e10vq
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
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þ |
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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 June 30, 2006
or
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o |
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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. 0-28178
CARBO CERAMICS INC.
(Exact name of registrant as specified in its charter)
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DELAWARE
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72-1100013 |
(State or other jurisdiction of
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(I.R.S. Employer |
incorporation or organization)
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Identification Number) |
6565 MacArthur Boulevard
Suite 1050
Irving, Texas 75039
(Address of principal executive offices)
(972) 401-0090
(Registrants telephone number)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes þ No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated
filer, or a non-accelerated filer. See definition of accelerated filer and large accelerated
filer in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer þ Accelerated Filer o Non-Accelerated Filer 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
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and reports required to
be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the
distribution of securities under a plan confirmed by a court. Yes o No o
As of July 31, 2006, 24,371,112 shares of the registrants Common Stock, par value $.01 per
share, were outstanding.
CARBO CERAMICS INC.
Index to Quarterly Report on Form 10-Q
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PAGE |
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3 |
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4 |
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5 |
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6-9 |
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10-14 |
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14 |
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14 |
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15 |
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15 |
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15 |
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15 |
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15 |
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16 |
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16 |
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17 |
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18 |
2
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CARBO CERAMICS INC.
CONSOLIDATED BALANCE SHEETS
($ in thousands)
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June 30, |
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December 31, |
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2006 |
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2005 |
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(Unaudited) |
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(Note 1) |
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ASSETS |
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Current assets: |
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Cash and cash equivalents |
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$ |
15,559 |
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$ |
19,695 |
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Short-term investments |
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41,215 |
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41,975 |
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Trade accounts receivable, net |
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57,809 |
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53,918 |
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Inventories: |
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Finished goods |
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26,728 |
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17,981 |
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Raw materials and supplies |
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7,815 |
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8,490 |
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Total inventories |
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34,543 |
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26,471 |
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Prepaid expenses and other current assets |
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3,625 |
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2,433 |
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Deferred income taxes |
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4,269 |
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3,795 |
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Total current assets |
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157,020 |
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148,287 |
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Property, plant and equipment: |
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Land and land improvements |
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2,812 |
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2,812 |
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Land-use and mineral rights |
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5,279 |
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5,271 |
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Buildings |
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25,092 |
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15,051 |
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Machinery and equipment |
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209,666 |
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154,785 |
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Construction in progress |
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43,757 |
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72,074 |
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Total |
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286,606 |
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249,993 |
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Less accumulated depreciation |
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79,440 |
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70,493 |
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Net property, plant and equipment |
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207,166 |
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179,500 |
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Goodwill |
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21,840 |
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21,840 |
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Intangible and other assets, net |
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6,945 |
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6,169 |
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Total assets |
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$ |
392,971 |
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$ |
355,796 |
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LIABILITIES AND SHAREHOLDERS EQUITY |
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Current liabilities: |
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Accounts payable |
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$ |
9,639 |
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$ |
11,277 |
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Accrued payroll and benefits |
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5,454 |
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6,941 |
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Accrued freight |
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1,156 |
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1,356 |
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Accrued utilities |
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3,028 |
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3,389 |
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Accrued income taxes |
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21,410 |
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9,998 |
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Retainage related to construction in progress |
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180 |
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337 |
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Other accrued expenses |
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7,364 |
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3,011 |
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Total current liabilities |
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48,231 |
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36,309 |
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Deferred income taxes |
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27,041 |
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26,121 |
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Shareholders equity: |
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Preferred stock, par value $0.01 per share, 5,000 shares authorized,
none outstanding |
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Common stock, par value $0.01 per share, 40,000,000 shares authorized;
24,367,612 and 24,286,388 shares issued and outstanding at June 30,
2006 and December 31, 2005, respectively |
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244 |
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243 |
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Additional paid-in capital |
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102,930 |
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102,536 |
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Unearned stock compensation |
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(2,135 |
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Retained earnings |
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213,176 |
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192,196 |
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Accumulated other comprehensive income |
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1,349 |
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526 |
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Total shareholders equity |
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317,699 |
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293,366 |
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Total liabilities and shareholders equity |
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$ |
392,971 |
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$ |
355,796 |
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The accompanying notes are an integral part of these statements.
3
CARBO CERAMICS INC.
CONSOLIDATED STATEMENTS OF INCOME
($ in thousands, except per share data)
(Unaudited)
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Three months ended |
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Six months ended |
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June 30, |
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June 30, |
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2006 |
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2005 |
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2006 |
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2005 |
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Revenues |
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$ |
73,485 |
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$ |
63,834 |
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$ |
147,763 |
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$ |
125,002 |
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Cost of sales |
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46,095 |
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38,202 |
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93,007 |
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74,549 |
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Gross profit |
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27,390 |
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25,632 |
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54,756 |
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50,453 |
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Selling, general and administrative expenses |
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8,793 |
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6,777 |
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16,266 |
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13,826 |
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Start-up costs |
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70 |
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239 |
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421 |
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254 |
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Loss on disposal of assets |
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95 |
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95 |
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Operating profit |
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18,527 |
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18,521 |
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38,069 |
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36,278 |
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Other income (expense): |
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Net interest income |
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487 |
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526 |
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924 |
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910 |
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Earnings in equity-method investee |
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47 |
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95 |
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30 |
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95 |
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Other, net |
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302 |
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(11 |
) |
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657 |
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(8 |
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836 |
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610 |
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1,611 |
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997 |
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Income before income taxes |
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19,363 |
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19,131 |
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39,680 |
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37,275 |
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Income taxes |
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6,501 |
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6,954 |
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13,834 |
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13,504 |
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Net income |
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$ |
12,862 |
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$ |
12,177 |
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$ |
25,846 |
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$ |
23,771 |
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Earnings per share: |
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Basic |
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$ |
0.53 |
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$ |
0.51 |
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$ |
1.07 |
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$ |
0.99 |
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Diluted |
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$ |
0.53 |
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$ |
0.50 |
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$ |
1.06 |
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$ |
0.98 |
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Other information: |
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Dividends declared per common share |
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$ |
0.10 |
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$ |
0.08 |
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$ |
0.20 |
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$ |
0.16 |
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The accompanying notes are an integral part of these statements.
