UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

For the quarterly period ended September 30, 2005
Commission File No. 1-2960

Newpark Resources, Inc.

(Exact name of registrant as specified in its charter)

Delaware (State or other jurisdiction of incorporation or organization)		72-1123385 (I.R.S. Employer Identification No.)

3850 N. Causeway, Suite 1770 Metairie, Louisiana (Address of principal executive offices)		70002 (Zip Code)

(504) 838-8222
(Registrant’s telephone number, including area code)

None
(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 þ No o

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

Yes þ No o

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

Yes o No þ

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: 88,313,895 shares at November 1, 2005.

 

 

NEWPARK RESOURCES, INC.
INDEX TO FORM 10-Q
FOR THE THREE AND NINE MONTH PERIODS ENDED
September 30, 2005

Item						Page
Number				Description		Number
				PART I
	1			Unaudited Consolidated Financial Statements:
				Balance Sheets as of September 30, 2005 and December 31, 2004			5
				Statements of Income for the Three and Nine Month Periods Ended September 30, 2005 and 2004			6
				Statements of Comprehensive Income for the Three and Nine Month Periods Ended September 30, 2005 and 2004			7
				Statements of Cash Flows for the Nine Month Periods Ended September 30, 2005 and 2004			8
				Notes to Unaudited Consolidated Financial Statements			9
	2			Management’s Discussion and Analysis of Financial Condition and Results of Operations			20
	3			Quantitative and Qualitative Disclosures About Market Risk			40
	4			Controls and Procedures			41
				PART II
	1			Legal Proceedings			42
	2			Unregistered Sales of Equity Securities and Use of Proceeds			42
	3			Defaults Upon Senior Securities			42
	4			Submission of Matters to a Vote of Security Holders			42
	5			Other Information			42
	6			Exhibits			42
				Signatures			43
Certification Pursuant to Section 302
Certification Pursuant to Section 302
Certification Pursuant to Section 906
Certification Pursuant to Section 906

Forward-Looking Statements

     The following discussion contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. 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 below, 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. In light of these risks,

uncertainties and assumptions, the forward-looking events discussed in this report might not occur.

     Among the risks and uncertainties that could cause future events and results to differ materially from those anticipated by us in the forward-looking statements included in this report are the following:

	•		A material decline in the level of oil and gas exploration and production, to which we refer as “E&P,” and any reduction in the industry’s willingness to spend capital on environmental and oilfield services could adversely affect the demand for our services;
	•		Material changes in oil and gas prices, expectations about future prices, the cost of exploring for, producing and delivering oil and gas, the discovery rate of new oil and gas reserves and the ability of oil and gas companies to raise capital could adversely affect the demand for our services;
	•		Changes in domestic and international political, military, regulatory and economic conditions may adversely affect the demand for oil and gas or production volumes;
	•		A rescission or relaxation of government regulations affecting E&P waste disposal could reduce the demand for our services and reduce our revenues and income.
	•		Changes in existing regulations could require us to change the way we do business, which may have a material adverse affect on our consolidated financial position, results of operations and cash flows;
	•		Our patents or other proprietary technology may not prevent our competitors from developing substantially similar technology, which would reduce any competitive advantages we may have from these patents and proprietary technology;
	•		We may not be able to keep pace with the continual and rapid technological developments that characterize the market for our products and services, and our failure to do so may result in our loss of market share;
	•		We face intense competition in our existing markets and expect to face competition in any markets into which we seek to expand, which may put pressure on our ability to maintain our current market share and may limit our ability to expand our market share or enter into new markets;
	•		Our acquisitions or new market expansions may not achieve sales and profitability levels that justify our investment in them, which could result in these businesses placing downward pressure on our margins, our disposing of these businesses at a loss or potential impairment of goodwill related to these businesses;
	•		The demand for our services may be adversely affected by shortages of critical supplies or equipment in the oil and gas industry and personnel trained to operate this equipment;
	•		We may not be successful in gaining acceptance or market share for new products and services, including Bravo™ mats and our newly licensed proprietary water treatment technology;
	•		We may not be able to maintain the necessary permits to operate our non-hazardous waste disposal wells or we may not be able to successfully compete in this market;

