Form 10-Q
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended March 31, 2010
or
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to .
Commission File No. 1-2960
Newpark Resources, Inc.
(Exact name of registrant as specified in its charter)
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Delaware
(State or other jurisdiction of
incorporation or organization)
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72-1123385
(I.R.S. Employer
Identification No.) |
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2700 Research Forest Drive, Suite 100
The Woodlands, Texas
(Address of principal executive offices)
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77381
(Zip Code) |
(281) 362-6800
(Registrant’s telephone number, including area code)
(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 has submitted electronically and posted on its
corporate Web site, if any, every Interactive Data File required to be submitted and posted
pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period
that the registrant was required to submit and post such files).
Yes o No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a
non-accelerated filer or a smaller reporting company. See definitions of “large accelerated
filer”, “accelerated filer” and “small reporting company” in Rule 12b-2 of the Exchange Act.
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Accelerated filer þ
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Non-accelerated filer o
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Smaller reporting company o |
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(Do not check if a smaller reporting company) |
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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
As of April 27, 2010, a total of 88,990,682 shares of common stock, $0.01 par value per share, were
outstanding.
NEWPARK RESOURCES, INC.
INDEX TO QUARTERLY REPORT ON FORM 10-Q
FOR THE THREE MONTHS ENDED
MARCH 31, 2010
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of
Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act
of 1934, as amended, and the Private Securities Litigation Reform Act of 1995, as amended. We also
may provide oral or written forward-looking statements in other materials we release to the public.
The words “anticipates,” “believes,” “estimates,” “expects,” “plans,” “intends,” and similar
expressions are intended to identify these forward-looking statements but are not the exclusive
means of identifying them. These forward-looking statements reflect the current views of our
management; however, various risks, uncertainties and contingencies, including the risks identified
in Item 1A in Part II of this Quarterly Report, Item 1A, “Risk Factors,” in Part I of our Annual
Report on Form 10-K for the year ended December 31, 2009, and those set forth from time to time in
our filings with the Securities and Exchange Commission, could cause our actual results,
performance or achievements to differ materially from those expressed in, or implied by, these
statements, including the success or failure of our efforts to implement our business strategy.
We assume no obligation to update publicly any forward-looking statements, whether as a result
of new information, future events or otherwise, except as required by securities laws. In light of
these risks, uncertainties and assumptions, the forward-looking events discussed in this Quarterly
Report on Form 10-Q might not occur.
For further information regarding these and other factors, risks and uncertainties affecting
us, we refer you to the risk factors set forth in Item 1A in Part II of this Quarterly Report and
Part I of our Annual Report on Form 10-K for the year ended December 31, 2009.
2
PART I FINANCIAL INFORMATION
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| ITEM 1. |
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Financial Statements |
Newpark Resources, Inc.
Condensed
Consolidated Balance Sheets
(unaudited)
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March 31, |
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December 31, |
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| (In
thousands, except share data) |
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2010 |
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2009 |
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ASSETS |
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Cash and cash equivalents |
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$ |
12,266 |
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$ |
11,534 |
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Receivables, net |
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153,986 |
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122,386 |
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Inventories |
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105,359 |
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115,495 |
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Deferred tax asset |
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20,075 |
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7,457 |
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Prepaid expenses and other current assets |
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11,819 |
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11,740 |
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Total current assets |
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303,505 |
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268,612 |
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Property, plant and equipment, net |
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220,298 |
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224,625 |
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Goodwill |
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62,097 |
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62,276 |
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Other intangible assets, net |
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15,219 |
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16,037 |
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Other assets |
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4,669 |
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13,564 |
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Total assets |
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$ |
605,788 |
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$ |
585,114 |
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LIABILITIES AND STOCKHOLDERS’ EQUITY |
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Foreign bank lines of credit |
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$ |
7,378 |
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$ |
6,901 |
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Current maturities of long-term debt |
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10,232 |
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10,319 |
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Accounts payable |
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61,613 |
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62,992 |
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Accrued liabilities |
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28,258 |
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25,290 |
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Total current liabilities |
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107,481 |
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105,502 |
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Long-term debt, less current portion |
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110,666 |
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105,810 |
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Deferred tax liability |
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8,871 |
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2,083 |
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Other noncurrent liabilities |
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4,421 |
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3,697 |
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Total liabilities |
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231,439 |
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217,092 |
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Commitments and contingencies (Note 6) |
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Common stock, $0.01 par value, 200,000,000 shares authorized
91,686,001 and 91,672,871
shares issued, respectively |
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917 |
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917 |
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Paid-in capital |
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461,350 |
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460,544 |
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Accumulated other comprehensive income |
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6,243 |
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8,635 |
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Retained deficit |
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(78,878 |
) |
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(86,660 |
) |
Treasury stock, at cost; 2,705,857 and 2,727,765 shares,
respectively |
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(15,283 |
) |
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(15,414 |
) |
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Total stockholders’ equity |
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374,349 |
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368,022 |
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Total liabilities and stockholders’ equity |
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$ |
605,788 |
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$ |
585,114 |
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See Accompanying Notes to Unaudited Condensed Consolidated Financial Statements
3
Newpark Resources, Inc.
Condensed Consolidated Statements of Operations
(Unaudited)
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Three Months Ended March 31, |
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| (In thousands, except per share data) |
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2010 |
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2009 |
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Revenues |
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$ |
160,798 |
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$ |
126,938 |
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Cost of revenues |
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133,518 |
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123,512 |
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Selling, general and administrative expenses |
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14,413 |
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16,230 |
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Other income, net |
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(842 |
) |
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(25 |
) |
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Operating income (loss) |
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13,709 |
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(12,779 |
) |
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Foreign currency exchange (gain) loss |
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(611 |
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29 |
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Interest expense |
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2,148 |
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1,650 |
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Income (loss) from operations before income taxes |
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12,172 |
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(14,458 |
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Provision for income taxes |
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4,390 |
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(2,454 |
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Net income (loss) |
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$ |
7,782 |
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$ |
(12,004 |
) |
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Basic weighted average common shares outstanding |
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88,654 |
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88,323 |
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Diluted weighted average common shares
outstanding |
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88,867 |
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88,323 |
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Income (loss) per common share — basic |
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$ |
0.09 |
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$ |
(0.14 |
) |
Income (loss) per common share — diluted |
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$ |
0.09 |
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$ |
(0.14 |
) |
See Accompanying Notes to Unaudited Condensed Consolidated Financial Statements
4
Newpark Resources, Inc.
