<PAGE> 1
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 December 31, 1998
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 76-0566682
- ------------------------ ------------------------------------
(State of incorporation) (IRS Employer Identification Number)
11490 Westheimer, Suite 1000, Houston, Texas 77077
- -------------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
(281) 721-4200
------------------
(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 22,113,646 shares
outstanding as of February 12, 1999
<PAGE> 2
ICO, INC.
INDEX TO QUARTERLY REPORT ON FORM 10-Q
<TABLE>
<CAPTION>
PAGE
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets as of December 31, 1998 and
September 30, 1998.................................................................................. 3
Consolidated Statements of Operations for the Three Months
Ended December 31, 1998 and 1997.................................................................... 4
Consolidated Statements of Comprehensive Income for the
Three Months ended December 31, 1998 and 1997....................................................... 5
Consolidated Statements of Cash Flows for the Three Months
Ended December 31, 1998 and 1997.................................................................... 6
Notes to Consolidated Financial Statements.......................................................... 7
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations........................................................................... 9
Item 3. Quantitative and Qualitative Disclosures About Market Risks......................................... 17
PART II. OTHER INFORMATION
Item 1. Legal Proceedings (no response required)............................................................ -
Item 2. Changes in Securities............................................................................... 18
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.................................................................... 18
</TABLE>
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<PAGE> 3
ICO, INC.
CONSOLIDATED BALANCE SHEET
(Unaudited and in thousands, except share data)
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1998 1998
------------- -------------
<S> <C> <C>
ASSETS
Current assets:
Cash and equivalents $ 44,339 $ 51,135
Trade receivables (less allowance for doubtful accounts
of $1,552 and $1,690, respectively) 49,942 56,868
Inventories 28,574 29,963
Deferred tax asset 1,492 3,154
Prepaid expenses and other 3,135 4,320
------------- -------------
Total current assets 127,482 145,440
------------- -------------
Property, plant and equipment, at cost 188,757 184,683
Less - accumulated depreciation and amortization (69,793) (67,384)
------------- -------------
118,964 117,299
------------- -------------
Other assets:
Goodwill (less accumulated amortization of $6,992
and $6,592, respectively) 57,482 57,304
Debt offering costs 4,060 4,180
Other 4,830 4,454
------------- -------------
$ 312,818 $ 328,677
============= =============
LIABILITIES, STOCKHOLDERS' EQUITY AND
ACCUMULATED OTHER COMPREHENSIVE LOSS
Current liabilities:
Short-term borrowings and current portion of long-term debt $ 10,257 $ 12,836
Accounts payable 22,467 24,220
Accrued interest 1,275 4,395
Accrued insurance 2,027 1,790
Accrued salaries and wages 1,552 2,372
Income taxes payable 603 43
Other accrued expenses 8,933 10,564
------------- -------------
Total current liabilities 47,114 56,220
Deferred income taxes 6,927 9,454
Long-term liabilities 2,035 2,056
Long-term debt, net of current portion 132,182 132,631
------------- -------------
Total liabilities 188,258 200,361
------------- -------------
Commitments and contingencies -- --
Stockholders' equity:
Preferred stock, without par value - 500,000 shares
authorized; 322,500 shares issued and outstanding
with a liquidation preference of $32,250 13 13
Junior participating preferred stock, without par value -
50,000 shares authorized; 0 shares issued and
outstanding -- --
Common stock, without par value - 50,000,000 shares
authorized; 22,108,153 shares issued and outstanding 39,170 39,170
Additional paid-in capital 108,725 108,725
Accumulated other comprehensive loss (1,472) (1,890)
Accumulated deficit (21,876) (17,702)
------------- -------------
124,560 128,316
------------- -------------
$ 312,818 $ 328,677
============= =============
</TABLE>
The accompanying notes are an integral part of these
financial statements.
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<PAGE> 4
ICO, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited and in thousands, except share data)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
DECEMBER 31,
------------------------
1998 1997
-------- --------
<S> <C> <C>
Revenues:
Petrochemical processing sales and services $ 44,242 $ 39,344
Oilfield sales and services 18,549 26,220
-------- --------
Total net revenues 62,791 65,564
-------- --------
Cost and expenses:
Cost of sales and services 47,993 49,157
Selling, general and administrative 10,472 13,344
Litigation charges -- 1,200
Depreciation 3,537 2,881
Amortization of intangibles 708 874
-------- --------
62,710 67,456
-------- --------
Operating income (loss) 81 (1,892)
-------- --------
Other income (expense):
Gain on sale of equity investment -- 11,773
Interest income 649 1,085
Interest expense (3,470) (3,495)
Other (1) 63
-------- --------
(2,822) 9,426
-------- --------
Income (loss) before taxes (2,741) 7,534
Provision for income taxes 327 (3,854)
-------- --------
Net income (loss) $ (2,414) $ 3,680
-------- --------
Preferred Dividends 544 544
-------- --------
Net income (loss) applicable to common stock $ (2,958) $ 3,136
======== ========
Basic earnings (loss) per share (see Note 3) $ (.13) $ .14
======== ========
Diluted earnings (loss) per share (see Note 3) $ (.13) $ .14
======== ========
</TABLE>
The accompanying notes are an integral part of these
financial statements.
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<PAGE> 5
ICO, INC.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(Unaudited and in thousands, except share data)
<TABLE>
<CAPTION>
THREE MONTHS ENDED DECEMBER 31,
-------------------------------
1998 1997
-------- --------
<S> <C> <C>
Net Income (loss) $ (2,414) $ 3,680
Other comprehensive income (loss)
Foreign currency translation adjustment 418 (1,494)
-------- --------
Comprehensive income (loss) $ (1,996) $ 2,186
======== ========
</TABLE>
The accompanying notes are an integral part of these
financial statements.
