<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
_________
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended March 31, 1995
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission File Number 0-10068
ICO, Inc.
______________________________________________________
(Exact name of registrant as specified in its charter)
Texas 75-1619554
________________________ _________________________
(State of incorporation) (IRS Employer
Identification Number)
100 Glenborough Drive, Suite 250, Houston, Texas 77067
________________________________________________ __________
(Address of principal executive offices) (Zip Code)
(713) 872-4994
__________________
(Telephone Number)
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO
____ ____
Common stock, without par value: 8,701,240 shares
outstanding as of May 1, 1995
<PAGE>
ICO, INC.
INDEX TO QUARTERLY REPORT FORM 10-Q
Part I. Financial Information Page
Item 1. Financial Statements
Consolidated Statements of
Operations for the Three
Months and Six Months Ended
March 31, 1995 and 1994 . . . . . . . . . . 2
Consolidated Balance Sheets as
of March 31, 1995 and
September 30, 1994 . . . . . . . . . . . . . 3
Consolidated Statements of Cash
Flows for the Six Months Ended
March 31, 1995 and 1994 . . . . . . . . . . 5
Notes to Consolidated Financial Statements . 7
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of
Operations . . . . . . . . . . . . . . . . . 8
Part II. Other Information
Item 1. Legal Proceedings
(no response required) . . . . . . . . . . -
Item 2. Changes in Securities
(no response required) . . . . . . . . . . _
Item 3. Defaults upon Senior Securities
(no response required) . . . . . . . . . . -
Item 4. Submission of Matters to a Vote of Security
Holders (no response required) . . . . . . -
Item 5. Other Information (no response required) . -
Item 6. Exhibits and Reports on Form 8-K
(no response required) . . . . . . . . . . -
<PAGE>
ICO, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
Three Months Ended Six Months Ended
March 31, March 31,
______________________ _________________________
1995 1994 1995 1994
__________ __________ ___________ ____________
Revenues:
Exploration services $7,669,000 $6,950,000 $15,089,000 $13,985,000
Production services 4,880,000 4,313,000 9,478,000 9,303,000
Corrosion Control services 4,638,000 2,848,000 8,847,000 6,428,000
Product sales 3,081,000 2,863,000 5,898,000 6,249,000
Other sales and services 588,000 490,000 1,779,000 490,000
___________ ___________ ___________ ___________
20,856,000 17,464,000 41,091,000 36,455,000
___________ ___________ ___________ ___________
Cost and expenses:
Cost of sales and
services 14,108,000 13,021,000 28,400,000 26,430,000
Selling, general and
administrative 4,513,000 3,506,000 8,280,000 7,147,000
Depreciation and
amortization 1,245,000 1,006,000 2,468,000 1,957,000
Interest, net (332,000) (164,000) (614,000) 3,000
___________ ___________ ___________ ___________
19,534,000 17,369,000 38,532,000 35,537,000
___________ ___________ ___________ ___________
Income before taxes and
extraordinary item 1,322,000 95,000 2,557,000 918,000
Federal income taxes 148,000 __ 178,000 __
___________ ___________ ___________ ___________
Income before
extraordinary item 1,174,000 95,000 2,379,000 918,000
Extraordinary item -
loss on extinguishment
of debt __ __ __ (1,371,000)
___________ ___________ ___________ ___________
Net income (loss) $ 1,174,000 $ 95,000 $ 2,379,000 $( 453,000)
___________ ___________ ___________ ___________
___________ ___________ ___________ ___________
Earnings (loss) per common
and common equivalent share:
Income before extraordinary
item $ .07 $ (.06) $ .15 $ .02
Extraordinary item __ __ __ (.17)
___________ ___________ ___________ ___________
Net income (loss) $ .07 $ (.06) $ .15 $ (.15)
___________ ___________ ___________ ___________
___________ ___________ ___________ ___________
Weighted average shares
outstanding 8,648,218 8,091,243 8,628,984 7,921,856
___________ ___________ ___________ ___________
___________ ___________ ___________ ___________
The accompanying notes are an integral part of
these financial statements
<PAGE>
ICO, INC.
CONSOLIDATED BALANCE SHEETS
ASSETS
(unaudited)
March 31, September 30,
1995 1994
___________ _____________
Current assets:
Cash and cash equivalents $25,865,000 $24,763,000
Trade receivables
(less allowance for doubtful
accounts of $531,000 and
$576,000) 15,398,000 14,307,000
Inventories 4,766,000 4,642,000
Prepaid expenses and other 2,853,000 3,253,000
_____________ _____________
Total current assets 48,882,000 46,965,000
_____________ _____________
Property, plant and equipment,
at cost 81,290,000 76,374,000
Less - accumulated
depreciation and amortization (51,202,000) (48,861,000)
_____________ _____________
30,088,000 27,513,000
_____________ _____________
Other assets:
Goodwill, net 3,946,000 3,663,000
Patents and licenses, net 247,000 264,000
Other 734,000 564,000
_____________ _____________
$83,897,000 $78,969,000
_____________ _____________
_____________ _____________
The accompanying notes are an integral part of
these financial statements
<PAGE>
ICO, INC.
