Form 10-Q
Table of Contents

 
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
     
þ   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2011
or
     
o   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                      to                     .
Commission File No. 1-2960
Newpark Resources, Inc.
(Exact name of registrant as specified in its charter)
     
Delaware   72-1123385
(State or other jurisdiction of   (I.R.S. Employer
incorporation or organization)   Identification No.)
     
2700 Research Forest Drive, Suite 100    
The Woodlands, Texas   77381
(Address of principal executive offices)   (Zip Code)
(281) 362-6800
(Registrant’s telephone number, including area code)
 
(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 þ No o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes o No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definitions of “large accelerated filer”, “accelerated filer” and “small reporting company” in Rule 12b-2 of the Exchange Act.
             
Large accelerated filer o   Accelerated filer þ  Non-accelerated filer o  Smaller reporting company o
        (Do not check if a smaller reporting company)    
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes o No þ
As of April 19, 2011, a total of 90,390,302 shares of common stock, $0.01 par value per share, were outstanding.
 
 

 

 


 

NEWPARK RESOURCES, INC.
INDEX TO QUARTERLY REPORT ON FORM 10-Q
FOR THE THREE MONTHS ENDED
MARCH 31, 2011
                 
Item         Page  
Number     Description   Number  
 
               
       
 
       
  1            
       
 
       
            3  
       
 
       
            4  
       
 
       
            5  
       
 
       
            6  
       
 
       
            7  
       
 
       
  2         15  
       
 
       
  3         21  
       
 
       
  4         21  
       
 
       
               
       
 
       
  1         21  
       
 
       
  1A         21  
       
 
       
  2         22  
       
 
       
  3         22  
       
 
       
  4         22  
       
 
       
  5         22  
       
 
       
  6         22  
       
 
       
            23  
       
 
       
 Exhibit 10.1
 Exhibit 31.1
 Exhibit 31.2
 Exhibit 32.1
 Exhibit 32.2
 Exhibit 99.1
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995, as amended. We also may provide oral or written forward-looking statements in other materials we release to the public. The words “anticipates,” “believes,” “estimates,” “expects,” “plans,” “intends,” and similar expressions are intended to identify these forward-looking statements but are not the exclusive means of identifying them. These forward-looking statements reflect the current views of our management; however, various risks, uncertainties and contingencies, including the risks identified in Item 1A in Part II of this Quarterly Report, Item 1A, “Risk Factors,” in Part I of our Annual Report on Form 10-K for the year ended December 31, 2010, and those set forth from time to time in our filings with the Securities and Exchange Commission, could cause our actual results, performance or achievements to differ materially from those expressed in, or implied by, these statements, including the success or failure of our efforts to implement our business strategy.
We assume no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by securities laws. In light of these risks, uncertainties and assumptions, the forward-looking events discussed in this Quarterly Report on Form 10-Q might not occur.
For further information regarding these and other factors, risks and uncertainties affecting us, we refer you to the risk factors set forth in Part I of our Annual Report on Form 10-K for the year ended December 31, 2010.

 

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PART I FINANCIAL INFORMATION
ITEM 1.  
Financial Statements
Newpark Resources, Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
                 
    March 31,     December 31,  
(In thousands, except share data)   2011     2010  
 
               
ASSETS
               
Cash and cash equivalents
  $ 95,366     $ 83,010  
Receivables, net
    200,200       196,799  
Inventories
    122,911       123,028  
Deferred tax asset
    21,041       27,654  
Prepaid expenses and other current assets
    10,097       10,036  
 
           
Total current assets
    449,615       440,527  
 
               
Property, plant and equipment, net
    212,792       212,655  
Goodwill
    63,008       62,307  
Other intangible assets, net
    12,664       13,072  
Other assets
    8,372       8,781  
 
           
Total assets
  $ 746,451     $ 737,342  
 
           
 
               
LIABILITIES AND STOCKHOLDERS’ EQUITY
               
Short-term debt
  $ 359     $ 1,606  
Accounts payable
    62,861       66,316  
Accrued liabilities
    34,009       43,234  
 
           
Total current liabilities
    97,229       111,156  
 
               
Long-term debt, less current portion
    172,996       172,987  
Deferred tax liability
    32,225       31,549  
Other noncurrent liabilities
    4,661       4,303  
 
           
Total liabilities
    307,111       319,995  
 
           
 
               
Commitments and contingencies (Note 5)
               
 
               
Common stock, $0.01 par value, 200,000,000 shares authorized 93,153,576 and 93,143,102 shares issued, respectively
    932       931  
Paid-in capital
    469,547       468,503  
Accumulated other comprehensive income
    13,679       8,581  
Retained deficit
    (29,180 )     (45,034 )
Treasury stock, at cost; 2,763,274 and 2,766,912 shares, respectively
    (15,638 )     (15,634 )
 
           
Total stockholders’ equity
    439,340       417,347  
 
           
Total liabilities and stockholders’ equity
  $ 746,451     $ 737,342  
 
           
See Accompanying Notes to Unaudited Condensed Consolidated Financial Statements

 

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Newpark Resources, Inc.
Condensed Consolidated Statements of Operations
(Unaudited)
                 
    Three Months Ended March 31,  
(In thousands, except per share data)   2011     2010  
 
               
Revenues
  $ 202,651     $ 160,798  
 
               
Cost of revenues
    159,002       133,518  
Selling, general and administrative expenses
    15,818       14,413  
Other operating income, net
    (117 )     (842 )
 
           
 
               
Operating income
    27,948       13,709  
 
               
Foreign currency exchange loss (gain)
    323       (611 )
Interest expense, net
    2,257       2,148  
 
           
 
               
Income from operations before income taxes
    25,368       12,172  
Provision for income taxes
    9,514       4,390  
 
           
 
               
Net income
  $ 15,854     $ 7,782  
 
           
 
               
Income per common share — basic
  $ 0.18     $ 0.09  
Income per common share — diluted
  $ 0.16     $ 0.09  
See Accompanying Notes to Unaudited Condensed Consolidated Financial Statements

 

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Newpark Resources, Inc.
Condensed Consolidated Statements of Comprehensive Income
(Unaudited)
                 
    Three Months Ended March 31,  
(In thousands)   2011     2010  
 
Net income
  $ 15,854     $ 7,782  
 
               
Changes in fair value of interest rate swap, net of tax
          (10 )
Foreign currency translation adjustments
    5,098       (2,382 )
 