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<PAGE> 6
ICO, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited and in thousands, except share data)
<TABLE>
<CAPTION>
THREE MONTHS ENDED DECEMBER 31,
-------------------------------
1998 1997
-------------- -------------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ (2,414) $ 3,680
Adjustments to reconcile net income to net cash
provided by (used for) operating activities:
Depreciation and amortization 4,245 3,755
Gain on sale of equity investment -- (11,773)
Changes in assets and liabilities, net of the effects
of business acquisitions:
Receivables 6,818 (3,587)
Inventories 2,276 (2,224)
Prepaid expenses and other assets (98) 73
Income taxes payable 572 3,329
Deferred taxes (883) 32
Accounts payable (1,747) 5,984
Accrued interest (3,120) (2,870)
Accrued expenses (2,658) 1,896
---------- ----------
Total adjustments 5,405 (5,385)
---------- ----------
Net cash provided by (used for) operating activities 2,991 (1,705)
---------- ----------
Cash flows used for investing activities:
Capital expenditures (5,393) (6,320)
Acquisitions, net of cash acquired -- (2,114)
Disposition of equity investment, net of expenses -- 4,086
Dispositions of property, plant and equipment 79 220
---------- ----------
Net cash used for investing activities (5,314) (4,128)
---------- ----------
Cash flows used for financing activities:
Net proceeds from sale of stock -- 983
Payment of dividend on preferred stock (544) (544)
Payment of dividend on common stock (1,216) (1,200)
Additional debt -- 782
Debt repayments (2,713) (2,387)
---------- ----------
Net cash used for financing activities (4,473) (2,366)
---------- ----------
Net decrease in cash and equivalents (6,796) (8,199)
Cash and equivalents at beginning of period 51,135 83,892
---------- ----------
Cash and equivalents at end of period $ 44,339 $ 75,693
========== ==========
Supplemental disclosures of cash flow information:
Cash received (paid) during the period for:
Interest received $ 649 $ 1,103
Interest paid $ (6,582) $ (6,304)
Income taxes paid $ (13) $ (458)
</TABLE>
The accompanying notes are an integral part of these
financial statements.
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<PAGE> 7
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 Annual Report on Form
10-K for the year ended September 30, 1998 for ICO, Inc. (the "Company"). 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 December 31, 1998,
the results of operations for the three months ended December 31, 1998 and 1997
and the changes in its cash position for the three months ended December 31,
1998 and 1997. Results of operations for the three month period ended December
31, 1998 are not necessarily indicative of the results that may be expected for
the year ending September 30, 1999. 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, 1998.
NOTE 2. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
During June 1998, the Financial Accounting Standards Board issued SFAS
No. 133, "Accounting for Derivative Instruments and Hedging Activities", which
requires that companies recognize all derivative instruments as either assets or
liabilities on the balance sheet and measure those instruments at fair value.
The Company is required to adopt SFAS No. 133 in its financial statements for
the fiscal year ending September 30, 2000. Due to the Company's limited use of
derivative instruments, the impact of adopting SFAS No. 133 is not expected to
be material to the Company's financial statements.
During April 1998, the American Institute of Certified Public
Accountants issued Statement of Position (SOP) 98-5, "Reporting on the Costs of
Start-Up Activities", which requires that companies expense as incurred costs of
start-up activities and organization costs. The Company is required to adopt SOP
98-5 in its financial statements for the fiscal year ending September 30, 2000.
Upon adoption, the Company will be required to expense approximately $650,000 of
organization costs and will account for the adoption of SOP 98-5 as the
cumulative effect of an accounting change under APB Opinion No. 20, "Accounting
Changes."
Statement of Financial Accounting Standards ("SFAS") No. 131,
"Disclosure About Segments of an Enterprise and Related Information" is
effective for financial statements issued for periods beginning after December
15, 1997. SFAS No. 131 requires disclosures about segments of an enterprise and
related information regarding the different types of business activities in
which an enterprise engages and the different economic environments in which it
operates. The Company intends to adopt the requirements of this pronouncement in
financial statements for the year ended September 30, 1999, as required by the
Statement. The Company does not believe that the implementation of SFAS No. 131
will have a material impact on its financial statements.
Certain reclassifications have been made to prior year amounts in order
to conform to current year classifications.
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<PAGE> 8
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 3. EARNINGS PER SHARE AND STOCKHOLDERS' EQUITY
Earnings per share is based on earnings applicable to common
shareholders and is calculated using the weighted average number of common
shares outstanding and in accordance with SFAS 128, "Earnings per Share". During
the three months ended December 31, 1998 and December 31, 1997, the potentially
dilutive effects of the Company's exchangeable preferred stock (would have an
anti-dilutive effect) and common stock options, with exercise prices exceeding
fair market value of the underlying common shares, have been excluded from
diluted earnings per share.
<TABLE>
<CAPTION>
THREE MONTHS ENDED DECEMBER 31,
--------------------------------------------------------------------------------------
1998 1997
--------------------------------------- ------------------------------------------
(In thousands, except share data)
Income Shares Amount Income Shares Amount
----------- ----------- ------ ----------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net Income $ (2,414) $ 3,680
Less: Preferred stock dividends 544 544
----------- ----------
BASIC EPS (2,958) 22,108,153 $(.13) 3,136 21,760,338 $ .14
===== =====
EFFECT OF DILUTIVE SECURITIES
Options -- -- -- 232,666
Warrants -- -- -- 166,722
----------- ----------- ---------- -----------
DILUTED EPS $ (2,958) 22,108,153 $(.13) $ 3,136 22,159,726 $ .14
=========== =========== ===== ========== =========== =====
</TABLE>
NOTE 4. COMPREHENSIVE INCOME
As of October 1, 1998, the Company adopted Statement of Financial
Accounting Standards No. 130 ("SFAS 130"), "Reporting Comprehensive Income".
SFAS 130 establishes new requirements for reporting comprehensive income and its
components. Adoption of this statement had no impact on the Company's net income
or stockholders' equity for the periods presented. SFAS 130 requires unrealized
gains or losses on the Company's foreign currency translation adjustments, which
prior to adoption were reported separately in stockholders' equity, to be
included in other comprehensive income.
