UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1996.
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 0-27732
DAWSON PRODUCTION SERVICES, INC.
(Exact name of registrant as specified in its charter)
TEXAS 74-2231546
(State or other jurisdiction (I.R.S. Employer
or organization) Identification No.)
901 N.E. Loop 410, Suite 700
San Antonio, Texas 78209-1306
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (210) 828-1838
NOT APPLICABLE
(Former name, former address and former fiscal year,
if changed since last report)
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 and 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.........
The number of shares outstanding of each of the issuer's classes of common
stock. as of February 14 , 1997: Common Stock, $0.01 par value per share -
6,399,725 shares.
<PAGE>
PART I
ITEM 1. FINANCIAL STATEMENTS (unaudited)
DAWSON PRODUCTION SERVICES, INC.
CONSOLIDATED BALANCE SHEETS
ASSETS
March 31, December 31,
1996 1996
------------ ------------
(unaudited)
Current assets:
Cash and cash equivalents ................. $ 13,863,108 $ 9,183,167
Trade receivables (net of allowance for
doubtful accounts of $290,839
and $407,080, respectively) .......... 8,773,156 16,382,461
Other receivables ......................... 95,202 277,322
Income taxes receivable ................... 740,768 466,814
Prepaid expenses and other ................ 215,497 571,868
------------ ------------
Total current assets ............ 23,687,731 26,881,632
Net property and equipment, substantially
all pledged ............................... 29,114,671 39,273,241
Goodwill and other assets ...................... 3,565,555 10,542,591
------------ ------------
Total assets .................... $ 56,367,957 $ 76,697,464
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable .......................... $ 2,909,390 $ 3,951,418
Accrued liabilities ....................... 2,825,926 3,944,088
Current portion of long-term debt ......... 20,055 9,329,311
Current portion of obligations under
capital leases ........................ 1,167,384 1,203,713
------------ ------------
Total current liabilities ....... 6,922,755 18,428,530
------------ ------------
Long-term debt, net of current portion ......... 1,530,903 2,740,602
Obligations under capital leases,
net of current portion .................... 2,163,610 1,742,824
Deferred income taxes .......................... 56,310 4,301,784
Shareholders' equity :
Preferred stock, no par value, 560,600
shares authorized, none
issued and outstanding ................ -- --
Common stock, $.01 par value,
20,560,600 shares authorized,
6,382,526 and 6,391,126 issued
and outstanding, respectively ........ 63,826 63,912
Paid-in capital ............................ 41,458,254 41,522,152
Retained earnings .......................... 4,314,177 8,039,538
Notes receivable from officers ............. (141,878) (141,878)
------------ ------------
Total shareholders' equity ...... 45,694,379 49,483,724
Commitments and contingencies .................. ------------ ------------
Total liabilities and equity .... $ 56,367,957 $ 76,697,464
============ ============
See accompanying notes to consolidated financial statements.
1
<PAGE>
DAWSON PRODUCTION SERVICES, INC.
CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
December 31, December 31,
---------------------------- ----------------------------
1995 1996 1995 1996
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Revenues ..................................... $ 13,059,200 $ 22,455,685 $ 38,947,587 $ 56,267,119
------------ ------------ ------------ ------------
Costs and expenses:
Operating ............................... 8,592,345 13,881,062 25,467,503 35,774,569
General and administrative .............. 2,347,245 3,705,837 6,585,256 9,174,641
Depreciation and amortization ........... 1,197,858 1,968,979 3,214,282 4,844,953
------------ ------------ ------------ ------------
Total costs and expenses ...... 12,137,448 19,555,878 35,267,041 49,794,163
------------ ------------ ------------ ------------
Operating income ............ 921,752 2,899,807 3,680,546 6,472,956
------------ ------------ ------------ ------------
Other income and expenses:
Interest expense ........................ 448,502 295,457 1,401,374 591,479
Other expense (income), net ............ (50,846) (96,404) (78,053) (348,224)
------------ ------------ ------------ ------------
Total other income and expenses 397,656 199,053 1,323,321 243,255
------------ ------------ ------------ ------------
Income before minority interest
and income taxes ......... 524,096 2,700,754 2,357,225 6,229,701
Minority interest in consolidated subsidiary . 150,163 -- 937,164 --
------------ ------------ ------------ ------------
Income before income taxes ................... 373,933 2,700,754 1,420,061 6,229,701
Provision for income taxes ................... 162,490 1,150,396 560,490 2,504,340
------------ ------------ ------------ ------------
Net income ................................... 211,443 1,550,358 859,571 3,725,361
------------ ------------ ------------ ------------
Preferred stock dividends .................... 19,094 -- 69,180 --
------------ ------------ ------------ ------------
Net income applicable to common stock ........ $ 192,349 $ 1,550,358 $ 790,391 $ 3,725,361
============ ============ ============ ============
Earnings per common share:
Primary ................................. $ 0.06 $ 0.24 $ 0.31 $ 0.57
Fully diluted ........................... $ 0.06 $ 0.23 $ 0.30 $ 0.57
Weighted average common and common equivalent
shares outstanding:
Primary ................................. 2,971,284 6,547,701 2,542,720 6,516,844
Fully diluted ........................... 2,971,284 6,617,754 3,228,113 6,575,160
</TABLE>
See accompanying notes to consolidated financial statements.
2
<PAGE>
DAWSON PRODUCTION SERVICES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
December 31,
----------------------------
1995 1996
------------ ------------
<S> <C> <C>
Cash flows from operating activities:
Net income ............................................. $ 859,571 $ 3,725,361
Adjustments to reconcile net income to net cash
provided by operating activities:
Minority interest in net income of
subsidiary company ................................ 937,164 --
Depreciation and amortization .......................... 3,214,280 4,844,953
Allowance for doubtful accounts ........................ (43,589) 116,241
(Gain) loss on sale of assets .......................... (91,873) 108,916
Increase (decrease) in deferred income taxes ........... 488,444 2,035,787
Decrease (increase) in receivables ..................... (803,618) (3,652,125)
Decrease (increase) in prepaid expense and other ....... (368,916) (152,398)
Decrease (increase) in other assets .................... (286,814) 12,283
Increase (decrease) in accounts payable ................ 517,175 214,834
Increase (decrease) in income tax payable .............. (865,572) 114,579
Increase (decrease) in accrued expenses ................ (192,749) (38,072)
------------ ------------
Net cash provided by operating activities .. 3,363,503 7,330,359
Cash flows from investing activities:
Acquisitions ........................................... -- (13,304,887)
Additions to property and equipment .................... (3,415,276) (3,870,011)
Proceeds from sales of property ........................ 200,030 72,279
------------ ------------
Net cash used in investing activities ..... (3,215,246) (17,102,619)
Cash flows from financing activities:
Long-term borrowings ................................... 959,023 7,261,330
Payments on long-term debt ............................. (2,172,816) (770,613)
Capital lease payments ................................. (749,977) (1,462,382)
Exercise of common stock options and warrants .......... -- 63,984
Tax benefit realized from stock options ................ 42,326 --
Cash dividends on preferred stock ...................... (69,180) --
Subsidiary distributions to minority owner ............. (267,102) --
------------ ------------
Net cash (used) provided in financing activities .. (2,257,726) 5,092,319
------------ ------------
Net increase (decrease) in cash ................... (2,109,469) (4,679,941)
Cash and cash equivalents at the beginning of the period 2,796,540 13,863,108
------------ ------------
Cash and cash equivalents at the end of the period ..... $ 687,071 $ 9,183,167
============ ============
Supplemental disclosures of cash flow information:
Cash paid for:
Interest .................................... $ 1,525,200 $ 563,312
Income taxes ................................ 600,000 576,000
Supplemental disclosures of non-cash transactions:
Assets acquired under capital lease ..................... 2,034,355 1,052,153
Conversion of long-term debt to common stock ............ 75,000 --
Issuance of common stock for minority interest .......... 7,700,000 --
Conversion of preferred stock to common stock ........... 252,500 --
Note issued to seller in acquisition .................... -- 1,750,000
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE>
PART I--FINANCIAL INFORMATION
DAWSON PRODUCTION SERVICES, INC.
