U. S. SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDING JUNE 30, 1997.
[ ] 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 0-14908
TGC INDUSTRIES, INC.
(Exact name of small business issuer as specified in its charter)
Texas 74-2095844
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1304 Summit, Suite 2
Plano, Texas 75074
(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code: (972) 881-1099
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15 (d) of the Exchange Act during the past 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
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date.
Class Outstanding at July 31, 1997
Common Stock ($.10 Par Value) 6,315,738
PART 1 -- FINANCIAL INFORMATION
ITEM 1 -- FINANCIAL STATEMENTS
Incorporated herein is the following unaudited financial information:
Balance Sheet as of June 30, 1997.
Statements of Operations for the three and six month
periods ended June 30, 1997 and 1996.
Statements of Cash Flows for the six month periods
ended June 30,1997 and 1996.
Notes to Financial Statements.
TGC INDUSTRIES, INC.
BALANCE SHEET
(UNAUDITED)
<TABLE>
<S> <C>
June 30,
1997
___________
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 250,996
Accounts receivable 1,319,911
Costs and estimated earnings in excess
of billings on uncompleted contracts 285,062
Prepaid expenses 491,411
_____________
Total current assets 2,347,380
PROPERTY AND EQUIPMENT - at cost
Machinery and equipment 8,016,090
Automobiles and trucks 642,071
Furniture and fixtures 317,167
________________
8,975,328
Less accumulated depreciation (2,823,110)
________________
6,152,218
OTHER ASSETS 65,232
________________
Total assets $8,564,830
================
See notes to Financial Statements
</TABLE>
TGC INDUSTRIES, INC.
BALANCE SHEET -- CONTINUED
(UNAUDITED)
<TABLE>
<S> <C>
June 30,
1997
__________
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Trade accounts payable $1,939,139
Accrued liabilities 456,155
Billings in excess of costs and estimated
earnings on uncompleted contracts 888,260
Current maturities of long-term obligations 948,490
_____________
Total current liabilities 4,232,044
LONG-TERM OBLIGATIONS, less current
maturities 1,251,397
STOCKHOLDERS' EQUITY
Preferred stock, $1.00 par value; 4,000,000
shares authorized; 1,148,850 issued
and outstanding 1,148,850
Common stock, $.10 par value; 25,000,000
shares authorized; 6,400,820 shares issued 640,082
Additional paid-in capital 5,605,104
Accumulated deficit (4,113,458)
Treasury stock, at cost (85,082 shares) (199,189)
________________
3,081,389
Total liabilities and stockholders' equity $ 8,564,830
================
See notes to Financial Statements
</TABLE>
TGC INDUSTRIES, INC.
STATEMENTS OF OPERATIONS
<TABLE>
<S> <C> <C> <C> <C>
Three Months Ended Six Months Ended
June 30, June 30,
____________________ _________________
(Unaudited) (Unaudited)
1997 1996 1997 1996
_____ _____ _____ _____
Revenue $4,733,331 $2,225,255 $7,056,651 $4,459,927
Other income 7,339 - 424,372 -
__________ __________ __________ __________
4,740,670 2,225,255 7,481,023 4,459,927
Cost of services 3,998,589 1,972,973 6,526,504 3,774,410
Selling, general, adm. 248,374 187,852 457,682 399,577
__________ __________ __________ __________
4,246,963 2,160,825 6,984,186 4,173,987
INCOME FROM OPERATIONS 493,707 64,430 496,837 285,940
Interest expense 42,965 16,988 85,947 33,143
__________ __________ __________ __________
INCOME FROM CONTINUING
OPERATIONS 450,742 47,442 410,890 252,797
Discontinued operations
Loss from operations - (730,046) - (1,405,115)
__________ __________ __________ __________
NET INCOME (LOSS) 450,742 (682,604) 410,890 (1,152,318)
Less dividend requirement on
preferred stock 114,885 - 229,770 -
__________ __________ _________ ___________
INCOME (LOSS) ALLOCABLE
TO COMMON STOCKHOLDERS $ 335,857 $(682,604) $181,120 $(1,152,318)
Earnings (loss) per
common and common
equivalent share:
Primary earnings (loss)
per share:
Continuing operations $.05 $.01 $.03 $.04
Discontinued operations - (.12) - (.23)
__________ __________ __________ ________
$.05 $(.11) $.03 $(.19)
Fully diluted earnings
per share:
Continuing operations $.03 $.01 $.03 $.04
Weighted average number of
common and common equivalent
shares:
Primary 6,843,142 6,176,699 6,994,911 6,171,359
Fully diluted 14,516,118 6,176,699 14,653,911 6,171,359
See notes to Financial Statements
</TABLE>
TGC INDUSTRIES, INC.
