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FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended April 30, 2004
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
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------------
Commission File Number 33-48432
Layne Christensen Company
-----------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 48-0920712
- ------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1900 Shawnee Mission Parkway, Mission Woods, Kansas 66205
- --------------------------------------------------- -----------
(Address of principal executive offices) (Zip Code)
(Registrant's telephone number, including area code) (913) 362-0510
Not Applicable
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report.)
---------------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X]. No [ ].
Indicate by check mark whether the Registrant is an accelerated
filer (as defined in Rule 12b-2 of the Act). Yes [X] No [ ]
There were 12,545,634 shares of common stock, $.01 par value per share,
outstanding on May 14, 2004.
PART I
ITEM 1. Financial Statements
LAYNE CHRISTENSEN COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands)
April 30, January 31,
2004 2004
--------- ---------
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 6,147 $ 21,602
Customer receivables, less allowance
of $4,179 and $4,104, respectively 46,341 55,336
Costs and estimated earnings in excess of
billings on uncompleted contracts 16,531 13,746
Inventories 15,770 13,947
Deferred income taxes 10,080 9,357
Income taxes receivable 224 724
Other 4,706 6,057
--------- ---------
Total current assets 99,799 120,769
--------- ---------
Property and equipment:
Land 7,810 7,861
Buildings 14,201 14,648
Machinery and equipment 163,360 160,327
Gas transportation facilities and equipment 3,412 2,267
Oil and gas properties 13,394 10,376
Mineral interest in oil and gas properties 2,630 1,441
--------- ---------
204,807 196,920
Less - Accumulated depreciation (133,980) (132,120)
--------- ---------
Net property and equipment 70,827 64,800
--------- ---------
Other assets:
Investment in affiliates 19,325 19,239
Goodwill 2,449 2,449
Deferred income taxes 7,474 7,717
Other 2,526 2,353
--------- ---------
Total other assets 31,774 31,758
--------- ---------
$ 202,400 $ 217,327
========= =========
See Notes to Consolidated Financial Statements.
- Continued -
2
LAYNE CHRISTENSEN COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS - (Continued)
(in thousands, except per share data)
April 30, January 31,
2004 2004
----------- -----------
(unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 23,086 $ 25,568
Accrued compensation 10,063 11,925
Accrued insurance expense 6,378 6,392
Other accrued expenses 7,149 8,511
Lease termination costs -- 6,603
Income taxes payable 1,955 463
Billings in excess of costs and estimated
earnings on uncompleted contracts 7,067 8,901
---------- ----------
Total current liabilities 55,698 68,363
---------- ----------
Noncurrent and deferred liabilities:
Long-term debt 40,000 42,000
Accrued insurance expense 8,064 7,690
Other 5,253 5,589
---------- ----------
Total noncurrent and deferred liabilities 53,317 55,279
---------- ----------
Contingencies
Stockholders' equity:
Preferred stock, par value $.01 per share,
5,000,000 shares authorized, none issued and
outstanding -- --
Common stock, par value $.01 per share, 30,000,000
shares authorized, 12,545,634 and 12,533,818
shares issued and outstanding, respectively 125 125
Capital in excess of par value 89,852 89,759
Retained earnings 14,930 13,458
Accumulated other comprehensive loss (11,522) (9,629)
Notes receivable from management stockholders -- (28)
---------- ---------
Total stockholders' equity 93,385 93,685
---------- ---------
$ 202,400 $ 217,327
========== =========
See Notes to Consolidated Financial Statements.
- Concluded -
3
LAYNE CHRISTENSEN COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data)
Three Months
Ended April 30,
(unaudited)
-------------------------------
2004 2003
------------ ------------
Revenues $ 76,209 $ 59,745
Cost of revenues (exclusive of
depreciation shown below) 56,153 42,494
------------ ------------
Gross profit 20,056 17,251
Selling, general and administrative expenses 13,925 12,499
Depreciation and amortization 3,185 3,060
Other income (expense):
Equity in earnings of affiliates 469 92
Interest (683) (559)
Other, net 344 268
------------ ------------
Income from continuing operations
before income taxes 3,076 1,493
Income tax expense 1,538 864
Minority interest -- 56
------------ ------------
Net income from continuing operations
before discontinued operations 1,538 685
Loss from discontinued operations, net of
income taxes of ($95) and ($54) (66) (66)
------------ ------------
Net income $ 1,472 $ 619
============ ============
Basic income (loss) per share:
Net income from continuing operations $ 0.12 $ 0.06
Loss from discontinued operations,
net of tax (0.01) (0.01)
------------ ------------
Net income $ 0.11 $ 0.05
============ ============
Diluted income (loss) per share:
Net income from continuing operations $ 0.12 $ 0.06
Loss from discontinued operations,
net of tax (0.01) (0.01)
------------ ------------
Net income $ 0.11 $ 0.05
============ ============
Weighted average shares outstanding 12,535,000 11,903,000
Dilutive stock options 326,000 276,000
------------ ------------
12,861,000 12,179,000
============ ============
See Notes to Consolidated Financial Statements.
