<PAGE> 1
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1997
OR
[ ] 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: 0-22863
EAGLE GEOPHYSICAL, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<C> <C>
DELAWARE 76-0522659
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
50 BRIAR HOLLOW LANE
6TH FLOOR WEST
HOUSTON, TEXAS
(Address of Principal 77027
Executive offices) (Zip Code)
</TABLE>
Registrant's telephone number, including area code: (713) 881-2800
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 14 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 [ ] No [X]
The number of shares outstanding of the issuer's common stock, as of
September 17, 1997: 8,489,000
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EAGLE GEOPHYSICAL, INC.
INDEX TO FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1997
<TABLE>
<CAPTION>
PAGE
--------
<S> <C>
PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS............................... 4
EAGLE GEOPHYSICAL, INC. Unaudited Pro Forma Consolidated
Financial Statements
Pro forma Consolidated Balance Sheet as of June 30, 1997
(unaudited)............................................ 5
Pro forma Consolidated Statement of Operations for the
three and six month periods ended June 30, 1997
(unaudited)............................................ 6
Pro forma Consolidated Statement of Operations for the
three and six month periods ended June 30, 1996
(unaudited)............................................ 8
Notes to Unaudited Pro Forma Consolidated Financial
Statements............................................. 10
EAGLE GEOPHYSICAL, INC.
Consolidated Balance Sheets -- June 30, 1997 (unaudited)
and December 31, 1996.................................. 12
Consolidated Statements of Operations for the three and
six month periods ended June 30, 1997 and 1996
(unaudited)............................................ 13
Consolidated Statements of Cash Flows for the six month
periods ended June 30, 1997 and 1996 (unaudited)....... 14
Notes to Consolidated Financial Statements................ 15
ENERGY RESEARCH INTERNATIONAL
Consolidated Balance Sheets -- June 30, 1997 (unaudited)
and December 31, 1996.................................. 19
Consolidated Statements of Operations for the three and
six month periods ended June 30, 1997 and 1996
(unaudited)............................................ 20
Consolidated Statements of Cash Flows for the six month
periods ended June 30, 1997 and 1996 (unaudited)....... 21
Notes to Consolidated Financial Statements................ 22
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS................ 23
PART II OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.......... 27
</TABLE>
2
<PAGE> 3
EXPLANATORY NOTE
On August 5, 1997, the Securities and Exchange Commission declared the
Registration Statement of Eagle Geophysical, Inc. (Eagle) on Form S-1, File No.
333-28303 (Registration Statement), effective. Eagle became subject to the
periodic reporting requirements of the Securities Exchange Act of 1934 ('34 Act)
at that time. Eagle is filing this Quarterly Report on Form 10-Q, which is its
first such report, within 45 days of the effective date of the Registration
Statement in accordance with Rule 13a-13(a) under the '34 Act.
On August 11, 1997, Eagle closed its initial public offering of its common
stock (Offering), pursuant to which Eagle sold 4,000,000 shares of its common
stock and a selling stockholder sold 1,880,000 shares of Eagle common stock at a
price to the public of $17.00 per share. Contemporaneously with the Offering,
Eagle, which already owned 19% of the outstanding stock of Energy Research
International (ERI), acquired the remaining 81% of the stock of ERI (ERI
Acquisition). As used herein, the term "Company" refers to Eagle and its
subsidiaries, including ERI, unless otherwise indicated. On September 5, 1997,
the underwriters of the Offering purchased an additional 180,000 shares of
common stock of Eagle from certain selling stockholders and an additional
464,000 shares of Eagle common stock from Eagle pursuant to over-allotment
options granted to the underwriters in connection with the Offering.
3
<PAGE> 4
PART I -- FINANCIAL INFORMATION
ITEM 1 -- FINANCIAL STATEMENTS
PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS OF EAGLE GEOPHYSICAL, INC.
The accompanying unaudited pro forma consolidated financial statements of
Eagle Geophysical, Inc. are derived from the historical consolidated financial
statements of Eagle Geophysical, Inc., which prior to the Offering was
indirectly a wholly-owned subsidiary of Seitel Inc., and Energy Research
International. The unaudited pro forma consolidated financial statements are
prepared to show the pro forma effects of the acquisition of the remaining
interests in ERI (see Note A hereto), the issuance of 4,464,000 shares of common
stock of Eagle Geophysical, Inc. to the public pursuant to the Offering, and the
application of the net proceeds therefrom for planned repayments of indebtedness
and the planned dividend to Seitel, Inc. (see Note E hereto).
The unaudited pro forma consolidated balance sheet as of June 30, 1997 and
the unaudited pro forma consolidated statements of operations for the three and
six month periods ended June 30, 1997 and 1996 give effect to certain
transactions that took place upon the closing of the Offering on August 11, 1997
as if the transactions had taken place on June 30, 1997 in the case of the
unaudited pro forma consolidated balance sheet and January 1, 1996 in the case
of the unaudited pro forma consolidated statements of operations.
The unaudited pro forma consolidated statements of operations may not be
indicative of actual results that would have been achieved had the transactions
that were effected at the closing of the Offering actually been completed as of
the dates indicated. In addition, the unaudited pro forma consolidated financial
statements are not necessarily indicative of the results of future operations of
the Company and should be read in conjunction with Eagle and ERI's historical
and consolidated financial statements and notes thereto contained elsewhere in
this report.
4
<PAGE> 5
EAGLE GEOPHYSICAL, INC.
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
JUNE 30, 1997
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
ENERGY
EAGLE RESEARCH
GEOPHYSICAL, INC. INTERNATIONAL PRO FORMA PRO FORMA
HISTORICAL HISTORICAL ADJUSTMENTS AS ADJUSTED
----------------- ------------- ----------- -----------
<S> <C> <C> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents................................ $ 11 $ 151 $ 69,626(B) $ 32,609
(37,179)(C)
Restricted cash.......................................... -- -- 4,390(C) 4,390
Receivables:
Trade.................................................. 10,582 2,902 (885)(D) 12,599
Other.................................................. -- 409 -- 409
Inventories.............................................. -- 1,649 -- 1,649
Due from affiliate....................................... 6,339 860 (6,339)(E) 860
Prepaid expenses and other assets........................ 567 2,680 -- 3,247
-------- -------- -------- --------
Total current assets.............................. 17,499 8,651 29,613 55,763
PROPERTY AND EQUIPMENT, AT COST:
Geophysical equipment.................................... 28,624 33,770 (13,062)(A) 49,332
Furniture, fixtures and other............................ 129 240 -- 369
-------- -------- -------- --------
28,753 34,010 (13,062) 49,701
Less: Accumulated depreciation and amortization.......... (10,857) (13,062) 13,062(A) (10,857)
-------- -------- -------- --------
Net property and equipment........................ 17,896 20,948 -- 38,844
OTHER LONG-TERM ASSETS..................................... 1,036 -- 20,257(A) 21,293
-------- -------- -------- --------
TOTAL ASSETS...................................... $36,431 $ 29,599 $ 49,870 $115,900
======== ======== ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of bank line............................. $ -- $ 6,736 $ (6,736)(C) $ --
Current portion of long-term debt........................ 2,658 200 (2,858)(C) --
Current portion of capital lease obligations............. 838 4,430 (2,586)(C) 2,682
Accounts payable......................................... 5,435 7,284 (885)(D) 11,834
Accrued liabilities...................................... 1,174 3,697 -- 4,871
Accrued capital lease interest........................... -- 758 -- 758
Billings in excess of costs and estimated earnings on
uncompleted contracts.................................. 221 -- -- 221
Due to affiliate......................................... 1,189 976 (1,189)(C) 976
-------- -------- -------- --------
Total current liabilities.............................. 11,515 24,081 (14,254) 21,342
DUE TO AFFILIATE........................................... -- 4,679 (4,679)(C) --
LONG-TERM DEBT............................................. 11,919 -- (11,919)(C) --
CAPITAL LEASE OBLIGATIONS.................................. 1,162 10,897 (2,562)(C) 9,497
DEFERRED INCOME TAXES...................................... 840 -- (87)(C) 753
-------- -------- -------- --------
Total liabilities................................. 25,436 39,657 (33,501) 31,592
-------- -------- -------- --------
STOCKHOLDERS' EQUITY
Common Stock, par value $0.01 per share; authorized
25,000,000 shares; issued and outstanding 3,400,000
shares actual, 8,489,000 shares pro forma as
adjusted............................................... 34 -- 6(A) 85
45(B)
Additional paid-in capital............................... 8,671 -- 70,005(B) 84,821
10,194(A)
(4,049)(E)
Retained earnings (deficit).............................. 2,290 (9,654) 9,654(A) (173)
(2,290)(E)
(173)(C)
Translation adjustment................................... -- (404) 404(A) --
Note receivable from stockholder......................... -- -- (425)(B) (425)
-------- -------- -------- --------
TOTAL STOCKHOLDERS' EQUITY (DEFICIT).............. 10,995 (10,058) 83,371 84,308
-------- -------- -------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY........ $36,431 $ 29,599 $ 49,870 $115,900
======== ======== ======== ========
</TABLE>
See accompanying notes to unaudited pro forma consolidated financial statements.
