<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q/A
(Amendment No. 1)
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the Quarterly Period Ended March 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File Number 1-13884
----------------------------------------------------------
Cooper Cameron Corporation
- -------------------------------------------------------------------------------
(Exact Name of Registrant in its Charter)
Delaware 76-0451843
- -------------------------------------------------------------------------------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
515 Post Oak Blvd., Suite 1200, Houston, Texas 77027
-----------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
713/513-3300
- -------------------------------------------------------------------------------
(Registrant's Telephone Number, Including Area Code)
N/A
- --------------------------------------------------------------------------------
(Former Name, Former Address and Former Fiscal Year, if Changed Since Last
Report)
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 _____________
_____________
Number of shares outstanding of issuer's common stock as of April 30, 1996 was
25,179,358.
<PAGE>
The purpose of this filing is to amend Part I, Item 1 - Financial
Statements to reclassify the $441.0 million charge taken on June 30, 1995
related to the impairment of goodwill from the opening value of net assets
transferred to the Company by its former parent, Cooper Industries, Inc.,
(capital in excess of par value) to the Company's opening retained deficit as
shown in the consolidated balance sheet. This reclassification, which had no
effect on total stockholders' equity, was made at the request of the Staff of
the U.S. Securities and Exchange Commission following a review of the Company's
recent 1934 Exchange Act filings.
In conjunction with this change, Note 2 has been added to the Notes to
Consolidated Financial Statements and the remaining Notes have been renumbered.
Part I, Item 2 - Management's Discussion and Analysis of Results of
Operations and Financial Condition has been amended to correct a reference to
one of the renumbered Notes.
2
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
COOPER CAMERON CORPORATION
CONSOLIDATED RESULTS OF OPERATIONS
Three Months Ended
March 31,
--------------------
(dollars in millions, except per share data) 1996 1995
------- --------
<TABLE>
<CAPTION>
<S> <C> <C>
REVENUES................................................ $280.6 $254.6
------ ------
COSTS AND EXPENSES
Cost of sales (exclusive of depreciation and amortization).. 205.9 201.5
Depreciation and amortization............................... 15.2 17.4
Selling and administrative expenses......................... 44.4 40.1
Interest expense............................................ 4.2 6.0
------ ------
269.7 265.0
------ ------
Income (loss) before income taxes........................ 10.9 (10.4)
Income tax (provision) benefit.............................. (3.2) 6.1
------ ------
Net income (loss)........................................... $ 7.7 $ (4.3)
====== ======
Earnings (loss) per share $ .29 $ (.17)
======== ========
</TABLE>
The accompanying notes are an integral part of these statements.
3
<PAGE>
COOPER CAMERON CORPORATION
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, December 31,
(dollars in millions, except shares and per share data) 1996 1995
---------- -------------
<S> <C> <C>
ASSETS
Cash and cash equivalents....................................... $ 11.2 $ 12.1
Receivables, net................................................ 203.5 192.2
Inventories, net................................................ 317.8 308.5
Other........................................................... 14.6 16.0
-------- --------
Total current assets................................. 547.1 528.8
-------- --------
Plant and equipment, at cost.................................... 683.2 675.4
Less: accumulated depreciation................................. (344.8) (328.8)
Intangibles..................................................... 408.3 412.1
Less: accumulated amortization................................. (180.6) (178.9)
Other assets.................................................... 26.5 26.8
-------- --------
TOTAL ASSETS.................................... $1,139.7 $1,135.4
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current maturities of long-term debt............................ $ 39.6 $ 29.7
Accounts payable and accrued liabilities........................ 296.5 284.0
Accrued income taxes............................................ 5.0 3.0
-------- --------
Total current liabilities............................ 341.1 316.7
-------- --------
Long-term debt.................................................. 217.4 234.8
Postretirement benefits other than pensions..................... 102.0 103.4
Deferred income taxes........................................... 22.6 22.1
Other long-term liabilities..................................... 34.9 34.8
-------- --------
Total liabilities.................................... 718.0 711.8
-------- --------
Stockholders' Equity:
Common stock, par value $.01 per share, 75,000,000 shares
authorized, 25,146,232 shares issued and outstanding.... .3 .3
Capital in excess of par value.............................. 859.7 859.7
Translation component and minimum pension liability......... 16.3 25.9
Retained deficit (including $441.0 charge on June 30, 1995
related to goodwill impairment)......................... (454.6) (462.3)
-------- --------
Total stockholders' equity........................... 421.7 423.6
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY...................................... $1,139.7 $1,135.4
======== ========
</TABLE>
The accompanying notes are an integral part of these statements.
