<PAGE> 1
Form 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
____________________
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1995
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______ to ______
Commission file number 0-12757
TMBR/SHARP DRILLING, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
TEXAS 75-1835108
------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4607 WEST INDUSTRIAL BLVD.
MIDLAND, TEXAS 79703
---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number (area code) (915) 699-5050
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.
Common Stock, $.10 Par Value Outstanding at November 1, 1995
---------------------------- -------------------------------
(Title of Class) 3,257,386
<PAGE> 2
TMBR/SHARP DRILLING, INC.
QUARTERLY REPORT FORM 10-Q
INDEX
Page No.
Part I. Financial Information (Unaudited) . . . . . . . . . . . . 3
Item 1. Financial Statements
Balance Sheets, September 30, 1995 and
March 31, 1995 . . . . . . . . . . . . . . . . . . . . 3
Statements of Operations, Three Months
Ended September 30, 1995 and 1994 . . . . . . . . . . 5
Statements of Operations, Six Months
Ended September 30, 1995 and 1994 . . . . . . . . . . 7
Statements of Stockholders'
Equity . . . . . . . . . . . . . . . . . . . . . . . 9
Statements of Cash Flows, Six Months
Ended September 30, 1995 and 1994 . . . . . . . . . . 10
Notes to Financial Statements . . . . . . . . . . . . . 11
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . . . 14
Part II. Other Information . . . . . . . . . . . . . . . . . . . . 17
Item 1. Legal Proceedings . . . . . . . . . . . . . . . . . . . 17
Item 4. Submission of Matters to a Vote of
Security Holders . . . . . . . . . . . . . . . . . . . 18
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . 18
-2-
<PAGE> 3
PART ONE - FINANCIAL INFORMATION (UNAUDITED)
Item 1. FINANCIAL STATEMENTS
TMBR/SHARP DRILLING, INC.
BALANCE SHEETS
September 30, 1995 (Unaudited) and March 31, 1995
(In thousands, except per share data)
<TABLE>
<CAPTION>
September 30,
1995 March 31,
ASSETS (Unaudited) 1995
------ ------------- -----------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 639 $ 1,590
Trade receivables,
net of allowance for doubtful
accounts of $1,225 at both
September 30, and March 31, 1995 3,229 2,568
Inventories 43 45
Deposits 439 513
Other 117 265
-------- --------
Total current assets 4,467 4,981
-------- --------
Property and equipment, at cost:
Drilling equipment 39,269 38,308
Oil and gas properties, based on
successful efforts accounting 7,368 5,790
Other property and equipment 3,211 3,206
-------- --------
49,848 47,304
Less accumulated depreciation,
depletion and amortization (43,033) (42,505)
-------- --------
Net property and equipment 6,815 4,799
-------- --------
Other assets 338 260
-------- --------
Total assets $ 11,620 $ 10,040
======== ========
</TABLE>
See accompanying notes to financial statements.
-3-
<PAGE> 4
TMBR/SHARP DRILLING, INC.
BALANCE SHEETS
September 30, 1995 (Unaudited) and March 31, 1995
(In thousands, except per share data)
<TABLE>
<CAPTION>
September 30,
1995 March 31,
Liabilities and Stockholders' Equity (Unaudited) 1995
------------------------------------ ------------ -----------
<S> <C> <C>
Current liabilities:
Current portion of capital lease
obligations $ 50 $ 92
Trade payables 2,869 1,839
Accrued workers' compensation 1,190 1,220
Leasehold purchase obligation 37 386
Other 445 728
-------- --------
Total current liabilities 4,591 4,265
-------- --------
Contingencies
Stockholders' equity:
Common stock, $0.10 par value
Authorized, 50,000,000 shares;
issued, 4,521,525 and 4,393,525
shares at September 30 and
March 31, 1995, respectively 452 439
Additional paid-in capital 60,640 60,540
Accumulated deficit (53,913) (55,054)
Treasury stock-common, 1,268,739
shares at September 30, and
March 31, 1995, at cost (150) (150)
-------- --------
Total stockholders' equity 7,029 5,775
-------- --------
Total liabilities and
stockholders' equity $ 11,620 $ 10,040
======== ========
</TABLE>
See accompanying notes to financial statements.
-4-
<PAGE> 5
TMBR/SHARP DRILLING, INC.
