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SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

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FORM 10-Q

[ X ] QUARTERLY REPORT UNDER SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2003

[   ] TRANSITION REPORT UNDER SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM         TO        

COMMISSION FILE NUMBER 0-18335

 

TETRA Technologies, Inc.

(Exact name of registrant as specified in its charter)

 

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Delaware	74-2148293
(State of incorporation)	(IRS Employer Identification No.)

 

25025 Interstate 45 North, The Woodlands, Texas 77380

(Address of principal executive offices and zip code)

(281) 367-1983

(Registrant's telephone number, including area code)

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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 TWELVE 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 [   ]

INDICATE BY CHECK MARK WHETHER THE REGISTRANT IS AN ACCELERATED FILER (AS DEFINED IN RULE 12b-2 OF THE EXCHANGE ACT). YES [ X ]  NO [   ]

AS OF JUNE 30, 2003, THERE WERE 14,494,033 SHARES OUTSTANDING OF THE COMPANY'S COMMON STOCK, $0.01 PAR VALUE PER SHARE.

 

 

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PART I

FINANCIAL INFORMATION

Item 1. Financial Statements.

TETRA Technologies, Inc. and Subsidiaries

Consolidated Statements of Operations

(In Thousands, Except Per Share Amounts)

(Unaudited)

	Three Months Ended June 30,				Six Months Ended June 30,
	2003		2002		2003		2002
Revenues:
Product sales	$38,212		$28,897		$72,660		$58,020
Services	49,762		33,819		80,564		62,497
Total revenues	87,974		62,716		153,224		120,517
Cost of revenues:
Cost of product sales	27,257		20,731		52,219		41,328
Cost of services	35,990		25,700		62,928		47,393
Total cost of revenues	63,247		46,431		115,147		88,721
Gross profit	24,727		16,285		38,077		31,796
General and administrative expense	14,841		9,878		25,638		19,265
Operating income	9,886		6,407		12,439		12,531
Interest expense, net	69		597		277		1,260
Other income (expense)	(90	)	(265	)	493		120
Income before taxes and cumulative effect of change in accounting principle	9,727		5,545		12,655		11,391
Provision for income taxes	3,463		1,916		4,505		4,079
Income before cumulative effect of change in accounting principle	6,264		3,629		8,150		7,312
Cumulative effect of change in accounting principle, net of taxes	–		–		(1,464	)	–
Net income	$6,264		$3,629		$6,686		$7,312
Net income per share before cumulative effect of change in accounting principle	$0.43		$0.25		$0.56		$0.52
Cumulative effect per share of change in accounting principle	–		–		(0.10	)	–
Net income per share	$0.43		$0.25		$0.46		$0.52
Average shares	14,494		14,251		14,460		14,184
Net income per diluted share before cumulative effect of change in accounting principle	$0.41		$0.24		$0.54		$0.49
Cumulative effect per share of change in accounting principle	–		–		(0.10	)	–
Net income per diluted share	$0.41		$0.24		$0.44		$0.49
Average diluted shares	15,272		15,093		15,075		14,977

 

See Notes to Consolidated Financial Statements

 

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TETRA Technologies, Inc. and Subsidiaries

Consolidated Balance Sheets

(In Thousands)

	June 30, 2003		December 31, 2002
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$621		$3,366
Restricted cash	247		1,753
Trade accounts receivable net of allowance for doubtful accounts of $2,418 in 2003 and $2,385 in 2002	84,316		58,544
Inventories	36,002		37,428
Deferred tax assets	2,642		3,284
Assets held for sale	1,031		1,304
Prepaid expenses and other current assets	9,177		7,064
Total current assets	134,036		112,743
Property, plant and equipment:
Land and building	14,740		13,085
Machinery and equipment	165,091		159,291
Automobiles and trucks	12,453		12,312
Chemical plants	36,841		36,135
O&G producing assets	38,236		30,300
Construction in progress	2,586		5,975
	269,947		257,098
Less accumulated depreciation and depletion	(108,977	)	(95,534	)
Net property, plant and equipment	160,970		161,564
Other assets:
Cost in excess of net assets acquired, net of accumulated amortization of $3,540 in 2003 and $3,540 in 2002	24,382		24,382
Patents, trademarks and other intangible assets, net of accumulated amortization of $5,526 in 2003 and $5,054 in 2002	6,135		6,471
Other assets	3,463		3,657
Total other assets	33,980		34,510
	$328,986		$308,817

