statements and related notes filed on Form
10-K/A, Amendment No. 1 dated May 22, 1997.
Note 2 The consolidated financial statements include the accounts of Newpark
and its wholly-owned subsidiaries. All material intercompany
transactions are eliminated in consolidation.
The accompanying consolidated financial statements for all periods
presented have been restated to include the effects of the Sampey Bilbo
Meschi Drilling Fluids Management, Inc. ("SBM") acquisition that was
accounted for as a pooling of interests. This combination was completed
on February 28, 1997 in exchange for 2,328,000 shares of Newpark common
stock.
The accompanying consolidated financial statements also include the
results of operations of certain acquisitions accounted for by the
purchase method since their respective acquisition dates during fiscal
1997. These acquisitions were completed in exchange for an aggregate of
1,193,332 shares of Newpark common stock. The historical results of
operations related to these acquisitions individually and in the
aggregate were not considered significant in relation to the financial
reporting requirements of Newpark.
In addition, the accompanying 1997 consolidated financial statements
include the effects of two additional combinations accounted for as
pooling of interests. These combinations were completed in exchange for
an aggregate of 1,168,000 shares of Newpark common stock. Prior year
financial statements have not been restated because the financial
information related to these entities individually and in the aggregate
were not considered significant in relation to the financial reporting
requirements of Newpark. The results of operations related to these
entities during 1997, prior to the combination dates, were also not
considered significant.
Certain reclassifications of prior period amounts have been made to
conform to the current period presentation.
6
7
Note 3 The results of operations for the nine month period ended September 30,
1997 are not necessarily indicative of the results to be expected for
the entire year.
Note 4 Primary and fully diluted income per common share is calculated by
dividing net income by the average shares of common stock of the Company
("Common Stock") and common stock equivalents outstanding during the
period. When dilutive, stock options are included as share equivalents
using the treasury stock method. All per share and weighted average
share amounts have been restated to give retroactive effect to the
2-for-1 stock split, effected in the form of a 100% dividend, approved
by the board of directors on October 27, 1997 for shareholders of record
as of November 14, 1997, payable November 26, 1997.
Note 5 Included in accounts and notes receivable at September 30, 1997 and
December 31, 1996 (in thousands) are:
1997 1996
-------- --------
Trade receivables $ 50,932 $ 34,304
Unbilled revenues 7,880 6,616
-------- --------
Gross trade receivables 58,812 40,920
Allowance for doubtful accounts (1,925) (1,695)
-------- --------
Net trade receivables 56,887 39,225
Notes and other receivables 1,280 9,144
-------- --------
Total $ 58,167 $ 48,369
======== ========
Note 6 Inventories at September 30, 1997 and December 31, 1996 consisted
principally of raw materials.
Note 7 Interest of $496,000 and $57,000 was capitalized during the three months
ended September 30, 1997 and 1996, respectively. For the nine months
ended September 30, 1997 and 1996, interest of $758,000 and $442,000 was
capitalized, respectively.
Note 8 The Company maintains a $90.0 million bank credit facility in the form
of a revolving line of credit commitment. The credit facility is secured
by a pledge of substantially all of the Company's accounts receivable,
inventory and property, plant and equipment. It bears interest at either
a specified prime rate (8.50% at September 30, 1997) or the LIBOR rate
(5.77% at September 30, 1997) plus a spread which is determined
quarterly based upon the ratio of the Company's funded debt to cash
flow. Interest on the line of credit is payable monthly on prime rate
borrowings and the last day of the interest period on LIBOR rate
borrowings. The line of credit matures on June 30, 2000. At September
30, 1997, $2.0 million of letters of credit were issued and outstanding,
leaving a net of $88.0 million available for cash advances
7
8
under the line of credit, against which $73.7 million had been
borrowed. 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 September 30, 1997.
Note 9 During the nine month period ended September 30, 1997, noncash
transactions included the transfer of $1.1 million from fixed assets to
a note receivable, representing the Company's investment in a joint
manufacturing venture.
Equipment purchases of $3,466,000 and $1,498,000 were included in
accounts payable and accrued liabilities at September 30, 1997 and
1996, respectively, and in notes payable of $83,000 and $2,208,000 at
September 30, 1997 and 1996, respectively.
Interest of $3,308,000 and $3,371,000 and income taxes of $4,151,000
and $3,163,000 were paid during the nine months ending September 30,
1997 and 1996, respectively.