4
CARBO CERAMICS INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
($ in thousands)
(Unaudited)
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Six months ended |
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June 30, |
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2006 |
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2005 |
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Operating activities |
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Net income |
|
$ |
25,846 |
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$ |
23,771 |
|
Adjustments to reconcile net income to net cash
provided by operating activities: |
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Depreciation |
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|
8,952 |
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|
6,202 |
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Amortization |
|
|
363 |
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|
316 |
|
Provision for doubtful accounts |
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|
416 |
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|
348 |
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Deferred income taxes |
|
|
445 |
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|
|
1,261 |
|
Excess tax benefits from stock-based compensation |
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|
(334 |
) |
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Loss on disposal of assets |
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|
95 |
|
Foreign currency transaction gain |
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(640 |
) |
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Non-cash stock compensation expense |
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|
1,539 |
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|
452 |
|
Earnings in equity-method investee |
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(30 |
) |
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|
(95 |
) |
Changes in operating assets and liabilities: |
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Trade accounts receivable |
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|
(4,141 |
) |
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|
(7,628 |
) |
Inventories |
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|
(8,016 |
) |
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|
(577 |
) |
Prepaid expenses and other current assets |
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(1,162 |
) |
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(1,056 |
) |
Other long-term assets |
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|
108 |
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Accounts payable |
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(1,643 |
) |
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39 |
|
Accrued payroll and benefits |
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|
(1,491 |
) |
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|
(758 |
) |
Accrued freight |
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(202 |
) |
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|
573 |
|
Accrued utilities |
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(362 |
) |
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(270 |
) |
Accrued income taxes |
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|
11,860 |
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(4,197 |
) |
Other accrued expenses |
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|
4,355 |
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|
451 |
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Net cash provided by operating activities |
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35,863 |
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|
18,927 |
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Investing activities |
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Capital expenditures, net |
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(36,766 |
) |
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|
(21,245 |
) |
Investment in equity-method investee |
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|
(611 |
) |
Purchases of short-term investments |
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(25,190 |
) |
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(69,675 |
) |
Proceeds from maturities of short-term investments |
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|
25,950 |
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|
58,850 |
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Net cash used in investing activities |
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|
(36,006 |
) |
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|
(32,681 |
) |
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Financing activities |
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Proceeds from exercise of stock options |
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|
543 |
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|
354 |
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Dividends paid |
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|
(4,866 |
) |
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|
(3,842 |
) |
Excess tax benefits from stock-based compensation |
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|
334 |
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Net cash used in financing activities |
|
|
(3,989 |
) |
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|
(3,488 |
) |
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Net decrease in cash and cash equivalents |
|
|
(4,132 |
) |
|
|
(17,242 |
) |
Effect of exchange rate changes on cash |
|
|
(4 |
) |
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|
(26 |
) |
Cash and cash equivalents at beginning of period |
|
|
19,695 |
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|
|
33,990 |
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Cash and cash equivalents at end of period |
|
$ |
15,559 |
|
|
$ |
16,722 |
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|
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Supplemental cash flow information |
|
|
|
|
|
|
|
|
Income taxes paid |
|
$ |
1,529 |
|
|
$ |
16,440 |
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|
|
|
|
|
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|
The accompanying notes are an integral part of these statements.
5
CARBO CERAMICS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
($ in thousands, except per share data)
(Unaudited)
1. Basis of Presentation
The accompanying unaudited consolidated financial statements of CARBO Ceramics Inc. have been
prepared in accordance with accounting principles generally accepted in the United States for
interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation
S-X. Accordingly, they do not include all of the information and notes required by accounting
principles generally accepted in the United States for complete financial statements. In the
opinion of management, all adjustments, consisting only of normal recurring adjustments, considered
necessary for a fair presentation have been included. The results of the interim periods presented
herein are not necessarily indicative of the results to be expected for any other interim period or
the full year. The consolidated balance sheet as of December 31, 2005 has been derived from the
audited financial statements at that date. These financial statements should be read in
conjunction with the audited consolidated financial statements and notes thereto for the year ended
December 31, 2005 included in the Companys annual report on Form 10-K for the year ended December
31, 2005.
The consolidated financial statements include the accounts of CARBO Ceramics Inc. and its
operating subsidiaries (the Company). The significant operating subsidiaries include: CARBO
Ceramics (China) Company Limited, CARBO Ceramics (Eurasia) LLC, and Pinnacle Technologies, Inc.
The consolidated financial statements also include a 49% interest in a fracture-related services
company in Canada, acquired in April 2005, that is reported under the equity method of accounting.
All significant intercompany transactions have been eliminated.
2. Earnings Per Share
The following table sets forth the computation of basic and diluted earnings per share:
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Three months ended |
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Six months ended |
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|
|
June 30, |
|
|
June 30, |
|
|
|
2006 |
|
|
2005 |
|
|
2006 |
|
|
2005 |
|
Numerator for basic and diluted earnings per share: |
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
12,862 |
|
|
$ |
12,177 |
|
|
$ |
25,846 |
|
|
$ |
23,771 |
|
Denominator: |
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|
Denominator for basic earnings per share |
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|
|
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|
|
|
|
|
|
|
|
|
|
Weighted-average shares |
|
|
24,274,498 |
|
|
|
23,971,245 |
|
|
|
24,259,042 |
|
|
|
23,961,903 |
|
Effect of dilutive securities: |
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|
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|
|
|
|
|
|
|
|
Employee stock options |
|
|
111,071 |
|
|
|
179,875 |
|
|
|
115,542 |
|
|
|
180,935 |
|
Nonvested stock awards |
|
|
15,371 |
|
|
|
8,168 |
|
|
|
17,939 |
|
|
|
9,888 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dilutive potential common shares |
|
|
126,442 |
|
|
|
188,043 |
|
|
|
133,481 |
|
|
|
190,823 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Denominator for diluted earnings per share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted weighted-average shares |
|
|
24,400,940 |
|
|
|
24,159,288 |
|
|
|
24,392,523 |
|
|
|
24,152,726 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per share |
|
$ |
0.53 |
|
|
$ |
0.51 |
|
|
$ |
1.07 |
|
|
$ |
0.99 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share |
|
$ |
0.53 |
|
|
$ |
0.50 |
|
|
$ |
1.06 |
|
|
$ |
0.98 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
During the six months ended June 30, 2006, employees exercised stock options to acquire 28,236
common shares at a weighted-average exercise price of $19.23 per share and restrictions lapsed on
25,311 nonvested shares. The Company recognized a related income tax benefit, of which $449 was
credited directly to additional paid-in capital within shareholders equity.
