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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-Q
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(Mark One)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED NOVEMBER 30, 1995
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
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COMMISSION FILE NUMBER 1-7573
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PARKER DRILLING COMPANY
(Exact name of registrant as specified in its charter)
Delaware 73-0618660
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
Parker Building, Eight East Third Street, Tulsa, Oklahoma 74103
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(Address of principal executive offices) (zip code)
Registrant's telephone number, including area code (918) 585-8221
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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 X No
As of December 31, 1995, 56,175,764 common shares were outstanding.
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PARKER DRILLING COMPANY
INDEX
Part I. Financial Information Page No.
Consolidated Condensed Balance Sheets (Unaudited) -
November 30, 1995 and August 31, 1995 2
Consolidated Condensed Statements of Operations (Unaudited) -
Three Months Ended November 30, 1995 and
November 30, 1994 3
Consolidated Condensed Statements of Cash Flows (Unaudited) -
Three Months Ended November 30, 1995 and 4
November 30, 1994
Notes to Unaudited Consolidated Condensed
Financial Statements 5
Report of Review by Independent Accountants 6
Management's Discussion and Analysis of Financial
Condition and Results of Operations 7 - 8
Part II. Other Information
Item 6, Exhibits and Reports on Form 8-K 9
Signatures 10
Exhibit 15, Letter Re Unaudited Interim 11
Financial Information
Exhibit 27, Financial Data Schedule (EDGAR version only)
PART 1. FINANCIAL INFORMATION
PARKER DRILLING COMPANY AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(Dollars in Thousands)
(Unaudited)
November 30, August 31,
1995 1995
ASSETS ---------- ----------
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Current assets:
Cash and cash equivalents $ 20,647 $ 20,752
Other short-term investments 4,738 1,372
Accounts and notes receivable 39,904 39,578
Rig materials and supplies 11,031 11,532
Other current assets 4,868 5,146
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Total current assets 81,188 78,380
Property, plant and equipment less accumulated
depreciation, depletion and amortization of
$431,517 at November 30, 1995, and $432,360
at August 31, 1995 124,846 122,258
Other noncurrent assets 17,533 16,321
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Total assets $223,567 $216,959
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LIABILITIES AND STOCKHOLDERS' EQUITY
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Current liabilities:
Current portion of long-term debt $ 289 $ 289
Accounts payable and accrued liabilities 18,069 16,940
Accrued income taxes 6,145 5,109
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Total current liabilities 24,503 22,338
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Long-term debt 1,475 1,748
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Other long-term liabilities 6,730 5,953
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Common stock, $.16 2/3 par value 9,358 9,287
Capital in excess of par value 206,926 205,310
Retained earnings (accumulated deficit) (22,504) (24,391)
Other (2,921) (3,286)
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Total stockholders' equity 190,859 186,920
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Total liabilities and stockholders' equity $223,567 $216,959
======== ========
See accompanying notes to consolidated condensed financial statements.
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PARKER DRILLING COMPANY AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(Dollars in Thousands Except Per Share Amounts)
(Unaudited)
Three Months Ended
November 30,
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1995 1994
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Revenue:
Drilling contracts $ 41,504 $ 32,055
Other 1,206 1,228
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Gross operating revenue 42,710 33,283
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Operating expense:
Drilling 28,401 24,769
Other 1,391 1,450
Depreciation, depletion and
amortization 5,486 5,506
General and administrative 5,160 5,015
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40,438 36,740
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Operating income (loss) 2,272 (3,457)
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Other income and (expense):
Interest expense (31) (2)
Interest income 344 260
Other income (expense) - net 1,039 2,901
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1,352 3,159
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Income (loss) before income taxes 3,624 (298)
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Income tax expense 1,737 795
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Net income (loss) $ 1,887 $ (1,093)
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Earnings (loss) per share,
primary and fully diluted $ .03 $ (.02)
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Number of common shares used in
computing earnings (loss) per share:
Primary 55,678,060 54,518,336
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Fully diluted 55,705,953 54,518,336
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See accompanying notes to consolidated condensed financial statements.
