U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDING MARCH 31, 1997.
[ ] 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 0-14908
TGC INDUSTRIES, INC.
(Exact name of small business issuer as specified in its charter)
Texas 74-2095844
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1304 Summit, Suite 2
Plano, Texas 75074
(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code: (972) 881-1099
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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___
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date.
Class Outstanding at April 30, 1997
Common Stock ($.10 Par Value) 6,315,738
PART 1--FINANCIAL INFORMATION
ITEM 1--FINANCIAL STATEMENTS
Incorporated herein is the following unaudited financial information:
Balance Sheet as of March 31, 1997.
Statements of Operations for the three month periods ended March 31,
1997 and 1996.
Statements of Cash Flows for the three month periods ended March 31,
1997 and 1996.
Notes to Financial Statements.
TGC INDUSTRIES, INC.
BALANCE SHEET
(UNAUDITED)
MARCH 31,
1997
_______________
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 288,712
Accounts receivable 362,409
Costs and estimated earnings in excess
of billings on uncompleted contracts 248,600
Prepaid expenses 293,083
___________
Total current assets 1,192,804
PROPERTY AND EQUIPMENT - at cost
Machinery and equipment 7,979,592
Automobiles and trucks 612,712
Furniture and fixtures 312,913
____________
8,905,217
Less accumulated depreciation (2,512,313)
____________
6,392,904
OTHER ASSETS 65,232
_____________
Total Assets $ 7,650,940
===============
See Notes to Financial Statements
TGC INDUSTRIES, INC.
BALANCE SHEET--CONTINUED
(UNAUDITED)
MARCH 31,
1997
_____________
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Trade accounts payable $ 1,857,919
Accrued liabilities 150,211
Billings in excess of costs and estimated
earnings on uncompleted contracts 492,898
Current maturities of long-term obligations 945,235
________________
Total current liabilities 3,446,263
LONG-TERM OBLIGATIONS, less current
maturities 1,331,200
STOCKHOLDERS' EQUITY
Preferred stock, $1.00 par value; 4,000,000
shares authorized; 1,148,850 issued
and outstanding 1,148,850
Common stock, $.10 par value, 25,000,000
shares authorized; 6,400,820 shares issued 640,082
Additional paid-in capital 5,847,934
Accumulated deficit (4,564,200)
Treasury stock, at cost (85,082 shares) (199,189)
________________
2,873,477
_________________
Total liabilities and stockholders' equity $ 7,650,940
=================
See Notes to Financial Statements
TGC INDUSTRIES, INC.
STATEMENTS OF OPERATIONS
Three Months Ended
March 31,
________________________
(Unaudited)
1997 1996
_____ _____
Revenue $2,323,320 $2,234,672
Other Income 417,033 -
__________ ___________
2,740,353 2,234,672
Cost of services 2,527,915 1,801,437
Selling, general, adm. 209,308 211,725
__________ ___________
2,737,223 2,013,162
INCOME (LOSS) FROM
OPERATIONS 3,130 221,510
Interest expense 42,982 16,155
___________ ___________
INCOME (LOSS) FROM
CONTINUING OPERATIONS (39,852) 205,355
Discontinued operations
(Loss) from operations - (675,070)
___________ ___________
NET (LOSS) (39,852) (469,715)
Less dividend requirement on
preferred stock 114,885 -
____________ ____________
(LOSS) ALLOCABLE TO
COMMON STOCKHOLDERS $(154,737) $ (469,715)
Earnings (loss) per common
and common equivalent share
Continuing operations $(.02) $ .03
Discontinued operations - (.11)
____________ _____________
$(.02) $(.08)
Weighted average number
of common and common
equivalent shares 6,323,100 6,232,152
See Notes to Financial Statements
TGC INDUSTRIES, INC.