5
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EAGLE GEOPHYSICAL, INC.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE THREE MONTH PERIOD ENDED JUNE 30, 1997
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
ENERGY
EAGLE RESEARCH
GEOPHYSICAL, INC. INTERNATIONAL PRO FORMA PRO FORMA
HISTORICAL HISTORICAL ADJUSTMENTS AS ADJUSTED
----------------- ------------- ----------- -----------
<S> <C> <C> <C> <C>
REVENUE............................................. $15,785 $ 11,568 $ (472)(F) $ 26,881
OPERATING EXPENSES
Operating expenses (exclusive of depreciation and
amortization shown below)...................... 11,493 8,948 (472)(F) 19,969
Depreciation and amortization..................... 1,470 1,385 353 (G) 3,208
Selling, general and administrative expenses...... 1,115 736 283 (H) 2,134
Interest expense, net............................. (124) 460 (188)(I) 148
------- -------- -------- --------
Total expenses............................ 13,954 11,529 (24) 25,459
------- -------- -------- --------
Income before provision for income taxes............ 1,831 39 (448) 1,422
Provision (benefit) for income taxes................ 671 -- (276)(J) 395
------- -------- -------- --------
NET INCOME.......................................... $ 1,160 $ 39 $ (172) $ 1,027
======= ======== ======== ========
Earnings per share.................................. $ .34 $ .12
======= ========
Weighted average number of common shares............ 3,400 5,089 8,489
======= ======== ========
</TABLE>
See accompanying notes to unaudited proforma consolidated financial statements.
6
<PAGE> 7
EAGLE GEOPHYSICAL, INC.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE SIX MONTH PERIOD ENDED JUNE 30, 1997
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
ENERGY
EAGLE RESEARCH
GEOPHYSICAL, INC. INTERNATIONAL PRO FORMA PRO FORMA
HISTORICAL HISTORICAL ADJUSTMENTS AS ADJUSTED
----------------- ------------- ----------- -----------
<S> <C> <C> <C> <C>
REVENUE............................................. $28,766 $ 22,200 $ (906)(F) $ 50,060
EXPENSES
Operating expenses (exclusive of depreciation and
amortization shown below)...................... 20,779 16,206 (906)(F) 36,079
Depreciation and amortization..................... 2,772 2,762 704 (G) 6,238
Selling, general and administrative expenses...... 1,565 1,253 566 (H) 3,384
Interest expense, net............................. 34 996 (733)(I) 297
------- -------- -------- --------
Total expenses............................ 25,150 21,217 (369) 45,998
------- -------- -------- --------
Income before provision for income taxes............ 3,616 983 (537) 4,062
Provision (benefit) for income taxes................ 1,326 -- (481)(J) 845
------- -------- -------- --------
NET INCOME.......................................... $ 2,290 $ 983 $ (56) $ 3,217
======= ======== ======== ========
Earnings per share.................................. $ .67 $ .38
======= ========
Weighted average number of common shares............ 3,400 5,089 8,489
======= ======== ========
</TABLE>
See accompanying notes to unaudited proforma consolidated financial statements.
7
<PAGE> 8
EAGLE GEOPHYSICAL, INC.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE THREE MONTH PERIOD ENDED JUNE 30, 1996
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
EAGLE ENERGY
GEOPHYSICAL, RESEARCH
INC. INTERNATIONAL PRO FORMA PRO FORMA
(HISTORICAL) (HISTORICAL) ADJUSTMENTS AS ADJUSTED
------------- ------------- ----------- -----------
<S> <C> <C> <C> <C>
REVENUE.............................................. $11,777 $12,681 $ (207)(K) $24,251
OPERATING EXPENSES
Operating expenses (exclusive of depreciation and
amortization shown below)....................... 8,431 10,983 (207)(K) 19,207
Depreciation and amortization...................... 640 1,196 351 (L) 2,187
Selling, general and administrative expenses....... 981 840 283 (O) 2,104
Interest expense, net.............................. 158 411 (337)(M) 232
------- ------- ------ -------
Total expenses.................................. 10,210 13,430 90 23,730
------- ------- ------ -------
Income (loss) before provision for income taxes...... 1,567 (749) (297) 521
Provision (benefit) for income taxes................. 574 -- (133)(N) 441
------- ------- ------ -------
NET INCOME (LOSS)(1)................................. $ 993 $ (749) $ (164) $ 80
======= ======= ====== =======
Earnings per share................................... $ .29 $ .01
======= =======
Weighted average number of common shares............. 3,400 5,089 8,489
======= ====== =======
</TABLE>
- ---------------
(1) Excludes the effect of a $600,000 extraordinary gain for early
extinguishment of debt on ERI's historical 1996 financial statements.
See accompanying notes to unaudited proforma consolidated financial
statements.
8
<PAGE> 9
EAGLE GEOPHYSICAL, INC.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE SIX MONTH PERIOD ENDED JUNE 30, 1996
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
EAGLE ENERGY
GEOPHYSICAL, RESEARCH
INC. INTERNATIONAL PRO FORMA PRO FORMA
(HISTORICAL) (HISTORICAL) ADJUSTMENTS AS ADJUSTED
------------- ------------- ----------- -----------
<S> <C> <C> <C> <C>
REVENUE.................................... $17,751 $19,597 $ (414)(K) $36,934
OPERATING EXPENSES
Operating expenses (exclusive of
depreciation and amortization shown
below)................................ 12,767 18,113 (414)(K) 30,466
Depreciation and amortization............ 1,297 2,232 702 (L) 4,231
Selling, general and administrative
expenses.............................. 1,342 1,306 566 (O) 3,214
Interest expense, net.................... 294 818 (648)(M) 464
------- ------- ------ -------
Total expenses........................ 15,700 22,469 206 38,375
------- ------- ------ -------
Income (loss) before provision for income
taxes.................................... 2,051 (2,872) (620) (1,441)
Provision (benefit) for income taxes....... 752 -- (273)(N) 479
------- ------- ------ -------
NET INCOME (LOSS)(1)....................... $ 1,299 $(2,872) $ (347) $(1,920)
======= ======= ====== =======
Earnings (loss) per share.................. $ .38 $ (.23)
======= =======
Weighted average number of common shares... 3,400 5,089 8,489
======= ====== =======
</TABLE>
- ---------------
(1) Excludes the effect of a $600,000 extraordinary gain for early
extinguishment of debt on ERI's historical 1996 financial statements.
See accompanying notes to unaudited proforma consolidated financial statements.
9
<PAGE> 10
EAGLE GEOPHYSICAL, INC.
NOTES TO UNAUDITED PRO FORMA
CONSOLIDATED FINANCIAL STATEMENTS
BASIS OF PRESENTATION
The accompanying pro forma consolidated financial statements have been
prepared to reflect certain adjustments to the historical consolidated financial
statements to give effect to the acquisition of the remaining interests in
Energy Research International (ERI) and the net proceeds from the Offering and
sale of 4,000,000 shares and 464,000 shares of common stock to the public which
was completed on August 11, 1997 and September 5, 1997 respectively (the
Offering). The adjustments are based upon currently available information and
certain estimates and assumptions. Actual adjustments made to effect the
transactions may differ from the pro forma adjustments; however, management
believes the accompanying pro forma financial statements reasonably present the
effects of the transactions.
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET AT JUNE 30, 1997
A.) Adjustments to reflect the acquisition of ERI including i) the exchange
of an 81% interest in ERI for 600,000 shares of Eagle Geophysical, Inc.
common stock valued at the initial offering price and ii) Seitel,
Inc.'s contribution of its 19% ownership interest in ERI to the Company
at Seitel's carryover basis. The following table summarizes elements of
the ERI acquisition, which was accounted for by the Company as a
purchase transaction (in thousands):
<TABLE>
<S> <C>
Consideration:
Stock purchase price........................................ $ 10,200
Liabilities assumed......................................... 39,656
Assets acquired............................................. (29,599)
--------
Goodwill Adjustment....................................... $ 20,257
--------
</TABLE>
The remaining 19% interest in ERI was contributed to Eagle by Seitel in
May, 1997 at Seitel's carryover basis of $914,000 and is included in
Eagle's June 30, 1997 historical balance sheet.