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/TABLE
PARKER DRILLING COMPANY AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
Increase (Decrease) in Cash and Cash Equivalents
(Dollars in Thousands)
(Unaudited)
Three Months Ended
November 30,
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1995 1994
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Cash flows from operating activities:
Net income (loss) $ 1,887 $(1,093)
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Depreciation, depletion and amortization 5,486 5,506
Expenses not requiring cash 413 (939)
Change in operating assets and liabilities 2,500 4,607
Other-net (772) (1,144)
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Net cash provided by operating activities 9,514 6,937
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Cash flows from investing activities:
Capital expenditures (8,389) (3,183)
Proceeds from the sale of equipment 1,687 4,604
Decrease (increase) in short-term
investments (3,366) (14)
Other-net (826) 786
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Net cash provided (used) by investing
activities (10,894) 2,193
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Cash flows from financing activities:
Proceeds from exercise of stock warrants 1,552 -
Other (277) (93)
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Net cash provided (used) by financing
activities 1,275 (93)
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Net change in cash and cash equivalents (105) 9,037
Cash and cash equivalents at
beginning of period 20,752 10,660
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Cash and cash equivalents at
end of period $20,647 $19,697
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Supplemental disclosure:
Interest paid $ 109 $ 2
Taxes paid $ 701 $ 791
Supplemental noncash financing activity:
In November 1994, the Company acquired a limited partner's ownership
interest in two consolidated partnerships in exchange for a promissory
note in the amount of $1,850,000.
See accompanying notes to consolidated condensed financial statements.
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PARKER DRILLING COMPANY AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
1. In the opinion of the Company, the accompanying unaudited consolidated
condensed financial statements reflect all adjustments (of a normally
recurring nature) which are necessary for a fair presentation of (1) the
financial position as of November 30, 1995 and August 31, 1995, (2) the
results of operations for the three months ended November 30, 1995 and
November 30, 1994, and (3) cash flows for the three months ended November
30, 1995 and November 30, 1994. Results for the three months ended
November 30, 1995, are not necessarily indicative of the results which
will be realized for the year ending August 31, 1996. The year-end
consolidated condensed balance sheet data was derived from audited
financial statements, but does not include all disclosures required by
generally accepted accounting principles. The financial statements should
be read in conjunction with the Company's Form 10-K for the year ended
August 31, 1995.
2. Earnings per common share are based on the weighted average number of
common shares and common share equivalents outstanding during the period.
Common shares granted under the 1969 Key Employee Stock Grant Plan, 1980
Incentive Career Stock Plan and the 1991 Stock Grant Plan are issued and
outstanding and are only considered in the computation of weighted average
shares outstanding when their effect on earnings per share is dilutive.
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Report of Independent Accountants
To the Board of Directors and Shareholders
Parker Drilling Company
We have reviewed the consolidated condensed balance sheet of Parker
Drilling Company and subsidiaries as of November 30, 1995, and the related
consolidated condensed statements of operations for the three month periods
ended November 30, 1995 and 1994 and consolidated condensed statements of cash
flows for the three month periods ended November 30, 1995 and 1994. These
financial statements are the responsibility of the Company's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures
to financial data and making inquiries of persons responsible for financial
and accounting matters. It is substantially less in scope than an audit
conducted in accordance with generally accepted auditing standards, the
objective of which is the expression of an opinion regarding the financial
statements taken as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that
should be made to the condensed consolidated financial statements referred to
above for them to be in conformity with generally accepted accounting
principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet as of August 31, 1995, and the
related consolidated statements of operations, redeemable preferred stock and
stockholders' equity and cash flows for the year then ended (not presented
herein); and in our report, dated October 17, 1995, we expressed an
unqualified opinion on those consolidated financial statements. In our
opinion, the information set forth in the accompanying condensed consolidated
balance sheet as of August 31, 1995, is fairly stated in all material respects
in relation to the consolidated balance sheet from which it has been derived.
By: /s/ Coopers & Lybrand L.L.P.
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COOPERS & LYBRAND L.L.P.
Tulsa, Oklahoma
January 11, 1996
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
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The Company's net income of $1.9 million for the first quarter of fiscal
1996 reflected an improvement of $3.0 million over the $1.1 million net loss
recorded in the corresponding period of fiscal 1995. An improvement of $5.8
million in drilling margins (drilling revenue less drilling expense), offset
by a decline of $1.8 million of other income and an increase in income taxes
of $.9 million, was the primary reason for the improvement in net income.
Drilling revenue in the first quarter of fiscal 1996 was $41.5 million, an
increase of $9.4 million over the $32.1 million recorded in the first quarter
of fiscal 1995. Utilization of the Company's entire rig fleet increased from
41% in the first quarter of fiscal 1995 to 43% in the current year's first
quarter while international rig utilization was 58% in the first quarter of
both years. (Fiscal 1995 utilization has been adjusted to reflect rigs
removed from the rig fleet at the end of fiscal 1995.)
Western Hemisphere international drilling revenue remained nearly the same
when compared with fiscal 1995's first quarter. Revenue declined in
Argentina due to the stacked status of the shallow-depth rigs located in the
southern region of the country. Seven rigs operated in southern Argentina in
the first quarter of fiscal 1995. Two additional rigs operating in the
northern region of Argentina and one additional rig operating in Colombia
offset the loss of revenue from southern Argentina.