NOTE 5. INVENTORIES
Inventories consisted of the following:
<TABLE>
<CAPTION>
DECEMBER 31, 1998 SEPTEMBER 30, 1998
----------------- ------------------
(In thousands)
<S> <C> <C>
Finished Goods $ 14,392 $ 14,292
Raw Materials 9,288 10,302
Work in Progress 920 1,491
Supplies 3,974 3,878
-------- ---------
$ 28,574 $ 29,963
======== ========
</TABLE>
-8-
<PAGE> 9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The statements contained in all parts of this document, including, but
not limited to, availability of liquidity for future capital expenditures,
effects of the Year 2000 issue, the effect of legal proceedings, market
conditions, future acquisitions, effects of the Euro adoption, future growth
plans, financial results and any other statements which are not historical facts
are forward-looking statements within the meaning of section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934
that involve substantial risks and uncertainties. When words such as
"anticipate", "believe", "estimate", "intend", "expect", "plan" and similar
expressions are used, they are intended to identify the statements as
forward-looking. Actual results, performance or achievements can differ
materially from results suggested by these forward-looking statements due to a
number of factors, including those described in the Company's fiscal 1998 Form
10-K dated December 23, 1998.
INTRODUCTION
The Company's revenue is classified within two operating segments:
petrochemical processing and oilfield services. Petrochemical processing
revenues are derived from (1) distributing plastic powders, (2) grinding
petrochemicals into powders (size reduction), providing ancillary services and
selling grinding equipment manufactured by the Company, and (3) compounding
sales and services, which include the manufacture and sale of concentrates.
Distribution revenues include the operating results of the ICO Polymers
companies and the distribution operations of Rotec and Verplast, all of which
are wholly-owned subsidiaries of the Company and operate in Europe; a majority
of the revenues generated by J.R. Courtenay (NZ) Ltd., which operates in New
Zealand and Australia; and a small portion of the revenues generated by Wedco in
the United States. The Company's distribution operations utilize the Company's
size reduction and compounding facilities to process petrochemical products
prior to sale. Oilfield services revenues include revenues derived from (1)
exploration sales and services (new tubular goods inspection), (2) production
sales and services (reclamation, reconditioning and inspection of used tubular
goods and sucker rods), (3) corrosion control services (coating of tubular goods
and sucker rods), and (4) other sales and services (oilfield engine sales and
services in Canada). Service revenues in both of the Company's business segments
are recorded as the services are performed or, in the case of product sales,
upon shipment to third parties.
The expansion of the Company's distribution business within the
petrochemical processing segment has reduced overall petrochemical processing
margins as a percentage of revenues. The gross margin percentages for the
distribution business, as well as the concentrate manufacturing business, are,
generally, significantly lower than those generated by the Company's size
reduction services. Several of the Company's petrochemical processing
subsidiaries, including the Company's concentrate manufacturing and distribution
operations, typically buy raw materials, improve the material and then sell the
finished product. The distribution operations utilize the Company's processing
facilities to improve the raw materials. In contrast, many of the Company's size
reduction operations typically involve processing customer-owned material
(referred to as "toll" processing).
Cost of sales and services for the petrochemical processing and oilfield
services segments is primarily comprised of compensation and benefits to
non-administrative employees, occupancy costs, repair and maintenance,
electricity and equipment costs and supplies, and, in the case of concentrate
manufacturing operations and the Company's distribution business, purchased raw
materials. Selling, general and administrative expenses consist primarily of
compensation and related benefits to the sales and marketing, executive
management, accounting, human resources and other administrative employees of
the Company; other sales and marketing expenses; communications costs; systems
costs; insurance costs and legal and accounting professional fees.
The demand for the Company's oilfield products and services depends upon
oil and natural gas prices and the level of oil and natural gas production and
exploration activity. In addition to changes in commodity prices, exploration
and production activities are affected by worldwide economic conditions, supply
and demand for oil and natural gas, seasonal trends and the political stability
of oil-producing countries. The oil and gas industry has
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<PAGE> 10
been highly volatile over the past several years, due primarily to the
volatility of oil and natural gas prices. During fiscal 1996 and 1997, the oil
and gas service industry generally experienced increased demand and improved
product and service pricing as a result of improved commodity prices and greater
levels of oil and gas exploration and production activity, due largely to a
strong world economy. In fiscal 1998, however, oil prices declined significantly
versus fiscal 1997 levels. While gas prices also declined during this period, it
was to a lesser extent. These trends have been attributed to, among other
factors, an excess worldwide oil supply, lower domestic energy demand resulting
from an unseasonably warm winter and declining demand due to the economic
downturn in Southeast Asia. As oil and, to a lesser extent, natural gas prices
have declined, demand for oilfield products and services, including those
provided by the Company, has softened. A significant decline in oil and, to a
lesser extent, gas prices has occurred since the end of fiscal 1998, which has
increased these effects. The Company's oilfield service revenues and income have
been impacted by these factors and can be expected to continue to be adversely
impacted if the current low level of oil and gas prices continues to persist.
Although the Company is optimistic that market conditions will improve at some
point, the timing of such a recovery cannot be predicted with certainty.
LIQUIDITY AND CAPITAL RESOURCES
The following are considered by management as key measures of liquidity
applicable to the Company:
<TABLE>
<CAPTION>
DECEMBER 31, 1998 SEPTEMBER 30, 1998
----------------- ------------------
<S> <C> <C>
Cash and cash equivalents $44,339,000 $51,135,000
Working capital 80,368,000 89,220,000
Current ratio 2.7 2.6
Debt-to-capitalization .53 to 1 .53 to 1
</TABLE>
Cash and cash equivalents decreased $6,796,000 during the three months
ended December 31, 1998 due to the factors described below. The Company's
working capital decreased during the three months ended December 31, 1998 from
$89,220,000 at September 30, 1998 to $80,368,000 at December 31, 1998 as a
result of the factors described below.