B.) Reflects the issuance of 4,464,000 shares of Eagle Geophysical, Inc.
common stock to the public at $17 per share pursuant to the Offering,
net of underwriting discounts, commissions and offering costs (which
total approximately $6,262,000), and the sale of 25,000 shares of
Common Stock, at the initial public offering price, to Jay N.
Silverman, President of the Company, for a note.
C.) Adjustment to reflect the application of $32,529,000 of the net
proceeds from the Offering to reduce debt, capital lease and due to
affiliate obligations at June 30, 1997, including a prepayment penalty
on early extinguishment of debt of approximately $260,000, and the
related tax effect. Approximately $4,390,000 will be deposited in
escrow as additional security for an existing capital lease obligation.
D.) Reflects the elimination of intercompany payables and receivables
between Eagle and ERI totaling $885,000.
E.) Reflects the elimination of due from affiliate of $6,339,000 between
Eagle and affiliates in the form of a dividend.
10
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EAGLE GEOPHYSICAL, INC.
NOTES TO UNAUDITED PRO FORMA
CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS FOR THE
QUARTER AND SIX MONTHS ENDED JUNE 30, 1997
F.) Adjustments to eliminate $472,000 and $906,000 in lease income between
Eagle and ERI, for the three and six month periods ended June 30, 1997
respectively.
G.) Reflects the amortization of goodwill associated with the acquisition
of ERI over a 15-year estimated useful life.
H.) Represents additions supported by contractual agreements to selling,
general and administrative (SG&A) expenses the Company estimates it
will incur when operating as a public registrant. Such incremental
expenses primarily include increases in personnel, contractual
employment arrangements, and directors' and officers' compensation and
insurance. (See Note O for additional discussion of increases in annual
SG&A amounts)
I.) Reflects a reduction in interest expense of $188,000 and $733,000 for
the three and six month periods ended June 30, 1997, respectively, as
a result of the application of $32,529,000 of the estimated net
proceeds from the Offering to reduce debt and capital lease
obligations and due to affiliate obligations at June 30, 1997.
J.) Adjustments to the provision for income taxes related to the above
adjustments applicable to Eagle, computed using Eagle's statutory tax
rates and considering the applicable provisions of SFAS No. 109. No
adjustment was made to the provision for income taxes related to ERI's
adjustments as ERI was not required to record a tax provision during
the pro forma periods. The Company does not anticipate repatriating any
of its earnings from foreign operations, so no accrual of additional
U.S. deferred taxes has been made for the acquired, non-U.S.
operations.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS FOR THE
QUARTER AND SIX MONTHS ENDED JUNE 30, 1996
K.) Adjustments to eliminate lease income between Eagle and ERI.
L.) Reflects the amortization of goodwill associated with the acquisition
of ERI over a 15-year estimated useful life.
M.) Reflects a reduction in interest expense of $337,000 and 648,000 for
the three and six month periods ended June 30, 1996, respectively, as a
result of the application of$32,529,000 of the estimated net proceeds
from the Offering to reduce debt and capital lease obligations.
N.) Adjustments to the provision for income taxes related to the above
adjustments applicable to Eagle, computed using Eagle's statutory tax
rates and considering the applicable provisions of SFAS No. 109. No
adjustment was made to the provision for income taxes related to ERI's
adjustments as ERI was not required to record a tax provision during
the pro forma periods. The Company does not anticipate repatriating any
of its earnings from foreign operations, so no accrual of additional
U.S. deferred taxes has been made for the acquired, non-U.S.
operations.
O.) Represents additions supported by contractual agreements to SG&A
expenses the Company estimates it will incur when operating as a public
registrant. Such incremental annual expenses primarily include
increases in personnel ($420,900), contractual employment arrangements
($277,000), directors' and officers' compensation and insurance
($340,000) and other identifiable expenses ($95,000). The Company also
projects it will experience other increases in SG&A for professional
services, benefit plans, license and filing fees and similar expenses
not currently covered by contractual arrangements, which are estimated
to total approximately $468,500 annually.
11
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EAGLE GEOPHYSICAL, INC.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
ASSETS
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
1996 1997
------------ --------
(UNAUDITED)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents................................. $ -- $ 11
Receivables:
Trade, billed.......................................... 12,913 10,582
Costs and estimated earnings in excess of billings on
uncompleted contracts................................. 441 --
Other.................................................. 233 --
Due from affiliate........................................ -- 6,339
Prepaid expenses and other assets......................... 860 567
------- --------
Total current assets.............................. 14,447 17,499
PROPERTY AND EQUIPMENT, AT COST:
Geophysical equipment..................................... 20,200 28,624
Furniture, fixtures and other............................. 108 129
------- --------
20,308 28,753
Less: Accumulated depreciation and amortization........... (8,103) (10,857)
------- --------
Net property and equipment........................ 12,205 17,896
OTHER LONG-TERM ASSETS...................................... 69 1,036
------- --------
TOTAL ASSETS...................................... $26,721 $ 36,431
======= ========
LIABILITIES AND STOCKHOLDER'S EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt......................... $ 2,556 $ 2,658
Current portion of capital lease obligations.............. 1,033 838
Accounts payable.......................................... 4,623 5,435
Accrued liabilities....................................... 652 1,174
Billings in excess of costs and estimated earnings on
uncompleted contracts.................................. 78 221
Due to affiliate.......................................... -- 1,189
------- --------
Total current liabilities......................... 8,942 11,515
LONG-TERM DEBT.............................................. 6,039 11,919
CAPITAL LEASE OBLIGATIONS................................... 1,274 1,162
DUE TO AFFILIATE............................................ 1,965 --
DEFERRED INCOME TAXES....................................... 712 840
------- --------
TOTAL LIABILITIES................................. 18,932 25,436
------- --------
CONTINGENCIES AND COMMITMENTS
STOCKHOLDER'S EQUITY:
Common stock, par value $.01 per share; authorized
25,000,000 shares; issued and outstanding 3,400,000
shares at December 31, 1996 and June 30, 1997.......... 34 34
Additional paid-in capital................................ 7,755 8,671
Retained earnings......................................... -- 2,290
------- --------
TOTAL STOCKHOLDER'S EQUITY........................ 7,789 10,995
------- --------
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY........ $26,721 $ 36,431
======= ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
12
<PAGE> 13
EAGLE GEOPHYSICAL, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
THREE MONTH SIX MONTH
PERIODS ENDED PERIODS ENDED
JUNE 30, JUNE 30,
------------------ ------------------
1996 1997 1996 1997
------- ------- ------- -------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
REVENUE(1).......................................... $11,777 $15,785 $17,751 $28,766
EXPENSES
Operating expenses (exclusive of depreciation and
amortization shown below)(1)................... 8,431 11,493 12,767 20,779
Depreciation and amortization..................... 640 1,470 1,297 2,772
Selling, general and administrative expenses...... 981 1,115 1,342 1,565
Interest expense.................................. 158 336 294 612
Interest income................................... -- (460) -- (578)
------- ------- ------- -------
10,210 13,954 15,700 25,150
------- ------- ------- -------
Income before provision for income taxes............ 1,567 1,831 2,051 3,616
Provision for income taxes.......................... 574 671 752 1,326
------- ------- ------- -------
NET INCOME.......................................... $ 993 $ 1,160 $ 1,299 $ 2,290
======= ======= ======= =======
Earnings per share.................................. $ .29 $ .34 $ .38 $ .67
======= ======= ======= =======
Weighted average number of common shares............ 3,400 3,400 3,400 3,400
======= ======= ======= =======
</TABLE>
- ---------------
(1) Includes revenue from affiliates of $6,729,000, $9,611,000, $7,131,000 and
$15,212,000 for the unaudited three and six month periods ended June 30,
1996 and 1997, respectively, and operating expenses related to such
affiliate revenue of $4,998,000, $6,953,000, $4,775,000 and $11,210,000 for
the unaudited three and six month periods ended June 30, 1996 and 1997,
respectively.
The accompanying notes are an integral part of these consolidated financial
statements.