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY
(unaudited)
March 31, September 30,
1995 1994
_____________ ______________
Current liabilities:
Current portion of
long-term debt $ 483,000 $ 437,000
Accounts payable 7,014,000 5,122,000
Accrued salaries and wages 562,000 553,000
Accrued expenses 4,092,000 3,197,000
_____________ _____________
Total current liabilities 12,151,000 9,309,000
_____________ _____________
Long-term debt, net of
current portion 926,000 456,000
_____________ _____________
Stockholders' equity:
Preferred stock, without par
value - 500,000 shares
authorized; 322,500 and 0
shares issued, respectively,
with a liquidation preference
of $32,250,000 and 0,
respectively 13,000 13,000
Common stock, without par value
- 50,000,000 shares
authorized; 8,696,240 and
8,551,574 shares issued,
respectively 33,848,000 33,394,000
Additional paid-in capital 56,106,000 56,053,000
Accumulated deficit (19,147,000) (20,256,000)
_____________ _____________
70,820,000 69,204,000
_____________ _____________
$83,897,000 $78,969,000
_____________ _____________
_____________ _____________
The accompanying notes are an integral part of
these financial statements
<PAGE>
ICO, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
Six Months Ended
March 31,
___________________________
1995 1994
____________ ____________
Increase (decrease) in cash and
cash equivalents:
Cash flows from operating
activities:
Cash received from customers $40,478,000 $35,747,000
Cash paid to suppliers and
employees (34,315,000) (34,730,000)
Interest received (paid) 610,000 (328,000)
_____________ _____________
Net cash provided by (used
for) operating activities 6,773,000 689,000
Cash flows from investing
activities:
Capital expenditures (3,604,000) (2,839,000)
Acquisitions (922,000) (1,996,000)
Proceeds from dispositions of
property, plant and equipment 1,000 6,000
_____________ _____________
Net cash provided by (used
for) investing
activities (4,525,000) (4,829,000)
_____________ _____________
Cash flows from financing
activities:
Net proceeds from sale of stock 121,000 31,302,000
Payment of dividends on
preferred stock (1,088,000) (738,000)
Current maturities and
long-term debt:
Additions 142,000 --
Reductions (321,000) (10,283,000)
_____________ _____________
Net cash provided by (used for)
financing activities (1,146,000) 20,281,000
_____________ _____________
Net increase (decrease) in cash 1,102,000 16,141,000
Cash and cash equivalents at
beginning of period 24,763,000 9,450,000
_____________ _____________
Cash and cash equivalents at
end of period $25,865,000 $25,591,000
_____________ _____________
_____________ _____________
(continued on next page)
The accompanying notes are an integral part of
these financial statements
<PAGE>
(continued from prior page)
Six Months Ended
March 31,
___________________________
1995 1994
___________ ____________
Reconciliation of net income (loss)
to net cash provided by (used for)
operating activities:
Net income (loss) $2,379,000 $(453,000)
_____________ _____________
Adjustments:
Depreciation and amortization 2,468,000 1,957,000
Loss on extinguishment of debt -- 1,371,000
Interest not paid
(paid not expensed) -- (325,000)
Change in assets and
liabilities:
Receivables (665,000) (708,000)
Inventories (108,000) (1,396,000)
Prepaid expenses 161,000 (490,000)
Other assets (146,000) 68,000
Accounts payable 1,790,000 (6,000)
Accrued expenses 894,000 671,000
_____________ _____________
Total adjustments 4,394,000 1,142,000
_____________ _____________
Net cash provided by (used for)
operating activities $ 6,773,000 $ 689,000
_____________ _____________
_____________ _____________
Non-cash investing and
financing activities:
Non-cash aspects of acquisitions
Liabilities assumed or
incurred $ 308,000 $ 1,691,000
Common stock issued 333,000 1,558,000
Assets acquired by
incurring directly
related liabilities 500,000 450,000
The accompanying notes are an integral part of
these financial statements
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
NOTE 1. BASIS OF FINANCIAL STATEMENTS
_____________________________
The accompanying unaudited consolidated financial statements
have been prepared in accordance with Rule 10-01 of Regulation
S-X, "Interim Financial Statements," and accordingly do not
include all information and footnotes required under generally
accepted accounting principles for complete financial
statements. The financial statements have been prepared in
conformity with the accounting principles and practices as
disclosed in the ICO, Inc. (the Company) Annual Report on Form
10-K for the year ended September 30, 1994. In the opinion of
management, these interim financial statements contain all
adjustments (consisting only of normal recurring adjustments)
necessary for a fair presentation of the Company's financial
position as of March 31, 1995, the results of its operations
for the three months and six months ended March 31, 1995 and
1994 and the changes in its cash position for the six months
ended March 31, 1995 and 1994. Results of operations for the
three month and six month periods ended March 31, 1995 are not
necessarily indicative of the results that may be expected for
the year ending September 30, 1995. For additional
information, refer to the consolidated financial statements
and footnotes included in the Company's Annual Report on Form
10-K for the year ended September 30, 1994.
