<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended NOVEMBER 30, 1999
----------------------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period to
------------- ------------
Commission file number 0-9950
------------------------------------------
TEAM, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Texas 74-1765729
- -------------------------------------------- ---------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
200 Hermann Drive, Alvin, Texas 77511
- -------------------------------------------- ---------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (281) 331-6154
--------------------
--------------------------------------
Indicate by checkmark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
--------- ---------
On January 4, 2000, there were 8,247,254 shares of the Registrant's
common stock outstanding.
<PAGE> 2
TEAM, INC.
INDEX
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION Page No.
----------
<S> <C> <C>
Item 1. Financial Statements
Consolidated Condensed Balance Sheets -- 1
November 30, 1999 (Unaudited) and May 31, 1999
Consolidated Condensed Statements of Operations
(Unaudited) -- 2
Three Months Ended
November 30, 1999 and 1998
Six Months Ended
November 30, 1999 and 1998
Consolidated Condensed Statements of Cash Flows
(Unaudited) -- 3
Six Months Ended
November 30, 1999 and 1998
Notes to Unaudited Consolidated Condensed
Financial Statements 4
Item 2. Management's Discussion and Analysis 8
of Financial Condition and
Results of Operations
Item 3. Quantitative and Qualitative Disclosure 9
about Market Risk
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders 10
Item 6. Exhibits and Reports on Form 8-K 11
</TABLE>
<PAGE> 3
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
TEAM, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
NOVEMBER 30, MAY 31,
ASSETS 1999 1999
------------ ------------
(Unaudited)
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 521,000 $ 1,035,000
Accounts receivable, net of allowance for doubtful
accounts of $290,000 and $297,000 12,417,000 10,726,000
Inventories 8,162,000 8,566,000
Income tax receivable 0 87,000
Deferred income taxes 709,000 709,000
Prepaid expenses and other current assets 995,000 512,000
------------ ------------
Total Current Assets 22,804,000 21,635,000
Property, Plant and Equipment:
Land and buildings 10,027,000 9,996,000
Machinery and equipment 17,493,000 17,100,000
------------ ------------
27,520,000 27,096,000
Less accumulated depreciation and amortization 14,593,000 13,600,000
------------ ------------
12,927,000 13,496,000
Goodwill, net of accumulated amortization
of $236,000 and $100,000 10,705,000 10,769,000
Other Assets 1,714,000 1,526,000
Restricted Cash 451,000 451,000
------------ ------------
Total Assets $ 48,601,000 $ 47,877,000
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current portion of long-term debt $ 957,000 $ 948,000
Accounts payable 1,102,000 1,104,000
Other accrued liabilities 3,920,000 3,735,000
Income taxes payable 187,000 0
------------ ------------
Total Current Liabilities 6,166,000 5,787,000
Deferred income taxes 228,000 228,000
Long-term Debt and Other Obligations 20,331,000 20,518,000
Stockholders' Equity:
Preferred stock, cumulative, par value $100 per share,
500,000 shares authorized, none issued 0 0
Common stock, par value $.30 per share, 30,000,000 shares
authorized, 8,256,954 and 8,213,652 shares issued at
November 30, 1999 and May 31, 1999, respectively 2,477,000 2,464,000
Additional paid-in capital 32,103,000 32,000,000
Accumulated deficit (12,570,000) (12,972,000)
Unearned compensation (37,000) (51,000)
Treasury stock at cost, 9,700 shares (97,000) (97,000)
------------ ------------
Total Stockholders' Equity 21,876,000 21,344,000
------------ ------------
Total Liabilities and Stockholders' Equity $ 48,601,000 $ 47,877,000
============ ============
</TABLE>
See notes to unaudited consolidated condensed financial statements.