 

See Notes to Consolidated Financial Statements

 

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TETRA Technologies, Inc. and Subsidiaries

Consolidated Balance Sheets

(In Thousands)

	June 30 , 2003		December 31, 2002
	(Unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Trade accounts payable	$31,857		$22,893
Accrued expenses	28,268		17,804
Current portions of all long-term debt and capital lease obligations	198		226
Total current liabilities	60,323		40,923
Long-term debt, less current portion	22,000		37,000
Capital lease obligation, less current portion	125		220
Deferred income taxes	26,832		25,721
Decommissioning liabilities	24,074		20,001
Other liabilities	4,317		800
Total long-term and other liabilities	77,348		83,742
Commitments and contingencies
Stockholders' equity:
Common stock, par value $0.01 per share; 40,000,000 shares authorized with 14,494,033 shares issued and outstanding at June 30, 2003 and 14,367,239 shares issued and outstanding at December 31, 2002	149		148
Additional paid-in capital	94,015		92,702
Treasury stock, at cost; 441,239 shares at June 30, 2003 and 437,684 shares at December 31, 2002	(7,354	)	(7,313	)
Accumulated other comprehensive income (loss)	(990	)	(194	)
Retained earnings	105,495		98,809
Total stockholders' equity	191,315		184,152
	$328,986		$308,817

 

See Notes to Consolidated Financial Statements

 

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TETRA Technologies, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(In Thousands)

(Unaudited)

	Six Months Ended June 30,
	2003		2002
Operating activities:
Net income	$6,686		$7,312
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation, depletion, accretion and amortization	15,356		10,030
Provision for deferred income taxes	2,561		(30	)
Provision for doubtful accounts	224		511
Amortization of gain on leaseback	(101	)	(451	)
Gain on sale of property, plant and equipment	(644	)	(113	)
Cumulative effect of accounting change	1,464		–
Changes in operating assets and liabilities, net of assets acquired
Trade accounts receivable	(26,711	)	8,738
Inventories	1,426		(2,170	)
Prepaid expenses and other current assets	(2,164	)	(1,591	)
Trade accounts payable and accrued expenses	14,320		(4,442	)
Decommissioning liabilities	433		(4,506	)
Discontinued operations: working capital changes	–		580
Other	151		332
Net cash provided by operating activities	13,001		14,200
Investing activities:
Purchases of property, plant and equipment	(5,766	)	(12,272	)
Change in restricted cash	1,506		–
Decrease (increase) in other assets	435		(4,629	)
Proceeds from sale of property, plant and equipment	1,929		1,276
Net cash used by investing activities	(1,896	)	(15,625	)
Financing activities:
Proceeds from long-term debt and capital lease obligations	6,850		3,000
Principal payments on long-term debt and capital lease obligations	(21,973	)	(12,270	)
Proceeds from sale of common stock and exercised stock options	1,273		3,073
Net cash used in financing activities	(13,850	)	(6,197	)
Decrease in cash and cash equivalents	(2,745	)	(7,622	)
Cash and cash equivalents at beginning of period	3,366		13,115
Cash and cash equivalents at end of period	$621		$5,493
Supplemental cash flow information:
Capital lease obligations paid	$122		$242
Interest paid	995		1,358
Taxes paid	2,573		1,280
Supplemental disclosure of non-cash investing and financing activities:
O&G properties acquired through assumption of decomm. liabilities	9,427		1,012

 

See Notes to Consolidated Financial Statements

 

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

NOTE A – BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

The consolidated financial statements include the accounts of the Company and its subsidiaries, all of which are wholly owned. All significant intercompany balances and transactions have been eliminated in consolidation.

The accompanying unaudited consolidated financial statements 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 generally accepted accounting principles for complete financial statements. However, the information furnished reflects all normal recurring adjustments, which are, in the opinion of management, necessary to a fair statement of the results for the interim periods. The accompanying financial statements should be read in conjunction with the audited financial statements for the year ended December 31, 2002.

