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EXCEL - IDEA: XBRL DOCUMENT - LAYNE CHRISTENSEN COFinancial_Report.xls

 

 

 

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

x

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended October 31, 2014

OR

¨

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from              to             

Commission File Number 001-34195

 

Layne Christensen Company

(Exact name of registrant as specified in its charter)

 

 

Delaware

 

48-0920712

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification No.)

 

1800 Hughes Landing Boulevard Ste 700 The Woodlands, TX

 

 

77380

(Address of principal executive offices)

 

(Zip Code)

(Registrant’s telephone number, including area code) (281)475-2600

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  ¨

Indicated by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

 

Large accelerated filer

 

¨

 

 

  

Accelerated filer

 

x

 

 

 

 

 

Non-accelerated filer

 

¨

 

(Do not check if a smaller reporting company)

  

Smaller reporting company

 

¨

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x

There were 19,739,583 shares of common stock, $.01 par value per share, outstanding on December 1, 2014.

 

 

 

 

 

 


 

LAYNE CHRISTENSEN COMPANY AND SUBSIDIARIES

Form 10-Q

For the QUARTERLY PERIOD ENDED October 31, 2014

INDEX

 

 

 

 

  

Page

PART I

 

 

  

 

 

 

 

ITEM 1.

 

Financial Statements (Unaudited)

  

3

 

 

 

ITEM 2.

 

Management’s Discussion and Analysis of Financial Condition and Results of Operations

  

28

 

 

 

ITEM 3.

 

Quantitative and Qualitative Disclosures About Market Risk

  

39

 

 

 

ITEM 4.

 

Controls and Procedures

  

40

 

 

 

PART II

 

 

  

 

 

 

 

ITEM 1.

 

Legal Proceedings

  

41

 

 

 

ITEM 1A.

 

Risk Factors

  

41

 

 

 

ITEM 2.

 

Unregistered Sales of Equity Securities and Use of Proceeds

  

41

 

 

 

ITEM 3.

 

Defaults Upon Senior Securities

  

41

 

 

 

ITEM 4.

 

Mine Safety Disclosures

  

41

 

 

 

ITEM 5.

 

Other Information

  

41

 

 

 

ITEM 6.

 

Exhibits

  

42

 

 

 

 

 

Signatures

  

43

 

 

 

2


 

PART I

 

 

ITEM 1. Financial Statements

LAYNE CHRISTENSEN COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

 

 

 

October 31,

 

 

January 31,

 

(in thousands)

 

2014

 

 

2014

 

 

 

(unaudited)

 

 

(unaudited)

 

ASSETS

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

35,931

 

 

$

30,909

 

Customer receivables, less allowance of $4,270 and $7,481, respectively

 

 

109,956

 

 

 

88,217

 

Costs and estimated earnings in excess of billings on uncompleted contracts

 

 

107,565

 

 

 

88,744

 

Inventories

 

 

31,774

 

 

 

31,481

 

Deferred income taxes

 

 

3,950

 

 

 

4,100

 

Income taxes receivable

 

 

12,777

 

 

 

9,068

 

Cash surrender value of life insurance policies

 

 

 

 

 

10,651

 

Restricted deposits-current

 

 

4,145

 

 

 

2,881

 

Discontinued operations-assets

 

 

 

 

 

36,640

 

Other

 

 

15,243

 

 

 

14,166

 

Total current assets

 

 

321,341

 

 

 

316,857

 

Property and equipment:

 

 

 

 

 

 

 

 

Land

 

 

16,360

 

 

 

16,474

 

Buildings

 

 

38,983

 

 

 

37,600

 

Machinery and equipment

 

 

457,434

 

 

 

478,651

 

 

 

 

512,777

 

 

 

532,725

 

Less - Accumulated depreciation

 

 

(348,662

)

 

 

(341,332

)

Net property and equipment

 

 

164,115

 

 

 

191,393

 

Other assets:

 

 

 

 

 

 

 

 

Investment in affiliates

 

 

63,783

 

 

 