-1-
<PAGE> 4
TEAM, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
NOVEMBER 30, NOVEMBER 30,
------------------------- -------------------------
1999 1998 1999 1998
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Revenues $16,337,000 $13,892,000 $31,747,000 $25,260,000
Operating expenses 9,086,000 8,142,000 18,001,000 14,634,000
----------- ----------- ----------- -----------
Gross Margin 7,251,000 5,750,000 13,746,000 10,626,000
Selling, general and administrative expenses 6,168,000 5,302,000 12,213,000 9,543,000
----------- ----------- ----------- -----------
Earnings from operations 1,083,000 448,000 1,533,000 1,083,000
Interest 411,000 210,000 788,000 305,000
----------- ----------- ----------- -----------
Income before income taxes 672,000 238,000 745,000 778,000
Provision for income taxes 316,000 131,000 343,000 379,000
----------- ----------- ----------- -----------
Net income $ 356,000 $ 107,000 $ 402,000 $ 399,000
=========== =========== =========== ===========
Net income per common share:
Basic $ 0.04 $ 0.01 $ 0.05 $ 0.05
=========== =========== =========== ===========
Diluted $ 0.04 $ 0.01 $ 0.05 $ 0.05
=========== =========== =========== ===========
Weighted average number of shares outstanding:
Basic 8,238,000 7,509,000 8,230,000 7,350,000
=========== =========== =========== ===========
Diluted 8,285,000 7,680,000 8,311,000 7,598,000
=========== =========== =========== ===========
</TABLE>
See notes to unaudited consolidated condensed financial statements.
-2-
<PAGE> 5
TEAM, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
NOVEMBER 30,
----------------------------
1999 1998
------------ ------------
<S> <C> <C>
Cash Flows from Operating Activities:
Net income $ 402,000 $ 399,000
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization 1,511,000 1,040,000
Loss (gain) on sale of assets 0 (14,000)
Change in assets and liabilities
(Increase) decrease:
Accounts receivable (1,691,000) 466,000
Inventories 404,000 253,000
Prepaid expenses and other current assets (483,000) 51,000
Income taxes receivable 87,000 0
Increase (decrease):
Accounts payable (2,000) 172,000
Other accrued liabilities 244,000 166,000
Income taxes payable 187,000 (158,000)
------------ ------------
Net cash provided by operating activities 659,000 2,375,000
Cash Flows From Investing Activities:
Capital expenditures (575,000) (1,790,000)
Disposal of property and equipment 41,000 74,000
Other (532,000) (374,000)
Acquisition of Climax, net of cash and equivalents acquired 0 (6,746,000)
Payments of Climax notes payable at acquisition date 0 (2,893,000)
------------ ------------
Net cash used in investing activities (1,066,000) (11,729,000)
Cash Flows From Financing Activities:
Payments under debt agreements and other long-term obligations (237,000) (5,070,000)
Proceeds from issuance of long-term debt 0 10,708,000
Issuance of common stock 130,000 3,391,000
------------ ------------
Net cash provided by (used in) financing activities (107,000) 9,029,000
------------ ------------
Net decrease in cash and cash equivalents (514,000) (325,000)
Cash and cash equivalents at beginning of year 1,035,000 1,355,000
------------ ------------
Cash and cash equivalents at end of period $ 521,000 $ 1,030,000
============ ============
Supplemental disclosure of cash flow information:
Cash paid during the period for interest $ 754,000 $ 235,000
============ ============
Income taxes paid $ 69,000 $ 731,000
============ ============
</TABLE>
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES:
In connection with the acquisition of Climax Portable Machine Tools, Inc.,
effective August 31, 1998, the Company issued 200,000 shares of its common
stock with an assigned value of $4.00 per share.
See notes to unaudited consolidated condensed financial statements.
-3-
<PAGE> 6
TEAM, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED CONDENSED
FINANCIAL STATEMENTS
1. Method of Presentation
General
The interim financial statements are unaudited, but in the opinion of
management, reflect all adjustments, consisting only of normal recurring
adjustments, necessary for a fair presentation of results for such periods.