Statements of Cash Flows (Unaudited)
Three Months Ended
March 31,
_________________________
1997 1996
______ ______
INCREASE (DECREASE) IN
CASH AND CASH EQUIVALENTS
CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss $ (39,852) $(469,715)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Loss from discontinued operations - 675,070
Depreciation and amortization 269,996 200,962
Gain on disposal of property and equipment (208,985) (6,085)
Changes in operating assets and liabilities
Accounts receivable 524,997 (300,779)
Billings in excess of cost and estimated
earnings on uncompleted contracts (260,107) 781,354
Prepaid expenses (216,540) (284,283)
Accounts payable 374,090 (139,986)
Accrued liabilities (274,718) (120,082)
___________ ___________
NET CASH PROVIDED BY CONTINUING OPERATIONS 168,881 336,456
NET PROVIDED BY DISCONTINUED OPERATIONS - 293,016
NET CASH PROVIDED BY (USED IN) OPERATING ----------- ----------
ACTIVITIES 168,881 629,472
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to machinery and equipment (594,187) (22,740)
Proceeds from sale of property and equipment 210,332 9,000
Increase in other assets (33,840) 453
INVESTING ACTIVITIES OF DISCONTINUED
OPERATIONS - (77,539)
___________ __________
NET CASH USED IN INVESTING ACTIVITIES (417,695) (90,826)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of debt - 30,000
Proceeds from issuance of stock - -
Principal payments of debt obligations (117,754) (48,447)
FINANCING ACTIVITIES OF DISCONTINUED
OPERATIONS - (506,763)
__________ __________
NET CASH PROVIDED BY (USED IN) FINANCING
ACTIVITIES (117,754) (525,210)
__________ __________
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS (366,568) 13,436
Cash and cash equivalents at beginning of period 655,280 114,868
__________ __________
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 288,712 $128,304
========== ==========
Three Months Ended
March 31,
_________________________
1997 1996
______ ______
Supplemental cash flow information
Cash paid during the year
Interest $ 42,982 $ 8,483
Income taxes $ - $ -
Noncash investing and financing activities
(1) On January 7, 1997, options for 4,668 shares and 47,500 shares of Common
Stock at an exercise price of $1.00 and $.40 respectively per share were
exercised. The Company received 14,025 shares of its Common Stock at a
market value of $1.6875 per share as payment for the exercise of the options.
(2) In March 1997, the Company financed the acquisition of equipment through
a capital lease in the amount of $876,656.
See Notes to Financial Statements
TGC INDUSTRIES, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
March 31, 1997
NOTE A--BASIS OF PRESENTATION
The accompanying unaudited financial statements have been prepared in
accordance with the instructions to Form 10-QSB and therefore do not include
all information and footnotes necessary for a fair presentation of financial
position, results of operations and changes in financial position in
conformity with generally accepted accounting principles.
NOTE B--MANAGEMENT PRESENTATION
In the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation of financial position,
results of operations, and changes in financial position have been included.
The results of the interim periods are not necessarily indicative of results
to be expected for the entire year. For further information, refer to the
financial statements and the footnotes thereto included in the Company's
Annual Report for the year ended December 31, 1996 filed on Form 10-KSB.
NOTE C--EARNINGS (LOSS) PER SHARE
The computation of earnings (loss) per share is based on the weighted average
number of shares of common stock and common stock equivalents, if dilutive,
outstanding during the period. Net earnings (loss) used in the computation
of earnings (loss) per share for the three months ended March 31, 1997, are
reduced by preferred stock dividend requirements.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
RESULTS OF OPERATIONS
TGC Industries, Inc. ("TGC") reported revenues from continuing operations for
the three months ended March 31, 1997, of $2,323,320 compared with revenues
from continuing operations of $2,234,672 for the same period of the prior
year. TGC reported a loss from continuing operations, before the dividend
requirement on preferred stock, of $39,852 for the three months ended March
31, 1997. This compares with income from continuing operations of $205,355
for the same period of 1996. There were no preferred stock dividends
incurred in the first quarter of 1996. Loss per common share from continuing
operations, after dividend requirements on preferred stock, was $.02 for the
first quarter of 1997, compared with income from continuing operations of
$.03 for the same period of 1996.