4
LAYNE CHRISTENSEN COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOW
(in thousands)
Three Months
Ended April 30,
(unaudited)
-----------------------
Cash flow from operating activities: 2004 2003
-------- --------
Net income $ 1,472 $ 619
Adjustments to reconcile net income to cash
used in operations:
Loss on discontinued operations, net of tax 66 66
Depreciation and amortization 3,185 3,060
Deferred income taxes (1,049) (1,017)
Equity in earnings of affiliates (469) (92)
Dividends received from foreign affiliates 422 273
Minority interest -- (56)
Gain from disposal of property and equipment (479) (224)
Changes in current assets and liabilities:
(Increase) decrease in customer receivables 975 (1,096)
Increase in costs and estimated earnings in
excess of billings on uncompleted contracts (2,789) (4,980)
Increase in inventories (1,929) (1,026)
Decrease in other current assets 1,387 54
Increase in accounts payable and accrued expenses 1,081 3,820
Decrease in billings in excess of costs and
estimated earnings on uncompleted contacts (1,845) (422)
Other, net (371) 637
-------- --------
Cash used in continuing operations (343) (384)
Cash used in discontinued operations (4,178) (2,647)
-------- --------
Cash used in operating activities (4,521) (3,031)
-------- --------
Cash flow used in investing activities:
Additions to property and equipment (4,646) (2,121)
Additions to oil and gas properties (2,639) (280)
Addition to gas transportation facilities and
equipment (1,145) (17)
Additions to mineral interest in oil and gas
properties (79) (331)
Proceeds from disposal of property and equipment 962 77
Proceeds from sale of business 300 --
Acquisition of oil and gas working interest (1,000) --
Investment in joint venture (38) --
-------- --------
Cash used in continuing operations (8,285) (2,672)
Cash used in discontinued operations -- (1,384)
-------- --------
Cash used in investing activities (8,285) (4,056)
-------- --------
Cash flow from (used in) financing activities:
Net borrowings (repayments) under revolving facility (2,000) 4,000
Repayment of long-term debt -- (1,368)
Payments on notes receivable from management
stockholders 28 --
Payments on DrillCorp promissory note (660) --
Issuance of common stock 54 --
-------- --------
Cash from (used in) financing activities (2,578) 2,632
-------- --------
Effects of exchange rate changes on cash (71) 189
-------- --------
Net decrease in cash and cash equivalents (15,455) (4,266)
Cash and cash equivalents at beginning of period 21,602 10,770
-------- --------
Cash and cash equivalents at end of period $ 6,147 $ 6,504
======== ========
See Notes to Consolidated Financial Statements.
5
LAYNE CHRISTENSEN COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Accounting Policies and Basis of Presentation
The consolidated financial statements include the accounts of Layne Christensen
Company and its subsidiaries (together, the "Company"). All significant
intercompany transactions have been eliminated. Investments in affiliates (20%
to 50% owned) in which the Company exercises influence over operating and
financial policies are accounted for on the equity method. The unaudited
consolidated financial statements should be read in conjunction with the
consolidated financial statements of the Company for the year ended January 31,
2004 as filed in its Annual Report on Form 10-K.
The accompanying unaudited consolidated financial statements include all
adjustments (consisting only of normal recurring accruals) which, in the opinion
of management, are necessary for a fair presentation of financial position,
results of operations and cash flows. Results of operations for interim periods
are not necessarily indicative of results to be expected for a full year.
Revenue is recognized on large, long-term contracts using the percentage of
completion method based upon materials installed and labor costs incurred.
Changes in job performance, job conditions, and estimated profitability,
including those arising from contract penalty provisions, and final contract
settlements may result in revisions to costs and income and are recognized in
the period in which the revisions are determined. Revenue is recognized on
smaller, short-term contracts using the completed contract method. Provisions
for estimated losses on uncompleted contracts are made in the period in which
such losses are determined.
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and 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.
The Company values inventories at the lower of cost (first in, first out) or
market. Allowances are recorded for inventory considered to be excess or
obsolete. Inventories consist primarily of parts and supplies.
Through its energy division, the Company engages in the operation, development,
production and acquisition of oil and gas properties, principally focusing on
coalbed methane gas projects. The Company follows the full-cost method of
accounting for these properties. Under this method, all productive and
nonproductive costs incurred in connection with the exploration for and
development of oil and gas reserves are capitalized. Such capitalized costs
include lease acquisition, geological and geophysical work, delay rentals,
drilling, completing and equipping oil and gas wells, including salaries,
benefits and other internal costs directly attributable to these activities. The
capitalized costs associated with the Company's oil and gas properties are
depleted using the units of production method. Costs associated with production
and general corporate activities are expensed in the period incurred. As of
April 30, 2004 and January 31, 2004, the Company has capitalized $16,024,000 and
6
$11,817,000, respectively, related to oil and gas properties and mineral
interest acquisition costs. The Company has also capitalized $3,412,000 and
$2,267,000 as of April 30, 2004 and January 31, 2004, respectively, related to
gas transportation facilities and equipment. The Company's projects are in the
early stages of completion and the Company does not have sufficient production
information by which reserves can be established.
The Company follows SFAS No. 133, "Accounting for Derivative Instruments and
Hedging Activities" ("SFAS 133"), as amended, which requires all derivative
financial instruments to be recorded on the balance sheet at fair value and
establishes criteria for designation and effectiveness of hedging relationships.
Under SFAS 133, the Company accounts for its unrealized hedges of forecasted
costs as cash flow hedges, such that changes in fair value for the effective
portion of hedge contracts, if material, are recorded in accumulated other
comprehensive income in stockholders' equity. Changes in the fair value of the
effective portion of hedge contracts are recognized in accumulated other
comprehensive income until the hedged item is recognized in operations. The
ineffective portion of the derivatives change in fair value, if any, is
immediately recognized in operations (see Note 5 for disclosure regarding the
fair value of foreign currency derivative instruments).
Income taxes are provided using the asset/liability method, in which deferred
taxes are recognized for the tax consequences of temporary differences between
the financial statement carrying amounts and tax bases of existing assets and
liabilities. Deferred tax assets are reviewed for recoverability and valuation
allowances are provided as necessary. Provision for U.S. income taxes on
undistributed earnings of foreign subsidiaries and foreign affiliates is made
only on those amounts in excess of those funds considered to be invested
indefinitely.
Earnings per share are based upon the weighted average number of common and
dilutive equivalent shares outstanding. Options to purchase common stock are
included based on the treasury stock method for dilutive earnings per share,
except when their effect is antidilutive.
Stock-based compensation may be accounted for either based on the estimated fair
value of the awards at the date they are granted (the "SFAS 123 Method") or
based on the difference, if any, between the market price of the stock at the
date of grant and the amount the employee must pay to acquire the stock (the
"APB 25 Method"). The Company uses the APB 25 Method to account for its
stock-based compensation programs. Pro forma net income and earnings per share
for the three months ended April 30, 2004 and 2003, determined as if the SFAS
123 Method had been applied, are presented in the following table (in thousands,
except per share amounts):
Three Months Ended April 30,
----------------------------
2004 2003
------- -------
Net income, as reported $ 1,472 $ 619
Deduct: Total stock-based employee
compensation expense determined
under fair value based method for
all awards, net of tax (17) (147)
------- -------
Pro forma net income $ 1,455 $ 472
======= =======
7
Three Months Ended April 30,
----------------------------
2004 2003
-------- --------
Income per share:
Basic - as reported $ 0.11 $ 0.05
======== ========
Basic - pro forma $ 0.11 $ 0.04
======== ========
Diluted - as reported $ 0.11 $ 0.05
======== ========
Diluted - pro forma $ 0.11 $ 0.04
======== ========
The amounts paid for income taxes, net of refunds, and interest are as
follows (in thousands):
Three Months Ended April 30,
----------------------------
2004 2003
---- ----
Income taxes $ 79 $ 337
Interest 1,280 459
Supplemental Non-cash Transactions - The Company issued 217,504 shares of common
stock at fair market value related to compensation awards during the three
months ended April 30, 2003. The Company did not issue shares of common stock
related to compensation awards during the three months ended April 30, 2004.