           
 
               
Comprehensive income
  $ 20,952     $ 5,390  
 
           
See Accompanying Notes to Unaudited Condensed Consolidated Financial Statements

 

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Newpark Resources, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
                 
    Three Months Ended March 31,  
(In thousands)   2011     2010  
Cash flows from operating activities:
               
Net income
  $ 15,854     $ 7,782  
Adjustments to reconcile net income to net cash provided by (used in) operations:
               
Depreciation and amortization
    6,430       6,711  
Stock-based compensation expense
    975       870  
Provision for deferred income taxes
    7,567       3,147  
Net (recovery) provision for doubtful accounts
    (44 )     239  
(Gain) loss on sale of assets
    (17 )     348  
Change in assets and liabilities:
               
Increase in receivables
    (1,063 )     (32,724 )
Decrease in inventories
    1,453       9,183  
Decrease (increase) in other assets
    285       (261 )
Decrease in accounts payable
    (3,895 )     (1,134 )
(Decrease) increase in accrued liabilities and other
    (9,648 )     3,470  
 
           
Net cash provided by (used in) operating activities
    17,897       (2,369 )
 
               
Cash flows from investing activities:
               
Capital expenditures
    (6,188 )     (2,029 )
Proceeds from sale of property, plant and equipment
    66       48  
 
           
Net cash used in investing activities
    (6,122 )     (1,981 )
 
               
Cash flows from financing activities:
               
Borrowings on lines of credit
    1,193       45,409  
Payments on lines of credit
    (2,332 )     (39,564 )
Other borrowings (payments)
    9       (186 )
Proceeds from employee stock plans
    87       48  
Purchase of treasury stock
    (95 )     (86 )
 
           
Net cash (used in) provided by financing activities
    (1,138 )     5,621  
Effect of exchange rate changes on cash
    1,719       (539 )
 
           
Net increase in cash and cash equivalents
    12,356       732  
Cash and cash equivalents at beginning of period
    83,010       11,534  
 
           
 
Cash and cash equivalents at end of period
  $ 95,366     $ 12,266  
 
           
 
               
Cash paid for:
               
Income taxes
  $ 3,582     $ 1,132  
Interest
  $ 234     $ 2,269  
See Accompanying Notes to Unaudited Condensed Consolidated Financial Statements

 

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NEWPARK RESOURCES, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 1 — Basis of Presentation and Significant Accounting Policies
The accompanying unaudited condensed consolidated financial statements of Newpark Resources, Inc. and our wholly-owned subsidiaries, which we refer to as “we,” “our” or “us,” have been prepared in accordance with Rule 10-01 of Regulation S-X for interim financial statements required to be filed with the Securities and Exchange Commission (“SEC”), and do not include all information and footnotes required by the accounting principles generally accepted in the United States (“U.S. GAAP”) for complete financial statements. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2010. Our fiscal year end is December 31 and our first quarter represents the three month period ended March 31. The results of operations for the first quarter of 2011 are not necessarily indicative of the results to be expected for the entire year.
In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments necessary to present fairly our financial position as of March 31, 2011, the results of our operations for the first quarter of 2011 and 2010, and our cash flows for the first quarter of 2011 and 2010. All adjustments are of a normal recurring nature. Our balance sheet at December 31, 2010 is derived from the audited consolidated financial statements at that date.
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. For further information, see Note 1 in our Annual Report on Form 10-K for the year ended December 31, 2010.
New Accounting Standards
In October 2009, the Financial Accounting Standards Board (“FASB“) issued additional guidance on multiple-deliverable revenue arrangements. The guidance provides amendments to the criteria for separating consideration in multiple-deliverable arrangements. It replaces the term “fair value” in the revenue allocation guidance with “selling price” to clarify that the allocation of revenue is based on entity-specific assumptions rather than assumptions of a marketplace participant, and they establish a selling price hierarchy for determining the selling price of a deliverable. The amendments eliminate the residual method of allocation and require that arrangement consideration be allocated at the inception of the arrangement to all deliverables using the relative selling price method, and they significantly expand the required disclosures related to multiple-deliverable revenue arrangements. The amendments were effective prospectively for revenue arrangements entered into or materially modified in fiscal years beginning after June 15, 2010. The impact of this additional guidance has not had a material impact on our consolidated financial statements.
In December 2010, the FASB issued updated accounting guidance related to the calculation of the carrying amount of a reporting unit when performing the first step of a goodwill impairment test. Specifically, this update requires an entity to use an equity premise when performing the first step of a goodwill impairment test and if a reporting unit has a zero or negative carrying amount, the entity must assess and consider qualitative factors and whether it is more likely than not that a goodwill impairment exists. The new accounting guidance is effective for impairment tests performed during entities’ fiscal years (and interim periods within those years) that begin after December 15, 2010. The impact of this updated guidance has not had a material impact on our consolidated financial statements.
In December 2010, the FASB issued updated accounting guidance to clarify that pro forma disclosures should be presented as if a business combination occurred at the beginning of the prior annual period for purposes of preparing both the current reporting period and the prior reporting period pro forma financial information. These disclosures should be accompanied by a narrative description about the nature and amount of material, nonrecurring pro forma adjustments. The new accounting guidance is effective for business combinations consummated in periods beginning after December 15, 2010, and should be applied prospectively as of the date of adoption. The impact of this guidance has not had a material impact on our consolidated financial statements.

 

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Note 2 — Earnings per Share
The following table presents the reconciliation of the numerator and denominator for calculating earnings per share:
                 
    First Quarter  
(In thousands, except per share data)   2011     2010  
 
               
Basic EPS:
               
Net income
  $ 15,854     $ 7,782  
 
           
 
               
Weighted average number of common shares outstanding
    89,621       88,654  
 
           
 
               
Basic income per common share
  $ 0.18     $ 0.09  
 
           
 
               
Diluted EPS:
               
Net income
  $ 15,854     $ 7,782  
Assumed conversion of Senior Notes
    1,194        
 
           
Adjusted net income
  $ 17,048     $ 7,782  
 
           
 
               
Weighted average number of common shares outstanding-basic
    89,621       88,654  
Add: Dilutive effect of stock options and restricted stock awards
    823       213  
Dilutive effect of Senior Notes
    15,682        
 
           
 
               
Diluted weighted average number of common shares outstanding
    106,126       88,867  
 
           
 