During the six months ended June 30, 2005, employees exercised stock options to acquire 22,200
common shares at a weighted-average exercise price of $15.95 per share and restrictions lapsed on
9,021 nonvested shares. The Company recognized a related income tax benefit, of which $270 was
credited directly to additional paid-in capital within shareholders equity.
6
3. Stock-Based Compensation
The Company has three stock-based compensation plans: a restricted stock plan and two stock
option plans. The restricted stock plan provides for granting shares of Common Stock in the form
of restricted stock awards to employees and non-employee directors of the Company. Under the
restricted stock plan, the Company may issue up to 375,000 shares, plus (i) the number of shares
that are forfeited, and (ii) the number of shares that are withheld from the participants to
satisfy tax withholding obligations. No more than 75,000 shares may be granted to any single
employee. One-third of the shares subject to award vest (i.e., transfer and forfeiture
restrictions on these shares are lifted) on each of the first three anniversaries of the grant
date. All unvested shares granted to an individual vest when the individual reaches age 62. The
stock option plans provide for granting options to purchase shares of the Companys Common Stock to
employees and non-employee directors. Under the stock option plans, the Company may grant options
for up to 2,175,000 shares. The exercise price of each option generally is equal to the market
price on the date of grant. The maximum term of an option is ten years and options generally
become exercisable (i.e., vest) proportionately on each of the first four anniversaries of the
grant date. As of June 30, 2006, 254,357 shares were available for issuance under the restricted
stock plan and 52,650 shares were available for issuance under the stock option plans.
Prior to January 1, 2006 the Company accounted for its stock-based compensation plans using
the intrinsic value method under the recognition and measurement provisions of APB Opinion No. 25,
Accounting for Stock Issued to Employees (APB 25), and related interpretations as permitted by
FASB Statement No. 123, Accounting for Stock-Based Compensation (SFAS 123). Under the intrinsic
value method, compensation expense was recognized in the income statement to the extent the
exercise price of the award was less than the market value of the underlying common stock. Since
the Company historically has granted stock options with an exercise price equal to the market price
on the date of grant, stock option awards had no intrinsic value and, therefore, no compensation
expense was recognized. Because restricted stock awards had no exercise price, the resulting
intrinsic value was equal to the market price on the date of grant and recognized as compensation
expense on a straight-line basis over the vesting period of each award. Pro forma disclosures were
provided to illustrate the effects on net income and earnings per share as if the Company had
applied the fair value recognition provisions of SFAS 123 and recognized expense for both
restricted stock awards and stock option awards.
Effective January 1, 2006 the Company adopted the fair value recognition provisions of FASB
Statement No. 123(R), Share-Based Payment (SFAS 123(R)), which is a revision of SFAS 123 and
supersedes APB 25. SFAS 123(R) requires the Company to recognize compensation expense in the
income statement for all share-based payments to employees. Pro forma disclosure is no longer an
alternative. The Company elected to adopt SFAS 123(R) using the modified prospective transition
method, under which compensation expense includes: (a) compensation cost for all share-based
payments granted prior to, but not yet vested as of December 31, 2005, based on the grant date fair
value estimated in accordance with the original provisions of SFAS 123 used in the Companys pro
forma disclosures, and (b) compensation cost for all share-based payments granted on or after
January 1, 2006, based on the grant-date fair value estimated in accordance with the provisions of
SFAS 123(R). Results for prior periods have not been restated as permitted under the modified
prospective approach; therefore pro forma disclosures will continue to be provided for periods
prior to January 1, 2006.
Under SFAS 123(R), the cost of employee services received in exchange for stock is measured
based on the grant-date fair value. The Company recognizes that cost on a straight-line basis over
the period during which an employee is required to provide service in exchange for the award
(usually the vesting period). The fair value of stock options is estimated using a Black-Scholes
option-pricing model and the fair value of restricted stock is determined based on the market price
of the Companys Common Stock on the date of grant. Compensation expense is recognized only for
share based payments expected to vest; therefore the Company estimates forfeitures at the time of
grant based on historical forfeiture rates and future expectations and reduces compensation expense
accordingly. Forfeiture rates are revised, if necessary, in subsequent periods, with the Company
ultimately recognizing expense only on awards that actually vest. Excess tax benefits, as defined
in SFAS 123(R), are recognized as additions to paid-in capital.
As a result of adopting SFAS 123(R), the Companys income before income taxes for the three
and six months ended June 30, 2006 was lower by $99 and $206, respectively, than it would have been
if the Company had continued to account for stock-based compensation under APB 25. Net income for
the three and six months ended June 30, 2006 was lower by $62 and $130, respectively. Diluted
earnings per share were unchanged by the adoption of SFAS 123(R) for the three months ended June
30, 2006 but were lower by $0.01 per share for the six months ended June 30, 2006. Prior to
adoption of SFAS 123(R), the Company presented
7
all tax benefits of deductions resulting from stock compensation as operating cash flows in
the statement of cash flows. SFAS 123(R) requires the cash flows from tax benefits resulting from
tax deductions in excess of compensation cost recognized in the income statement (excess tax
benefits) to be classified as financing cash flows. The $334 excess tax benefit classified as a
financing cash inflow for the six months ended June 30, 2006 would have been classified as an
operating cash inflow if the Company had not adopted SFAS 123(R). Under SFAS 123(R), the Companys
unearned stock compensation balance of $2,135 included in shareholder equity at December 31, 2005
was reclassified to additional paid-in capital during the quarter ended March 31, 2006.