Reclassifications - Certain fiscal 2004 amounts, primarily related to
discontinued operations, have been reclassified to conform with the fiscal 2005
presentation.
2. Discontinued Operations
During the third quarter of fiscal 2004, the Company reclassified the results of
operations of its Toledo Oil and Gas ("Toledo") business to discontinued
operations. Toledo was historically reported in the Company's energy segment and
offered conventional oilfield fishing services and coil tubing fishing services
(see Note 9). On January 6, 2004, the Company sold the Toledo operation for
$2,500,000 and recorded a gain on the sale of $57,000, net of income taxes of
$30,000, for the year ended January 31, 2004. The Company received $2,200,000
upon the sale and an additional $300,000 in February 2004 at the end of a
contingency period.
In connection with the sale of Toledo, the Company recorded a contract
termination liability for a long-term lease of the Toledo facilities. The
contract termination liability represents the present value of the rental
payments specified in the lease reduced by an estimate for sublease rentals
(based on market value of similar properties). The Company will record accretion
expense due to the passage of time for the difference between the expected lease
obligations, net of sublease rentals, and the present value of such operations.
The present value liability was adjusted during the quarter to reflect higher
than anticipated sublease rentals during February and March. A summary of the
lease liability follows (in thousands):
Amounts
-------
February 1, 2004 $ 117
Payments (2)
Accretion 1
Adjustments (4)
-------
April 30, 2004 $ 112
=======
8
The present value liability was adjusted to reflect higher than anticipated
sublease rentals during February and March.
Lease obligations of $131,000, net of sublease rentals, are expected to be paid
over the term of the lease which extends to 2008.
On January 30, 2004, the Company sold its Layne Christensen Canada Ltd. ("Layne
Canada") subsidiary for $15,914,000. Layne Canada was a component of the
Company's energy segment (see Note 9) and provided drilling services to the
shallow, unconventional oil and gas market. The Company recorded a gain on the
sale of $1,652,000, net of income taxes of $994,000 for the year ended January
31, 2004.
In accordance with SFAS No. 144, "Accounting for the Impairment or Disposal of
Long-Lived Assets," the results of operations for Toledo and Layne Canada have
been classified as discontinued operations. Revenues and net income (loss) from
discontinued operations for the three months ended April 30, 2004 and 2003 were
as follows (in thousands):
Three Months Ended April 30,
----------------------------
2004 2003
------- -------
Revenues:
Canada $ -- $ 5,980
Toledo -- 622
------- -------
Total $ -- $ 6,602
======= =======
Income (loss) from discontinued
operations before income taxes:
Canada $ (152) $ 267
Toledo (9) (387)
------- -------
Total $ (161) $ (120)
======= =======
3. Indebtedness
On July 31, 2003, the Company entered into an agreement ("Master Shelf
Agreement") whereby it could issue up to $60,000,000 in unsecured notes. Upon
closing, the Company issued $40,000,000 of notes ("Senior Notes") under the
Master Shelf Agreement. The remaining $20,000,000, subject to terms and
conditions and acceptance by the lender, is available for issuance by the
Company at market rates until July 31, 2005. The Senior Notes bear a fixed
interest rate of 6.05% and are due on July 31, 2010, with annual principal
payments of $13,333,000 beginning July 31, 2008. Proceeds from issuance of the
Senior Notes were used to refinance borrowings outstanding under the Company's
previous term loan and revolving credit facility ("Previous Loan Facilities").
Concurrent with the signing of the Master Shelf Agreement, the Company closed on
a new bank revolving credit facility ("Credit Agreement"). The Credit Agreement
is an unsecured $30,000,000 revolving facility to be used for working capital
requirements and general corporate purposes. The maximum available under the
Credit Agreement is $30,000,000, less any outstanding letter of credit
commitments (which are subject to a $15,000,000 sublimit). The Credit Agreement
provides interest at variable rates equal to, at the Company's option, a
Eurodollar rate plus 1.75% to 2.75% (depending upon certain ratios) or an
alternative reference rate as defined in the Credit Agreement. The Credit
9
Agreement will be due and payable on July 31, 2006. On April 30, 2004, there
were letters of credit of $9,028,000 outstanding on the Credit Agreement.
The Master Shelf Agreement and the Credit Agreement contain certain covenants
including restrictions on the incurrence of additional indebtedness and liens,
investments, acquisitions, transfer or sale of assets, transactions with
affiliates, payment of dividends and certain financial maintenance covenants,
including among others, fixed charge coverage, maximum debt to EBITDA, minimum
tangible net worth and minimum asset coverage. The Company was in compliance
with its covenants as of April 30, 2004.
The Company's previous floating rate debt exposed it to changes in interest
rates going forward. During September 2002, the Company entered into an interest
rate swap agreement (the "Swap Agreement"), as required by the Previous Loan
Facilities. The Swap Agreement effectively converted a portion of the previous
term loan to a fixed rate basis, thus reducing the impact of interest rate
changes. Upon entering the Master Shelf Agreement, a fixed interest rate
contract, the Swap Agreement no longer qualified for hedge accounting and gains
and losses related to the Swap Agreement were included in Other, net in the
Company's Consolidated Statements of Income as incurred. The Swap Agreement
calls for quarterly interest payments which commenced on October 1, 2002, and
will terminate September 9, 2004. The Swap Agreement is recorded at its fair
market value of $80,000 as of April 30, 2004, in other accrued expenses in the
Company's Consolidated Balance Sheets.