               
Diluted income per common share
  $ 0.16     $ 0.09  
 
           
 
               
Stock options and warrants excluded from calculation of diluted earnings per share because anti-dilutive for the period
    3,826       4,561  
 
           
For the first quarter of 2011 and 2010, we had weighted average dilutive stock options and restricted stock outstanding of approximately 3.0 million shares and 2.8 million shares respectively. The resulting net effect of stock options and restricted stock were used in calculating diluted earnings per share for the period.
In June 2000, we completed the sale of 120,000 shares of Series B Convertible Preferred Stock, $0.01 par value per share (the “Series B Preferred Stock”), and a warrant (the “Series B Warrant”) to purchase up to 1,900,000 shares of our common stock at an exercise price of $10.075 per share, subject to anti-dilution adjustments. As of March 31, 2011, the Series B Warrant, as adjusted for anti-dilution provisions, remains outstanding and provides for the right to purchase up to approximately 2.1 million shares of our common stock at an exercise price of $8.97, and expires in February 2012.

 

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Note 3 — Receivables and Inventories
Receivables — Receivables consist of the following:
                 
    March 31,     December 31,  
(In thousands)   2011     2010  
 
               
Gross trade receivables
  $ 197,212     $ 193,349  
Allowance for doubtful accounts
    (5,796 )     (5,839 )
 
           
Net trade receivables
    191,416       187,510  
 
               
Other receivables
    8,784       9,289  
 
           
 
               
Total receivables, net
  $ 200,200     $ 196,799  
 
           
Inventories — Our inventories include $121.6 million and $122.5 million of raw materials and components for our drilling fluids systems at March 31, 2011 and December 31, 2010, respectively. The remaining balance consists primarily of composite mat finished goods.
Note 4 — Financing Arrangements and Fair Value of Financial Instruments
Our financing arrangements include $172.5 million of unsecured convertible senior notes (“Senior Notes”) and a $150.0 million revolving credit facility, of which no borrowings were outstanding at March 31, 2011. The Senior Notes bear interest at a rate of 4.0% per year, payable semi-annually in arrears on April 1 and October 1 of each year, beginning April 1, 2011. Holders may convert the Senior Notes at their option at any time prior to the close of business on the business day immediately preceding the October 1, 2017 maturity date. The conversion rate is initially 90.8893 shares of our common stock per $1,000 principal amount of Senior Notes (equivalent to an initial conversion price of $11.00 per share of common stock), subject to adjustment in certain circumstances. Upon conversion, the Senior Notes will be settled in shares of our common stock. We may not redeem the Senior Notes at our election prior to their maturity date.
Our financial instruments include cash and cash equivalents, receivables, payables, and debt. We believe the carrying values of these instruments, with the exception of our debt, approximated their fair values at March 31, 2011 and December 31, 2010. The estimated fair value of our outstanding debt is $172.5 million at March 31, 2011 and $159.1 million at December 31, 2010. The estimated fair value of the Senior Notes at these respective dates is based on quoted market prices.
Note 5 — Commitments and Contingencies
In the ordinary course of conducting our business, we become involved in litigation and other claims from private party actions, as well as judicial and administrative proceedings involving governmental authorities at the federal, state and local levels. In the opinion of management, any liability in these matters should not have a material effect on our consolidated financial statements.

 

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Note 6 — Segment Data
Summarized operating results for our reportable segments is shown in the following table (net of inter-segment transfers):
                 
    First Quarter  
(In thousands)   2011     2010  
 
               
Revenues
               
Fluids systems and engineering
  $ 170,467     $ 136,310  
Mats and integrated services
    23,063       13,620  
Environmental services
    9,121       10,868  
 
           
Total revenues
  $ 202,651     $ 160,798  
 
           
 
               
Operating income (loss)
               
Fluids systems and engineering
  $ 19,199     $ 12,414  
Mats and integrated services
    11,784       2,714 (1)
Environmental services
    1,620       2,679  
Corporate office
    (4,655 )     (4,098 )
 
           
Operating income
  $ 27,948     $ 13,709  
 
           
(1)  
Includes $0.9 million of other income reflecting proceeds from insurance claims related to Hurricane Ike in 2008.
Note 7 — Subsequent Event
In April 2011, we completed the acquisition of the drilling fluids and engineering services business from Rheochem PLC, a publicly-traded Australian-based oil and gas company. The acquired business provides drilling fluids and related engineering services to the oil and gas exploration and geothermal industries with operations in Australia, New Zealand and India. Total cash paid at closing was AUD$24.0 million ($25.4 million), and total consideration is subject to typical adjustments for working capital conveyed at closing. Additional consideration may be payable based on financial results of the acquired business over a one-year earnout period, up to a maximum total consideration of AUD$45 million. In the most recently completed fiscal year ended June 30, 2010, Rheochem PLC’s drilling fluid services segment reported revenues of AUD$20.3 million. Our operating results for the first quarter of 2011 include $0.4 million of acquisition-related costs. Proforma results of operations have not been presented as the effects of this acquisition is not material to our consolidated financial statements.
Note 8 — Guarantor and Non-Guarantor Financials
In May 2010, we filed a “shelf” registration statement on Form S-3 (“Form S-3”) registering up to $200 million in securities that may be issued by the Company from time to time. In October 2010, we completed our offering of Senior Notes under this “shelf” registration statement. While our Senior Notes did not include subsidiary guarantees, under our remaining “shelf” registration statement, we may in the future issue additional debt securities registered pursuant to the Form S-3 that are fully and unconditionally guaranteed by certain subsidiaries of the Company, as identified in the Form S-3 and primarily consisting of our U.S. subsidiaries. As a result, we are required to present consolidating financial information regarding the guarantors and non-guarantors of the securities in accordance with SEC Regulation S-X Rule 3-10. As specified in Rule 3-10, the unaudited condensed consolidating balance sheets, results of operations, and statements of cash flows presented on the following pages meet the requirements for financial statements of the issuer and each guarantor of the debt securities because the guarantors are all direct or indirect wholly-owned subsidiaries of Newpark Resources, Inc., and all of the guarantees are full and unconditional on a joint and several basis. The unaudited condensed consolidating balance sheets as of March 31, 2011 and December 31, 2010, and unaudited condensed consolidating statements of operations and statements of cash flows for the quarters ended March 31, 2011 and 2010 are as follows:

 

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Condensed Consolidating Balance Sheets
                                         