67,293

 

Goodwill

 

 

8,915

 

 

 

8,915

 

Other intangible assets, net

 

 

4,136

 

 

 

5,150

 

Restricted deposits-long term

 

 

4,526

 

 

 

4,964

 

Deferred income taxes

 

 

489

 

 

 

546

 

Deferred financing fees, net

 

 

7,513

 

 

 

5,313

 

Discontinued operations-assets

 

 

 

 

 

38,752

 

Other

 

 

17,072

 

 

 

7,435

 

Total other assets

 

 

106,434

 

 

 

138,368

 

Total assets

 

$

591,890

 

 

$

646,618

 

 

- Continued -

 

 

 

3


 

LAYNE CHRISTENSEN COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS—(Continued)

 

 

 

October 31,

 

 

January 31,

 

(in thousands, except per share data)

 

2014

 

 

2014

 

 

 

(unaudited)

 

 

(unaudited)

 

LIABILITIES AND EQUITY

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

85,810

 

 

$

60,922

 

Current maturities of long term debt

 

 

194

 

 

 

128

 

Accrued compensation

 

 

23,452

 

 

 

15,169

 

Accrued insurance expense

 

 

13,744

 

 

 

10,710

 

Accrued FCPA liability

 

 

5,127

 

 

 

10,352

 

Discontinued operations-current liabilities

 

 

 

 

 

31,853

 

Other accrued expenses

 

 

32,591

 

 

 

24,544

 

Acquisition escrow obligation-current

 

 

 

 

 

2,858

 

Income taxes payable

 

 

8,588

 

 

 

7,736

 

Billings in excess of costs and estimated earnings on uncompleted contracts

 

 

37,383

 

 

 

31,255

 

Total current liabilities

 

 

206,889

 

 

 

195,527

 

Noncurrent and deferred liabilities:

 

 

 

 

 

 

 

 

Convertible notes, net

 

 

109,210

 

 

 

106,782

 

Long-term debt

 

 

22,122

 

 

 

336

 

Accrued insurance expense

 

 

15,965

 

 

 

16,883

 

Deferred income taxes

 

 

9,894

 

 

 

10,945

 

Discontinued operations-long term liabilities

 

 

 

 

 

1,186

 

Other

 

 

21,602

 

 

 

24,256

 

Total noncurrent and deferred liabilities

 

 

178,793

 

 

 

160,388

 

Equity:

 

 

 

 

 

 

 

 

Common stock, par value $.01 per share, 60,000 and 30,000 shares authorized, 20,179

   and 19,915 shares issued and outstanding, respectively

 

 

202

 

 

 

199

 

Capital in excess of par value

 

 

369,097

 

 

 

367,461

 

Accumulated deficit

 

 

(148,916

)

 

 

(61,656

)

Accumulated other comprehensive loss

 

 

(14,837

)

 

 

(16,540

)

Total Layne Christensen Company equity

 

 

205,546

 

 

 

289,464

 

Noncontrolling interests

 

 

662

 

 

 

1,239

 

Total equity

 

 

206,208

 

 

 

290,703

 

Total liabilities and equity

 

$

591,890

 

 

$

646,618

 

 

See Notes to Condensed Consolidated Financial Statements.

-Concluded-

 

 

 

4


 

LAYNE CHRISTENSEN COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

 

 

 

Three Months

 

 

Nine Months

 

 

 

Ended October 31,

 

 

Ended October 31,

 

 

 

(unaudited)

 

 

(unaudited)

 

(in thousands, except per share data)

 

2014

 

 

2013

 

 

2014

 

 

2013

 

Revenues

 

$

222,906

 

 

$

201,978

 

 

$

603,698

 

 

$

628,411

 

Cost of revenues (exclusive of depreciation and amortization,

   shown below)

 

 

(185,459

)

 

 

(166,313

)

 

 

(513,291

)

 

 

(522,388

)

Selling, general and administrative expenses (exclusive of

   depreciation and amortization shown below)

 

 

(30,103

)

 

 

(36,621

)