April 30, January 31,
2004 2004
------- -------
Long-term debt:
Credit Agreement $ -- $ 2,000
Senior Notes 40,000 40,000
------- -------
Total long-term debt 40,000 42,000
------- -------
Total debt $40,000 $42,000
======= =======
4. Acquisitions
During April 2004, the Company acquired the remaining 50% working interest in
oil and gas properties, including mineral interests, held by a third party under
an August 2002 development agreement for $1,000,000 cash and forgiveness of
approximately $489,000 in joint interest receivables from such partner. The
acquisition furthers the Company's expansion of its energy presence in the
mid-continent region of the United States. The acquisition had the following
effect on the Company's consolidated financial position.
April 30,
2004
----------
Customer receivables $ (409,000)
Other current assets (80,000)
Mineral interest in oil and gas properties 1,110,000
Oil and gas properties 379,000
----------
Total cash purchase price $1,000,000
==========
5. Foreign Currency Derivatives
The Company has foreign operations that have significant costs denominated in
foreign currencies, and thus is exposed to risks associated with changes in
10
foreign currency exchange rates. At any point in time, the Company might use
various hedge instruments, primarily foreign currency option contracts, to
manage the exposures associated with forecasted expatriate labor costs and
purchases of operating supplies. The Company does not enter into foreign
currency derivative financial instruments for speculative or trading purposes.
As of April 30, 2004, the Company held option contracts with an aggregate U.S.
dollar notional value of $18,025,000 to hedge the risks associated with
forecasted Australian dollar denominated costs in its African operations. The
contracts settle in various increments through January 2005. The fair value of
the instruments of $391,000 at April 30, 2004, is recorded in other current
assets and, net of income taxes of $151,000, in accumulated other comprehensive
income. Aggregate gains of $5,000 on foreign currency hedging transactions were
recognized for the three months ended April 30, 2004 as the forecasted
transactions being hedged occurred and were recorded primarily in cost of
revenues in the Company's Consolidated Statements of Income.
6. Severance Costs
During the second quarter of fiscal 2004, the Company announced involuntary
workforce reductions of 189 employees. The actions were primarily necessary to
align the Company's cost structure with current market conditions. As of July
31, 2003, the Company had notified all applicable employees affected by these
actions. The Company recorded severance and benefit charges of approximately
$530,000 related to these actions in the second quarter of fiscal 2004 in
accordance with SFAS No. 146, "Accounting for Costs Associated with Exit or
Disposal Activities."
As of April 30, 2004, the Company had paid $523,000 in costs associated with
these workforce reductions. A summary of the severance costs and related
activity follows:
Number of Amount
Employees (in 000's)
--------- ----------
Balance February 1, 2003 -- $ --
Charges 189 530
Payments (187) (502)
----- -----
Balance January 31, 2004 2 28
Charges -- --
Payments (1) (21)
----- -----
Balance April 30, 2004 1 $ 7
===== =====
7. Other Comprehensive Income (Loss)
Components of other comprehensive income (loss) are summarized as follows (in
thousands):
11
Three Months
Ended April 30,
----------------------
2004 2003
------- -------
Net income $ 1,472 $ 619
Other comprehensive income (loss), net of taxes;
Foreign currency translation adjustments (1,277) 101
Unrealized loss on available for sale
investments -- (4)
Unrealized loss on Swap -- (23)
Unrealized loss on Exchange Contract (616) --
------- -------
Other comprehensive income (loss) $ (421) $ 693
======= =======
The components of accumulated other comprehensive loss for the three months
ended April 30, 2004 are as follows (in thousands):
Unrealized Accumulated
Cumulative Unrecognized Gain (loss) Other
Translation Pension on Exchange Comprehensive
Adjustment Liability Contracts Loss
----------- ------------ ----------- --------------
Balance,
February 1, 2004 $ (8,701) $ (1,784) $ 856 $ (9,629)
Period change (1,277) - (616) (1,893)
---------- ----------- ---------- ------------
Balance,
April 30, 2004 $ (9,978) $ (1,784) $ 240 $ (11,522)
========== =========== ========== ============
8. Employee Benefit Plans
The Company sponsors a pension plan covering certain hourly employees not
covered by union-sponsored, multi-employer plans. Benefits are computed based
mainly on years of service. The Company makes annual contributions to the plan
substantially equal to the amounts required to maintain the qualified status of
the plans. Contributions are intended to provide for benefits related to past
and current service with the Company. Effective December 31, 2003, the Company
froze the pension plan and recorded a curtailment loss of approximately $20,000
for the year ended January 31, 2004. Benefits will no longer be accrued after
December 31, 2003, and no further employees will be added to the Plan. The
Company expects to maintain the assets of the Plan to pay normal benefits
accrued through December 31, 2003. Assets of the plan consist primarily of
stocks, bonds and government securities.
Net periodic pension cost for the three months ended April 30, 2004 and 2003
includes the following components (in thousands):
Three Months
Ended April 30,
2004 2003
------- -------
Service cost $ 17 $ 53
Interest cost 110 105
Expected return on assets (113) (104)
Net amortization 48 48
------ ------
Net periodic pension cost $ 62 $ 102
====== ======
The Company has recognized the full amount of its actuarially determined pension
liability and the related intangible asset (if applicable). The unrecognized
12
pension cost has been recorded as a charge to consolidated stockholders' equity
after giving effect to the related future tax benefit.
The Company also provides supplemental retirement benefits to its chief
executive officer. Benefits are computed based on the compensation earned during
the highest five consecutive years of employment reduced for a portion of Social
Security benefits and an annuity equivalent of the chief executive's defined
contribution plan balance. The Company does not contribute to the plan or
maintain any investment assets related to the expected benefit obligation. The
Company has recognized the full amount of its actuarially determined pension
liability. Net periodic pension cost of the supplemental retirement benefits for
the three months ended April 30, 2004 and 2003 include the following components
(in thousands):
Three Months
Ended April 30,
2004 2003
------- -------
Service cost $ 25 $ 25
Interest cost 18 17
------- -------
Net periodic pension cost $ 43 $ 42
======= =======
9. Operating Segments
The Company is a multinational company which provides sophisticated services and
related products to a variety of markets. The Company is organized into discrete
divisions based on its primary product lines. The Company's reportable segments
are defined as follows:
Water Resources Division
This division provides a full line of water-related services and products
including hydrological studies, site selection, well design, drilling and well
development, pump installation, and repair and maintenance. The division's
offerings include design and construction of water treatment facilities and the
manufacture and sale of products to treat volatile organics and other
contaminants such as nitrates, iron, manganese, arsenic, radium and radon in
groundwater. The division also offers environmental services to assess and
monitor groundwater contaminants.