Condensed Consolidated Statements of Comprehensive Income
(Unaudited)
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Three Months Ended March 31, |
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| (In thousands) |
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2010 |
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2009 |
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Net income (loss) |
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$ |
7,782 |
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$ |
(12,004 |
) |
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Changes in fair value of interest rate swap,
net of tax |
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(10 |
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72 |
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Foreign currency translation adjustments |
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(2,382 |
) |
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(3,117 |
) |
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Comprehensive income (loss) |
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$ |
5,390 |
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$ |
(15,049 |
) |
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See Accompanying Notes to Unaudited Condensed Consolidated Financial Statements
5
Newpark Resources, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
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Three Months Ended March 31, |
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| (In thousands) |
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2010 |
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2009 |
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Cash flows from operating activities: |
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Net income (loss) |
|
$ |
7,782 |
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$ |
(12,004 |
) |
Adjustments to reconcile net income (loss) to
net cash provided by operations: |
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Depreciation and amortization |
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6,711 |
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6,927 |
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Stock-based compensation expense |
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|
870 |
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|
427 |
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Provision for deferred income taxes |
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3,147 |
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(3,596 |
) |
Provision for doubtful accounts |
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|
239 |
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|
587 |
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Loss (gain) on sale of assets |
|
|
348 |
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(224 |
) |
Change in assets and liabilities: |
|
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(Increase) decrease in receivables |
|
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(32,724 |
) |
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|
74,374 |
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Decrease in inventories |
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|
9,183 |
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|
|
5,520 |
|
(Increase) decrease in other assets |
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(261 |
) |
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|
2,543 |
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Decrease in accounts payable |
|
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(1,134 |
) |
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(30,958 |
) |
Increase (decrease) in accrued liabilities and other |
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3,470 |
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(10,558 |
) |
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Net cash (used in) provided by operating activities |
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(2,369 |
) |
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|
33,038 |
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Cash flows from investing activities: |
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Capital expenditures |
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(2,029 |
) |
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(7,540 |
) |
Proceeds from sale of property, plant and equipment |
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48 |
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|
533 |
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Net cash used in investing activities |
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(1,981 |
) |
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(7,007 |
) |
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Cash flows from financing activities: |
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Borrowings on lines of credit |
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45,409 |
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48,827 |
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Payments on lines of credit |
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(39,564 |
) |
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(73,784 |
) |
Principal payments on notes payable and long-term
debt |
|
|
(186 |
) |
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|
(96 |
) |
Long-term borrowings |
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|
— |
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|
740 |
|
Proceeds from employee stock plans |
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48 |
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|
103 |
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Purchase of treasury stock |
|
|
(86 |
) |
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(202 |
) |
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Net cash provided by (used in) in financing
activities |
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5,621 |
|
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|
(24,412 |
) |
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Effect of exchange rate changes on cash |
|
|
(539 |
) |
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|
(562 |
) |
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Net increase in cash and cash equivalents |
|
|
732 |
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|
1,057 |
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| |
Cash and cash equivalents at beginning of period |
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11,534 |
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8,252 |
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Cash and cash equivalents at end of period |
|
$ |
12,266 |
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$ |
9,309 |
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Cash paid for: |
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Income taxes (net of refunds) |
|
$ |
1,132 |
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|
$ |
1,853 |
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Interest |
|
$ |
2,269 |
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|
$ |
1,426 |
|
See Accompanying Notes to Unaudited Condensed Consolidated Financial Statements
6
NEWPARK RESOURCES, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 1 — Basis of Presentation and Significant Accounting Policies
The accompanying unaudited condensed consolidated financial statements of Newpark Resources,
Inc. and our wholly-owned subsidiaries, which we refer to as “we,” “our” or “us,” have been
prepared in accordance with Rule 10-01 of Regulation S-X for interim financial statements required
to be filed with the Securities and Exchange Commission (“SEC”), and do not include all information
and footnotes required by generally accepted accounting principles for complete financial
statements. These unaudited condensed consolidated financial statements should be read in
conjunction with the consolidated financial statements and notes thereto included in our Annual
Report on Form 10-K for the year ended December 31, 2009. Our fiscal year end is December 31 and our
first quarter represents the three month period ending March 31. The results of operations for the
first quarter of 2010 are not necessarily indicative of the results to be expected for the entire
year.
In the opinion of management, the accompanying unaudited condensed consolidated financial
statements reflect all adjustments necessary to present fairly our financial position as of
March 31, 2010, the results of our operations for the first quarter of 2010 and 2009, and our cash
flows for the first quarter of 2010 and 2009. All adjustments are of a normal recurring nature. Our
balance sheet at December 31, 2009 reflects the audited financial statements at that date.
The preparation of financial statements in conformity with accounting principles generally
accepted in the United States of America (“U.S. GAAP”) requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities, the disclosure of
contingent assets and liabilities at the date of the financial statements and the reported amounts
of revenues and expenses during the reporting period. Actual results could differ from those
estimates. For further information, see Note 1 in our Annual Report on Form 10-K for the year ended
December 31, 2009.
New Accounting Standards
In October 2009, the Financial Accounting Standards Board (“FASB”) issued additional guidance
on multiple-deliverable revenue arrangements. The guidance provides amendments to the criteria for
separating consideration in multiple-deliverable arrangements. It replaces the term “fair value”
in the revenue allocation guidance with “selling price” to clarify that the allocation of revenue
is based on entity-specific assumptions rather than assumptions of a marketplace participant, and
they establish a selling price hierarchy for determining the selling price of a deliverable. The
amendments eliminate the residual method of allocation and require that arrangement consideration
be allocated at the inception of the arrangement to all deliverables using the relative selling
price method, and they significantly expand the required disclosures related to
multiple-deliverable revenue arrangements. The amendments will be effective prospectively for
revenue arrangements entered into or materially modified in fiscal years beginning after June 15,
2010 and we do not expect the impact of this statement to be material.