For the purposes of the statements of cash flows, the Company considers all highly liquid cash investments with a maturity of three months or less to be cash equivalents.

Interest paid on debt during the six months ended June 30, 2003 and 2002 was $1.0 million and $1.4 million, respectively, with the decrease between periods primarily due to lower debt balances outstanding. Approximately $0.6 million of current period interest payments relates to interest accrued from the prior year. During the prior year period, interest expense reflects the payment of accrued interest at 6.4% under the interest rate swap agreements that expired at December 31, 2002.

Income tax payments during the six months ended June 30, 2003 and 2002 were $2.6 million and $1.3 million, respectively.

Certain previously reported financial information has been reclassified to conform to the current year period’s presentation. The impact of such reclassifications was not significant to the prior year period’s overall presentation.

In January 2003, the FASB issued Interpretation No. 46, “Consolidation of Variable Interest Entities, an Interpretation of Accounting Research Bulletin No. 51.” Interpretation No. 46 requires a company to consolidate a variable interest entity (VIE) if the company has a variable interest (or combination of variable interests) that is exposed to a majority of the entity’s expected losses if they occur, receive a majority of the entity’s expected residual returns if they occur, or both. In addition, more extensive disclosure requirements apply to the primary and other significant variable interest owners of the VIE. This interpretation applies immediately to VIEs created after January 31, 2003, and to VIEs in which an enterprise obtains an interest after that date. It is also effective for the first fiscal year or interim period beginning after June 15, 2003, to VIEs in which a company holds a variable interest that was acquired before February 1, 2003. The guidance regarding this interpretation is extremely complex, however the Company does not believe that it has an interest in a VIE, or that this interpretation will have any impact on the Company’s financial statements.

NOTE B – COMMITMENTS AND CONTINGENCIES

The Company, its subsidiaries and other related companies are named as defendants in numerous lawsuits and respondents in certain governmental proceedings arising in the ordinary course of business. While the outcome of lawsuits or other proceedings against the Company cannot be predicted with certainty, management does not expect these matters to have a material adverse impact on the Company.

NOTE C – ASSET RETIREMENT OBLIGATIONS

Effective January 1, 2003, the Company changed its method of accounting for asset retirement obligations in accordance with Statement of Financial Accounting Standards (SFAS) No. 143, “Accounting for Asset Retirement Obligations.” Previously, the Company had not recognized amounts related to asset retirement obligations for its non-oil and gas properties at the time they were incurred. The Company’s wholly owned exploitation and production subsidiary, Maritech Resources, Inc. (“Maritech”), had previously recorded decommissioning liabilities associated with its oil and gas properties at their undiscounted fair value and

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reported them as decommissioning liabilities on the balance sheet. Under the new accounting method, the Company must now calculate asset retirement obligations as the discounted fair value of future obligations, with the impact of the discount being accreted into earnings over the life of the obligation. The associated asset retirement costs are capitalized as part of the carrying amount of the long-lived asset. The Company operates facilities worldwide in the manufacture, storage, and distribution of its products and services, including offshore oil and gas production facilities and equipment. These facilities are a combination of owned and leased assets. The Company is required to take certain actions in connection with the retirement of these assets. The Company has reviewed its obligations in this regard in detail and estimated the cost of these actions. These estimates are the fair values that have been recorded for retiring these long-lived assets. These fair value amounts have been capitalized as part of the cost basis of these assets. The costs are depreciated on a straight-line basis over the life of the asset for non-oil and gas assets and on a unit of production basis for oil and gas properties.