Mineral Exploration Division
This division provides a complete range of drilling services for the mineral
exploration industry. Its aboveground and underground drilling activities
include all phases of core drilling, diamond, reverse circulation, dual tube,
hammer and rotary air-blast methods.
Geoconstruction Division
This division focuses on services that improve soil stability, primarily jet
grouting, grouting, vibratory ground improvement, drilled micropiles, stone
columns, anchors and tiebacks. The division also manufactures a line of
high-pressure pumping equipment used in grouting operations and geotechnical
drilling rigs used for directional drilling.
13
Energy Division
This division primarily focuses on exploration and production of coalbed methane
("CBM") properties in the United States. To date it has been concentrated on
projects in the mid-continent region of the United States. Historically, the
division has also included service businesses in shallow gas and tar sands
exploration drilling, conventional oilfield fishing services and coil tubing
fishing services. During fiscal 2004, the division's strategy shifted to focus
mainly on resource development rather than providing services to external
customers. Accordingly, in January 2004, the Company sold its Canadian drilling
unit to Ensign Drilling and its oilfield fishing services to Smith
International. The results of operations for these units have been reclassified
to discontinued operations for all periods presented (see Note 2). The division
is now composed of the Company's CBM development activities and two small,
specialty energy service companies.
Revenues and income from continuing operations pertaining to the Company's
operating segments are presented below. Intersegment revenues are accounted for
based on the fair market value of the services provided. The Corporate operating
loss consists of unallocated corporate expenses, primarily general and
administrative functions and incentive compensation. Operating segment revenues
and income from continuing operations are summarized as follows (in thousands):
Three Months
Ended April 30,
-----------------------
2004 2003
-------- --------
Revenues
Water resources $ 45,283 $ 38,769
Mineral exploration 24,089 14,056
Geoconstruction 6,090 6,131
Energy 747 789
-------- --------
Total revenues $ 76,209 $ 59,745
======== ========
Income (loss) from continuing operations
Water resources $ 4,567 $ 5,400
Mineral exploration 3,818 (178)
Geoconstruction (109) 262
Energy (971) (199)
Unallocated corporate expenses (3,546) (3,233)
Interest (683) (559)
-------- --------
Total income from continuing operations $ 3,076 $ 1,493
======== ========
Geographic Information:
Revenues
North America $ 58,908 $ 49,018
Africa/Australia 16,250 9,357
Other foreign 1,051 1,370
-------- --------
Total revenues $ 76,209 $ 59,745
======== ========
10. Contingencies
The Company's drilling activities involve certain operating hazards that can
result in personal injury or loss of life, damage and destruction of property
and equipment, damage to the surrounding areas, release of hazardous substances
or wastes and other damage to the environment, interruption or suspension of
drill
14
site operations and loss of revenues and future business. The magnitude of these
operating risks is amplified when the Company, as is frequently the case,
conducts a project on a fixed-price, "turnkey" basis where the Company delegates
certain functions to subcontractors but remains responsible to the customer for
the subcontracted work. In addition, the Company is exposed to potential
liability under foreign, federal, state and local laws and regulations,
contractual indemnification agreements or otherwise in connection with its
provision of services and products. Litigation arising from any such occurrences
may result in the Company being named as a defendant in lawsuits asserting large
claims. Although the Company maintains insurance protection that it considers
economically prudent, there can be no assurance that any such insurance will be
sufficient or effective under all circumstances or against all claims or hazards
to which the Company may be subject or that the Company will be able to continue
to obtain such insurance protection. A successful claim for damage resulting
from a hazard for which the Company is not fully insured could have a material
adverse effect on the Company. In addition, the Company does not maintain
political risk insurance with respect to its foreign operations.
The Company is involved in various matters of litigation, claims and disputes
which have arisen in the ordinary course of the Company's business. While the
resolution of any of these matters may have an impact on the financial results
for the period in which the matter is resolved, the Company believes that the
ultimate disposition of these matters will not, in the aggregate, have a
material adverse effect upon its business or consolidated financial position,
results of operations or cash flows.
11. New Accounting Pronouncements
On April 30, 2004, the FASB staff issued FASB Staff Position (FSP) FAS 141-1 and
FAS 142-1, which amends FASB Statement No. 141, "Business Combinations" and No.
142, "Goodwill and Other Intangible Assets." The FSP clarifies that mineral
rights in oil and gas properties should be classified as tangible assets. This
amendment is effective for the first reporting period beginning after April 29,
2004. The adoption of this amendment will not have a significant impact on the
Company's results of operations or financial position as the Company's mineral
interests in oil and gas properties are recorded as tangible assets.
ITEM 2. Management's Discussion and Analysis of Results of Operations
and Financial Condition
Cautionary Language Regarding Forward-Looking Statements
This Form 10-Q contains forward-looking statements within the meaning of Section
27A of the Securities Act of 1933 and Section 21E of the Exchange Act of 1934.
Such statements are indicated by words or phrases such as "anticipate,"
"estimate," "project," "believe," "intend," "expect," "plan" and similar words
or phrases. Such statements are based on current expectations and are subject to
certain risks, uncertainties and assumptions, including but not limited to
prevailing prices for various metals, unanticipated slowdowns in the Company's
major markets, the impact of competition, the effectiveness of operational
changes expected to increase efficiency and productivity, worldwide economic and
political conditions and foreign currency fluctuations that may affect worldwide
results of operations. Should one or more of these risks or uncertainties
materialize, or should underlying assumptions prove incorrect, actual results
may vary materially and adversely from those anticipated,
15
estimated or projected. These forward-looking statements are made as of the date
of this filing, and the Company assumes no obligation to update such
forward-looking statements or to update the reasons why actual results could
differ materially from those anticipated in such forward-looking statements.
Results of Operations
The following table presents, for the periods indicated, the percentage
relationship which certain items reflected in the Company's consolidated
statements of income bear to revenues and the percentage increase or decrease in
the dollar amount of such items period to period.