NOTE 2. EARNINGS (LOSS) PER SHARE AND STOCKHOLDERS' EQUITY
__________________________________________________
Cumulative foreign currency translation adjustment of $182,000
has been included in accumulated deficit.
Earnings (loss) per share is based on earnings (loss)
applicable to common shareholders and is calculated using the
weighted-average number of common and common equivalent shares
outstanding including stock options and warrants which had a
dilutive effect at March 31, 1994. At March 31, 1995
outstanding options and warrants had no dilutive effect.
Reacquired shares are excluded from the weighted average
calculation from the date of their acquisition.
In March 1995 the Company acquired substantially all of the
operational assets (excluding real estate) of Kebco Pipe
Services, Inc. ("Kebco"), which provides testing, inspecting
and reconditioning services for oil country tubular goods in
the West Texas area. Kebco was acquired for a total
consideration of approximately $616,000, excluding
acquisitions costs, consisting of approximately $574,000 cash
and a $42,000 note. The Company accounted for this
acquisition under the purchase method of accounting. For the
year ended June 30, 1994, (unaudited) Kebco generated revenues
of approximately $730,000 and net income of approximately
$37,000.
<PAGE>
NOTE 4. CONDENSED PRO FORMA INFORMATION
_______________________________
In November 1993 the Company acquired substantially all of the
property, plant and equipment of Tubular Ultrasound
Corporation, Inc. ("TUC"). In February 1994 the Company
purchased all of the outstanding capital stock of Shearer
Supply Ltd. ("Shearer"). In April 1994, the Company acquired
all of the outstanding capital stock of Permian Enterprises,
Inc. ("Permian") and Frontier Inspection Services, Inc.
("Frontier"). In October 1994 the Company purchased all of
the outstanding capital stock of B&W Equipment Sales and Mfg.,
Inc. ("B&W"). The following condensed unaudited pro forma
combined results of operations have been presented as if the
acquisitions of TUC, Shearer, Permian, Frontier, B&W and Kebco
had occurred on the first day of the indicated period.
Pro Forma
_______________________________________________
Three Months Ended Six Months Ended
March 31, March 31,
______________________ ______________________
1995 1994 1995 1994
__________ __________ ___________ __________
Revenues $20,947,00 $21,425,000 $41,320,000 $43,936,000
Income before
extraordinary items 1,197,000 679,000 2,436,000 1,809,000
Income before
extraordinary items
per common share .08 $.02 $.16 $.13
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
_________________________________________________
Liquidity and Capital Resources:
In March 1995 the Company acquired substantially all of the
operational assets (excluding real estate) of Kebco Pipe
Services, Inc. ("Kebco"), which provides testing, inspecting
and reconditioning services on oil country tubular goods in
the West Texas area. Kebco was acquired for a total
consideration of approximately $616,000, consisting of
approximately $574,000 cash and a $42,000 note. The Company
accounted for this acquisition under the purchase method of
accounting. For the year ended June 30, 1994, (unaudited)
Kebco generated revenues of approximately $730,000 and net
income of approximately $37,000.
For the six months ended March 31, 1995 cash provided by
operating activities increased $6,084,000 compared to the six
months ended March 31, 1994. The increase resulted from net
income of $2,379,000 for the six months ended March 31, 1995
compared to a net loss of $453,000 for the six months ended
March 31, 1994. Changes in the Company's levels of accounts
receivable and accounts payable due to timing of cash receipts
and cash disbursements for the six months ended March 31, 1995
also contributed to the increase in cash provided by operating
activities. The Company had working capital of $36,731,000 at
March 31, 1995.
