UNITED STATES
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 JUNE 30, 2001.
[ ] 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 July 31, 2001
Common Stock ($.30 Par Value) 2,428,669
PART I -- FINANCIAL INFORMATION
ITEM 1 -- FINANCIAL STATEMENTS
Incorporated herein is the following unaudited financial information:
Balance Sheet as of June 30, 2001.
Statements of Operations for the three and six month periods ended
June 30, 2001 and 2000.
Statements of Cash Flows for the six month periods ended June 30,
2001 and 2000.
Notes to Financial Statements.
TGC INDUSTRIES, INC
BALANCE SHEET
(UNAUDITED)
JUNE 30,
2001
_______________
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 1,373,062
Accounts receivable 675,751
Cost and estimated earnings in excess
of billings on uncompleted contracts 39,964
Prepaid expenses and other 126,211
__________
Total current assets 2,214,988
PROPERTY AND EQUIPMENT - at cost
Machinery and equipment 11,299,710
Automobiles and trucks 839,052
Furniture and fixtures 323,323
Other 18,144
__________
12,480,229
Less accumulated depreciation
and amortization (9,098,394)
__________
3,381,835
OTHER ASSETS 1,824
__________
Total assets $ 5,598,647
=========
See notes to Financial Statements
TGC INDUSTRIES, INC
BALANCE SHEET -- CONTINUED
(UNAUDITED)
JUNE 30,
2001
__________
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Trade accounts payable $ 875,905
Accrued liabilities 140,793
Billings in excess of costs and estimated
earnings on uncompleted contracts 999,514
Current maturities of long-term obligations 101,870
__________
Total current liabilities 2,118,082
LONG-TERM OBLIGATIONS, less current
maturities 139,253
STOCKHOLDERS' EQUITY
Preferred stock, $1.00 par value;
4,000,000 shares authorized:
8-1/2% Senior convertible preferred stock;
2,456,062 shares issued and outstanding 2,456,062
8% Series C convertible exchangeable
preferred stock; 1,150,350 shares issued,
1,070,650 shares outstanding 1,070,650
Common stock, $.30 par value; 25,000,000
shares authorized; 2,423,669 shares issued 727,101
Additional paid-in capital 5,508,968
Accumulated deficit (6,206,155)
Treasury stock, at cost (31,944 shares) (215,314)
__________
3,341,312
__________
Total liabilities and stockholders' equity $ 5,598,647
==========
See notes to Financial Statements
TGC INDUSTRIES, INC
STATEMENTS OF OPERATIONS
Three Months Ended Six Months Ended
June 30, June 30,
____________________ _____________________
(Unaudited) (Unaudited)
2001 2000 2001 2000
_________ _________ _________ _________
Revenue $2,573,480 $1,439,829 $3,455,632 $ 1,798,367
Cost of services 2,606,298 1,733,277 3,787,357 2,466,339
Selling, general, adm. 254,688 249,409 491,286 484,891
_________ _________ _________ _________
2,860,986 1,982,686 4,278,643
2,951,230
LOSS FROM OPERATIONS (287,506) (542,857) (823,011)
(1,152,863)
Interest expense 5,439 45,697 11,304 121,896
_________ _________ _________ _________
NET LOSS (292,945) (588,554) (834,315)
(1,274,759)
Less dividend
requirements on
preferred stock 164,514 116,207 330,092 227,232
_________ _________ _________ _________
LOSS ALLOCABLE TO
COMMON STOCKHOLDERS $ (457,459) $ (704,761) $(1,164,407)
$1,501,991)
Loss per common share:
Basic and diluted $ (.19) $ (.31) $ (.49) $ (.66)
Weighted average
number of
common shares:
Basic and diluted 2,368,786 2,276,146 2,354,659 2,269,362
See notes to Financial Statements
TGC INDUSTRIES, INC
Statements of Cash Flows (Unaudited)
Six Months Ended
June 30,
________________________
2001 2000
___________ __________
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (834,315) $(1,274,759)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization 806,252 816,477
(Gain) on disposal of property and equipment (500) (3,901)
Changes in operating assets and liabilities
Trade accounts receivable 219,013 (696,177)
Billings in excess of cost
and estimated earnings
on uncompleted contracts 789,050 813,207
Prepaid expenses (54,126) (158,822)
Other assets (1,429) -
Accounts payable 539,029 277,458
Accrued liabilities 258 247,857
___________ ___________
NET CASH PROVIDED BY OPERATING ACTIVITIES 1,463,232 21,340
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (225,854) (456,346)
Proceeds from sale of property and equipment 500 3,901
__________ __________
NET CASH (USED IN) INVESTING ACTIVITIES (225,354) (452,445)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from exercise of warrants 3,766 -
Proceeds from issuance of debt 43,300 77,580
Principal payments of debt obligations (171,013) (457,223)
___________ ___________
NET CASH (USED IN) FINANCING ACTIVITIES (123,947) (379,643)
___________ __________
NET INCREASE (DECREASE)
IN CASH AND CASH EQUIVALENTS 1,113,931 (810,748)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 259,131 1,898,674
__________ __________
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 1,373,062 $ 1,087,926
=========== ===========
Supplemental cash flow information
Interest paid $ 11,304 $ 41,618
Income taxes paid $ - $ -
See notes to Financial Statements
TGC INDUSTRIES, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
June 30, 2001
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, 2000 filed on Form 10-KSB.