	•		Adverse weather conditions could disrupt drilling operations and reduce the demand for our services;
	•		We may fail to comply with any of the numerous federal, state and local laws, regulations and policies that govern environmental protection, zoning and other matters applicable to our business, or these regulations and policies may change, and we may face fines or other penalties if we fail to comply with existing or new regulations, or be forced to make significant capital expenditures or changes to our operations;
	•		Our business exposes us to potential environmental and regulatory liability, and we could be required to pay substantial amounts with respect to these liabilities, including the costs to clean up and close contaminated sites;
	•		We may not have adequate insurance for potential liabilities, and any significant liability not covered by insurance or in excess of our coverage limits could have a material adverse affect on our financial condition;
	•		Our international operations are subject to uncertainties which could limit our ability to expand or reduce the revenues and profitability of these operations, including difficulties and costs associated with complying with a wide variety of complex foreign laws, treaties and regulations, unexpected changes in regulatory environments, inadequate protection of intellectual property in foreign countries, legal uncertainties, timing delays and expenses associated with tariffs, export licenses and other trade barriers, among other risks;
	•		Any increases in interest rates under our credit facility, either as a result of increases in the prime or LIBOR rates or as a result of changes in our funded debt to cash flow ratio, would increase our cost of borrowing and have an adverse affect on our consolidated financial statements; and
	•		We may not be able to retire or refinance our long-term debt at or before its maturity, whether due to conditions in financial markets or our own financial condition at that future time. We also cannot assure you that we will be able to obtain any replacement long-term financing on terms as favorable to us as under our current financing.

     For further information regarding these and other factors, risks and uncertainties affecting us, we refer you to the risk factors set forth in the Prospectus included in our Registration Statement on Form S-3 filed on May 8, 2002 (File No. 333-87840), to the section entitled “Forward-Looking Statements” on page 17 of that Prospectus and to our periodic reports filed with the Securities and Exchange Commission.

PART I

ITEM 1. Unaudited Consolidated Financial Statements

Newpark Resources, Inc.

		September 30,				December 31,
		2005				2004
(In thousands, except share data)		(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents		$	10,318			$	7,022
Trade accounts receivable, less allowance of $1,107 in 2005 and $3,260 in 2004			132,608				100,587
Notes and other receivables			10,158				7,321
Inventories			83,746				84,044
Deferred tax asset			10,585				12,501
Prepaid expenses and other current assets			13,236				13,275
Total current assets			260,651				224,750
Property, plant and equipment, at cost, net of accumulated depreciation			236,765				210,514
Goodwill			117,035				117,414
Deferred tax asset			—				4,063
Other intangible assets, net of accumulated amortization			18,525				15,355
Other assets			6,648				18,018
		$	639,624			$	590,114
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Foreign bank lines of credit		$	10,514			$	8,017
Current maturities of long-term debt			10,037				5,031
Accounts payable			41,278				38,822
Accrued liabilities			38,794				26,875
Total current liabilities			100,623				78,745
Long-term debt, less current portion			193,187				186,286
Other non-current liabilities			3,336				2,118
Stockholders’ equity:
Preferred Stock, $.01 par value, 1,000,000 shares authorized, none and 80,000 outstanding at September 30, 2005 and December 31, 2004, respectively			—				20,000
Common Stock, $.01 par value, 100,000,000 shares authorized, authorized, 88,303,729 and 84,021,351 issued and outstanding at September 30, 2005 and December 31, 2004, respectively			884				840
Paid-in capital			427,280				402,248
Unearned restricted stock compensation			(294	)			(472	)
Accumulated other comprehensive income			7,754				8,199
Retained deficit			(93,146	)			(107,850	)
Total stockholders’ equity			342,478				322,965
		$	639,624			$	590,114

See Accompanying Notes to Unaudited Consolidated Financial Statements

Newpark Resources, Inc.