STATEMENTS OF OPERATIONS
Three months ended September 30, 1995 and 1994 (Unaudited)
(In thousands, except per share data)
<TABLE>
<CAPTION>
Three months ended
September 30,
-----------------------------
1995 1994
----------- -----------
<S> <C> <C>
Revenues:
Contract drilling $ 5,197 $ 3,701
Oil and gas 432 216
----------- -----------
Total revenues 5,629 3,917
----------- -----------
Operating costs and expenses:
Contract drilling 3,959 3,088
Oil and gas production 121 64
Dry holes and abandonments 274 86
Depreciation, depletion and
amortization 255 110
General and administrative 375 368
----------- -----------
Total operating costs
and expenses 4,984 3,716
----------- -----------
Operating income 645 201
----------- -----------
Other income (expense):
Interest (35) (27)
Gain on sales of assets 24 71
Other, net 14 12
----------- -----------
Total other income 3 56
----------- -----------
Net income before income
tax provision 648 257
Provision for income taxes (18) --
----------- -----------
Net income $ 630 $ 257
=========== ===========
</TABLE>
See accompanying notes to financial statements.
-5-
<PAGE> 6
TMBR/SHARP DRILLING, INC.
STATEMENTS OF OPERATIONS
Three months ended September 30, 1995 and 1994 (Unaudited)
(In thousands, except per share data)
<TABLE>
<CAPTION>
Three months ended
September 30,
-----------------------------
1995 1994
----------- -----------
<S> <C> <C>
Net income per share
of common stock $ .15 $ .06
=========== ===========
Weighted average number of
common shares outstanding 4,086,560 4,030,218
=========== ===========
</TABLE>
See accompanying notes to financial statements.
-6-
<PAGE> 7
TMBR/SHARP DRILLING, INC.
STATEMENTS OF OPERATIONS
Six months ended September 30, 1995 and 1994 (Unaudited)
(In thousands, except per share data)
<TABLE>
<CAPTION>
Six months ended
September 30,
-----------------------------
1995 1994
----------- -----------
<S> <C> <C>
Revenues:
Contract drilling $ 11,128 $ 7,020
Oil and gas 791 358
----------- -----------
Total revenues 11,919 7,378
----------- -----------
Operating costs and expenses:
Contract drilling 8,961 5,905
Oil and gas production 205 122
Dry holes and abandonments 291 301
Depreciation, depletion and
amortization 525 325
General and administrative 771 694
----------- -----------
Total operating costs
and expenses 10,753 7,347
----------- -----------
Operating income 1,166 31
----------- -----------
Other income (expense):
Interest (67) (66)
Gain on sales of assets 24 100
Other, net 48 44
----------- -----------
Total other income 5 78
----------- -----------
Net income before income
tax provision 1,171 109
Provision for income taxes (30) --
----------- -----------
Net income $ 1,141 $ 109
=========== ===========
</TABLE>
See accompanying notes to financial statements.
-7-
<PAGE> 8
TMBR/SHARP DRILLING, INC.
STATEMENTS OF OPERATIONS
Six months ended September 30, 1995 and 1994 (Unaudited)
(In thousands, except per share data)
<TABLE>
<CAPTION>
Six months ended
September 30,
-----------------------------
1995 1994
----------- -----------
<S> <C> <C>
Net income per share
of common stock $ .28 $ .03
=========== ===========
Weighted average number of
common shares outstanding 4,083,973 4,028,866
=========== ===========
</TABLE>
See accompanying notes to financial statements.
-8-
<PAGE> 9
TMBR/SHARP DRILLING, INC.
STATEMENTS OF STOCKHOLDERS EQUITY
Six Months Ended September 30,1995 (Unaudited) and
Year Ended March 31, 1995
(In thousands)
<TABLE>
<CAPTION>
Treasury Stock
--------------
Common Stock Additional Common Stock Total
-------------- Paid-In Accumulated -------------- Stockholders'
Shares Amount Capital Deficit Shares Amount Equity
------ ------ ------- ----------- ------ ------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance,
March 31, 1995 4,394 $ 439 $ 60,540 $(55,054) 1,269 $(150) $ 5,775
Exercise of
stock options 128 13 100 -- -- -- 113
Net income -- -- -- 1,141 -- -- 1,141
----- ----- -------- -------- ------- ----- -------
Balance,
September 30,
1995 4,522 $ 452 $ 60,640 $(53,913) 1,269 $(150) $ 7,029
===== ===== ======== ======== ======= ===== =======
</TABLE>
See accompanying notes to financial statements.
-9-
<PAGE> 10
TMBR/SHARP DRILLING, INC.