4
<PAGE>
COOPER CAMERON CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Three Months Ended
March 31,
--------------------
(dollars in millions) 1996 1995 /(1)/
------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss)....................................................... $ 7.7 $ (4.3)
Adjustments to reconcile net income (loss) to net cash provided
by (used for) operating activities:
Depreciation.................................................... 11.8 10.8
Amortization.................................................... 3.4 6.6
Allocation of interest and general and administrative expenses
from Cooper Industries, Inc. (net of tax)................... - 4.7
Deferred income taxes........................................... (.3) (8.1)
Changes in assets and liabilities, net of translation and
other non-cash activity:
Receivables.............................................. (13.3) (4.7)
Inventories.............................................. (12.9) (18.5)
Accounts payable and accrued liabilities................. 16.0 9.3
Other assets and liabilities, net........................ .3 (8.0)
------ -----------
Net cash provided by (used for) operating activities.. 12.7 (12.2)
------ -----------
Cash flows from investing activities:
Capital expenditures.................................................... (6.1) (14.1)
Proceeds from sales of plant and equipment.............................. .1 2.9
------ -----------
Net cash used for investing activities................ (6.0) (11.2)
------ -----------
Cash flows from financing activities:
Net loan repayments..................................................... (7.5) -
Transferred from Cooper Industries, Inc................................. - 22.9
------ -----------
Net cash (used for) provided by financing activities.. (7.5) 22.9
------ -----------
Effect of translation on cash............................................... (.1) .5
------ -----------
Decrease in cash and cash equivalents....................................... (.9) -
------ -----------
Cash and cash equivalents, beginning of period.............................. 12.1 -
------ -----------
Cash and cash equivalents, end of period.................................... $ 11.2 $ -
====== ===========
</TABLE>
/(1)/ Revised for consistency with the full year 1995 presentation in the
Annual Report to Stockholders.
The accompanying notes are an integral part of these statements.
5
<PAGE>
COOPER CAMERON CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1. Adjustments
-----------
The financial information presented as of March 31, 1996 and for the
three-month periods ended March 31, 1996 and 1995 has been prepared from the
books and records without audit. Financial information as of December 31, 1995
has been derived from the audited financial statements of the Company, but does
not include all disclosures required by generally accepted accounting
principles. In the opinion of management, all adjustments, consisting only of
normal recurring adjustments, necessary for a fair presentation of the financial
information for the periods indicated, have been included. However, the
Company's results for the three months ended March 31, 1995 reflect an
allocation of interest expense and certain general and administrative costs and
other items from its former parent Cooper Industries, Inc. ("Cooper"). As a
consequence, the information presented is not necessarily indicative of the
results of operations or financial position that the Company would have achieved
had it been a separate stand-alone company during the three months ended March
31, 1995. For further information regarding the Company's accounting policies,
refer to the consolidated financial statements and related notes included in the
Company's Annual Report to Stockholders for the year ended December 31, 1995.
Note 2. Retained Deficit
----------------
The Company's retained deficit as of March 31, 1996 and December 31,
1995 includes a $441.0 million charge made on June 30, 1995 related to the
goodwill write-down described in Note 3 of the Notes to Consolidated Financial
Statements included in the Company's Annual Report to Stockholders for the year
ended December 31, 1995. Should the Company decide to pay dividends on its
Common stock in future periods, this deficit would not prohibit such payments.
