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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
     
þ   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2011
or
     
o   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                      to                      .
Commission File No. 001-15903
CARBO CERAMICS INC.
(Exact name of registrant as specified in its charter)
     
DELAWARE   72-1100013
(State or other jurisdiction of   (I.R.S. Employer
incorporation or organization)   Identification Number)
575 North Dairy Ashford
Suite 300
Houston, Texas 77079
(Address of principal executive offices)
(281) 921-6400
(Registrant’s telephone number)
          Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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 þ No o
          Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ No o
          Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
             
Large accelerated filer þ
  Accelerated filer o   Non-accelerated filer o   Smaller reporting company o
 
      (Do not check if a smaller reporting company)    
          Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ
          As of April 25, 2011, 23,162,193 shares of the registrant’s Common Stock, par value $.01 per share, were outstanding.
 
 

 

 

CARBO CERAMICS INC.
Index to Quarterly Report on Form 10-Q
         
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CARBO CERAMICS INC.
CONSOLIDATED BALANCE SHEETS
($ in thousands, except per share data)
                 
    March 31,     December 31,  
    2011     2010  
    (Unaudited)     (Note 1)  
ASSETS
Current assets:
               
Cash and cash equivalents
  $ 54,359     $ 46,656  
Trade accounts and other receivables, net
    107,752       89,531  
Inventories:
               
Finished goods, net
    46,834       47,872  
Raw materials and supplies
    44,910       43,183  
 
           
Total inventories
    91,744       91,055  
Prepaid expenses and other current assets
    3,732       2,970  
Deferred income taxes
    7,601       7,443  
 
           
Total current assets
    265,188       237,655  
Property, plant and equipment:
               
Land and land improvements
    14,079       14,074  
Land-use and mineral rights
    8,573       8,041  
Buildings
    57,965       56,442  
Machinery and equipment
    372,795       362,286  
Construction in progress
    78,141       67,551  
 
           
Total
    531,553       508,394  
Less accumulated depreciation and amortization
    177,601       169,911  
 
           
Net property, plant and equipment
    353,952       338,483  
Goodwill
    12,164       13,053  
Intangible and other assets, net
    9,195       10,380  
 
           
Total assets
  $ 640,499     $ 599,571  
 
           
 
               
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
               
Accounts payable
  $ 21,797     $ 22,161  
Accrued income taxes
    12,752       113  
Dividends payable
    4,632       —  
Other accrued expenses
    25,205       28,973  
 
           
Total current liabilities
    64,386       51,247  
Deferred income taxes
    27,994       26,345  
Shareholders’ equity:
               
Preferred stock, par value $0.01 per share, 5,000 shares authorized, none outstanding
    —       —  
Common stock, par value $0.01 per share, 40,000,000 shares authorized; 23,162,193 and 23,108,082 shares issued and outstanding at March 31, 2011 and December 31, 2010, respectively
    231       231  
Additional paid-in capital
    59,895       57,475  
Retained earnings
    488,511       468,387  
Accumulated other comprehensive loss
    (518 )     (4,114 )
 
           
Total shareholders’ equity
    548,119       521,979  
 
           
Total liabilities and shareholders’ equity
  $ 640,499     $ 599,571  
 
           
The accompanying notes are an integral part of these statements.

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CARBO CERAMICS INC.
CONSOLIDATED STATEMENTS OF INCOME
($ in thousands, except per share data)
(Unaudited)
                 
    Three months ended  
    March 31,  
    2011     2010  
Revenues
  $ 150,830     $ 123,449  
Cost of sales
    88,774       80,884  
 
           
 
               
Gross profit
    62,056       42,565  
Selling, general and administrative expenses
    14,287       13,635  
Start-up costs
    —       135  
Loss on disposal or impairment of assets
    1,679       3  
 
           
 
               
Operating profit
    46,090       28,792  
 
               
Other income (expense):
               
Interest income, net
    44       33  
Foreign currency exchange (loss) gain, net
    (188 )     36  
Other, net
    (77 )     (123 )
 
           
 
    (221 )     (54 )
 
           
 
               
Income before income taxes
    45,869       28,738  
Income taxes
    15,705       9,746  
 
           
 
               
Net income
  $ 30,164     $ 18,992  
 
           
 
               
Earnings per share:
               
Basic
  $ 1.30     $ 0.82  
 
           
Diluted
  $ 1.30     $ 0.82  
 
           
 
               
Other information:
               
Dividends declared per common share (see Note 4)
  $ 0.40     $ 0.36  
 
           
The accompanying notes are an integral part of these statements.

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CARBO CERAMICS INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
($ in thousands)
(Unaudited)
                 
    Three months ended  
    March 31,  
    2011     2010  
Operating activities
               
Net income
  $ 30,164     $ 18,992  
Adjustments to reconcile net income to net cash provided by operating activities:
               
Depreciation and amortization
    8,180       6,734  
Deferred income taxes
    1,272       208  
Excess tax benefits from stock based compensation
    (1,228 )     (567 )
Loss on disposal or impairment of assets
    1,679       3  
Foreign currency transaction loss (gain), net
    188       (36 )
Stock compensation expense
    1,359       925  
Changes in operating assets and liabilities:
               
Trade accounts and other receivables
    (17,907 )     (13,629 )
Inventories
    118       4,495  
Prepaid expenses and other current assets
    (722 )     618  
Long-term prepaid expenses
    433       (13 )
Accounts payable
    (377 )     4,801  
Accrued expenses
    (4,108 )     13  
Accrued income taxes, net
    13,880       6,530  
 