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)		2005				2004				2005				2004
Revenues		$	139,143			$	110,790			$	409,692			$	319,733
Cost of revenues			126,420				103,401				368,194				296,110
			12,723				7,389				41,498				23,623
General and administrative expenses			2,480				2,122				7,180				6,993
Operating income			10,243				5,267				34,318				16,630
Foreign currency (gain) loss			(352	)			76				(343	)			217
Interest income			(126	)			(118	)			(250	)			(1,255	)
Interest expense			4,122				3,760				12,398				10,885
Income before income taxes			6,599				1,549				22,513				6,783
Provision for income taxes			1,554				589				7,300				2,578
Net income			5,045				960				15,213				4,205
Less:
Preferred stock dividends			59				225				509				713
Net income applicable to common and common equivalent shares		$	4,986			$	735			$	14,704			$	3,492
Basic and diluted income per common and common equivalent share		$	0.06			$	0.01			$	0.17			$	0.04

See Accompanying Notes to Unaudited Consolidated Financial Statements

Newpark Resources, Inc.

For the Three and Nine Month Periods Ended September 30

(Unaudited)

		Three Months Ended								Nine Months Ended
		September 30,								September 30,
(In thousands)		2005				2004				2005				2004
Net income		$	5,045			$	960			$	15,213			$	4,205
Other comprehensive income (loss):
Foreign currency translation adjustments			1,878				1,706				(445	)			(788	)
Comprehensive income		$	6,923			$	2,666			$	14,768			$	3,417

See Accompanying Notes to Unaudited Consolidated Financial Statements

Newpark Resources, Inc.

For the Nine Month Periods Ended September 30,

(Unaudited)

(In thousands )		2005				2004
Cash flows from operating activities:
Net income		$	15,213			$	4,205
Adjustments to reconcile net income to net cash provided by operations:
Depreciation and amortization			18,975				15,340
Provision for deferred income taxes			6,570				2,008
Gain on sale of assets			(549	)			(15	)
Change in assets and liabilities:
Decrease in restricted cash			—				8,029
Increase in accounts and notes receivable			(31,907	)			(7,806	)
Decrease (increase) in inventories			395				(105	)
Increase in other assets			(5,918	)			(5,385	)
Increase (decrease) in accounts payable			1,822				(4,156	)
Increase in accrued liabilities and other			14,233				1,040
Net cash provided by operating activities			18,834				13,155
Cash flows from investing activities:
Capital expenditures			(25,348	)			(14,224	)
Proceeds from sale of property, plant and equipment			1,022				336
Acquisition, net of cash acquired			(840	)			—
Payment received on former shipyard operation note receivable			—				6,328
Net cash used in investing activities			(25,166	)			(7,560	)
Cash flows from financing activities:
Net borrowings (payments) on lines of credit			6,415				(19,345	)
Long-term borrowings			4,855				13,213
Principal payments on notes payable and long-term debt			(5,890	)			—
Preferred stock dividends paid in cash			(375	)			(450	)
Proceeds from exercise of stock options and ESPP			4,942				631
Net cash provided by (used in) financing activities			9,947				(5,951	)
Effect of exchange rate changes			(319	)			(5	)
Net increase (decrease) in cash and cash equivalents			3,296				(361	)
Cash and cash equivalents at beginning of period			7,022				4,692
Cash and cash equivalents at end of period		$	10,318			$	4,331

See Accompanying Notes to Unaudited Consolidated Financial Statements

NEWPARK RESOURCES, INC.

Note 1 — Interim Financial Statements

          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”) as of September 30, 2005, the results of its operations for the three and nine month periods ended September 30, 2005 and 2004, and its cash flows for the nine month periods ended September 30, 2005 and 2004. All such adjustments are of a normal recurring nature. These interim financial statements should be read in conjunction with the December 31, 2004 audited financial statements and related notes filed in Newpark’s Annual Report on Form 10-K. The results of operations for the three and nine month periods ended September 30, 2005 are not necessarily indicative of the results to be expected for the entire year. We have reclassified certain amounts previously reported to conform with the presentation at September 30, 2005.