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
1. GENERAL
The unaudited consolidated financial statements included herein have been
prepared without audit pursuant to the rules and regulations of the Securities
and Exchange Commission. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted, pursuant to such rules and
regulations. These unaudited consolidated financial statements should be read in
conjunction with Dawson Production Services, Inc. (the "Company's") audited
consolidated financial statements and notes thereto included in the Company's
Annual Report on Form 10-K for the year ended March 31, 1996.
The unaudited consolidated financial information included herein reflects
all adjustments, consisting only of normal recurring adjustments, which are
necessary, in the opinion of management, for a fair presentation of the
Company's financial position or results of operations for the interim periods
presented. The interim information contained herein is not necessarily
indicative of the results to be expected for the full year.
2. ACQUISITIONS
In April 1996, the Company acquired the assets of two small production
testing companies in Louisiana. The aggregate purchase price was approximately
$673,000. Goodwill and a non-compete agreement were recognized on these
transactions which amounted to approximately $111,000. These items are being
amortized over twenty and five year periods, respectively.
In May 1996, the Company acquired the Texas-based well servicing division
of a non-affiliated company. The aggregate purchase price was $779,000.
In July 1996, the Company acquired the assets of a trucking company in
Louisiana. The aggregate purchase price was approximately $400,000. Goodwill
recognized on the transaction amounted to $50,000 which is being amortized over
a twenty-year period.
Effective July 29, 1996, the Company acquired all of the issued and
outstanding stock of Taylor Companies, Inc. for an aggregate purchase price of
$12,750,000, consisting of $11,100,000 in cash and $1,750,000 subordinated
promissory note payable to the selling shareholders. Goodwill recognized on this
transaction amounted to $6,690,000 which is being amortized over a twenty-year
period. The Company reported this acquisition and related proforma effects on a
current report on Form 8-K.
The acquisitions have been accounted for as purchases and, accordingly,
the operating results have been included in the Company's statement of income
since the dates of acquisition. The effect on results of operations would not
have been material if such acquisitions had occurred at the beginning of the
year other than the Taylor acquisition.
<PAGE>
2. ACQUISITIONS (CONTINUED)
On January 20, 1997, the Company acquired the liquid services assets of
Mobley Environmental Services, Inc. for approximately $5.0 million in cash and
a $.5 million five year subordinated note
On December 23, 1996, the Company entered into an Asset Purchase Agreement
pursuant to which the Company will acquire substantially all of U.S. land-based
well servicing assets of Pride Petroleum Services, Inc. for approximately
$135,900,000 in cash ("Pride Acquisition"). The acquisition is expected to be
financed through public offerings of senior subordinated notes and common stock.
The Company also expects the acquisition to close during the quarter ending
March 31, 1997.
3. LOAN COMMITMENTS
In July 1996, to finance a portion of the Taylor acquisition, the Company
obtained an unsecured loan from a bank in the amount of $7.0 million. The
promissory note carries an annual interest rate of 7.625% at December 31, 1996
and has a maturity date of March 31, 1997.
The Company is currently negotiating with Frost Bank for a $50.0 million
revolving credit facility and a $10.0 million to $20.0 million acquisition line
of credit. The $50.0 million facility is expected to be subject to the closing
of the public financings and the Pride Acquisition (as defined above). In the
event the Pride Acquisition does not close, the Company, based on discussions
with the bank, anticipates that the revolving credit facility will be reduced to
$10.0 million and closed. Although management believes that the revolving credit
will be consummated, there can be no assurance thereof and, the failure to
consummate the revolving credit facility could have a material adverse effect on
the Company's cash flow and working capital. The Company does not anticipate
closing the acquisition line of credit until there is a closing ( or a
determination not to close) the Pride Acquisition.
4. COMMITMENTS AND CONTINGENCIES
The Company is involved in various claims and legal actions arising in the
ordinary course of business. In the opinion of management, the ultimate
disposition of these matters will not have a material adverse effect on the
Company's consolidated financial position or results of operations.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
Forward-Looking Information
This Quarterly Report on Form 10-Q includes "forward-looking statements"
within the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended. All statements
other than statement of historical information provided herein are
forward-looking and may contain information about financial results, economic
conditions, trends and known uncertainties. The Company cautions the reader that
actual results could differ materially from those expected by the Company
depending on the outcome of certain factors, including without limitation (I)
fluctuations in the prices of oil and natural gas, competition, operating risks,
acquisition risks, liquidity and capital requirements and the effects of
governmental and environmental regulation, (ii) adverse changes in the
operations acquired in connection with the acquisition by the Company of the
land-based well servicing operation of Pride Petroleum Services, Inc. (the
"Pride Acquisition") and (iii) adverse changes in the market for the Company's
services. Readers are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date hereof. The Company
undertakes no obligation to release publicly the results of any revisions to
these forward-looking statements which may be made to reflect events or
circumstances after the date hereof, including without limitation, changes in
the Company's business strategy or planned capital expenditures, or to reflect
the occurrence of unanticipated events.
Results of Operations - Quarters Ended December 31, 1996 and 1995
Revenues. Revenues were $22.5 million for the quarter ended December 31,
1996, a 72% increase compared with revenues of $13.1 million for the quarter
ended December 31, 1995. Compared to the same period in 1995, revenues for the
quarter ended December 31, 1996 increased by 22%, 161% and 78% in the workover,
liquid and production services lines of business, respectively. The increase in
revenues is attributable primarily to the acquisition of a liquid services
business, Taylor Service Company, Inc. (the "Taylor Acquisition") in July 1996,
which added 66 vacuum trucks to the Company's fleet. The remainder of the
increase is due to the addition of 11 vacuum trucks in March 1996, the
acquisition of six workover rigs in May 1996, the acquisition of a Louisiana
based production testing company in February 1996, commencement of limited
operations in Mexico and a general overall increase in demand in the workover,
liquid services and production services lines of business.
Costs and Expenses. The Company's costs and expenses for the quarter ended
December 31, 1996 were $19.6 million, a 61% increase compared to costs and
expenses of $12.1 million for the quarter ended December 31, 1995. Operating
costs for the quarter ended December 31, 1996 increased $5.3 million from $8.6
million for the quarter ended December 31, 1995. General and administrative
expenses, which include field office general and administrative expenses,
increased $1.4 million over the same period in the previous fiscal year. The
increases are primarily attributable to the Taylor Acquisition; however, the
other acquisitions described above and overall increased demand for all of the
Company's services has also contributed to the increase in expenses.