           
Net cash provided by operating activities
    32,931       29,074  
 
               
Investing activities
               
Capital expenditures
    (21,568 )     (14,862 )
Acquisition of BBL Falcon Industries, Ltd.
    —       193  
 
           
Net cash used in investing activities
    (21,568 )     (14,669 )
 
               
Financing activities
               
Net proceeds from stock based compensation
    76       —  
Dividends paid
    (4,632 )     (4,163 )
Purchase of common stock
    (776 )     (563 )
Excess tax benefits from stock based compensation
    1,228       567  
 
           
Net cash used in financing activities
    (4,104 )     (4,159 )
 
               
Effect of exchange rate changes on cash
    444       172  
 
           
 
               
Net increase in cash and cash equivalents
    7,703       10,418  
Cash and cash equivalents at beginning of period
    46,656       69,557  
 
           
Cash and cash equivalents at end of period
  $ 54,359     $ 79,975  
 
           
 
               
Supplemental cash flow information
               
 
               
Interest paid
  $ —     $ —  
 
           
Income taxes paid
  $ 553     $ 3,008  
 
           
The accompanying notes are an integral part of these statements.

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CARBO CERAMICS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
($ in thousands, except per share data)
(Unaudited)
1. Basis of Presentation
     The accompanying unaudited consolidated financial statements of CARBO Ceramics Inc. have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by accounting principles generally accepted in the United States for complete financial statements. In the opinion of management, all adjustments, consisting only of normal recurring adjustments, considered necessary for a fair presentation have been included. The results of the interim periods presented herein are not necessarily indicative of the results to be expected for any other interim period or the full year. The consolidated balance sheet as of December 31, 2010 has been derived from the audited financial statements at that date. These financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto for the year ended December 31, 2010 included in the annual report on Form 10-K of CARBO Ceramics Inc. for the year ended December 31, 2010.
     The consolidated financial statements include the accounts of CARBO Ceramics Inc. and its operating subsidiaries (the “Company”). The consolidated financial statements also include an interest in a Texas-based electronic equipment manufacturing company that was acquired in March 2008 that is reported under the cost method of accounting. All significant intercompany transactions have been eliminated.
Cash Equivalents
     The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. The carrying amounts reported in the balance sheet for cash equivalents approximate fair value.
Loss on Disposal or Impairment of Assets
     Loss on disposal or impairment of assets of $1,679 during the quarter ended March 31, 2011 consists primarily of a $890 impairment of goodwill related to the Company’s geotechnical monitoring business and a $760 write-down of a 6% interest in an investment accounted for under the cost method, as a result of the sale of the business by majority shareholders.
2. Earnings Per Share
     The following table sets forth the computation of basic and diluted earnings per share under the two-class method:
                 
    Three months ended  
    March 31,  
    2011     2010  
Numerator for basic and diluted earnings per share:
               
Net income
  $ 30,164     $ 18,992  
Effect of reallocating undistributed earnings of participating securities
    (176 )     (121 )
 
           
Net income available under the two-class method
  $ 29,988     $ 18,871  
 
           
Denominator:
               
Denominator for basic earnings per share— weighted-average shares
    23,014,530       22,967,485  
Effect of dilutive securities:
               
Employee stock options (See Note 6)
    1,302       5,701  
Deferred stock awards (See Note 6)
    —       4,017  
 
           
Dilutive potential common shares
    1,302       9,718  
 
           
Denominator for diluted earnings per share— adjusted weighted-average shares
    23,015,832       22,977,203  
 
           
 
               
Basic earnings per share
  $ 1.30     $ 0.82  
 
           
 
               
Diluted earnings per share
  $ 1.30     $ 0.82  
 
           

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3. Common Stock Repurchase Program
     On August 28, 2008, the Company’s Board of Directors authorized the repurchase of up to two million shares of the Company’s common stock. Shares are effectively retired at the time of purchase. The Company did not repurchase any shares under this plan during the first quarter of 2011. As of March 31, 2011, the Company has repurchased and retired 1,762,576 shares at an aggregate price of $65,925.
4. Dividends Paid
     On January 18, 2011, the Board of Directors declared a cash dividend of $0.20 per common share payable to shareholders of record on February 1, 2011. The dividend was paid on February 15, 2011. On March 22, 2011, the Board of Directors declared a cash dividend of $0.20 per common share payable to shareholders of record on May 2, 2011. The dividend is payable on May 16, 2011 and is presented in Current Liabilities at March 31, 2011.
5. Comprehensive Income
     The following table sets forth the components of comprehensive income:
                 
    Three months ended  
    March 31,  
    2011     2010  
Net income
  $ 30,164     $ 18,992  
Foreign currency translation adjustment
    3,596       1,288  
 