Three Months
Ended Period-to-Period
April 30, Change
------------------
2004 2003 Three Months
----- ----- --------------
Revenues:
Water resources 59.4% 64.9% 16.8
Mineral exploration 31.6 23.5 71.4
Geoconstruction 8.0 10.3 (0.7)
Energy 1.0 1.3 (5.3)
----- -----
Total net revenues 100.0% 100.0% 27.6
===== =====
Cost of revenues 73.7 71.1 32.1
----- -----
Gross profit 26.3 28.9 16.3
Selling, general and administrative
expenses 18.3 20.9 11.4
Depreciation and amortization 4.2 5.2 4.1
Other income (expense):
Equity in earnings of affiliates 0.6 0.2 *
Interest (0.9) (0.9) 22.2
Other, net 0.5 0.4 28.4
----- -----
Income from continuing operations
before income taxes and minority
interest 4.0 2.5 *
Income tax expense 2.0 1.4 78.0
Minority interest 0.0 0.0 *
----- -----
Net income from continuing operations
before discontinued operations 2.0 1.0 *
Loss from discontinued operations,
net of tax (0.1) (0.1) *
----- -----
Net income 1.9% 1.0% *
===== =====
- ----------------
* Not meaningful.
Results of Operations
- ----------------------
Revenues for the three months ended April 30, 2004 increased $16,464,000, or
27.6%, to $76,209,000 compared to $59,745,000 the same period last year. See
further discussion of results of operations by division below.
Gross profit as a percentage of revenues was 26.3% for the three months ended
April 30, 2004 compared to 28.9% for the three months ended April 30, 2003. The
decrease in gross profit percentage was primarily attributable to continued
pricing pressures in the water resources division and reduced margins associated
with the promotion of certain new water treatment products. The decrease in the
16
water resources division was partially offset by increased margins in the
mineral exploration division due to increased activity levels associated with
higher gold and base metal prices.
Selling, general and administrative expenses increased to $13,925,000 for the
three months ended April 30, 2004 compared to $12,499,000 for the three months
ended April 30, 2003. The increase was primarily the result of expenses related
to the Company's expansion of its water treatment capabilities and increased
expenses associated with the Company's CBM development efforts.
Depreciation and amortization increased to $3,185,000 for the three months ended
April 30, 2004 compared to $3,060,000 for the same period last year. The
increase was primarily the result of increased depreciation in the mineral
exploration division and depletion associated with the Company's CBM projects.
Interest expense increased to $683,000 for the three months ended April 30, 2004
compared to $559,000 for the three months ended April 30, 2003. The increase was
primarily a result of increases in the Company's average borrowings for the
period.
Income tax expense of $1,538,000 (an effective rate of 50.0%) was recorded for
the three months ended April 30, 2004, compared to $864,000 (an effective rate
of 57.9%) for the same period last year. The improvement in the effective rate
is primarily attributable to improved pre-tax earnings, especially in
international operations. The effective rate in excess of the statutory federal
rate for the periods was a result of the impact of nondeductible expenses and
the tax treatment available for certain foreign operations.
WATER RESOURCES DIVISION
(in thousands)
Three months ended
April 30,
------------------------
2004 2003
------- -------
Revenues $45,283 $38,769
Income from continuing operations 4,567 5,400
Water resources revenues increased 16.8% to $45,283,000 from $38,769,000 for the
three months ended April 30, 2004 and 2003. The increase in revenues was
primarily attributable to the Company's continued efforts to maintain market
share, results from the Company's water treatment initiatives and increased
infrastructure needs in metropolitan areas of California and Illinois.
Income from continuing operations for the water resources division decreased
15.5% to $4,567,000 for the three months ended April 30, 2004, compared to
$5,400,000 for the three months ended April 30, 2003. The decrease in income
from continuing operations was the result of the impact of competitive pricing
pressures and an increased level of additional costs associated with the
Company's water treatment initiatives.
17
MINERAL EXPLORATION DIVISION
(in thousands)
Three months ended
April 30,
------------------
2004 2003
---- ----
Revenues $24,089 $14,056
Income (loss) from continuing operations 3,818 (178)
Mineral exploration revenues increased 71.4% to $24,089,000 from $14,056,000 for
the three months ended April 30, 2004 and 2003, respectively. The increase was
primarily attributable to increased worldwide exploration activity due to higher
gold and base metal prices. The largest increases for the Company were in Africa
and Australia, partially the result of additional capacity from the DrillCorp
asset purchase late in fiscal 2004.
Income from continuing operations for the mineral exploration division was
$3,818,000 for the three months ended April 30, 2004, compared to a loss from
continuing operations of $178,000 for the three months ended April 30, 2003. The
improved earnings in the division were primarily attributable to the increased
activity levels noted above and improved earnings by the Company's Latin
American affiliates. In the first quarter of last year, the Company incurred
increased expenses in Australia to bring equipment into compliance with changes
to local transportation regulations, negatively impacting prior year earnings.
GEOCONSTRUCTION DIVISION
(in thousands)
Three months ended
April 30,
------------------
2004 2003
---- ----
Revenues $6,090 $6,131
Income (loss) from continuing operations (109) 262
Geoconstruction revenues were essentially flat at $6,090,000 for the three
months ended April 30, 2004, compared to $6,131,000 for the three months ended
April 30, 2003.
The geoconstruction division had a loss from continuing operations of $109,000
for the three months ended April 30, 2004, compared to income from continuing
operations of $262,000 for the three months ended April 30, 2003. The decrease
in income from continuing operations was primarily the result of customer delays
on certain public sector projects.
ENERGY DIVISION
(in thousands)
Three months ended
April 30,
------------------
2004 2003
---- ----
Revenues $747 $789
Loss from continuing operations (971) (199)
Energy revenues decreased 5.3% to $747,000 for the three months ended April 30,
2004, compared to revenues of $789,000 for the three months ended April 30,
2003. The decrease in revenue was primarily attributable to a slow first quarter
for the division's service businesses, partially offset by increased revenue
from the Company's CBM projects.
18
The loss from continuing operations for the energy division was $971,000 for the
three months ended April 30, 2004, compared to $199,000 for the three months
ended April 30, 2003. The increased loss for the division was the result of
increased costs associated with the Company's CBM development efforts and the
slow start to the year in the division's service businesses.
