EXHIBIT 99
----------
NEWS RELEASE
- -------------------------------------------------------- [Layne Logo]
CONTACTS: LAYNE CHRISTENSEN COMPANY
JERRY W. FANSKA
VICE PRESIDENT FINANCE
913-677-6858
www.laynechristensen.com
WEDNESDAY, DECEMBER 3, 2003
LAYNE CHRISTENSEN REPORTS FISCAL 2004 THIRD QUARTER RESULTS
o Revenues up 9.2% on strength of minerals business, water resources up
slightly from prior year.
o Water division margins remain under pressure due to soft municipal market.
o Mineral exploration division profit up $2.0 million on 32% increase in
revenue.
----------------------------------------------------- ------------------------ --------- -------------------------- ----------
Financial Data Three Months ended Nine Months ended
------------- ---------- % -------------------------- %
(in 000's, except per share data) 10/31/03 10/31/02 Change 10/31/03 10/31/02 Change
----------------------------------------------------- ------------- ---------- --------- ------------- ------------ ----------
Net Revenues
--Water Resources $ 43,817 $43,164 1.5% $ 127,193 $128,463 (1.0)%
--Mineral Exploration 18,353 13,888 32.2 49,245 41,821 17.8
--Geoconstruction Services 6,921 6,750 2.5 21,273 22,673 (6.2)
--Energy Services and Production 3,685 2,848 29.4 13,755 9,962 38.1
Gross Profit 19,205 19,008 1.0 58,249 57,800 0.8
Net Income(a) 541 200 170.5 710 (13,974) *
Dilutive EPS(a) 0.04 0.02 100.0 0.06 (1.16) *
----------------------------------------------------- ------------- ---------- --------- ------------- ------------ ----------
* not meaningful
(a) nine months ended October 31, 2002 includes a charge for the cumulative
effect of accounting change of $14,429,000 or $1.19 per share
- -------------------------------------------------------------------------------
"This quarter continues the trend of strengthening mineral exploration
year-over-year activity. At the same time, our water resources division is more
than maintaining its share in the current market environment, however, margins
remain under pressure particularly in the municipal sector. In our energy
division, expenses were especially high this quarter as we gear up for a
stronger Canadian oil sands drilling season than experienced in prior years. Our
focus in coalbed methane has shifted during the quarter from drilling to
bringing completed wells on line and into production. Geoconstruction continues
to deal successfully with "start and stop" activity which has characterized much
of the year. In total, operational results were about what we expected in the
quarter. With the turnaround in minerals profitability this year the "bumps" in
the road are a lot closer to home and more manageable."--
ANDREW B. SCHMITT, PRESIDENT AND CHIEF EXECUTIVE OFFICER
- -------------------------------------------------------------------------------
-more-
MISSION WOODS, KANSAS, December 3, 2003 - Layne Christensen Company (Nasdaq:
LAYN), today announced net income for the third quarter ended October 31, 2003
of $541,000, or $0.04 per share, compared to net income of $200,000 or $0.02 per
share, in the same period last year. Net income from continuing operations was
$0.06 per share versus $0.07 per share last year. Revenues for the three months
ended October 31, 2003 increased $6,146,000, or 9.2%, to $72,776,000 compared to
$66,630,000 the same period last year.
Andrew B. Schmitt, President and Chief Executive Officer, stated, "This quarter
continues the trend of strengthening mineral exploration year-over-year
activity. At the same time, our water resources division is more than
maintaining its share in the current market environment, however, margins remain
under pressure particularly in the municipal sector. In our energy division,
expenses were especially high this quarter as we gear up for a stronger Canadian
oil sands drilling season than experienced in prior years. Our focus in coalbed
methane has shifted during the quarter from drilling to bringing completed wells
on line and into production. Geoconstruction continues to deal successfully with
"start and stop" activity which has characterized much of the year. In total,
operational results were about what we expected in the quarter. With the
turnaround in minerals profitability this year the "bumps" in the road are a lot
closer to home and more manageable."