           
Comprehensive income
  $ 33,760     $ 20,280  
 
           
     The foreign currency translation adjustment for the three months ended March 31, 2011 and 2010 is net of deferred income tax expense of $219 and none, respectively.
6. Stock Based Compensation
     The CARBO Ceramics Inc. Omnibus Incentive Plan (the “Omnibus Incentive Plan”), which replaced the previously expired restricted stock and stock option plans, provides for granting of cash-based awards, stock options (both non-qualified and incentive) and other equity-based awards (including stock appreciation rights, phantom stock, restricted stock, restricted stock units, performance shares, deferred share units or share-denominated performance units) to employees and non-employee directors. The amount paid under the Omnibus Incentive Plan to any single participant in any calendar year with respect to any cash-based award shall not exceed $2,000. Awards may be granted with respect to a number of shares of the Company’s Common Stock that in the aggregate does not exceed 750,000 shares prior to the fifth anniversary of its effective date, plus (i) the number of shares that are forfeited, cancelled or returned, and (ii) the number of shares that are withheld from the participants to satisfy an option exercise price or minimum statutory tax withholding obligations. No more than 50,000 shares may be granted to any single participant in any calendar year. Equity-based awards may be subject to performance-based and/or service-based conditions. With respect to stock options and stock appreciation rights granted, the exercise price shall not be less than the market value of the underlying Common Stock on the date of grant. The maximum term of an option is ten years. Restricted stock awards granted generally vest (i.e., transfer and forfeiture restrictions on these shares are lifted) proportionately on each of the first three anniversaries of the grant date, but subject to certain limitations, awards may specify other vesting periods. As of March 31, 2011, 615,684 shares were available for issuance under the Omnibus Incentive Plan. Although the Company’s previous restricted stock and stock option plans have expired, outstanding options and unvested shares granted under these plans remain outstanding in accordance with their terms.
     The Company also had a Director Deferred Fee Plan (the “Plan”), which terminated on January 19, 2010, that permitted non-employee directors of the Company to defer receipt of cash compensation for service as a director and to receive those fees in the form of the Company’s Common Stock on a specified later date that was on or after the director’s retirement from the Board of Directors. In January 2011, a total of 4,058 shares were issued in full payment of $171 of deferred fees remaining under the Plan to electing directors.
     A summary of stock option activity and related information for the three months ended March 31, 2011 is presented below:

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            Weighted-   Aggregate
            Average   Intrinsic
    Options   Exercise Price   Value
Outstanding at January 1, 2011
    5,900     $ 22.04          
Granted
    —       —          
Exercised
    (3,475 )   $ 21.83          
Forfeited
    —       —          
 
                       
Outstanding at March 31, 2011
    2,425     $ 22.35     $ 288  
 
                       
Exercisable at March 31, 2011
    2,425     $ 22.35     $ 288  
 
                       
     As of March 31, 2011, all compensation cost related to stock options granted under the expired stock option plans has been recognized. The weighted-average remaining contractual term of options outstanding at March 31, 2011 was 1.5 years. The total intrinsic value of options exercised during the three months ended March 31, 2011 was $346.
     A summary of restricted stock activity and related information for the three months ended March 31, 2011 is presented below:
                 
            Weighted-
            Average
            Grant-Date
    Shares   Fair Value
Nonvested at January 1, 2011
    134,276     $ 51.20  
Granted
    54,740     $ 104.07  
Vested
    (52,153 )   $ 46.83  
Forfeited
    (899 )   $ 68.74  
 
               
Nonvested at March 31, 2011
    135,964     $ 74.05  
 
               
     As of March 31, 2011, there was $7,724 of total unrecognized compensation cost, net of estimated forfeitures, related to restricted shares granted under the restricted stock plans. That cost is expected to be recognized over a weighted-average period of 2.0 years. The total fair value of shares vested during the three months ended March 31, 2011 was $2,442.
     The Company also had an International Long-Term Incentive Plan that provided for granting units of stock appreciation rights (“SARs”) or phantom shares to key international employees. This plan was replaced by the Omnibus Incentive Plan. One-third of the units subject to an award vests and ceases to be forfeitable on each of the first three anniversaries of the grant date. Participants awarded units of SARs have the right to receive an amount, in cash, equal to the excess of the fair market value of a share of Common Stock as of the vesting date, or in some cases on a later exercise date chosen by the participant, over the exercise price. Participants awarded units of phantom shares are entitled to a lump sum cash payment equal to the fair market value of a share of Common Stock on the vesting date. In no event will Common Stock of the Company be issued under either plan with regard to outstanding SARs or phantom shares. As of March 31, 2011, there were 21,565 units of phantom shares granted under the plans, of which 11,026 have vested and 790 have been forfeited, with a total value of $1,376, the vested portion of which is recorded as a liability within Other Accrued Expenses.
7. Bank Borrowings
     The Company has an unsecured revolving credit agreement with a bank. Under the terms of the agreement, dated January 29, 2010, the Company can borrow up to $10,000. The Company has the option of choosing either the bank’s fluctuating Base Rate or LIBOR Fixed Rate, plus an Applicable Margin, all as defined in the credit agreement. The terms of the credit agreement provide for certain affirmative and negative covenants and require the Company to maintain certain financial ratios. Commitment fees are payable quarterly at the annual rate of 0.50% of the unused line of credit.