CORPORATE EXPENSES
Corporate expenses not allocated to individual divisions were $3,546,000 for the
three months ended April 30, 2004 compared to $3,233,000 for the three months
ended April 30, 2003. The increase in unallocated corporate expenses was
attributable to increased incentive-related accruals for the mineral exploration
division and increased travel-related expenditures.
Changes in Financial Condition
- -------------------------------
Management exercises discretion regarding the liquidity and capital resource
needs of its business segments. This includes the ability to prioritize the use
of capital and debt capacity, to determine cash management policies and to make
decisions regarding capital expenditures.
The Company's primary sources of liquidity have historically been cash from
operations, supplemented by borrowings under its credit facilities. The Company
usually experiences a decrease in cash available from operations in the first
quarter due to incentive compensation payments and increased working capital
requirements principally in the Company's water division as it prepares for the
summer drilling season. Cash used in operating activities was $4,521,000 and
$3,031,000 for the three months ended April 30, 2004 and 2003, respectively.
Cash available at January 31, 2004 was used to fund capital spending during the
quarter and the acquisition of a partner's working interest in oil and gas
properties for $1,000,000. As of April 30, 2004, the Company had no material
commitments outstanding for capital assets.
The Company maintains an agreement (the "Master Shelf Agreement") whereby it can
issue up to $60,000,000 in unsecured notes. The Company also holds a revolving
credit facility (the "Credit Agreement") composed of an unsecured $30,000,000
revolving facility. Borrowings under the Master Shelf and Credit Agreements were
used to refinance borrowings outstanding under the Company's previous credit
facilities. At April 30, 2004, the Company had no borrowings outstanding under
the Credit Agreement and outstanding notes of $40,000,000 under the Master Shelf
Agreement (see Note 3 of the Notes to Consolidated Financial Statements). The
remaining $20,000,000 of notes under the Master Shelf Agreement are available
for issuance at market rates until July 2005. Issuance of the notes is
contingent on, among other things, compliance with financial covenants in the
Master Shelf and Credit Agreements. The Company was in compliance with its
financial covenants at April 30, 2004 and expects to remain in compliance
through the foreseeable future.
The Company's working capital as of April 30, 2004 and January 31, 2004 was
$44,101,000 and $52,406,000, respectively. The decrease in working capital at
April 30, 2004 was primarily attributable to the use of available cash to fund
capital expenditures. The Company believes it will have sufficient cash from
operations and access to credit facilities to meet the Company's operating cash
requirements and to fund its budgeted capital expenditures for fiscal 2005.
19
Operating Activities
Cash used in operating activities, including discontinued operations, increased
$1,490,000 to $4,521,000 for the three months ended April 30, 2004. The cash
used for operating activities for the three months ended April 30, 2004 included
$4,178,000 used in discontinued operations. This was primarily attributable to
the payment of lease termination liabilities and closing costs related to the
sale of Layne Canada, partially offset by collection of receivables related to
Layne Canada. Proceeds from the sale of Layne Canada of approximately
$16,000,000 had been received on January 31, 2004. Cash from operations was also
negatively impacted by increased inventory levels at the Company's manufacturing
subsidiary in Italy due to higher work-in-process balances for pending orders.
Investing Activities
The Company's capital expenditures of $9,509,000 for the three months ended
April 30, 2004 were directed primarily toward the Company's expansion into
coalbed methane exploration and production, including the acquisition of a joint
interest partner's working interest for $1,000,000. The remaining capital
expenditures were directed towards expansion and upgrading of the Company's
equipment and facilities primarily in the water resources and mineral
exploration divisions.
Financing Activities
The Company's financing activities primarily related to the repayment of
$2,000,000 under the Company's revolving credit facility and payment of $660,000
for the DrillCorp promissory note.
Critical Accounting Policies and Estimates
- -------------------------------------------
Management's Discussion and Analysis of Financial Condition and Results of
Operations discusses the Company's consolidated financial statements, which have
been prepared in accordance with accounting principles generally accepted in the
United States. The preparation of these financial statements requires management
to make estimates and assumptions that affect the reported amounts of assets and
liabilities and 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. On an on-going basis, management evaluates its
estimates and judgments, which are based on historical experience and on various
other factors that are believed to be reasonable under the circumstances, the
results of which form 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 these estimates under different assumptions or
conditions.
Our accounting policies are more fully described in Note 1 to the financial
statements, located elsewhere in this Form 10-Q and in Note 1 of our Annual
Report on Form 10-K for the year ended January 31, 2004. We believe that the
following represent our more critical estimates and assumptions used in the
preparation of our consolidated financial statements, although not all
inclusive.
Revenue Recognition - Revenue is recognized on large, long-term contracts using
the percentage of completion method based upon materials installed and labor
costs incurred. Changes in job performance, job conditions and estimated
20
profitability, including those arising from contract penalty provisions, and
final contract settlements may result in revisions to costs and income and are
recognized in the period in which the revisions are determined. Provisions for
estimated losses on uncompleted contracts are made in the period in which such
losses are determined.
Other Long-lived assets - In evaluating the fair value and future benefits of
long-lived assets, including the Company's coalbed methane assets, the Company
performs an analysis of the anticipated future net cash flows of the related
long-lived assets and reduce their carrying value by the excess, if any, of the
result of such calculation. The Company believes at this time that the
long-lived assets' carrying values and useful lives continue to be appropriate.
Accrued Insurance Expense - The Company maintains insurance programs where it is
responsible for a certain amount of each claim up to a self-insured limit.
Estimates are recorded for health and welfare, property and casualty insurance
costs that are associated with these programs. These costs are estimated based
on actuarially determined projections of future payments under these programs.
Should a greater amount of claims occur compared to what was estimated or costs
of the medical profession increase beyond what was anticipated, reserves
recorded may not be sufficient and additional costs to the consolidated
financial statements could be required.
Costs estimated to be incurred in the future for employee medical benefits,
workers' compensation and casualty insurance programs resulting from claims
which have occurred are accrued currently. Under the terms of the Company's
agreement with the various insurance carriers administering these claims, the
Company is not required to remit the total premium until the claims are actually
paid by the insurance companies. These costs are not expected to significantly
impact liquidity in future periods.