Note 2 — Earnings Per Share

     The following table presents the reconciliation of the numerator and denominator for calculating income per share in accordance with the disclosure requirements of Financial Accounting Standards (“FAS”) 128:

		Three Months Ended
		September 30,
(In thousands, except per share amounts)		2005				2004
Income applicable to common and common equivalent shares		$	4,986			$	735
Weighted average number of common shares outstanding			87,147				83,921
Add:
Net effect of dilutive stock options and warrants			793				332
Adjusted weighted average number of common shares outstanding			87,940				84,253
Basic and diluted income applicable to common and common equivalent shares		$	0.06			$	0.01

		Nine Months Ended
		September 30,
(In thousands, except per share amounts)		2005				2004
Income applicable to common and common equivalent shares		$	14,704			$	3,492
Weighted average number of common shares outstanding			85,330				83,549
Add:
Net effect of dilutive stock options and warrants			467				269
Adjusted weighted average number of common shares outstanding			85,797				83,818
Basic and diluted income applicable to common and common equivalent shares		$	0.17			$	0.04

     Basic net income per share was calculated by dividing net income by the weighted-average number of common shares outstanding during the period. For the three months and nine months ended September 30, 2005, Newpark had dilutive stock options and warrants of approximately 4.6 million shares and 3.4 million shares, respectively, which were assumed to be exercised using the treasury stock method. For the three months and nine months ended September 30, 2004, Newpark had dilutive stock options and warrants of approximately 3.0 million shares and 1.9 million shares, respectively, which were assumed to be exercised using the treasury stock method. The resulting net effects of stock options and warrants were used in calculating diluted income per share for these periods.

     Options and warrants to purchase a total of approximately 4.7 million shares and 6.0 million shares, respectively, of common stock were outstanding during the three months and nine months ended September 30, 2005, but were not included in the computation of diluted income per share because they were anti-dilutive. Options and warrants to purchase a total of approximately 7.2 million shares and 8.2 million shares of common stock were outstanding during the three months and nine months ended September 30, 2004, respectively, but were not included in the computation of diluted income per share because they were anti-dilutive.

     The net effects of the assumed conversion of preferred stock have been excluded from the computation of diluted income per share for the three and nine months ended September 30, 2004 because the effect would have been anti-dilutive.

Note 3 — Stock-Based Compensation

     At September 30, 2005, Newpark maintained six stock-based compensation plans, including four stock option plans and two long-term incentive plans. Newpark applies Accounting Principles Board Opinion 25 (“APB 25”) and related Interpretations in accounting for its stock-based compensation plans. In accordance with this guidance, no compensation cost has been recognized for Newpark’s stock option plans as the exercise price of all stock options granted thereunder is equal to the fair value at the date of grant. Compensation expense is recorded for Newpark’s long-term incentive plans. Had compensation costs for all of Newpark’s stock-based compensation plans been determined

based on the fair value at the grant dates for awards under those plans consistent with the method of FAS 123, “Accounting for Stock-Based Compensation,” Newpark’s net income and net income per share would have been the pro forma amounts indicated below:

		Three Months Ended
		September 30,
(In thousands, except per share data)		2005				2004
Income applicable to common and common equivalent shares:
As reported		$	4,986			$	735
Add recorded stock-based compensation expense, net of related taxes			90				51
Deduct stock-based compensation expense determined under fair value based method for all awards, net of related taxes			(273	)			(485	)
Pro forma income		$	4,803			$	301
Earnings per share:
Basic:
As reported		$	0.06			$	.01
Proforma		$	0.06			$	.00
Diluted:
As reported		$	0.06			$	.01
Proforma		$	0.05			$	.00

		Nine Months Ended
		September 30,
(In thousands, except per share data)		2005				2004
Income applicable to common and common equivalent shares:
As reported		$	14,704			$	3,492
Add recorded stock-based compensation expense, net of related taxes			241				154
Deduct stock-based compensation expense determined under fair value based method for all awards, net of related taxes			(683	)			(1,310	)
Pro forma income		$	14,262			$	2,336
Earnings per share:
Basic:
As reported		$	0.17			$	.04
Pro forma		$	0.17			$	.03
Diluted:
As reported		$	0.17			$	.04
Pro forma		$	0.17			$	.03

     During the year ended December 31, 2004, Newpark modified the terms of non-director and non-executive officer stock options to accelerate the vesting of out-of-the-money options. This resulted in a decrease of approximately $177,000 and $661,000, respectively, in the pro forma after-tax expense that otherwise would have been reported for the three and nine months ended September 30, 2005 presented above.

