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 PERIOD ENDED SEPTEMBER 30, 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 0-9953
BONRAY DRILLING CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 73-1086424
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
4701 N. E. 23rd Street, Oklahoma City, Oklahoma 73121
(Address of principal executive offices, including zip code)
405/424-4327
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No _____.
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date:
Class Outstanding at October 31, 1996
Common Stock, $1.00 par value 423,540 shares
<PAGE>
BONRAY DRILLING CORPORATION
Index
Page
Number
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PART I. FINANCIAL INFORMATION
Condensed Consolidated Balance Sheets at September 30,
1996 and June 30, 1996.
Condensed Consolidated Statements of Operations for the
three months ended September 30, 1996 and 1995.
Consolidated Statements of Cash Flows for the three months
ended September 30, 1996 and 1995.
Notes to Condensed Consolidated Financial Statements.
Management's Discussion and Analysis of Financial
Condition and Results of Operations.
PART II. OTHER INFORMATION
Items 1 through 5 have been omitted since the items are
either inapplicable or the answer is negative.
<PAGE>
PART I. FINANCIAL INFORMATION
<TABLE>
BONRAY DRILLING CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Information at September 30, 1996 is unaudited)
(Dollars in thousands)
<CAPTION>
September 30, June 30,
1996 1996
------------- --------
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 82 $ 187
Accounts receivable, net 2,411 2,172
Drilling contracts in progress 5 20
Prepaid expenses 131 89
------- -------
Total current assets 2,629 2,468
Properties and equipment, net 7,827 7,843
------- -------
Total assets $10,456 $10,311
======= =======
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 772 $ 689
Notes payable:
Short term line of credit 555 555
Other 43 189
Accrued liabilities:
Salaries and wages 163 246
Workers' compensation insurance 557 446
Other 185 177
------- -------
Total current liabilities 2,275 2,302
Obligations due after one year 96 103
Stockholders' equity:
Common stock, $1.00 par value; 800,000
shares authorized, 432,740 shares
issued 433 433
Capital in excess of par value 12,497 12,497
Accumulated deficit (4,753) (4,932)
------- -------
8,177 7,998
Less - cost of 9,200 treasury shares 92 92
------- -------
Total stockholders' equity 8,085 7,906
------- -------
Total liabilities and stockholders'
equity $10,456 $10,311
======= =======
</TABLE>
See accompanying Notes to Condensed Consolidated Financial Statements.
<PAGE>
<TABLE>
BONRAY DRILLING CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(Dollars in thousands, except per share amounts)
<CAPTION>
Three Months Ended
September 30,
------------------
1996 1995
---- ----
<S> <C> <C>
Revenues:
Contract drilling
operations $ 2,980 $ 2,360
Gain (loss) on disposal of assets 35 (7)
Other 11 11
------- -------
3,026 2,364
Costs and expenses:
Contract drilling operations 2,309 1,951
General and administrative 240 236
Depreciation 298 317
------- -------
2,847 2,504
------- -------
Net income (loss) $ 179 $ (140)
======= =======
Net income (loss) per share $ .42 $ (.33)
======= =======
Average shares outstanding 423,540 423,540
======= =======
</TABLE>
See accompanying Notes to Condensed Consolidated Financial Statements.
<PAGE>
<TABLE>
BONRAY DRILLING CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollars in thousands)
<CAPTION>
Three Months Ended
September 30,
------------------
1996 1995
------ ------
<S> <C> <C>
Cash flows from operating activities:
Cash received from customers $ 2,949 $ 2,760
Cash paid to suppliers and employees (2,667) (2,434)
Interest received - 1
Interest paid (14) (19)
Other cash receipts 18 16
------- -------
Net cash provided by operating
activities 286 324
Cash flows from investing activities:
Proceeds from sales of assets 48 8
Capital expenditures (293) (193)
------- -------
Net cash provided (used) by
investing activities (245) (185)
Cash flows from financing activities:
Repayment of short term borrowings (146) (132)
------- -------
Net cash used by financing activities (146) (132)
------- -------
Net increase (decrease) in cash and cash
equivalents (105) 7
Cash and cash equivalents at beginning of period 187 160
------- -------
Cash and cash equivalents at end of period $ 82 $ 167
======= =======
Reconciliation of net loss to net cash provided
by operating activities:
Net income (loss) $ 179 $ (140)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation 298 317
Change in assets and liabilities:
Decrease (increase) in current assets:
Accounts receivable (239) 312
Drilling contracts in progress 15 (50)
Prepaid expenses and taxes (42) (21)
Increase (decrease) in current liabilities:
Accounts payable 83 (107)
Accrued liabilities 36 7
Loss (gain) on disposal of assets (35) 7
Obligations due after one year (7) (7)
Other (2) 6
------- -------
Total adjustments 107 464
------- -------
Net cash provided by operating activities $ 286 $ 324
======= =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
BONRAY DRILLING CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
September 30, 1996
1. In the opinion of the Company the accompanying unaudited condensed
financial statements contain all adjustments (consisting of primarily
normal recurring accruals) necessary to present fairly the financial
position as of September 30, 1996 and June 30, 1996, the results of
operations for the three months ended September 30, 1996 and 1995 and
the changes in financial position for the three month period then
ended. The condensed balance sheet at June 30, 1996 was derived from
information obtained from audited financial statements as of that
date.