During the nine month period ended September 30, 1996, noncash
transactions included the acquisition of certain patents in exchange
for 177,182 shares of the Company's common stock and $1,200,000 in
cash. In connection with the purchase of these patents the Company
recorded a deferred tax liability of $900,000. Transfers from inventory
to fixed assets of $3,040,000 were made during this period. The Company
sold and refinanced $16,000,000 of certain assets in exchange for
$7,200,000 of notes receivable, $1,200,000 in cash, and the assumption
by the buyer of $7,600,000 in debt obligation.
Note 10 Newpark and its subsidiaries are involved in litigation 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 $1,650,000 at September
30, 1997. At September 30, 1997, the Company had outstanding guaranty
obligations totaling $865,000 in connection with facility closure
obligations.
8
9
On August 29, 1996, the Company sold the land, buildings and certain
equipment comprising substantially all of the assets of its former
marine repair operation to the operator of the facility. These assets
had previously been subject to an operating lease to the same party,
and the purchase was made under the terms of a purchase option granted
in the original lease. The Company has guaranteed certain of the debt
obligations of the operator, limited to a maximum of $10 million and
reducing proportionately with debt repayments made by the operator.
In conjunction with the acquisition of certain assets from Campbell
Wells, Ltd. ("Campbell"), on August 12, 1996, the Company assumed the
obligation to deliver to Campbell, for each of the next 25 years, for
disposal at Campbell's landfarms the lesser of one-third of the barrels
of NOW collected by Newpark from a defined market area or 1,850,000
barrels of NOW, subject to certain adjustments. The initial price per
barrel to be paid by Newpark to Campbell is $5.50 per barrel and is
subject to adjustment in future years. Prior to any adjustments,
Newpark's obligation is $10,175,000 annually. In addition, the
liability of Newpark under the agreement is reduced by certain revenues
earned by Campbell or its affiliates.
Note 11 In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards Number 128 "Earnings per
Share" ("SFAS 128") which changes the method of calculating earnings
per share (EPS). SFAS 128 requires the presentation of "basic" EPS and
"diluted" EPS on the face of the statement of income. Basic EPS is
computed by dividing the net income available to common shareholders by
the weighted average shares of outstanding common stock. The
calculation of diluted EPS is similar to basic EPS except that the
denominator includes dilutive common stock equivalents such as stock
options and warrants. The statement is effective for financial
statements issued for periods ending after December 15, 1997. At that
time, the Company will be required to change the method currently used
to compute EPS and to restate all prior periods. Early adoption is not
permitted. This statement will not have a significant impact on the
Company's reported EPS amounts.
9
10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
GENERAL
In February 1997, Newpark acquired, a full service drilling fluids
company, serving customers in the Louisiana and Texas Gulf Coast, in exchange
for an aggregate of 2,328,000 shares of Newpark common stock. The acquisition
was accounted for as a pooling of interests, and direct costs of $316,000
related to the acquisition were charged to current operations. Newpark's
results of operations for the three and nine months ended September 30, 1996
and its working capital position have been restated to give effect to this
transaction. Since this acquisition, Newpark has completed five additional
acquisitions in the drilling fluids industry, in exchange for an aggregate of
1,371,112 shares of Newpark common stock. The additional acquisitions involved
three drilling fluids distribution companies, one specialty chemical company
and one specialty milling company. Newpark has recently acquired two oilfield
site contractors to expand its presence and service capabilities in the site
preparation business, and an aggregate of 990,888 shares of Newpark common
stock were issued in connection with these acquisitions. Newpark also has
recently acquired additional properties and facilities to expand its disposal
capacity, including two active injection wells on 37 acres of land adjacent to
Newpark's Big Hill facility, and 120 acres of land adjacent to its Big Hill
facility, which Newpark plans to develop into an industrial waste disposal
facility.
On September 27, 1997 Newpark filed for a license authority with the
Texas Natural Resources Conservation Commission for several non-hazardous
industrial disposal wells.
Subsequent to September 30, 1997 the Company completed the purchase of
four disposal facilities located in the Texas Permian Basin at a total purchase
price of $3.7 million. Three of these facilities currently are licensed for the
disposal of NOW waste, and the fourth is expected to be similarly licensed in
the near future. It is expected that one or more of the licenses will be
expanded to include NORM.
RESULTS OF OPERATIONS
The following table represents revenue by product line, for the three
and nine month periods ended September 30, 1997 and 1996. The product line data
has been reclassified from prior periods' presentation in order to more
10
11
effectively distinguish the fluids management services and mat rental services,
in which the Company maintains certain proprietary advantages, from its other
service offerings.