    March 31, 2011  
(in thousands)           Guarantor     Non-guarantor     Consolidating          
(unaudited)   Parent     subsidiaries     subsidiaries     entries     Consolidated  
ASSETS
                                       
Cash and cash equivalents
  $ 80,886     $ (9,083 )   $ 23,563     $     $ 95,366  
Receivables, net
    586       127,355       72,259             200,200  
Inventories
          83,503       39,408             122,911  
Deferred tax asset
    10,383       10,350       308             21,041  
Prepaid expenses and other current assets
    752       2,477       6,868             10,097  
 
                             
Total current assets
    92,607       214,602       142,406             449,615  
 
                                       
Property, plant and equipment, net
    9,011       178,606       25,175             212,792  
Goodwill
          38,237       24,771             63,008  
Other intangible assets, net
          10,135       2,529             12,664  
Other assets
    7,252       590       1,601       (1,071 )     8,372  
Investment in subsidiaries
    188,554       29,283             (217,837 )      
 
                             
Total assets
  $ 297,424     $ 471,453     $ 196,482     $ (218,908 )   $ 746,451  
 
                             
 
                                       
LIABILITIES AND STOCKHOLDERS’ EQUITY
                                       
Foreign lines of credit and other short-term debt
  $     $     $ 359     $     $ 359  
Accounts payable
    1,998       36,840       24,023             62,861  
Accrued liabilities
    12,285       9,544       12,180             34,009  
 
                             
Total current liabilities
    14,283       46,384       36,562             97,229  
 
                                       
Long-term debt, less current portion
    172,500             496             172,996  
Deferred tax liability
          31,785       1,511       (1,071 )     32,225  
Other noncurrent liabilities
    2,307       10       2,344             4,661  
Net intercompany (receivable) payable
    (331,006 )     255,823       75,183              
 
                             
Total liabilities
    (141,916 )     334,002       116,096       (1,071 )     307,111  
 
                                       
Common stock
    932       24,557       29,110       (53,667 )     932  
Paid-in capital
    469,547       56,417       3       (56,420 )     469,547  
Accumulated other comprehensive income
    13,679             19,470       (19,470 )     13,679  
Retained (deficit) earnings
    (29,180 )     56,477       31,803       (88,280 )     (29,180 )
Treasury stock, at cost
    (15,638 )                       (15,638 )
 
                             
Total stockholders’ equity
    439,340       137,451       80,386       (217,837 )     439,340  
 
                             
Total liabilities and stockholders’ equity
  $ 297,424     $ 471,453     $ 196,482     $ (218,908 )   $ 746,451  
 
                             

 

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    December 31, 2010  
(in thousands)           Guarantor     Non-guarantor     Consolidating          
(unaudited)   Parent     subsidiaries     subsidiaries     entries     Consolidated  
ASSETS
                                       
Cash and cash equivalents
  $ 68,128     $ (4,290 )   $ 19,172     $     $ 83,010  
Receivables, net
    789       122,827       73,183             196,799  
Inventories
          83,434       39,594             123,028  
Deferred tax asset
    16,572       10,351       731             27,654  
Prepaid expenses and other current assets
    2,121       2,279       5,636             10,036  
 
                             
Total current assets
    87,610       214,601       138,316             440,527  
 
                                       
Property, plant and equipment, net
    6,991       180,743       24,921             212,655  
Goodwill
          38,237       24,070             62,307  
Other intangible assets, net
          10,562       2,510             13,072  
Other assets
    8,316       594       1,621       (1,750 )     8,781  
Investment in subsidiaries
    180,700       29,283             (209,983 )      
 
                             
Total assets
  $ 283,617     $ 474,020     $ 191,438     $ (211,733 )   $ 737,342  
 
                             
 
                                       
LIABILITIES AND STOCKHOLDERS’ EQUITY
                                       
Foreign lines of credit and other short-term debt
  $     $     $ 1,606     $     $ 1,606  
Accounts payable
    2,083       38,516       25,717             66,316  
Accrued liabilities
    16,470       11,094       15,670             43,234  
 
                             
Total current liabilities
    18,553       49,610       42,993             111,156  
 
                                       
Long-term debt, less current portion
    172,500             487             172,987  
Deferred tax liability
          31,785       1,514       (1,750 )     31,549  
Other noncurrent liabilities
    2,043       10       2,250             4,303  
Net intercompany (receivable) payable
    (326,826 )     254,541       72,285              
 
                             
Total liabilities
    (133,730 )     335,946       119,529       (1,750 )     319,995  
 
                                       
Common stock
    931       24,557       29,110       (53,667 )     931  
Paid-in capital
    468,503       56,417       3       (56,420 )     468,503  
Accumulated other comprehensive income
    8,581             14,826       (14,826 )     8,581  
Retained (deficit) earnings
    (45,034 )     57,100       27,970       (85,070 )     (45,034 )
Treasury stock, at cost
    (15,634 )                       (15,634 )
 
                             
Total stockholders’ equity
    417,347       138,074       71,909       (209,983 )     417,347  
 
                             
Total liabilities and stockholders’ equity
  $ 283,617     $ 474,020     $ 191,438     $ (211,733 )   $ 737,342  
 
                             

 

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Condensed Consolidated Statements of Operations
                                         
    First Quarter 2011  
(in thousands)           Guarantor     Non-guarantor     Consolidating          
(unaudited)   Parent     subsidiaries     subsidiaries     entries     Consolidated  
 
                                       
Revenues
  $     $ 144,801     $ 57,850     $     $ 202,651  
 
                                       
Cost of revenues
          112,349       46,653             159,002  
Selling, general and administrative expenses
    4,655       6,865       4,298             15,818  
Other operating income, net
          (80 )     (37 )           (117 )
 
                             
 
                                       
Operating (loss) income
    (4,655 )     25,667       6,936             27,948  
 
                                       
Foreign currency exchange (gain) loss
          (11 )     334             323  
Interest expense (income), net
    2,304       (5 )     (42 )           2,257  
Intercompany interest (income) expense
          (730 )     730              
 
                             
 
                                       
(Loss) income from operations before income taxes
    (6,959 )     26,413       5,914             25,368  
Provision for income taxes
    (2,952 )     11,204       1,262             9,514  
Equity in income of subsidiaries
    19,861       3,625             (23,486 )      
 
                             
Net income
  $ 15,854     $ 18,834     $ 4,652     $ (23,486 )   $ 15,854  
 
                             
 