Gross profit as a percentage of revenues was 26.4% for the three months ended
October 31, 2003 compared to 28.5% for the three months ended October 31, 2002.
The decrease in gross profit percentage for the period was primarily related to
the continued negative impact of competitive pricing pressures at the Company's
domestic water locations due to reduced municipal spending. The decrease for the
period was partially offset by improved margins in the Company's mineral
exploration division due to increased activity levels associated with higher
gold prices.
Selling, general and administrative expenses were $13,280,000 for the three
months ended October 31, 2003 compared to $13,638,000 for the three months ended
October 31, 2002. The decrease in selling, general and administrative expenses
for the three months ended October 31, 2003 was primarily the result of
workforce reductions completed during the second quarter of fiscal 2004
partially offset by increased insurance costs.
During the third quarter of 2003, the Company reclassified the results of
operations of its Toledo Oil and Gas ("Toledo") business to discontinued
operations. The Company continues to shift the energy division's focus to the
resource development side of the business. Toledo was historically reported in
the Company's Energy Services and Production segment and offered conventional
oilfield fishing services and coil tubing fishing services.
Water Resources Division
(in thousands) Three months ended
October 31,
----------------------------
2003 2002
-------- ---------
Revenues $43,817 $43,164
Income from continuing operations 5,551 7,190
Water resources revenue increased 1.5% to $43,817,000 for the three months ended
October 31, 2003 compared to $43,164,000 for the three months ended October 31,
2002. The increase for the three months ended October 31, 2003 was primarily the
result of a focused effort to maintain market share in the division's markets,
especially the soft municipal market where pricing has been impacted by
competitive pressures and reduced demand.
2
Income from continuing operations for the water resources division decreased
22.8% to $5,551,000 for the three months ended October 31, 2003 compared to
$7,190,000 for the three months ended October 31, 2002. The decrease in
operating income for the three months ended October 31, 2003 was primarily
attributable to pricing pressures associated with a soft municipal market and
reduced activity on a multi-divisional project compared to last year.
Mineral Exploration Division
(in thousands) Three months ended
October 31,
----------------------------
2003 2002
-------- --------
Revenues $18,353 $13,888
Income (loss) from continuing operations 1,066 (926)
Mineral exploration revenues increased 32.2% to $18,353,000 for the three months
ended October 31, 2003 compared to revenues of $13,888,000 for the three months
ended October 31, 2002. The increase for the three months ended October 31, 2003
was primarily attributable to increased exploration activity in the Company's
markets as a result of higher gold prices.
Income from continuing operations for the mineral exploration division was
$1,066,000 for the three months ended October 31, 2003 compared to a loss from
continuing operations of $926,000 for the three months ended October 31, 2002.
The improved profitability in the division for the three months ended October
31, 2003 was primarily due to the increased activity levels noted above.
Geoconstruction Services Division
(in thousands)
Three months ended
October 31,
----------------------------
2003 2002
-------- ---------
Revenues $ 6,921 $ 6,750
Income from continuing operations 221 291
Geoconstruction services revenues increased 2.5% to $6,921,000 for the three
months ended October 31, 2003 compared to $6,750,000 for the three months ended
October 31, 2002. The increase in revenue for the three months ended October 31,
2003 was primarily the result of beginning certain public sector projects that
had been previously delayed.
The geoconstruction services division had income from continuing operations of
$221,000 for the three months ended October 31, 2003 compared to $291,000 for
the three months ended October 31, 2002. The decrease for the three months ended
October 31, 2003 was primarily the result of increased costs encountered on
certain projects partially offset by reduced depreciation expense from assets
fully depreciated in prior periods.
3
Energy Services and Production Division
(in thousands)
Three months ended
October 31,
----------------------------
2003 2002
-------- ---------
Revenues $3,685 $2,848
Loss from continuing operations (658) (63)
Energy services and production revenues increased 29.4% to $3,685,000 for the
three months ended October 31, 2003 compared to revenues of $2,848,000 for the
three months ended October 31, 2002. The increase for the three months ended
October 31, 2003 was primarily the result of increased drilling services for a
large shallow gas project in the northwest region of the United States and
third-party coalbed methane exploration drilling.