7
Note 2 — Earnings per Share
The following table presents the reconciliation of the numerator and denominator for
calculating income per share:
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First Quarter |
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| (In thousands, except per share data) |
|
2010 |
|
|
2009 |
|
| |
Net income (loss) |
|
$ |
7,782 |
|
|
$ |
(12,004 |
) |
|
|
|
|
|
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|
|
|
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|
|
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|
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|
Weighted average number of common shares
outstanding |
|
|
88,654 |
|
|
|
88,323 |
|
Add: Net effect of dilutive stock options
and restricted stock awards |
|
|
213 |
|
|
|
— |
|
|
|
|
|
|
|
|
Adjusted weighted average number of common shares
outstanding |
|
|
88,867 |
|
|
|
88,323 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per common share: |
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.09 |
|
|
$ |
(0.14 |
) |
Diluted |
|
$ |
0.09 |
|
|
$ |
(0.14 |
) |
|
|
|
|
|
|
|
|
|
Stock options, restricted stock and warrants
excluded from
calculation of diluted earnings per share because
they were anti-dilutive for the period |
|
|
4,561 |
|
|
|
5,361 |
|
|
|
|
|
|
|
|
For the first quarter of 2010, we had dilutive stock options and restricted stock of
approximately 2.8 million shares, and zero dilutive stock options or restricted stock for the same
period in 2009. The resulting net effect of stock options and restricted stock were used in
calculating diluted income per share for the period.
On June 1, 2000, we completed the sale of 120,000 shares of Series B Convertible Preferred
Stock, $0.01 par value per share (the “Series B Preferred Stock”), and a warrant (the “Series B
Warrant”) to purchase up to 1,900,000 shares of our common stock at an exercise price of $10.075
per share, subject to anti-dilution adjustments. Prior to 2006, all outstanding shares of the
Series B Preferred Stock were converted to common stock. The Series B Warrant was originally
issued with a seven year life, expiring June 1, 2007. This warrant contains certain registration
provisions, which, if not met, reduce the exercise price of the warrant by 2.5%, for each year we
are not in compliance with the registration requirements, and extend the term of the warrant.
Effective May 1, 2009, we became compliant with the registration requirements for the warrant.
Previously, we were not in compliance with these requirements which resulted in adjustments to the
exercise price and extended the term of the warrant. As of March 31, 2010, the Series B Warrant,
as adjusted for certain anti-dilution provisions, remains outstanding and provides for the right to
purchase up to approximately 2.1 million shares of our common stock at an exercise price of $8.98,
and expires in February 2012.
Note 3 — Receivables, net
Receivables consist of the following:
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|
|
|
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| |
|
March 31, |
|
|
December 31, |
|
| (In thousands) |
|
2010 |
|
|
2009 |
|
|
|
|
|
|
|
|
|
|
Gross trade receivables |
|
|
154,531 |
|
|
|
123,909 |
|
Allowance for doubtful accounts |
|
|
(6,083 |
) |
|
|
(5,969 |
) |
|
|
|
|
|
|
|
Net trade receivables |
|
|
148,448 |
|
|
|
117,940 |
|
|
|
|
|
|
|
|
|
|
Notes and other receivables |
|
|
5,538 |
|
|
|
4,446 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total receivables, net |
|
$ |
153,986 |
|
|
$ |
122,386 |
|
|
|
|
|
|
|
|
8
Note 4 — Inventories
Inventories consist of the following:
| |
|
|
|
|
|
|
|
|
| |
|
March 31, |
|
|
December 31, |
|
| (In thousands) |
|
2010 |
|
|
2009 |
|
| |
Finished goods-mats |
|
$ |
630 |
|
|
$ |
1,681 |
|
|
|
|
|
|
|
|
|
|
Raw materials and components: |
|
|
|
|
|
|
|
|
Drilling fluids |
|
|
104,157 |
|
|
|
113,287 |
|
Mats |
|
|
572 |
|
|
|
527 |
|
|
|
|
|
|
|
|
Total raw materials and
components |
|
|
104,729 |
|
|
|
113,814 |
|
|
|
|
|
|
|
|
| |
Total |
|
$ |
105,359 |
|
|
$ |
115,495 |
|
|
|
|
|
|
|
|
Note 5 — Fair Value of Financial instruments
Our derivative instruments consist of interest rate swap agreements entered into in January
2008 which effectively fix the underlying LIBOR rate on our borrowings under our term loan. The
initial notional amount of the swap agreements totaled $50.0 million reducing by $10.0 million each
December, matching the required principal payments under the term loan. As of March 31, 2010, $30.0
million remained outstanding on the term loan. As a result of the swap agreements, we will pay a
fixed rate of 3.74% plus the applicable margin to lenders.
The swap agreements represent a cash flow hedge, entered into for the purpose of fixing a
portion of our borrowing costs and thereby decreasing the volatility of future cash flows. These
agreements are valued based upon “level 2” fair value criteria, where the fair value of these
instruments is determined using observable inputs, including quoted prices for similar
assets/liabilities and market corroborated inputs as well as quoted prices in inactive markets. The
fair value of the interest rate swap arrangements was an obligation of $0.9 million, net of tax as
of March 31, 2010 and December 31, 2009, recorded within accrued liabilities.
Our financial instruments include cash and cash equivalents, receivables, payables, debt, and
certain derivative financial instruments. We believe the carrying values of these instruments
approximated their fair values at March 31, 2010 and December 31, 2009. We estimate the fair value
of our derivative instruments by obtaining available market information and quotes from brokers.
At March 31, 2010 and December 31, 2009, the estimated fair value of total debt is equal to
the carrying value of $128.3 million and $123.0 million, respectively.
Note 6 — Commitments and Contingencies
In the ordinary course of conducting our business, we become involved in litigation and other
claims from private party actions, as well as judicial and administrative proceedings involving
governmental authorities at the federal, state and local levels. In the opinion of management, any
liability in these matters should not have a material effect on our consolidated financial
statements.
SEC Investigation
On March 12, 2007, we were advised that the SEC opened a formal investigation into the matters
disclosed in Amendment No. 2 to our Annual Report on Form 10-K/A filed on October 10, 2006. We have
and will continue to cooperate fully with the SEC’s investigation. On July 16, 2009, the SEC filed
a civil lawsuit against our former Chief Financial Officer, the former Chief Financial Officer of
our Soloco business unit and one former vendor in connection with the transactions that were
described in the Amended Form 10-K/A. Subsequently, the SEC announced that it reached a settlement
of its claims against the former vendor. We have not been named as a defendant in this lawsuit.