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8. Foreign Currencies
     As of March 31, 2011, the Company’s net investment that is subject to foreign currency fluctuations totaled $85,057 and the Company has recorded a cumulative foreign currency translation loss of $518, net of deferred income tax benefit. This cumulative translation loss is included in Accumulated Other Comprehensive Loss.
9. New Accounting Pronouncements
     The Company continually assesses any new accounting pronouncements to determine their applicability. Where it is determined that a new accounting pronouncement affects the Company’s financial reporting, the Company undertakes a study to determine the consequence of the change to its financial statements and assures that there are proper controls in place to ascertain that the Company’s financials properly reflect the change. New pronouncements assessed by the Company recently are discussed below:
     In December 2010, the FASB issued authoritative guidance on application of goodwill impairment model when a reporting unit has a zero or negative carrying amount. When a reporting unit has a zero or negative carrying value, Step 2 of the goodwill impairment test should be performed if qualitative factors indicate that it is more likely than not that a goodwill impairment exists. The guidance is effective for the Company beginning in the first quarter of fiscal 2012. The Company is currently evaluating the potential impact, if any, of the adoption of this guidance on its consolidated financial statements.
     In December 2010, the FASB issued authoritative guidance on disclosure of supplementary pro forma information for business combinations. The new guidance requires that pro forma financial information should be prepared as if the business combination occurred as of the beginning of the prior annual period. The guidance is effective for the Company for business combinations with acquisition dates occurring in and from the first quarter of fiscal 2012.
     Other pronouncements issued by the FASB or other authoritative accounting standards groups with future effective dates are either not applicable or are not expected to be significant to the financial statements of the Company.
10. Legal Proceedings
     The Company is subject to legal proceedings, claims and litigation arising in the ordinary course of business. While the outcome of these matters is currently not determinable, management does not expect that the ultimate costs to resolve these matters will have a material adverse effect on the Company’s consolidated financial position, results of operations, or cash flows.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Business
The Company generates revenue primarily through the sale of products and services to the oil and natural gas industry. The Company’s principal business consists of manufacturing and selling ceramic proppant for use primarily in the hydraulic fracturing of oil and natural gas wells. The Company recently commenced the sale of resin-coated sand, which is an alternative to both ceramic proppant and raw frac sand, in order to broaden its proppant suite of products. The Company also provides the industry’s most popular fracture simulation software FracPro®, as well as fracture design and consulting services. In addition, the Company provides a broad range of technologies for spill prevention, containment and countermeasures, along with geotechnical monitoring.
Critical Accounting Policies
The consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States, which require the Company to make estimates and assumptions (see Note 1 to the consolidated financial statements included in the annual report on Form 10-K for the year ended December 31, 2010). The Company believes that some of its accounting policies involve a higher degree of judgment and complexity than others. As of December 31, 2010, critical accounting policies for the Company included revenue recognition, estimating the recoverability of accounts receivable, inventory valuation, accounting for income taxes and accounting for long-lived assets. These critical accounting policies are discussed more fully in the Company’s annual report on Form 10-K for the year ended December 31, 2010. There have been no changes in the Company’s evaluation of its critical accounting policies since December 31, 2010.
Results of Operations
Three Months Ended March 31, 2011
Revenues. Revenues of $150.8 million for the first quarter of 2011 increased 22% compared to $123.4 million for the same period in 2010. The increase is mainly attributed to an 8% increase in proppant sales volume, an increase in the average proppant selling price as a result of price increases and an increase in revenues of Falcon Technologies. Worldwide proppant sales volume totaled 399 million pounds in the first three months of 2011 compared to 370 million pounds for the same period in 2010. North American (defined as Canada and the U.S.) sales volume increased 11% due primarily to an increase in the drilling rig count in the U.S. and Canada as well as continued acceptance of the Company’s products in unconventional resource plays, including shale formations. North American proppant volumes were also favorably impacted by the availability of additional product from the Company’s recently completed third manufacturing line in Toomsboro, Georgia and increases in sales of CARBO Bond® resin-coated sand and ceramic proppant that meets standards published by the American Petroleum Institute (“API”) and the International Organization for Standardization (“ISO”) manufactured on an outsourced basis. International (excluding Canada) sales volume decreased 8% primarily due to decreases in Mexico, Africa, and the Middle East partially offset by increases in China and Russia. The average selling price per pound of all proppant was $0.351 during the first quarter of 2011 compared to $0.313 for the same period in 2010.
Gross Profit. Gross profit for the first quarter of 2011 was $62.1 million, or 41% of revenues, compared to $42.6 million, or 34% of revenues, for the first quarter of 2010. The increase in gross profit was primarily the result of an increase in the average proppant selling price, higher proppant sales volume, and the contribution of Falcon Technologies. Gross profit as a percentage of revenues increased primarily as a result of an increase in the average proppant selling price, a change in the mix of products sold towards lightweight products, and lower natural gas costs in the Company’s U.S. manufacturing facilities, partially offset by higher freight costs.
Selling, General and Administrative (SG&A) and Other Operating Expenses. SG&A expenses totaled $14.3 million for the first quarter of 2011 compared to $13.6 million for the first quarter of 2010. As a percentage of revenues, SG&A expenses decreased to 9.5% in 2011 compared to 11.0% for the first quarter of 2010. The increase in SG&A expenses primarily resulted from higher marketing, research and development spending. Loss on disposal or impairment of assets of $1.7 million in 2011 is attributed to a $0.9 million impairment of goodwill related to the Company’s geotechnical monitoring business and a $0.8 million write-down of a 6% interest in an investment accounted for under the cost method as a result of the sale of the business by majority shareholders.