                                       
                                         
    First Quarter 2010  
(in thousands)           Guarantor     Non-guarantor     Consolidating          
(unaudited)   Parent     subsidiaries     subsidiaries     entries     Consolidated  
 
                                       
Revenues
  $     $ 113,703     $ 47,095           $ 160,798  
 
                                       
Cost of revenues
          94,462       39,056             133,518  
Selling, general and administrative expenses
    4,107       6,183       4,123             14,413  
Other (income) expense, net
    (11 )     (961 )     130             (842 )
 
                             
 
                                       
Operating (loss) income
    (4,096 )     14,019       3,786             13,709  
 
                                       
Foreign currency exchange loss (gain)
          19       (630 )           (611 )
Interest expense (income), net
    2,079       (9 )     78             2,148  
Intercompany interest (income) expense
          (709 )     709              
 
                             
 
                                       
(Loss) income from operations before income
    (6,175 )     14,718       3,629             12,172  
Provision for income taxes
    (2,735 )     6,482       643             4,390  
Equity in income of subsidiaries
    11,222       1,938             (13,160 )      
 
                             
Net income
  $ 7,782     $ 10,174     $ 2,986     $ (13,160 )   $ 7,782  
 
                             

 

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Condensed Consolidated Statements of Cash Flows
                                 
    First Quarter 2011  
(in thousands)           Guarantor     Non-guarantor        
(unaudited)   Parent     subsidiaries     subsidiaries     Consolidated  
 
                               
Net cash (used in) provided by operating activitites
  $ (4,752 )   $ 19,816     $ 2,833     $ 17,897  
 
                       
 
                               
Net cash used in investing activities
    (2,142 )     (2,575 )     (1,405 )     (6,122 )
 
                       
 
                               
Borrowings on lines of credit
                1,193       1,193  
Payments on lines of credit
                (2,332 )     (2,332 )
Other borrowings
                9       9  
Inter-company borrowings (repayments)
    19,660       (22,034 )     2,374        
Other financing activities
    (8 )                 (8 )
 
                       
Net cash (used in) provided by financing activities
    19,652       (22,034 )     1,244       (1,138 )
 
                       
 
                               
Effect of exchange rate changes on cash
                1,719       1,719  
 
                       
Net increase (decrease) in cash
    12,758       (4,793 )     4,391       12,356  
Cash at the beginning of the period
    68,128       (4,290 )     19,172       83,010  
 
                       
Cash at the end of the period
  $ 80,886     $ (9,083 )   $ 23,563     $ 95,366  
 
                       
                                 
    First Quarter 2010  
(in thousands)           Guarantor     Non-guarantor        
(unaudited)   Parent     subsidiaries     subsidiaries     Consolidated  
 
                               
Net cash (used in) provided by operating activitites
  $ (3,054 )   $ 7,684     $ (6,999 )   $ (2,369 )
 
                       
 
                               
Net cash used in investing activities
    (20 )     (722 )     (1,239 )     (1,981 )
 
                       
 
                               
Borrowings on lines of credit
    36,000             9,409       45,409  
Payments on lines of credit
    (31,000 )           (8,564 )     (39,564 )
Inter-company (repayments) borrowings
    (1,810 )     (6,880 )     8,690        
Other financing activities
    (38 )     (82 )     (104 )     (224 )
 
                       
New cash provided by (used in) financing activities
    3,152       (6,962 )     9,431       5,621  
 
                       
 
                               
Effect of exchange rate changes on cash
                (539 )     (539 )
 
                       
Net increase in cash
    78             654       732  
Cash at the beginning of the period
    162             11,372       11,534  
 
                       
Cash at the end of the period
  $ 240     $     $ 12,026     $ 12,266  
 
                       

 

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ITEM 2.  
Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion of our financial condition, results of operations, liquidity and capital resources should be read together with our unaudited condensed consolidated financial statements and notes to unaudited condensed consolidated financial statements contained in this report as well as our Annual Report on Form 10-K for the year ended December 31, 2010. Our first quarter represents the three month period ended March 31.
Overview
We are a diversified oil and gas industry supplier with three reportable segments: Fluids Systems and Engineering, Mats and Integrated Services, and Environmental Services. We provide these products and services primarily to the oil and gas exploration (“E&P”) industry domestically in the U.S. Gulf Coast, West Texas, Oklahoma, East Texas, North Louisiana, Rocky Mountains and Northeast regions, as well as internationally in certain areas of Europe, North Africa, Brazil, Canada and Mexico. Further, we established a presence outside the E&P sector, particularly in Mats and Integrated Services, where we are marketing to utilities, municipalities and government sectors. Our North American operations generated 77% of total reported revenues for the first quarter 2011, and our consolidated revenues by segment are as follows:
                 
    First Quarter        
(In thousands)   2011 Revenues     %  
 
               
Fluids systems and engineering
  $ 170,467       84 %
Mats and integrated services
    23,063       11 %
Environmental services
    9,121       5 %
 
           
Total revenues
  $ 202,651       100 %
 
           
Our operating results depend, to a large extent, on oil and gas drilling activity levels in the markets we serve, as well as the depth of drilling, which governs the revenue potential of each well. The drilling activity in turn, depends on oil and gas commodity pricing, inventory levels and demand, and more recently, regulatory actions affecting operations in the Gulf of Mexico.
Rig count data is the most widely accepted indicator of drilling activity. Average North American rig count data for the first quarter of 2011, as compared to the first quarter of 2010 is as follows:
                                 
    First Quarter     2011 vs 2010  
    2011     2010     Count     %  
 
                               
U.S. Rig Count
    1,716       1,333       383       29 %
Canadian Rig Count
    587       449       138       31 %
 
                       
North America
    2,303       1,782       521       29 %
 
                       
 
     
Source: Baker Hughes Incorporated
In April 2010, the Deepwater Horizon drilling rig sank in the Gulf of Mexico after an explosion and fire, resulting in the discharge of oil from the well. Following the Deepwater Horizon oil spill, the Department of Interior of the U.S. government took several actions aimed at restricting and temporarily prohibiting certain drilling activity in the Gulf of Mexico. While the Department of Interior has since announced the formal end of the drilling moratorium placed in effect in May 2010, increased permitting requirements are applicable to both shallow water and deepwater drilling activities. As a result, the near-term outlook for drilling activity in the Gulf of Mexico remains uncertain.