Statements of Cash Flows (Unaudited)
<TABLE>
<S> <C> <C> <C>
Six Months Ended
June 30,
_____________________________________
1997 1996
___________ _____________
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income (Loss) $ 410,890 $(1,152,318)
Adjustments to reconcile net
income (loss) to net cash
provided by operating activities:
Loss from discontinued operations - 1,405,115
Depreciation and amortization 596,815 388,721
Gain on disposal of property
and equipment (208,985) (8,585)
Changes in operating assets
and liabilities
Accounts receivable (432,505) 41,748
Billings in excess of cost
and estimated earnings on
uncompleted contracts 98,793 529,874
Prepaid expenses (414,868) (382,087)
Accounts payable 455,310 10,267
Accrued liabilities 261,296 28,914
_______________ _______________
NET CASH PROVIDED BY
CONTINUING OPERATIONS 766,746 861,649
NET CASH PROVIDED BY
DISCONTINUED OPERATIONS - 150,682
_______________ _______________
NET CASH PROVIDED BY
OPERATING ACTIVITIES 766,746 1,012,331
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (680,320) (197,695)
Proceeds from sale of property
and equipment 210,332 11,500
Increase in other assets (33,840) (1,019)
INVESTING ACTIVITIES OF
DISCONTINUED OPERATIONS - (88,063)
____________ _____________
NET CASH USED IN
INVESTING ACTIVITIES (503,828) (275,277)
CASH FLOWS FROM FINANCING ACTIVITIES
Advance of private placement
proceeds - 150,000
Dividends paid (459,840) -
Proceeds from issuance of debt 142,700 125,813
Proceeds from issuance of stock - 3,750
Other (13,060) -
Principal payments of debt
obligations (337,002) (96,715)
FINANCING ACTIVITIES OF
DISCONTINUED OPERATIONS - (905,161)
___________ ___________
NET CASH USED IN FINANCING
ACTIVITIES (667,202) (722,313)
___________ ___________
NET INCREASE (DECREASE) IN
CASH AND CASH EQUIVALENTS (404,284) 14,741
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 655,280 114,868
___________ __________
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $ 250,996 $ 129,609
=========== ===========
</TABLE>
TGC INDUSTRIES, INC.
Statements of Cash Flows (Unaudited) Continued
<TABLE>
<S> <C> <C> <C>
Six Months Ended
June 30,
_____________________________________
1997 1996
___________ _____________
Supplemental cash flow information
Cash paid during the year
Interest $ 85,947 $ 11,936
Income taxes $ - $ -
</TABLE>
Noncash investing and financing
activities
(1) On January 7, 1997, options for 4,668 shares and 47,500 shares of Common
Stock at an exercise price of $1.00 and $.40 respectively per share were
exercised. The Company received 14,025 shares of its Common Stock at a
market value of $1.6875 per share as payment for the exercise of its options.
(2) In March 1997, the Company financed the acquisition of equipment through
a capital lease in the amount of $876,656.
See note to Financial Statements
TGC INDUSTRIES, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
June 30, 1997
NOTE A -- BASIS OF PRESENTATION
The accompanying unaudited financial statements have been prepared in
accordance with the instructions to Form 10-QSB and therefore do not include
all information and footnotes necessary for a fair presentation of financial
position, results of operations and changes in financial position in
conformity with generally accepted accounting principles.
NOTE B -- MANAGEMENT PRESENTATION
In the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation of financial position,
results of operations, and changes in financial position have been included.
The results of the interim periods are not necessarily indicative of results
to be expected for the entire year. For further information, refer to the
financial statements and the footnotes thereto included in the Company's
Annual Report for the year ended December 31, 1996 filed on Form 10-KSB.
NOTE C -- EARNINGS (LOSS) PER SHARE
Primary earnings (loss) per common and common equivalent share are computed
by dividing net earnings (loss), after deducting preferred stock dividends,
by the weighted average number of common shares outstanding during each
period plus the incremental shares that would have been outstanding upon the
assumed exercise of dilutive stock options and warrants. Fully diluted
earnings (loss) per share are computed by dividing net earnings (loss) by the
weighted average number of common shares outstanding during each period plus
the incremental shares that would have been outstanding upon the assumed
exercise of dilutive stock options, warrants and conversion of the preferred
shares. There were no preferred shares outstanding during the three and six
month periods ended June 30, 1996.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
RESULTS OF OPERATIONS
TGC Industries, Inc. ("TGC") reported record revenues and income from
continuing operations for the second quarter ended June 30, 1997. Revenue
from continuing operations increased significantly to $4,733,331 for the
three months ended June 30, 1997, compared with revenues from continuing
operations of $2,225,255 for the same period of the prior year. Income from
continuing operations, before the dividend requirement on preferred stock,
increased to $450,742 compared with $47,442 in the second quarter of 1996.