For the three months ended December 31, 1998, cash provided by (used
for) operating activities increased to $2,991,000 from $(1,705,000) for the
three months ended December 31, 1997. The increase occurred despite lower net
income, and was primarily due to an increase in depreciation and amortization
expense, the various changes in working capital accounts (particularly changes
of accounts receivable, inventory, accounts payable, income taxes payable and
accrued liabilities), and a gain on a sale of an equity investment included in
the first quarter of fiscal 1998 results, which was classified as an investment
activity in the statement of cash flows.
Capital expenditures totaled $5,393,000 during the three months ended
December 31, 1998, of which $2,063,000, related to the oilfield services
business and the remaining $3,330,000 related to the petrochemical processing
business. A majority of the expenditures, particularly within the oilfield
service business, involved fulfilling commitments made by the Company during
fiscal 1998. For the remainder of fiscal 1999, capital expenditures are expected
to decline significantly from fiscal 1998 levels. The Company anticipates that
available cash and/or existing credit facilities will be sufficient to fund
remaining fiscal 1999 capital expenditure requirements.
Cash flows used for financing activities increased to uses of
$(4,473,000) during the three months ended December 31, 1998 from uses of
$(2,366,000) during the first three months of fiscal 1998. The increase was the
result of decreased borrowings and increased debt repayments in the first
quarter of fiscal 1999, compared to the comparable 1998 period. The Company is
currently examining its common stock dividend policy in light of current market
conditions. It is expected that a decision regarding this policy will be made
during the second quarter of fiscal 1999.
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<PAGE> 11
As of January 31, 1999, the Company had approximately $19,875,000 of
additional borrowing capacity available under various credit arrangements. Of
this amount, $12,500,000 is available under the Company's domestic credit
facility and the remaining sum is available under various foreign facilities.
Currently, the Company has no outstanding indebtedness under its domestic credit
facility.
The terms of the Company's domestic credit facility and the Senior Notes
limit the amount of liens and additional indebtedness that the Company can
incur. The domestic credit facility is secured by certain receivables and
inventories, and requires maintenance of certain financial ratios, which include
minimum tangible net worth and profitability and maximum debt to total
capitalization.
CONVERSION TO THE EURO CURRENCY
The Company has a substantial portion of its operations within countries
which adopted the Euro currency on January 1, 1999. The Company has begun to
invoice and receive payments denominated in Euros whenever possible. The cost of
achieving this has not been, and is not expected to be, material. The adoption
of the Euro by the European Economic and Monetary Union is expected, from a
competitive viewpoint, to benefit the Company to some extent as price
transparency becomes a reality. The benefit will, however, be somewhat limited
as transportation costs are an important consideration for the Company's
customers. At this time, the Company anticipates that the impact of the Euro,
with regard to currency exchange and taxation implications, will not have a
material impact on the results of operations or the financial condition of the
Company. Additionally, material contractual agreements of the Company are
expected to continue without disruption.
-11-
<PAGE> 12
RESULTS OF OPERATIONS
<TABLE>
<CAPTION>
THREE MONTHS ENDED DECEMBER 31,
-------------------------------------------
% of % of
NET REVENUES (000's) 1998 Total 1997 Total
-------------------------------------------
<S> <C> <C> <C> <C>
Distribution $18,782 42 $15,316 39
Size Reduction Services and Other Sales and Services 12,379 28 13,177 33
Compounding Sales and Services 13,081 30 10,851 28
------- ------- ------- -------
Total Petrochemical Processing Revenues 44,242 100 39,344 100
------- -------
Exploration Sales and Services 6,519 35 9,722 37
Production Sales and Services 7,093 38 8,948 34
Corrosion Control Sales and Services 4,436 24 6,302 24
Other Sales and Services 501 3 1,248 5
------- ------- ------- -------
Total Oilfield Sales and Services Revenues 18,549 100 26,220 100
------- -------
$62,791 $65,564
======= =======
</TABLE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED DECEMBER 31,
-------------------------------------------
% of % of
1998 Total 1997 Total
OPERATING PROFIT (000's) -------------------------------------------
<S> <C> <C> <C> <C>
Petrochemical Processing $ 2,015 68 $ 1,882 40
Oilfield Sales and Services 928 32 2,870 60
------- ------- ------- -------
Total Operations 2,943 100 4,752 100
General Corporate Expenses (2,862) (6,644)
------- -------
Total $ 81 $(1,892)
======= =======
</TABLE>
REVENUES.
Consolidated revenues decreased $2,773,000 or 4% during the Company's
first fiscal quarter of fiscal 1999 compared to the same quarter of fiscal 1998.
The decrease resulted from a decline in Oilfield Service revenues partially
offset by an increase in Petrochemical Processing revenues.
Petrochemical Processing revenues increased $4,898,000 (12%) to
$44,242,000 primarily due to the March 1998 acquisition of the J.R. Courtenay
companies ("JRC"), in Australia and New Zealand and the acquisition of Soreco
S.A. ("Soreco") in June 1998. Distribution revenues improved to $18,782,000, an
increase of $3,466,000 (23%) over the first quarter of fiscal 1998. The increase
resulted from the acquisition of JRC, offset by a decline in European revenues.
The Company believes the decline in European revenues is primarily the result of
declining polymer prices. This trend has motivated many customers to defer
purchase of raw materials and draw down on their inventories, in the hope that
resin prices will continue to fall and, thus, lower their raw material costs.
This can result in a decline in demand of the Company's services when polymer
prices are falling. Size reduction services and other sales and services
revenues declined $798,000 (6%) to $12,379,000 during the first quarter of
fiscal 1999 compared to the same quarter of fiscal 1998. This decline was the
result of lower processing volumes across most of the Company's European
locations partially offset by a modest increase within the Company's domestic
operations. The European revenue decline is primarily the result of declining
resin prices, as discussed above.