 

 

(89,887

)

 

 

(110,389

)

Depreciation and amortization

 

 

(11,967

)

 

 

(14,055

)

 

 

(37,861

)

 

 

(42,223

)

Impairment charges

 

 

 

 

 

 

 

 

 

 

 

(14,646

)

Restructuring costs

 

 

(828

)

 

 

 

 

 

(2,156

)

 

 

 

Equity in (losses) earnings of affiliates

 

 

(1,496

)

 

 

(2,300

)

 

 

973

 

 

 

(4,088

)

Interest expense

 

 

(3,259

)

 

 

(1,457

)

 

 

(10,333

)

 

 

(3,292

)

Other income, net

 

 

954

 

 

 

257

 

 

 

1,518

 

 

 

4,780

 

Loss from continuing operations before income taxes

 

 

(9,252

)

 

 

(18,511

)

 

 

(47,339

)

 

 

(63,835

)

Income tax benefit (expense)

 

 

5,544

 

 

 

3,276

 

 

 

3,575

 

 

 

(53,821

)

Net loss from continuing operations

 

 

(3,708

)

 

 

(15,235

)

 

 

(43,764

)

 

 

(117,656

)

Net (loss) income from discontinued operations

 

 

(778

)

 

 

(306

)

 

 

(42,433

)

 

 

3,862

 

Net loss

 

 

(4,486

)

 

 

(15,541

)

 

 

(86,197

)

 

 

(113,794

)

Net income attributable to noncontrolling interests

 

 

(18

)

 

 

(231

)

 

 

(1,063

)

 

 

(577

)

Net loss attributable to Layne Christensen Company

 

$

(4,504

)

 

$

(15,772

)

 

$

(87,260

)

 

$

(114,371

)

Earnings per share information attributable to Layne Christensen

   shareholders:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic loss per share - continuing operations

 

$

(0.19

)

 

$

(0.79

)

 

$

(2.28

)

 

$

(6.03

)

Basic(loss) income per share - discontinued operations

 

 

(0.04

)

 

 

(0.01

)

 

 

(2.16

)

 

 

0.20

 

Basic loss per share

 

$

(0.23

)

 

$

(0.80

)

 

$

(4.44

)

 

$

(5.83

)

Diluted loss per share - continuing operations

 

$

(0.19

)

 

$

(0.79

)

 

$

(2.28

)

 

$

(6.03

)

Diluted (loss) income per share - discontinued operations

 

 

(0.04

)

 

 

(0.01

)

 

 

(2.16

)

 

 

0.20

 

Diluted loss per share

 

$

(0.23

)

 

$

(0.80

)

 

$

(4.44

)

 

$

(5.83

)

Weighted average shares outstanding - basic

 

 

19,634

 

 

 

19,622

 

 

 

19,629

 

 

 

19,589

 

Dilutive stock options and nonvested shares

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding  - dilutive

 

 

19,634

 

 

 

19,622

 

 

 

19,629

 

 

 

19,589

 

 

See Notes to Condensed Consolidated Financial Statements.

 

 

 

5


 

LAYNE CHRISTENSEN COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

 

 

 

Three Months

 

 

Nine Months

 

 

 

Ended October 31,

 

 

Ended October 31,

 

 

 

(unaudited)

 

 

(unaudited)

 

(in thousands)

 

2014

 

 

2013

 

 

2014

 

 

2013

 

Net loss

 

$

(4,486

)

 

$

(15,541

)

 

$

(86,197

)

 

$

(113,794

)

Other comprehensive (loss) income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustments (net of tax (expense)

   benefit of $0, ($1,021), $0, and ($2,757), respectively)

 

 

(2,313

)

 

 

(1,163

)

 

 

(2,091

)

 

 

1,075

 

Reclassification adjustment for foreign currency translation, net

   of taxes of $0

 

 

158

 

 

 

 

 

 

3,794

 

 

 

 

Other comprehensive (loss) income

 

 

(2,155

)

 

 

(1,163

)

 

 

1,703

 

 

 

1,075

 

Comprehensive loss

 

 

(6,641

)

 

 

(16,704

)

 

 

(84,494

)

 

 

(112,719

)

Comprehensive income attributable to noncontrolling interests

 

 

(18

)

 

 

(231

)

 

 

(1,063

)

 

 

(577

)

Comprehensive loss attributable to Layne Christensen Company

 

$

(6,659

)

 

$

(16,935

)

 

$

(85,557

)

 

$

(113,296

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

See Notes to Condensed Consolidated Financial Statements.