The consolidated condensed balance sheet at May 31, 1999 is derived from
the May 31, 1999 audited consolidated financial statements. The results of
operations for any interim period are not necessarily indicative of results
for the full year. These financial statements should be read in conjunction
with the financial statements and notes thereto contained in the Company's
annual report for the fiscal year ended May 31, 1999.
New Accounting Standards
In June 1998, the Financial Accounting Standards Board (FASB) issued
statement of Financial Accounting Standards (SFAS) No. 133, "Accounting for
Derivative Instruments and Hedging Activities," which establishes
accounting and reporting standards for derivative instruments, including
certain derivative instruments embedded in other contracts, and for hedging
activities. SFAS No. 133 is effective for all fiscal quarters of fiscal
years beginning after June 15, 2000. The Company is currently analyzing
this statement to determine the impact on the Company's financial position,
results of operations, and cash flows.
2. Dividends
No dividends were paid during the first six months of fiscal 2000 or
1999. Pursuant to the Company's Credit Agreement, the Company may not pay
quarterly dividends without the consent of its senior lender. Future
dividend payments will depend upon the Company's financial condition and
other relevant matters.
3. Long-Term Debt and Other Obligations
Long-term obligations consist of:
<TABLE>
<CAPTION>
November 30, May 31,
1999 1999
------------ -----------
<S> <C> <C>
Revolving credit agreement $ 7,590,000 $ 7,470,000
Term notes 11,245,000 11,307,000
Capital lease obligations 191,000 238,000
Agreements with former officers 1,491,000 1,657,000
Deferred compensation 451,000 451,000
Other 320,000 343,000
------------ -----------
21,288,000 21,466,000
Less current portion 957,000 948,000
------------ -----------
Total $ 20,331,000 $20,518,000
============ ===========
</TABLE>
-4-
<PAGE> 7
Effective August 26, 1998, the Company entered into a new credit
facility with a new primary lender in the amount of $24,000,000. This new
facility provides for (i) a $12,500,000 revolving loan, (ii) $9,500,000 in
term loans for business acquisitions and (iii) a $2,000,000 mortgage loan
to refinance existing real estate indebtedness. Amounts borrowed under the
revolving credit loan are due September 30, 2001. Amounts borrowed against
the term loans are due in quarterly installments in the amount of $339,000
beginning December 31, 1999, with the remaining principal balance to be
paid on the term loans maturity date of September 30, 2003. Amounts
borrowed against the mortgage loan are to be repaid in quarterly
installments in the amount of $31,000 beginning December 31, 1998, with the
remaining principal balance to be paid on the mortgage loan maturity date
of September 30, 2008. Amounts outstanding under this facility bear
interest at a marginal rate over the LIBOR rate or prime rate. The marginal
rate is based on the Company's level of funded debt to cash flow, and
ranges from 1.50% to 2.50% over the LIBOR rate and from 0.00% to 0.50% over
the prime rate. The effective rate on outstanding borrowings under the new
agreement is approximately 8.1%.
In October 1998, the Company entered into an interest rate swap
transaction on $4,500,000 of the outstanding term loans, exchanging a
floating LIBOR rate (5.3% at the time of the swap) for a fixed rate of
5.19%. The maturity of this swap agreement is September 30, 2003. In
December 1998, the Company executed two additional swap transactions
related to $1,800,000 borrowed against the mortgage loan and to $2,000,000
of the amount outstanding under the revolver. A floating LIBOR rate (5.25%
at the time of these swap transactions) was exchanged for fixed rates of
5.24% and 5.19% on the $1,800,000 and $2,000,000 notional amounts,
respectively. The maturity of these swap agreements is December 31, 2001.
Loans under the Company's bank credit facility are secured by
substantially all of the assets of the Company. The terms of the agreement
require the maintenance of certain financial ratios and limit investments,
liens, leases and indebtedness, among other things. At November 30, 1999,
the Company was in compliance with all credit facility covenants.