Interest Expense. Interest expense for the quarter ended December 31, 1996
was $0.3 million
<PAGE>
compared to $0.4 million for the quarter ended December 31, 1995. The decrease
of $0.1 million is attributable to the retirement of debt from funds generated
from the Company's initial public offering which was completed in March 1996.
The Company anticipates that interest expense will increase in future periods
due to the incurrence of debt in connection with the Taylor Acquisition and the
anticipated Pride Acquisition.
Minority Interest. The elimination of the minority interest expense in the
quarter ended December 31, 1996 was due to the acquisition, in November 1995, of
the 39% minority interest in the Company's subsidiary, Dawson Welltech, L.C.
Net Income. For the quarter ended December 31, 1996, the Company had net
income of $1.6 million, a 631% increase over the $0.2 million in net income for
the quarter ended December 31, 1995. The increase in net income reflects the
acquisitions made by the Company. The Taylor Acquisition has had the largest
impact on net income. Other factors that have contributed to the increase in net
income are stronger overall market conditions, the purchase of the remaining
minority interest in Dawson Welltech, L.C. and interest savings resulting from
the retirement of debt using a portion of the funds generated from the Company's
initial public offering completed in March 1996.
Results of Operations - Nine Months Ended December 31, 1996 and 1995
Revenues. Revenues were $56.3 million for the nine months ended December
31, 1996, a 44% increase compared with revenues of $38.9 million for the nine
months ended December 31, 1995. Compared to the same period in 1995, revenues
for the nine months ended December 31, 1996 increased by 16%, 109% and 30% in
the workover, liquid and production services lines of business, respectively.
The increase in revenues is attributable primarily to the Taylor Acquisition ,
the addition of 11 vacuum trucks in March 1996, the acquisition of six workover
rigs acquired in May 1996, the acquisition of a Louisiana based production
testing facility in February 1996, commencement of limited operations in Mexico
and a general overall increase in demand in the workover, liquid services and
production services lines of business.
Costs and Expenses. The Company's costs and expenses for the nine months
ended December 31, 1996 were $49.8 million, a 41% increase compared to costs and
expenses of $35.3 million for the nine months ended December 31, 1995. Operating
costs for the period ended December 31, 1996 increased $10.3 million from $25.5
million for the nine months ended December 31, 1995. General and administrative
expenses, which include the field office general and administrative expenses,
increased $2.6 million over the same period in the previous fiscal year. The
increases are primarily attributable to the Taylor Acquisition; however, the
other acquisitions described above and a general increase in demand for all of
the Company's services has also contributed to the increases in expenses.
Interest Expense. Interest expense for the nine months ended December 31,
1996 was $0.6 million compared with $1.4 million for the corresponding period in
1995. The decrease of $0.8 million is attributable to the retirement of debt
from funds generated from the Company's initial public offering completed in
March 1996. The Company anticipates interest expense will increase in future
periods due to the incurrence of $7.0 million in debt to acquire Taylor.
Minority Interest. The elimination of the minority interest expense in the
nine month period ended December 31, 1996 was due to the acquisition, in
November 1995, of the remaining 39% minority interest in the Company's
subsidiary, Dawson Welltech, L.C.
<PAGE>
Net Income. For the nine months ended December 31, 1996, the Company had
net income of $3.7 million, a 371% increase over the $0.8 million in net income
for the same period in 1995. The increase in net income resulted primarily from
the acquisitions completed by the Company, and in particular the Taylor
Acquisition. Other factors that contributed to the increase in net income are
stronger overall market conditions, the purchase of the remaining minority
interest in Dawson Welltech, L.C. and interest savings resulting from the
retirement of debt using a portion of the funds generated from the Company's
initial public offering completed in March 1996.
Liquidity and Capital Resources
Cash Flows. The Company had cash and cash equivalents of $9.2 million at
December 31, 1996 compared to $13.9 million at March 31, 1996. Working capital
was $8.5 million and $16.8 million at December 31, 1996 and March 31, 1996,
respectively. The Company used a net $17.1 million for investing activities in
the nine months ended December 31, 1996, primarily for the Taylor Acquisition
and for capital expenditures of $3.9 million. The Company used a net amount of
approximately $3.2 million for investing activities in the nine months ended
December 31, 1995. The Company anticipates that fiscal 1997 capital expenditures
will consist of approximately $7.0 million for improvements to its existing
equipment and expanding capital additions. Acquisitions of additional assets
and businesses are expected to continue to be an important part of the Company's
strategy for growth. The Company would, under certain circumstances, need to
obtain additional financing to fund such acquisitions. If the Company is unable
to locate suitable acquisitions or to obtain financing on acceptable terms, the
Company's growth will be adversely affected. While the Company believes it will
be able to negotiate favorable acquisitions and financing, there can be no
assurance that this will be the case.
Credit Facilities and Long-Term Debt. The Company has available a bank line
of credit to finance temporary working capital requirements and to support the
issuance of letters of credit. The maximum availability is the lesser of (i)
$4.0 million or (ii) a calculated amount based on a percentage of accounts
receivable meeting certain criteria. This line of credit is secured by a first
lien security interest on the Company's accounts receivable. At December 31,
1996, the maximum availability was $4.0 million, none of which had been drawn in
cash, and $0.4 million of which was being utilized to support the issuance of
letters of credit related to the Company's workers' compensation coverage. This
line of credit matures March 31, 1997.
In July 1996, to finance a portion of the Taylor acquisition, the Company
obtained a loan from a bank in the amount of $7.0 million . The promissory note
carries an annual interest rate of 7.75% effective January 25, 1997 and has a
maturity date of March 31, 1997. In September 1996, the Company obtained a
take-out commitment for a term loan in the amount of $7.0 million to replace the
promissory note. The Company, however, intends to prepay the loan with a portion
of the proceeds from the Public Financings (as defined below) and has decided to
not take advantage of the take-out commitment.
The Company is currently negotiating with Frost Bank for a $50.0 million
revolving credit facility and a $10.0 million to $20.0 million acquisition line
of credit. The $50.0 million facility is expected to be subject to the closing
of the Public Financings and the Pride Acquisition. In the event the Pride
Acquisition does not close, the Company, based on discussions with the bank,
anticipates that the revolving credit facility will be reduced to $10.0 million
and closed. Although management believes that the revolving credit will be
consummated there can be no assurance thereof and, the failure to consummate the
revolving credit facility could have a material adverse effect on the Company's
cash flow and working capital. The Company does not anticipate closing the
acquisition line of credit until there is a closing (or a determination not to
close) the Pride Acquisition.
<PAGE>
In addition to the foregoing, in connection with the Taylor Acquisition,
the Company assumed $0.6 million of debt owed by Randy Taylor to a bank, and
guaranteed prompt payment of approximately $1.5 million of indebtedness owed by
Taylor Services Company, Inc. to the same bank.