2. The results of operations for the three month period ended September
30, 1996 are not necessarily indicative of the results to be expected
for the full year.
3. Net income per common share is computed on the basis of the weighted
average shares of common stock outstanding.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Liquidity and Capital Resources
The Company reported net working capital September 30, 1996 of $354,000
and a current ratio of 1.16 to 1, compared to net working capital of $166,000
and a current ratio of 1.07 to 1 at June 30, 1996. The decrease in cash and
cash equivalents of $105,000 during the quarter is largely due to expenditures
for drilling equipment.
Most of the Company's customers pay for services on a basis of
60 to 90 days. Due to the inordinate delay in collecting receivables, the
Company has a line of credit at a local bank. The agreement with the bank
provides for credit up to $750,000 at a rate 1/2% above the national prime
lending rate and requires the Company to pledge up to 75% of its receivables.
The agreement expires October 31, 1997. At the end of the quarter, the
Company had $555,000 of borrowings under this agreement.
Management will continue to exercise tight controls in order to minimize
expenses without affecting productivity and by making only those capital
expenditures required to maintain the rigs in good operating condition.
Results of Operations
Revenues from contract drilling operations for the first quarter of fiscal
year 1997 were $2,980,000, compared to $2,766,000 reported last quarter and
$2,360,000 reported for the same period last year.
Gross income from drilling operations, excluding depreciation was $373,000
which compares to a gross income of $253,000 last quarter and gross income of
$92,000 for the same quarter last year. Rig utilization during the first
quarter of fiscal year 1997 was 49.06% compared to 49.67% last quarter and
43.99% for the same period last year. The increase in gross income from last
quarter and the same quarter a year ago is the result of the Company's
efforts in controlling costs along with a slight increase in drilling day
rates.
Daywork contracts generally provide for the payment of a certain amount
per day without a limit on the time necessary to drill a well to its contract
depth. Daywork contracts transfer certain risks associated with the drilling
activity to the Company's customers.
For footage contracts, the Company earns (at an agreed depth) a specific
amount per foot drilled without regard to the problems it may encounter in the
drilling process or the amount of drilling time necessary to achieve the
contract depth. For turnkey contracts, the Company agrees to drill to a
specified depth for a specified amount. It may also agree to provide
additional materials and services in connection with the completion of a
well which presents the opportunity for additional profits. Turnkey and
footage contracts generally do not provide compensation for drilling delays
or problems encountered in the drilling process, thus shifting certain risks
to the Company.
The following table shows the composition of revenue and operating
profit from drilling contracts by type of contract. No allocation of corporate
overhead, interest, or depreciation is reflected in the computations.
<TABLE>
<CAPTION>
Three Months Ended
--------------------------
9/30/96 6/30/96 9/30/95
------- ------- -------
<S> <C> <C> <C>
Revenue
Daywork 79.5% 94.4% 87.5%
Footage 20.5% 5.6% 12.5%
Turnkey 0.0% 0.0% 0.0%
Operating Profit
Daywork 91.5% 94.7% 94.4%
Footage 8.5% 4.8% 5.6%
Turnkey 0.0% .5% 0.0%
</TABLE>
The Company adopted Statement of Financial Accounting Standards No. 121
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets
to Be Disposed Of" during the quarter ended September 30, 1996. The effect of
adopting this Standard had no impact on the financial position or results of
operations of the Company for the quarter.
Depreciation for the quarter was $298,000, which is $19,000 less than the
same quarter a year ago. The quarter ended September 30, 1995 includes a
charge to depreciation on stacked or mothballed rigs of $20,000.
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits - The following exhibit is filed with this Form 10-Q and is
identified by the number indicated:
27 Financial Data Schedule
(b) Reports on Form 8-K - There were no reports on Form 8-K filed for the
three months ended September 30, 1996.
<PAGE>
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.
BONRAY DRILLING CORPORATION
Date: November 12, 1996 By: RICHARD B. HEFNER
Richard B. Hefner, President and
Chief Executive Officer
Date: November 12, 1996 By: JOANNE BELCHER
Joanne Belcher, Controller,
Chief Accounting Officer and
Treasurer
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Method of Filing
- ------- ----------------
<S> <C> <C>
27 Financial Data Schedule Filed herewith electronically
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> SEP-30-1996
<CASH> 82
<SECURITIES> 0
<RECEIVABLES> 2,411
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,629
<PP&E> 22,104
<DEPRECIATION> 14,277
<TOTAL-ASSETS> 10,456
<CURRENT-LIABILITIES> 2,275
<BONDS> 0
0
0
<COMMON> 433
<OTHER-SE> 7,652
<TOTAL-LIABILITY-AND-EQUITY> 10,456
<SALES> 2,980
<TOTAL-REVENUES> 3,026
<CGS> 2,309
<TOTAL-COSTS> 2,607
<OTHER-EXPENSES> 226
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 14
<INCOME-PRETAX> 179
<INCOME-TAX> 0
<INCOME-CONTINUING> 179
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 179
<EPS-PRIMARY> 0.42
<EPS-DILUTED> 0.00
</TABLE>