 

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In April 2011, we completed the acquisition of the drilling fluids and engineering services business from Rheochem PLC, a publicly-traded Australian-based oil and gas company. The acquired business provides drilling fluids and related engineering services to the oil and gas exploration and geothermal industries with operations in Australia, New Zealand and India. Total cash paid at closing was AUD$24.0 million ($25.4 million), and total consideration is subject to typical adjustments for working capital conveyed at closing. Additional consideration may be payable based on financial results of the acquired business over a one-year earnout period, up to a maximum total consideration of AUD$45 million. In the most recently completed fiscal year ended June 30, 2010, Rheochem PLC’s drilling fluid services segment reported revenues of AUD$20.3 million.
First Quarter of 2011 Compared to First Quarter of 2010
Results of Operations
Summarized results of operations for the first quarter of 2011 compared to the first quarter of 2010 are as follows:
                                 
    First Quarter     2011 vs 2010  
(In thousands)   2011     2010     $     %  
 
                               
Revenues
  $ 202,651     $ 160,798     $ 41,853       26 %
Cost of revenues
    159,002       133,518       25,484       19 %
Selling, general and administrative expenses
    15,818       14,413       1,405       10 %
Other operating income, net
    (117 )     (842 )     725       (86 )%
 
                       
 
Operating income
    27,948       13,709       14,239       104 %
 
Foreign currency exchange loss (gain)
    323       (611 )     934     NM  
Interest expense, net
    2,257       2,148       109       5 %
 
                       
 
Income from operations before income taxes
    25,368       12,172       13,196       108 %
Provision for income taxes
    9,514       4,390       5,124       117 %
 
                       
 
                               
Net income
  $ 15,854     $ 7,782     $ 8,072       104 %
 
                       
NM — not meaningful
Revenues
Revenues increased 26% to $202.7 million in the first quarter of 2011, compared to $160.8 million in the first quarter of 2010. This $41.9 million improvement includes a $32.5 million (26%) increase in revenues in North America, largely driven by the 29% improvement in the U.S. rig count. Revenues from our international operations increased by $9.3 million (25%) reflecting continued growth in Brazil along with improvements in our Eastern Europe operations. Additional information regarding the change in revenues is provided within the operating segment results below.
Cost of revenues
Cost of revenues increased 19% to $159.0 million in the first quarter of 2011, as compared to $133.5 million in the first quarter of 2010. The increase is primarily driven by the 26% increase in revenues. Additional information regarding the change in cost of revenues is provided within the operating segment results below.
Selling, general and administrative expenses
Selling, general and administrative expenses increased $1.4 million to $15.8 million in the first quarter of 2011 from $14.4 million for the first quarter of 2010. The increase is primarily attributable to higher costs associated with the increase in revenues, along with $0.4 million of legal and related costs associated with the April 2011 acquisition of Rheochem.

 

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Foreign currency exchange
Foreign currency exchange primarily reflects the impact of currency translations on assets and liabilities held in our foreign operations that are denominated in currencies other than functional currencies. Our foreign operations have a portion of their cash and accounts receivable that are denominated in U.S. dollars. During the first quarter of 2011, foreign currency exchange was unfavorably impacted by the weakening U.S. dollar as compared to other currencies in our foreign operations, while the first quarter of 2010 benefitted from the strengthening U.S. dollar as compared to such currencies.
Interest expense, net
Interest expense totaled $2.3 million for the first quarter of 2011, reflecting a 5% increase from $2.1 million for the first quarter of 2010. The increase in interest expense is due to increased debt levels following the October 2010 issuance of $172.5 million in convertible senior notes, bearing interest at 4.0% (“Senior Notes”). Following the Senior Notes offering, total debt at March 31, 2011 was $173.4 million, reflecting a 35% increase from the $128.3 million of total debt outstanding at March 31, 2010. The impact of the increased debt balance is largely offset by lower interest rates, as the 4.0% rate on the Senior Notes is down from the 5.4% weighted average borrowing rate at March 31, 2010.
Provision for income taxes
The provision for income taxes for the 1st quarter of 2011 was $9.5 million of expense, reflecting an effective tax rate of 37.5%, compared to $4.4 million in the first quarter of 2010 with an effective tax rate of 36.1%.
Operating Segment Results
Summarized financial information for our reportable segments is shown in the following table (net of inter-segment transfers):
                                 
    First Quarter     2011 vs 2010  
(In thousands)   2011     2010     $     %  
 
                               
Revenues
                               
Fluids systems and engineering
  $ 170,467     $ 136,310     $ 34,157       25 %
Mats and integrated services
    23,063       13,620       9,443       69 %
Environmental services
    9,121       10,868       (1,747 )     (16 )%
 
                       
Total revenues
  $ 202,651     $ 160,798     $ 41,853       26 %
 
                       
 
                               
Operating income (loss)
                               
Fluids systems and engineering
  $ 19,199     $ 12,414     $ 6,785          
Mats and integrated services
    11,784       2,714       9,070          
Environmental services
    1,620       2,679       (1,059 )        
Corporate office
    (4,655 )     (4,098 )     (557 )        
 
                         
Operating income
  $ 27,948     $ 13,709     $ 14,239          
 
                         
 
                               
Segment operating margin
                               
Fluids systems and engineering
    11.3 %     9.1 %                
Mats and integrated services
    51.1 %     19.9 %                
Environmental services
    17.8 %     24.7 %                

 

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Fluids Systems and Engineering
Revenues
Total revenues for this segment consisted of the following:
                                 
    First Quarter     2011 vs 2010  
(In thousands)   2011     2010     $     %  
 
                               
United States
  $ 112,721     $ 90,173     $ 22,548       25 %
Canada
    10,804       8,722       2,082       24 %
 
                       
Total North America
    123,525       98,895       24,630       25 %
Mediterranean
    27,068       22,277       4,791       22 %
Brazil
    19,874       15,138       4,736       31 %
 