There were no preferred stock dividends incurred in the first six months of
1996. Income per common share, on a fully diluted basis, from continuing
operations was $.03 for the second quarter of 1997, as compared with income
from continuing operations of $.01 for the same period of 1996.
For the six month period ended June 30, 1997, TGC had revenues from
continuing operations of $7,056,651 and income, before dividend requirements
on preferred stock, of $410,890. This compares to revenue of $4,459,927 and
income from continuing operations of $252,797 for the same period in 1996.
Income per common share on a fully diluted basis, from continuing operations,
was $.03 for the first six months of 1997, as compared to $.04 for the same
period in 1996.
TGC has two state-of-the-art Eagle 1500 Channel crews and these crews are
under contract the remainder of 1997, and TGC is booking business for 1998.
During the third quarter of 1997, TGC expects to add an additional 500
channels to each of the two systems to improve productivity, capabilities,
and revenue; TGC is in the process of obtaining financing for this
equipment.
The geophysical business continues to be favorable and strong and management
believes that 1997 will be a record year for revenues and earnings. However,
with the unpredictable nature of forecasting weather, the potential for
contract delay or cancellation and the potential for fluctuations in oil and
gas prices, no assurance can be given that management's expectations can be
achieved.
FINANCIAL CONDITION
Cash of $766,746 was provided from continuing operations for the first six
months of 1997 compared with cash provided from continuing operations of
$861,649 for the first six months of 1996. The funds generated in the first
six months of 1997 were primarily attributable to net earnings before non-
cash depreciation charges. Cash used in investing activities for the first
six months of 1997 was primarily for additions to machinery and equipment for
geophysical field operations. Cash used in financing activities for the
first six months of 1997 was primarily for preferred stock dividend payments
of $459,840 and principal payments of debt obligations in the amount of
$337,002.
Working capital decreased $599,135 to $(1,884,664) from the December 31, 1996
balance of $(1,285,529) primarily as a result of an increase in trade
accounts payable and current maturities of long-term obligations. The
Company's current ratio was .6 to 1 at both June 30, 1997, and December 31,
1996.
As a result of one of the Company's crews suffering immobilization and
equipment losses in the first quarter of 1997 in the California floods, the
Company was able to secure a loan in May 1997 in the amount of $142,600 from
the Small Business Administration on very favorable terms.
Stockholders equity increased $64,083 from the December 31, 1996 balance of
$3,017,306 to $3,081,389 at June 30, 1997. This increase is primarily
attributable to income allocable to common stockholders, for the six months
ended June 30, 1997, of $181,120 less a charge associated with the completion
of the spin-off of Chase Packaging Corporation on March 7, 1997 which
resulted in a decrease in stockholders equity of $103,977.
PART II - OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The annual meeting of shareholders was held on June 5, 1997. The following
matters were voted upon and approved by the Company's shareholders:
a. Nominated and elected to the Board of Directors were Messrs.
William J. Barrett, Robert J. Campbell, Herbert M. Gardner, Allen T. McInnes
and Wayne A. Whitener.
b. Ratification of the selection of the Company's auditors, Grant
Thornton LLP was approved by the shareholders by a vote of 5,014,376 to
7,507.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits -- None.
b. Reports -- No reports on Form 8-K have been filed during the quarter
for which this report is filed.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
TGC INDUSTRIES, INC.
Date: August 12, 1997
/s/ Robert J. Campbell
Robert J. Campbell
Vice Chairman of the Board
(Principal Executive Officer)
Date: August 12, 1997
/s/ Kenneth W. Uselton
Kenneth W. Uselton
Treasurer (Principal Financial
and Accounting Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 250,996
<SECURITIES> 0
<RECEIVABLES> 1,319,911
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,347,380
<PP&E> 8,975,328
<DEPRECIATION> 2,823,100
<TOTAL-ASSETS> 8,564,830
<CURRENT-LIABILITIES> 4,232,044
<BONDS> 1,251,397
<COMMON> 640,082
0
1,148,850
<OTHER-SE> 1,292,457
<TOTAL-LIABILITY-AND-EQUITY> 8,564,830
<SALES> 0
<TOTAL-REVENUES> 7,481,023
<CGS> 0
<TOTAL-COSTS> 6,526,504
<OTHER-EXPENSES> 457,682
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 85,947
<INCOME-PRETAX> 181,120
<INCOME-TAX> 0
<INCOME-CONTINUING> 181,120
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 181,120
<EPS-PRIMARY> 0.03
<EPS-DILUTED> 0.03
</TABLE>