13
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EAGLE GEOPHYSICAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTH PERIODS
ENDED JUNE 30,
------------------
1996 1997
------- -------
(UNAUDITED)
<S> <C> <C>
Cash flows from operating activities:
Net income................................................ $ 1,299 $ 2,290
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization.......................... 1,297 2,772
Gain on sale of property and equipment................. -- (18)
Deferred income tax provision.......................... 30 128
(Increase) decrease in receivables..................... (4,463) 3,005
Increase in other assets............................... 1 240
Increase in accounts payable and other liabilities..... 5,535 1,479
------- -------
Total adjustments................................. 2,400 7,606
------- -------
Net cash provided by operating activities......... 3,699 9,896
------- -------
Cash flows from investing activities:
Purchase of property and equipment........................ (3,071) (8,098)
Cash received on disposal of property and equipment....... -- 27
------- -------
Net cash used in investing activities............. (3,071) (8,071)
------- -------
Cash flows from financing activities:
Borrowings under term loans............................... 433 7,925
Principal payments on term loans.......................... (464) (1,943)
Principal payments on capital leases...................... (618) (681)
Payments due to affiliate................................. -- (7,115)
------- -------
Net cash used in financing activities............. (649) (1,814)
------- -------
Net increase (decrease) in cash and cash equivalents........ (21) 11
Cash and cash equivalents at beginning of period............ 58 --
------- -------
Cash and cash equivalents at end of period.................. $ 37 $ 11
======= =======
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest............................................... $ 417 $ 339
======= =======
Income taxes........................................... $ -- $ --
======= =======
Noncash investing activities:
Equipment purchased through capital leases............. $ 41 $ 374
======= =======
Contribution of Investment in Energy Research
International by Seitel............................... $ -- $ 914
======= =======
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
14
<PAGE> 15
EAGLE GEOPHYSICAL, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
JUNE 30, 1997
1. BASIS OF PRESENTATION AND SIGNIFICANT ACTIVITIES
The accompanying unaudited interim condensed financial statements of the
Company for the six months ended June 30, 1997 and 1996 have been prepared
without an audit pursuant to the rules and regulations of the Securities and
Exchange Commission. In the opinion of management, all adjustments, which
consist of normal recurring adjustments, necessary to present fairly the
financial position, results of operations, and cash flows for all periods
presented have been made. Operating results for the interim period are not
necessarily indicative of the results that can be achieved for a full year. It
is suggested that these interim condensed financial statements be read in
conjunction with the audited financial statements and the notes thereto included
in the Company's Registration Statement on Form S-1.
The accompanying interim condensed financial statements include the
accounts of Eagle Geophysical, Inc. which as of June 30, 1997 and 1996 was
indirectly a wholly-owned subsidiary of Seitel, Inc. (Seitel) and the accounts
of Eagle Geophysical Onshore, Inc., both of which were formed on December 18,
1996. Effective December 31, 1996, substantially all of the assets of its
predecessor, Seitel Geophysical, Inc., a wholly-owned subsidiary of Seitel, were
contributed to Eagle Geophysical Onshore, Inc. The Company's reported assets,
liabilities, revenues and expenses include the predecessor operations of Seitel
Geophysical, Inc. for all periods presented. The financial reporting basis of
the contributed net assets was carried forward to the Company's accounts, and
the net equity of Seitel Geophysical, Inc. for periods prior to December 31,
1996 is reflected in the Company's additional paid-in capital account.
In May 1997, the Company amended its Certificate of Incorporation to
authorize the issuance of 25,000,000 shares of common stock and changed the par
value to $.01 per share. At the same time, the Company approved a 3,400-for-one
stock split. All share and per share information included in the accompanying
condensed financial statements has been adjusted to give retroactive effect to
the split.
In May 1997, the Company also amended its Certificate of Incorporation to
authorize the issuance of 5,000,000 shares of preferred stock, the terms and
conditions to be determined by the Board of Directors in creating any particular
series.
In May 1997, Seitel contributed to the Company all of the shares that it
owned of Energy Research International (ERI), representing a 19% ownership
interest. ERI is a holding company that wholly owns two marine seismic
companies. This contribution was recorded at Seitel's basis in such investment
and resulted in a $914,000 increase in the Company's additional paid-in capital
account.
On July 23, 1997, the Company issued 25,000 shares of common stock to the
president of the Company for a note valued at $425,000.
On August 11, 1997 and September 5, 1997, the Company completed the
offering and sale of a total of 6,524,000 shares of common stock to the public
at a price of $17 per share (including 1,880,000 shares sold by the Company's
former parent, Seitel, Inc. and 180,000 shares sold by the former owners of ERI)
resulting in net proceeds of $69.5 million to the Company after deducting
offering-related expenses (the Offering). Also on August 11, 1997, the Company
acquired the remaining 81% of Energy Research International in exchange for
600,000 shares of common stock. The acquisition was accounted for by the Company
as a purchase transaction in which the Company recorded its cost in the assets
acquired less liabilities assumed, with the difference between the cost and the
sum of the fair values of tangible assets less liabilities assumed being
recorded to goodwill. The Company is currently evaluating the value of the
assets acquired and liabilities assumed in order to determine the purchase price
allocation related to ERI.
15
<PAGE> 16
EAGLE GEOPHYSICAL, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS -- (CONTINUED)
2. EARNINGS PER COMMON SHARE:
Net income per share of common stock has been computed on the basis of the
weighted average number of common shares outstanding during the period and,
where dilutive, the effect of common stock contingently issuable, which arises
primarily from the exercise of stock options. The weighted average shares of
common stock outstanding was 3,400,000 to the six months ending June 30, 1997
and 1996 respectively.
3. PRO FORMA RESULTS OF OPERATIONS:
On August 11, 1997, the Company completed the acquisition of the remaining
81% interest in Energy Research International with the issuance of 600,000
shares of common stock for a purchase price valued at approximately $10.2
million. The following table presents the pro-forma effects of the Offering and
the application of the net proceeds thereof and the purchase of ERI as if such
transactions had occurred on January 1, 1996:
<TABLE>
<CAPTION>
SIX MONTHS THREE MONTHS
ENDED JUNE 30, ENDED JUNE 30,
-------------------- --------------------
1997 1996 1997 1996
--------- ------- --------- -------
<S> <C> <C> <C> <C>
Pro Forma Revenues....................... $50,060 $36,934 $26,881 $24,251
Pro Forma Income (Loss) Before Taxes..... $4,062 (1,441) $1,422 521
Pro Forma Net Income (Loss).............. $3,217 (1,920) $1,027 80
Pro Forma Weighted Average Common Shares
Outstanding............................ 8,489 8,489 8,489 8,489
Pro Forma Earnings (Loss) Per Common
Share.................................. $.38 $ (.23) $.12 $ .01
========= ======= ========= =======
</TABLE>
4. COMMITMENTS AND CONTINGENCIES
The Company is involved in or threatened with various legal proceedings
from time to time arising in the normal course of business. Management of the
Company does not believe that any liabilities resulting from such proceedings
will have a material adverse effect on its operations or financial position.
The Company has obtained a commitment from Bank One, Texas N.A. with
respect to a $20,000,000 revolving credit facility to be secured by the
Company's accounts receivable. The amount the Company may borrow under the
facility will be limited to a borrowing base that will be equal to 90% of the
eligible U.S. and U.K. investment grade accounts receivable, as defined, 100% of
receivables secured by acceptable letters of credit, and 80% of eligible
investment grade foreign receivables. Interest only will be payable monthly or
at the end of LIBOR interest periods, and the credit facility will be payable in
full in three years. Mandatory prepayments will be required if borrowings exceed
the borrowing base. Interest will accrue under the credit facility at the bank's
base rate or LIBOR plus a spread of 1.375% if the Company's debt to net worth
ratio is less than 1 to 1, and 1.625% of such ratio is equal to or greater than
1 to 1. The Company expects to finalize such credit agreement by early October,
1997.
5. RELATED PARTY TRANSACTIONS.
The Company enters into various types of transactions with Seitel and its
subsidiaries. The Company performs seismic data acquisition services for
Seitel's seismic data library subsidiary and its exploration and production
subsidiary. For the unaudited three and six month periods ended June 30, 1996
and 1997, the Company recognized revenue of $6,729,000, $9,611,000, and
$7,131,000, $15,212,000, respectively, for seismic data acquisition services
performed for Seitel's subsidiaries. Such revenues from affiliates are based on
prices charged to unaffiliated third parties for similar work. Gross margin
recognized on work for affiliates is limited in each reporting period to the
total margin percentage earned on work for unaffiliated parties.
16
<PAGE> 17
EAGLE GEOPHYSICAL, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS -- (CONTINUED)
The Company reimburses Seitel for direct and indirect costs of certain
Seitel employees who provide services to the Company and for other costs,
primarily general and administrative expenses, related to the Company's
operations. Seitel allocates indirect costs to the Company using a formula based
upon the ratio of the Company's levels of revenue, number of personnel or other
factors, as applicable, to the total consolidated Seitel levels for such
factors. Management of the Company believes that the use of such formula results
in a reasonable allocation of indirect costs. During the years ended December
31, 1994, 1995, 1996 and for the unaudited six month periods ended June 30, 1996
and 1997, the Company recorded general and administrative costs allocated from
Seitel of $613,000, $749,000, $1,217,000, $494,000 and $645,000, respectively.
