SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 UNDER
THE SECURITIES EXCHANGE ACT OF 1934
For the month of February, 2003
CE Franklin Ltd.
1900, 300 — 5th Avenue S.W.
Calgary, AB. T2P 3C4
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:
Form 20-FxForm 40-Fo
Indicate by check mark whether by furnishing the information contained in this Form, the registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
YesoNox
If “ Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82-
| SIGNATURE | ||||||||
| NEWS RELEASE | ||||||||
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant, CE Franklin Ltd., has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| �� | ||
| Date: | February 11, 2003 | |
| CE Franklin Ltd. |
By:
/s/ Salvatore Secreti
NEWS RELEASE
FOR IMMEDIATE RELEASE
CE Franklin Ltd. announces significant improvement in its fourth quarter
operating results
Calgary, Alberta, February 11, 2003 — CE FRANKLIN LTD. (TSX.CFT, AMEX.CFK) announced its results for the quarter ended, and the year ended December 31, 2002.
Net loss from continuing operations for the quarter ended December 31, 2002 was $678,000 or $0.04 per share diluted as compared to a loss of $2.3 million or $0.13 per share diluted for the quarter ended December 31, 2001.
Well completion activity, excluding dry and service wells, declined 6.3% to 3,570 wells completed for the quarter ended December 31, 2002 as compared to 3,809 wells completed for the quarter ended December 31, 2001.
Sales decreased $24.3 million, or 28.4% to $61.1 million for the quarter ended December 31, 2002. The majority of the sales decline relates to a $23.1 million decline in Tubular sales reflecting merger and acquisition activity which resulted in larger customers’ now being able to directly access steel mills coupled with the overall decline in activity levels.
General Supplies sales declined 1.1% to $45.3 million for the quarter ended December 31, 2002 despite a 6.3% decline in well completion activity. CE Franklin’s General Supplies business outperformed the market economics for the quarter end December 31, 2002 as compared to the quarter ended December 31, 2001.
Earnings before interest, income taxes, amortization and other expenses (EBITDA) improved significantly to $372,000 for the quarter ended December 31, 2002 from an EBITDA loss of $2.7 million for the quarter ended December 31, 2001. Included in the quarter ended December 31, 2001 operating results was $2.8 million in charges relating to severance, inventory provisions, restructuring and closure costs. Excluding the $2.8 million charge, the improvement in EBITDA for the quarter ended December 31, 2002 reflects an improvement in gross profit margins to 15.4% from 11.7%, and a $911,000 or 9.2% reduction in SG&A expenses.
For the year ended December 31, 2002 net loss from continuing operations was $2.5 million or $0.15 per share diluted versus a net loss from continuing operations of $1.6 million or $0.09 per share for the year ended December 31, 2001.
“CE Franklin incurred costs in 2001 and 2002 in order to restructure its business and is now positioned for growth”, said Michael West President and Chief Executive Officer. “Customer service enhancement initiatives, margin improvement, expense rationalization and leveraging the relationship with Wilson Supply have all lead to stronger performance in Q4. The Company is well positioned for market activity in 2003”.
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Conference Call and Webcast Information
A conference call to review the quarterly results, which is open to the public, will be held on Wednesday, February 12, 2003, beginning at 11:00 a.m. EST. Participants may join the call by dialing 1-888-881-4892 at the scheduled time. A recording of the entire call may be accessed by 1 p.m. EST on the same day by calling 1-877-289-8525 and entering the pass code of 233113# and may be accessed until midnight Wednesday, February 19th, 2003.
The call will also be webcast live at:
http://www.newswire.ca/webcast/viewEventCNW.html?eventID=458480 and will be
available on the Company’s website at http://www.cefranklin.com.
About CE Franklin
CE Franklin is one of Canada’s largest distributors of supplies for the drilling, production, processing and pipelining of hydrocarbons. In addition to its complete range of tubular products and production equipment, including artificial lift technology, the Company sells pipe, valves, fitting and maintenance supplies and provides complete customer inventory procurement and management services through its 37 locations across Canada.
CE Franklin’s common shares trade on the Toronto Stock Exchange under the symbol CFT and on the American Stock Exchange under the symbol CFK. For additional information visit the website at www.cefranklin.com.
This news release includes forward looking statements within the meaning of section 27A of the United States Securities Act of 1933 and Section 21E of the United States Securities Exchange Act of 1934. Although the Company believes that its expectations are based on reasonable assumptions, it can give no assurance that expected results will be achieved. Important factors that could cause actual results to differ materially from those in the forward looking statements herein include economic conditions, seasonality of drilling activity, commodity prices for oil and gas, currency fluctuations and government regulations, and other risks and uncertainties as described in the Company’s 2001 Annual Report on Form 20-F as filed with the United States Securities and Exchange Commission.