STATEMENTS OF CASH FLOWS
For the six months ended September 30,1995 and 1994 (Unaudited)
(In thousands)
<TABLE>
<CAPTION>
Six months ended September 30,
------------------------------
1995 1994
--------- ---------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 1,141 $ 109
Adjustments to reconcile net income
to net cash provided (required) by
operating activities:
Depreciation, depletion and amortization 525 325
Dry holes and abandonments 291 301
Gain on sales of assets (24) (100)
Changes in assets and liabilities:
Trade receivables (661) (367)
Deposits 74 194
Inventories and other assets 72 (117)
Trade payables 1,030 (306)
Accrued interest and other liabilities (313) (218)
-------- --------
Total adjustments 994 (288)
-------- --------
Net cash provided (required) by
operating activities 2,135 (179)
Cash flows from investing activities:
Additions to property and equipment (2,834) (976)
Proceeds from sales of property and
equipment 26 106
-------- --------
Net cash required by
investing activities (2,808) (870)
Cash flows from financing activities:
Repayments of capital lease (42) (50)
Issuance of common stock 113 96
Loans from bank -- --
Repayments of leasehold borrowings (349) --
-------- --------
Net cash provided (required) by
financing activities (278) 46
-------- --------
Net decrease in cash
and cash equivalents (951) (1,003)
Cash and cash equivalents at beginning
of period 1,590 1,039
-------- --------
Cash and cash equivalents at end of period $ 639 $ 36
======== ========
</TABLE>
See accompanying notes to financial statements.
-10-
<PAGE> 11
TMBR/SHARP DRILLING, INC.
NOTES TO FINANCIAL STATEMENTS
The amounts presented in the balance sheet as of March 31, 1995 were
derived from the Company's audited financial statements included in its
Form 10-K filed for the year then ended. The notes to such statements are
hereby incorporated by reference.
(1) Management's Representation
In the opinion of management, the accompanying unaudited financial
statements contain all adjustments (all of which are of a normal recurring
nature) necessary to present fairly the Company's financial position as of
September 30, 1995 and March 31, 1995, the results of operations for the
three and six months ended September 30, 1995 and 1994, and the cash flows
for the six month period ended September 30, 1995 and 1994.
While the Company believes that the disclosures presented are adequate
to make the information not misleading, it is suggested that these
condensed financial statements be read in conjunction with the financial
statements and the related notes in the Company's Annual Report for 1995 on
Form 10-K.
(2) Summary of Significant Accounting Policies
Inventories
Inventories consist primarily of casing and tubing. The Company
values its inventories at the lower of cost or estimated net recoverable
value using the specific identification method.
Property and Equipment
Drilling equipment is depreciated on a units-of-production method
based on the monthly utilization of the equipment. Drilling equipment
which is not utilized during a month is depreciated using a minimum
utilization rate of approximately twenty-five percent. Estimated useful
lives range from four to eight years.
Oil and gas properties are accounted for using the successful efforts
method. Accordingly, the costs incurred to acquire property (proved and
unproved), all development costs and successful exploratory costs are
capitalized, whereas the costs of unsuccessful exploratory wells are
expensed. Geological and geophysical costs, including seismic costs, are
charged to expense when incurred. In cases where the Company provides
contract drilling services related to oil and gas properties in which it
also has an ownership interest, the Company's proportionate share of costs
related to these properties is capitalized as stated above, net of its
working interest share of profits from the related drilling contracts.
Capitalized costs of undeveloped properties, which are not depleted until
-11-
<PAGE> 12
proved reserves can be associated with the properties, are periodically
reviewed for possible impairment.
Depletion of capitalized oil and gas property costs is provided using
the units-of-production method based on estimated proved or proved
developed oil and gas reserves, as applicable, of the respective property
units. Other property and equipment is depreciated using the straight-line
method of depreciation with estimated useful lives of three to seven years.
Major renewals and betterments are capitalized in the appropriate
property accounts while the cost of repairs and maintenance is charged to
operating expense in the period incurred. For assets sold or otherwise
retired, the cost and related accumulated depreciation amounts are removed
from the accounts and any resulting gain or loss is recognized.
Net Income Per Common Share
Net income per share of common stock is based on the weighted average
number of common shares outstanding during each period. All common stock
equivalents are considered dilutive for purposes of calculating the net
income per share.