9
Note 7 — Segment Data
Summarized operating results for our reportable segments is shown in the following table (net
of inter-segment transfers):
| |
|
|
|
|
|
|
|
|
| |
|
First Quarter |
|
| (In thousands) |
|
2010 |
|
|
2009 |
|
| |
Revenues |
|
|
|
|
|
|
|
|
Fluids systems and engineering |
|
$ |
136,310 |
|
|
$ |
106,588 |
|
Mats and integrated services |
|
|
13,620 |
|
|
|
8,863 |
|
Environmental services |
|
|
10,868 |
|
|
|
11,487 |
|
|
|
|
|
|
|
|
Total revenues |
|
$ |
160,798 |
|
|
$ |
126,938 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss) |
|
|
|
|
|
|
|
|
Fluids systems and engineering |
|
$ |
12,414 |
|
|
$ |
(5,574 |
)(2) |
Mats and integrated services |
|
|
2,714 |
(1) |
|
|
(3,414 |
)(2) |
Environmental services |
|
|
2,679 |
|
|
|
1,157 |
|
Corporate office |
|
|
(4,098 |
) |
|
|
(4,948 |
)(2) |
|
|
|
|
|
|
|
Operating income (loss) |
|
$ |
13,709 |
|
|
$ |
(12,779 |
) |
|
|
|
|
|
|
|
| |
|
|
| (1) |
|
Includes $0.9 million of other income reflecting proceeds from insurance claims
related to Hurricane Ike in 2008. |
| |
| (2) |
|
The first quarter of 2009 includes employee termination and related charges of
$2.0 million in fluids systems and engineering, $0.4 million in mats and integrated
services and $0.2 million in our corporate office. |
10
|
|
|
| ITEM 2. |
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
The following discussion of our financial condition, results of operations, liquidity and
capital resources should be read together with our consolidated financial statements and notes to
consolidated financial statements contained in this report as well as our Annual Report on Form
10-K for the year ended December 31, 2009. Our first quarter represents the three month period ended
March 31.
Overview
We are a diversified oil and gas industry supplier, and have three reportable segments: Fluids
Systems and Engineering, Mats and Integrated Services, and Environmental Services. We provide these
products and services primarily to the oil and gas exploration (“E&P”) industry domestically in the
U.S. Gulf Coast, West Texas, Oklahoma, East Texas, North Louisiana, Rocky Mountains and Northeast
regions, as well as Canada, Brazil, United Kingdom (“U.K.”), Mexico and certain areas of Europe and
North Africa. Further, we established a presence outside the E&P sector, particularly in Mats and
Integrated Services, where we are marketing to utilities, municipalities and government sectors.
Our operating results depend, to a large extent, on oil and gas drilling activity levels in
the markets we serve, as well as the depth of drilling, which governs the revenue potential of each
well. The drilling activity in turn, depends on oil and gas commodity pricing, inventory levels and
product demand. Rig count data is the most widely accepted indicator of drilling activity. Average
North American rig count data for the first quarter of 2010, as compared to the comparable period
of the prior year is as follows:
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
First Quarter |
|
|
2010 vs 2009 |
|
| |
|
2010 |
|
|
2009 |
|
|
Count |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Rig Count |
|
|
1,333 |
|
|
|
1,344 |
|
|
|
(11 |
) |
|
|
(1 |
%) |
Canadian Rig Count |
|
|
449 |
|
|
|
332 |
|
|
|
117 |
|
|
|
35 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
North America |
|
|
1,782 |
|
|
|
1,676 |
|
|
|
106 |
|
|
|
6 |
% |
| |
|
|
Source: Baker Hughes Incorporated |
During the first half of 2009, North American drilling activity declined dramatically from
levels experienced in previous years. In response to these declines, we executed cost reduction
programs during 2009 including workforce reductions, reduced discretionary spending, salary
reductions, as well as reductions in capital expenditures in North America. As part of this cost
reduction program, we reduced our North American workforce by 548 employees, in addition to
eliminating substantially all contract employee positions. As a result of these workforce
reductions, operating results for the first quarter of 2009 include $2.6 million of charges
associated with employee termination and related costs.
11
First Quarter of 2010 Compared to First Quarter of 2009
Results of Operations
Summarized results of operations for the first quarter of 2010 compared to the first quarter
of 2009 are as follows:
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
First Quarter |
|
|
2010 vs 2009 |
| (In thousands) |
|
2010 |
|
|
2009 |
|
|
$ |
| |
Revenues |
|
$ |
160,798 |
|
|
$ |
126,938 |
|
|
$ |
33,860 |
|
Cost of revenues |
|
|
133,518 |
|
|
|
123,512 |
|
|
|
10,006 |
|
Selling, general and administrative expenses |
|
|
14,413 |
|
|
|
16,230 |
|
|
|
(1,817 |
) |
Other income, net |
|
|
(842 |
) |
|
|
(25 |
) |
|
|
(817 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss) |
|
|
13,709 |
|
|
|
(12,779 |
) |
|
|
26,488 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency exchange (gain) loss |
|
|
(611 |
) |
|
|
29 |
|
|
|
(640 |
) |
Interest expense, net |
|
|
2,148 |
|
|
|
1,650 |
|
|
|
498 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from operations before income
taxes |
|
|
12,172 |
|
|
|
(14,458 |
) |
|
|
26,630 |
|
Provision for income taxes |
|
|
4,390 |
|
|
|
(2,454 |
) |
|
|
6,844 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from operations |
|
$ |
7,782 |
|
|
$ |
(12,004 |
) |
|
$ |
19,786 |
|
|
|
|
|
|
|
|
|
|
|
Revenues
Revenues were $160.8 million in the first quarter of 2010, reflecting a 27% increase from the
$126.9 million reported in the first quarter of 2009. This increase in revenues is primarily
driven by the expansion into new markets, including $12.3 million of increased revenues from Brazil
and $5.5 million from the Northeast U.S. region, along with share gains in our existing U.S.
markets. Additional information regarding these increases is provided within the operating segment
results below.
Cost of revenues
Cost of revenues were $133.5 million in the first quarter of 2010, reflecting an 8% increase
from the $123.5 million reported in the first quarter of 2009. The increase is primarily driven by
the 27% increase in revenues, largely offset by the benefits of the 2009 cost reduction programs,
workforce reductions and non-recurring employee termination and related costs recorded in the first
quarter of 2009. Additional information regarding these declines is provided within the operating
segment results below.