NOTE C -- EARNINGS (LOSS) PER SHARE
Basic earnings (loss) per common share are based upon the weighted average
number of shares of common stock outstanding. Diluted earnings (loss) per
share are based upon the weighted average number of common shares outstanding
and, when dilutive, common shares issuable for stock options, warrants and
convertible securities. The effect of preferred stock dividends on the
amount of loss available to common stockholders was $.07 and $.05 for the
three months ended June 30, 2001 and 2000, respectively, and $.14 and $.10
for the six months ended June 30, 2001 and 2000, respectively.
Outstanding warrants that were not included in the diluted calculation
because their effect would be anti-dilutive totaled 850,000 for each of the
three and six month periods ended June 30, 2001, and 1,136,575 for each of
the three and six month periods ended June 30, 2000. Outstanding options
that were not included in the diluted calculation because their effect would
be anti-dilutive totaled 241,100 for each of the three and six month
TGC INDUSTRIES, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
June 30, 2001
(Continued)
NOTE C -- EARNINGS (LOSS) PER SHARE - Continued
periods ended June 30, 2001, and 167,497 for each of the three and six month
periods ended June 30, 2000.
NOTE D DIVIDENDS
Holders of the Company's Series C 8% Convertible Exchangeable Preferred Stock
("Series C Preferred Stock") will receive, when, as and if declared by the
Board of Directors of the Company, dividends at a rate of 8% per annum. The
dividends are payable semi-annually during January and July of each year. At
June 30, 2001, cumulative dividends of approximately $1,070,650 were in
arrears on the Company's Series C Preferred Stock.
Holders of the Company's 8-1/2% Senior Convertible Preferred Stock (the
"Senior Preferred Stock") will receive, when, as and if declared by the Board
of Directors of the Company, dividends at a rate of 8-1/2% per annum. The
dividends are payable semi-annually during June and December of each year.
Dividends paid during 2000, on the Senior Preferred Stock, were paid in
additional shares of Senior Preferred Stock, in accordance with the terms of
the agreement. The holders of the Company's Senior Preferred Stock elected
to receive the June 2001 dividend in additional shares of Senior Preferred
Stock in accordance with the terms of the agreement. At June 30, 2001, there
were no dividends in arrears on the Company's Senior Preferred Stock.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
RESULTS OF OPERATIONS
TGC Industries, Inc. ("TGC") reported revenue of $2,573,480 and a net loss,
before dividend requirements on preferred stock, of $(292,945) for the three
month period ended June 30, 2001, compared with revenue of $1,439,829 and a
net loss, before dividend requirements on preferred stock, of $(588,554) for
2000. Loss per common share, on a basic and diluted basis, was $(.19) for
the three month period ended June 30, 2001, compared with a loss per common
share of $(.31) for 2000.
For the six month period ended June 30, 2001, TGC had revenue of $3,455,632
and a net loss, before dividend requirements on preferred stock, of
$(834,315). This compares with revenue of $1,798,367 and a net loss, before
dividend requirements on preferred stock, of $(1,274,759) for 2000. Loss per
common share, on a basic and diluted basis, was $(.49) for the six month
period ended June 30, 2001, compared with a loss per common share of $(.66)
for 2000.