In December 1996, the Company signed an agreement to acquire the U.S.
land-based well servicing operations of Pride Petroleum Services, Inc. The
purchase price is estimated to be approximately $135.9 million which will be
financed through the sale of Senior Notes due 2007 of $140.0 million and the
sale for the account of the Company of Common Stock with net proceeds to the
Company of $47.1 million (the "Public Financings"). The Company also intends to
retire all of the outstanding capital leases and other non-subordinated debt to
banks, with the proceeds of the Public Financings. On February 14, 1997, the
Public Financings were offered for sale to the public. The closing of each of
the Public Financings is conditioned upon the simultaneous closing of the other
and upon the simultaneous closing of the Pride Acquisition. The anticipated
closing date of the Pride Acquisition is February 20, 1997. In the event the
Pride Acquisition is not closed by March 17, 1997, the Company will be subject
to a break-up fee of $5.0 million payable in cash or, at the Company's option,
$1.0 million in cash and $4.0 million in the Company's Common Stock.
Inflation
Inflation has not had a significant impact on the Company's operations to
date.
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
See note 4 herein to the Notes to the Unaudited Financial Statements.
ITEM 2. CHANGES IN SECURITIES
Not applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matters have been submitted to a vote of security holders during
the quarter ended December 31, 1996.
ITEM 5. OTHER INFORMATION
Not applicable.
ITEM 6. EXHIBITS
(a) Exhibits
Exhibit Number
10.25 - Second Amendment to Loan Agreement between the
Company, Dawson Production Services, Inc. and The Frost
National Bank dated November 30, 1994 and Modification,
Renewal and Extension Agreement among The Frost National Bank,
and the Company, Dawson Production Services, Inc. dated
December 4, 1996.
10.26 - Third Amendment to Loan Agreement between the Company,
Dawson Production Services, Inc. and The Frost National Bank
dated November 30, 1994 and Modification, Renewal and
Extension Agreement among The Frost National Bank, and the
Company, Dawson Production Services, Inc. dated January
28, 1997.
10.27 - The Frost National Bank Promissory Note dated
November 25, 1996.
10.28 - The Frost National Bank Promissory Note dated
January 25, 1997.
11.1 - Earnings per share computations.
<PAGE>
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, thereto duly authorized.
DAWSON PRODUCTION SERVICES, INC.
By: /s/ P. MARK STARK
Date: February 14, 1997
EXHIBIT 10.25
SECOND AMENDMENT TO LOAN AGREEMENT
THIS SECOND AMENDMENT TO LOAN AGREEMENT (hereinafter referred to as the
"Second Amendment"), dated as of December 4, 1996, is made by and between DAWSON
PRODUCTION SERVICES, INC.("Dawson"), a Texas corporation, whose principal
business address is at 901 N.E. Loop 410, Suite 700, San Antonio, Texas 78209-
1306, and THE FROST NATIONAL BANK, a national banking association with its
principal place of business at 100 W. HOUSTON STREET, San Antonio, Texas 78205
(the "Bank").
RECITALS
A. On or about November 30, 1994, Dawson Well Servicing, Inc., a Texas
corporation and Dawson WellTech, L.C., a Texas limited liability
company and bank entered into that certain Loan Agreement(the
"Agreement") concerning the terms, conditions and covenants of that
certain $13,000,000.00 Term Loan from Bank to WellTech and that
certain $4,000,000.00 Revolving Credit Facility in favor of Dawson
Well Servicing.
B. The Loan Agreement was amended by First Amendment to Loan
Agreement dated November 28, 1995.
C. Since the date of the First Amendment, Dawson Well Servicing,
Inc. and Dawson WellTech, L.C. have been merged and a new company
formed, Dawson Production Services, Inc.
D. This Second Amendment is necessary to amend the Loan Agreement to
reflect the change in name described above and to evidence the
renewal of the $4,000,000.00 Revolving Credit Facility.
E. All capitalized terms not otherwise defined in this Second Amendment
shall have the same meanings as are set forth in the Agreement.
NOW, THEREFORE, for and in consideration of the mutual covenants and
promises herein contained, Bank and Dawson agree as follows:
AGREEMENTS
1. The definition of "Borrowers" or "Borrower" as set forth in the Loan
Agreement and in Appendix A to the Loan Agreement shall hereinafter
mean Dawson Production Services, Inc.
<PAGE>
2. The $4,000,000.00 Revolving Credit Facility is renewed and shall be
evidenced by a Promissory Note in the original principal amount of
$4,000,000.00 dated November 28, 1996 executed by Dawson Production
Services, Inc. and payable to the order of Bank.
3. Except as speciifically modified or amended herein, all terms,
provisions and requirements of the Agreement shall remain as written,
and as amended from time to time. Borrowers hereby reaffirm all
covenants, conditions, representations and warranties contained in
the Agreement, as amended.
NOTICE TO COMPLY WITH STATE LAW
For the purpose of this Notice, the term "WRITTEN AGREEMENT" shall include
the document set forth above, together with each and every other document
relating to and/or securing the same loan transaction, regardless of the date of
execution.
THIS WRITTEN AGREEMENT REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES
AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT
ORAL AGREEMENTS OF THE PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
EXECUTED as of the day and year first above written.
BORROWER:
--------
DAWSON PRODUCTION SERVICES, INC.,
a Texas corporation
By: /s/ Michael E. Little
Michael E. Little,
President
LENDER:
- ------
FROST NATIONAL BANK
By: /s/ James B. Crosby
James B. Crosby, Senior Vice President
EXHIBIT 10.26
THIRD AMENDMENT TO LOAN AGREEMENT
THIS THIRD AMENDMENT TO LOAN AGREEMENT (hereinafter referred to as the
"Third Amendment"), dated as of Janusry 28, 1997, is made by and between DAWSON
PRODUCTION SERVICES, INC.("Dawson"), a Texas corporation, whose principal
business address is at 901 N.E. Loop 410, Suite 700, San Antonio, Texas 78209-
1306, and THE FROST NATIONAL BANK, a national banking association with its
principal place of business at 100 W. Houston Street, San Antonio, Texas 78205
(the "Bank").
RECITALS
A. On or about November 30, 1994, Dawson Well Servicing, Inc., a Texas
corporation and Dawson WellTech, L.C., a Texas limited liability
company and Bank entered into that certain Loan Agreement(the
"Agreement") concerning the terms, conditions and covenants of that
certain $13,000,000.00 Term Loan from Bank to WellTech and that
certain $4,000,000.00 Revolving Credit Facility in favor of Dawson
Well Servicing.
B. The Loan Agreement was amended by First Amendment to Loan
Agreement dated November 28, 1995 and was subsequently amended by
Second Amendment to Loan Agreement dated December 4, 1996.
C. Since the date of the First Amendment, Dawson Well Servicing,
Inc. and Dawson WellTech, L.C. have been merged and a new company
formed, Dawson Production Services, Inc.
D. This Third Amendment is to amend the Loan Agreement to extend the
maturity date of the $4,000,000.00 Revolving Credit Facility to
March 31, 1997.
E. All capitalized terms not otherwise defined in this Third Amendment
shall have the same meanings as are set forth in the Agreement.
NOW, THEREFORE, for and in consideration of the mutual covenants and
promises herein contained, Bank and Dawson agree as follows:
AGREEMENTS
1. The definition of "Borrowers" or "Borrower" as set forth in the Loan
Agreement and in Appendix A to the Loan Agreement shall hereinafter
mean Dawson Production Services, Inc.
<PAGE>
2. The $4,000,000.00 Revolving Credit Facility is renewed and shall be
evidenced by a Promissory Note in the original principal amount of
$4,000,000.00 dated January 28, 1997 executed by Dawson Production
Services, Inc. and payable to the order of Bank.