<PAGE>
Expenditures for property, plant and equipment totaled
$2,308,000 during the quarter. Approximately $513,000 of the
expenditures for the quarter ended March 31, 1995 related to
the Company's new facility in Bakersfield, California. This
facility provides sucker rod inspection and reclamation,
tubular goods inspection, mobile inspection and Wellhead
Scanalog inspection. The expenditures for the quarter
included the purchase of the 30-acre facility, building
improvements and equipment. The remainder of the expenditures
were incurred for major repairs and for enhancement of
existing facilities and for manufacture of inspection
equipment currently under contract for sale or lease. For the
remainder of fiscal 1995 capital expenditures are planned to
be approximately $3,800,000 and are expected to be financed
through cash generated from operations and existing cash.
Estimated capital expenditures have increased primarily due to
additional contracts for mill inspection units obtained during
the quarter.
Results of Operations:
For the six months ended March 31, 1995 the Company had
revenues of $41,091,000 compared to $36,455,000 for the six
months ended March 31, 1994, an increase of 12.7%. Net income
for the six months ended March 31, 1995 was $2,379,000
compared to a net loss of $453,000 for the same period last
year. The net loss for the six months ended March 31, 1994
included an extraordinary loss of $1,371,000 resulting from
the retirement of indebtedness recorded on the consolidated
balance sheet at a discounted value.
For the three months ended March 31, 1995 the Company had net
income of $1,174,000 compared to net income of $95,000 during
the corresponding period of the prior year. The Company's
earnings before interest, taxes, depreciation and amortization
for the quarter ended March 31, 1995 were $2,235,000 compared
to $937,000 for the quarter ended March 31, 1994, an increase
of 138.5%.
Revenues increased 19.4% in the three months ended March 31,
1995 as compared to the same period last year from $17,464,000
to $20,856,000. Excluding the effect of acquisitions since
January 1994, revenues increased 5.9% despite a drop of 7.9%
in the average rig count in the 1995 quarter compared to the
1994 quarter.
Revenues from exploration services increased $719,000 or 10.3%
from the quarter ended March 31, 1994 to the same quarter in
1995. The increase in revenues was primarily due to an
increase in mill inspection services relating to additional
contracts awarded to the Company since the quarter ended March
31, 1994.
Revenues from production services, which include used tubular
and sucker rod services, increased $567,000 or 13.1% from the
quarter ended March 31, 1994 to the same quarter in 1995 due
to the acquisitions of Shearer and Frontier.
Revenues from corrosion control, which include internal
coating and lining services, increased $1,790,000 or 62.9% for
the quarter ended March 31, 1995 when compared to the same
quarter in 1994. This increase was due to the acquisition of
Permian in April 1994 and to increased revenues in the
Company's Amelia, Louisiana coating facility.
<PAGE>
Product sales increased $218,000 or 7.6% from the quarter
ended March 31, 1994 to the same quarter in 1995. Sales for
the quarter ended March 31, 1995 include revenues from B&W
which was acquired in October 1994.
Revenues from other sales and services consist primarily of
revenues generated by Shearer related to reconditioning
engines utilized in connection with pumping units of oil
wells. Shearer was acquired in February 1994.
Cost of sales and services as a percentage of net revenues was
67.6% for the three months ended March 31, 1995 compared to
74.6% for the three months ended March 31, 1994 reflecting
improved operating efficiencies due to the Company's cost
control programs and higher volumes. Selling, general and
administrative expenses increased from $3,506,000 for the
quarter ended March 31, 1994 to $4,513,000 for the quarter
ended March 31, 1995 due to the additional costs associated
with the acquisitions during fiscal 1994 and non-recurring
costs incurred during the quarter associated with relocation
and severance in connection with the Company's ongoing cost
control efforts. Selling, general and administrative costs as
a percentage of net revenues were 21.6% for the quarter ended
March 31, 1995 compared to 20.1% for the quarter ended March
31, 1994. Excluding the non-recurring expenses related to
relocation and severance of approximately $380,000, SG&A
expenses as a percentage of net revenues were 19.8%.
Depreciation and amortization expense increased from
$1,006,000 for the quarter ended March 31, 1994 to $1,245,000
for the quarter ended March 31, 1995. The increase resulted
from the property, plant and equipment and goodwill related to
the acquisitions of Shearer, Permian, Frontier, B&W and Kebco
as well as additions of property, plant and equipment during
the quarter. Net interest income was $164,000 during the
quarter ended March 31, 1994 compared to $332,000 for the
quarter ended March 31, 1995. This increase resulted from the
retirement of indebtedness in the quarter ended March 31, 1994
and increased yields on the Company's investments in cash
equivalents.
<PAGE>
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.
ICO, Inc.
________________________
(Registrant)
May 11, 1995 Asher O. Pacholder
_________________________
Asher O. Pacholder
Chairman and Chief
Financial Officer
Vicki J. Baum
_________________________
Vicki J. Baum
Vice President &
Chief Accounting Officer