(3) Debt
Line of Credit
The Company and its lender entered into an agreement which provides
for a $1,000,000 revolving line of credit ("LOC") secured by the Company's
accounts receivable. At September 30, 1995, the Company had not borrowed
any funds against the LOC. The LOC bears interest at 1% above the Norwest
Bank Minnesota, Base Rate and matures on July 15, 1996.
Subsequent to the end of the quarter, on October 11, 1995, the Company
borrowed $500,000 against the LOC.
Leasehold Purchase Obligation
On December 9, 1994, the Company entered into an agreement with
Paladin Exploration Co., Inc. ("Paladin") to acquire certain oil and gas
leases. The Company has agreed to reimburse Paladin an aggregate amount of
approximately $629,000 (including imputed interest at a rate of 9.5% per
annum) for leasehold acquisition, legal and seismic costs incurred by
Paladin associated with the acquisition of such leases. At September 30,
1995, the balance outstanding to Paladin was approximately $37,000.
(4) Stockholders' Equity
1984 Stock Option Plan
In August of 1984, the Company adopted the 1984 Stock Option Plan (the
"Plan") which authorized 375,000 shares of the Company's common stock to be
issued as either incentive stock options or nonqualified stock options.
-12-
<PAGE> 13
This Plan was amended in August 1986 to increase the authorized shares to
475,000 shares of the Company's common stock. In January 1988, the Plan
was amended to reduce the option price on certain options issued prior to
March 31, 1986, to reflect the then current fair market value of the
Company's common stock. The Plan provides that options may be granted to
key employees or directors for various terms at a price not less than the
fair market value of the shares on the date of the grant. Options to
purchase 108,000 shares of common stock are currently outstanding with
60,500 of the options exercisable at September 30, 1995. No additional
shares are available for granting. The Plan expired by its own terms in
August 1994. The options that were granted prior to the expiration of the
Plan, and which are outstanding, remain subject to the terms of the Plan.
1994 Stock Option Plan
In July 1994, the Company adopted the 1994 Stock Option Plan (the
"1994 Plan") which authorized the grant of options to purchase up to
750,000 shares of the Company's common stock. These options may be issued
as either incentive or nonqualified stock options. The 1994 Plan provides
that options may be granted to key employees or directors for various terms
at a price not less than the fair market value of the shares on the date of
the grant. The 1994 Plan was ratified and approved by the stockholders at
the Company's annual meeting of stockholders on August 30, 1994. The
Company has not granted any options under the 1994 Plan.
(5) Employee Benefits
Effective May 1, 1995, the Company established the TMBR/Sharp
Drilling, Inc. Employee Retirement Plan which is a 401(K) profit sharing
plan. Company contributions are discretionary and have been currently set
at 25% for each dollar contributed by each eligible employee limited to 5%
of the employee's compensation.
(6) Subsequent Events
On March 19, 1992, the Company was notified by the Texas Department of
Insurance that the Company's former workers' compensation insurance
carriers, Sir Lloyd's Insurance Company and its affiliate, Standard
Financial Indemnity Corporation ("SFIC"), had been placed in liquidation by
order of the 201st District Court of Travis County, Texas on March 12, 1992
in Cause No. 92-12765, The State of Texas vs. Sir Lloyd's Insurance Company
and Sir Insurance Agency, Inc., and in Cause No. 91-12766, The State of
Texas vs. Standard Financial Indemnity Corporation. Approximately two
months before being ordered into liquidation, SFIC requested that the
Company pay policy premiums in the amount of $646,476. On July 22, 1993
the special deputy receiver of SFIC billed the Company approximately
$1,061,000 for retrospective premiums, but adjusted the amount to $854,153
on January 12, 1994. Although the Company disputes the amount claimed by
SFIC and its receiver, the Company is presently unable to determine whether
and to what extent such amount is, in fact, an accurate estimate of amounts
owed to SFIC, if any, largely as a result of the difficulty of verifying
the insurance carrier's estimated claims and adjustments and the
unavailability of SFIC personnel. However, an accrual was made in the
-13-
<PAGE> 14
Company's financial statements for the amount in question.
In a related development, on November 3, 1995, the Company was
notified that a lawsuit had been filed in Travis County, Texas styled Texas
Property and Casualty Insurance Guaranty Association vs. TMBR/Sharp
Drilling, Inc. (Cause No. 95-12318). The Texas Property and Casualty
Insurance Guaranty Association ("Guaranty Association") seeks a recovery of
past workers' compensation claims advanced by the Guaranty Association
related to the Company's workers compensation insurance program with SFIC.
The Guaranty Association is seeking to recover a total of $803,057.11.