3. Except as specifically modified or amended herein, all terms,
provisions and requirements of the Agreement shall remain as written,
and as amended from time to time. Borrowers hereby reaffirm all
covenants, conditions, representations and warranties contained in
the Agreement, as amended.
NOTICE TO COMPLY WITH STATE LAW
For the purpose of this Notice, the term "WRITTEN AGREEMENT" shall include
the document set forth above, together with each and every other document
relating to and/or securing the same loan transaction, regardless of the date of
execution.
THIS WRITTEN AGREEMENT REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES
AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT
ORAL AGREEMENTS OF THE PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
EXECUTED as of the day and year first above written.
BORROWER:
--------
DAWSON PRODUCTION SERVICES, INC.,
a Texas corporation
By: /s/ Michael E. Little
Michael E. Little, President
LENDER:
------
THE FROST NATIONAL BANK
By: /s/ James B. Crosby
James B. Crosby, Senior Vice President
EXHIBIT 10.27
PROMISSORY NOTE
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
PRINCIPAL LOAN DATE MATURITY LOAN NO. CALL COLLATERAL ACCOUNT OFFICER INITIALS
$7,000,000.00 11-25-1996 01-25-1997 9001 500 0010 2211480 035
</TABLE>
References in the shaded area are for Lender's use only and do not limit the
applicability of this document to any particular loan or item.
<TABLE>
<CAPTION>
<S> <C> <C>
BORROWER: DAWSON PRODUCTION SERVICES, INC. (TIN: LENDER: THE FROST NATIONAL BANK
74-2231546) P.O. BOX 1600
901 NE LOOP 410, SUITE 700 SAN ANTONIO, TX 78296
SAN ANTONIO, TX 78209
</TABLE>
================================================================================
PRINCIPAL AMOUNT: INITIAL RATE: DATE OF NOTE:
$7,000,000.00 7.625% NOVEMBER 25, 1996
PROMISE TO PAY. DAWSON PRODUCTION SERVICES, INC. ("Borrower") promises to pay to
THE FROST NATIONAL BANK ("Lender"), or order, in lawful money of the United
States of America, the principal amount of Seven Million & 00/100 Dollars
($7,000,000.00), together with interest on the unpaid principal balance from
November 25, 1996, until maturity.
PAYMENT. Borrower will pay this loan in one principal payment of $7,000,000.00
plus interest on January 25, 1997. This payment due January 25, 1997, will be
for all principal and accrued interest not yet paid. In addition, Borrower will
pay regular monthly payments of all accrued unpaid interest due as of each
payment date, beginning December 25, 1996, with all subsequent interest payments
to be due on the same day of each month after that. Interest on this Note is
computed on a 365/360 simple interest basis; that is, by applying the ratio of
the annual interest rate over a year of 360 days, multiplied by the outstanding
principal balance, multiplied by the actual number of days the principal balance
is outstanding, unless such calculation would result in a usurious rate, in
which case interest shall be calculated on a per diem basis of a year of 365 or
366 days, as the case may be. Borrower will pay Lender at Lender's address shown
above or at such other place as Lender may designate in writing. Unless
otherwise agreed or required by applicable law, payments will be applied first
to accrued unpaid interest, then to principal, and any remaining amount to any
unpaid collection costs and late charges.
VARIABLE INTEREST RATE. The interest rate on this Note is subject to change from
time to time based on changes in an independent index which is the London
Interbank Offered Rate (LIBOR) for one (1) month as quoted in the most recently
published issue of THE WALL STREET JOURNAL under the "Money Rates" column, and
if more than one LIBOR rate for one (1) month is quoted, the higher rate shall
apply (the "Index"). The Index is not necessarily the lowest rate charged by
Lender on its loans. If the Index becomes unavailable during the term of this
loan, Lender may designate a substitute index after notice to Borrower. Lender
will tell Borrower the current Index rate upon Borrower's request. Borrower
understands that Lender may make loans based on other rates as well. The
interest rate change will not occur more often than each day. The Index
currently is 5.375% per annum. The Interest rate to be applied prior to maturity
to the unpaid principal balance of this Note will be at a rate of 2.250
percentage points over the Index, resulting in an initial rate of 7.625% per
annum. NOTICE: Under no circumstances will the interest rate on this Note be
more than the maximum rate allowed by applicable law. For purposes of this Note,
the "maximum rate allowed by applicable law" means the greater of (a) the
maximum rate of interest permitted under federal or other law applicable to the
indebtedness evidenced by this Note, or (b) the "Indicated Rate Ceiling" as
referred to in Article 5069-1.04 (a)(1) V.T.C.S.
PREPAYMENT. Borrower may pay without penalty all or a portion of the amount owed
earlier than it is due. Early payments will not, unless agreed to by Lender in
writing, relieve Borrower of Borrower's obligation to continue to make payments
under the payment schedule. Rather, they will reduce the principal balance due.
POST MATURITY RATE. The Post Maturity Rate on this Note is the maximum rate
allowed by applicable law. Borrower will pay interest on all sums due after
final maturity, whether by acceleration or otherwise, at that rate, with the
exception of any amounts added to the principal balance of this Note based on
Lender's payment of insurance premiums, which will continue to accrue interest
at the pre-maturity rate.
DEFAULT. Borrower will be in default if any of the following happens: (a)
Borrower fails to make any payment when due. (b) Borrower breaks any promise
Borrower has made to Lender, or Borrower fails to comply with or to perform when
due any other term, obligation, covenant, or condition contained in this Note or
any agreement related to this Note, or in any other agreement or loan Borrower
has with Lender. (c) Borrower defaults under any loan, extension of credit,
security agreement, purchase or sales agreements, or any other agreement, in
favor of any other creditor or person that may materially affect any of
Borrower's property or Borrower's ability to repay this Note or perform
Borrower's obligations under this Note or any of the Related Documents. (d) Any
representation or statement made or furnished to Lender by Borrower or on
Borrower's behalf is false or misleading in any material respect either now or
at the time made or furnished. (e) Borrower becomes insolvent, a receiver is
appointed for any part of Borrower's property, Borrower makes an assignment for
the benefit of creditors, or any proceeding is commenced either by Borrower or
against Borrower under any bankruptcy or insolvency laws. (f) Any creditor tries
to take any of Borrower's property on or in which Lender has a lien or security
interest. This includes a garnishment of any of Borrower's accounts with Lender.
(g) Any guarantor dies or any of the other events described in this default
section occurs with respect to any guarantor of this Note. (h) A material
adverse change occurs in Borrower's financial condition, or Lender believes the
prospect of payment or performance of the Indebtedness is impaired. (i) Lender
in good faith deems itself insecure.
