TTI_Form 11K_06302014




UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549


 
 
FORM 11-K
 
        (MARK ONE)
 
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2013
 
OR
 
[   ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM ____ TO ____
 
Commission File No. 1-13455
 
A. Full title of the plan and address of the plan, if different from that of the issuer named below:
 
TETRA Technologies, Inc. 401(k) Retirement Plan
 
 
 
 
B. Name of issuer of the securities held pursuant to the plan and the address of its principal executive office:
 
TETRA Technologies, Inc.
24955 Interstate 45 North
The Woodlands, Texas 77380
 




TABLE OF CONTENTS
 
 
Report of Independent Registered Public Accounting Firm
Page  2
Audited Financial Statements
 
 
Statements of Net Assets Available for Benefits at December 31, 2013 and 2012
Page 3
 
 
Statement of Changes in Net Assets Available for Benefits for the Year Ended
   December 31, 2013
Page 4
 
Notes to Financial Statements
Page 5
 
Supplemental Schedule
 
 
Schedule H, Line 4(i) – Schedule of Assets (Held at End of Year)
Page 12





Report of Independent Registered Public Accounting Firm
 
Administrator of TETRA Technologies, Inc. 401(k) Retirement Plan
 
We have audited the accompanying statements of net assets available for benefits of TETRA Technologies, Inc. 401(k) Retirement Plan as of December 31, 2013 and 2012, and the related statement of changes in net assets available for benefits for the year ended December 31, 2013. These financial statements are the responsibility of the Plan's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Plan's internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Plan's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits of TETRA Technologies, Inc. 401(k) Retirement Plan at December 31, 2013 and 2012, and the changes in its net assets available for benefits for the year ended December 31, 2013, in conformity with U.S. generally accepted accounting principles.

Our audits were conducted for the purpose of forming an opinion on the financial statements taken as a whole. The accompanying supplemental schedule of assets (held at end of year) as of December 31, 2013, is presented for purposes of additional analysis and is not a required part of the financial statements but is supplementary information required by the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. Such information has been subjected to the auditing procedures applied in our audits of the financial statements and, in our opinion, is fairly stated in all material respects in relation to the financial statements taken as a whole.

 
 
/s/ Ernst & Young LLP
Houston, Texas
June 27, 2014


2




TETRA Technologies, Inc. 401(k) Retirement Plan
Statements of Net Assets Available for Benefits

 
 

December 31,
 

2013
 
2012
ASSETS

 


 

Receivables:

 


 

Notes receivable from participants

$
4,032,394


$
3,955,504

Investments, at fair value

100,396,860


84,578,821

Net assets reflecting investments at fair value

104,429,254


88,534,325

Adjustment from fair value to contract value for

 


 

fully benefit-responsive investment contracts

(208,849
)

(559,892
)
Net assets available for benefits

$
104,220,405


$
87,974,433


 
See accompanying notes.

3



TETRA Technologies, Inc. 401(k) Retirement Plan
Statement of Changes in Net Assets Available for Benefits
Year Ended December 31, 2013
 
Additions:
 

Employer contributions
$
3,545,581

Participant contributions
10,076,528

Rollover contributions
562,202

Interest and dividends
2,988,013

Interest income on notes receivable from participants
149,017

Net appreciation in fair value of investments
15,561,096

Total additions
32,882,437

 
 

Deductions:
 

Benefits paid to participants
16,616,435

Administrative expenses
20,030

Total deductions
16,636,465

 
 

Net increase
16,245,972

 
 

Net assets available for benefits:
 

Beginning of year
87,974,433

End of year
$
104,220,405

 
 

 
 
See accompanying notes.


4



TETRA Technologies, Inc. 401(k) Retirement Plan
Notes to Financial Statements
December 31, 2013

1. Description of Plan
 
The following description of the TETRA Technologies, Inc. 401(k) Retirement Plan (the Plan) is provided for general information only. Participants should refer to the Plan Document and Summary Plan Description for a more complete description of the Plan’s provisions, a copy of which is available from TETRA Technologies, Inc. (the Company or Plan Administrator).
 
General
 
The Plan, which initially became effective January 1, 1990, is a profit sharing plan as defined by Section 401(a) of the Internal Revenue Code of 1986, as amended (IRC) and contains a provision for salary reduction contributions under Section 401(k) of the IRC. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974, as amended (ERISA). The Company is the designated administrator of the Plan and the Plan is advised by the 401(k) Committee, which currently consists of certain officers of the Company. T. Rowe Price Trust Company (TRP or Trustee) is the trustee of the Plan.
 