Note 4 — Accounts Receivable

     Included in accounts receivable at September 30, 2005 and December 31, 2004 are:

		September 30,				December 31,
(In thousands)		2005				2004
Trade receivables		$	109,393			$	86,152
Unbilled revenues			24,322				17,695
Gross trade receivables			133,715				103,847
Allowance for doubtful accounts			(1,107	)			(3,260	)
Net trade receivables		$	132,608			$	100,587

     The reduction in the allowance for doubtful accounts during the nine months ended September 30, 2005 is principally due to the write-off of accounts deemed to be uncollectible.

Note 5 — Inventory

     Newpark’s inventory consisted of the following items at September 30, 2005 and December 31, 2004:

		September 30,				December 31,
(In thousands)		2005				2004
Finished goods:
Composite mats		$	9,960			$	12,824
Raw materials and components:
Drilling fluids raw material and components			64,901				63,602
Logs			6,992				5,121
Supplies			308				287
Other			1,585				2,210
Total raw materials and components			73,786				71,220
Total inventory		$	83,746			$	84,044

Note 6 — Acquisitions

     On April 18, 2005, Newpark acquired OLS Consulting Services, Inc. (“OLS”) in exchange for a net cash payment of $840,000. The principal assets of OLS included patents licensed to The Loma Company, LLC (“LOMA”) for use in the manufacture of composite mats, its 51% membership interest in LOMA and a note receivable from LOMA. As a result of the acquisition of OLS, Newpark, through two of its subsidiaries, owns all of the outstanding equity interests in LOMA.

     The acquisition of OLS and consolidation of LOMA were accounted for following the principles of FAS 141. The purchase price, including approximately $57,000 of acquisition costs, was allocated to the net assets of OLS and LOMA based on preliminary estimates of fair value at the date of acquisition as shown in the table below (in thousands). Estimates are considered preliminary principally pending final income tax amounts which affect the recording of deferred taxes.

Current assets, net of cash acquired		$	467
Property, plant and equipment			15,585
Intangible assets — patents (10 - 18 year lives)			4,582
Accrued liabilities			(19	)
Current and long-term debt			(5,284	)
Payable to Newpark			(14,491	)
Cash purchase price, net of cash acquired		$	840

     In consolidation, the payable to Newpark was eliminated primarily against other assets.

Note 7 — New Accounting Standards

     In December 2004, the Financial Accounting Standards Board (“FASB”) issued FAS 123 (revised 2004), “Share-Based Payment,” (“FAS 123(R)”) which is a revision of FAS 123, “Accounting for Stock-Based Compensation.” FAS 123(R) supersedes Accounting Principles Board (“APB”) Opinion No. 25, “Accounting for Stock Issued to Employees,” and amends FAS 95, “Statement of Cash Flows.” Generally, the approach in FAS 123(R) is similar to the approach described in FAS 123. However, FAS 123(R) requires that all share-based payments to employees, including grants of employee stock options, be recognized in the income statement based on their fair values. Pro forma disclosure is no longer an alternative. FAS 123(R) permits adoption of its requirements using one of two methods: (1) a “modified prospective” method in which compensation cost is recognized beginning with the effective date of FAS 123(R) (a) based on the requirement of FAS 123(R) for all share-based payments granted after that effective date and (b) based on the requirements of FAS 123 for all awards granted prior to the effective date of FAS 123(R) that remain unvested on the effective date; and (2) a “modified retrospective” method which includes the requirements of the modified prospective method previously described, but also permits restatement of prior periods based on the amounts previously reported in pro forma disclosures under FAS 123. Newpark currently plans to adopt FAS 123(R) using the modified prospective method and to continue using the Black-Scholes option-pricing model to estimate the fair value of its stock options. On April 14, 2005, the Securities and Exchange Commission announced amended compliance dates for FAS 123(R) and the new rules now require Newpark to adopt FAS 123(R) starting with its first quarter of its fiscal year beginning January 1, 2006.