The following table illustrates the pro forma effect on prior year net income and earnings per
share as if the Company had applied the fair value recognition provisions of SFAS 123 to the
Companys stock-based employee compensation during those periods:
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
|
Six months ended |
|
|
|
June 30, 2005 |
|
|
June 30, 2005 |
|
Net income, as reported |
|
$ |
12,177 |
|
|
$ |
23,771 |
|
Add: Stock-based employee compensation
expense included in reported net income, net
of related tax effects |
|
|
148 |
|
|
|
284 |
|
Deduct: Total stock-based compensation
expense determined under fair value based
method for all awards, net of related tax effects |
|
|
(316 |
) |
|
|
(705 |
) |
|
|
|
|
|
|
|
Pro forma net income |
|
$ |
12,009 |
|
|
$ |
23,350 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share: |
|
|
|
|
|
|
|
|
Basic as reported |
|
$ |
0.51 |
|
|
$ |
0.99 |
|
|
|
|
|
|
|
|
Basic pro forma |
|
$ |
0.50 |
|
|
$ |
0.97 |
|
|
|
|
|
|
|
|
Diluted as reported |
|
$ |
0.50 |
|
|
$ |
0.98 |
|
|
|
|
|
|
|
|
Diluted pro forma |
|
$ |
0.50 |
|
|
$ |
0.97 |
|
|
|
|
|
|
|
|
A summary of stock option activity and related information for the six months ended June 30,
2006 is presented below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted- |
|
Aggregate |
|
|
|
|
|
|
Average |
|
Intrinsic |
|
|
Options |
|
Exercise Price |
|
Value |
Outstanding at January 1, 2006 |
|
|
291,248 |
|
|
$ |
22.16 |
|
|
|
|
|
Granted |
|
|
|
|
|
|
|
|
|
|
|
|
Exercised |
|
|
(28,236 |
) |
|
$ |
19.23 |
|
|
|
|
|
Forfeited |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at June 30, 2006 |
|
|
263,012 |
|
|
$ |
22.47 |
|
|
$ |
7,012 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercisable at June 30, 2006 |
|
|
231,383 |
|
|
$ |
21.34 |
|
|
$ |
6,430 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of June 30, 2006, there was $308 of total unrecognized compensation cost related to stock
options granted under the plans. The weighted-average remaining contractual term of options
outstanding at June 30, 2006 is 5.5 years. There have been no stock options granted since 2004.
A summary of restricted stock activity and related information for the six months ended June
30, 2006 is presented below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted- |
|
|
|
|
|
|
Average |
|
|
|
|
|
|
Grant-Date |
|
|
Shares |
|
Fair Value |
Nonvested at January 1, 2006 |
|
|
58,634 |
|
|
$ |
47.03 |
|
Granted |
|
|
55,510 |
|
|
$ |
57.96 |
|
Vested |
|
|
(25,311 |
) |
|
$ |
50.43 |
|
Forfeited |
|
|
(2,522 |
) |
|
$ |
50.26 |
|
|
|
|
|
|
|
|
|
|
Nonvested at June 30, 2006 |
|
|
86,311 |
|
|
$ |
52.97 |
|
|
|
|
|
|
|
|
|
|
As of June 30, 2006, there was $3,643 of total unrecognized compensation cost related to
restricted shares granted under the plan. That cost is expected to be recognized over a
weighted-average period of 2.2 years.
8
4. Segment Information
The Company has two operating segments: 1) Proppant and 2) Fracture and Reservoir Diagnostics.
Services and software sold by the Fracture and Reservoir Diagnostics segment are provided through
the Companys wholly-owned subsidiary Pinnacle Technologies, Inc. (Pinnacle).
Goodwill totaling $21,840 arising from the Companys acquisition of Pinnacle is not assigned
to an operating segment because that information is not used by the Companys chief operating
decision maker in allocating resources. An intersegment note receivable totaling $14,786 at June
30, 2006 and the costs of the Companys corporate offices are reported in the Proppant segment.
Intersegment sales are not material.
Summarized financial information for the Companys reportable segments is shown in the
following table:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fracture |
|
|
|
|
|
|
|
|
and |
|
|
|
|
|
|
|
|
Reservoir |
|
|
|
|
Proppant |
|
Diagnostics |
|
Total |
Three Months Ended June 30, 2006 |
|
|
|
|
|
|
|
|
|
|
|
|
Revenues from external customers |
|
$ |
65,670 |
|
|
$ |
7,815 |
|
|
$ |
73,485 |
|
Income before income taxes |
|
|
18,846 |
|
|
|
517 |
|
|
|
19,363 |
|
Three Months Ended June 30, 2005 |
|
|
|
|
|
|
|
|
|
|
|
|
Revenues from external customers |
|
$ |
57,132 |
|
|
$ |
6,702 |
|
|
$ |
63,834 |
|
Income before income taxes |
|
|
18,575 |
|
|
|
556 |
|
|
|
19,131 |
|
Six Months Ended June 30, 2006 |
|
|
|
|
|
|
|
|
|
|
|
|
Revenues from external customers |
|
$ |
132,670 |
|
|
$ |
15,093 |
|
|
$ |
147,763 |
|
Income before income taxes |
|
|
38,451 |
|
|
|
1,229 |
|
|
|
39,680 |
|
Segment assets as of June 30, 2006 |
|
|
354,829 |
|
|
|
31,088 |
|
|
|
385,917 |
|
Six Months Ended June 30, 2005 |
|
|
|
|
|
|
|
|
|
|
|
|
Revenues from external customers |
|
$ |
112,293 |
|
|
$ |
12,709 |
|
|
$ |
125,002 |
|
Income before income taxes |
|
|
36,422 |
|
|
|
853 |
|
|
|
37,275 |
|
5. Dividends Paid
On April 18, 2006, the Board of Directors declared a cash dividend of $0.10 per common share
payable to shareholders of record on April 28, 2006. The dividend was paid on May 15, 2006.