Eligibility
 
Employees who have attained age 18 are eligible to participate in the Plan beginning on the first day of any calendar month coincident with or following completion of six months of service. However, the following employees or classes of employees are not eligible to participate: (i) employees who are non-resident aliens and who receive no earned income from the Company which constitutes income from sources within the United States; (ii) leased employees; and (iii) reclassified employees and independent contractors.
 
Contributions
 
The maximum elective contribution limit is 70% of eligible Plan compensation. Contributions for each participant are limited in any calendar year to annual “regular” and “catch-up” contribution limits as determined pursuant to the IRC. Unless the employee elects otherwise, 3% of each eligible employee’s eligible Plan compensation is automatically contributed to the Plan on a pre-tax basis. The Plan provides an automated service which increases the employee’s elective contribution rate by 1% at the same time each year until a 6% elective contribution rate has been reached. The 6% elective contribution is the amount needed to take advantage of the full Company match, if any. The employee is reminded annually before the change takes place and can elect to change the amount at any time by contacting TRP. Employees have the option to elect a 0% elective contribution rate or to change their elective contribution rate in accordance with the Plan.
 
The Company may contribute an amount equal to a specified matching percentage of the participant’s elective contribution. During 2013, the Company made matching contributions of 50% of the first 6% of the participant’s elective contributions per pay period.
 
The Company may also, at the discretion of the Board of Directors, make a profit sharing contribution to the Plan at the end of each fiscal year. Such Company contribution will be allocated to Plan participants, who are employed on December 31st, in the same ratio that each participant’s eligible Plan compensation bears to the total eligible Plan compensation of all participants. No profit sharing contribution was made for the 2013 Plan year.

Participants have the right to direct the investment of their contributions, including the Company’s matching contributions and profit sharing, into any of the investment funds offered by the Plan. In the event no participant election is made, participant contributions, the related Company match, and any profit sharing contributions are automatically allocated to a diversified portfolio. This portfolio invests 60% in stock funds and 40% in fixed income funds using a wide variety of funds in the Plan. If contributions for a participant are automatically allocated to this diversified portfolio, the participant may elect to change such investments in accordance with the Plan.
 

5



Company Stock Fund
The Plan permits participants to invest in common stock of the Company through the Plan’s Company Stock Fund. The Company Stock Fund may also hold cash or other short-term securities, although these are expected to be a small percentage of the fund.
The Plan limits the amount a participant can invest in the Company Stock Fund to encourage diversification of participants’ accounts. Each payroll period, a participant can direct up to a maximum of 50% of their contributions in the Company Stock Fund. In addition, a participant may not transfer amounts from other investment funds into the Company Stock Fund to the extent the transfer would result in more than 50% of the participant’s total account balance being invested in the Company Stock Fund.
Vesting
 
Participants are immediately vested in their elective contributions plus actual earnings thereon. Vesting in the matching contribution and profit sharing contribution portions of their accounts plus actual earnings thereon is based on years of service. Participants are 25% vested after two years of service and vest an additional 25% each year, becoming 100% vested after five years of service. Upon a participant’s death, disability or normal retirement, the participant becomes 100% vested in his or her entire account. Except as otherwise described herein, participants forfeit the non-vested matching contribution and profit sharing contribution portions of their accounts in the Plan upon termination of employment with the Company.
 
Benefit Payments and Forfeitures
 
Upon separation from service for any reason, a participant’s vested balance is payable in a lump sum or installments. Amounts which are forfeited due to termination of employment are used to reduce the Company’s contributions, if any. Cumulative forfeitures relating to prior period activity and available to be applied against any future employer contributions were approximately $93,618 and $92,626 as of December 31, 2013 and 2012 respectively. During 2013, $379,946 in forfeitures was applied against employer contributions.
 
Plan Amendment and Termination
 
The Company has the right under the Plan to amend the Plan, subject to applicable law. In addition, the Company has the right under the Plan to terminate the Plan subject to applicable law. In the event of Plan termination, participants will become 100% vested in their accounts.
 
Participant Loans
 
Participants, during their time of employment, may borrow from their fund accounts a minimum of $1,000, up to a maximum equal to the lesser of $50,000 or 50% of their vested account balances. Loan terms range from 1 to 5 years, or up to 15 years for the purchase of the participant’s primary residence. The loans are secured by the balances in the participants’ accounts and bear interest at rates established at the inception of the loan, set at one percentage point higher than the prime lending rate as posted in the Wall Street Journal (or similar financial publication). Principal and interest are paid ratably generally through payroll deductions.