4. Earnings Per Share
The following table is a reconciliation of the numerators and
denominators of the basic and diluted earnings per share computations:
<TABLE>
<CAPTION>
Three months ended November 30, 1999 Three months ended November 30, 1998
---------------------------------------- ---------------------------------------
Income Shares Per-Share Income Shares Per-Share
(Numerator) (Denominator) Amount (Numerator) (Denominator) Amount
------------- --------------- ---------- ------------- --------------- ---------
<S> <C> <C> <C> <C> <C> <C>
Basic EPS:
Net income $ 356,000 8,238,000 $ 0.04 $ 107,000 7,509,000 $0.01
Effect of Dilutive Securities:
Options -- 47,000 -- 171,000
--------- ---------- ---------- ----------
Diluted EPS:
Net income $ 356,000 8,285,000 $ 0.04 $ 107,000 7,680,000 $0.01
========= ========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
Six months ended November 30, 1999 Six months ended November 30, 1998
---------------------------------------- ---------------------------------------
Income Shares Per-Share Income Shares Per-Share
(Numerator) (Denominator) Amount (Numerator) (Denominator) Amount
------------- --------------- ---------- ------------- --------------- ---------
<S> <C> <C> <C> <C> <C> <C>
Basic EPS:
Net income $ 402,000 8,230,000 $ 0.05 $ 399,000 7,350,000 $0.05
Effect of Dilutive Securities:
Options -- 81,000 -- 248,000
--------- ---------- --------- ----------
Diluted EPS:
Net income $ 402,000 8,311,000 $ 0.05 $ 399,000 7,598,000 $0.05
========= ========== ========= ==========
</TABLE>
-5-
<PAGE> 8
5. Industry Segment Information
The Company adopted SFAS No. 131, "Disclosure about Segments of an
Enterprise and Related Information," in fiscal 1999. SFAS No. 131 requires
that the Company disclose certain information about its operating segments
where operating segments are defined as "components of an enterprise about
which separate financial information is available that is evaluated
regularly by the chief operating decision maker in deciding how to allocate
resources and in assessing performance." Generally, financial information
is required to be reported on the basis that is used internally for
evaluating segment performance and deciding how to allocate resources to
segments.
Pursuant to SFAS No. 131, the Company has two reportable segments:
industrial services and equipment sales and rentals. The industrial
services segment includes services consisting of leak repair, hot tapping,
emissions control monitoring, field machining, and mechanical inspection.
The equipment sales and rental segment consists of the Climax business.
The Company evaluates performance based on earnings before interest and
income taxes. Inter-segment sales are eliminated in the following schedule.
Interest is not allocated to the segments.
THREE MONTHS ENDED NOVEMBER 30, 1999
<TABLE>
<CAPTION>
Industrial Equipment Corporate
Services Sales & Rentals & Other Total
----------- --------------- ----------- -----------
<S> <C> <C> <C> <C>
Revenues $13,807,000 $ 2,530,000 $ 0 $16,337,000
=========== ============== =========== ===========
Earnings before interest & taxes 2,030,000 70,000 (1,017,000) 1,083,000
Interest 0 0 411,000 411,000
----------- -------------- ----------- -----------
Earnings before income taxes 2,030,000 70,000 (1,428,000) 672,000
=========== ============== =========== ===========
Depreciation and amortization 429,000 224,000 87,000 740,000
=========== ============== =========== ===========
Capital expenditures 190,000 122,000 21,000 333,000
=========== ============== =========== ===========
Identifiable assets $36,266,000 $ 7,727,000 $ 4,608,000 $48,601,000
=========== ============== =========== ===========
</TABLE>
THREE MONTHS ENDED NOVEMBER 30, 1998
<TABLE>
<CAPTION>
Industrial Equipment Corporate
Services Sales & Rentals & Other Total
----------- --------------- ----------- -----------
<S> <C> <C> <C> <C>
Revenues $11,637,000 $ 2,255,000 $ 0 $13,892,000
=========== ============== =========== ===========