The cumulative effect of the change on prior years resulted in a charge to income of $1.5 million (net of income taxes of $0.8 million) ($0.10 per diluted share), which is included in income for the six months ended June 30, 2003. The effect of the change on the six months ended June 30, 2003 was to decrease income before the cumulative effect of the accounting change by $0.26 million (net of taxes) ($0.02 per diluted share) due to the resulting accretion and depreciation expense. The pro forma effects, net of taxes, of the application of SFAS 143 if the Statement had been adopted prior to January 1, 2002 are presented below:

	Three Months Ended June 30,				Six Months Ended June 30,
	2003		2002		2003		2002
	(In Thousands, Except Per Share Amounts)
Net income as reported	$6,264		$3,629		$6,686		$7,312
Additional accretion and depreciation expense	–		(94	)	–		(184	)
Cumulative effect of accounting change	–		–		1,464		–
Pro forma net income	$6,264		$3,535		$8,150		$7,128
Pro forma net income per diluted share	$0.41		$0.23		$0.54		$0.48

 

The pro forma asset retirement obligation liability balances computed as if SFAS 143 had been adopted on January 1, 2002 (rather than January 1, 2003) and the changes in the asset retirement obligations as compared to the current year activity are as follows:

	Six Months Ended June 30,
	2003		2002
	(In Thousands)
Beginning balance for the period, as reported	$24,333		$14,269
Impact from adoption of SFAS 143	2,029		1,562
Amount of liability at beginning of period, pro forma	26,362		15,831
Activity in the period:
Accretion of liability	678		247
Retirement obligations incurred	10,618		1,312
Settlement of retirement obligations	(1,504	)	(4,806	)
Ending balance at June 30	$36,154		$12,584

 

NOTE D – ACQUISITIONS

During the first quarter of 2003, the Company’s wholly owned subsidiary, Maritech, purchased oil and gas producing properties in four separate transactions. Maritech purchased oil and gas producing assets in offshore Gulf of Mexico and onshore Louisiana locations in exchange for the assumption of approximately $9.0 million in decommissioning liabilities. These oil and gas producing assets were recorded at their estimated fair market value, approximately the value of the decommissioning liabilities assumed, less cash received of $2.7 million.

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NOTE E – NET INCOME PER SHARE

The following is a reconciliation of the weighted average number of common shares outstanding with the number of shares used in the computations of net income per common and common equivalent share:

	Three Months Ended June 30,				Six Months Ended June 30,
	2003		2002		2003		2002
Number of weighted average common shares outstanding	14,494,033		14,251,179		14,460,309		14,184,213
Assumed exercise of stock options	778,101		841,873		614,973		792,600
Average diluted shares outstanding	15,272,134		15,093,052		15,075,282		14,976,813

 

In applying the treasury stock method to determine the dilutive effect of the stock options outstanding during the first half of 2003, the average market price of $23.94 was used.

NOTE F – COMPREHENSIVE INCOME

Comprehensive income for the three and six month periods ended June 30, 2003 and 2002 is as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
	2003		2002		2003		2002
	(In Thousands)
Net income	$6,264		$3,629		$6,686		$7,312
Increase in the fair value of interest rate swap agreements, net of taxes	–		433		–		703
Decrease in the fair value of oil and gas swap agreements, net of taxes	(432	)	(21	)	(826	)	(178	)
Foreign currency translation adjustment	247		401		30		329
Comprehensive income	$6,079		$4,442		$5,890		$8,166

 

NOTE G – INDUSTRY SEGMENTS

The Company manages its operations through three divisions: Fluids, Well Abandonment & Decommissioning and Testing & Services.

The Company’s Fluids Division manufactures and markets clear brine fluids to the oil and gas industry for use in well drilling, completion and workover operations in both domestic and international markets. The Division also markets certain fluids and dry calcium chloride manufactured at its production facilities to a variety of markets outside the energy industry.

The Well Abandonment & Decommissioning Division provides a broad array of services required for the abandonment of depleted oil and gas wells and the decommissioning of platforms, pipelines and other associated equipment. The Division services the onshore Gulf Coast region and the inland waters and offshore markets of the Gulf of Mexico. The Division is also an oil and gas producer from wells acquired in its well abandonment and decommissioning business and provides electric wireline, workover and drilling services.

The Company’s Testing & Services Division provides production testing services to the Texas, Louisiana, Alabama, Mississippi, offshore Gulf of Mexico and certain Latin American markets. It also provides the technology and services required for separation and recycling of oily residuals generated from petroleum refining and offshore exploration and production.