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<PAGE> 13
Compounding sales and service revenues improved from $10,851,000 to $13,081,000,
representing a $2,230,000 (21%) increase in the first quarter of fiscal 1999,
compared to the first quarter of fiscal 1998. This increase was the result of
greater domestic compounding revenues, due in large part to the mid-fiscal 1998
domestic compounding capacity expansion, and the acquisition of Soreco in June
1998.
Oilfield Service revenues declined from $26,220,000 in the first quarter
of fiscal 1998, to $18,549,000 in the first quarter of fiscal 1999, a decline of
$7,671,000 (29%). The revenue decline was broad based, across all Oilfield
Service product lines and was the result of declining demand for the Company's
oilfield products and services. Declining demand is the result of significantly
lower oil and gas prices and, as a result, significantly lower rig counts in
both the United States and Canada, during the three months ended December 31,
1998, compared to the same period of the prior year. The Company has reacted to
this environment by aggressively cutting costs, particularly by reducing
oilfield service employee headcount, which has been reduced approximately 20%
versus June 1998.
COSTS AND EXPENSES
Gross margin (calculated as net revenues minus total costs of sales and
services), as a percentage of revenues, declined from 25.0% of revenues, in the
first quarter of fiscal 1998, to 23.6% during the first quarter of fiscal 1999.
The gross margin decline, as a percentage of revenues, was driven by a decline
of both petrochemical processing and oilfield service gross margins.
Petrochemical processing gross margins declined from 22.5%, during the
three months ended December 31, 1997, to 22.1% during the three months ended
December 31, 1998. The decline resulted primarily from the acquisition of JRC in
March 1998, and a softening of European gross margins, due to declining volumes,
offset by a modest improvement in domestic petrochemical processing gross
margins.
Oilfield Service gross margins declined to 27.2% of revenues in the
first quarter of fiscal 1999 as compared to 28.9% in the first quarter of fiscal
1998. The decline was driven by lower volumes, as costs were spread over less
revenues, and weaker pricing, as a result of declining market conditions. The
Company has reacted to these conditions by rationalizing the business to reflect
current activity levels. These cost reductions have included a greater than 20%
reduction of the Company's oilfield service work force, from June 1998 levels.
Additionally, the Company has significantly reduced the amount of contract labor
being utilized to operate its oilfield service facilities.
Selling, general and administrative expenses decreased $2,872,000 (22%)
from $13,344,000 (20% of revenues), during the first quarter of fiscal 1998, to
$10,472,000 (17% of revenues), during the first quarter of fiscal 1999. This
decline was due to decreases in: bonus expenses, general corporate
administrative expenses, bad debt expenses, and unsuccessful acquisition
expenses; offset by the effect of the JRC and Soreco acquisitions.
Litigation charges of $1,200,000 (classified as general corporate
expenses) were recognized by the Company during the first quarter of fiscal
1998. The legal matters relating to the charges were substantially resolved
during fiscal 1998.
Depreciation and amortization expenses increased from $3,755,000 during
the first quarter of fiscal 1998 to $4,245,000 during the same quarter of fiscal
1999. This increase was the result of fiscal 1998 and first quarter fiscal 1999
capital expenditures and fiscal 1998 business acquisitions.
OPERATING INCOME
Operating income increased from a loss of $(1,892,000) for the three
months ended December 31, 1997, to income of $81,000 for the three months ended
December 31, 1998. The increase was due to the changes in revenues and costs and
expenses discussed above.
-13-
<PAGE> 14
GAIN ON SALE OF EQUITY INVESTMENT
During the first quarter of fiscal 1998, the Company recognized a
pre-tax gain of $11,773,000 on the sale of an equity investment. The Company
received cash of $14,484,000 and recorded an after-tax gain of approximately
$6,799,000 on the sale.
INTEREST INCOME/EXPENSE
Net interest expense was $2,821,000 during the three months ended
December 31, 1998. For the three months ended December 31, 1997, the Company had
net interest expense of $2,410,000. This change was primarily the result of
declining cash balances resulting from acquisitions and internal capital
expenditures.
INCOME TAXES
The Company's effective income tax rate decreased to 12% during the
three months ended December 31, 1998, compared to 51% during the three months
ended December 31, 1997. The decrease was the result of a sale of an equity
investment during the first quarter of fiscal 1998, which created tax expense
equal to 42% of the pre-tax gain, and a change in the mixture of pre-tax income
generated by the Company's operations in various taxing jurisdictions.
NET INCOME
For the three months ended December 31, 1998, the Company had a net loss
of $(2,414,000), compared to net income of $3,680,000 for the same period in
fiscal 1998, due to the factors described above.
FOREIGN CURRENCY TRANSLATION
The fluctuations of the U.S. dollar against the Dutch guilder, Swedish
krona, British pound, Italian lira, Canadian dollar, and the French franc have
impacted the translation of revenues and income of the Company's European
petrochemical processing operations and Canadian oilfield service operations.
The table below summarizes the impact of the above currencies during the three
months ended December 31, 1998 compared to the exchange rates used to translate
the three months ended December 31, 1997.
<TABLE>
<S> <C>
Net revenues $ (613,682)
Operating income (64,184)
Pre-tax income (51,197)
Net income $ (28,294)
</TABLE>
YEAR 2000 ISSUE
The Securities and Exchange Commission has published guidance regarding
the effect of "Year 2000" issues on companies. The Year 2000 problem arose
because some computer programs use only the last two digits of a year as a
reference date, causing the program to improperly recognize a year that does not
begin with "19".
The Company has been working toward Year 2000 readiness since 1997 and
is proceeding on schedule. Completion of the project is scheduled for the fourth
fiscal quarter of 1999. To improve access to business information through
common, integrated computing systems within business operations, the Company has
begun a business systems replacement project. The new systems ("Business
Replacement Systems"), which are expected to make the Company's business
computer systems Year 2000 compliant, are scheduled for completion by September
1999. Implementation of these programs is approximately 55 percent complete. The
Company has developed a contingency plan to make the programs that are scheduled
to be replaced by these systems Year 2000 compliant. A decision to implement the
contingency plan will be made by the end of the fourth fiscal quarter of
-14-
<PAGE> 15
1999. Remaining business software programs, including those supplied by vendors,
are expected to be made Year 2000 compliant through the Year 2000 project or
they will be retired.