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Other Income (Expense). Other expense for the first quarter of 2011 increased $0.2 million compared to the same period in 2010. This increase is mainly attributed to losses resulting from changes in exchange rates between the functional currency and the foreign currency in which the effective transactions were denominated.
Income Tax Expense . Income tax expense was $15.7 million, or 34.2% of pretax income, for the first quarter of 2011 compared to $9.7 million, or 33.9% of pretax income, for the same period last year. The $6.0 million increase is primarily due to higher pre-tax income.
Liquidity and Capital Resources
At March 31, 2011, the Company had cash and cash equivalents of $54.4 million compared to cash and cash equivalents of $46.7 million at December 31, 2010. During the first quarter of 2011, the Company generated $32.9 million of cash from operating activities, retained $1.2 million from excess tax benefits relating to stock based compensation, received $0.1 million proceeds from exercised stock options and retained $0.4 million from the effect of exchange rate changes on cash. Uses of cash included $21.5 million for capital expenditures, $4.6 million for the payment of cash dividends and $0.8 million for repurchases of the Company’s common stock made in connection with the payment of payroll-related taxes upon the vesting of restricted stock awards.
The Company believes its operating results for the remainder of 2011 will continue to be influenced by the level of oil and natural gas drilling in North America. While natural gas prices remain low, the continuing shift in oilfield activity by the Company’s clients to oily, liquids-rich plays will likely keep industry activity at high levels for the remainder of 2011. This, in turn, should provide the Company with continued opportunity with respect to the demand for its proppant. The Company expects to support this demand by pursuing capacity increases in both ceramic and resin-coated sand proppant. During periods of high demand, and at the request of its customers, the Company may also continue to engage in the sale of ceramic proppant that meets API/ISO standards manufactured on an outsourced basis .
Subject to the Company’s financial condition, the amount of funds generated from operations and the level of capital expenditures, the Company’s current intention is to continue to pay quarterly dividends to holders of its common stock. On March 22, 2011, the Board of Directors declared a cash dividend of $0.20 per common share, or $4.6 million in the aggregate, to shareholders of record on May 2, 2011. That dividend is payable on May 16, 2011. The Company estimates its total capital expenditures for the remainder of 2011 will be between $85 million and $95 million. Capital expenditures for the remainder of 2011 are expected to include costs associated with completion of the previously announced construction of the Company’s fourth production line at its Toomsboro, Georgia facility and a second resin coating line at the Company’s New Iberia facility. The Company anticipates that both projects will be completed by the end of 2011.
The Company maintains an unsecured line of credit of $10.0 million with Wells Fargo Bank, N.A. As of March 31, 2011, there was no outstanding debt under the new credit agreement. The Company anticipates that cash on hand, cash provided by operating activities and funds available under its line of credit will be sufficient to meet planned operating expenses, tax obligations, capital expenditures and other cash needs for the next 12 months. The Company also believes that it could acquire additional debt financing, if needed. Based on these assumptions, the Company believes that its fixed costs could be met even with a moderate decrease in demand for the Company’s products.
Off-Balance Sheet Arrangements
The Company had no off-balance sheet arrangements as of March 31, 2011.
Forward-Looking Information
The statements in this Form 10-Q that are not historical statements, including statements regarding our future financial and operating performance and liquidity and capital resources, are forward-looking statements within the meaning of the federal securities laws. All forward-looking statements are based on management’s current expectations and estimates, which involve risks and uncertainties that could cause actual results to differ materially from those expressed in forward-looking statements. Among these factors are:
  •   changes in overall economic conditions,
 
  •   changes in the cost of raw materials and natural gas used in manufacturing our products,
 
  •   changes in demand and prices charged for our products,

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  •   changes in the demand for, or price of, oil and natural gas,
 
  •   risks of increased competition,
 
  •   technological, manufacturing and product development risks,
 
  •   loss of key customers,
 
  •   changes in foreign and domestic government regulations, including environmental restrictions on operations and regulation of hydraulic fracturing,
 
  •   changes in foreign and domestic political and legislative risks,
 
  •   the risks of war and international and domestic terrorism,
 
  •   risks associated with foreign operations and foreign currency exchange rates and controls, and
 
  •   weather-related risks and other risks and uncertainties.
Additional factors that could affect our future results or events are described from time to time in our reports filed with the Securities and Exchange Commission (the “SEC”). See in particular our annual report on Form 10-K for the fiscal year ended December 31, 2010 under the caption “Risk Factors” and similar disclosures in subsequently filed reports with the SEC. We assume no obligation to update forward-looking statements, except as required by law.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company’s major market risk exposure is to foreign currency fluctuations that could impact its investments in China and Russia. As of March 31, 2011, the Company’s net investment that is subject to foreign currency fluctuations totaled $85.1 million and the Company has recorded a cumulative foreign currency translation loss of $0.5 million, net of deferred income tax benefit. This cumulative translation loss is included in Accumulated Other Comprehensive Loss. From time to time, the Company may enter into forward foreign exchange contracts to hedge the impact of foreign currency fluctuations. There were no such foreign exchange contracts outstanding at March 31, 2011.
ITEM 4. CONTROLS AND PROCEDURES
(a) Evaluation of Disclosure Controls and Procedures
Disclosure controls and procedures are designed to ensure that information required to be disclosed in the reports filed or submitted under the Securities Exchange Act of 1934 (the “Exchange Act”) is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in the reports filed under the Exchange Act is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.
As of March 31, 2011, management carried out an evaluation, under the supervision and with the participation of the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures. There are inherent limitations to the effectiveness of any system of disclosure controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurances of achieving their control objectives. Based upon and as of the date of that evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that the Company’s disclosure controls and procedures were effective to ensure that information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms, and to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.
(b) Changes in Internal Control over Financial Reporting
There were no changes in the Company’s internal control over financial reporting during the quarter ended March 31, 2011 that materially affected, or are reasonably likely to materially affect, those controls.

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PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Not applicable
ITEM 1A. RISK FACTORS
There have been no material changes to the risk factors discussed in the Annual Report on Form 10-K for the year ended December 31, 2010.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
The following table provides information about the Company’s repurchases of Common Stock during the quarter ended March 31, 2011:
ISSUER PURCHASES OF EQUITY SECURITIES
                                 
                            Maximum
                            Number of
                    Total Number of   Shares that May
    Total Number   Average   Shares Purchased   Yet be Purchased
    of Shares   Price Paid   as Part of Publicly   Under the
Period   Purchased   per Share   Announced Plan   Plan(1)
 
01/01/11 to 01/31/11
    7,488 (2)   $ 103.67       —       237,424  
02/01/11 to 02/28/11
    —     $ —       —       237,424  
03/01/11 to 03/31/11
    —     $ —       —       237,424  
 
Total
    7,488               —          
 
(1)   On August 28, 2008, the Company announced the authorization by its Board of Directors for the repurchase of up to two million shares of its Common Stock.
 