Selling, general and administrative expenses
Selling, general and administrative expenses declined $1.8 million to $14.4 million in the
first quarter of 2010 from $16.2 million for the first quarter of 2009. The decrease includes $0.6
million in fluids systems and engineering and $0.8 million in the corporate office, and is
primarily attributable to the impact of cost reduction programs implemented during 2009, partially
offset by a $1.8 million increase in performance-based employee incentive costs in the 2010 period.
Other income, net
Other income, net was $0.8 million during the first quarter of 2010, primarily reflecting
proceeds from insurance claims within our Mats and Integrated Services business, resulting from
Hurricane Ike in 2008.
Foreign currency exchange
Foreign currency exchange was a $0.6 million gain in the first quarter of 2010, reflecting the
impact of non-functional currency fluctuations in our foreign operations.
12
Interest expense, net
Interest expense, net totaled $2.1 million for the first quarter of 2010 compared to $1.7
million for the first quarter of 2009. The increase in interest expense is primarily attributable
to higher interest rates following the First Amendment and Waiver to the Amended Credit Agreement
(“First Amendment”), which was entered into in July 2009. Following the First Amendment, the
weighted average borrowing rate under our credit facilities was 5.40% at March 31, 2010, compared
to a weighted average borrowing rate of 3.52% at March 31, 2009. See additional discussion
regarding the First Amendment in Liquidity and Capital Resources below.
Provision for income taxes
The provision for income taxes for the first quarter of 2010 was a $4.4 million expense,
reflecting an effective tax rate of 36.1%, compared to a $2.5 million benefit for the first quarter
of 2009, reflecting an effective tax rate of 17.0%. The low effective tax rate in the first
quarter of 2009 is primarily due to the write off of a previously recognized net operating loss
carryforward tax asset in Canada, along with losses generated in certain foreign countries for
which the recording of a tax benefit is not permitted.
Operating Segment Results
Summarized financial information for our reportable segments is shown in the following table
(net of inter-segment transfers):
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
First Quarter |
|
|
2010 vs 2009 |
|
| (In thousands) |
|
2010 |
|
|
2009 |
|
|
$ |
|
|
% |
|
| |
Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fluids systems and engineering |
|
$ |
136,310 |
|
|
$ |
106,588 |
|
|
$ |
29,722 |
|
|
|
28 |
% |
Mats and integrated services |
|
|
13,620 |
|
|
|
8,863 |
|
|
|
4,757 |
|
|
|
54 |
% |
Environmental services |
|
|
10,868 |
|
|
|
11,487 |
|
|
|
(619 |
) |
|
|
(5 |
%) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues |
|
$ |
160,798 |
|
|
$ |
126,938 |
|
|
$ |
33,860 |
|
|
|
26.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fluids systems and engineering |
|
$ |
12,414 |
|
|
$ |
(5,574 |
) |
|
$ |
17,988 |
|
|
|
|
|
Mats and integrated services |
|
|
2,714 |
|
|
|
(3,414 |
) |
|
|
6,128 |
|
|
|
|
|
Environmental services |
|
|
2,679 |
|
|
|
1,157 |
|
|
|
1,522 |
|
|
|
|
|
Corporate office |
|
|
(4,098 |
) |
|
|
(4,948 |
) |
|
|
850 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss) |
|
$ |
13,709 |
|
|
$ |
(12,779 |
) |
|
$ |
26,488 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment operating margin |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fluids systems and engineering |
|
|
9.1 |
% |
|
|
(5.2 |
%) |
|
|
|
|
|
|
|
|
Mats and integrated services |
|
|
19.9 |
% |
|
|
(38.5 |
%) |
|
|
|
|
|
|
|
|
Environmental services |
|
|
24.7 |
% |
|
|
10.1 |
% |
|
|
|
|
|
|
|
|
Fluids Systems and Engineering
Revenues
Total revenues for this segment consisted of the following:
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
First Quarter |
|
|
2010 vs 2009 |
|
| (In thousands) |
|
2010 |
|
|
2009 |
|
|
$ |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Drilling fluids and engineering |
|
$ |
78,438 |
|
|
$ |
60,936 |
|
|
$ |
17,502 |
|
|
|
29 |
% |
Completion fluids and services |
|
|
8,339 |
|
|
|
8,919 |
|
|
|
(580 |
) |
|
|
(7 |
%) |
Industrial minerals |
|
|
12,118 |
|
|
|
8,885 |
|
|
|
3,233 |
|
|
|
36 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total North America |
|
|
98,895 |
|
|
|
78,740 |
|
|
|
20,155 |
|
|
|
26 |
% |
Mediterranean |
|
|
22,277 |
|
|
|
25,037 |
|
|
|
(2,760 |
) |
|
|
(11 |
%) |
Brazil |
|
|
15,138 |
|
|
|
2,811 |
|
|
|
12,327 |
|
|
|
439 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
136,310 |
|
|
$ |
106,588 |
|
|
$ |
29,722 |
|
|
|
28 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
13
North America revenues increased 26% to $98.9 million for the first quarter of 2010, as
compared to $78.7 million for the first quarter of 2009. Drilling fluids and engineering revenues
increased 29% which is largely attributable to expansion in the Northeast U.S. region, market share
gains in East Texas and North Louisiana, and increased activity in Canada. Our completion fluids
and services activity was down 7%. Our wholesale industrial minerals revenues were up 36%,
relatively consistent with our growth in drilling fluids and engineering.
Mediterranean revenues decreased 11% compared to the first quarter of 2009, reflecting
fluctuations caused by the timing of specific customer drilling activities in the North African
markets and unusually cold weather in Eastern Europe. Brazil revenues in the first quarter of 2010
were up $12.3 million, reflecting the continued ramp-up in activity in that market.
Operating Income
Operating income for this segment was $12.4 million in the first quarter of 2010, reflecting
an improvement of $18.0 million from a $5.6 million operating loss for the same period in 2009.
Substantially all of this improvement was generated by the North American operations, which
generated a $17.9 million improvement in operating income. This improvement is primarily
attributable to the incremental profit from a $20.2 million increase in revenues described above,
combined with lower freight costs on barite ore, operating expense reductions from programs
implemented during 2009, and $2.0 million of first quarter 2009 charges associated with employee
terminations.
Operating income from international operations increased $0.1 million, including a $1.9
million increase in Brazil, resulting from the increased revenue levels. This increase was offset
by a $1.8 decline in the Mediterranean operations, resulting from the $2.8 million decline in
revenues in this region.