The Company generally evaluates performance and allocates resources based on profit or loss from operations before income taxes and nonrecurring charges, return on investment and other criteria. The accounting policies of the reportable segments are the same as those described in the summary of significant

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accounting policies. Transfers between segments, as well as geographic areas, are priced at the estimated fair value of the products or services as negotiated between the operating units. “Other” includes corporate expenses, nonrecurring charges and elimination of intersegment revenues.

Summarized financial information concerning the business segments from continuing operations is as follows:

	Fluids		WA&D		Testing & Services		Other		Consolidated
	(In Thousands)
Three Months Ended June 30, 2003
Revenues from external customers
Products	$24,910		$10,145		$3,157		$–		$38,212
Services and rentals	3,968		33,861		11,933		–		49,762
Intersegmented revenues	361		12		44		(417	)	–
Total revenues	29,239		44,018		15,134		(417	)	87,974
Income before taxes	3,960		9,686		1,464		(5,383	)	9,727
Total assets	$119,529		$132,035		$66,683		$10,739		$328,986
Three Months Ended June 30, 2002
Revenues from external customers
Products	$22,134		$4,113		$2,650		$–		$28,897
Services and rentals	3,117		17,969		12,733		–		33,819
Intersegmented revenues	321		269		12		(602	)	–
Total revenues	25,572		22,351		15,395		(602	)	62,716
Income before taxes	3,936		1,645		3,337		(3,373	)	5,545
Total assets	$123,285		$103,942		$62,382		$13,352		$302,961
Six Months Ended June 30, 2003
Revenues from external customers
Products	$47,843		$19,452		$5,365		$–		$72,660
Services and rentals	7,085		49,882		23,597		–		80,564
Intersegmented revenues	621		34		111		(766	)	–
Total revenues	55,549		69,368		29,073		(766	)	153,224
Income before taxes and cumulative effect of change in accounting principle	7,243		11,702		2,441		(8,731	)	12,655
Total assets	$119,529		$132,035		$66,683		$10,739		$328,986
Six Months Ended June 30, 2002
Revenues from external customers
Products	$46,236		$6,902		$4,882		$–		$58,020
Services and rentals	6,121		31,614		24,762		–		62,497
Intersegmented revenues	611		323		23		(957	)	–
Total revenues	52,968		38,839		29,667		(957	)	120,517
Income before taxes	8,367		3,622		6,458		(7,056	)	11,391
Total assets	$123,285		$103,942		$62,382		$13,352		$302,961

 

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NOTE H – DERIVATIVES

The Company has market risk exposure in the pricing applicable to its oil and gas production. Realized pricing is primarily driven by the prevailing worldwide price for crude oil and spot prices in the U.S. natural gas market. Historically, prices received for oil and gas production have been volatile and unpredictable, and price volatility is expected to continue. The Company’s risk management activities involve the use of derivative financial instruments, such as swap agreements, to hedge the impact of market price risk exposures for a portion of its oil and gas production. The Company is exposed to the volatility of oil and gas prices for the portion of its oil and gas production that is not hedged.

Under SFAS 137 and 138, all derivative instruments are required to be recognized on the balance sheet at their fair value, and criteria must be established to determine the effectiveness of the hedging relationship. Hedging activities may include hedges of fair value exposures and hedges of cash flow exposures. Hedges of cash flow exposure are undertaken to hedge a forecasted transaction or the variability of cash flows to be received or paid related to a recognized asset or liability. The Company engages primarily in cash flow hedges.

As required by SFAS 133, the Company formally documents all relationships between hedging instruments and hedged items, as well as its risk management objectives, strategies for undertaking various hedge transactions and its methods for assessing and testing correlation and hedge ineffectiveness. All hedging instruments are linked to the hedged asset, liability, firm commitment or forecasted transaction. The Company also assesses, both at the inception of the hedge and on an ongoing basis, whether the derivatives that are used in these hedging transactions are highly effective in offsetting changes in cash flows of the hedged items.

The Company believes that its swap agreements are “highly effective cash flow hedges,” as defined in SFAS 133, in managing the volatility of future cash flows associated with its oil and gas production. The effective portion of the derivative’s gain or loss (i.e., that portion of the derivative’s gain or loss that offsets the corresponding change in the cash flows of the hedged transaction) is initially reported as a component of accumulated other comprehensive income (loss) and will be subsequently reclassified into earnings when the hedged exposure affects earnings. The “ineffective” portion of the derivative’s gain or loss is recognized in earnings immediately.