Administrative Expenses

Certain administrative expenses are paid by the Company.

2. Summary of Accounting Policies

Basis of Accounting
 
The accompanying financial statements of the Plan have been prepared using the accrual basis of accounting in accordance with U.S. generally accepted accounting principles (GAAP). Benefit payments to participants are recorded upon distribution.
 

6



As required by subsections 9-19 of Accounting Standards Codification (ASC) Subtopic 946.210.45, Financial Services – Investment Companies, Balance Sheet, Other Presentation Matters, investments in the accompanying Statements of Net Assets Available for Benefits include fully benefit-responsive investment contracts and are recognized at fair value.  ASC Topic 962, Plan Accounting – Defined Contribution Pension Plans, requires fully benefit-responsive investment contracts to be reported at fair value in the Plan’s Statements of Net Assets Available for Benefits with a corresponding adjustment to reflect these investments at contract value.
 
Use of Estimates
 
The preparation of financial statements in conformity with GAAP requires management to make estimates that affect the amounts reported in the financial statements and accompanying notes and schedule. Actual results could differ from those estimates.
 
Notes Receivable from Participants
 
Notes receivable from participants represent participant loans that are recorded at their unpaid principal balance plus any accrued but unpaid interest. Interest income on notes receivable from participants is recorded when it is earned. Related fees are recorded as administrative expenses and are recorded when they are incurred. No allowance for credit losses has been recorded as of December 31, 2013 or 2012. If a participant ceases to make loan repayments and the plan administrator deems the participant loan to be a distribution, the participant loan balance is reduced and a benefit payment is recorded.

Investment Valuation and Income Recognition
 
The Plan’s investments are stated at fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price). See Note 4 for further discussion of fair value measurements. Investments in common collective trust funds include the Stable Value Fund. The Stable Value Fund invests in fully benefit-responsive investment contracts (as defined by Subtopic 946 previously discussed) including primarily guaranteed and synthetic investment contracts issued by banks, insurance companies and other issuers. The Stable Value Fund is recorded at fair value (see Note 4). However, since these contracts are fully benefit-responsive, an adjustment is made to reflect this investment at contract value, which represents cost plus accrued income less redemptions. The fair value of the guaranteed investment contracts is generally determined by discounting the scheduled future payments required under the contract. The fair value of wrap contracts reflects the discounted present value of the difference between the current wrap contract cost and its replacement cost, based on issuer quotes. For assets other than investment contracts, including securities underlying synthetic investment contracts, fair value generally is reflected by market value at close of business on the valuation date.       
 
Short term investments are valued at cost, which approximates fair value. Purchases and sales of securities are recorded on a trade date basis. Interest income is recorded on the accrual basis and dividends are recorded on the ex-dividend date.
 
3. Investments
 
Individual investments that represent 5% or more of the Plan’s net assets at either December 31, 2013 or 2012 are as follows:
 

December 31,
 

2013

2012
TETRA Technologies, Inc. common stock

$
10,241,178


$
7,589,924

TRP Stable Value Fund, at contract value*

14,735,710


13,023,659

TRP Equity Income

14,985,098


12,390,801

TRP Growth Stock Fund

11,905,032


9,425,487

PIMCO Total Return Fund

10,958,142


11,755,399

American EuroPacific Growth Fund

5,497,845


4,684,042

Artisan Mid Cap

5,713,598


4,556,373

Ridgeworth Total Return Bond I

5,975,248


4,946,983


7



 
* The fair value of this fully benefit-responsive investment totaled $14,944,559 and $13,583,551at December 31, 2013 and 2012, respectively.
 
