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U.S. SECURITIES AND EXCHANGE
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
SEPTEMBER 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 October 31, 2001
Common Stock ($.30 Par Value) 2,479,225
1
PART I -- FINANCIAL INFORMATION
ITEM 1 -- FINANCIAL STATEMENTS
Incorporated herein is the following unaudited financial
information:
Balance Sheet as of September 30, 2001.
Statements of Operations for the three and nine month
periods ended September 30, 2001 and 2000.
Statements of Cash Flows for the nine month periods ended
September 30, 2001 and 2000.
Notes to Financial Statements.
2
TGC INDUSTRIES, INC
BALANCE SHEET
(UNAUDITED)
SEPTEMBER 30,
2001
_____________
ASSETS
CURRENT ASSETS
Cash and cash equivalents $1,121,094
Accounts receivable 626,278
Cost and estimated earnings in excess
of billings on uncompleted contracts 156,032
Prepaid expenses and other 73,790
__________
Total current assets 1,977,194
PROPERTY AND EQUIPMENT - at cost
Machinery and equipment 11,352,340
Automobiles and trucks 852,179
Furniture and fixtures 323,323
Other 18,144
__________
12,545,986
Less accumulated depreciation
and amortization (9,462,927)
__________
3,083,059
OTHER ASSETS 1,824
__________
Total assets $5,062,077
==========
See notes to Financial Statements
3
TGC INDUSTRIES, INC
BALANCE SHEET -- CONTINUED
(UNAUDITED)
SEPTEMBER 30,
2001
______________
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Trade accounts payable $ 557,129
Accrued liabilities 267,481
Billings in excess of costs and estimated
earnings on uncompleted contracts 641,039
Current maturities of long-term obligations 64,482
__________
Total current liabilities 1,530,131
LONG-TERM OBLIGATIONS, less current
maturities 145,528
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,
1,035,650 shares outstanding 1,035,650
Common stock, $.30 par value; 25,000,000
shares authorized; 2,511,169 shares issued 753,351
Additional paid-in capital 5,517,718
Accumulated deficit (6,161,049)
Treasury stock, at cost (31,944 shares) (215,314)
__________
3,386,418
__________
Total liabilities and stockholders' equity $ 5,062,077
===========
See notes to Financial Statements
4
TGC INDUSTRIES, INC
STATEMENTS OF OPERATIONS
Three Months Ended Nine Months Ended
September 30, September 30,
(Unaudited) (Unaudited)
__________________ _________________
2001 2000 2001 2000
____ ____ ____ ____
Revenue $3,545,427 $2,589,305 $7,001,059 $4,387,672
Cost of services 3,251,429 2,291,310 7,038,786 4,757,649
Selling, general, adm. 245,292 243,080 736,578 727,971
_________ _________ _________ _________
3,496,721 2,534,390 7,775,364 5,485,620
INCOME (LOSS)
FROM OPERATIONS 48,706 54,915 (774,305) (1,097,948)
Interest expense 3,600 12,756 14,904 134,652
_______ _______ ________ __________
NET INCOME (LOSS) 45,106 42,159 (789,209) (1,232,600)
Less dividend requirements
on preferred stock 156,585 181,349 486,677 408,581
________ _______ ________ ________
LOSS ALLOCABLE TO
COMMON STOCKHOLDERS $(111,479) $(139,190) $(1,275,886) $(1,641,181)
Loss per common share:
Basic and diluted $ (.05) $ (.06) $ (.54) $ (.72)
Weighted average number of
common shares:
Basic and diluted 2,437,893 2,321,358 2,382,708 2,286,820
See notes to Financial Statements
5
TGC INDUSTRIES, INC
Statements of Cash Flows (Unaudited)
Nine Months Ended
September 30,
2001 2000
____ ____
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $(789,209) $(1,232,600)
Adjustments to reconcile net loss to
net cash provided by operating activities:
Depreciation and amortization 1,211,711 1,235,559
Gain on disposal of property and
equipment (4,000) (3,901)
Changes in operating assets and
liabilities
Trade accounts receivable 268,486 (653,914)
Billings in excess of cost and
estimated earnings on
uncompleted contracts 314,507 323,403
Prepaid expenses (1,705) (95,836)
Other assets (1,429) 100
Accounts payable 220,253 422,224
Accrued liabilities 126,946 266,748
________ ________
NET CASH PROVIDED BY OPERATING
ACTIVITIES 1,345,560 261,783
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (332,537) (513,336)
Proceeds from sale of property and
equipment 4,000 3,901
_________ ________
NET CASH USED IN INVESTING ACTIVITIES (328,537) (509,435)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from exercise of warrants 3,766 -
Proceeds from issuance of debt 81,904 77,580
Principal payments of debt obligations (240,730) (719,204)
_________ ________
NET CASH USED IN FINANCING ACTIVITIES (155,060) (641,624)
NET INCREASE (DECREASE) IN CASH AND _________ ________
CASH EQUIVALENTS 861,963 (889,276)
CASH AND CASH EQUIVALENTS AT BEGINNING
OF PERIOD 259,131 1,898,674