     As permitted by FAS 123, Newpark currently accounts for stock-based compensation using APB 25’s intrinsic value method and, as such, generally recognizes no compensation cost for employee stock options. Accordingly, the adoption of FAS 123(R) may have a material impact on Newpark’s results of operations. However, the ultimate impact of adoption of FAS 123(R) cannot be predicted at this time because it will depend on

levels of share-based payments granted in the future. If Newpark had adopted FAS 123(R) in prior periods, the impact for the three and nine months ended September 30, 2005 and 2004, would have approximated the impact of FAS 123 as described in the disclosure of pro forma net income and earnings per share in Note 3.

     In November 2004, the FASB issued FAS 151, “Inventory Costs-an amendment of ARB No. 43, Chapter 4,” to clarify the accounting for abnormal amounts of idle facility expense, freight, handling costs and wasted material (spoilage). It requires that these items be recognized as current-period charges regardless of whether they meet a criterion of “so abnormal.” FAS 151 is effective for inventory costs incurred during fiscal years beginning after June 15, 2005. Management has not yet determined the impact that adoption of FAS 151 will have on Newpark’s financial results.

Note 8 — Segment Data

     Summarized financial information concerning Newpark’s reportable segments is shown in the following table:

		Three Months Ended								Nine Months Ended
		September 30,								September 30,
(In thousands)		2005				2004				2005				2004
Revenues by segment:
Fluids sales and engineering		$	104,298			$	71,448			$	282,560			$	196,042
Mat and integrated services			21,322				23,979				82,286				76,072
E&P waste disposal			13,523				15,363				44,846				47,619
Total revenues		$	139,143			$	110,790			$	409,692			$	319,733
Segment operating income:
Fluids sales and engineering		$	12,708			$	4,978			$	29,137			$	13,778
Mat and integrated services			165				1,168				8,962				4,232
E&P waste disposal			(150	)			1,243				3,399				5,613
Total segment operating income			12,723				7,389				41,498				23,623
General and administrative expenses			2,480				2,122				7,180				6,993
Total operating income		$	10,243			$	5,267			$	34,318			$	16,630

The figures above are shown net of intersegment transfers.

Note 9 — Condensed Consolidating Financial Information

     The supplemental condensed consolidating financial information should be read in conjunction with the notes to these consolidated financial statements and has been prepared pursuant to the rules and regulations for condensed financial information. The supplemental condensed consolidated financial information does not include all disclosures included in annual financial statements; nevertheless, Newpark believes that the disclosures made are adequate to make the information presented not misleading. Certain reclassifications were made to conform all of the financial information to the financial

presentation on a consolidated basis. The principal eliminating entries eliminate investments in subsidiaries, intercompany balances and intercompany revenues and expenses. The allocation of the consolidated income tax provision was made using the with and without allocation method.

SUPPLEMENTAL CONDENSED CONSOLIDATING BALANCE SHEET
AS OF SEPTEMBER 30, 2005
(In thousands)

		Parent								Non-
		Company				Guarantor				Guarantor
		Only				Subsidiaries				Subsidiaries				Eliminations				Consolidated
Current assets:
Cash and cash equivalents		$	2,562			$	3,110			$	4,646			$	—			$	10,318
Accounts receivable, net			—				103,865				31,120				(2,377	)			132,608
Inventories			—				63,058				20,688				—				83,746
Other current assets			15,192				13,134				8,833				(3,180	)			33,979
Total current assets			17,754				183,167				65,287				(5,557	)			260,651
Investment in subsidiaries			487,996				—				—				(487,996	)			—
Property and equipment, net			11,977				217,744				7,044				—				236,765
Goodwill			—				95,115				21,920				—				117,035
Identifiable intangibles, net			—				16,224				2,301				—				18,525
Other assets, net			22,917				1,887				1,122				(19,278	)			6,648
Total assets		$	540,644			$	514,137			$	97,674			$	(512,831	)		$	639,624
Current liabilities:
Foreign bank lines of credit		$	—			$	—			$	10,514			$	—			$	10,514
Current maturities of long-term debt			2,117				7,852				68								10,037
Accounts payable			686				26,885				16,084				(2,377	)			41,278
Accrued liabilities			9,283				18,728				12,362				(1,579	)			38,794
Total current liabilities			12,086				53,465				39,028				(3,956	)			100,623
Long-term debt			183,583				3,491				17,825				(11,712	)			193,187
Other non-current liabilities			2,497				2,458				2,389				(4,008	)			3,336
Stockholders’ Equity:
Common stock			884				807				12,750				(13,557	)			884
Paid-in capital			427,280				437,742				20,252				(457,994	)			427,280
Unearned restricted stock			(294	)			—				—				—				(294	)
Cumulative translation adjustment			7,754				—				5,076				(5,076	)			7,754
Retained deficit			(93,146	)			16,174				354				(16,528	)			(93,146	)
Total stockholders’ equity			342,478				454,723				38,432				(493,155	)			342,478
Total liabilities and equity		$	540,644			$	514,137			$	97,674			$	(512,831	)		$	639,624