Mats and Integrated Services
Revenues
Total revenues for this segment consisted of the following:
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
First Quarter |
|
|
2010 vs 2009 |
|
| (In thousands) |
|
2010 |
|
|
2009 |
|
|
$ |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mat rental and integrated
services |
|
$ |
7,730 |
|
|
$ |
7,421 |
|
|
$ |
309 |
|
|
|
4 |
% |
Mat sales |
|
|
5,890 |
|
|
|
1,442 |
|
|
|
4,448 |
|
|
|
308 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
13,620 |
|
|
$ |
8,863 |
|
|
$ |
4,757 |
|
|
|
54 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
The $0.3 million increase in mat rental and integrated services revenues in the first
quarter of 2010 compared to the first quarter of 2009 is primarily attributable to a $2.2 million
increase in the Northeast U.S. region and a $0.3 million increase in the U.K., largely offset by a
$2.2 million decrease in Colorado.
Mat sales primarily consist of export sales of composite mats to various international
markets, as well as to non-oilfield industries domestically. Mat sales increased by $4.4 million
in the first quarter of 2010 from the first quarter of 2009, as demand for these products has
improved from the E&P and other industries, following the economic downturn in 2009.
Operating Income
Segment operating income increased by $6.1 million to $2.7 million for the first quarter of
2010. This improvement in operating income is primarily attributable to the $4.8 million increase
in revenues, along with $2.5 million in operating expense reductions associated with 2009 cost
reduction programs, including $0.4 million of employee termination costs incurred in the prior
year. In addition, the first quarter of 2010 included $0.9 million of other income reflecting
proceeds for insurance claims related to Hurricane Ike in 2008.
14
Environmental Services
Revenues
Total revenues for this segment consisted of the following:
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
First Quarter |
|
|
2010 vs 2009 |
|
| (In thousands) |
|
2010 |
|
|
2009 |
|
|
$ |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
E&P waste — Gulf Coast |
|
$ |
7,928 |
|
|
$ |
8,393 |
|
|
$ |
(465 |
) |
|
|
(6 |
%) |
E&P waste — West Texas |
|
|
645 |
|
|
|
1,063 |
|
|
|
(418 |
) |
|
|
(39 |
%) |
NORM and industrial
waste |
|
|
2,295 |
|
|
|
2,031 |
|
|
|
264 |
|
|
|
13 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
10,868 |
|
|
$ |
11,487 |
|
|
$ |
(619 |
) |
|
|
(5 |
%) |
|
|
|
|
|
|
|
|
|
|
|
|
|
E&P waste revenues in the Gulf Coast region decreased 6% to $7.9 million in the first
quarter of 2010 compared to the first quarter of 2009. This decline in revenues is primarily due
to changes in sales mix and pricing, as volumes processed were relatively unchanged from prior
year.
E&P waste revenues in West Texas decreased by 39% to $0.6 million in the first quarter of 2010
compared to the first quarter of 2009, primarily due to lower volumes processed.
NORM and industrial waste revenues increased by 13% to $2.3 million in the first quarter of
2010, compared to the first quarter of 2009, due primarily to a 27% increase in NORM volumes
processed.
Operating Income
Environmental services operating income increased by $1.5 million in the first quarter of
2010, despite a $0.6 million decline in revenues compared to the first quarter of 2009. The impact
of the lower revenues was more than offset by operating expense reductions, including a $0.9
million reduction in equipment rental expenses, a $0.5 million reduction in personnel expenses, and
a $0.3 million reduction in waste transportation expenses.
Liquidity and Capital Resources
Net cash used by operating activities during the first quarter of 2010 totaled $2.4 million.
Net income adjusted for non-cash items provided $19.1 million of cash during the period, while
increases in working capital used $21.5 million of cash. The increase in working capital during
the period includes $32.7 million from increases in receivables reflecting the impact of increased
revenue levels, partially offset by a $9.2 million decrease in inventories.
Net cash used in investing activities during the first quarter of 2010 was $2.0 million,
consisting primarily of capital expenditures. Net cash provided by financing activities during the
first quarter of 2010 was $5.6 million, reflecting net borrowings on our revolving credit
facilities during the period.
We anticipate that our working capital requirements for our operations will fluctuate with our
sales activity in the near term. Cash generated by operations along with availability under our
existing credit agreement is expected to be adequate to fund our anticipated capital needs.
15
Our capitalization was as follows as of:
| |
|
|
|
|
|
|
|
|
| |
|
March 31, |
|
|
December 31, |
|
| (In thousands) |
|
2010 |
|
|
2009 |
|
| |
Term loan |
|
$ |
30,000 |
|
|
$ |
30,000 |
|
Revolving credit facility |
|
|
90,000 |
|
|
|
85,000 |
|
Foreign bank lines of credit |
|
|
7,378 |
|
|
|
6,901 |
|
Other |
|
|
898 |
|
|
|
1,129 |
|
|
|
|
|
|
|
|
Total |
|
|
128,276 |
|
|
|
123,030 |
|
Stockholder’s equity |
|
|
374,349 |
|
|
|
368,022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total capitalization |
|
$ |
502,625 |
|
|
$ |
491,052 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total debt to capitalization |
|
|
25.5 |
% |
|
|
25.1 |
% |
|
|
|
|
|
|
|
In December 2007, we entered into a $225.0 million Amended and Restated Credit Agreement
(“Credit Agreement”) which consisted of a $175.0 million revolving credit facility and a $50.0
million term loan. The Credit Agreement contained certain financial covenants including a minimum
fixed charge coverage ratio, a maximum consolidated leverage ratio, and a maximum funded
debt-to-capitalization ratio. At June 30, 2009, we were not in compliance with the fixed charge
coverage ratio and consolidated leverage ratio covenants. However, in July 2009, we entered into
the First Amendment, which provided a waiver of the financial covenant violations as of June 30,
2009 and modified certain covenant requirements in future periods, as follows:
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
March 31, |
|
|
June 30, |
|
|
|
|
| |
|
2010 |
|
|
2010 |
|
|
Thereafter |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed charge coverage ratio
(minimum) |
|
|
1.00 |
|
|
|
1.10 |
|
|
|
1.20 |
|
| |
Consolidated leverage ratio
(maximum) |
|
|
3.50 |
|
|
|
3.00 |
|
|
|
3.00 |
|
Historically, our performance for financial covenant compliance purposes was based on our
trailing four fiscal quarter results. Under the First Amendment, financial covenant calculations
will utilize annualized results beginning with the third quarter of 2009, and continuing through
the first quarter of 2010, after which time the calculations will return to using trailing four
fiscal quarter results.