 

 

 

6


 

LAYNE CHRISTENSEN COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (UNAUDITED)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Retained

 

 

Accumulated

 

 

Total Layne

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital In

 

 

Earnings

 

 

Other

 

 

Christensen

 

 

 

 

 

 

 

 

 

 

 

Common Stock

 

 

Excess of

 

 

(Accumulated

 

 

Comprehensive

 

 

Company

 

 

Noncontrolling

 

 

 

 

 

(in thousands, except share data)

 

Shares

 

 

Amount

 

 

Par Value

 

 

Deficit)

 

 

(Loss) Income

 

 

Equity

 

 

Interest

 

 

Total

 

Balance February 1, 2013

 

 

19,818,376

 

 

$

198

 

 

$

352,048

 

 

$

66,983

 

 

$

(6,492

)

 

$

412,737

 

 

$

2,334

 

 

$

415,071

 

Net (loss) income

 

 

 

 

 

 

 

 

 

 

 

(114,371

)

 

 

 

 

 

(114,371

)

 

 

577

 

 

 

(113,794

)

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,075

 

 

 

1,075

 

 

 

 

 

 

1,075

 

Issuance of nonvested shares

 

 

107,646

 

 

 

1

 

 

 

(1

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Treasury stock purchased and

   subsequently cancelled

 

 

(2,634

)

 

 

 

 

 

(52

)

 

 

 

 

 

 

 

 

(52

)

 

 

 

 

 

(52

)

Issuance of stock upon exercise of

   options

 

 

72,613

 

 

 

 

 

 

1,105

 

 

 

 

 

 

 

 

 

1,105

 

 

 

 

 

 

1,105

 

Cancellation of stock options issued

 

 

(8,099

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Forfeiture of nonvested shares

 

 

(22,809

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Distribution to noncontrolling interest

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,683

)

 

 

(1,683

)

Share-based compensation

 

 

 

 

 

 

 

 

2,535

 

 

 

 

 

 

 

 

 

2,535

 

 

 

 

 

 

2,535

 

Balance October 31, 2013

 

 

19,965,093

 

 

$

199

 

 

$

355,635

 

 

$

(47,388

)

 

$

(5,417

)

 

$

303,029

 

 

$

1,228

 

 

$

304,257

 

Balance February 1, 2014

 

 

19,914,976

 

 

$

199

 

 

$

367,461

 

 

$

(61,656

)

 

$

(16,540

)

 

$

289,464

 

 

$

1,239

 

 

$

290,703

 

Net (loss) income

 

 

 

 

 

 

 

 

 

 

 

(87,260

)

 

 

 

 

 

(87,260

)

 

 

1,063

 

 

 

(86,197

)

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,703

 

 

 

1,703

 

 

 

 

 

 

1,703

 

Issuance of nonvested shares

 

 

583,859

 

 

 

6

 

 

 

(6

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Treasury stock purchased and

   subsequently cancelled

 

 

(2,051

)

 

 

 

 

 

(27

)

 

 

 

 

 

 

 

 

(27

)

 

 

 

 

 

(27

)

Forfeiture of nonvested shares

 

 

(317,939

)

 

 

(3

)

 

 

3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Distribution to noncontrolling interest

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,640

)

 

 

(1,640

)

Share-based compensation

 

 

 

 

 

 

 

 

1,666

 

 

 

 

 

 

 

 

 

1,666

 

 

 

 

 

 

1,666

 

Balance October 31, 2014

 

 

20,178,845

 

 

$

202

 

 

$

369,097

 

 

$

(148,916

)

 

$

(14,837

)

 

$

205,546

 

 

$

662

 

 

$

206,208

 

 

See Notes to Condensed Consolidated Financial Statements.