Overview. The Company's Project is divided into four sections: Corporate
and Facility Infrastructure, Applications Software, Inspection and Processing
Equipment, and Third-Party Suppliers. Each section consists of four phases: Year
2000 readiness analysis and assessment; retiring, replacing, or upgrading items
that are not Year 2000 ready; remediation testing of upgraded and replacement
hardware and software; and contingency planning.
Applications Software. The Application Software section includes the
conversion of software which is not Year 2000 compliant or, where available from
the supplier, the replacement of such software. Application Software consists of
all software not used directly in conjunction with the operation of the
Company's manufacturing and service facilities. The Company estimates that the
software conversion phase was more than 50 percent complete at December 31,
1998, and that the remaining conversions are on schedule to be completed by the
end of the fourth fiscal quarter 1999. The testing phase is conducted as the
software is replaced and is scheduled to be completed in the Company's third
fiscal quarter of 1999. Contingency planning for this section is scheduled to
begin in the second fiscal quarter of 1999 and completed by the end of the third
fiscal quarter of 1999.
Corporate Infrastructure. The Corporate Infrastructure section consists
of mainframe and desktop computing hardware and connectivity. The Company
believes its North American infrastructure is Year 2000 compliant, and the
Company has begun testing this infrastructure to confirm such compliance. The
Company's European infrastructure is being replaced, and the completion of the
replacement process is scheduled for the fourth fiscal quarter of 1999. The
Company's Australian and New Zealand corporate infrastructures are more than 90
percent complete and are expected to be Year 2000 compliant by the end of the
second fiscal quarter of 1999.
Facility Infrastructure. The Facility Infrastructure section consists of
hardware and systems software, which is used in the operation of the Company's
facilities. The Company has developed a plan detailing the tasks and resources
required for this section. The assessment of the Year 2000 readiness of Facility
Infrastructure was begun during the first fiscal quarter of 1999. The testing
and repair of Facility Infrastructure is scheduled for completion during the
third fiscal quarter of 1999 for the Company's North American, Australian, and
New Zealand operations, and during the fourth fiscal quarter of 1999 for the
Company's European operations. Contingency planning for this section is
scheduled to begin in the second fiscal quarter of 1999 and to be completed by
mid-1999.
Inspection and Processing Equipment. The Company's oilfield services
sector uses inspection and processing equipment, which the Company believes to
be currently Year 2000 compliant. The equipment is scheduled to be tested and
repaired, if necessary, during the quarter ended December 31, 1999. The Company
does not foresee the need for any contingency planning in this area.
Third Party Suppliers. The Company has begun identifying critical Third
Party Suppliers. The Company is communicating with suppliers of the Company's
operations in North America and Europe, and evaluating their state of Year 2000
preparedness. This process is expected to be complete by the end of the
Company's third fiscal quarter of 1999. Ninety percent of the suppliers to the
Company's Australian and New Zealand operations have been verified for
compliance. The Company-wide evaluation process is scheduled for completion by
the end of the third fiscal quarter 1999. These evaluations will be followed by
the development of contingency plans, which are scheduled for completion during
the fourth fiscal quarter of 1999.
Costs. The total cost associated with required software and hardware
modifications to become Year 2000 compliant is not expected to be material to
the Company's financial position or results of operations. The estimated total
cost of the Year 2000 project is approximately $450,000. The total amount
expended on the project through December 31, 1998 was $186,000. The estimated
future cost of completing the Year 2000 project is estimated to be approximately
$305,000. The cost to implement the Business Replacement Systems is not included
-15-
<PAGE> 16
in these estimates. Costs related to the Year 2000 project will be accounted for
in accordance with the Company's existing policies. Other than purchases of new
hardware and software, Year 2000 project expenditures will be expensed as
incurred.
Risks. A Year 2000 failure could result in a business disruption that
adversely affects the Company's business, financial condition or results of
operations. For example, if a Year 2000 failure causes insufficient rail and
freight service to be available to the Company, the receipt of raw materials and
the shipment of finished products by the Company's petrochemical operations
could be curtailed. Such failures could materially and adversely affect the
Company's results of operations, liquidity and financial condition. Due to the
general uncertainty inherent in the Year 2000 problem, resulting in part from
the uncertainty of the Year 2000 readiness of third-party suppliers and
customers, the Company cannot determine at this time whether the consequences of
Year 2000 failures will have a material impact on the Company's results of
operations, liquidity, or financial condition. The Company believes that, with
the implementation of new business systems and completion of the Year 2000
Project as scheduled, the possibility of significant interruptions of normal
operations should be reduced.
-16-
<PAGE> 17
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company's primary market risk exposures include short-term debt
obligations carrying variable interest rates, and forward currency contracts
intended to hedge accounts payable obligations denominated in currencies other
than a given operation's functional currency.
The Company's strategy has typically been to finance only working
capital with variable interest rate debt and to fix interest rates for the
financing of long-term assets. Forward currency contracts are used by the
Company as a method to establish a fixed functional currency cost for raw
material purchases denominated in non-functional currency (typically the U.S.
dollar).
The following table summarizes the Company's market sensitive financial
instruments. These transactions are considered non-trading activities.