6. Comprehensive Income
Comprehensive income, which includes net income and all other changes in equity during a
period except those resulting from investments and distributions to owners, was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
|
Six months ended |
|
|
|
June 30, |
|
|
June 30, |
|
|
|
2006 |
|
|
2005 |
|
|
2006 |
|
|
2005 |
|
Net income |
|
$ |
12,862 |
|
|
$ |
12,177 |
|
|
$ |
25,846 |
|
|
$ |
23,771 |
|
Foreign currency translation adjustment |
|
|
428 |
|
|
|
(25 |
) |
|
|
823 |
|
|
|
(26 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income |
|
$ |
13,290 |
|
|
$ |
12,152 |
|
|
$ |
26,669 |
|
|
$ |
23,745 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7. Legal Proceedings
The Company is subject to legal proceedings, claims and litigation arising in the ordinary
course of business. While the outcome of these matters is currently not determinable, management
does not expect that the ultimate cost to resolve these matters will have a material adverse effect
on the Companys consolidated financial position, results of operations, or cash flows.
9
ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Business
The Company manufactures ceramic proppant and provides services that are used in the hydraulic
fracturing of natural gas and oil wells. Goods and services are provided through two operating
segments: 1) Proppant and 2) Fracture and Reservoir Diagnostics. The Companys Proppant segment
manufactures and sells ceramic proppants. The Companys Fracture and Reservoir Diagnostics segment
provides fracture mapping and reservoir diagnostic services, sells fracture simulation software and
provides engineering services to oil and gas companies worldwide. These services and software are
provided through the Companys wholly-owned subsidiary, Pinnacle Technologies, Inc.
Critical Accounting Policies
The consolidated financial statements are prepared in accordance with accounting principles
generally accepted in the United States, which require the Company to make estimates and
assumptions (see Note 1 to the consolidated financial statements included in the annual report on
Form 10-K for the year ended December 31, 2005). The Company believes that some of its accounting
policies involve a higher degree of judgment and complexity than others. Critical accounting
policies for the Company include revenue recognition, estimating the recoverability of accounts
receivable, inventory valuation, accounting for income taxes, accounting for long-lived assets and
accounting for legal contingencies. Critical accounting policies are discussed more fully in the
annual report on Form 10-K for the year ended December 31, 2005 and there have been no changes in
the Companys evaluation of its critical accounting policies since the preparation of that report.
Results of Operations
Three Months Ended June 30, 2006
Revenues. Consolidated revenues of $73.5 million for the quarter ended June 30, 2006 increased 15%
compared to $63.8 million in revenues for the quarter ended June 30, 2005. The improvement was due
to increases in both the sales volume and average selling price of the Companys ceramic proppant
and an increase in revenues from the Fracture and Reservoir Diagnostics segment.
Proppant segment revenues of $65.7 million for the quarter ended June 30, 2006 surpassed revenues
of $57.1 million for the same period in 2005 by 15% as a result of a 7% increase in the average
selling price of proppant and a 7% increase in proppant sales volume. Worldwide proppant sales
totaled 204 million pounds for the quarter compared to 190 million pounds for the second quarter of
2005. The increased sales volume was primarily the result of record sales in the U.S., which
increased 20% compared to the second quarter of 2005. Canadian sales were slowed by the normal
seasonal decline in drilling activity associated with the spring thaw, but increased 22% compared
to last years second quarter. These sales volume increases were due to continued strong demand
caused by increased natural gas drilling activity in the U.S. and Canada, combined with increased
market share in certain geographic markets and improved product availability made possible by the
Companys new Toomsboro, Georgia manufacturing facility, which began production at the beginning of
this year. Overseas sales volume declined 21 percent compared to last years second quarter
principally due to decreased sales volume in Russia. While proppant sales in Russia reached their
highest level since last years third quarter, activity in the region remains slow due to an
increase in freight costs and tariffs on imported products. The Company is addressing this
situation through the construction of a manufacturing facility in Kopeysk, Russia. Excluding
results in Russia, sales volume in overseas export markets was down 4% from the previous year with strong
activity in China, West Africa and North Africa offset by a decline in sales in the Middle East.
The average selling price of proppant in the second quarter of 2006 was $0.322 per pound, an
increase of 7% compared to the second quarter of 2005 average selling price of $0.300 per pound.
The higher average selling price was because of increases in list prices that went into effect in
June 2005 and November 2005. The impact of these increases was partially offset by a shift in the
mix of products produced and sold toward the Companys lower-priced lightweight proppant.
Fracture and Reservoir Diagnostics segment revenues of $7.8 million for the quarter ended June 30,
2006 exceeded revenues of $6.7 million for the same period in 2005 by 16%. The increase was
primarily due to
10
continued growth in the fracture mapping and reservoir diagnostics businesses, attributable to
increased hydraulic fracturing activity in North America, and a price increase instituted in
January 2006.
Gross Profit. Consolidated gross profit for the second quarter of 2006 was $27.4 million, or 37%
of revenues, compared to $25.6 million, or 40% of revenues, for the second quarter of 2005. Gross
profit increased by 7% compared to last years second quarter as a result of increased revenues in
both the Proppant and Fracture and Reservoir Diagnostics segments. The decline in gross profit as a
percentage of revenues was primarily due to a decrease in the margin on proppant sales, which was
partially offset by an improvement in the margin for fracture and reservoir diagnostics.
Proppant segment gross profit of $24.3 million for the second quarter of 2006 increased 4% compared
to gross profit of $23.2 million for the second quarter of 2005 as a result of increased sales
volume. Gross profit as a percentage of revenues declined to 37% in the second quarter of 2006
from 41% in the second quarter of 2005 primarily as a result of higher prices paid for natural gas
and raw materials used to manufacture proppant. The Companys spending for natural gas delivered
to its U.S. manufacturing facilities during the quarter increased by 49% compared to the second
quarter of 2005.
Fracture and Reservoir Diagnostics segment gross profit for the second quarter of 2006 was $3.1
million, or 40% of revenues, compared to $2.4 million, or 35% of revenues, for the second quarter
of 2005. The increase in gross profit margin was primarily due to a price increase instituted in
January 2006 and increased utilization of staff and equipment.
Selling, General and Administrative (SG&A) and Other Operating Expenses. Consolidated SG&A
expenses and other operating expenses were $8.8 million and $0.1 million, respectively, for the
second quarter of 2006 compared to $6.8 million and $0.3 million, respectively, for the
corresponding period in 2005. As a percentage of revenues, SG&A expenses were 12.0% for the
quarter ended June 30, 2006 compared to 10.6% for the quarter ended June 30, 2005.