This is the case since under the laws of the State of Delaware in which the
Company is incorporated, dividends may be declared by the Company's Board of
Directors from a current year's earnings as well as from the net of capital in
excess of par value less the retained deficit. Accordingly, at March 31, 1996
the Company had approximately $405 million from which dividends could be paid.
Note 3. Change in Accounting Policies
-----------------------------
Effective January 1, 1996, the Company adopted the provisions of
Financial Accounting Standards Board Statements No. 121 (Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of) and
No. 123 (Accounting for Stock-Based Compensation). Since the Company's previous
policy for the evaluation of long-lived assets was more conservative than the
approach required under SFAS No. 121, there was no effect on the Company at the
time of adopting this new standard. As permitted by SFAS No. 123, the Company
will continue to follow existing accounting requirements for stock options and
stock-based awards and will not change its current method of measuring
compensation expense to the method contained in SFAS No. 123. The pro forma
disclosures required by SFAS No. 123 will be included in the Company's year end
1996 consolidated financial statements.
6
<PAGE>
Note 4. Acquisitions and Divestitures
-----------------------------
During the first quarter of 1996, the Company completed the
divestiture of the Cameron division's foundry located in Richmond, Texas. The
loss on this sale was fully reserved during 1995.
On April 1, 1996, the Company announced that it had reached a
definitive agreement to acquire the assets and assume certain liabilities of
Ingram Cactus Company, headquartered in Houston, Texas, for approximately $100
million in cash. The purchase will be financed through additional borrowings
under the Company's long-term Credit Agreement. The Company has made the
necessary filings with the appropriate governmental agencies and is currently
awaiting approval. Ingram Cactus had 1995 revenues of approximately $105
million and EBITDA (earnings before interest, taxes, depreciation and
amortization) of $15 million.
<TABLE>
<CAPTION>
Note 5. Inventories
March 31, December 31,
(dollars in millions) 1996 1995
---------- -------------
<S> <C> <C>
Raw materials...................................... $ 53.5 $ 56.4
Work-in-process.................................... 170.2 147.8
Finished goods, including parts and subassemblies.. 233.9 242.3
Perishable tooling and supplies.................... 3.8 3.8
------- -------
461.4 450.3
Excess of current standard costs over LIFO costs... (102.8) (101.5)
Allowance for obsolete and slow-moving inventory... (40.8) (40.3)
------- -------
Net inventories.................................... $ 317.8 $ 308.5
======= =======
</TABLE>
Note 6. Long-term Debt
--------------
At March 31, 1996, the Company has classified $39.6 million of its
outstanding indebtedness as current based on the scheduled maturities of its
Credit Facility term loans during the next twelve months. Other amounts
borrowed, which by their terms represent current liabilities, have been
reclassified to long-term debt reflecting the Company's intention and ability to
refinance such amounts under its long-term Credit Agreement.
Note 7. Earnings (Loss) Per Share
-------------------------
Earnings (loss) per share for the three-month period ended March 31,
1995 has been calculated on a pro forma basis as if 25 million shares of the
Company's common stock were outstanding during that period. The first quarter
1996 earnings per share was calculated utilizing the 26.1 million weighted
average number of common shares and common share equivalents outstanding for the
three-month period ended March 31, 1996.
7
<PAGE>
Item 2. Management's Discussion and Analysis of Results of Operations and
Financial Condition
Certain of the comments which follow represent forward looking
information with respect to the Company's future results of operations and its
related capital resources and financial condition. The Company relies on a
variety of internal and external information as well as management judgment in
order to develop such forward looking information. Because of the inherent
limitations in this process, as well as the relatively volatile nature of the
industry in which the Company operates, there can be no assurance that this
forward looking information will in fact occur. Accordingly, evaluation of the
future prospects of the Company must be made with caution when relying on this
forward looking information.