On January 1, 1997, Eagle Crew No. 2 was immobilized and suffered equipment
losses in the California floods. TGC was successful in securing replacement
equipment and the crew returned to work at the end of February. These losses
were partially offset by insurance coverage and TGC experienced a nominal
loss in the first quarter of 1997. The other income of $417,033 was
principally net insurance proceeds for business interruption and equipment
lost or damaged in the California floods.
Despite the weather related problems in the first quarter of 1997, management
believes that 1997 will be a record year for revenues and earnings. TGC has
two state-of-the-art Eagle 1500 Channel crews and these crews are under
contract through October 1997. The geophysical business continues to be
favorable and strong. However, with the unpredictable nature of forecasting
weather, the potential for contract delay or cancellation and the potential
for fluctuations in oil and gas prices, no assurance can be given that
management's expectations can be achieved.
Common shares of Chase Packaging Corporation ("Chase") were distributed on
March 7, 1997 to TGC shareholders, thereby concluding the spin-off of Chase.
The spin-off was effective July 31, 1996. As a result, Chase has been
accounted for as a discontinued operation in the accompanying financial
statements.
FINANCIAL CONDITION
Cash of $168,881 was provided from continuing operations for the first three
months of 1997 compared with cash provided from continuing operations of
$336,456 for the first three months of 1996. The funds generated in the
first three months of 1997 were primarily attributable to net earnings before
non-cash depreciation charges. Cash used in investing activities for the
first three months of 1997 was primarily for additions to machinery and
equipment for geophysical field operations.
Working capital decreased $967,930 to ($2,253,459) from the December 31, 1996
balance of ($1,285,529) primarily as a result of decreases in cash and cash
equivalents, accounts receivable, and costs and estimated earnings in excess
of billings on uncompleted contracts. These decreases were primarily caused
by weather related problems in the first quarter of 1997, and management
believes with the current contracts and expected increase in revenues, the
Company's working capital should improve in the second quarter. The
Company's current ratio was .3 to 1 at March 31, 1997, compared with .6 to 1
at December 31, 1996.
In March of 1997, the Company financed the acquisition of equipment through
a capital lease in the amount of $876,656. In addition, on March 18, 1997,
the Company sold Chase's Portland, Oregon facility for $2,430,000. The
proceeds of the sale were applied in satisfaction of the mortgage
indebtedness with respect to such facility and the excess proceeds were
remitted to Chase pursuant to the spin-off agreement.
Stockholders' equity decreased $143,829 from the December 31, 1996 balance of
$3,017,306 to $2,873,477 at March 31, 1997. The completion of the spin-off
of Chase on March 7, 1997, resulted in a decrease of $103,977 in
stockholders' equity.
PART II-OTHER INFORMATION
ITEM 5. OTHER INFORMATION
a. On March 7, 1997, the Chase common stock was distributed as a stock
dividend to the shareholders of TGC common stock, and on an as if converted
basis, TGC preferred stock. The spin-off of Chase was effective July 31,
1996. As a result, Chase has been accounted for as a discontinued operation
in the accompanying financial statements.
b. On March 18, 1997, TGC sold Chase's Portland, Oregon facility for
$2,430,000. TGC applied such proceeds in satisfaction of the mortgage
indebtedness with respect to such facility and remitted the excess proceeds
to Chase pursuant to the spin-off agreement.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
a. Exhibits -- None.
b. Reports -- No reports on Form 8-K have been filed during the quarter for
which this report is filed.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
TGC INDUSTRIES, INC.
Date: May 12, 1997 /s/ ROBERT J. CAMPBELL
Robert J. Campbell
Vice Chairman of the Board
(Principal Executive Officer)
Date: May 12, 1997 /s/ KENNETH W. USELTON
Kenneth W. Uselton
Treasurer (Principal Financial
and Accounting Officer)
H:\DOCS3\T9140\001\65299.1
5
3-MOS
DEC-31-1997
MAR-31-1997
288,712
0
362,409
0
0
1,192,804
8,905,217
2,512,313
7,650,940
3,446,263
1,331,200
640,082
0
1,148,850
1,084,545
7,650,940
0
2,740,353
0
2,527,915
209,308
0
42,982
(154,737)
0
(154,737)
0
0
0
(154,737)
(.02)
0