Drilling revenue in the Company's Asia Pacific region increased $6.8
million in the first quarter of fiscal 1996 when compared with the same period
in the prior fiscal year. Operations in Papua New Guinea, where the Company
operated five rigs during fiscal 1996's first quarter, were largely
responsible for the increase in revenue. This compares to one rig operating
and two on standby in the previous year's first quarter. Revenue declined in
the Philippines as one of the two rigs located in that country completed
operations in the current quarter. This rig will be relocated to Vietnam, a
new market for the Company, in the current fiscal year's second quarter to
commence operations on a recently-awarded contract.
Drilling revenue from operations in Africa, the Middle East and
Commonwealth on Independent States declined $.8 million in the first quarter
of fiscal 1996 when compared to the first quarter of fiscal 1995. An increase
in revenue in the Russian Republic, due to the commencement of a one-rig
contract in the current quarter, was offset by the loss of revenue in Chad
where the Company completed a one-rig contract in fiscal 1995's first quarter.
Domestic drilling revenue increased $3.6 million when compared to the prior
fiscal year's first quarter primarily due to the operation of Rig 245 in
Alaska, which had been idle during the first quarter of fiscal 1995.
Drilling margin as a percent of drilling revenue improved from 23% in the
first quarter of fiscal 1995 to 32% in the corresponding quarter of fiscal
1996. The improvement was largely attributable to operations in Argentina.
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RESULTS OF OPERATIONS (continued)
Other income (expense) decreased $1.8 million due primarily to the recognition
in fiscal 1995 of a $1.5 million gain on reversal of a prior year's foreign
currency accrual. Income tax expense, which consists primarily of foreign
income taxes, exceeds the prior year's first quarter provision primarily due
to improved international revenue and margins.
LIQUIDITY AND CAPITAL RESOURCES
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Cash and other short-term investments increased $3.3 million in the first
three months of the fiscal year. Cash was generated by the following: $9.5
million from operating activities, $1.7 million from the sale of fixed assets,
and $1.6 million from the exercise of stock warrants.
Capital expenditures in the first three months of fiscal 1996 totalled
$8.4 million, an increase of $5.2 million over the first quarter of fiscal
1995, as the Company continued to upgrade its rig fleet to meet international
contract opportunities. Management currently forecasts capital expenditures
for fiscal 1996 to be approximately $32.0 million. In the event the Company
obtains additional contracts that require the purchase or construction of new
or specialized rigs, or significant modifications to existing rigs, capital
expenditures could increase further. Any significant increase in capital
expenditures would be subject to any restrictions imposed on the Company as
specified below.
The Company has a credit agreement with a bank which provides for a $7.5
million revolving credit facility through May 31, 1996, all of which was
available for drawdown as of November 30, 1995. The agreement contains
restrictions on annual capital expenditures and certain senior and
subordinated indebtedness which can be incurred by Parker Drilling Company and
certain subsidiaries designated in the agreement. These designated
subsidiaries comprise the operating subsidiaries through which the Company
performs the majority of its drilling operations. The credit facility also
limits payment of dividends on the Company's common stock to the lesser of 40
percent of consolidated net income for the preceding fiscal year, or $2.6
million. The remaining subsidiaries of the Company are not a party to the
credit facility and are able to make capital expenditures and obtain
independent financing from lenders that have no recourse to Parker Drilling
Company and the designated subsidiaries, subject only to an overall limitation
of indebtedness.
The restrictions in the agreement are not anticipated to restrict growth
or investment opportunities in the foreseeable future.
Management believes that the current level of cash and short-term
investments, together with cash generated from operations, should be
sufficient to meet the Company's immediate capital needs. However, in the
event the Company obtains additional contracts requiring further significant
capital expenditures or acquires equipment or companies in the drilling
service industry, management believes the Company would likely meet both
short-term and long-term capital needs through a combination of cash generated
from operations, borrowings under the bank credit agreement and either equity
or long-term debt financing.
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PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a)Exhibits:
Page
Exhibit 15 Letter re Unaudited Interim Financial Information 11
Exhibit 27 Financial Data Schedule (EDGAR version only)
(b)Reports on Form 8-K - There were no reports on Form 8-K filed
during the three months ended November 30, 1995.
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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.
Parker Drilling Company
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Registrant
Date: January 11, 1996
By: /s/James J. Davis
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James J. Davis
Vice President, Finance and
Chief Financial Officer
By: /s/Randy Ellis
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Randy Ellis
Controller and
Chief Accounting Officer
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