The Company disagrees with the claims made by the Guaranty Association
and intends to vigorously defend this lawsuit. The Company believes that
if the Guaranty Association's claim is ultimately determined to be valid
and enforceable, then the Receiver's claim against the Company is either
without merit or that its claim would be offset against the claims of the
Guaranty Association. For these reasons, the Company has not accrued the
Guaranty Association's claim in its financial statements.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Liquidity and Capital Resources
The Company has entered into an agreement with an exploration and
production company to fund approximately $629,000 including imputed
interest at a rate of 9.5% per annum for leasehold acquisition, legal and
seismic costs incurred in acquiring certain oil and gas leases. At
September 30, 1995, the remaining obligation relating to this transaction
was approximately $37,000. See Note (3).
The Company intends to meet its capital resource requirements for
fiscal 1996 through available cash balances on hand and cash flow provided
through operations. If needed, the Company will consider borrowing the
funds available through the Company's LOC with its lender.
The Company believes it owns a sufficient number of drilling rigs to
remain competitive within its areas of operation. However, the cash flow
generated from operations will continue to be directly affected by the
level of drilling activity in the Company's areas of operations. By
focusing on drilling contracts which can provide operating cash flow and
maintaining its cost containment program, the Company believes its
operating cash flow will improve. Cash provided by operating activities
was $2,135,000 for the six months ended September 30, 1995, compared with
an outflow of $179,000 for the six months ended September 30, 1994.
Results of Operations
Total revenues were $5,629,000 and $11,919,000 for the three and six
months ended September 30, 1995 which represents a 44% and a 62% increase
over the same periods in 1994, respectively. Operating expenses as a
percent of revenue were 86% and 90% for the three and six months ended
September 30, 1995 versus 95% and 99% for the same period of the prior
-14-
<PAGE> 15
year. These changes can be attributed to an increase in rig utilization
rates coupled with a slight increase in the footage and daywork prices the
Company receives for contract drilling.
Rig utilization rates were 40% and 47% for the three and six months
ended September 30, 1995 as compared to 41% and 37% in the same periods in
1994. Rig utilization in the Company's operating market is difficult to
project because contract drilling is a highly competitive industry. In
addition, the number of rigs, industry wide, actually available for work
cannot be accurately determined.
Oil and gas revenues increased by approximately 100% and 121% for the
three and six months ended September 30, 1995 compared to September 30,
1994 periods, respectively. Accordingly, oil and gas production expenses
also increased. Depreciation and depletion expense has also increased due
to the increase in the number of producing wells in which the Company has
an ownership interest.
On September 5, 1995, the Company entered into a 10 year License
Agreement with the Government of the Republic of Palau and the State of
Kayangel which will allow the Company to explore for oil and natural gas
offshore. The license covers approximately 1.1 million acres within the
waters of Palau. The Company plans to conduct exploration activities
jointly with other parties or enter into farmout arrangements with third
parties. The Company has agreed to commence drilling of an exploratory
well no later than the last day of the second year of the license
agreement. The Company has also agreed to commence drilling of an
additional well within six months of the initial well. The Company
estimates that it will cost approximately $6,000,000 to drill these two
wells. The Company intends to sell enough interest in the project to
retain a carried interest.
Net working capital was a negative $124,000 for the period ended
September 30, 1995 as compared to $716,000 for the period ended March 31,
1995. This decrease in working capital is a result of a decrease in cash
and an increase in accounts payable. The Company has expended
approximately 2.8 million in cash in the six months ended September 30,
1995 for asset acquisitions. The Company purchased a 110 National drilling
rig with a depth capacity of 22,000 feet. Additionally, the Company
continues to invest in oil and gas exploration projects.
-15-
<PAGE> 16
Financial Condition
Recently, the Company has entered into several turnkey contracts which
bear substantially more economic risk than footage or daywork contracts.
Under a turnkey contract the Company contracts to drill a well to a
specified depth and bears the risk of loss to that depth. The Company
could experience substantial losses if drilling problems occur under a
turnkey contract.
The Company has experienced improved operating results which can be
attributable to several factors. The Company's oil and gas exploration
program has been successful and drilling rig utilization rates have
stabilized as have drilling prices. The Company has substantially improved
its safety record which has made a positive impact on worker's compensation
costs. All of these factors coupled with a successful cost containment
program have positively impacted the Company's operating margins. However,
the Company is still subject to considerable uncertainty due to the
instability of oil and gas prices, decreased demand for contract drilling
services and intense competition which is prevalent in the contract
drilling industry.