LENDER'S RIGHTS. Upon default, Lender may declare the entire indebtedness,
including the unpaid principal balance on this Note, all accrued unpaid
interest, and all other amounts, costs and expenses for which Borrower is
responsible, under this Note or any other agreement with Lender pertaining to
this loan, immediately due, without notice, and then Borrower will pay that
amount. Lender may hire an attorney to help collect this Note if Borrower does
not pay, and Borrower will pay Lender's reasonable attorneys' fees. Borrower
also will pay Lender all other amounts actually incurred by Lender as court
costs, lawful fees for filing, recording, or releasing to any public office any
instrument securing this loan; the reasonable cost actually expended for
repossessing, storing, preparing for sale, and selling any security; and fees
for noting a lien on or transferring a certificate of title to any motor vehicle
offered as security for this loan, or premiums or identifiable charges received
in connection with the sale of authorized insurance. This Note has been
delivered to Lender and accepted by Lender in the State of Texas. If there is a
lawsuit, and if the transaction evidenced by this Note occurred in Bexar County,
Borrower agrees upon Lender's request to submit to the jurisdiction of the
courts of Bexar County, the State of Texas. Subject to the provisions on
arbitration, this Note shall be governed by and construed in accordance with the
laws of the State of Texas and applicable Federal laws.
ARBITRATION. Lender and Borrower agree that all disputes, claims and
controversies between them, whether individual, joint, or class in nature,
arising from this Note or otherwise, including without limitation contract and
tort disputes, shall be arbitrated pursuant to the Rules of the American
Arbitration Association, upon request of either party. No act to take or dispose
of any collateral securing this Note shall constitute a waiver of this
arbitration agreement or be prohibited by this arbitration agreement. This
includes, without limitation, obtaining injunctive relief or a temporary
restraining order; invoking a power of sale under any deed of trust or mortgage;
obtaining a writ of attachment or imposition of a receiver; or exercising any
rights relating to personal property, including taking or disposing of such
property with or without judicial process pursuant to Article 9 of the Uniform
Commercial Code. Any disputes, claims, or controversies concerning the
lawfulness or reasonableness of any act, or exercise of any right, concerning
any collateral securing this Note, including any claim to rescind, reform, or
otherwise modify any agreement relating to the collateral
<PAGE>
securing this Note, shall also be arbitrated, provided however that no
arbitrator shall have the right or the power to enjoin or restrain any act of
any party. Judgment upon any award rendered by any arbitrator may be entered in
any court having jurisdiction. Nothing in this Note shall preclude any party
from seeking equitable relief from a court of competent jurisdiction. The
statute of limitations, estoppel, waiver, laches, and similar doctrines which
would otherwise be applicable in an action brought by a party shall be
applicable in any arbitration proceeding, and the commencement of an arbitration
proceeding shall be deemed the commencement of an action for these purposes. The
Federal Arbitration Act shall apply to the construction, interpretation, and
enforcement of this arbitration provision.
DISHONORED CHECK CHARGE. In the event a check offered in full or partial payment
on this loan is returned unpaid, Lender may charge a fee for the purpose of
defraying the expense incident to handling such returned check, and Borrower
agrees to pay such fee. The fee shall not exceed the maximum amount permitted
under applicable law.
RENEWAL AND EXTENSION. This Note is given in renewal and extension and not in
novation of the following described indebtedness: THE PROMISSORY NOTE FROM
DAWSON PRODUCTION SERVICES, INC. TO LENDER DATED JULY 25, 1996.
GENERAL PROVISIONS. If any part of this Note cannot be enforced, this fact will
not affect the rest of the Note. In particular, this section means (among other
things) that Borrower does not agree or intend to pay, and Lender does not agree
or intend to contract for, charge, collect, take, reserve or receive
(collectively referred to herein as "charge or collect"), any amount in the
nature of interest or in the nature of a fee for this loan, which would in any
way or event (including demand, prepayment, or acceleration) cause Lender to
charge or collect more for this loan than the maximum Lender would be permitted
to charge or collect by federal law or the law of the State of Texas (as
applicable). Any such excess interest or unauthorized fee shall, instead of
anything stated to the contrary, be applied first to reduce the principal
balance of this loan, and when the principal has been paid in full, be refunded
to Borrower. The right to accelerate maturity of sums due under this Note does
not include the right to accelerate any interest which has not otherwise accrued
on the date of such acceleration, and Lender does not intend to charge or
collect any unearned interest in the event of acceleration. All sums paid or
agreed to be paid to Lender for the use, forbearance or detention of sums due
hereunder shall, to the extent permitted by applicable law, be amortized,
prorated, allocated and spread throughout the full term of the loan evidenced by
this Note until payment in full so that the rate or amount of interest on
account of the loan evidenced hereby does not exceed the applicable usury
ceiling. Lender may delay or forgo enforcing any of its rights or remedies under
this Note without losing them. Borrower and any other person who signs,
guarantees or endorses this Note, to the extent allowed by law, waive
presentment, demand for payment, protest, notice of dishonor, notice of intent
to accelerate the maturity of this Note, and notice of acceleration of the
maturity of this Note. Upon any change in the terms of this Note, and unless
otherwise expressly stated in writing, no party who signs this Note, whether as
maker, guarantor, accommodation maker or endorser, shall be released from
liability. All such parties agree that Lender may renew or extend (repeatedly
and for any length of time) this loan, or release any party or guarantor or
collateral; or impair, fail to realize upon or perfect Lender's security
interest in the collateral without the consent of or notice to anyone. All such
parties also agree that Lender may modify this loan without the consent of or
notice to anyone other than the party with whom the modification is made.
PRIOR TO SIGNING THIS NOTE, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF
THIS NOTE, INCLUDING THE VARIABLE INTEREST RATE PROVISIONS. BORROWER AGREES TO
THE TERMS OF THE NOTE AND ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THE NOTE.
BORROWER:
DAWSON PRODUCTION SERVICES INC.
By: /s/ MICHAEL E. LITTLE
MICHAEL E. LITTLE, PRESIDENT/CHIEF EXECUTIVE OFFICER
================================================================================
Variable Rate. Single Pay.
LASER PRO, Reg. U.S. Pat. & T.M. Off., Ver. 3.21 (c) CFI 1996 ProServices, Inc.
All rights reserved. [TX-D20 22114801.LN C1.OVL]
EXHIBIT 10.28
PROMISSORY NOTE
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
PRINCIPAL LOAN DATE MATURITY LOAN NO. CALL COLLATERAL ACCOUNT OFFICER INITIALS
$7,000,000.00 01-25-1997 03-31-1997 9001 500 0010 2211480 035
</TABLE>
References in the shaded area are for Lender's use only and do not limit the
applicability of this document to any particular loan or item.
<TABLE>
<CAPTION>
<S> <C> <C>
BORROWER: DAWSON PRODUCTION SERVICES, INC. (TIN: LENDER: THE FROST NATIONAL BANK
74-2231546) P.O. BOX 1600
901 NE LOOP 410, SUITE 700 SAN ANTONIO, TX 78296
SAN ANTONIO, TX 78209
</TABLE>
================================================================================
PRINCIPAL AMOUNT: INITIAL RATE: DATE OF NOTE:
$7,000,000.00 7.750% JANUARY 25, 1997
PROMISE TO PAY. DAWSON PRODUCTION SERVICES, INC. ("Borrower") promises to pay to
THE FROST NATIONAL BANK ("Lender"), or order, in lawful money of the United
States of America, the principal amount of Seven Million & 00/100 Dollars
($7,000,000.00), together with interest on the unpaid principal balance from
January 25, 1997, until maturity.