_________ _________
CASH AND CASH EQUIVALENTS AT END OF
PERIOD $1,121,094 $1,009,398
========== ==========
Supplemental cash flow information
Interest paid $14,904 $ 54,374
Income taxes paid $ - $ -
See notes to Financial Statements
6
TGC INDUSTRIES, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
September 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 $.06 and $.08 for the three months ended September 30, 2001 and
2000, respectively, and $.20 and $.18 for the nine months ended
September 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 nine month periods ended September 30, 2001, and
1,136,575 for each of the three and nine month periods ended September
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 nine month periods ended September 30, 2001,
and 176,497 for each of the three and nine month periods ended
September 30, 2000.
7
TGC INDUSTRIES, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
September 30, 2001
(Continued)
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 September 30, 2001, cumulative
dividends of approximately $1,035,650 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 September 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 $3,545,427 and net
income, before dividend requirements on preferred stock, of $45,106 for
the three month period ended September 30, 2001, compared with revenue
of $2,589,305 and net income, before dividend requirements on preferred
stock, of $42,159 for 2000. Loss allocable to common stockholders per
common share, on a basic and diluted basis, was $(.05) for the three
month period ended September 30, 2001, compared with a loss per common
share of $(.06) for 2000.
For the nine month period ended September 30, 2001, TGC had revenue of
$7,001,059 and a net loss, before dividend requirements on preferred
stock, of $(789,209). This compares with revenue of $4,387,672 and a
net loss, before dividend requirements on preferred stock, of
$(1,232,600) for the same period in 2000. Loss allocable to common
stockholders per common share, on a basic and diluted basis, was $(.54)
for the nine month period ended September 30, 2001, compared with a
loss per common share of $(.72) for the same period in 2000.
8
As a result of TGC reporting a loss allocable to common stockholders
for the three and nine month periods ended September 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 was awarded and completed sufficient work to return to
profitability, before dividend requirements on preferred stock, during
the third quarter of 2001 showing a significant improvement over the
first two quarters of 2001. TGC had a backlog of $6,173,700 at
September 30, 2001. Despite the recent difficult industry conditions,
management believes that bidding activity for seismic services will
remain at or near current levels and the geophysical services industry
has favorable long-term prospects.
Non-cash charges for depreciation and amortization were $1,211,711 for
the nine month period ended September 30, 2001 compared with $1,235,559
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 $1,345,560 was provided from operations for the nine month
period ended September 30, 2001 compared with cash provided from
operations of $261,783 for the same period of 2000. This increase was
primarily the result of a decrease in accounts receivable, and a
reduction in the net loss. Cash used in investing activities for the
nine month periods ended September 30, 2001 and 2000, was $328,537 and
$509,435, respectively. These funds were used principally for the
addition of equipment. Cash used in financing activities for the nine
month periods ended September 30, 2001 and 2000, was $155,060 and
$641,624, respectively. These funds were used primarily for principal
payments of debt obligations.
Working capital increased $117,529 to $447,063 from the December 31,
2000 balance of $329,534. The Company's current ratio was 1.29 at
September 30, 2001, compared with 1.36 at December 31, 2000.
Stockholders' equity decreased $785,442 from the December 31, 2000
balance of $4,171,860 to $3,386,418 at September 30, 2001. This
decrease was primarily attributable to the net loss, before dividend
requirements on preferred stock, of $789,209.
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.
9
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 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: November 8, 2001 /s/ Wayne A. Whitener
Wayne A. Whitener
President & Chief
Executive Officer
(Principal Executive Officer)
Date: November 8, 2001 /s/ Kenneth W. Uselton
Kenneth W. Uselton
Treasurer (Principal Financial
and Accounting Officer)
10