Proppant segment SG&A expenses totaled $6.2 million for the second quarter of 2006 compared to $4.9
million for the corresponding period in 2005. SG&A expenses increased mostly due to higher
administrative expenses and professional fees associated with the Companys growth, increased
marketing activity and increased stock compensation expense. As a percentage of revenues, proppant
segment SG&A expenses increased from 8.6% to 9.5% due primarily to accelerated expense recognition
for restricted stock awarded in the second quarter of 2006 to directors of the Company. Under the
Companys restricted stock plan, the vesting of shares is accelerated (i.e., transfer and
forfeiture restrictions are lifted immediately) when an individual reaches retirement age. As four
directors were above normal retirement age (as defined in Companys restricted stock plan) at the
time of the grant, the expense for these grants was recognized immediately upon issuance. Other
operating expenses of $0.1 million in 2006 consisted of final startup costs for the Toomsboro
facility and startup costs for proppant resin-coating equipment at the Companys China facility,
while other operating expenses of $0.3 in 2005 consisted of startup costs for the Toomsboro plant
and the write-off of equipment removed from service at the New Iberia facility.
Fracture and Reservoir Diagnostics segment SG&A expenses totaled $2.6 million for the second
quarter of 2006 and $1.9 million for the corresponding period in 2005. The increase was primarily
due to increased research and development spending and greater marketing and administrative
expenses necessary to support higher sales activity.
Income Tax Expense. Consolidated income tax expense was $6.5 million for the quarter ended June
30, 2006 and $7.0 million for quarter ended June 30, 2005. Income tax expense decreased $0.5
million due to a reduction of net deferred income tax liabilities resulting from changes in state
taxes, primarily related to a tax law change in Texas that will reduce the Companys future tax
liability in that state. Accordingly, the effective tax rate declined to 33.6% for the second
quarter of 2006 compared to 36.3% for the same period a year ago. The effective tax rate for the
remainder of 2006 is expected to be approximately 36.0%.
Six Months Ended June 30, 2006
Revenues. Consolidated revenues of $147.8 million for the six months ended June 30, 2006 exceeded
revenues of $125.0 million for the same period in 2005 by 18%. The improvement in revenues was
largely due to a 12% increase in the average selling price of ceramic proppant.
11
Proppant segment revenues of $132.7 million for the six months ended June 30, 2006 exceeded
revenues of $112.3 million for the same period in 2005 by 18%. The growth was driven primarily by
a 12% increase in the average selling price of proppant along with a 5% increase in sales volume.
Worldwide proppant sales totaled a mid-year record 413 million pounds in the first half of 2006
compared to 392 million pounds in the first half of 2005. A year over year increase in the natural
gas rig count in North America created additional demand for the Companys proppant products, and
the augmented production capacity provided by the new Toomsboro facility enabled the Company to
capitalize on that demand and increase year over year sales volume in the U.S. and Canada by 20%
and 9%, respectively. Overseas sales volume declined 26% primarily due to a decrease in Russia,
where the Companys sales have been adversely impacted by an increase in freight costs and tariffs
on imported products. Excluding Russia, overseas sales increased 12% over the first half of 2005.
The average selling price per pound of ceramic proppant for the first half of 2006 was $0.321
versus $0.287 for the first half of 2005. The higher average selling price was because of
increases in list prices that went into effect in June 2005 and November 2005.
Fracture and Reservoir Diagnostics segment revenues of $15.1 million for the six months ended June
30, 2006 exceeded revenues of $12.7 million for the same period in 2005 by 19%. The growth was
driven primarily by an increase in demand for fracture mapping in North America and growth in the
reservoir diagnostics business, and a price increase instituted in January 2006.
Gross Profit. Consolidated gross profit for the six months ended June 30, 2006 was $54.8 million,
or 37% of revenues, compared to $50.5 million, or 40% of revenues, for the same period in 2005.
The 9% increase in gross profit was the result of year over year improvements in both the Proppant
segment and Fracture and Reservoir Diagnostics segment, while the decline in gross profit as a
percentage of revenues was primarily due to a decrease in the margin on proppant sales.
Proppant segment gross profit for the six months ended June 30, 2006 was $48.6 million, or 37% of
revenues, compared to $46.0 million, or 41% of revenues, for the same period in 2005. Gross profit
increased 6% due to increased sales volume but decreased as a percentage of revenues because sales
price increases did not fully offset higher costs for natural gas and raw materials.
Fracture and Reservoir Diagnostics segment gross profit for the six months ended June 30, 2006 was
$6.2 million, or 41% of revenues, compared to $4.5 million, or 36% of revenues, for the same period
in 2005. The increase in gross profit margin was primarily due to a price increase instituted in
January 2006 and increased utilization of staff and equipment.
Selling, General and Administrative (SG&A) and Other Operating Expenses. Consolidated SG&A
expenses and other operating expenses were $16.3 million and $0.4 million, respectively, for the
six months ended June 30, 2006 compared to $13.8 million and $0.3 million, respectively, for the
six months ended June 30, 2005. As a percentage of revenues, SG&A expenses remained unchanged at
11.0% for the first half of 2006 compared to the same period in 2005.
Proppant segment SG&A expenses totaled $11.5 million for the six months ended June 30, 2005
compared to $10.2 million for the six months ended June 30, 2005. SG&A expenses increased mostly
because of higher administrative expenses and professional fees associated with the Companys
growth, expenses related to the search for a new president, increased marketing activity, and
increased stock compensation expense on restricted stock awards to the Companys directors. As a
percentage of revenues, SG&A expenses dropped slightly to 8.6% in 2006 from 9.1% in 2005. Other
operating expenses of $0.4 million in 2006 and $0.3 million in 2005 consisted mostly of start-up
costs associated with the new manufacturing facility in Toomsboro, Georgia that began production in
January 2006.
Fracture and Reservoir Diagnostics segment SG&A expenses totaled $4.8 million for the six months
ended June 30, 2006 compared to $3.6 million for the six months ended June 30, 2005. The increase
was primarily due to greater marketing and administrative expenses necessary to support higher
revenues and increased spending on technology development.