As a result of TGC reporting a loss for the three and six month periods ended
June 30, 2001 and 2000, the number of shares used in the loss per share
computation does not include any common shares issuable for stock options,
warrants or convertible securities because the effect of their inclusion
would be anti-dilutive.
TGC secured a sufficient number of contracts to deploy a second seismic crew
during the second quarter of 2001, and had a backlog of $7,846,000 at June
30, 2001. TGC's other seismic crew was fully employed during the second
quarter of 2001. This resulted in a significant increase in revenue over the
first quarter of 2001. This increase in revenue enabled TGC to significantly
reduce its losses in the second quarter of 2001 compared with the first
quarter of 2001. Despite the recent difficult industry conditions,
management believes that the geophysical services industry has favorable
long-term prospects. Geophysical services should be in greater demand due to
the recent increase in seismic bidding activity and the prospect of oil and
natural gas prices remaining at or near their current levels. Though there
can be no assurance, such conditions should enable TGC to keep both of its
seismic crews employed the remainder of 2001 thereby further improving the
Company's performance in 2001.
Non-cash charges for depreciation and amortization were $806,252 for the six
month period ended June 30, 2001 compared with $816,477 for the same period
of 2000.
At December 31, 2000, TGC had net operating loss carryforwards of
approximately $7,800,000 available to offset future taxable income, which
expire at various dates through 2020.
FINANCIAL CONDITION
Cash of $1,463,232 was provided from operations for the six month period
ended June 30, 2001 compared with cash provided from operations of $21,340
for the same period of 2000. This increase was primarily the result of a
decrease in accounts receivable, a reduction in the net loss, and an increase
in accounts payable. Cash used in investing activities for the six month
periods ended June 30, 2001 and 2000, was $225,354 and $452,445,
respectively. These funds were used principally for the addition of
equipment. Cash used in financing activities for the six month periods ended
June 30, 2001 and 2000, was $123,947 and $379,643, respectively. These funds
were used primarily for principal payments of debt obligations.
Working capital decreased $232,628 to $96,906 from the December 31, 2000
balance of $329,534. The Company's current ratio was 1.05 at June 30, 2001,
compared with 1.36 at December 31, 2000. Stockholders' equity decreased
$830,548 from the December 31, 2000 balance of $4,171,860 to $3,341,312 at
June 30, 2001. This decrease was primarily attributable to the net loss,
before dividend requirements on preferred stock, of $834,315.
The Company anticipates that available funds, together with anticipated cash
flows generated from future operations will be sufficient to meet the
Company's cash needs during 2001.
Forward-Looking Statements
This report contains forward-looking statements which reflect the view of
Company's management with respect to future events. Although management
believes that the expectations reflected in such forward-looking statements
are reasonable, it can give no assurance that such expectations will prove to
have been correct. Important factors that could cause actual results to
differ materially from such expectations are disclosed in the Company's
Securities and Exchange Commission filings, and include, without limitation,
the unpredictable nature of forecasting weather, the potential for contract
delay or cancellation, and the potential for fluctuations in oil and gas
prices. The forward-looking statements contained herein reflect the current
views of the Company's management and the Company assumes no obligation to
update the forward-looking statements or to update the reasons actual results
could differ from those contemplated by such forward-looking statements.
PART II - OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The annual meeting of shareholders was held on June 14, 2001. The following
matters were voted upon and approved by the Company's shareholders:
a. Election to the Board of Directors of Messrs. William J.
Barrett, Edward L. Flynn, Herbert M. Gardner, Allen T. McInnes,
Pasquale V. Scaturro, William H. White and Wayne A. Whitener was
approved by the shareholders by a majority vote by a vote of
5,222,862 to 25,398.
b. Ratification of the selection of the Company's auditors, Grant
Thornton LLP, was approved by the shareholders by a majority vote
by a vote of 5,241,710 shares voted for, 4,646 voted against
(with 1,904 shares abstaining).
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits -- None.
b. Reports -- None.
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: August 13, 2001 /s/ Wayne A. Whitener
Wayne A. Whitener
President & Chief
Executive Officer
(Principal Executive Officer)
Date: August 13, 2001 /s/ Kenneth W. Uselton
Kenneth W. Uselton
Treasurer (Principal Financial
and Accounting Officer)