                       
Total
  $ 170,467     $ 136,310     $ 34,157       25 %
 
                       
North America revenues increased 25% to $123.5 million for the first quarter of 2011, as compared to $98.9 million for the first quarter of 2010, largely attributable to the 29% increase in the U.S. rig count. Revenues from all U.S. operating regions improved from the first quarter of 2010, with the exception of East Texas and the Louisiana Gulf Coast, both of which experienced lower drilling activity in the first quarter of 2011.
Internationally, revenues were up 25% to $46.9 million for the first quarter of 2011, as compared to $37.4 million for the first quarter of 2010. This increase includes a $6.3 million improvement from our Eastern Europe operations, as the first quarter of 2010 was negatively impacted by unusually cold weather. The remainder of the Mediterranean region was down, $1.5 million, due in part to the impact of political and social unrest in Tunisia and Libya. Brazil revenues increased $4.7 million due to the continued ramp-up of activity in this market.
Operating Income
Operating income for this segment was $19.2 million reflecting an operating margin of 11.3%, in the first quarter of 2011, compared to $12.4 million, and a 9.1% operating margin in the first quarter of 2010. Of this $6.8 million improvement, our North American operating income increased $3.6 million on a $24.6 million increase in revenues, reflecting a 15% incremental margin. The lower than typical incremental margin is the result of a greater mix of low margin products in the first quarter of 2011, as compared to the first quarter of 2010. Our product mix typically fluctuates from period to period based on the specific customer activities and needs in the period. Our international operations generated a $3.2 million increase in operating income on a $9.5 million increase in revenues, reflecting a 33% incremental margin.
Mats and Integrated Services
Revenues
Total revenues for this segment consisted of the following:
                                 
    First Quarter     2011 vs 2010  
(In thousands)   2011     2010     $     %  
 
                               
Mat rental and integrated services
  $ 15,672     $ 7,730     $ 7,942       103 %
Mat sales
    7,391       5,890       1,501       25 %
 
                       
Total
  $ 23,063     $ 13,620     $ 9,443       69 %
 
                       
Mat rental and integrated services revenues increased $7.9 million, including a $9.4 million increase in the Northeast U.S. region, partially offset by declines in rental and service revenues in the Gulf Coast locations, as we have re-deployed our rental mat fleet assets to higher demand areas, including the Northeast U.S. region. Mat sales also increased $1.5 million, due to increasing demand for these products from the E&P industry. Our mat manufacturing facility is currently operating at full production capacity, which may limit our growth in the near-term. We are planning to make capital investments in the facility during 2011 to increase capacity, in order to meet customer demand.

 

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Operating Income
Segment operating income increased by $9.1 million on the $9.4 million increase in revenues, reflecting an incremental margin of 96%. The high incremental margin is primarily attributable to the higher mix of mat rental activity. Incremental margins on mat rentals are stronger than mat sales or service activities, due to the fixed nature of operating expenses, including depreciation expense on our rental mat fleet.
Environmental Services
Revenues
Total revenues for this segment consisted of the following:
                                 
    First Quarter     2011 vs 2010  
(In thousands)   2011     2010     $     %  
 
                               
E&P waste
  $ 6,354     $ 8,573     $ (2,219 )     (26 )%
NORM and industrial waste
    2,767       2,295       472       21 %
 
                       
Total
  $ 9,121     $ 10,868     $ (1,747 )     (16 )%
 
                       
Environmental services revenues declined 16% to $9.1 million in the first quarter of 2011, as compared to the first quarter of 2010. Substantially all of the decline is attributable to lower E&P waste from offshore Gulf of Mexico, reflecting the impact of U.S. government restrictions on drilling activity in the Gulf of Mexico.
Operating Income
Operating income for this segment decreased by $1.1 million in the first quarter of 2011, compared to the first quarter of 2010, on a $1.7 million decline in revenues, reflecting an incremental margin of 61%. The high incremental impact to operating income from the decline in revenues is due to the fixed nature of the majority of our operating expenses in this segment, including the operating costs and depreciation expense associated with our environmental disposal facilities.
Liquidity and Capital Resources
Net cash provided by operating activities during the first quarter of 2011 totaled $17.9 million. Net income adjusted for non-cash items provided $30.8 million of cash during the period, while changes in operating assets and liabilities used $12.9 million of cash, including a $9.6 million reduction of accrued liabilities following the March 2011 payment of 2010 performance incentives and a $3.9 million reduction in accounts payable.
Net cash used in investing activities during the first quarter of 2011 was $6.1 million, consisting primarily of capital expenditures. Net cash used in financing activities during the first quarter of 2011 was $1.1 million, primarily reflecting net payments on our foreign credit facilities during the period.
We anticipate that our working capital requirements for our operations will fluctuate with our sales activity in the near term. Further, we expect total 2011 capital expenditures to range between $30 million to $40 million in addition to the investment required for the Rheochem acquisition. We expect our $95.4 million of cash on-hand at March 31, 2011, along with cash generated by operations and availability under our existing credit agreement to be adequate to fund our anticipated capital needs.

 

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Our capitalization is as follows:
                 
    March 31,     December 31,  
(In thousands)   2011     2010  
 
               
Senior Notes
  $ 172,500     $ 172,500  
Foreign bank lines of credit
    242       1,458  
Other
    613       635  
 
           
Total
    173,355       174,593  
Stockholder’s equity
    439,340       417,347  
 
           
 
               
Total capitalization
  $ 612,695     $ 591,940  
 
           
 
               
Total debt to capitalization
    28.3 %     29.5 %
 
           
In addition to the borrowings noted above, we have a $150.0 revolving credit facility (“Facility”) which expires in December 2012, under which there are currently no borrowings outstanding. Under the terms of the Facility, we can elect to borrow at an interest rate either based on LIBOR plus a margin based on our consolidated leverage ratio, ranging from 400 to 750 basis points, or at an interest rate based on the greatest of: (a) prime rate, (b) the federal funds rate in effect plus 50 basis points, or (c) the Eurodollar rate for a Eurodollar Loan with a one-month interest period plus 100 basis points, in each case plus a margin ranging from 300 to 650 basis points. The applicable margin on LIBOR borrowings at March 31, 2011 was 400 basis points. In addition, we are required to pay a commitment fee on the unused portion of the Facility of 50 basis points. As of March 31, 2011, we had $3.3 million of letters of credit issued under this Facility, leaving $146.7 million available for borrowing. The Facility contains certain financial covenants including a minimum fixed charge coverage ratio, a maximum consolidated leverage ratio, and a maximum funded debt-to-capitalization ratio. We were in compliance with these covenants as of March 31, 2011, and expect to remain in compliance through March 31, 2012.
The Facility is a senior secured obligation, secured by first liens on all of our U.S. tangible and intangible assets, including our accounts receivable and inventory. Additionally, a portion of the capital stock of our non-U.S. subsidiaries has also been pledged as collateral.
Critical Accounting Estimates
Our consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America, which requires us to make assumptions, estimates and judgments that affect the amounts reported. We periodically evaluate our estimates and judgments related to uncollectible accounts and notes receivable, customer returns, reserves for obsolete and slow moving inventory, impairments of long-lived assets, including goodwill and other intangibles and our valuation allowance for deferred tax assets. Our estimates are based on historical experience and on our future expectations that we believe to be reasonable. The combination of these factors forms the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from our current estimates and those differences may be material.
For additional discussion of our critical accounting estimates and policies, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual Report on Form 10-K for the year ended December 31, 2010. Our critical accounting policies have not changed materially since December 31, 2010.