As shown in the table below, the Company has currently entered into three cash flow hedging swap contracts to fix cash flows relating to a portion of the Company’s oil and gas production.

Quantity		Period		Expiration		Fixed-Price Rate
300 Barrels of oil per day		365 days		November 20, 2003		$26.17
500 Barrels of oil per day		365 days		February 20, 2004		$27.96
6,000 MMBTU of gas per day		365 days		March 31, 2004		$4.82

 

At June 30, 2003, the aggregate fair market value of these cash flow hedge derivatives was a liability of approximately $1.5 million, which the Company reflects as a current liability. These hedges are highly effective and the impact of cumulative changes in the fair value of the hedge derivative of approximately $1.0 million, net of taxes, is reflected in other comprehensive income (loss) within stockholders’ equity, which the Company expects to reclassify to earnings to be matched with the corresponding future hedged production revenues over the remaining term of the hedge derivatives. To date, there has been no material ineffectiveness associated with the cash flow hedges during the period the swaps have been outstanding.

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NOTE I – STOCK-BASED COMPENSATION

The Company accounts for stock-based compensation using the intrinsic value method. The table below shows the pro forma effect to reported net income and earnings per share, as required under SFAS 123, amended by SFAS 148, as if the Company had elected to recognize the compensation cost based on the fair value of the options granted at the grant date and amortized the expense over the options’ vesting period.

	Three Months Ended June 30,				Six Months Ended June 30,
	2003		2002		2003		2002
	(In Thousands, Except Per Share Amounts)
Net income, as reported	$6,264		$3,629		$6,686		$7,312
Stock-based employee compensation expense in reported net income, net of related tax effects	–		–		–		–
Total stock-based employee compensation expense determined under fair value based method for all awards, net of related tax effects	(677	)	(542	)	(1,272	)	(1,065	)
Pro forma net income	$5,587		$3,087		$5,414		$6,247
Earnings per share:
Basic - as reported	$0.43		$0.25		$0.46		$0.52
Basic - pro forma	$0.39		$0.22		$0.37		$0.44
Diluted - as reported	$0.41		$0.24		$0.44		$0.49
Diluted - pro forma	$0.37		$0.20		$0.36		$0.42
Average shares	14,494		14,251		14,460		14,184
Average diluted shares	15,272		15,093		15,075		14,977

 

NOTE J – SUBSEQUENT EVENTS

In July 2003, the Company’s wholly owned exploitation and production subsidiary, Maritech, relinquished the production rights of one of its Texas offshore properties. Maritech retained the ownership of the offshore production platform and facilities related to this property, which it currently plans to use to support anticipated future exploitation and production efforts. The Company expects that the future cash flows will be sufficient to recover the carrying value of the asset. The Company will continue to evaluate the realizability of the carrying value of the production platform and facilities in future periods, considering any changes in plans or expectations for the asset.

In August 2003, the Company’s Board of Directors declared a 3-for-2 stock split of the Company’s common stock, to be effected in the form of a stock dividend to be distributed during the third quarter of 2003. Stockholders of record as of August 15, 2003 (the “Record Date”) will be entitled to one additional share of common stock for each two shares held on that date, with fractional shares paid in cash based on the closing price per share of the common stock as reported on the New York Stock Exchange on the Record Date.

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PART II

OTHER INFORMATION

Item 1. Legal Proceedings.

The Company, its subsidiaries and other related companies are named as defendants in numerous lawsuits and respondents in certain governmental proceedings arising in the ordinary course of business. While the outcome of lawsuits or other proceedings against the Company cannot be predicted with certainty, management does not expect these matters to have a material adverse impact on the Company.

Item 4. Submission of Matters to a Vote of Security Holders.