Earnings before interest & taxes 1,680,000 (36,000) (1,196,000) 448,000
Interest 0 0 210,000 210,000
----------- -------------- ----------- -----------
Earnings before income taxes 1,680,000 (36,000) (1,406,000) 238,000
=========== ============== =========== ===========
Depreciation and amortization 376,000 152,000 113,000 641,000
=========== ============== =========== ===========
Capital expenditures 830,000 46,000 253,000 1,129,000
=========== ============== =========== ===========
Identifiable assets $23,473,000 $ 8,928,000 $ 6,193,000 $38,594,000
=========== ============== =========== ===========
</TABLE>
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<PAGE> 9
SIX MONTHS ENDED NOVEMBER 30, 1999
<TABLE>
<CAPTION>
Industrial Equipment Corporate
Services Sales & Rentals & Other Total
----------- --------------- ----------- -----------
<S> <C> <C> <C> <C>
Revenues $26,722,000 $ 5,025,000 $ 0 $31,747,000
=========== ============== =========== ===========
Earnings before interest & taxes 3,256,000 156,000 (1,879,000) 1,533,000
Interest 0 0 788,000 788,000
----------- -------------- ----------- -----------
Earnings before income taxes 3,256,000 156,000 (2,667,000) 745,000
=========== ============== =========== ===========
Depreciation and amortization 852,000 460,000 199,000 1,511,000
=========== ============== =========== ===========
Capital expenditures 410,000 139,000 26,000 575,000
=========== ============== =========== ===========
Identifiable assets $36,266,000 $ 7,727,000 $ 4,608,000 $48,601,000
=========== ============== =========== ===========
</TABLE>
SIX MONTHS ENDED NOVEMBER 30, 1998
<TABLE>
<CAPTION>
Industrial Equipment Corporate
Services Sales & Rentals & Other Total
----------- --------------- ----------- -----------
<S> <C> <C> <C> <C>
Revenues $23,005,000 $ 2,255,000 $ 0 $25,260,000
=========== ============== =========== ===========
Earnings before interest & taxes 3,477,000 (36,000) (2,358,000) 1,083,000
Interest 0 0 305,000 305,000
----------- -------------- ----------- -----------
Earnings before income taxes 3,477,000 (36,000) (2,663,000) 778,000
=========== ============== =========== ===========
Depreciation and amortization 673,000 152,000 215,000 1,040,000
=========== ============== =========== ===========
Capital expenditures 993,000 46,000 751,000 1,790,000
=========== ============== =========== ===========
Identifiable assets $23,473,000 $ 8,928,000 $ 6,193,000 $38,594,000
=========== ============== =========== ===========
</TABLE>
-7-
<PAGE> 10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
THREE MONTHS ENDED NOVEMBER 30, 1999 COMPARED
TO THREE MONTHS ENDED NOVEMBER 30, 1998
Revenues for the quarter ended November 30, 1999 were $16.3 million compared to
$13.9 million for the corresponding period of the preceding year. $1.9 million
of the $2.4 million increase is attributable to the inclusion of X Ray
Inspection, Inc., ("XRI"), in Team's operating results for the 1999 period. (XRI
was acquired in April 1999 and, therefore, was not included in 1998 results).
Earnings before interest and taxes, ("EBIT"), were $1.1 million in the 1999
quarter, an increase of $635 thousand from the EBIT of $448 thousand reported in
the 1998 quarter. $350 thousand of the increase was attributable to the
industrial services segment and $106 thousand of the increase was attributable
to the equipment sales and rental segment. Additionally, reduced corporate
general and administrative costs resulted in $179 thousand of improved EBIT.
The addition of XRI's inspection services in the 1999 quarter accounted for $271
thousand of the $350 thousand increase in profitability of the industrial
services segment in the 1999 quarter as compared to 1998. Operating profits in
Team's traditional service lines improved by $79 thousand in the 1999 quarter on
a modest increase in revenues. The $106 thousand improvement in operating
results from the equipment sales and rental segment was a result of increased
sales and operating margins.