Three Month Periods Ended September 30,
(Dollars in thousands)
1997 1996
------------------- -------------------
Revenues by product line:
Fluids management services:
NOW & NORM disposal $16,208 28.0% $11,555 34.9%
Fluids engineering & sales 16,021 27.7 4,621 13.9
------- ------ ------- ------
Total fluids management services 32,229 55.7 16,176 48.8
Mat rental services 13,690 23.6 7,004 21.1
Integrated services 11,989 20.7 9,652 29.1
Other -- -- 340 1.0
------- ------ ------- ------
Total revenues $57,908 100.0% $33,172 100.0%
======= ====== ======= ======
Nine Month Periods Ended September 30,
(Dollars in thousands)
1997 1996
------------------- -------------------
Revenues by product line:
Fluids management services:
NOW & NORM disposal $ 45,328 30.5% $28,946 31.9%
Fluids engineering & sales 34,641 23.3 9,139 10.1
-------- ------ ------- ------
Total fluids management services 79,969 53.8 38,085 42.0
Mat rental services 37,588 25.2 20,613 22.7
Integrated services 31,225 21.0 30,578 33.7
Other -- -- 1,360 1.6
-------- ------ ------- ------
Total revenues $148,782 100.0% $90,636 100.0%
======== ====== ======= ======
THREE MONTH PERIOD ENDED SEPTEMBER 30, 1997 COMPARED TO THREE MONTH PERIOD
ENDED SEPTEMBER 30, 1996
Revenues
Total revenues increased to $57.9 million in the 1997 period from
$33.2 million in the 1996 period, an increase of $24.7 million or 74%,
consisting primarily of a $16.1 million increase in fluids management service
revenue , a $6.7 million increase in mat rental revenue and a $2.3 million
increase in integrated services revenue. Within the fluids management service
revenue, drilling fluids sales and service revenue increased $11.4 million and
waste disposal revenue increased $4.6 million. The increase in drilling fluids
sales was a result of a series of acquisitions made during 1997, the expansion
of inventories and facilities subsequent to the acquisitions in order to
service new and expanded markets, and increased drilling activity. The drilling
fluids market has
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12
been positively impacted by the increase in the drilling activity. The
increased disposal revenues is primarily attributable to the acquisition of a
competitor's marine-related collection operations in August 1996, coupled with
increases in the domestic market rig count. NOW revenues increased to $14.9
million in the recent 1997 quarter, compared to $9.3 million in 1996, and
volume increased to 1.4 million barrels, compared to 1.1 million barrels in the
respective periods. NORM revenue declined to $1.3 million in the 1997 quarter
compared to $2.2 million in 1996, due to reduced remediation activity. The
increase in mat rental revenue reflects improvements in the domestic market rig
count and increased pricing of the Company's mat inventory. In addition, mat
rental revenues in the 1997 period were positively impacted by two acquisitions
which occurred during 1997. The increase in integrated services can be
attributed to the overall increase in drilling activity in the Company's key
markets.
Operating Income
Operating income of $16.8 million in the 1997 period increased by $9.6
million, or $133% compared to $7.2 million in the 1996 period. The major
components of the increase were increased profitability from disposal
operations due to improved prices and operating leverage, increased utilization
and higher pricing of the Company's mat inventory, and increased profitability
from drilling fluids sales, resulting from consolidation and expansion.
Restructure Expense
During the 1996 quarter, the Company recorded a non-recurring
restructure charge in the amount of $2.4 million. A total of approximately $1.8
million was related to the restructuring of certain of the Company's NOW
processing operations and staffing changes to facilitate the integration of its
operations with those acquired from a competitor. The Company recognized an
additional $600,000 of non-recurring costs associated with the termination of
processing operations at its original NORM facility at Port Arthur, Texas and
the partial closure of the site.
Provision for Income Taxes
For the 1997 and 1996 periods, the Company recorded income tax
provisions of $5.9 million and $2.3 million, equal to 37.0% and 36.5% of
pre-tax income, respectively.
Statement of Financial Accounting Standards Number 128
In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards Number 128, which changes the
method of calculating earnings per share. The statement is effective for
financial
12
13
statements issued for periods ending after December 15, 1997. The Company will
adopt SFAS 128 in the fourth quarter of 1997, as early adoption is not
permitted. The adoption of this standard will not have a significant impact on
the Company's reported per share amounts.