We were in compliance with these covenants as of March 31, 2010, and expect to remain in
compliance through March 31, 2011. The calculated performance for these covenants as of March 31,
2010 is as follows:
| |
|
|
|
|
|
|
|
|
| |
|
Covenant |
|
|
Calculation as of |
|
| |
|
Requirement |
|
|
March 31, 2010 |
|
|
|
|
|
|
|
|
|
|
Fixed charge coverage ratio |
|
1.00 minimum |
|
|
|
2.34 |
|
|
|
|
|
|
|
|
|
|
Consolidated leverage ratio |
|
3.50 maximum |
|
|
|
2.09 |
|
|
|
|
|
|
|
|
|
|
Funded debt-to-captalization ratio |
|
45.0% maximum |
|
|
|
24.4 |
% |
16
The First Amendment also reduced the revolving credit facility from $175.0 million to
$150.0 million, and provided for adjustments in the interest rates and commitment fees under the
credit facility. Under the Credit Agreement, as amended by the First Amendment, we can elect to
borrow at an interest rate either based on LIBOR plus a margin based on our consolidated leverage
ratio, ranging from 400 to 750 basis points, or at an interest rate based on the greatest of: (a)
prime rate, (b) the federal funds rate in effect plus 50 basis points, or (c) the Eurodollar rate
for a Eurodollar Loan with a one-month interest period plus 100 basis points, in each case plus a
margin ranging from 300 to 650 basis points. The First Amendment also increased the commitment fee
rate payable under the credit facility, which is now fixed at 50 basis points. The applicable
margin on LIBOR borrowings at March 31, 2010 was 425 basis points.
As of March 31, 2010, $89.0 million of the outstanding principal of the revolving credit
facility was bearing interest at LIBOR plus 425 basis points, or 4.52%, while the remaining $1.0
million in outstanding principal was bearing interest at Prime Rate plus 325 basis points, or
6.25%. In January 2008, we entered into interest rate swap agreements to effectively fix the
underlying LIBOR rate on our borrowings under the Term Loan. The initial notional amount of the
swap agreements totaled $50.0 million, reducing by $10.0 million each December, matching the
required principal repayments under the Term Loan. As a result of the swap agreements, we will pay
a fixed rate of 3.74% over the term of the loan plus the applicable margin to lenders, which was
425 basis points at March 31, 2010. The weighted average interest rate on the outstanding balances
under our Credit Agreement including the interest rate swaps as of March 31, 2010 and December 31,
2009 was 5.40% and 5.55%, respectively.
The Credit Agreement is a senior secured obligation, secured by first liens on all of our U.S.
tangible and intangible assets, including our accounts receivable and inventory. Additionally, a
portion of the capital stock of our non-U.S. subsidiaries has also been pledged as collateral.
At March 31, 2010, $3.6 million in letters of credit were issued and outstanding relating to
our insurance programs. In addition, we had $90.0 million outstanding under our revolving credit
facility at
March 31, 2010, leaving $56.4 million of availability at that date. Additionally, we had $1.5
million in letters of credit outstanding relating to foreign operations.
Critical Accounting Estimates
Our consolidated financial statements are prepared in accordance with accounting principles
generally accepted in the United States of America, which requires us to make assumptions,
estimates and judgments that affect the amounts reported. We periodically evaluate our estimates
and judgments related to uncollectible accounts and notes receivable, customer returns, reserves
for obsolete and slow moving inventory, impairments of long-lived assets, including goodwill and
other intangibles and our valuation allowance for deferred tax assets. Our estimates are based on
historical experience and on our future expectations that we believe to be reasonable. The
combination of these factors forms the basis for making judgments about the carrying values of
assets and liabilities that are not readily apparent from other sources. Actual results may differ
from our current estimates and those differences may be material.
For additional discussion of our critical accounting estimates and policies, see “Management’s
Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual
Report on Form 10-K for the year ended December 31, 2009. Our critical accounting policies have
not changed materially since December 31, 2009.
|
|
|
| ITEM 3. |
|
Quantitative and Qualitative Disclosures about Market Risk |
We are exposed to market risk from changes in interest rates and changes in foreign currency
rates. A discussion of our primary market risk exposure in financial instruments is presented
below.
Interest Rate Risk
Our policy is to manage exposure to interest rate fluctuations by using a combination of fixed
and variable-rate debt. At March 31, 2010, we had total debt outstanding of $128.3 million.
17
In January 2008, we entered into interest rate swap agreements to effectively fix the
underlying LIBOR interest rate on our borrowings under the term loan portion of our credit
facility. The initial notional amount of the swap agreements totaled $50.0 million, reducing by
$10.0 million each December, matching the required principal repayments under the term loan. As of
March 31, 2010, $30.0 million remained outstanding under this term loan. As a result of the swap
agreements, we will pay a fixed rate of 3.74% plus the applicable margin to lenders, over the term
of the loan.
The remaining $98.3 million of debt outstanding at March 31, 2010 bears interest at a floating
rate, which was a weighted average of 4.62% at March 31, 2010. At the March 31, 2010 balance, a
200 basis point increase in market interest rates during 2010 would cause our annual interest
expense to increase approximately $2.0 million, resulting in a $0.01 per diluted share reduction in
annual net earnings.
Foreign Currency
Our principal foreign operations are conducted in certain areas of Europe and North Africa,
Brazil, Canada, U.K. and Mexico. We have foreign currency exchange risks associated with these
operations, which are conducted principally in the foreign currency of the jurisdictions in which
we operate which include European euros, Canadian dollars and Brazilian reais. Historically, we
have not used off-balance sheet financial hedging instruments to manage foreign currency risks when
we enter into a transaction denominated in a currency other than our local currencies because the
dollar amount of these transactions has not warranted our using hedging instruments.
|
|
|
| ITEM 4. |
|
Controls and Procedures |
Evaluation of disclosure controls and procedures
Based on their evaluation of our disclosure controls and procedures as of the end of the
period covered by this report, our Chief Executive Officer and Chief Financial Officer have
concluded that the disclosure controls and procedures were effective as of March 31, 2010, the end
of the period covered by this quarterly report.
Changes in internal control over financial reporting
There has been no change in internal control over financial reporting during
the quarter ended March 31, 2010 that has materially affected, or is
reasonably likely to materially affect, our internal control over financial
reporting.