Income Tax Expense. Consolidated income tax expense was $13.8 million for the six months ended
June 30, 2006 and $13.5 million for the six months ended June 30, 2005. Income tax expense
increased with the increase in taxable income but was partially offset by a $0.5 million reduction
of net deferred income tax liabilities resulting from changes in state taxes, primarily related to
a tax law change in Texas which will reduce the Companys future tax liability in that state.
Accordingly, the effective tax rate was 34.9% for the first half
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of 2006 compared to 36.2% for the first half of 2005. The effective tax rate for the remainder of
2006 is expected to be approximately 36.0%.
Liquidity and Capital Resources
At June 30, 2006, the Company had cash and cash equivalents of $15.6 million and short-term
investments of $41.2 million compared to cash and cash equivalents of $19.7 million and short-term
investments of $42.0 million at December 31, 2005. The Company generated $35.9 million cash from
operations, of which $11.4 million originated from the deferral of income tax payments resulting
from the extension of tax payment deadlines to August 28, 2006 for those tax payers affected by
Hurricane Katrina. The Company also received $0.5 million proceeds from employee exercises of
stock options, retained $0.3 million cash from excess tax benefits relating to stock-based
compensation to employees and received $0.8 million for net purchases and maturities of short-term
investments. Uses of cash included $36.8 million of capital spending and $4.8 million of cash
dividends. Major capital spending included $14.5 million on a new proppant manufacturing facility
in Kopeysk, Russia, which is expected to be completed in the fourth quarter of 2006 at an estimated
total cost of $42 million, $6.9 million on a new proppant manufacturing facility in Toomsboro,
Georgia, which was completed slightly below planned expenditure of $62 million and began operating
in the first quarter of 2006, and $6.8 million to add a second production line at the
Toomsboro facility, which is expected to be completed in the third quarter of 2007 and to add 250
million pounds of capacity to that facility at an estimated total cost of $54 million.
The Company believes that the relatively high prices for oil and natural gas in the futures market
will continue to spur drilling and fracturing activity worldwide. Consequently, the Company
expects demand for its products to remain strong. Production from the new Toomsboro facility
during the second quarter of 2006 was slightly below 75% of total expected capacity but is still
expected to reach 100% of the total expected capacity of 250 million pounds per year by the end of
this year. The Company has twelve production lines located at its five manufacturing locations
worldwide and will adjust production to meet demand as necessary in future periods.
Subject to its financial condition, the amount of funds generated from operations and the level of
capital expenditures, the Companys current intention is to continue to pay quarterly dividends to
shareholders of its Common Stock. On April 18, 2006, the Companys Board of Directors approved the
payment of a quarterly cash dividend of $0.10 per share to shareholders of the Companys Common
Stock on April 28, 2006. The Company has total projected capital expenditures of approximately $40
million for the remainder of 2006, including spending to complete its manufacturing facility in
Kopeysk, Russia, to expand its Toomsboro, Georgia manufacturing facility, to expand its
distribution facilities and to acquire or construct additional fracture mapping tools.
The Company maintains an unsecured line of credit of $10.0 million. As of June 30, 2006, there was
no outstanding debt under the credit agreement. The Company anticipates that cash on hand and
available through liquidation of short-term investments, cash provided by operating activities and
funds available under its line of credit will be sufficient to meet planned operating expenses, tax
obligations and capital expenditures for the next 12 months. The Company also believes that it
could acquire additional debt financing, if needed. Based on these assumptions, we believe that
the Companys fixed costs could be met even with a moderate decrease in demand for the Companys
products.
Off-Balance Sheet Arrangements
The Company had no off-balance sheet arrangements as of June 30, 2006.
Forward-Looking Information
The statements in this Form 10-Q that are not historical statements, including statements regarding
our future financial and operating performance, are forward-looking statements within the meaning
of the federal securities laws. All forward-looking statements are based on managements current
expectations and estimates, which involve risks and uncertainties that could cause actual results
to differ materially from those expressed in forward-looking statements. Among these factors are:
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changes in overall economic conditions, |
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changes in the cost of raw materials and natural gas used in manufacturing our products, |
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changes in demand for our products, |
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changes in the demand for, or price of, oil and natural gas, |
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risks of increased competition, |
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technological, manufacturing and product development risks, |
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loss of key customers, |
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changes in foreign and domestic government regulations, |
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changes in foreign and domestic political and legislative risks, |
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the risks of war and international and domestic terrorism, |
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risks associated with foreign operations and foreign currency exchange rates and controls, |
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weather-related risks and other risks and uncertainties. |
Additional factors that could affect our future results or events are described from time to time
in our Securities and Exchange Commission reports. See in particular our Form 10-K for the fiscal
year ended December 31, 2005 under the caption Risk Factors and similar disclosures in
subsequently filed reports with the Securities and Exchange Commission. We assume no obligation to
update forward-looking statements, except as required by law.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Companys major market risk exposure is to foreign currency fluctuations that could impact its
investments in China and Russia. When necessary, the Company may enter into forward foreign
exchange contracts to hedge the impact of foreign currency fluctuations. There were no such
foreign exchange contracts outstanding at June 30, 2006. The Company has a $10.0 million line of
credit with its primary commercial bank. Under the terms of the revolving credit agreement, the
Company may elect to pay interest at either a fluctuating base rate established by the bank from
time to time or at a rate based on the rate established in the London inter-bank market. As of
June 30, 2006, there was no outstanding debt under the credit agreement. The Company does not
believe that it has any material exposure to market risk associated with interest rates.
ITEM 4. CONTROLS AND PROCEDURES
(a) Evaluation of Disclosure Controls and Procedures
Disclosure controls and procedures are designed to ensure that information required to be disclosed
in the reports filed or submitted under the Exchange Act is recorded, processed, summarized and
reported, within the time periods specified in the SECs rules and forms. Disclosure controls and
procedures include, without limitation, controls and procedures designed to ensure that information
required to be disclosed in the reports filed under the Exchange Act is accumulated and
communicated to management, including the Chief Executive Officer and Chief Financial Officer, as
appropriate, to allow timely decisions regarding required disclosure.