Interest expense in the 1999 quarter was $411 thousand compared to $210 thousand
in the same quarter of 1998. The $201 thousand increase is directly associated
with borrowings in connection with the XRI acquisition.
SIX MONTHS ENDED NOVEMBER 30, 1999 COMPARED
TO SIX MONTHS ENDED NOVEMBER 30, 1998
Revenues for the six months ended November 30, 1999 of $31.7 million were 26%
greater than the $25.3 million reported in 1998. The increase is primarily
attributable to the inclusion, in 1999, of the operating results of XRI and of
Climax Portable Machine Tools, Inc., ("Climax"), which were both acquired in the
fiscal year ended May 31, 1999. Operating results for the six months of 1998 do
not include XRI results and Climax results are only included for the second
quarter of 1998.
As reported in Form 10-Q for the quarter ended August 31, 1999, first quarter
revenues and profits of the industrial services segment were negatively impacted
by a softening in the market for the Company's traditional services,
particularly in the refining and petrochemical industries. The second quarter of
1999 reflects improved trends in market conditions with traditional industrial
service revenues increasing by $892 thousand over the first quarter ended August
31, 1999. The second quarter improvement caused year to date industrial service
revenues for the six months ended November 30, 1999 (excluding XRI) to be
relatively flat as compared to the same period of 1998.
EBIT for the six months ended November 30, 1999, was $1.5 million, or $450
thousand more than the same period of 1998. XRI results accounted for an
increase of $699 thousand and Climax accounted for an increase of $192 thousand.
Corporate general and administrative costs were reduced $479 thousand in the
1999 period as compared to 1998, offsetting the impact of the $920 thousand
decline in EBIT in traditional industrial
-8-
<PAGE> 11
services--all of which occurred in the first quarter ended August 31, 1999. As
discussed above, the first quarter decline in industrial services profitability
was due to a softening in the market for the Company's traditional services
while, at the same time, field based personnel were being added to support new
field machining and technical bolting service lines. In August 1999, overall
personnel levels were reduced to meet the requirements of existing business
conditions, which contributed to the improvement in second quarter 1999 results.
LIQUIDITY AND CAPITAL RESOURCES
At November 30, 1999, the Company's working capital totaled $16.6 million,
an increase of approximately $800 thousand since May 31, 1999. As of November
30, 1999, cash and cash equivalents totaled $521 thousand, a decrease of $514
thousand since May 31, 1999. The Company utilizes excess operating funds to
automatically reduce the amount outstanding under the revolving credit facility.
At November 30, 1999 the outstanding balance under the revolving credit facility
was $7.6 million and approximately $3.5 million was available to borrow under
the facility.
In the opinion of management, cash flow from operations, cash balances and
available borrowings will be sufficient for the foreseeable future to finance
anticipated working capital requirements, capital expenditures and debt service
requirements.
YEAR 2000 COMPLIANCE
The Company, like other businesses, faced the Year 2000 issue. Effective
February 1, 1999, the Company substantially completed a comprehensive project to
upgrade its information, technology and manufacturing facilities' computer
hardware and software to programs that address the Year 2000 problem. The new
hardware and packaged software were purchased from large vendors who represented
that the systems are Year 2000 compliant. As of January 10, 2000, the Company
has experienced no problems with the Year 2000 rollover.
DISCLOSURE REGARDING FORWARD LOOKING STATEMENTS
Certain forward-looking information contained herein is being provided in
accordance with the provisions of the Private Securities Litigation Reform Act.
Such information is subject to certain assumptions and beliefs based on current
information known to the Company and is subject to factors that could result in
actual results differing materially from those anticipated in the
forward-looking statements contained herein. Such factors include domestic and
international economic activity, interest rates, market conditions for the
Company's customers, regulatory changes and legal proceedings, and the Company's
successful implementation of its internal operating plans. Accordingly, there
can be no assurance that the forward-looking statements contained herein will
occur or that objectives will be achieved.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
The Company holds certain floating-rate obligations. The exposure of these
obligations to increase in short-term interest rates is limited by interest rate
swap agreements entered into by the Company. There were no other material
quantitative or qualitative changes during the first six months of fiscal 2000
in the Company's market risk sensitive instruments.