 

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ITEM 3.  
Quantitative and Qualitative Disclosures about Market Risk
We are exposed to market risk from changes in interest rates and changes in foreign currency rates. A discussion of our primary market risk exposure in financial instruments is presented below.
Interest Rate Risk
At March 31, 2011, we had total debt outstanding of $173.4 million, including $172.5 million of borrowings under our Senior Notes, bearing interest at a fixed rate of 4.0% and $0.9 million of other borrowings, which bear interest at variable rates. Due to the limited borrowing currently outstanding under variable rate agreements, interest rate risk is minimal.
Foreign Currency
In addition to the April 2011 acquisition in Australia, our principal foreign operations are conducted in certain areas of Europe and North Africa, Brazil, Canada, U.K. and Mexico. We have foreign currency exchange risks associated with these operations, which are conducted principally in the foreign currency of the jurisdictions in which we operate which include European euros, Canadian dollars and Brazilian reais. Historically, we have not used off-balance sheet financial hedging instruments to manage foreign currency risks when we enter into a transaction denominated in a currency other than our local currencies because the dollar amount of these transactions has not warranted our using hedging instruments.
ITEM 4.  
Controls and Procedures

Evaluation of disclosure controls and procedures
Based on their evaluation of our disclosure controls and procedures as of the end of the period covered by this report, our Chief Executive Officer and Chief Financial Officer have concluded that the disclosure controls and procedures were effective as of March 31, 2011, the end of the period covered by this quarterly report.
Changes in internal control over financial reporting
There has been no change in internal control over financial reporting during the quarter ended March 31, 2011 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
PART II OTHER INFORMATION
ITEM 1.  
Legal Proceedings
The information set forth in the legal proceedings section of “Note 5, Commitments and Contingencies,” to our condensed consolidated financial statements included in this Quarterly Report on Form 10-Q is incorporated by reference into this Item 1.
ITEM 1A.  
Risk Factors
There have been no material changes during the period ended March 31, 2011 in our “Risk Factors” as discussed in Item 1A to our Annual Report on Form 10-K for the year ended December 31, 2010.

 

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ITEM 2.  
Unregistered Sales of Equity Securities and Use of Proceeds
(a)  
Not applicable
 
(b)  
Not applicable
 
(c)  
The following table details our repurchases of shares of our common stock, for the three months ended March 31, 2011:
                                 
                    Total Number of     Maximum Approximate Dollar  
                    Shares Purchased as Part     Value of Shares that May Yet  
    Total Number of     Average Price     of Publicly Announced     be Purchased Under  
Period   Shares Purchased     per Share     Plans or Programs     the Plans or Programs  
January 1 - 31, 2011
                    $9.9 million
February 1 - 28, 2011
                    $9.9 million
March 1 - 31, 2011
    12,422 (1)   $ 7.65           $9.9 million
 
                         
Total
    12,422     $ 7.65                
     
(1)  
The shares purchased represent shares surrendered in lieu of taxes under vesting of restricted stock awards.
ITEM 3.  
Defaults Upon Senior Securities
Not applicable.
ITEM 4.  
[Removed and Reserved]
ITEM 5.  
Other Information
Under the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”), each operator of a coal or other mine is required to include certain mine safety results in its periodic reports filed with the Securities and Exchange Commission. We do not believe that certain operations of our subsidiary, Excalibar Minerals LLC (“Excalibar”), are subject to the jurisdiction of the Mine Safety and Health Administration (“MSHA”) and we previously filed an action with MSHA requesting a transfer of regulatory jurisdiction for the operations of Excalibar to the Occupational Safety and Health Administration (“OSHA”). Our request to transfer regulatory jurisdiction for these operations from MSHA to OSHA has been denied. As a result, the four specialized barite and calcium carbonate grinding facilities operated by Excalibar and a gravel excavation facility formerly operated by the Mats and Integrated Services business were subject to the regulation by MSHA under the Federal Mine Safety and Health Act of 1977 (the “Mine Act”). As required by the reporting requirements regarding mine safety included in the Dodd-Frank Act, Exhibit 99.1 includes the information for the three months ended March 31, 2011 for each of the specialized facilities operated by our subsidiaries.

 

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ITEM 6.  
Exhibits
         
  10.1    
Share Sale and Purchase Agreement with Rheochem Plc.
       
 
  31.1    
Certification of Paul L. Howes pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
       
 
  31.2    
Certification of James E. Braun pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
       
 
  32.1    
Certification of Paul L. Howes pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
       
 
  32.2    
Certification of James E. Braun pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
       
 
  99.1    
Reporting requirements under the Mine Safety and Health Administration.

 

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NEWPARK RESOURCES, INC.
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.
Date: April 29, 2011
         
  NEWPARK RESOURCES, INC.
 
 
  By:   /s/ Paul L. Howes    
    Paul L. Howes, President and   
    Chief Executive Officer
(Principal Executive Officer) 
 
     
  By:   /s/ James E. Braun    
    James E. Braun, Senior Vice President and   
    Chief Financial Officer
(Principal Financial Officer) 
 
     
  By:   /s/ Gregg S. Piontek    
    Gregg S. Piontek, Vice President, Controller and   
    Chief Accounting Officer
(Principal Accounting Officer) 
 
 

 

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EXHIBIT INDEX
         
  10.1    
Share Sale and Purchase Agreement with Rheochem Plc.
       
 
  31.1    
Certification of Paul L. Howes pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
       
 
  31.2    
Certification of James E. Braun pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
       
 
  32.1    
Certification of Paul L. Howes pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
       
 
  32.2    
Certification of James E. Braun pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
       
 
  99.1    
Reporting requirements under the Mine Safety and Health Administration.

 

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