-16-
<PAGE> 17
PART TWO - OTHER INFORMATION
Item 1. Legal Proceedings
On March 19, 1992, the Company was notified by the Texas Department of
Insurance that the Company's former workers' compensation insurance
carriers, Sir Lloyd's Insurance Company and its affiliate, Standard
Financial Indemnity Corporation ("SFIC"), had been placed in liquidation by
order of the 201st District Court of Travis County, Texas on March 12, 1992
in Cause No. 92-12765, The State of Texas vs. Sir Lloyd's Insurance Company
and Sir Insurance Agency, Inc., and in Cause No. 91-12766, The State of
Texas vs. Standard Financial Indemnity Corporation. Approximately two
months before being ordered into liquidation, SFIC requested that the
Company pay policy premiums in the amount of $646,476. On July 22, 1993
the special deputy receiver of SFIC billed the Company approximately
$1,061,000 for retrospective premiums, but adjusted the amount to $854,153
on January 12, 1994. Although the Company disputes the amount claimed by
SFIC and its receiver, the Company is presently unable to determine whether
and to what extent such amount is, in fact, an accurate estimate of amounts
owed to SFIC, if any, largely as a result of the difficulty of verifying
the insurance carrier's estimated claims and adjustments and the
unavailability of SFIC personnel. However, an accrual was made in the
Company's financial statements for the amount in question.
In a related development, on November 3, 1995, the Company was
notified that a lawsuit had been filed in Travis County, Texas styled Texas
Property and Casualty Insurance Guaranty Association vs. TMBR/Sharp
Drilling, Inc. (Cause No. 95-12318). The Texas Property and Casualty
Insurance Guaranty Association ("Guaranty Association") seeks a recovery of
past workers' compensation claims advanced by the Guaranty Association
related to the Company's workers compensation insurance program with SFIC.
The Guaranty Association is seeking to recover a total of $803,057.11.
The Company disagrees with the claims made by the Guaranty Association
and intends to vigorously defend this lawsuit. The Company believes that
if the Guaranty Association's claim is ultimately determined to be valid
and enforceable, then the Receiver's claim against the Company is either
without merit or that its claim would be offset against the claims of the
Guaranty Association. For these reasons, the Company has not accrued the
Guaranty Association's claim in its financial statements.
-17-
<PAGE> 18
Item 4. Submission of matters to a vote of security holders.
The Company's annual meeting of stockholders was held on August 31,
1995. At the meeting, the following persons were elected to serve as
Directors of the Company until the 1996 annual meeting of stockholders and
until their respective successors are duly qualified and elected: (1)
Thomas C. Brown, (2) Donald L. Evans, (3) David N. Fitzgerald and (4) Joe
G. Roper.
Set forth below is a tabulation of votes with respect to each nominee
for Director:
<TABLE>
<CAPTION>
Votes Votes
Cast Cast Votes Broker
Name For Against Withheld Abstentions Non-Votes
---- ----- ------- -------- ----------- ---------
<S> <C> <C> <C> <C> <C>
Thomas C. Brown 2,860,413 2,259 -- -- --
Donald L. Evans 2,860,413 2,259 -- -- --
David N. Fitzgerald 2,860,399 2,273 -- -- --
Joe G. Roper 2,860,403 2,269 -- -- --
</TABLE>
No other matters were voted upon at the annual meeting.
Item 6. Exhibits and reports on Form 8-K.
(a) Exhibits:
27 - Financial Data Schedule
(b) Reports on Form 8-K:
No reports on Form 8-K were filed during the quarter ended
September 30, 1995.
-18-
<PAGE> 19
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.
<TABLE>
<S> <C>
TMBR/SHARP DRILLING, INC.
(Registrant)
November 8, 1995 /s/ Patricia R. Elledge
---------------- --------------------------
Date Patricia R. Elledge
Controller/Treasurer
(Ms. Elledge is the Chief Financial
Officer and has been duly authorized
to sign on behalf of the Registrant)
</TABLE>
-19-
<PAGE> 20
Exhibit Index
<TABLE>
<CAPTION>
Exhibit
Number Description
------- -----------
<S> <C>
27 Financial Data Schedule
</TABLE>
-20-
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1995
<PERIOD-END> SEP-30-1995
<CASH> 639
<SECURITIES> 0
<RECEIVABLES> 4454
<ALLOWANCES> 1225
<INVENTORY> 43
<CURRENT-ASSETS> 4467
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