During 2013, the Plan’s investments (including gains and losses of investments bought, sold, and held during the year) appreciated (depreciated) in value as follows:
Mutual funds
$
11,254,883

Common stock
$
4,306,213

 
$
15,561,096


4. Fair Value Measurements
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (i.e., an exit price). The fair value hierarchy prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets and liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are described below:
Level 1 – Unadjusted quoted prices in active markets that are accessible to the reporting entity at the measurement date for identical assets and liabilities.
Level 2 – Inputs other than quoted prices in active markets for identical assets and liabilities that are observable either directly or indirectly for substantially the full term of the asset or liability. Level 2 inputs include the following:
quoted prices for similar assets and liabilities in active markets
quoted prices for identical or similar assets or liabilities in markets that are not active
observable inputs other than quoted prices that are used in the valuation of the asset or liabilities (e.g.,interest rate and yield curve quotes at commonly quoted intervals)
inputs that are derived principally from or corroborated by observable market data by correlation or other means
Level 3 – Unobservable inputs for the asset or liability (i.e., supported by little or no market activity). Level 3 inputs include management’s own assumption about the assumptions that market participants would use in pricing the asset or liability (including assumptions about risk).
The level in the fair value hierarchy within which the fair value measurement is classified is determined based on the lowest level input that is significant to the fair value measure in its entirety.
The following tables set forth by level within the fair value hierarchy, the Plan’s assets carried at fair value for the years ended December 31, 2013 and 2012:
 

Assets at Fair Value as of December 31, 2013
 

Level 1

Level 2

Level 3

Total
Company stock

$
10,241,178

 
$

 
$

 
$
10,241,178

Stable Value Fund (a)


 
14,944,559

 

 
14,944,559

Mutual funds:



 


 


 
 
Large cap stock

26,890,130

 

 

 
26,890,130

Mid cap stock

14,071,073

 

 

 
14,071,073

Small cap stock

5,698,200

 

 

 
5,698,200

Intermediate term bond

16,933,389

 

 

 
16,933,389

Foreign large blend

11,618,331

 

 

 
11,618,331

Total assets at fair value

$
85,452,301

 
$
14,944,559

 
$

 
$
100,396,860

 

8



 
 
Assets at Fair Value as of December 31, 2012
 
 
Level 1
 
Level 2
 
Level 3
 
Total
Company stock
 
$
7,589,924

 
$

 
$

 
$
7,589,924

Stable Value Fund (a)
 

 
13,583,551

 

 
13,583,551

Mutual funds:
 
 

 
 

 
 

 
 

Large cap stock
 
21,816,287

 

 

 
21,816,287

Mid cap stock
 
10,740,572

 

 

 
10,740,572

Small cap stock
 
4,259,689

 

 

 
4,259,689

Intermediate term bond
 
16,702,383

 

 

 
16,702,383

Foreign large blend
 
9,538,850

 

 

 
9,538,850

Other
 
347,565

 

 

 
347,565

Total assets at fair value
 
$
70,995,270


$
13,583,551

 
$

 
$
84,578,821

 
(a)    This category includes a common/collective trust fund that is designed to deliver safety and stability by preserving principal and accumulating earnings. This fund is primarily invested in guaranteed investment contracts and synthetic investment contracts. Participant-directed redemptions have no restrictions; however, the Plan is required to provide a one year redemption notice to liquidate its entire share in the fund. The fair value of this fund is based on the net asset value as reported by the issuer of the fund, which is determined based on the fair value of the underlying investment contracts in the fund. The fair value differs from the contract value. As previously discussed in Note 2, contract value is the relevant measurement attributable to fully benefit-responsive investment contracts because contract value is the amount participants would receive if they were to initiate permitted transactions under the terms of the Plan.
 
The Plan’s valuation methodology used to measure the fair values of Company stock and mutual funds were derived from quoted market prices, as these instruments have active markets. The valuation technique used to measure fair value of common/collective trust funds is included in Note 2.
5. Income Tax Status
 
The underlying non-standardized prototype plan has received an opinion letter from the Internal Revenue Service (IRS) dated March 31, 2008, stating that the form of the Plan is qualified under Section 401(a) of the IRC, and therefore, the related trust is tax exempt. In accordance with Revenue Procedures 2013-6 and 2011-49, the Plan Administrator has determined that it is eligible to and has chosen to rely on the current IRS prototype plan opinion letter. Once qualified, the Plan is required to operate in conformity with the IRC to maintain its qualification. The Plan Administrator has indicated that it will take the necessary steps, if any, to bring the Plan’s operations into compliance with the Code.
 
U.S. generally accepted accounting principles require plan management to evaluate uncertain tax positions taken by the Plan. The financial statement effects of a tax position are recognized when the position is more likely than not, based on the technical merits, to be sustained upon examination by the IRS. The Plan Administrator has analyzed the tax positions taken by the Plan, and has concluded that as of December 31, 2013, there are no uncertain positions taken or expected to be taken. The Plan has recognized no interest or penalties related to uncertain tax positions. The Plan is subject to routine audits by taxing jurisdictions; however, there are currently no audits for any tax periods in progress. The Plan Administrator believes it is no longer subject to income tax examinations for years prior to 2010.