PAYMENT. Borrower will pay this loan in one principal payment of $7,000,000.00
plus interest on March 31, 1997. This payment due March 31, 1997, will be
for all principal and accrued interest not yet paid. In addition, Borrower will
pay regular monthly payments of all accrued unpaid interest due as of each
payment date, beginning February 28, 1997, with all subsequent interest payments
to be due on the same day of each month after that. Interest on this Note is
computed on a 365/360 simple interest basis; that is, by applying the ratio of
the annual interest rate over a year of 360 days, multiplied by the outstanding
principal balance, multiplied by the actual number of days the principal balance
is outstanding, unless such calculation would result in a usurious rate, in
which case interest shall be calculated on a per diem basis of a year of 365 or
366 days, as the case may be. Borrower will pay Lender at Lender's address shown
above or at such other place as Lender may designate in writing. Unless
otherwise agreed or required by applicable law, payments will be applied first
to accrued unpaid interest, then to principal, and any remaining amount to any
unpaid collection costs and late charges.
VARIABLE INTEREST RATE. The interest rate on this Note is subject to change from
time to time based on changes in an independent index which is the London
Interbank Offered Rate (LIBOR) for one (1) month as quoted in the most recently
published issue of THE WALL STREET JOURNAL under the "Money Rates" column, and
if more than one LIBOR rate for one (1) month is quoted, the higher rate shall
apply (the "Index"). The Index is not necessarily the lowest rate charged by
Lender on its loans. If the Index becomes unavailable during the term of this
loan, Lender may designate a substitute index after notice to Borrower. Lender
will tell Borrower the current Index rate upon Borrower's request. Borrower
understands that Lender may make loans based on other rates as well. The
interest rate change will not occur more often than each day. The Index
currently is 5.469% per annum. The Interest rate to be applied prior to maturity
to the unpaid principal balance of this Note will be at a rate of 2.250
percentage points over the Index, resulting in an initial rate of 7.750% per
annum. NOTICE: Under no circumstances will the interest rate on this Note be
more than the maximum rate allowed by applicable law. For purposes of this Note,
the "maximum rate allowed by applicable law" means the greater of (a) the
maximum rate of interest permitted under federal or other law applicable to the
indebtedness evidenced by this Note, or (b) the "Indicated Rate Ceiling" as
referred to in Article 5069-1.04 (a)(1) V.T.C.S.
PREPAYMENT. Borrower may pay without penalty all or a portion of the amount owed
earlier than it is due. Early payments will not, unless agreed to by Lender in
writing, relieve Borrower of Borrower's obligation to continue to make payments
under the payment schedule. Rather, they will reduce the principal balance due.
POST MATURITY RATE. The Post Maturity Rate on this Note is the maximum rate
allowed by applicable law. Borrower will pay interest on all sums due after
final maturity, whether by acceleration or otherwise, at that rate, with the
exception of any amounts added to the principal balance of this Note based on
Lender's payment of insurance premiums, which will continue to accrue interest
at the pre-maturity rate.
DEFAULT. Borrower will be in default if any of the following happens: (a)
Borrower fails to make any payment when due. (b) Borrower breaks any promise
Borrower has made to Lender, or Borrower fails to comply with or to perform when
due any other term, obligation, covenant, or condition contained in this Note or
any agreement related to this Note, or in any other agreement or loan Borrower
has with Lender. (c) Borrower defaults under any loan, extension of credit,
security agreement, purchase or sales agreement, or any other agreement, in
favor of any other creditor or person that may materially affect any of
Borrower's property or Borrower's ability to repay this Note or perform
Borrower's obligations under this Note or any of the Related Documents. (d) Any
representation or statement made or furnished to Lender by Borrower or on
Borrower's behalf is false or misleading in any material respect either now or
at the time made or furnished. (e) Borrower becomes insolvent, a receiver is
appointed for any part of Borrower's property, Borrower makes an assignment for
the benefit of creditors, or any proceeding is commenced either by Borrower or
against Borrower under any bankruptcy or insolvency laws. (f) Any creditor tries
to take any of Borrower's property on or in which Lender has a lien or security
interest. This includes a garnishment of any of Borrower's accounts with Lender.
(g) Any guarantor dies or any of the other events described in this default
section occurs with respect to any guarantor of this Note. (h) A material
adverse change occurs in Borrower's financial condition, or Lender believes the
prospect of payment or performance of the Indebtedness is impaired. (i) Lender
in good faith deems itself insecure.
LENDER'S RIGHTS. Upon default, Lender may declare the entire indebtedness,
including the unpaid principal balance on this Note, all accrued unpaid
interest, and all other amounts, costs and expenses for which Borrower is
responsible, under this Note or any other agreement with Lender pertaining to
this loan, immediately due, without notice, and then Borrower will pay that
amount. Lender may hire an attorney to help collect this Note if Borrower does
not pay, and Borrower will pay Lender's reasonable attorneys' fees. Borrower
also will pay Lender all other amounts actually incurred by Lender as court
costs, lawful fees for filing, recording, or releasing to any public office any
instrument securing this loan; the reasonable cost actually expended for
repossessing, storing, preparing for sale, and selling any security; and fees
for noting a lien on or transferring a certificate of title to any motor vehicle
offered as security for this loan, or premiums or identifiable charges received
in connection with the sale of authorized insurance. This Note has been
delivered to Lender and accepted by Lender in the State of Texas. If there is a
lawsuit, and if the transaction evidenced by this Note occurred in Bexar County,
Borrower agrees upon Lender's request to submit to the jurisdiction of the
courts of Bexar County, the State of Texas. Subject to the provisions on
arbitration, this Note shall be governed by and construed in accordance with the
laws of the State of Texas and applicable Federal laws.
ARBITRATION. Lender and Borrower agree that all disputes, claims and
controversies between them, whether individual, joint, or class in nature,
arising from this Note or otherwise, including without limitation contract and
tort disputes, shall be arbitrated pursuant to the Rules of the American
Arbitration Association, upon request of either party. No act to take or dispose
of any collateral securing this Note shall constitute a waiver of this
arbitration agreement or be prohibited by this arbitration agreement. This
includes, without limitation, obtaining injunctive relief or a temporary
restraining order; invoking a power of sale under any deed of trust or mortgage;
obtaining a writ of attachment or imposition of a receiver; or exercising any
rights relating to personal property, including taking or disposing of such
property with or without judicial process pursuant to Article 9 of the Uniform
Commercial Code. Any disputes, claims, or controversies concerning the
lawfulness or reasonableness of any act; or exercise of any right, concerning
any collateral securing this Note, including any claim to rescind, reform, or
otherwise modify any agreement relating to the collateral
<PAGE>
securing this Note, shall also be arbitrated, provided however that no
arbitrator shall have the right or the power to enjoin or restrain any act of
any party. Judgment upon any award rendered by any arbitrator may be entered in
any court having jurisdiction. Nothing in this Note shall preclude any party
from seeking equitable relief from a court of competent jurisdiction. The
statute of limitations, estoppel, waiver, laches, and similar doctrines which
would otherwise be applicable in an action brought by a party shall be
applicable in any arbitration proceeding, and the commencement of an arbitration
proceeding shall be deemed the commencement of an action for these purposes. The
Federal Arbitration Act shall apply to the construction, interpretation, and
enforcement of this arbitration provision.
DISHONORED CHECK CHARGE. In the event a check offered in full or partial payment
on this loan is returned unpaid, Lender may charge a fee for the purpose of
defraying the expense incident to handling such returned check, and Borrower
agrees to pay such fee. The fee shall not exceed the maximum amount permitted
under applicable law.