Seitel funds the Company's direct operating costs through intercompany advances
and is reimbursed for such advances as the Company has available cash. Amounts
payable to or receivable from Seitel and its subsidiaries bear or earn interest
at the same rates which Seitel is charged or receives. During the years ended
December 31, 1994, 1995, 1996 and for the unaudited six month period ended June
30, 1996, the Company recorded net interest expense of $5,000, $21,000, $59,000
and $121,000, respectively, and net interest income of $309,000 for the
unaudited six month period ended June 30, 1997, related to the amounts payable
to or receivable from Seitel and its subsidiaries.
The Company intends to declare a dividend to its sole shareholder, a
wholly-owned, indirect subsidiary of Seitel, of the Company's receivable from
Seitel for work performed by the Company for Seitel and its subsidiaries, which
receivable has been classified as a due from affiliate on the unaudited
consolidated balance sheet as of June 30, 1997.
The Company leases certain marine seismic equipment to Horizon Exploration
Limited, a marine seismic company wholly-owned by Energy Research International,
under a five-year operating rental agreement expiring June 30, 2001. For the
unaudited three and six month periods ended June 30, 1997, the Company
recognized revenue of $472,000 and $906,000, respectively, related to this
lease. At December 31, 1996 and June 30, 1997, the Company had a receivable of
$138,000 and $885,000, respectively, related to this lease.
The Company and Seitel have entered into a number of agreements for the
purpose of defining their continuing relationship. Conflicts of interest may
arise in the future between Seitel and the Company in connection with these
agreements and other areas of their ongoing relationship. The following is a
summary of certain prospective arrangements between the Company and Seitel.
MASTER SEPARATION AGREEMENT. The Master Separation Agreement provides for
the Company and Seitel to enter into a Sublease, a Registration Rights
Agreement, a Tax Indemnity Agreement and an Administrative Services Agreement.
In addition, the Master Separation Agreement requires the Company to repay
indebtedness owed by the Company and its subsidiaries to Seitel and indebtedness
owed by the Company and its subsidiaries to third parties guaranteed by Seitel
contemporaneously with the consummation of the offering. Under the Master
Separation Agreement, Seitel and its subsidiaries and the Company and its
subsidiaries have indemnified each other with respect to liabilities arising in
connection with the operations of their respective businesses prior to and after
the date of consummation of the Offering including liabilities under the
Securities Act with respect to the Offering. The Master Separation Agreement
also provides for continued access by the Company to historical financial and
operational information relating to the Company and its subsidiaries maintained
by Seitel.
SUBLEASE. The Sublease between the Company and Seitel provides for the
Company to lease its principal corporate offices, comprising approximately 7,600
square feet, from Seitel for a term of three years at an annual rent of
approximately $85,000. The Sublease also provides for the Company to utilize
certain shared office equipment, such as phone systems and central computer
systems, for an additional charge.
17
<PAGE> 18
EAGLE GEOPHYSICAL, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS -- (CONTINUED)
REGISTRATION RIGHTS AGREEMENT. Pursuant to the Registration Rights
Agreement, the Company will agree to register the offer and sale by Seitel on a
delayed and continuous basis from time to time of the shares of Common Stock
owned by Seitel after the Offering at the expense of the Company.
TAX INDEMNITY AGREEMENT. Prior to the offering, the Company has been a
member of the Seitel affiliated group and has filed its tax returns on a
consolidated basis with such group. After the offering, the Company will no
longer be a member of the Seitel affiliated group. The Company and Seitel have
entered into a Tax Indemnity Agreement to define their respective rights and
obligations relating to federal, state and other taxes for periods before and
after the offering. Pursuant to the Tax Indemnity Agreement, the Company is
required to pay Seitel (to the extent not already paid) its share of federal
income taxes prior to the date of consummation of the Offering, and is
responsible for federal income taxes from its operations on and after the date
of the Offering. Any subsequent refunds, additional taxes or penalties or other
adjustments relating to the Company's federal income taxes for periods prior to
the date of consummation of the Offering shall be for the benefit of or be borne
by Seitel. Similar provisions apply under the Tax Indemnity Agreement to other
taxes, such as state and local income taxes.
ADMINISTRATIVE SERVICES AGREEMENT. Seitel and the Company have entered into
an Administrative Services Agreement pursuant to which Seitel will provide the
Company with administrative services, primarily accounting services, at up to
the same levels as provided prior to the Offering. Seitel will provide these
services for a 90-day transition period to allow the Company adequate time to
build an internal administrative staff. The Company will pay Seitel for these
services at Seitel's actual cost of providing these services.
EMPLOYMENT AGREEMENTS. The Company has entered into employment agreements
with certain of its executive officers in connection with the Offering.
EMPLOYEE BENEFITS ALLOCATION AGREEMENT. The Company has entered into an
employee benefits allocation agreement with Seitel to govern certain matters
relating to employees of Seitel who have become employees of the Company.
18
<PAGE> 19
ENERGY RESEARCH INTERNATIONAL
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
1996 1997
------------ -----------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current Assets:
Cash...................................................... $ 813 $ 151
Receivables
Trade.................................................. 3,702 2,902
Other.................................................. 323 409
Due from related party................................. 18 860
Prepaid expenses and other assets......................... 2,795 2,680
Inventories............................................... 1,585 1,649
-------- --------
Total current assets...................................... 9,236 8,651
Property and equipment, at cost:
Geophysical equipment..................................... 29,418 33,770
Furniture, fixtures and other............................. 246 240
-------- --------
29,664 34,010
Less: accumulated depreciation.............................. (10,843) (13,062)
-------- --------
Net property and equipment................................ 18,821 20,948
-------- --------
TOTAL ASSETS................................................ $ 28,057 $ 29,599
======== ========
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities:
Current portion of long-term debt......................... $ 600 $ 200
Current portion of capital leases......................... 2,612 4,430
Bank borrowings........................................... 6,630 6,736
Accounts payable.......................................... 7,400 7,284
Accrued liabilities....................................... 5,158 3,697
Accrued capital lease interest............................ 821 758
Due to related party...................................... 158 976
-------- --------
Total current liabilities................................. 23,379 24,081
Due to related party........................................ 4,679 4,679
Obligations under capital leases............................ 11,230 10,897
-------- --------
TOTAL LIABILITIES........................................... 39,288 39,657
-------- --------
CONTINGENCIES AND COMMITMENTS
STOCKHOLDERS' DEFICIT
Common stock, $0.001 par value; Authorized shares
900,000,000; Issued and outstanding 1996 and June 30,
1997 61,728 shares; 1995 100,000 shares................ -- --
Retained (deficit)........................................ (10,634) (9,654)
Translation adjustment.................................... (597) (404)
-------- --------
TOTAL STOCKHOLDERS' DEFICIT................................. (11,231) (10,058)
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT................. $ 28,057 $ 29,599
======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
19
<PAGE> 20
ENERGY RESEARCH INTERNATIONAL
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
THREE MONTH PERIODS SIX MONTH PERIODS
ENDED JUNE 30, ENDED JUNE 30,
-------------------- ------------------
1996 1997 1996 1997
-------- -------- ------- -------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
REVENUE........................................... $ 12,681 $ 11,568 $19,597 $22,200
EXPENSES
Cost of sales (exclusive of depreciation shown
below)....................................... 10,983 8,948 18,113 16,206
Depreciation.................................... 1,196 1,385 2,232 2,762
Selling, general and administrative expenses.... 840 736 1,306 1,253
Interest expense................................ 411 460 818 996
-------- -------- ------- -------
13,430 11,529 22,469 21,217
-------- -------- ------- -------
Income (loss) before provision for income taxes
and extraordinary item.......................... (749) 39 (2,872) 983
Provision for income taxes........................ -- -- -- --
-------- -------- ------- -------
Income (loss) before extraordinary item........... (749) 39 (2,872) 983
-------- -------- ------- -------
Extraordinary credit on early extinguishment of
debt............................................ 600 -- 600 --
-------- -------- ------- -------
NET INCOME (LOSS)................................. $ (149) $ 39 $(2,272) $ 983
======== ======== ======= =======
Income (loss) per share
Income (loss) before extraordinary item......... $ (1.49) $ .63 $(22.72) $ 15.92
Extraordinary item.............................. -- -- 6.00 --
-------- -------- ------- -------
Net income (loss)................................. $ (1.49) $ .63 $(16.72) $ 15.92
======== ======== ======= =======
Weighted average number of common shares.......... 100,000 61,728 100,000 61,728
======== ======== ======= =======
</TABLE>
- ---------------
The accompanying notes are an integral part of these consolidated financial
statements.