FIRST QUARTER 1996 COMPARED TO FIRST QUARTER 1995
Cooper Cameron Corporation had net income of $7.7 million, or $.29 per
share, for the first quarter of 1996 compared to a net loss of $4.3 million, or
$.17 per share on a pro forma basis, for the first quarter of 1995. This $12.0
million improvement in net income was largely the result of improved results in
the Petroleum Production Equipment segment, now comprised solely of the
Company's Cameron Division since the fourth quarter 1995 sale of the Wheeling
Machine Products Division. Also, affecting the net income comparison is an
estimated full year 1996 effective tax rate of 30% applied to first quarter
income before taxes, compared to an estimated full year effective tax rate of
59% that was applied to the first quarter 1995's loss before taxes.
REVENUES
Revenues for the first quarter of 1996 totaled $280.6 million, an
increase of 10% from $254.6 million in the first quarter of 1995. Approximately
90% of this improvement occurred in the Petroleum Production Equipment segment
and 10% in the Compression and Power Equipment segment.
The Petroleum Production Equipment segment's revenues of $171.3 million
represented an increase of 16% over the $147.8 million in the first quarter of
1995. (The first quarter of 1995 included revenues of $3.6 million related to
the Wheeling Machine Products Division which was sold during the fourth quarter
of 1995.) The revenue increase reflected the continuing improvement in general
market conditions driven by increasing oil and natural gas prices. Additionally,
shipments associated with several large development and production projects in
the North Sea and the Gulf of Mexico contributed to the higher revenue level.
Order activity for this segment in the first quarter of 1996 totaled
$162.1 million, a decline of 27% from the same period in 1995 due primarily to
two large orders totaling in excess of $70 million that were received in the
first quarter of 1995 for subsea projects in the North Sea. Although no major
subsea project orders were received in the first quarter of 1996, the market is
very active, and several North Sea and Gulf of Mexico projects are currently
expected to generate orders during 1996.
8
<PAGE>
Revenues for the Compression and Power Equipment segment of $109.3
million increased 2% from $106.8 million in the first quarter of 1995. This
improvement was the result of continued strong demand for centrifugal air
compressors in both the air separation and industrial air compressor
applications. Shipments of these products increased by $7.0 million. Offsetting
a portion of this improvement were weak shipments of natural gas compression
equipment in the North American market. Demand for this equipment started
improving in the fourth quarter of 1995 and continued during the first quarter
of 1996 as natural gas prices continued an upward trend. The manufacturing lead
times, however, are such that an increase in revenue will not be realized until
later in the year. Additionally, the increase in international gas turbine and
compressor project orders that began late in the third quarter of 1995 will not
have a significant effect on revenues until the second half of 1996. Incoming
orders for this segment were $126.4 million in the first quarter of 1996, an
increase of 27% from the first quarter of 1995.
COSTS AND EXPENSES
Cost of sales (exclusive of depreciation and amortization) of $205.9
million in the first quarter of 1996 increased by $4.4 million, or 2%, compared
with $201.5 million in the same period of 1995. This increase is attributable
to the previously discussed revenue improvements partially offset by several
other factors. Within the Petroleum Production Equipment segment, the gross
margin percent (defined as revenues less cost of sales as a percentage of
revenues) increased to 27.4% in the first quarter of 1996 from 19.7% in the
first quarter of 1995. This improvement was the result of some firming in
prices, several very low margin projects shipped in the first quarter of 1995
that did not recur in 1996, and other cost reduction programs within the Cameron
operations. For the Compression and Power Equipment segment, the gross margin
percent increased from 22.5% in the first quarter of 1995 to 25.4% in the first
quarter of 1996. This improvement resulted from a mix of shipments heavier in
higher margin aftermarket business and lower in relatively lower margin units,
and higher production levels related to the increased orders in recent quarters
resulting in more absorption of various manufacturing costs that are relatively
fixed during the short-term.
Selling and administrative expenses increased by $4.3 million, from $40.1
million in the first quarter of 1995 to $44.4 million in the first quarter of
1996. However, as a percentage of revenues, selling and administrative costs
were virtually unchanged. The increase in costs was primarily the result of the
effects of inflation, a higher level of those costs, such as agent's
commissions, which vary with revenue levels, greater first quarter 1996
corporate expenses than those allocated from Cooper in the first quarter of
1995, and a concerted emphasis on marketing, particularly in the Petroleum
Production Equipment segment.