(2)   Represents shares of stock withheld for the payment of withholding taxes upon the vesting of restricted stock.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable
ITEM 4. MINE SAFETY DISCLOSURE
Our U.S. manufacturing facilities process mined minerals, and therefore are viewed as mine operations subject to regulation by the federal Mine Safety and Health Administration under the Federal Mine Safety and Health Act of 1977. Information concerning mine safety violations or other regulatory matters required by section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and the recently proposed Item 106 of Regulation S-K (17 CFR 229.106) is included in Exhibit 99.1 to this quarterly report.
ITEM 5. OTHER INFORMATION
Not applicable
ITEM 6. EXHIBITS
The following exhibits are filed as part of the Quarterly Report on Form 10-Q:
  10.1   Amendment No. 1 to the Proppant Supply Agreement, dated February 28, 2011, by and between CARBO Ceramics Inc. and Halliburton Energy Services, Inc. (Confidential treatment has been requested for certain confidential portions of this exhibit pursuant to Rule 24b-2 under the Securities Exchange Act of 1934. In accordance with Rule 24b-2, these confidential

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      portions have been omitted from this exhibit and filed separately with the Securities and Exchange Commission).
 
  10.2   Description of modification to Annual Non-Employee Director Stock Grants
 
  31.1   Rule 13a-14(a)/15d-14(a) Certification by Gary A. Kolstad.
 
  31.2   Rule 13a-14(a)/15d-14(a) Certification by Ernesto Bautista III.
 
  32   Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 
  99.1   Mine Safety Disclosure
 
  101   The following financial information from the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2011, formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Balance Sheets at March 31, 2011 and December 31, 2010; (ii) Consolidated Statements of Income for the three months ended March 31, 2011 and 2010; (iii) Consolidated Statements of Cash Flows for the three months ended March 31, 2011 and 2010; and (iv) Notes to the Consolidated Financial Statements, tagged as blocks of text.

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SIGNATURES
     Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
         
  CARBO CERAMICS INC.
  		 
  /s/ Gary A. Kolstad    
  Gary A. Kolstad   
  President and Chief Executive Officer   
 
     
  /s/ Ernesto Bautista III    
  Ernesto Bautista III   
  Chief Financial Officer   
 
Date: May 5, 2011

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EXHIBIT INDEX
     
EXHIBIT   DESCRIPTION
 
   
10.1
  Amendment No. 1 to the Proppant Supply Agreement, dated February 28, 2011, by and between CARBO Ceramics Inc. and Halliburton Energy Services, Inc. (Confidential treatment has been requested for certain confidential portions of this exhibit pursuant to Rule 24b-2 under the Securities Exchange Act of 1934. In accordance with Rule 24b-2, these confidential portions have been omitted from this exhibit and filed separately with the Securities and Exchange Commission).
 
   
10.2
  Description of modification to Annual Non-Employee Director Stock Grants
 
   
31.1
  Rule 13a-14(a)/15d-14(a) Certification by Gary A. Kolstad.
 
   
31.2
  Rule 13a-14(a)/15d-14(a) Certification by Ernesto Bautista III.
 
   
32
  Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 
   
99.1
  Mine Safety Disclosure
 
   
101
  The following financial information from the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2011, formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Balance Sheets at March 31, 2011 and December 31, 2010; (ii) Consolidated Statements of Income for the three months ended March 31, 2011 and 2010; (iii) Consolidated Statements of Cash Flows for the three months ended March 31, 2011 and 2010; and (iv) Notes to the Consolidated Financial Statements, tagged as blocks of text.

16

Exhibit 10.1
CONFIDENTIAL PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED AND FILED SEPARATELY WIH THE SECURITIES AND EXCHANGE COMMISSION UNDER A CONFIDENTIAL TREATMENT REQUEST. THE REDACTED TERMS HAVE BEEN MARKED IN THIS EXHIBIT AT THE APPROPRIATE PLACE WITH THREE ASTERISKS [***].
AMENDMENT NO. 1
TO THE
PROPPANT SUPPLY AGREEMENT
     THIS AMENDMENT NO. 1 TO THE PROPPANT SUPPLY AGREEMENT (this “ Amendment ”), dated as of February 28, 2011, is entered into by and between CARBO Ceramics Inc., a Delaware corporation (“ Seller ”), and Halliburton Energy Services, Inc., a Delaware corporation (“ Buyer ”). Defined terms used herein, but not otherwise defined, shall have such meanings as are set forth in the Supply Agreement (as defined below).
RECITALS
     WHEREAS, reference is herein made to that certain Proppant Supply Agreement by and between Seller and Buyer dated August 28, 2008 (the “ Supply Agreement ”); and
     WHEREAS, Seller and Buyer desire to amend the Supply Agreement as set forth herein in accordance with Section 11.3 of the Supply Agreement.
AGREEMENT
     NOW, THEREFORE, in consideration of the premises, the mutual covenants and agreements contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Buyer and Seller hereby agree as follows:
1. Amendments to the Supply Agreement .
     (a)  Article I . The definition “ Prioritize ” in Article I of the Supply Agreement is hereby amended and restated in its entirety by the following:
“ Prioritize ” means that in the event of applicable Seller Product shortages, Seller shall use commercially reasonable efforts to fill the orders of Buyer and the Buyer Beneficiaries before orders from other parties for the identical Product made under similar circumstances, including the Geographic Region for which the order is placed. Buyer and Seller agree that Seller shall have satisfied its obligation to use commercially reasonable efforts hereunder if Seller makes available to Buyer in one or more Geographic Regions a percentage of Seller’s actual annual manufactured output as follows in the table below; provided , however , that in no event shall Seller’s commercially reasonable efforts require it to provide more than [***] of Product multiplied by the applicable percentage of actual manufactured output set forth in the table below:

 

 

     
    Percentage of Actual
Calendar Year   Manufactured Output
2011
  [***]%
2012
  [***]%
2013 and each calendar year thereafter during the term of the Agreement
  [***]%
     (b)  Section 2.1 . Section 2.1 of the Supply Agreement is hereby amended and restated in its entirety by the following:
“2.1 Agreement to Purchase Products . Beginning on the Effective Date and throughout the term of this Agreement, Buyer hereby agrees that it and its Affiliates shall purchase at least [***]% of their total global Product requirements from Seller each calendar year, as further described herein (the “ Purchase Commitment ”). In addition, Buyer and its Affiliates shall use commercially reasonable efforts to purchase at least [***]% of their total international Product requirements (excludes the United States) from Seller each calendar year. Notwithstanding the foregoing, in no event shall Buyer or its Affiliates be prohibited from purchasing products on the market from third parties which are similar to the Products, even if such third party is a competitor of Seller. Each Buyer Beneficiary shall execute an Affiliate Addendum before being able to purchase CARBO Products under the terms of this Agreement, using the form set forth herein as Exhibit A . Each Affiliate Addendum shall (a) incorporate the terms of this Agreement, and (b) contain such other provisions as may be reasonably necessary to comply with the applicable laws and regulations of the jurisdiction in which the Buyer Beneficiary is located.”
     (c)  Section 3.1 . Section 3.1 of the Supply Agreement is hereby amended and restated in its entirety by the following:
“3.1 Selling Price .
     (a) Seller shall sell, and shall cause its Affiliates to sell, each CARBO Product to Buyer or the Buyer Beneficiaries, as applicable, at the then current Base Selling Price, less any discount set forth in Section 3.2 below. Base Selling Prices shall be calculated for each Seller Product Line on a three-month basis for each Geographic Region and Seller shall send Buyer a written report that sets forth the Base Selling Price by Seller Product Line in each Geographic Region (a “ Pricing Report ”), as set forth in the table below; provided , however , that the Pricing Report delivered to Buyer on March 1, 2011, shall be based on the period commencing on January 1, 2011, and ending on February 28, 2011. The Base Selling Price in each Pricing Report shall be effective on the first day of the month following delivery of the Pricing Report to Buyer by Seller.

2

 

         
Period Basis for   Delivery Date of   Effective Date of
Pricing Report   Pricing Report   Pricing Report
December 1 — February 28
(February 29, as applicable)
  March 1   April 1
March 1 — May 31
  June 1   July 1
June 1 — August 31
  September 1   October 1
September 1— November 30
  December 1   January 1
(b) From time to time during the term of this Agreement, Buyer and Seller may also enter into special written pricing arrangements for Seller Product Lines in particular Geographic Regions. Any such arrangements shall be specified in a written document executed by both Parties.”
     (d)  Section 3.2 . Section 3.2 of the Supply Agreement is hereby amended and restated in its entirety by the following:
“3.2 Discount . During the term of this Agreement, Buyer and Buyer Beneficiaries shall receive a [***]% discount from the Base Selling Price for each Seller Product sold pursuant to this Agreement.”
     (e)  Section 3.3 . Section 3.3 of the Supply Agreement is hereby deleted in its entirety and replaced with “ [Intentionally omitted.] ,” and all references to Section 3.3 in the Supply Agreement are hereby deleted.
     (f)  Section 4.1 . In order to correct an error in the equation to calculate Actual Purchase Percentage in Section 4.1 of the Supply Agreement, “100%” is hereby replaced with “100” in such equation.
     (g)  Section 6.1 . Section 6.1 of the Supply Agreement is hereby deleted in its entirety and replaced with “ [Intentionally omitted.] ,” and all references to Section 6.1 in the Supply Agreement are hereby deleted.
     (h)  Section 7.1 . Section 7.1 of the Supply Agreement is hereby amended and restated in its entirety by the following:
“7.1 Term . The term of this Agreement shall be for a period beginning on the Effective Date and ending on January 15, 2016, unless earlier terminated in accordance with the provisions of this Agreement or extended by agreement of the Parties. Unless provided otherwise in this Agreement, upon termination of this Agreement, neither Party shall have any liability or obligation under this Agreement of any kind.”
     2.  Ratification . Except as expressly modified and amended by this Amendment, the Supply Agreement is ratified and confirmed in all respects and shall continue in full force and effect.
     3.  Governing Law . This Amendment shall be governed and controlled as to validity, enforcement, interpretation, construction, effect and in all other respects by the internal laws of the

3

 

State of Delaware applicable therein, without giving effect to the conflicts of laws principles thereof, and specifically excludes the U.N. Convention on Contracts for International Sale of Goods.
     4.  Counterparts . This Amendment may be executed in multiple counterparts, each of which when so executed shall be deemed an original and all of which shall constitute one and the same agreement.
[ Signature Page Follows ]

4

 

     IN WITNESS WHEREOF, the parties hereto have executed this Amendment on the date first above written.
         
  SELLER:

CARBO CERAMICS INC.
  		 
  By:   /s/ Gary Kolstad    
  Name: Gary Kolstad   
  Title: President and Chief Executive Officer   
 
  BUYER:

HALLIBURTON ENERGY SERVICES, INC.
  		 