20
<PAGE> 21
ENERGY RESEARCH INTERNATIONAL
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTH PERIODS
ENDED JUNE 30,
------------------
1996 1997
------- -------
(UNAUDITED)
<S> <C> <C>
Cash flows from operating activities:
Net income (loss)........................................... $(2,272) $ 983
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Depreciation.............................................. 2,232 2,762
Extraordinary gain on early extinguishment of debt........ (600) --
(Increase)/decrease in receivables........................ (1,671) 714
(Increase)/decrease in other assets....................... (866) 51
(Decrease)/increase in accounts payable and other
liabilities............................................ 3,243 (1,643)
------- -------
Total adjustments................................. 2,338 1,884
------- -------
Net cash provided by operating activities......... 66 2,867
------- -------
Cash flows from investing activities:
Purchase of property and equipment........................ (582) (1,009)
------- -------
Net cash used in investing activities............. (582) (1,009)
------- -------
Cash flows from financing activities:
Borrowings under bank facility............................ 1,378 106
Borrowings under term loans............................... 2,000 --
Principal payments on term loans.......................... (2,400) (400)
Principal payments on capital leases...................... (359) (2,395)
Decrease in amounts due to related party.................. -- (24)
------- -------
Net cash provided by/(used in) financing
activities....................................... 619 (2,713)
------- -------
Net increase (decrease) in cash............................. 103 (855)
Cash at beginning of period................................. 373 813
------- -------
476 (42)
Translation differences..................................... (230) 193
------- -------
Cash at end of period....................................... $ 246 $ 151
======= =======
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest............................................... $ 425 $ 1,050
Income taxes........................................... $ -- $ --
Non-cash investing activities:
Capital lease obligations.............................. $ -- $ 3,880
======= =======
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
21
<PAGE> 22
ENERGY RESEARCH INTERNATIONAL
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION AND SIGNIFICANT ACTIVITIES
The accompanying unaudited interim condensed financial statements of Energy
Research International (ERI or the Company) for the six months ended June 30,
1997 and 1996 have been prepared without an audit pursuant to the rules and
regulations of the Securities and Exchange Commission. In the opinion of
management, all adjustments, which consist of normal recurring adjustments,
necessary to present fairly the financial position, results of operations, and
cash flows for all periods presented have been made. Operating results for the
interim period are not necessarily indicative of the results that can be
achieved for a full year. It is suggested that these interim condensed financial
statements be read in conjunction with the audited financial statements and the
notes thereto included in the registration statement of Eagle Geophysical, Inc.
on Form S-1.
In May 1997, Seitel, Inc. contributed to Eagle Geophysical, Inc. (Eagle)
all of the shares that it owns of ERI, representing a 19% ownership interest.
Eagle is an indirect wholly-owned subsidiary of Seitel, Inc.
On August 11, 1997 and September 5, 1997, Eagle completed the offering and
sale of a total of 6,524,000 shares of common stock to the public at a price of
$17 per share (including 1,880,000 shares sold by the Eagle's former parent,
Seitel, Inc. and 180,000 shares sold by the former owners of ERI) resulting in
net proceeds of $69.5 million to Eagle after deducting offering-related expenses
(the Offering). Also on August 11, 1997, Eagle acquired the remaining 81% of the
Company in exchange for 600,000 shares of common stock. The acquisition was
accounted for by Eagle as a purchase transaction in which Eagle recorded its
cost in the assets acquired less liabilities assumed, with the difference
between the cost and the sum of the fair values of tangible assets less
liabilities assumed being recorded to goodwill.
In April 1997, one of the Simon Labrador's streamers suffered a mechanical
failure and was damaged. The Company estimates that the cost of repairing such
damage will be approximately $175,000. The estimated loss of net income earned
by the Company, including the cost of repairs, is approximately $350,000.
In July 1997, an incident caused by a shrimping vessel damaged the
streamers deployed behind the Abshire Tide and the Discoverer in the Gulf of
Mexico. Based on initial estimates of the damage, the Company anticipates that
the cost to repair the streamers will be less than $500,000. The incident did
not cause any material interruption to the operation of the vessels. The Company
believes that for each of the incidents above, any damage in excess of its
$250,000 insurance deductible would be covered by the Company's insurance.
2. RELATED PARTY TRANSACTIONS
In July 1996, Seitel, Inc. acquired 50% of the issued and outstanding
shares of the Company from the directors of the Company who owned 97% of the
outstanding shares; in addition Seitel, Inc. advanced the Company by way of a
loan of $2 million to repay existing debt due on July 3, 1998. The existing debt
was extinguished for $1.4 million and a $600,000 extraordinary gain was
recognized in the results of operations for the period ended June 30, 1996.
In November 1996, the Company repurchased from Seitel, Inc. 38,272 shares
for $2,679,000, thereby reducing Seitel's share ownership to 19%. The repurchase
price was paid by delivery of a promissory note to Seitel, Inc. bearing interest
equal 5.35% until December 31, 1997 increasing to 8.0% from January 1, 1998
through December 31, 1998 and then at the prime rate of interest plus 1% from
January 1, 1999 through December 31, 2001, the date of repayment. The principal
amount due to Seitel, Inc. at December 31, 1996 and June 30, 1997 was $4,679,000
and is included in the Company's consolidated balance sheet as due to related
party.
A subsidiary of the Company leases certain marine seismic equipment from
Eagle under a five year operating rental agreement expiring June 30, 2001. The
Company recorded $472,000 and $906,000 of costs related to this lease for the
three and six months ended June 30, 1997 respectively.
22
<PAGE> 23
ITEM 2 -- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
GENERAL
The Company's revenues are generated from the sale of onshore and offshore
seismic data acquisition services. The Company focuses its onshore operations in
logistically difficult wetland environments along the U.S. Gulf Coast, and
focuses its offshore operations through Energy Research International (ERI) in
congested areas in the North Sea and the U.S. Gulf of Mexico. The Company
generally provides its onshore seismic data acquisition services under fixed fee
contracts with its customers. The Company provides its offshore seismic data
acquisition services under either distance- or time-based contracts (or a
combination of both methods) or turnkey contracts that provide for a fixed fee.
The Company generally does not retain rights to the data acquired. Onshore
operations accounted for approximately 56% of the Company's pro forma combined
revenues for the six months ended June 30, 1997, with offshore operations
accounting for the remaining 44% of pro forma combined revenues.
ONSHORE OPERATIONS
With respect to its onshore operations, the Company's prices, and therefore
its revenues, vary depending primarily on demand for the Company's services, the
number of acquisition crews of the Company, the acquisition capacity of each
crew, the utilization rates of the Company's crews and the complexity and
difficulty of the projects undertaken by each crew. The Company increased the
channel capabilities of its two existing Opseis crews during 1996 and added a
third Opseis crew in January 1997. Thus, the Company has increased the number of
crews operated and the acquisition capacities of its crews for the periods
presented in the financial statements, which has contributed substantially to
the increased revenues from period to period.
Revenues for less complex, easier to perform seismic acquisition projects
tend to be lower than revenues for more complex, difficult to perform projects,
even when the projects take the same amount of time for a crew to perform. The
mix of more and less complex projects results in variations from period to
period for revenues attributable to each crew. The projects performed by the
Company's two onshore crews operating in the second quarter of 1997 were
weighted more heavily towards complex projects than in the second quarter of
1996, further contributing to the increases in revenues in the second quarter of
1997 as compared to the second quarter of 1996.
OFFSHORE OPERATIONS
Similar to the Company's onshore operations, prices and revenues with
respect to the offshore operations performed by ERI vary depending primarily on
demand, the number of vessels operated by the Company, the acquisition capacity
of each vessel, utilization rates and the complexity and difficulty of the
projects undertaken by each vessel. During the second quarter of 1996, the
Company operated three vessels, whereas during the second quarter of 1997, the
Company operated four vessels. The Company also increased the streamer capacity
of its vessels in mid-1996, so that the vessels operated in the second quarter
of 1997 had greater data acquisition capabilities than in the second quarter of
1996. Thus, the Company has increased the number of vessels operated and the
acquisition capacities of its vessels for the periods presented in the financial
statements, which has contributed substantially to the increased revenues from
period to period.
In April 1997, one of the Simon Labrador's streamers suffered a mechanical
failure and was damaged. The Company estimates that the cost of repairing such
damage is unlikely to exceed $175,000. The Company believes that any damage in
excess of its $250,000 insurance deductible would be covered by the Company's
insurance. The Company estimates that the net income earned by the Company on
the project that was being performed when such damage occurred was approximately
$350,000 less than the Company had expected for that project. This decrease was
the result of the project taking longer to complete after such damage since the
vessel was operating with two instead of three streamers, the vessel earning a
reduced dayrate as a result of operating with fewer streamers and the Company
incurring the estimated cost of repair.