On May 23, 2003, the Company held its annual meeting of stockholders, at which three Class I directors were elected. The nominees for director were Messrs. Paul D. Coombs, Allen T. McInnes, and J. Taft Symonds. Mr. Coombs received 12,936,496 votes for and 832,198 votes withheld. Mr. McInnes received 8,391,348 votes for and 5,377,346 votes withheld. Mr. Symonds received 12,932,533 votes for and 836,161 votes withheld. In addition to the directors elected at the annual meeting, the terms of the following directors continued after the annual meeting: Messrs. Geoffrey M. Hertel, Hoyt Ammidon, Jr., Ralph S. Cunningham, Tom H. Delimitros, Kenneth P. Mitchell and K. E. White, Jr. In addition, the stockholders approved the appointment of Ernst & Young LLP as the independent auditors of the Company, with 13,557,318 votes for, 208,466 votes against and 2,910 votes abstained.

Item 6. Exhibits.

(a) Exhibits:

	31.1*		Certification Pursuant to Section 13(a)-14(a) or 15(d)-14(a) of the Exchange Act Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
	31.2*		Certification Pursuant to Section 13(a)-14(a) or 15(d)-14(a) of the Exchange Act Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
	32.1*		Certification Furnished Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
	32.2*		Certification Furnished Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

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* Filed with this report

A statement of computation of per share earnings is included in Note E of the Notes to Consolidated Financial Statements included in this report and is incorporated by reference into Part II of this report.

(b) Reports on Form 8-K:

On April 25, 2003, the Company furnished an 8-K in conjunction with its release of earnings results for the first quarter of 2003.

17

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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.

TETRA Technologies, Inc.

Date: August 14, 2003		By: /s/Geoffrey M. Hertel
		Geoffrey M. Hertel
		President
		Chief Executive Officer
Date: August 14, 2003		By: /s/Joseph M. Abell
		Joseph M. Abell
		Senior Vice President
		Chief Financial Officer
Date: August 14, 2003		By: /s/Ben C. Chambers
		Ben C. Chambers
		Vice President - Accounting
		Principal Accounting Officer

 

18

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Exhibit 31.1

Certification Pursuant to

Section 13(a) or 15(d) of the Exchange Act

As Adopted Pursuant to

Section 302 of the Sarbanes-Oxley Act of 2002

I, Geoffrey M. Hertel, certify that:

1. I have reviewed this quarterly report on Form 10-Q for the fiscal quarter ended June 30, 2003, of TETRA Technologies, Inc.;

2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and we have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

b) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this quarterly report based on such evaluation; and

c) disclosed in this quarterly report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent function):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 14, 2003

/s/ Geoffrey M. Hertel

Geoffrey M. Hertel

President

Chief Executive Officer

 

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Exhibit 31.2

Certification Pursuant to

Section 13(a) or 15(d) of the Exchange Act

As Adopted Pursuant to

Section 302 of the Sarbanes-Oxley Act of 2002

I, Jospeh M. Abell, certify that:

1. I have reviewed this quarterly report on Form 10-Q for the fiscal quarter ended June 30, 2003, of TETRA Technologies, Inc.;

2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and we have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

b) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this quarterly report based on such evaluation; and

c) disclosed in this quarterly report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent function):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 14, 2003

/s/ Joseph M. Abell

Joseph M. Abell

Senior Vice President

Chief Financial Officer

 

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Exhibit 32.1

Certification Pursuant to

18 U.S.C. Section 1350

As Adopted Pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002

 

In connection with the Quarterly Report of TETRA Technologies, Inc. (the “Company”) on Form 10-Q for the period ending June 30, 2003 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I Geoffrey M. Hertel, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

Dated: August 14, 2003

/s/ Geoffrey M. Hertel

Geoffrey M. Hertel

President

Chief Executive Officer

TETRA Technologies, Inc.

 

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

 

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Exhibit 32.2

Certification Pursuant to

18 U.S.C. Section 1350

As Adopted Pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002

 

In connection with the Quarterly Report of TETRA Technologies, Inc. (the “Company”) on Form 10-Q for the period ending June 30, 2003 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I Joseph M. Abell, Senior Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

Dated: August 14, 2003

/s/ Joseph M. Abell

Joseph M. Abell

Senior Vice President

Chief Financial Officer

TETRA Technologies, Inc.

 

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

 

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