-9-
<PAGE> 12
PART II - OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The 1999 Annual Meeting of Shareholders of the Company was held on October 7,
1999. At the meeting, Messrs. Philip J. Hawk and Louis A. Waters were elected to
serve as Class I Directors for a term of three years. The votes with respect to
the election of each such director were as follows:
<TABLE>
<CAPTION>
NAME FOR WITHHELD
- ------------------------ ----------- ----------
<S> <C> <C>
Mr. Philip J. Hawk 7,428,389 444,110
----------- ----------
Mr. Louis A. Waters 7,429,289 443,210
----------- ----------
</TABLE>
The four directors continuing in office until the expiration of their respective
terms are Messrs. George W. Harrison, Sidney B. Williams, Jack M. Johnson, Jr.
and E. Theodore Laborde.
The shareholders considered and approved an amendment to the 1998 Incentive
Stock Option Plan to increase the number of shares of Common Stock which are to
be made available for distribution under the plan from 500,000 shares to
1,000,000 shares by the following vote:
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
- ----------- ----------- ----------
<S> <C> <C>
4,802,825 829,054 16,168
- ----------- ----------- ----------
</TABLE>
The shareholders also approved the appointment of Deloitte & Touche LLP as
independent certified public accountants to audit the Company's accounts for the
fiscal year ending May 31, 2000 by the following vote:
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
- ----------- ----------- ----------
<S> <C> <C>
7,834,106 23,128 15,265
- ----------- ----------- ----------
</TABLE>
-10-
<PAGE> 13
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
(27) Financial Data Schedule
(b) Reports on Form 8-K
No reports on Form 8-K were filed this quarter.
-11-
<PAGE> 14
SIGNATURE
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 thereto duly authorized.
TEAM, INC
(Registrant)
Date: January 14, 2000
/s/ PHILIP J. HAWK
--------------------------------------
Philip J. Hawk
Chief Executive Officer and Director
/s/ TED W. OWEN
--------------------------------------
Ted W. Owen, Vice President and
Chief Financial Officer
(Principal Financial Officer and
Principal Accounting Officer)
<PAGE> 15
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------- -----------
<S> <C>
(27) Financial Data Schedule.
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED FINANCIAL STATEMENTS AND RELATED NOTES OF TEAM, INC. AND
SUBSIDIARIES FOR THE SIX MONTHS ENDED NOVEMBER 30, 1999 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAY-31-2000
<PERIOD-END> NOV-30-1999
<CASH> 521,000
<SECURITIES> 0
<RECEIVABLES> 12,707,000
<ALLOWANCES> 290,000
<INVENTORY> 8,162,000
<CURRENT-ASSETS> 22,804,000
<PP&E> 27,520,000
<DEPRECIATION> 14,593,000
<TOTAL-ASSETS> 48,601,000
<CURRENT-LIABILITIES> 6,166,000
<BONDS> 20,331,000<F1>
0
0
<COMMON> 2,477,000
<OTHER-SE> 19,399,000
<TOTAL-LIABILITY-AND-EQUITY> 48,601,000
<SALES> 0
<TOTAL-REVENUES> 31,747,000
<CGS> 0
<TOTAL-COSTS> 18,001,000
<OTHER-EXPENSES> 12,213,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 788,000
<INCOME-PRETAX> 745,000
<INCOME-TAX> 343,000
<INCOME-CONTINUING> 402,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 402,000
<EPS-BASIC> 0.05
<EPS-DILUTED> 0.05
<FN>
<F1>INCLUDES $1,491,000 FOR COMPENSATION ACCRUALS OF FORMER EMPLOYEES.
</FN>
</TABLE>