As of the end of the quarter ended June 30, 2006, management carried out an evaluation, under the
supervision and with the participation of the Companys Chief Executive Officer and Chief Financial
Officer, of the effectiveness of the design and operation of the Companys disclosure controls and
procedures. There are inherent limitations to the effectiveness of any system of disclosure
controls and procedures, including the possibility of human error and the circumvention of the
controls and procedures. Accordingly, even effective disclosure controls and procedures can only
provide reasonable assurance of achieving their control objectives. Based upon such evaluation and
as of the end of the quarter for which this report is made, the Chief Executive Officer and Chief
Financial Officer concluded that the Companys disclosure controls and procedures are effective to
provide reasonable assurance that information required to be disclosed in the reports the Company
files and submits under the Exchange Act is recorded, processed, summarized and reported as and
when required.
(b) Changes in Internal Control over Financial Reporting
There were no changes in the Companys internal control over financial reporting during the quarter
ended June 30, 2006 that materially affected, or are reasonably likely to materially affect, those
controls.
14
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Not applicable
ITEM 1A. RISK FACTORS
Not applicable
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
During
the three month period ended June 30, 2006, the Company credited 579 aggregate shares of Common Stock to bookkeeping accounts for three non-employee directors under the
CARBO Ceramics Inc. Director Deferred Fee Plan as a result of such directors prior fee
deferral elections. The fees so deferred were denominated in a number of shares of the
Companys Common Stock determined by reference to the closing price of a share of Common
Stock on the New York Stock Exchange on the day that the fees otherwise would have been
paid. Shares of Common Stock equal to the number of shares credited to a non-employee
directors account will be issued to the director on the later of (a) a date certain
selected by the director on the date of his or her first fee deferral election or (b) the
first date on which he or she ceases to be a director. These transactions are exempt from
the registration requirements of the Securities Act of 1933, as amended, pursuant to
Section 4(2) thereof.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
a. The Annual Meeting of Shareholders of Carbo Ceramics Inc. was held on April 18, 2006.
b. The following matters were submitted to a vote at the meeting:
(1) The election of the following nominees as directors of Carbo Ceramics Inc.
Votes representing 21,765,257 share of common stock were cast. The vote with
respect to each nominee was as follows:
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Nominee |
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For |
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Withheld |
Claude E. Cooke, Jr. |
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21,506,226 |
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259,031 |
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Chad C. Deaton |
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21,117,080 |
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648,177 |
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H. E. Lentz, Jr. |
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21,490,803 |
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274,454 |
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William C. Morris |
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21,342,132 |
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423,125 |
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John J. Murphy |
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21,506,151 |
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259,106 |
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Jesse P. Orsini |
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21,582,517 |
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182,740 |
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Robert S. Rubin |
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21,500,108 |
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265,149 |
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(2) The approval of certain amendments to the CARBO Ceramics Inc. 2004 Long-Term
Incentive Plan primarily to permit non-employee Directors to receive grants under
such Plan and to provide for an acceleration of vesting upon retirement (as more
fully described on Page 19 of the Companys Proxy Statement filed with the
Securities and Exchange Commission on March 17, 2006). Votes representing
19,591,107 share of common stock were cast. Results of the vote were as follows:
18,758,297 for, 433,169 against, and 399,641 abstained.
(3) The ratification of the appointment of Ernst & Young LLP as independent
accountants to audit the consolidated financial statements of CARBO Ceramics Inc.
for the year 2005. Votes representing 21,765,257 share of common stock were cast.
Results of the vote were as follows: 21,503,137 for, 258,550 against, and 3,570
abstained.
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ITEM 5. OTHER INFORMATION
Not applicable
ITEM 6. EXHIBITS
The following exhibits are filed as part of, or incorporated by reference into, this
Quarterly Report on Form 10-Q:
10.1 Amendment No. 1 to the 2004 CARBO Ceramics Inc. Long-Term Incentive Plan
(incorporated by reference to Annex A of CARBO Ceramics Inc.s Definitive Proxy Statement
for the 2006 Annual Meeting of Shareholders, filed with the Securities and Exchange
Commission on March 20, 2006).
10.2 Form of Non-Employee Director Restricted Stock Award Agreement (incorporated by
reference to Exhibit 10.2 of CARBO Ceramics Inc.s Current Report on Form 8-K , filed with
the Securities and Exchange Commission on April 24, 2006).
10.3 Form of Officer Restricted Stock Award Agreement (incorporated by reference to
Exhibit 10.3 of CARBO Ceramics Inc.s Current Report on Form 8-K , filed with the
Securities and Exchange Commission on April 24, 2006).
31.1 Rule 13a-14(a)/15d-14(a) Certification by Gary A. Kolstad.
31.2 Rule 13a-14(a)/15d-14(a) Certification by Paul G. Vitek.
32 Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002.
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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.
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CARBO CERAMICS INC.
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/s/ Gary A. Kolstad
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Gary A. Kolstad |
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President and Chief Executive Officer |
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/s/ Paul G. Vitek
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Paul G. Vitek |
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Sr. Vice President, Finance and
Chief Financial Officer |
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Date: August 1, 2006
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EXHIBIT INDEX
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EXHIBIT |
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DESCRIPTION |
10.1
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Amendment No. 1 to the 2004 CARBO Ceramics Inc. Long-Term Incentive Plan (incorporated by
reference to Annex A of CARBO Ceramics Inc.s Definitive Proxy Statement for the 2006 Annual
Meeting of Shareholders, filed with the Securities and Exchange Commission on March 20, 2006). |
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10.2
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Form of Non-Employee Director Restricted Stock Award Agreement (incorporated by reference to
Exhibit 10.2 of CARBO Ceramics Inc.s Current Report on Form 8-K , filed with the Securities
and Exchange Commission on April 24, 2006). |
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10.3
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Form of Officer Restricted Stock Award Agreement (incorporated by reference to Exhibit 10.3
of CARBO Ceramics Inc.s Current Report on Form 8-K , filed with the Securities and Exchange
Commission on April 24, 2006). |
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31.1
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Rule 13a-14(a)/15d-14(a) Certification by Gary A. Kolstad. |
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31.2
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Rule 13a-14(a)/15d-14(a) Certification by Paul G. Vitek. |
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32
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Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002. |
18