NINE MONTH PERIOD ENDED SEPTEMBER 30, 1997 COMPARED TO NINE MONTH PERIOD ENDED
SEPTEMBER 30, 1996
Revenues
Total revenues increased to $148.8 million in the 1997 period from
$90.6 million in the 1996 period, an increase of $58.2 million, or 64%,
consisting primarily of a $42.9 million increase in fluids management service
revenue and a $17.0 million increase in mat rental revenue. Principal
components of the increase in fluids management service revenue were drilling
fluids and service revenue which increased $25.5 million, and waste disposal
revenue, which increased $16.4 million. Drilling fluids sales increased as a
result of a series of acquisitions made during 1997 in the drilling fluids
market, the expansion of the businesses acquired through increased inventories
and facilities to service new and expanded markets and an increase in drilling
activity. The increase in waste disposal revenues can be primarily ascribed to
the acquisition of a competitor's marine-related collection operations in
August 1996 and increases in the domestic market rig count. NOW revenues for
1997 increased to $42.2 million, compared to $22.1 million in 1996. The volume
of NOW received increased to 4.1 million barrels, from 2.4 million barrels.
NORM revenue was $3.1 million in 1997, compared to $6.9 million in 1996, due to
decreased site remediation activity. The increase in mat rental revenue
reflects the acquisition of two competitors, improvements in the domestic
market rig count and increased pricing for the Company's mat inventory.
Operating Income
Operating income of $42.8 million in the 1997 period increased by
$22.5 million, or 111%, compared to $20.3 million in the 1996 period. Factors
contributing to the increase included increased profitability from disposal
operations, increased utilization and higher pricing of the Company's mat
inventory, and increased profitability from drilling fluids sales.
13
14
Restructure Expense
During the nine months ended September 30, 1996, the Company recorded
a non-recurring restructure charge in the amount of $2.4 million. A total of
approximately $1.8 million was related to the restructuring of certain of the
Company's NOW processing operations and staffing changes to facilitate the
integration of its operations with those acquired from a competitor. The
Company recognized an additional $600,000 of non-recurring costs associated
with the termination of processing operations at its original NORM facility at
Port Arthur, Texas and the partial closure of the site.
Provision for Income Taxes
For the 1997 and 1996 periods, the Company recorded income tax
provisions of $14.7 million and $6.2 million equal to 36.6% and 35.5% of
pre-tax income, respectively.
LIQUIDITY AND CAPITAL RESOURCES
The Company's working capital position increased by $27.9 million
during the nine months ended September 30, 1997. Key working capital data is
provided below:
September 30, 1997 December 31, 1996
------------------ -----------------
Working Capital (000's) $57,823 $29,881
Current Ratio 2.90 1.77
To date during 1997, the Company's working capital needs have been met
primarily from operating cash flow and borrowings under the Company's credit
facility. Total cash generated from operations of $28.1 million was
supplemented by $32.2 million from financing activities to provide for cash of
$56.3 million used in investing activities.
During the quarter ended June 30, 1997, Newpark entered into a
restated credit agreement which provides for a $90 million secured revolving
line of credit. These borrowings bear interest at the option of the Company, 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 covenants in the credit agreement at September 30,
1997.
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15
The revolving line of credit matures June 30, 2000. At September 30,
1997, $2.0 million of letters of credit were issued and outstanding under the
line and $73.7 million had been borrowed and was outstanding thereunder. The
amounts borrowed under the line were used to refinance approximately $30
million of term debt, purchase drilling fluid assets of approximately $11
million, expand inventories by approximately $10 million, acquire disposal
assets of approximately $6 million with the remainder being used primarily to
expand working capital.
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 arrangements which may be utilized to fund future
expansion plans.
Inflation has not materially impacted the Company's revenues or income.
15
16
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 September 30, 1997.
16
17
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: November 12, 1997
NEWPARK RESOURCES, INC.
By: /s/Matthew W. Hardey
-------------------------------------
Matthew W. Hardey, Vice President
and Chief Financial Officer
17
18
INDEX TO EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------
27. Financial Data Schedule
5
3-MOS
DEC-31-1997
JUL-01-1997
SEP-30-1997
6,179
0
60,092
(1,925)
18,305
88,257
221,159
(56,808)
376,728
(30,434)
0
0
0
(634)
(256,818)
(257,452)
57,908
57,908
40,152
40,152
883
0
858
16,074
5,945
10,129
0
0
0
10,129
0.15
0.15