For Further Information Contact:
| Sam Secreti Chief Financial Officer 403-531-5603 ssecreti@cefranklin.com |
*****
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CE Franklin Ltd.
Interim Statement of Operations
(Unaudited)
| Three Months Ended | Year Ended | |||||||||||||||
| December 31 | December 31 | December 31 | December 31 | |||||||||||||
| (thousands of Canadian dollars, except per share data) | 2002 | 2001 | 2002 | 2001 | ||||||||||||
Sales | ||||||||||||||||
| General supplies | 45,259 | 45,782 | 177,990 | 223,137 | ||||||||||||
| Tubulars | 14,455 | 37,577 | 77,138 | 148,030 | ||||||||||||
| Manufacturing | 1,412 | 2,057 | 6,201 | 6,678 | ||||||||||||
| 61,126 | 85,416 | 261,329 | 377,845 | |||||||||||||
Cost of sales | ||||||||||||||||
| General supplies | 37,075 | 39,323 | 147,245 | 188,871 | ||||||||||||
| Tubulars | 13,616 | 35,741 | 72,868 | 140,311 | ||||||||||||
| Manufacturing | 1,038 | 1,680 | 4,510 | 4,883 | ||||||||||||
| 51,729 | 76,744 | 224,623 | 334,065 | |||||||||||||
Gross profit | ||||||||||||||||
| General supplies | 8,184 | 6,459 | 30,745 | 34,266 | ||||||||||||
| Tubulars | 839 | 1,836 | 4,270 | 7,719 | ||||||||||||
| Manufacturing | 374 | 377 | 1,691 | 1,795 | ||||||||||||
| 9,397 | 8,672 | 36,706 | 43,780 | |||||||||||||
Other expenses (income) | ||||||||||||||||
| Selling, general and administrative expenses | 9,025 | 11,413 | 35,537 | 39,696 | ||||||||||||
| Amortization | 1,091 | 892 | 4,245 | 3,879 | ||||||||||||
| Interest expense | 320 | 343 | 1,099 | 2,031 | ||||||||||||
| Foreign exchange loss (gain) | (4 | ) | 82 | (116 | ) | 299 | ||||||||||
| Other expenses (income) | (56 | ) | (17 | ) | (151 | ) | (52 | ) | ||||||||
| 10,376 | 12,713 | 40,614 | 45,853 | |||||||||||||
Loss before income taxes | (979 | ) | (4,041 | ) | (3,908 | ) | (2,073 | ) | ||||||||
Income tax expense (recovery) | ||||||||||||||||
| Current | 48 | (1,861 | ) | (678 | ) | (835 | ) | |||||||||
| Future | (349 | ) | 113 | (737 | ) | 315 | ||||||||||
| (301 | ) | (1,748 | ) | (1,415 | ) | (520 | ) | |||||||||
Net loss from continuing operations | (678 | ) | (2,293 | ) | (2,493 | ) | (1,553 | ) | ||||||||
Net income from discontinued operations | — | 1,089 | — | 2,172 | ||||||||||||
Net income (loss) for the period | (678 | ) | (1,204 | ) | (2,493 | ) | 619 | |||||||||
Net loss per share from continuing operations | ||||||||||||||||
| Basic and diluted | (0.04 | ) | (0.13 | ) | (0.15 | ) | (0.09 | ) | ||||||||
Net income (loss) per share | ||||||||||||||||
| Basic and diluted | (0.04 | ) | (0.07 | ) | (0.15 | ) | 0.04 | |||||||||
Weighted average basic number of shares outstanding | 17,178,696 | 17,158,091 | 17,172,373 | 17,156,964 | ||||||||||||
CE Franklin Ltd.
Interim Balance Sheet
(Unaudited)
| As at December 31 | ||||||||
| (in thousands of Canadian dollars) | 2002 | 2001 | ||||||
ASSETS | ||||||||
Current assets | ||||||||
| Accounts receivable | 36,992 | 38,407 | ||||||
| Inventories | 40,679 | 50,876 | ||||||
| Income taxes recoverable | 741 | — | ||||||
| Other | 600 | 500 | ||||||
| 79,012 | 89,783 | |||||||
Property and equipment | 12,757 | 14,963 | ||||||
Goodwill | 7,765 | 8,180 | ||||||
Other assets | — | 3 | ||||||
| 99,534 | 112,929 | |||||||
LIABILITIES | ||||||||
Current liabilities | ||||||||
| Bank overdraft | 1,148 | 1,836 | ||||||
| Bank operating loan | 21,500 | 16,300 | ||||||
| Accounts payable | 16,525 | 25,066 | ||||||
| Accrued liabilities | 10,213 | 15,414 | ||||||
| Current portion of long-term debt | 297 | 251 | ||||||
| 49,683 | 58,867 | |||||||
Long-term debt | 299 | 614 | ||||||
Future income taxes | 2,381 | 3,491 | ||||||
| 52,363 | 62,972 | |||||||
SHAREHOLDERS’ EQUITY | ||||||||
Capital stock | 19,268 | 19,186 | ||||||
Contributed surplus | 13,566 | 13,566 | ||||||
Retained earnings | 14,337 | 17,205 | ||||||
| 47,171 | 49,957 | |||||||
| 99,534 | 112,929 | |||||||
CE Franklin Ltd.