9



6. Reconciliation of the Financial Statements to the Form 5500
 
The following is a reconciliation of the net assets available for benefits and the changes in net assets available for benefits per the financial statements to the Form 5500.
 
 
 
December 31, 2013
 
December 31, 2012
 
Net assets available for benefits per the financial
 
 

 
 

   statements
 
$
104,220,405

 
$
87,974,433

Adjustment from contract value to fair value for
 


 
 

   fully benefit-responsive investment contracts
 
208,849

 
559,892

Net assets available for benefits per the
 
 

 
 

  Form 5500
 
$
104,429,254

 
$
88,534,325

 
The following is a reconciliation of the net increase in net assets available for benefits per the financial statements to the net gain per the Form 5500.
 
Year Ended
 
December 31, 2013
 
Net increase in net assets available for benefits per 
 
   the financial statements
16,245,972

Change in adjustment from contract value to fair
 

   value for fully benefit-responsive investment contracts
(351,043
)
Net gain per Form 5500
$
15,894,929

 
Fully benefit-responsive investment contracts are valued at contract value on the statement of net assets available for benefits, whereas the Form 5500 requires all investments to be valued at fair value.

7. Risks and Uncertainties

The Plan provides for investments in various investment securities, which in general, are exposed to various risks, such as interest rate, credit, and overall market volatility risks. Due to the level of risk associated with certain investment securities, it is at least reasonably possible that changes in the values of investment securities will occur in the near term and that such changes could materially affect the amounts reported in the statements of net assets available for benefits and participant account balances.

8. Related Party Transactions
 
Certain investments of the Plan are managed by T. Rowe Price Trust Company, the Trustee of the Plan, and therefore, these transactions qualify as party-in-interest transactions. The Plan also invests in shares of the Company's common stock and these transactions also qualify as party-in-interest transactions. All of these transactions are exempt from the prohibited transactions rules.


10
























Supplemental Schedule









11



TETRA Technologies, Inc. 401(k) Retirement Plan
Schedule H, Line 4(i) – Schedule of Assets (Held at End of Year)
EIN: 74-2148293      PN: 001
December 31, 2013
 
 
Identity of Issue, Borrower,
 
 
 
Current
 
Lessor, or Similar Party
 
Description of Investment
 
Value
 
 
 
 
 
 

*
T. Rowe Price
 
Equity Income Fund
 
$
14,985,098

*
T. Rowe Price
 
TRP Growth Stock Fund
 
11,905,032

 
PIMCO
 
Total Return Fund
 
10,958,142

*
T. Rowe Price
 
TRP Stable Value Fund
 
14,944,559

 
American Funds
 
EuroPacific Growth Fund
 
5,497,845

 
Walthausen
 
Balanced Fund
 
2,707,423

 
Dreyfus
 
Small Cap Value Fund
 
4,165,015

 
Artisan Funds
 
Mid Cap Growth Fund
 
5,713,598

 
Columbia
 
Small Cap Fund
 
2,990,777

*
TETRA Technologies, Inc.
 
TETRA Technologies, Inc. common stock
 
10,060,719

 
 
 
Prime Reserves Fund
 
180,459

 
Ridgeworth
 
Total Return Bond I
 
5,975,247

 
Matthews
 
Asia Dividend Fund
 
3,156,830

 
Thornburg
 
International Value Fund
 
2,963,656

 
Vanguard
 
Selected Value Fund
 
4,192,460

*
Participant loans
 
Loans with various maturities and interest rates ranging from 4.25% to 10.50% per annum
 
4,032,394

 
 
 
 
 
$
104,429,254

 
* Party-in-interest


12




SIGNATURES
 
 
The Plan. Pursuant to the requirements of the Securities Exchange Act of 1934, the trustees (or other persons who administer the employee benefit plan) have duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
TETRA Technologies, Inc. 401(k)
 
Retirement Plan
 
 
By:
/s/Stuart M. Brightman
 
Stuart M. Brightman
 
President & Chief Executive Officer
 
TETRA Technologies, Inc.
 
Date: June 27, 2014


13



EXHIBIT INDEX
 
EXHIBIT NO.
 
DESCRIPTION
23.1
 
Consent of Independent Registered Public Accounting Firm


14