 

 

 

7


 

LAYNE CHRISTENSEN COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW

 

 

Nine Months

 

 

 

Ended October 31,

 

 

 

(unaudited)

 

(in thousands)

 

2014

 

 

2013

 

Cash flow from operating activities:

 

 

 

 

 

 

 

 

Net loss

 

$

(86,197

)

 

$

(113,794

)

Adjustments to reconcile net loss to cash flow from operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

40,420

 

 

 

45,745

 

Amortization of discount and deferred financing costs

 

 

4,514

 

 

 

 

Loss (gain) on disposal of discontinued operations

 

 

39,131

 

 

 

(8,333

)

Deferred income taxes

 

 

(769

)

 

 

47,900

 

Share-based compensation

 

 

1,666

 

 

 

2,535

 

Equity in (earnings) losses of affiliates

 

 

(973

)

 

 

4,088

 

Impairment charges

 

 

 

 

 

14,646

 

Restructuring activities

 

 

505

 

 

 

 

Dividends received from affiliates

 

 

4,481

 

 

 

6,129

 

Gain from disposal of property and equipment

 

 

(2,347

)

 

 

(4,716

)

     Changes in current assets and liabilities:

 

 

 

 

 

 

 

 

(Increase) decrease in customer receivables

 

 

(21,639

)

 

 

28,424

 

(Increase) decrease in costs and estimated earnings in excess

 

 

 

 

 

 

 

 

of billings on uncompleted contracts

 

 

(19,367

)

 

 

1,254

 

Decrease in inventories

 

 

14

 

 

 

2,663

 

Decrease (increase) in other current assets

 

 

562

 

 

 

(4,659

)

Increase (decrease) in accounts payable and accrued expenses

 

 

31,694

 

 

 

(23,846

)

Increase (decrease) in billings in excess of costs and

 

 

 

 

 

 

 

 

   estimated earnings on uncompleted contracts

 

 

6,131

 

 

 

(2,258

)

Other, net

 

 

(10,399

)

 

 

1,072

 

Cash used in operating activities

 

 

(12,573

)

 

 

(3,150

)

Cash flow from investing activities:

 

 

 

 

 

 

 

 

Additions to property and equipment

 

 

(12,269

)

 

 

(25,479

)

Proceeds from disposal of property and equipment

 

 

5,762

 

 

 

7,717

 

Proceeds from sale of business, net of cash divested

 

 

(3,766

)

 

 

12,064

 

Proceeds from redemption of insurance contracts

 

 

11,094

 

 

 

3,565

 

Proceeds from redemption of preferred units

 

 

500

 

 

 

 

Deposit of cash into restricted accounts

 

 

(32,849

)

 

 

 

Release of cash from restricted accounts

 

 

31,344

 

 

 

 

Cash used in investing activities

 

 

(184

)

 

 

(2,133

)

Cash flow from financing activities:

 

 

 

 

 

 

 

 

Borrowing under revolving loan facilities

 

 

46,420

 

 

 

286,161

 

Repayments under revolving loan facilities

 

 

(26,812

)

 

 

(275,116

)

Net increase (decrease) in notes payable

 

 

2,454

 

 

 

(959

)

Deferred financing costs

 

 

 

 

 

(397

)

Payment of debt issuance costs

 

 

(4,303

)

 

 

 

Principal payments under capital lease obligation

 

 

(611

)

 

 

(556

)

Distribution to noncontrolling interests

 

 

(1,640

)

 

 

(1,683

)

Issuance of common stock upon exercise of stock options

 

 

 

 

 

1,105

 

Purchases and retirement of treasury stock

 

 

(27

)

 

 

(52

)

Cash provided by financing activities

 

 

15,481

 

 

 

8,503

 

Effects of exchange rate changes on cash

 

 

(1,806

)