23
<PAGE> 24
On July 16, 1997, an incident caused by a shrimping vessel damaged the
streamers deployed behind the Abshire Tide and the Discoverer in the Gulf of
Mexico. Based on initial estimates of the damage, the Company anticipates that
the cost to repair the streamers will be less than $500,000, and that any repair
costs in excess of the Company's $250,000 deductible will be covered by the
Company's insurance. This incident did not cause any material interruption to
the operations of these vessels, and the Company does not believe that this
incident will have a material effect on its results of operations.
The Company currently intends to increase the streamer capacity of the
Simon Labrador beginning in the fourth quarter of 1997 and carrying over into
the first quarter of 1998 at an estimated capital cost of approximately $21.9
million, which will be funded from the proceeds of the Offering. This vessel
will be taken out of service for a period of approximately 90 days to accomplish
these modifications, during which period this vessel would have earned revenues
of approximately $2.7 million. The Company anticipates that revenues and income
generated by this vessel will increase as a result of these upgrades.
Because the Company derives a portion of its offshore revenues from sales
internationally, the Company is subject to risks relating to fluctuations in
currency exchange rates. The Company's costs and revenues from offshore
operations have historically been evenly divided between the U.S. dollar and the
British pound. The Company's financial statements are prepared using the U.S.
dollar as the functional currency, and, therefore, fluctuations in the exchange
rate between the U.S. dollar and the British pound affect the Company's costs
and revenues. Historically, fluctuations in exchange rates have not had a
material impact on the Company's results of operations, and the Company does not
currently engage in any currency hedging activities. As the Company expands its
operations into new geographic markets, such as Latin America, Africa and
Southeast Asia, which may involve more extensive currency risks, the Company
intends to protect itself against foreign currency fluctuations by generally
attempting to match foreign currency revenues and expenses in order to balance
its net position of receivables and payables denominated in foreign currencies,
by endeavoring to require its customers to pay for services in U.S. dollars and,
to a lesser extent, by purchasing foreign exchange contracts and other foreign
exchange instruments and implementing other procedures to counteract currency
fluctuations.
RESULTS OF OPERATIONS
The following discussion of the Results of Operations is divided into a
discussion of the Company's onshore operations, which were conducted by Eagle,
and the Company's offshore operations, which were conducted by ERI prior to the
consummation of the Offering. These discussions are presented based on the
revenues and expenses of the separate companies prior to the ERI Acquisition,
which occurred contemporaneously with the Offering. The revenues of Eagle
include intercompany profits from work performed for Seitel, Eagle's parent
corporation prior to the Offering, and its subsidiaries.
ONSHORE OPERATIONS
Second Quarter 1997 Compared to Second Quarter 1996
Revenue increased 34% from $11.8 million in the second quarter of 1996 to
$15.8 million in the second quarter of 1997, primarily due to the addition of a
third Opseis crew in January 1997. In the second quarter of 1997, Eagle operated
three crews, whereas in the second quarter of 1996, Eagle operated two crews.
Additionally, the surveys performed by the Company's crews in the 1997 period
were in more difficult logistical and environmental areas, providing higher
contract prices per crew, than the surveys performed in the 1996 period.
Operating costs (excluding depreciation) increased 36% from $8.4 million in
the second quarter of 1996 to $11.5 million in the second quarter of 1997,
primarily due to the addition of the third crew in the 1997 period. Operating
margin percentage (revenues less operating costs, as a percentage of revenues)
decreased slightly from 28.4% in the second quarter of 1996 to 27.2% in the
second quarter of 1997.
Depreciation increased 130% from $0.64 million in the second quarter of
1996 to $1.5 million in the second quarter of 1997, resulting from operating
three crews in the 1997 period versus two in the 1996 period
24
<PAGE> 25
and from depreciation of marine seismic equipment purchased by Eagle in July
1996 and leased to a subsidiary of ERI. Selling, general and administrative
expenses increased 4% from $0.98 million in the second quarter of 1996 to $1.1
million in the second quarter of 1997, primarily due to the addition of
administrative staff to support the expanded operations. Net interest expense
decreased from $0.16 million in the 1996 period to $(0.12) million in the 1997
period due to interest income earned on receivables from Seitel.
Six Months Ended June 30, 1997 Compared to June 30, 1996
Revenues increased 62% from $17.8 million for 1996 to $28.8 million for
1997. This increase in revenue was primarily due to the three crews operating in
the first six months of 1997 as compared to two crews operating in the 1996
period.
Operating expenses (excluding depreciation) increased 63% from $12.8
million in 1996 to $20.8 million for 1997. This increase is proportional to the
increase in revenue resulting from the third seismic crew. Operating margin
percentage (revenues less operating costs, as a percentage of revenues) was 28%
for both six month periods.
Depreciation and amortization increased 114% from $1.3 million in 1996 to
$2.8 million in 1997 resulting from the operation of three crews in 1997
compared to two crews in 1996 and from depreciation of marine seismic equipment
purchased by Eagle in July 1996 and leased to a subsidiary of ERI. Selling,
general, and administrative expenses increased 9.3% from $1.3 million in 1996 to
$1.5 million in 1997 primarily due to the addition of administrative staff to
support the expanded operations. Net interest expense decreased 88% from $0.3
million in 1996 to $0.03 million in 1997 primarily due to interest income earned
on receivables from Seitel.
OFFSHORE OPERATIONS
Second Quarter 1997 Compared to Second Quarter 1996
Revenue decreased 8.8% from $12.7 million in the second quarter of 1996 to
$11.6 million in the second quarter of 1997, primarily due to downtime resulting
from damages sustained by the Simon Labrador in April 1997.
Operating expenses (excluding depreciation) decreased from $11.0 million in
the second quarter of 1996 to $8.9 million in the second quarter of 1997 due to
start up costs incurred in 1996 in the Gulf of Mexico. Operating margins
increased from 13.4% in 1996 to 22.6% in 1997 as a result.
Depreciation increased 15.8% from $1.2 million in the second quarter of
1996 to $1.4 million in the second quarter of 1997, resulting from operating
four vessels in the 1997 period versus three in the 1996 period and from the
purchase of additional capital equipment in mid 1996 with corresponding
depreciation beginning in 1997. Selling, general and administrative expenses
decreased slightly due to lower legal and administrative costs. Interest expense
increased from $0.4 million in the 1996 period to $0.5 million in the 1997
period due to financing costs associated with additional working capital
requirements.
No provision was made for United States and United Kingdom income taxes in
either quarter due to operating losses and operating loss carry-forwards from
the offshore operations.
Six Months Ended June 30, 1997 Compared to June 30, 1996
Revenues increased 13.3% from $19.6 million for 1996 to $22.2 million for
1997. This increase in revenue was primarily due to improved vessel utilization
in the first six months of 1997 compared to the 1996 period. The Discoverer and
Abshire Tide were in a start up mode for a portion of the first quarter of 1996
whereas they were fully utilized in 1997.
Operating expenses (excluding depreciation) decreased 10.5% from $18.1
million in 1996 to $16.2 million for 1997. The decrease is due to the increased
utilization of the vessels coupled with no significant startup costs incurred
during 1997 as compared to 1996. Operating margin percentage (revenues less
operating costs, as a percentage of revenues) increased from 7.6% in 1996 to
27.0% in 1997 as a result.
25
<PAGE> 26
Depreciation increased 23.7% from $2.2 million in 1996 to $2.8 million in
1997 resulting from the operation of four vessels in 1997 compared to three
vessels in 1996. Selling, general, and administrative expenses decreased 4.1%
from $1.31 million in 1996 to $1.30 million in 1997. Net interest expense
increased 21.6% from $0.8 million in 1996 to $0.9 million in 1997 due to
increased working capital requirements.
LIQUIDITY AND CAPITAL RESOURCES
Prior to the Offering, Eagle was a wholly-owned subsidiary of Seitel. In
the past, Seitel had guaranteed certain indebtedness of Eagle and made loans to
Eagle. All of such debt owed to Seitel was repaid with a portion of the net
proceeds of the Offering. The Company's borrowing costs may increase in the
future as a result of having to obtain financing based on its own
creditworthiness. Therefore, the historical liquidity and capital resources of
Eagle may not be indicative of the Company's future liquidity and capital
resources.
The revenues of Eagle generated by work performed for Seitel and its other
subsidiaries were based on prices charged to unaffiliated third parties for
similar work and included a profit. Because Eagle was a wholly-owned subsidiary
of Seitel prior to the Offering, the profits generated by such intercompany work
were eliminated from Seitel's financial statements upon consolidation. Upon
consummation of the ERI Acquisition and the Offering, Eagle ceased to be a
wholly-owned subsidiary of Seitel. Because Seitel did not intend to fund any
payables to the Company which resulted from such intercompany work and which
were still outstanding at the time of the Offering, the Company declared a
dividend on July 22, 1997, to its sole stockholder, a wholly-owned, indirect
subsidiary of Seitel, to eliminate any remaining intercompany receivables from
Seitel. This dividend of Eagle's receivable from Seitel for profits attributable
to work performed by Eagle for Seitel and its subsidiaries since inception to
the date of consummation of the Offering, less taxes and allocable overhead
attributable to such intercompany work, was paid immediately prior to the
consummation of the Offering. As of June 30, 1997, the amount of such net
intercompany receivable was approximately $6.3 million.