Interim Statement of Cash Flows
(Unaudited)
| Three Months Ended | Year Ended | ||||||||||||||||
| December 31 | December 31 | December 31 | December 31 | ||||||||||||||
| (in thousands of Canadian dollars) | 2002 | 2001 | 2002 | 2001 | |||||||||||||
Cash flows from operating activities | |||||||||||||||||
| Net loss from continuing operations | (678 | ) | (2,293 | ) | (2,493 | ) | (1,553 | ) | |||||||||
| Items not affecting cash — | |||||||||||||||||
| Amortization | 1,091 | 892 | 4,245 | 3,879 | |||||||||||||
| Gain on disposal of property and equipment | (35 | ) | (17 | ) | (128 | ) | (48 | ) | |||||||||
| Future income taxes | (349 | ) | 113 | (737 | ) | 315 | |||||||||||
| Increase (decrease) in inventory reserves | 440 | 1,092 | 87 | 1,593 | |||||||||||||
| 469 | (213 | ) | 974 | 4,186 | |||||||||||||
| Net change in non-cash working capital balances related to operations — | |||||||||||||||||
| Accounts receivable | 2,081 | 10,740 | 1,415 | 23,950 | |||||||||||||
| Income taxes recoverable | (741 | ) | — | (741 | ) | 4,094 | |||||||||||
| Inventories | 4,092 | 7,105 | 9,254 | 11,639 | |||||||||||||
| Other current assets | 1,282 | 1,038 | (100 | ) | 1,825 | ||||||||||||
| Accounts payable | 3,085 | 13,813 | (8,541 | ) | (15,857 | ) | |||||||||||
| Accrued liabilities | (8,247 | ) | (17,659 | ) | (5,531 | ) | (3,320 | ) | |||||||||
| Net cash flows from continuing operations | 2,021 | 14,824 | (3,270 | ) | 26,517 | ||||||||||||
| Net cash flows from discontinued operations | — | 1,473 | — | 2,699 | |||||||||||||
| 2,021 | 16,297 | (3,270 | ) | 29,216 | |||||||||||||
Cash flows from financing activities | |||||||||||||||||
| Issuance of capital stock | — | — | 82 | 49 | |||||||||||||
| Increase (decrease) in bank operating loan | 1,400 | (15,900 | ) | 5,200 | (31,700 | ) | |||||||||||
| Increase (decrease) in bank overdraft | (2,886 | ) | (7,997 | ) | (688 | ) | (4,093 | ) | |||||||||
| Decrease in long-term debt | (71 | ) | (66 | ) | (269 | ) | (278 | ) | |||||||||
| Other | — | 225 | — | 225 | |||||||||||||
| (1,557 | ) | (23,738 | ) | 4,325 | (35,797 | ) | |||||||||||
Cash flows from investing activities | |||||||||||||||||
| Purchase of property and equipment | (507 | ) | (561 | ) | (1,234 | ) | (2,313 | ) | |||||||||
| Proceeds on disposal of property and equipment | 43 | 78 | 179 | 970 | |||||||||||||
| Net proceeds on disposal of Domino Machine | — | 7,924 | — | 7,924 | |||||||||||||
| (464 | ) | 7,441 | (1,055 | ) | 6,581 | ||||||||||||
Change in cash and cash equivalents during the period | — | — | — | — | |||||||||||||
Cash and cash equivalents — Beginning of period | — | — | — | — | |||||||||||||
Cash and cash equivalents — End of period | — | — | — | — | |||||||||||||
| Cash paid (received) during the period for: | |||||||||||||||||
| Interest on bank operating loan | 308 | 370 | 1,046 | 2,589 | |||||||||||||
| Interest on long-term debt | 12 | 18 | 53 | 60 | |||||||||||||
| Income taxes | (46 | ) | (435 | ) | 247 | 567 | |||||||||||