SUPPLEMENTAL CONDENSED CONSOLIDATING BALANCE SHEET
AS OF DECEMBER 31, 2004
(In thousands)

		Parent								Non-
		Company				Guarantor				Guarantor
		Only				Subsidiaries				Subsidiaries				Eliminations				Consolidated
Current assets:
Cash and cash equivalents		$	1,954			$	1,200			$	3,868			$	—			$	7,022
Accounts receivable, net			—				82,651				20,096				(2,160	)			100,587
Inventories			—				65,158				18,886				—				84,044
Other current assets			15,814				8,800				8,967				(484	)			33,097
Total current assets			17,768				157,809				51,817				(2,644	)			224,750
Investment in subsidiaries			461,677				—				—				(461,677	)			—
Property and equipment, net			3,814				200,373				6,327				—				210,514
Goodwill			—				95,114				22,300				—				117,414
Identifiable intangibles, net			—				12,715				2,640				—				15,355
Other assets, net			26,011				13,068				776				(17,774	)			22,081
Total assets		$	509,270			$	479,079			$	83,860			$	(482,095	)		$	590,114
Current liabilities:
Foreign bank lines of credit		$	—			$	—			$	8,017			$	—			$	8,017
Current portion of long-term debt			1,250				3,748				33				—				5,031
Accounts payable			956				30,868				9,158				(2,160	)			38,822
Accrued liabilities			5,736				11,017				10,606				(484	)			26,875
Total current liabilities			7,942				45,633				27,814				(2,644	)			78,745
Long-term debt			177,861				4,083				18,372				(14,030	)			186,286
Other non-current liabilities			502				(1,104	)			2,720				—				2,118
Preferred stock			20,000				—				—				—				20,000
Common stock			840				807				12,750				(13,557	)			840
Paid-in capital			402,248				436,133				21,397				(457,530	)			402,248
Unearned restricted stock			(472	)			—				—				—				(472	)
Cumulative translation adjustment			8,199				—				3,740				(3,740	)			8,199
Retained deficit			(107,850	)			(6,473	)			(2,933	)			9,406				(107,850	)
Total stockholders’ equity			322,965				430,467				34,954				(465,421	)			322,965
Total liabilities and equity		$	509,270			$	479,079			$	83,860			$	(482,095	)		$	590,114

SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF INCOME
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2005
(In thousands)

		Parent								Non-
		Company				Guarantor				Guarantor
		Only				Subsidiaries				Subsidiaries				Eliminations				Consolidated
Revenues		$	—			$	115,605			$	23,538			$	—			$	139,143
Cost of revenues			—				105,041				21,379				—				126,420
			—				10,564				2,159				—				12,723
General and administrative expense			2,296				—				184				—				2,480
Operating income (loss)			(2,296	)			10,564				1,975				—				10,243
Other (income) expense			68				(21	)			(525	)			—				(478	)
Interest expense			3,663				188				271				—				4,122
Income (loss) before income taxes			(6,027	)			10,397				2,229				—				6,599
Income taxes (benefit)			(2,224	)			3,266				512				—				1,554
Equity in earnings of subsidiaries			8,848				—				—				(8,848	)			—
Net income		$	5,045			$	7,131			$	1,717			$	(8,848	)		$	5,045

SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF INCOME
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2004
(In thousands)

		Parent								Non-
		Company				Guarantor				Guarantor
		Only				Subsidiaries				Subsidiaries				Eliminations				Consolidated
Revenues		$	—			$	93,884			$	16,906			$	—			$	110,790
Cost of revenues			—				86,251				17,150				—				103,401
			—				7,633				(244	)			—				7,389
General and administrative expense			1,960				—				162				—				2,122
Operating income (loss)			(1,960	)			7,633				(406	)			—				5,267
Other (income) expense			—				(111	)			69								(42	)
Interest expense			3,319				142				299								3,760
Income (loss) before income taxes			(5,279	)			7,602				(774	)			—				1,549
Income taxes (benefit)			(2,005	)			2,943				(349	)			—				589
Equity in earnings of subsidiaries			4,234				—				—				(4,234	)			—
Net income		$	960			$	4,659			$	(425	)		$	(4,234	)		$	960

SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF INCOME
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005
(In thousands)

		Parent								Non-
		Company				Guarantor				Guarantor
		Only				Subsidiaries				Subsidiaries				Eliminations				Consolidated
Revenues		$	—			$	338,336			$	71,356			$	—			$	409,692
Cost of revenues			—				301,594				66,600				—				368,194
			—				36,742				4,756				—				41,498
General and administrative expense			6,734				—				446				—				7,180
Operating income (loss)			(6,734	)			36,742				4,310				—				34,318
Other (income) expense			107				(99	)			(601	)			—				(593	)
Interest expense			11,150				634				614				—				12,398
Income (loss) before income taxes			(17,991	)			36,207				4,297				—				22,513
Income taxes (benefit)			(6,783	)			13,421				662				—				7,300
Equity in earnings of subsidiaries			26,421				—				—				(26,421	)			—
Net income		$	15,213			$	22,786			$	3,635			$	(26,421	)		$	15,213

SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF INCOME
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2004
(In thousands)

		Parent								Non-
		Company				Guarantor				Guarantor
		Only				Subsidiaries				Subsidiaries				Eliminations				Consolidated
Revenues		$	—			$	263,041			$	56,692			$	—			$	319,733
Cost of revenues			—				241,470				54,640				—				296,110
			—				21,571				2,052				—				23,623
General and administrative expense			6,548				—				445				—				6,993
Operating income (loss)			(6,548	)			21,571				1,607				—				16,630
Other (income) expense			(858	)			(344	)			164				—				(1,038	)
Interest expense			10,045				375				465				—				10,885
Income (loss) before income taxes			(15,735	)			21,540				978				—				6,783
Income taxes (benefit)			(5,980	)			8,117				441				—				2,578
Equity in earnings of subsidiaries			13,960				—				—				(13,960	)			—
Net income		$	4,205			$	13,423			$	537			$	(13,960	)		$	4,205

SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005
(In thousands)

		Parent								Non-
		Company				Guarantor				Guarantor
		Only				Subsidiaries				Subsidiaries				Eliminations				Consolidated
Net cash provided by operating activities		$	(21,987	)		$	32,034			$	8,787			$	—			$	18,834
Net cash provided by (used in) investing activities:
Capital expenditures, net of sales proceeds			(4,769	)			(18,776	)			(781	)			—				(24,326	)
Acquisition, net of cash acquired			(840	)			—				—				—				(840	)
Investments			17,048				(7,477	)			(9,571	)			—				—
			11,439				(26,253	)			(10,352	)			—				(25,166	)
Net cash provided by (used in) financing activities:
Net borrowings (payments on) lines of credit, notes payable and long-term debt			6,588				(3,871	)			2,663				—				5,380
Other			4,567				—				—				—				4,567
			11,155				(3,871	)			2,663				—				9,947
Effect of exchange rate changes			—				—				(319	)			—				(319	)
Net increase (decrease) in cash and cash equivalents			607				1,910				779				—				3,296
Cash and cash equivalents:
Beginning of period			1,954				1,200				3,868				—				7,022
End of period		$	2,562			$	3,110			$	4,646			$	—			$	10,318