<TABLE>
<CAPTION>
ON-BALANCE SHEET
FINANCIAL INSTRUMENTS DECEMBER 31, 1998
- --------------------- -------------------------------------------------------------------------------------
WEIGHTED AVERAGE
Variable interest rate debt: US$ EQUIVALENT IN THOUSANDS YEAR-END INTEREST RATE EXPECTED MATURITY
--------------------------- ---------------------- ------------------
CURRENCY DENOMINATION
- ---------------------
<S> <C> <C> <C>
Dutch Guilders $1,457 4.50% less than one year
British Pounds Sterling 1,263 7.29% less than one year
French Francs 103 4.62% 2001
Italian Lira 3,839 4.45% less than one year
New Zealand Dollar 520 5.99% less than one year
Australian Dollar 1,225 5.15% less than one year
</TABLE>
ANTICIPATED TRANSACTIONS AND RELATED DERIVATIVES
Forward Exchange Agreements (000s):
RECEIVE US$/PAY NZ$:
Contract Amounts US$ 960
Average Contractual Exchange Rate (NZ$/US$) .5233
Expected Maturity Dates January 1999 through May 1999
RECEIVE US$/PAY AUSTRALIAN $:
Contract Amounts US$ 860
Average Contractual Exchange Rate (A$/US$) .6252
Expected Maturity Dates January 1999 through May 1999
RECEIVE US$/PAY DUTCH GUILDER
Contract Amounts US$ 48
Average Contractual Exchange Rate (NLG/US$) 1.9165
Expected Maturity Dates January 1999
-17-
<PAGE> 18
PART II OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES
The Company's agreement relating to the Senior Notes due 2007 restricts
the Company's ability to pay dividends on preferred and common stock. The terms
of the Senior Notes, however, do allow for dividend payments on currently
outstanding preferred stock, in accordance with the terms of the preferred
stock, and up to $.22 per share, per annum on common stock, in the absence of
any default or event of default on the Senior Notes. The above limitations may
not be decreased, but may be increased based upon the Company's results of
operations and other factors. The Company is currently examining its common
stock dividend policy in light of current market conditions. It is expected that
a decision regarding this policy will be made during the second quarter of
fiscal 1999.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits - Reference is hereby made to the exhibit index which
appears on page 19.
(b) There were no reports on Form 8-K during the Company's fiscal first
quarter.
-18-
<PAGE> 19
The following instruments and documents are included as Exhibits to this
Form 10-Q. Exhibits incorporated by reference are so indicated by parenthetical
information.
EXHIBIT NO. EXHIBIT
2.1 -- Share Purchase Agreement between Rotec Chemicals Ltd. and
the Registrant (filed as Exhibit 99.2 to Form 8-K dated May
12, 1997)
2.2 -- Framework Agreement and Stock Sale & Purchase Agreements
dated July 21, 1997 among ICO, Inc., Wedco Italy, S.p.A. (a
wholly owned subsidiary of the Company), DARAC's S.p.A., Mr.
Francesco Panzini, and Mr. Massimo Viviani (filed as Exhibit
2 to Form 8-K dated August 5, 1997)
2.3 -- Agreement for sale & purchase of all the share capital of
J.R. Courtenay (N.Z.) Ltd. dated March 20, 1998 among ICO,
Inc., ICO Technology, Inc. (a wholly owned subsidiary of the
Company), Mr. J. R. Courtenay, Mr. Dario Masutti and Mr. R.
Narev and Mr. J. R. Courtenay, together as trustees (filed
as Exhibit 2 to Form 8-K dated April 15, 1998)
2.4 -- Plan of Merger of ICO Merger Sub, Inc. with and into ICO,
Inc. (filed as Exhibit 2.4 to Form 10-Q dated August 13,
1998)
3.1 -- Articles of Incorporation of the Company dated March 20,
1998. (filed as Exhibit 3.1 to Form 10-Q dated August 13,
1998)
3.2 -- Statement of Designation of $6.75 Convertible Exchangeable
Preferred Stock dated March 30, 1998 (filed as Exhibit 3.2
to Form 10-K dated December 23, 1998)
3.3 -- Certificate of Designation of Junior Participating Preferred
Stock of ICO Holdings, Inc. dated March 30, 1998 (filed as
Exhibit 3.3 to Form 10-K dated December 23, 1998)
4.0 -- By-Laws of the Company dated March 20, 1998. (filed as
Exhibit 3.2 to Form 10-Q dated August 13, 1998)
4.1 -- Indenture dated as of June 9, 1997 between the Company, as
issuer, and Fleet National Bank, as trustee, relating to
Senior Notes due 2007 (filed as Exhibit 4.1 to Form S-4
dated June 17, 1997)
4.2 -- First Supplemental Indenture and Amendment dated April
1,1998 between the Company, as issuer, and State Street and
Trust Company (formerly Fleet National Bank), as trustee,
relating to Senior Notes due 2007 (filed as Exhibit 4.2 to
Form 10-Q dated May 15, 1998)
4.3 -- Second Supplemental Indenture and Amendment dated April 1,
1998 between ICO P&O, Inc., a wholly owned subsidiary of the
Registrant, and State Street and Trust Company (formerly
Fleet National Bank), as trustee, relating to Senior Notes
due 2007 (filed as Exhibit 4.3 to Form 10-Q dated May 15,
1998)
4.4 -- Warrant Agreement -- Series A, dated as of September 1,
1992, between the Registrant and Society National Bank
(filed as Exhibit 4 of the Registrant's Annual Report on
Form 10-K for 1992)
4.5 -- Stock Registration Rights Agreement dated April 30, 1996 by
and between the Company, a subsidiary of the Company and the
Wedco Shareholders Group, as defined (filed as Exhibit 4.4
to Form S-4 dated May 15, 1996)
4.6 -- Shareholders' Rights Agreement dated November 20, 1997 by
and between the Company and Harris Trust and Savings Bank,
as rights agent (filed as Exhibit 1 to Form 8-A dated
December 22, 1997)
4.7 -- Shareholder Rights Agreement dated April 1, 1998 by and
between the Registrant and Harris Trust and Savings Bank, as