  By:   /s/ David M. Adams    
  Name: David M. Adams   
  Title: Vice President    
 
Signature Page — Amendment No. 1 to the Proppant Supply Agreement

 

Exhibit 10.2
Description of Modification to
Annual Non-Employee Director Stock Grants
In May 2010, the Compensation Committee of the Board of Directors of CARBO Ceramics Inc. (the “Company”) approved a grant of 200 shares of the Company’s common stock to be made each year on the first business day after the date of the Company’s Annual Meeting of Stockholders to each non-employee Director of the Company serving as such on such date (each, an “Annual Director Stock Grant”). In March 2011, the Compensation Committee approved an increase in the amount of Annual Director Stock Grants from 200 shares to 250 shares. All other terms of the Annual Director Stock Grants, as established in May 2010, remain unchanged.

 

Exhibit 31.1
Quarterly Certification
As required by Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934
I, Gary A. Kolstad, certify that:
1. I have reviewed this quarterly report on Form 10-Q of CARBO Ceramics Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: May 5, 2011
     
/s/ Gary A. Kolstad
 
Gary A. Kolstad
   
President & CEO
   

 

Exhibit 31.2
Quarterly Certification
As required by Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934
I, Ernesto Bautista III, certify that:
1. I have reviewed this quarterly report on Form 10-Q of CARBO Ceramics Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: May 5, 2011
     
/s/ Ernesto Bautista III
 
Ernesto Bautista III
   
Chief Financial Officer
   

 

Exhibit 32
Certification Pursuant to
18 U.S.C. Section 1350,
As Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
Pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code), each of the undersigned officers of CARBO Ceramics Inc. (the “Company”), does hereby certify, to such officer’s knowledge, that:
The Quarterly Report on Form 10-Q for the quarter ended March 31, 2011 (the “Form 10-Q”) of the Company fully complies with the requirements of section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934 and information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company as of, and for, the periods presented in the Form 10-Q.
Dated: May 5, 2011
     
/s/ Gary A. Kolstad
 
Name: Gary A. Kolstad
   
Title: Chief Executive Officer
   
 
   
Dated: May 5, 2011
   
 
   
/s/ Ernesto Bautista III
 
Name: Ernesto Bautista III
   
Title: Chief Financial Officer
   

 

Exhibit 99.1
Mine Safety Disclosure
     Under the Dodd-Frank Wall Street Reform and Consumer Protection Act, each operator of a mine is required to include certain mine safety results in its periodic reports filed with the SEC. Our manufacturing plants process mined minerals, and therefore are viewed as mine operations and are subject to regulation by the federal Mine Safety and Health Administration (MSHA) under the Federal Mine Safety and Health Act of 1977 (Mine Act). Below, we present the following items regarding certain mining safety and health matters for the three months ended March 31, 2011:
-   total number of violations of mandatory health or safety standards that could significantly and substantially contribute to the cause and effect of a mine safety or health hazard under section 104 of the Mine Act for which we have received a citation from MSHA;
 
-   total number of orders issued under section 104(b) of the Mine Act, which covers violations that had previously been cited under section 104(a) that, upon follow-up inspection by MSHA, are found not to have been totally abated within the prescribed time period, which results in the issuance of an order requiring the mine operator to immediately withdraw all persons (except certain authorized persons) from the mine;
 
-   total number of citations and orders for unwarrantable failure of the mine operator to comply with mandatory health or safety standards under Section 104(d) of the Mine Act;
 
-   total number of flagrant violations (i.e., reckless or repeated failure to make reasonable efforts to eliminate a known violation of a mandatory health or safety standard that substantially and proximately caused, or reasonably could have been expected to cause, death or serious bodily injury) under section 110(b)(2) of the Mine Act;
 
-   total number of imminent danger orders (i.e., the existence of any condition or practice in a mine which could reasonably be expected to cause death or serious physical harm before such condition or practice can be abated) issued under section 107(a) of the Mine Act;
 
-   total dollar value of proposed assessments from MSHA under the Mine Act;
 
-   total number of mining-related fatalities; and
 
-   total number of pending legal actions before the Federal Mine Safety and Health Review Commission involving such mine.
CARBO Ceramics Inc.
Mine Safety Disclosure
Three Months Ended March 31, 2011
(Unaudited)
(Whole dollars)
                                                                         
    Section   Section   104(d)   Section   Section   Proposed   Proposed           Pending
    104   104(b)   Citations   110(b)(2)   107(a)   MSHA   MSHA           Legal
Operation (1)   Citations   Orders   and Orders   Violations   Orders   Assessments (2)   Assessments (3)   Fatalities   Actions
New Iberia, LA
    0       —       —       —       —     $ 0.00     $ 34,322.00       —       18  
Eufaula, AL
    2       —       —       —       —       200.00       300.00       —       1  
McIntyre, GA
    2       —       —       —       —       200.00       110,681.00       —       10  
Toomsboro, GA
    2       —       —       —       —       534.00       1,220.00       —       4  
 
Total
    6       —       —       —       —     $ 934.00     $ 146,523.00       —       33  
 
(1)   The definition of mine under section 3 of the Mine Act includes the mine, as well as other items used in, or to be used in, or resulting from, the work of extracting minerals, such as land, structures, facilities, equipment, machines, tools, and preparation facilities. Unless otherwise indicated, any of these other items associated with a single mine have been aggregated in the totals for that mine.
 
(2)   Amounts included are the total dollar value of proposed or outstanding assessments received from MSHA for the three month period ended March 31, 2011 regardless of whether the assessment has been challenged or appealed, for alleged violations occurring during the three month period ended March 31, 2011.
 
(3)   Amounts included are the total dollar value of all proposed or outstanding assessments received from MSHA as of March 31, 2011 regardless of whether the assessment has been challenged or appealed.