PART II OTHER INFORMATION
|
|
|
| ITEM 1. |
|
Legal Proceedings |
The information set forth in the legal proceedings section of Note 6, “Commitments and
Contingencies,” to our condensed consolidated financial statements included in this Quarterly
Report on Form 10-Q is incorporated by reference into this Item 1.
Information regarding risk factors appears in Item 1A to our Annual Report on Form 10-K for
the year ended December 31, 2009. The risk factor described below updates, and should be read in
conjunction with, the risk factors identified in our Annual Report on Form 10-K for the period
ended December 31, 2009.
Our operations could be adversely impacted by the recent drilling rig accident and
resulting oil spill.
On Thursday, April 22, 2010, a deepwater Gulf of Mexico drilling rig, Deepwater Horizon,
sank after an apparent blowout and fire. Although attempts are ongoing to stop the discharge of
hydrocarbons from the well, currently, the well continues to leak and the spill area continues to
grow. We have ongoing operations in the Gulf of Mexico which could
possibly be threatened by the oil
spill. If conditions continue to deteriorate, among other things, our
customers may possibly be
forced to curtail or cease operations in the areas impacted by the spill, resulting in less demand
for our drilling fluids and waste disposal services. Further, our facilities on the coast of the
Gulf of Mexico may be forced to suspend operations as a result of impacts from the spill, or our
ability to transport drilling fluids material and waste for disposal utilizing barges may be
impacted. Either of these events could potentially result in a reduction in revenues or an increase in our
costs.
18
We cannot predict the full impact of the incident and resulting spill on our operations. In
addition, we cannot predict how government or regulatory agencies will respond to the incident or
whether changes in laws and regulations concerning operations in the Gulf of Mexico, or more
generally throughout the U.S. will be enacted. Significant changes in regulations regarding
future exploration and production activities in the Gulf of Mexico or other government or
regulatory actions could reduce drilling and production activity, or increase the costs of our
services, which could have a material adverse impact on our business.
|
|
|
| ITEM 2. |
|
Unregistered Sales of Equity Securities and Use of Proceeds |
| (a) |
|
Not applicable |
| |
| (b) |
|
Not applicable |
| |
| (c) |
|
The following table details our repurchases of shares of our common stock, for the three months
ended March 31, 2010: |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
Total Number of |
|
|
Maximum Approximate Dollar |
|
| |
|
|
|
|
|
|
|
|
|
Shares Purchased as Part |
|
|
Value of Shares that May Yet |
|
| |
|
Total Number of |
|
|
Average Price |
|
|
of Publicly Announced |
|
|
be Purchased Under |
|
| Period |
|
Shares Purchased |
|
|
per Share |
|
|
Plans or Programs |
|
|
the Plans or Programs |
|
January 1 - 31, 2010 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
$ |
9.9 million |
|
February 1 - 28,
2010 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
$ |
9.9 million |
|
March 1 - 31, 2010 |
|
|
15,628 |
(1) |
|
$ |
5.47 |
|
|
|
— |
|
|
$ |
9.9 million |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
15,628 |
|
|
$ |
5.47 |
|
|
|
— |
|
|
|
|
|
| |
|
|
| (1) |
|
The shares purchased represent shares surrendered in lieu of taxes under vesting of
restricted stock awards. These shares were not acquired as part of the stock repurchase plan. |
|
|
|
| ITEM 3. |
|
Defaults Upon Senior Securities |
Not applicable.
|
|
|
| ITEM 4. |
|
(Removed and Reserved) |
|
|
|
| ITEM 5. |
|
Other Information |
Not applicable.
19
| |
|
|
|
|
| |
10.1 |
|
|
Newpark Resources, Inc. 2010 Annual Cash Incentive Plan,
incorporated by reference to Exhibit 10.1 to the Company’s Current Report on
Form 8-K filed on April 2, 2010 (SEC File No. 001-02960). |
| |
|
|
|
|
| |
10.2 |
|
|
Letter agreement, dated as of March 3, 2010, between Newpark Resources,
Inc. and William D. Moss, incorporated by reference to Exhibit 10.1 to the
Company’s Current Report on Form 8-K filed on March 9, 2010 (SEC File No.
001-02960). |
| |
|
|
|
|
| |
31.1 |
|
|
Certification of Paul L. Howes pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002. |
| |
|
|
|
|
| |
31.2 |
|
|
Certification of James E. Braun pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002. |
| |
|
|
|
|
| |
32.1 |
|
|
Certification of Paul L. Howes pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002. |
| |
|
|
|
|
| |
32.2 |
|
|
Certification of James E. Braun pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002. |
20
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:
May 10, 2010
| |
|
|
|
|
| |
NEWPARK RESOURCES, INC.
|
|
| |
By: |
/s/ Paul L. Howes
|
|
| |
|
Paul L. Howes, President and |
|
| |
|
Chief Executive Officer
(Principal Executive Officer) |
|
| |
|
|
| |
By: |
/s/ James E. Braun
|
|
| |
|
James E. Braun, Vice President and |
|
| |
|
Chief Financial Officer
(Principal Financial Officer) |
|
| |
|
|
| |
By: |
/s/ Gregg S. Piontek
|
|
| |
|
Gregg Piontek, Vice President,
|
|
| |
|
Controller and Chief Accounting Officer
(Principal Accounting Officer) |
|
21
EXHIBIT INDEX
| |
|
|
|
|
| |
10.1 |
|
|
Newpark Resources, Inc. 2010 Annual Cash Incentive Plan,
incorporated by reference to Exhibit 10.1 to the Company’s Current Report on
Form 8-K filed on April 2, 2010 (SEC File No. 001-02960). |
| |
|
|
|
|
| |
10.2 |
|
|
Letter agreement, dated as of March 3, 2010, between Newpark Resources,
Inc. and William D. Moss, incorporated by reference to Exhibit 10.1 to the
Company’s Current Report on Form 8-K filed on March 9, 2010 (SEC File No.
001-02960). |
| |
|
|
|
|
| |
31.1 |
|
|
Certification of Paul L. Howes pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002. |
| |
|
|
|
|
| |
31.2 |
|
|
Certification of James E. Braun pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002. |
| |
|
|
|
|
| |
32.1 |
|
|
Certification of Paul L. Howes pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002. |
| |
|
|
|
|
| |
32.3 |
|
|
Certification of James E. Braun pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002. |
22