rights agent (filed as Exhibit 4.7 to Form 10-Q for the
quarter ended March 31, 1998)
-19-
<PAGE> 20
EXHIBIT NO. EXHIBIT
10.1 -- Amended and Restated Business Loan Agreement dated February
21, 1997 between the Registrant and Bank of America, Texas,
N.A. (filed as Exhibit 10 to Form 10-Q dated May 14, 1997)
10.2 -- Substituted First Amendment to Amended and Restated Business
Loan Agreement by and between the Company and Bank of
America Texas, N.A. dated June 6, 1997 (filed as Exhibit 10
to Form 10-Q dated August 14, 1997)
10.3 -- Second Amendment to Amended and Restated Business Loan
Agreement between the Registrant and Bank of America, Texas,
N.A. dated August 29, 1997 (filed as Exhibit 10.3 to Form
S-4 dated October 3, 1997)
10.4 -- Third Amendment to Amended and Restated Business Loan
Agreement between the Registrant and Bank of America, Texas,
N.A. dated July 17, 1998. (filed as Exhibit 10.4 to form
10-Q dated August 13, 1998)
10.5 -- ICO, Inc. 1985 Stock Option Plan, as amended (filed as
Exhibit B to the Registrant's Definitive Proxy Statement
dated April 27, 1987 for the Annual Meeting of Shareholders)
10.6 -- Amended and Restated 1993 Stock Option Plan for Non-Employee
Directors of ICO, Inc. (filed as Exhibit A to the
Registrant's Definitive Proxy Statement dated September 3,
1996 for the Annual Meeting of Shareholders)
10.7 -- 1994 Stock Option Plan of ICO, Inc. (filed as Exhibit A to
Registrant's Definitive Proxy Statement dated June 24, 1994
for the Annual Meeting of Shareholders)
10.8 -- ICO, Inc. 1995 Stock Option Plan (filed as Exhibit A to
Registrant's Definitive Proxy Statement dated August 10,
1995 for the Annual Meeting of Shareholders)
10.9 -- ICO, Inc. 1996 Stock Option Plan (filed as Exhibit A to
Registrant's Definitive Proxy Statement dated August 29,
1996 for the Annual Meeting of Shareholders)
10.10 -- ICO, Inc. 1998 Stock Option Plan (filed as Exhibit A to
Registrant's Definitive Proxy Statement dated January 23,
1998 for the Annual Meeting of Shareholders)
10.11 -- Willoughby International Stockholders Agreement dated April
30, 1996 (filed as Exhibit 10.9 to Form S- 4 dated May 15,
1996)
10.12 -- Consulting Agreement-- William E. Willoughby (filed as
Exhibit 10.13 to Form S-4 dated May 15, 1996)
10.13 -- Salary Continuation Agreement-- William E. Willoughby (filed
as Exhibit 10.14 to Form S-4 dated May 15, 1996)
10.14 -- Addendum to Salary Continuation Agreement-- William E.
Willoughby (filed as Exhibit 10.15 to form S-4 dated May 15,
1996)
10.15 -- Non-Competition Covenant William E. Willoughby (filed as
Exhibit 10.11 to Form S-4 dated May 15, 1996)
10.16 -- Stockholders Agreement respecting voting of shares of
certain former Wedco common shareholders (filed as Exhibit
10.21 to Form S-4 dated May 15, 1996)
10.17 -- Stockholders Agreement respecting voting of shares of
certain ICO common shareholders (filed as Exhibit 10.22 to
Form S-4 dated May 15, 1996)
10.18 -- Employment Agreement dated April 1, 1995 by and between the
Registrant and Asher O. Pacholder and amendments thereto
(filed as Exhibit 10.16 to Form 10-K dated December 29,
1997)
-20-
<PAGE> 21
EXHIBIT NO. EXHIBIT
10.19 -- Employment Agreement dated April 1, 1995 by and between the
Registrant and Sylvia A. Pacholder and amendments thereto
(filed as Exhibit 10.17 to Form 10-K dated December 29,
1997).
10.20 -- Employment Agreement dated September 4, 1998 by and between
the Registrant and Jon C. Biro (Filed as Exhibit 10.20 to
Form 10-K dated December 23, 1998)
10.21 -- Employment Agreement dated September 4, 1998 by and between
the Registrant and Isaac H. Joseph (Filed as Exhibit 10.21
to Form 10-K dated December 23, 1998)
10.22 -- Employment Agreement dated June 18, 1984 by and between a
wholly-owned subsidiary of the Registrant and Theo J.M.L.
Verhoeff (Filed as Exhibit 10.22 to Form 10-K dated December
23, 1998)
21 -- Subsidiaries of the Company (Filed as Exhibit 21 to Form
10-K dated December 23, 1998)
27** -- Financial Data Schedule
- -----------------
** Filed herewith
-21-
<PAGE> 22
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)
/s/ Asher O. Pacholder
February 12, 1999 ------------------------------------
Asher O. Pacholder
Chairman and Chief Financial Officer
(Principal Financial Officer)
/s/ Jon C. Biro
------------------------------------
Jon C. Biro
Senior Vice President and Treasurer
(Principal Accounting Officer)
-22-
<PAGE> 23
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. EXHIBIT
- ----------- -----------------------
<S> <C> <C>
27** -- Financial Data Schedule
</TABLE>
- -----------------
** Filed herewith
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
quarterly filing on Form 10-Q for the period ended December 31, 1998 and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1999
<PERIOD-START> OCT-01-1998
<PERIOD-END> DEC-31-1998
<CASH> 44,339
<SECURITIES> 0
<RECEIVABLES> 51,494
<ALLOWANCES> (1,552)
<INVENTORY> 28,574
<CURRENT-ASSETS> 127,482
<PP&E> 188,757
<DEPRECIATION> (69,793)
<TOTAL-ASSETS> 312,818
<CURRENT-LIABILITIES> 47,114
<BONDS> 0
0
13
<COMMON> 39,170
<OTHER-SE> 85,377
<TOTAL-LIABILITY-AND-EQUITY> 312,818
<SALES> 62,791
<TOTAL-REVENUES> 62,791
<CGS> 47,993
<TOTAL-COSTS> 62,710
<OTHER-EXPENSES> (1)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (2,821)
<INCOME-PRETAX> (2,741)
<INCOME-TAX> 327
<INCOME-CONTINUING> (2,414)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,414)
<EPS-PRIMARY> (.13)
<EPS-DILUTED> (.13)
</TABLE>