The Company's pro forma working capital as of June 30, 1997, after giving
effect to the consummation of the ERI Acquisition and the application of the net
proceeds from this Offering, was $34.4 million. The pro forma indebtedness of
the Company as of such date consisted of a capital lease obligation totaling
approximately $12.2 million relating to the capital lease of the vessel Simon
Labrador.
The Company has repaid $35.7 million of existing indebtedness with a
portion of the net proceeds of the Offering, which will significantly decrease
the Company's interest expenses and will eliminate the Company's obligation to
make payments on the principal of such debt in the future. This will allow the
Company to apply the cash generated from operations towards its capital
requirements rather than to service such debt.
The Company currently plans to expand its existing data acquisition
capabilities through the expansion of the streamer towing capacity of one of its
vessels beginning in the fourth quarter of 1997 and carrying over into the first
quarter of 1998, at a capital cost of approximately $21.9 million. This capital
expenditure will be funded from the net proceeds of the Offering. In 1998, the
Company intends to charter and equip one additional offshore seismic vessel, at
a capital cost of approximately $25 to $30 million. The Company intends to fund
these capital costs with a combination of cash from operations and additional
debt or equity financing.
The Company operates the Simon Labrador under a capital lease with
Simon-Horizon Limited (Simon), which in turn leases the vessel from the Royal
Bank of Scotland (RBS) under a capital lease. Pursuant to the arrangement
between the Company and Simon, the Company is required to use its best endeavors
to obtain the release of Simon from all obligations in connection with the lease
of this vessel. The Company has agreed in principle with RBS for RBS to enter
into a capital lease for this vessel directly with the Company, and the Company
has deposited $4,390,000 of the proceeds of the Offering with RBS as additional
security for the lease. The Company and RBS are currently negotiating the terms
of the definitive agreements relating to the release of Simon from its
obligations relating to this vessel and the new lease between the Company and
RBS.
In September 1997, the Company ordered a fourth Opseis seismic data
acquisition system at an estimated total cost of approximately $5.6 million.
This acquisition will be funded with cash flow from operations and vendor
financing. The Company anticipates that operation of this fourth system will
begin in
26
<PAGE> 27
the first quarter of 1997. Additionally, the Company has obtained a commitment
to purchase a total of 1,500 seismic recording channels for its three crews at a
cost of approximately $3.5 million. The Company anticipates funding this
purchase with cash flows from operations and vendor financing.
As of June 30, 1997, the Company had capital commitments to purchase
approximately $1.6 million of additional marine seismic data acquisition
equipment as part of its scheduled routine replacement of existing equipment.
The Company intends to pay for this equipment with a combination of the net
proceeds of the Offering and vendor financing.
The Company has obtained a commitment from Bank One, Texas, N.A. with
respect to a $20,000,000 revolving credit facility to be secured by the
Company's accounts receivable. The amount the Company may borrow under the
revolving credit facility will be limited to a borrowing base that will be equal
to 90% of eligible U.S. and U.K. investment grade accounts receivable, 100% of
receivables secured by acceptable letters of credit and 80% of eligible
investment grade foreign receivables, non-graded U.S. receivables and other
eligible receivables approved by the bank. Interest only will be payable monthly
or at the end of LIBOR interest periods, and the credit facility will be payable
in full in three years. Mandatory prepayments will be required if borrowings
exceed the borrowing base. Interest will accrue under the credit facility at the
bank's base rate or at LIBOR plus a spread of 1.375% if the Company's debt to
net worth ratio is less than 1 to 1, and 1.625% if such ratio is equal to or
greater than 1 to 1. The Company expects to finalize such credit agreement by
early October, 1997. However, the bank's commitment is subject to negotiation of
definitive loan agreements, and there can be no assurance that the Company will
enter into such arrangement, or that any credit facility the Company does obtain
will be on these terms.
The Company believes that its planned capital expenditures and operating
requirements through the end of 1997 will be funded from a portion of the net
proceeds of the Offering and the Company's cash flow from operations. The
Company anticipates that its cash flow from operations will be sufficient to
fund its operating requirements for the foreseeable future, and that any
additional capital expenditures will be funded from the Company's cash flow from
operations and additional debt or equity financing. If the Company is not able
to obtain additional financing, it will be unable to make such capital
expenditures and the Company's financial position and results of operations may
be materially and adversely affected as a result.
PART II -- OTHER INFORMATION
ITEMS 1, 3, 4, 5 AND 6 -- NOT APPLICABLE
ITEM 2 -- CHANGES IN SECURITIES AND USE OF PROCEEDS
On August 5, 1997, the Securities and Exchange Commission declared the
Company's registration statement on Form S-1, File No. 333-28303, effective, and
the offering commenced on that date. Such registration statement registered the
sale at an offering price of $17.00 per share of 4,000,000 shares of common
stock by the Company, the sale of 1,880,000 shares of common stock by a selling
stockholder, and the sale, pursuant to over-allotment options granted to the
underwriters, of up to an additional 602,000 shares of common stock by the
Company and up to an additional 280,000 shares of common stock by selling
stockholders, for an aggregate of 6,762,000 shares of common stock registered at
an aggregate offering price of $114,954,000. On August 11, 1997, the Company
sold 4,000,000 shares and a selling stockholder sold 1,880,000 shares of the
Company's common stock. On September 5, 1995, the underwriters purchased an
additional 180,000 shares of common stock from selling stockholders and an
additional 464,000 shares of common stock from the Company pursuant to the
over-allotment options, at which time the offering was terminated with an
aggregate of 6,524,000 shares of common stock sold at an aggregate price of
$110,908,000. The Company received $75,888,000 and the selling stockholders
received $35,020,000 of the total proceeds. Prudential Securities Incorporated
was the managing underwriter of the offering, and Simmons & Company
International was co-managing underwriter.
Total expenses incurred to date are approximately $8.9 million, consisting
of $7.8 million of underwriting discounts and commissions, and an estimated $1.1
million of accounting, legal and other expenses. After
27
<PAGE> 28
deducting the Company's underwriting commissions and other expenses, the net
proceeds to the Company were approximately $69.5 million. None of such expenses
were paid, directly or indirectly, to directors or officers of the Company or to
any person owning 10% or more of any class of equity securities of the Company
or to any affiliates of the Company.
Of the approximately $69.5 million of net proceeds to the Company from the
offering, $35.7 million has been applied to the repayment of indebtedness, of
which $7.8 million was repaid to Seitel, Inc., which owns in excess of 10% of
the outstanding common stock of the Company, and the balance of which was paid
to unrelated parties. In addition, the Company has deposited $4,390,000 with the
Royal Bank of Scotland as additional security for a capital lease of one of the
Company's seismic data acquisition vessels.
28
<PAGE> 29
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.
EAGLE GEOPHYSICAL, INC.
<TABLE>
<C> <C>
September 18, 1997 /s/ JAY N. SILVERMAN
- ----------------------------------------------------- --------------------------------------------
Date Jay N. Silverman, President
September 18, 1997 /s/ RICHARD W. MCNAIRY
- ----------------------------------------------------- --------------------------------------------
Date Richard W. McNairy, Chief Financial Officer
September 18, 1997 /s/ DAVID H. SAINDON
- ----------------------------------------------------- --------------------------------------------
Date David H. Saindon, Chief Accounting Officer
</TABLE>
29
<PAGE> 30
EXHIBIT INDEX
EXHIBIT
NO. DESCRIPTION
- ------- -----------
27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ITEM 8.,
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-30-1997
<PERIOD-END> JUN-30-1997
<CASH> 11
<SECURITIES> 0
<RECEIVABLES> 10,582
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 17,499
<PP&E> 28,753
<DEPRECIATION> (10,857)
<TOTAL-ASSETS> 36,431
<CURRENT-LIABILITIES> 11,515
<BONDS> 13,081
0
0
<COMMON> 34
<OTHER-SE> 10,961
<TOTAL-LIABILITY-AND-EQUITY> 36,431
<SALES> 28,766
<TOTAL-REVENUES> 28,766
<CGS> 20,779
<TOTAL-COSTS> 25,116
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 34
<INCOME-PRETAX> 3,616
<INCOME-TAX> 1,326
<INCOME-CONTINUING> 2,290
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,290
<EPS-PRIMARY> .67
<EPS-DILUTED> .67
</TABLE>