RENEWAL AND EXTENSION. This Note is given in renewal and extension and not in
novation of the following described indebtedness: THE PROMISSORY NOTE FROM
DAWSON PRODUCTION SERVICES, INC. TO LENDER DATED NOVEMBER 25, 1996.
GENERAL PROVISIONS. If any part of this Note cannot be enforced, this fact will
not affect the rest of the Note. In particular, this section means (among other
things) that Borrower does not agree or intend to pay, and Lender does not agree
or intend to contract for, charge, collect, take, reserve or receive
(collectively referred to herein as "charge or collect"), any amount in the
nature of interest or in the nature of a fee for this loan, which would in any
way or event (including demand, prepayment, or acceleration) cause Lender to
charge or collect more for this loan than the maximum Lender would be permitted
to charge or collect by federal law or the law of the State of Texas (as
applicable). Any such excess interest or unauthorized fee shall, instead of
anything stated to the contrary, be applied first to reduce the principal
balance of this loan, and when the principal has been paid in full, be refunded
to Borrower. The right to accelerate maturity of sums due under this Note does
not include the right to accelerate any interest which has not otherwise accrued
on the date of such acceleration, and Lender does not intend to charge or
collect any unearned interest in the event of acceleration. All sums paid or
agreed to be paid to Lender for the use, forbearance or detention of sums due
hereunder shall, to the extent permitted by applicable law, be amortized,
prorated, allocated and spread throughout the full term of the loan evidenced by
this Note until payment in full so that the rate or amount of interest on
account of the loan evidenced hereby does not exceed the applicable usury
ceiling. Lender may delay or forgo enforcing any of its rights or remedies under
this Note without losing them. Borrower and any other person who signs,
guarantees or endorses this Note, to the extent allowed by law, waive
presentment, demand for payment, protest, notice of dishonor, notice of intent
to accelerate the maturity of this Note, and notice of acceleration of the
maturity of this Note. Upon any change in the terms of this Note, and unless
otherwise expressly stated in writing, no party who signs this Note, whether as
maker, guarantor, accommodation maker or endorser, shall be released from
liability. All such parties agree that Lender may renew or extend (repeatedly
and for any length of time) this loan, or release any party or guarantor or
collateral; or impair, fail to realize upon or perfect Lender's security
interest in the collateral without the consent of or notice to anyone. All such
parties also agree that Lender may modify this loan without the consent of or
notice to anyone other than the party with whom the modification is made.
PRIOR TO SIGNING THIS NOTE, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF
THIS NOTE, INCLUDING THE VARIABLE INTEREST RATE PROVISIONS. BORROWER AGREES TO
THE TERMS OF THE NOTE AND ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THE NOTE.
BORROWER:
DAWSON PRODUCTION SERVICES INC.
By: /s/ MICHAEL E. LITTLE
MICHAEL E. LITTLE, PRESIDENT/CHIEF EXECUTIVE OFFICER
================================================================================
Variable Rate. Single Pay.
LASER PRO, Reg. U.S. Pat. & T.M. Off., Ver. 3.21 (c) 1997 CFI ProServices, Inc.
All rights reserved. [TX-D20 22114801.LN C1.OVL]
EXHIBIT 11.1
DAWSON PRODUCTION SERVICES, INC.
EARNINGS PER SHARE COMPUTATIONS
<TABLE>
<CAPTION>
Three Months Ended December 31, Nine Months Ended December 31,
-------------------------- --------------------------
1995 1996 1995 1996
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Primary Earnings Per Share
Net Income ................................................. $ 211,443 $ 1,550,358 $ 859,571 $ 3,725,361
Preferred stock dividends .................................. (19,094) -- (69,180) --
----------- ----------- ----------- -----------
Net income applicable to common stock ...................... $ 192,349 $ 1,550,358 $ 790,391 $ 3,725,361
----------- ----------- ----------- -----------
Shares used in earnings per share computation .............. 2,971,284 6,547,701 2,542,720 6,516,844
----------- ----------- ----------- -----------
Earnings per share ......................................... $ 0.06 $ 0.24 $ 0.31 $ 0.57
----------- ----------- ----------- -----------
Fully Diluted Earnings Per Share
Net Income ................................................. $ 211,443 $ 1,550,358 $ 859,571 $ 3,725,361
Interest on convertible debt, net of tax/
preferred stock dividends................................... (19,094) -- 114,372 --
----------- ----------- ----------- -----------
Net income applicable to common stock ...................... $ 192,349 $ 1,550,358 $ 973,943 $ 3,725,361
----------- ----------- ----------- -----------
Shares used in earnings per share computations ............. 2,971,284 6,617,754 3,228,113 6,575,160
----------- ----------- ----------- -----------
Earnings per share ......................................... $ 0.06 $ 0.23 $ 0.30 $ 0.57
----------- ----------- ----------- -----------
COMPUTATION OF SHARES USED IN EARNINGS PER SHARE
COMPUTATIONS-PRIMARY
Weighted average outstanding common shares ................. 2,664,315 6,391,125 1,971,126 6,391,031
Dilutive effect of stock and warrants issued within one year
prior to initial public offering ....................... 212,113 -- 508,269 --
Average other common equivalent shares-dilutive effect of
warrant shares ......................................... 94,856 156,576 63,325 125,813
----------- ----------- ----------- -----------
Shares used in earnings per share computations ............. 2,971,284 6,547,701 2,542,720 6,516,844
----------- ----------- ----------- -----------
COMPUTATION OF SHARES USED IN EARNINGS PER SHARE
COMPUTATIONS-FULLY DILUTED
Weighted average outstanding common shares ................. 2,664,315 6,391,125 1,971,126 6,391,031
Dilutive effect of stock and warrants issued within one year
prior to initial public offering ....................... 212,113 -- 508,269 --
Average other common equivalent shares-dilutive effect of
warrant shares ......................................... 94,856 226,629 63,325 184,129
Average shares attributable to preferred stock ............. -- -- 323,751 --
Average shares attributable to convertible debt ............ -- -- 361,642 --
----------- ----------- ----------- -----------
Shares used in earnings per share computation .............. 2,971,284 6,617,754 3,228,113 6,575,160
----------- ----------- ----------- -----------
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE FINANCIAL DATA SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM CONSOLIDATED BALANCE SHEET AND CONSOLIDATED STATEMENT AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCETO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1000
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 9183
<SECURITIES> 0
<RECEIVABLES> 17,534
<ALLOWANCES> (407)
<INVENTORY> 150
<CURRENT-ASSETS> 26,882
<PP&E> 56,551
<DEPRECIATION> 17,278
<TOTAL-ASSETS> 76,697
<CURRENT-LIABILITIES> 18,429
<BONDS> 0
0
0
<COMMON> 64
<OTHER-SE> 49,420
<TOTAL-LIABILITY-AND-EQUITY> 76,697
<SALES> 56,267
<TOTAL-REVENUES> 56,267
<CGS> 35,775
<TOTAL-COSTS> 35,775
<OTHER-EXPENSES> (348)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 591
<INCOME-PRETAX> 6230
<INCOME-TAX> 2504
<INCOME-CONTINUING> 3725
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,725
<EPS-PRIMARY> .57
<EPS-DILUTED> .57
</TABLE>