Reflecting the various factors discussed above, EBITDA (defined as
earnings before interest, taxes, depreciation and amortization) was $30.3
million in the first quarter of 1996, an increase of $17.3 million from the
first quarter of 1995, with $15.7 million of the improvement in the Petroleum
Production Equipment segment and $2.0 million in the Compression and Power
Equipment segment.
9
<PAGE>
Depreciation and amortization expense decreased by $2.2 million, from
$17.4 million in the first quarter of 1995 to $15.2 million in the first quarter
of 1996. This decline is primarily due to the effect on goodwill amortization
of the $441.0 million goodwill write-off recorded in the second quarter of 1995,
partially offset by the effect of normal capital additions as well as several
other changes affecting depreciation expense that were initiated in the second
quarter of 1995.
Interest expense decreased by $1.8 million, or 30%, from $6.0 million in
the first quarter of 1995 to $4.2 million in the first quarter of 1996. This
decline was the result of a lower average debt level as well as a somewhat lower
average interest rate. During the first two quarters of 1995 debt was constant
at the $375.0 million allocated from Cooper. Debt has been reduced to $257.0
million as of March 31, 1996.
Income taxes increased from a credit of $6.1 million in the first quarter
of 1995 to expense of $3.2 million in the first quarter of 1996. The Company's
estimated 1996 effective tax rate is 30% compared to a 59% estimated effective
tax rate in the first quarter of 1995. The difference in these rates reflects
not only a reduction in the amount of non-deductible goodwill for 1996 versus
1995 due to the goodwill write-off in the second quarter of 1995, but also
anticipated earnings versus 1995 losses in the Company's United Kingdom
operation with no tax expense being provided on such earnings because of tax
loss carryforwards recorded in prior years.
CASH FLOW, LIQUIDITY, CAPITAL RESOURCES AND FINANCIAL POSITION
During the first quarter of 1996, the Company generated $12.7 million of
cash from operations. This positive cash flow, combined with a $.9 million
reduction in cash on hand, was utilized to reduce long-term debt by $7.5 million
and to pay for $6.1 million of capital expenditures during the quarter. Because
of the cyclical nature of the industry in which the Company competes and the
long time period from when a large equipment order is first received until the
product can be manufactured, delivered and the receivable collected, the
Company's liquidity is susceptible to fairly large swings in relatively short
periods of time. At present, the Company does not anticipate further reductions
in debt during 1996 and may well have an operations related increase in debt in
addition to the additional borrowing described below.
As described further in Note 4 of the Notes to Consolidated Financial
Statements, the Company, assuming consummation of the transaction, expects to
fund the purchase of Ingram Cactus Company through additional borrowings of
approximately $100 million later in the year. Based on debt and equity levels at
March 31, 1996, this additional borrowing would have increased the Company's
debt to capitalization ratio from the current rate of 38% to approximately 46%.
Although a 46% rate is higher than what the Company believes would be
appropriate on a long-term basis, the Company does not believe that its overall
liquidity will be impaired and in fact currently anticipates that the
incremental debt related to Ingram Cactus should be able to be significantly
reduced by the end of 1997 assuming no major deterioration in current market
conditions. Changes in market conditions to lower levels, however, could
detrimentally affect this expectation and cause the Company to operate at higher
debt levels than it deems appropriate for a protracted period.
10
<PAGE>
The changes in receivables, inventories and accounts payable and accrued
liabilities in comparison to the comparable amounts at December 31, 1995 reflect
the Company's current operating levels. The other changes in various asset and
liability amounts reflected normal operating activity.
11
<PAGE>
PART II - OTHER INFORMATION
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 during the three months ended
March 31, 1996.
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.
Cooper Cameron Corporation
---------------------------
(Registrant)
Date July 19, 1996 /s/ Thomas R. Hix
--------------------------------------- ------------------------------
Thomas R. Hix
Senior Vice President &
Chief Financial Officer
and authorized to sign on
behalf of the Registrant
12