Losses from continuing operations for the energy services and production
division were $658,000 for the three months ended October 31, 2003 compared to
$63,000 for the three months ended October 31, 2002. The increased loss for the
three months ended October 31, 2003 was primarily the result of increased
maintenance expenses at the Company's Canadian drilling unit in preparation for
the winter drilling season and start-up expenses related to the Company's
coalbed methane development efforts.
Outlook
- -------
Andrew B. Schmitt, President and Chief Executive Officer, stated, "Like many
companies, we feel there is an undercurrent of improvement in both the U.S. and
Asian economies. It appears to be reflected first in the commodity sensitive
side of our business which would be expected. The next couple of quarters should
tell us if the foundation is solid. If so, and coupled with a low interest rate
environment, this should positively impact all our businesses. Because of our
diversity, we will tend to capture the various stages of the economic cycle. Our
goal is to position each of our businesses to make sure we maximize their
participation."
This press release contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Exchange Act of
1934. Such statements are based on current expectations and are subject to
certain risks, uncertainties and assumptions, including but not limited to
prevailing prices for various metals and unanticipated slowdowns in the
Company's major markets. Should one or more of these underlying assumptions
prove incorrect, actual results may vary materially from those currently
estimated. These statements are made as of the date of this release, and the
Company assumes no obligation to update such forward-looking statement or to
update the reasons why actual results could differ materially from those
anticipated in such forward-looking statements.
Layne Christensen Company provides sophisticated services and related products
for the water, mineral, construction and energy markets.
4
LAYNE CHRISTENSEN COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except share and per share data)
Three Months Nine Months
Ended October 31, Ended October 31,
(unaudited) (unaudited)
---------------------- ----------------------
2003 2002 2003 2002
--------- --------- --------- ---------
Revenues $ 72,776 $ 66,630 $ 211,466 $ 203,355
Cost of revenues (exclusive
of depreciation shown below) 53,571 47,622 153,217 145,555
--------- --------- --------- ---------
Gross profit 19,205 19,008 58,249 57,800
Selling, general and
administrative expenses 13,280 13,638 41,419 39,987
Depreciation and amortization 3,057 3,410 9,531 10,601
Other income (expense):
Equity in earnings of affiliates 23 209 723 683
Interest (687) (631) (1,918) (1,899)
Debt extinguishment costs -- -- (2,320) (1,135)
Other, net (108) 830 442 1,179
--------- --------- --------- ---------
Income from continuing operations
before income taxes and
minority interest 2,096 2,368 4,226 6,040
Income tax expense 1,186 1,468 2,878 3,738
Minority interest (163) (10) -- (192)
--------- --------- --------- ---------
Net income from continuing
operations before discontinued
operations and cumulative
effect of accounting change 747 890 1,348 2,110
Loss from discontinued operations,
net of income taxes (206) (690) (638) (1,655)
--------- --------- --------- ---------
Net income before cumulative
effect of accounting change 541 200 710 455
Cumulative effect of accounting
change, net of income taxes
of $5,796 -- -- -- (14,429)
--------- --------- --------- ---------
Net income (loss) $ 541 $ 200 $ 710 $ (13,974)
========= ========= ========= =========
Diluted income (loss) per share:
Net income from continuing
operations $ .06 $ .07 $ .11 $ .17
Loss from discontinued operations,
net of income taxes (.02) (.05) (.05) (.14)
--------- --------- --------- ---------
Income before cumulative effect
of accounting change .04 .02 .06 .03
Cumulative effect of accounting
change, net of income taxes -- -- -- (1.19)
--------- --------- --------- ---------
Net income (loss) per share $ .04 $ .02 $ .06 $ (1.16)
========= ========= ========= =========
5