Income Taxes - Income taxes are provided using the asset/liability method, in
which deferred taxes are recognized for the tax consequences of temporary
differences between the financial statement carrying amounts and tax bases of
existing assets and liabilities. Deferred tax assets are reviewed for
recoverability and valuation allowances are provided as necessary. Provision for
U.S. income taxes on undistributed earnings of foreign subsidiaries and foreign
affiliates is made only on those amounts in excess of those funds considered to
be invested indefinitely.
Litigation and Other Contingencies - The Company is involved in litigation
incidental to its business, the disposition of which is expected to have no
material effect on the Company's financial position or results of operations. It
is possible, however, that future results of operations for any particular
quarterly or annual period could be materially affected by changes in the
Company's assumptions related to these proceedings. The Company accrues its best
estimate of the probable cost for the resolution of legal claims. Such estimates
are developed in consultation with outside counsel handling these matters and
are based upon a combination of litigation and settlement strategies. To the
extent additional information arises or the Company's strategies change, it is
possible that the Company's best estimate of its probable liability in these
matters may change.
21
The Company's contractual obligations and commercial commitments are summarized
as follows:
Payments/Expiration by Period
Less than More than
Total 1 year 1-3 years 4-5 years 5 years
-------- --------- --------- --------- ------------
Contractual Obligations and
Other Commercial Commitments
Credit facilities $ 40,000 $ -- $ -- $ 13,333 $ 26,667
Operating leases 15,518 6,222 7,201 1,982 113
Mineral interest
obligations 475 107 96 80 192
DrillCorp promissory note 2,160 1,440 720 -- --
-------- -------- -------- -------- --------
Total contractual cash
obligations 58,153 7,769 8,017 15,395 26,972
-------- -------- -------- -------- --------
Standby letters of
credit 9,028 9,028 -- -- --
Asset retirement
obligations 122 -- -- -- 122
-------- -------- -------- -------- --------
Total contractual
obligations and
commercial commitments $ 67,303 $ 16,797 $ 8,017 $ 15,395 $ 27,094
======== ======== ======== ======== ========
ITEM 3. Quantitative and Qualitative Disclosures About Market Risk
The principal market risks to which the Company is exposed are interest rates on
variable rate debt and foreign exchange rates giving rise to translation and
transaction gains and losses.
The Company centrally manages its debt portfolio considering overall financing
strategies and tax consequences. A description of the Company's variable rate
debt is in Note 12 of the Notes to Consolidated Financial Statements appearing
in the Company's January 31, 2004 Form 10-K. As of April 30, 2004, the
$40,000,000 of the Company's debt outstanding is fixed-rate debt. Accordingly,
an instantaneous change in interest rates of one percentage point would not
significantly impact the Company's annual interest expense.
Operating in international markets involves exposure to possible volatile
movements in currency exchange rates. Currently, the Company's primary
international operations are in Australia, Africa, Mexico and Italy. The
operations are described in Note 1 of the Notes to Consolidated Financial
Statements appearing in the Company's January 31, 2004 Form 10-K and Note 9 of
this Form 10-Q. The majority of the Company's contracts in Africa and Mexico are
U.S. dollar based, providing a natural reduction in exposure to currency
fluctuations. The Company also may utilize various hedge instruments, primarily
foreign currency option contracts, to manage the exposures associated with
fluctuating currency exchange rates (see Note 13 of the Notes to Consolidated
Financial Statements). As of April 30, 2004, the Company held option contracts
with an aggregate U.S. dollar notional value of $18,025,000.
As currency exchange rates change, translation of the income statements of the
Company's international operations into U.S. dollars may affect year-to-year
comparability of operating results. We estimate that a ten percent change in
22
foreign exchange rates would not significantly impact income from continuing
operations for the three months ended April 30, 2004 and 2003. This quantitative
measure has inherent limitations, as it does not take into account any
governmental actions, changes in customer purchasing patterns or changes in the
Company's financing and operating strategies.
ITEM 4. Controls and Procedures
Based on an evaluation of disclosure controls and procedures for the period
ended April 30, 2004 conducted under the supervision and with the participation
of the Company's management, including the Principal Executive Officer and the
Principal Financial Officer, the Company concluded that its disclosure controls
and procedures are effective to ensure that information required to be disclosed
by the Company in reports that it files or submits under the Securities Exchange
Act of 1934 is recorded, processed, summarized and reported within the time
periods specified in Securities and Exchange Commission rules and forms.
Based on an evaluation of internal controls conducted by management for the
period ended April 30, 2004, no significant deficiencies or material weaknesses
were identified and the Company has not made any significant changes in internal
controls or in other factors that could significantly affect internal controls
since such evaluation.
However, it should be noted that any system of controls, however well designed
and operated, can provide only reasonable assurance regarding management's
control objectives. In addition, the design of any control system is based in
part upon certain assumptions about the likelihood of future events. Because of
these and other inherent limitations of control systems, there can be no
assurance that any design will succeed in achieving its stated goals under all
potential future conditions, regardless of how remote.
23
PART II
ITEM 1 - Legal Proceedings
NONE
ITEM 2 - Changes in Securities
NOT APPLICABLE
ITEM 3 - Defaults Upon Senior Securities
NOT APPLICABLE
ITEM 4 - Submission of Matters to a Vote of Security Holders
NONE
ITEM 5 - Other Information
NONE
ITEM 6 - Exhibits and Reports on Form 8-K
a) Exhibits
31(1) - Section 302 Certification of Chief Executive Officer of the
Company
31(2) - Section 302 Certification of Chief Financial Officer of the
Company
32(1) - Section 906 Certification of Chief Executive Officer of the
Company
32(2) - Section 906 Certification of Chief Financial Officer of the
Company
b) Reports on Form 8-K
Form 8-K filed on March 31, 2004 related to the Company's fiscal year
ended January 31, 2004 press release.
24
* * * * * * * * * *
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.
Layne Christensen Company
(Registrant)
DATE: June 7, 2004 /s/A.B. Schmitt
--------------------------------
A.B. Schmitt, President
and Chief Executive Officer
DATE: June 7, 2004 /s/Jerry W. Fanska
--------------------------------
Jerry W. Fanska, Vice President
Finance and Treasurer
25