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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-Q
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(Mark One)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED NOVEMBER 30, 1994
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
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COMMISSION FILE NUMBER 1-7573
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PARKER DRILLING COMPANY
(Exact name of registrant as specified in its charter)
Delaware 73-0618660
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
Parker Building, Eight East Third Street, Tulsa, Oklahoma 74103
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(Address of principal executive offices) (zip code)
Registrant's telephone number, including area code (918) 585-8221
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Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No
As of December 31, 1994, 55,129,888 common shares were outstanding.
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PARKER DRILLING COMPANY
INDEX
<CAPTION>
<S> <C>
Part I. Financial Information Page No.
Consolidated Condensed Balance Sheets (Unaudited) -
November 30, 1994 and August 31, 1994 2
Consolidated Condensed Statements of Operations (Unaudited) -
Three Months Ended November 30, 1994 and
November 30, 1993 3
Consolidated Condensed Statements of Cash Flows (Unaudited) -
Three Months Ended November 30, 1994 and 4
November 30, 1993
Notes to Unaudited Consolidated Condensed
Financial Statements 5
Report of Review by Independent Accountants 6
Management's Discussion and Analysis of Financial
Condition and Results of Operations 7 - 8
Part II. Other Information
Item 6, Exhibits and Reports on Form 8-K 9
Signatures 10
Exhibit 15, Letter Re Unaudited Interim 11
Financial Information
Exhibit 27, Financial Data Schedule
</TABLE>
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<TABLE>
PART 1. FINANCIAL INFORMATION
PARKER DRILLING COMPANY AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(Dollars in Thousands)
(Unaudited)
<CAPTION>
November 30, August 31,
1994 1994
ASSETS ---------- ----------
------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 19,697 $ 10,660
Other short-term investments 3,825 3,811
Accounts and notes receivable 28,955 34,675
Rig materials and supplies 9,201 9,117
Other current assets 4,703 4,029
-------- --------
Total current assets 66,381 62,292
Property, plant and equipment less accumulated
depreciation, depletion and amortization of
$439,587 at November 30, 1994, and $454,763
at August 31, 1994 122,689 127,178
Other noncurrent assets 18,292 19,878
-------- --------
Total assets $207,362 $209,348
-------- --------
-------- --------
</TABLE>
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
-------------------------------------
<S> <C> <C>
Current liabilities:
Current portion of long-term debt $ 264 $ -
Accounts payable and accrued liabilities 15,584 16,569
Accrued income taxes 5,057 5,053
-------- --------
Total current liabilities 20,905 21,622
-------- --------
Long-term debt 1,586 -
Deferred income tax 294 294
Other long-term liabilities 3,672 3,596
Minority interest 665 3,253
Common stock, $.16 2/3 par value 9,187 9,185
Capital in excess of par value 202,455 202,403
Retained earnings (accumulated deficit) (29,400) (28,307)
Other (2,002) (2,698)
-------- --------
Total stockholders equity 180,240 180,583
-------- --------
Total liabilities and stockholders' equity $207,362 $209,348
-------- --------
-------- --------
See accompanying notes to consolidated condensed financial statements.
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<TABLE>
PARKER DRILLING COMPANY AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(Dollars in Thousands Except Per Share Amounts)
(Unaudited)
<CAPTION>
Three Months Ended
November 30,
-------------------
1994 1993
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<S> <C> <C>
Revenue:
Drilling contracts $ 32,055 $39,396
Other 1,228 647
-------- -------
Gross operating revenue 33,283 40,043
-------- -------
Operating expense:
Drilling 24,769 27,994
Other 1,450 1,084
Depreciation, depletion and
amortization 5,506 4,922
General and administrative 5,015 4,049
-------- -------
36,740 38,049
-------- -------
Operating income (loss) (3,457) 1,994
-------- -------
Other income and (expense):
Interest expense (2) (3)
Interest income 260 357
Other income (expense) - net 2,901 40
-------- -------
3,159 394
-------- -------
Income (loss) before income taxes (298) 2,388
-------- -------
Income tax expense 795 780
-------- -------
Net income (loss) (1,093) 1,608
-------- -------
Earnings (loss) per share,
primary and fully diluted $ (.02) $ .03
-------- -------
Number of common shares used in -------- -------
computing earnings (loss) per share
Primary 54,518,336 54,490,360
---------- ----------
---------- ----------
Fully diluted 54,518,336 54,511,673
---------- ----------
---------- ----------
See accompanying notes to consolidated condensed financial statements.
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/TABLE
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<TABLE>
PARKER DRILLING COMPANY AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
Increase (Decrease) in Cash and Cash Equivalents
(Dollars in Thousands)
(Unaudited)
<CAPTION>
Three Months Ended
November 30,
--------------------
1994 1993
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<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $(1,093) $ 1,608
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Depreciation, depletion and amortization 5,506 4,922
Expenses not requiring cash (939) 910
Change in operating assets and liabilities 4,607 (6,607)
Other-net (1,144) (83)
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Net cash provided by operating activities 6,937 750
------- -------
Cash flows from investing activities:
Capital expenditures (3,183) (9,967)
Proceeds from the sale of equipment 4,604 171
Decrease (increase) in short-term
investments (14) 10,803
Other-net 786 -
------- -------
Net cash provided by investing
activities 2,193 1,007
------- -------
Cash flows from financing activities:
Other (93) (312)
------- -------
Net cash provided (used) by financing
activities (93) (312)
------- -------
Net increase in cash and cash equivalents 9,037 1,445
Cash and cash equivalents at
beginning of period 10,660 12,570
------- -------
Cash and cash equivalents at
end of period $19,697 $14,015
------- -------
------- -------
Supplemental disclosure:
Interest paid $ 2 $ 3
Taxes paid $ 791 $ 526
Supplemental noncash financing activity:
In November, 1994, the Company acquired a limited partner's ownership
interest in two consolidated partnerships in exchange for a promissory
note in the amount of $1,850,000.
See accompanying notes to consolidated condensed financial statements.
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/TABLE
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PARKER DRILLING COMPANY AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
1. In the opinion of the Company, the accompanying unaudited consolidated
condensed financial statements reflect all adjustments (of a normally
recurring nature) which are necessary for a fair presentation of (1) the
financial position as of November 30, 1994 and August 31, 1994, (2) the
results of operations for the three months ended November 30, 1994 and
November 30, 1993, and (3) cash flows for the three months ended November
30, 1994 and November 30, 1993. Results for the three months ended
November 30, 1994, are not necessarily indicative of the results which
will be realized for the year ending August 31, 1995. The year-end
consolidated condensed balance sheet data was derived from audited
financial statements, but does not include all disclosures required by
generally accepted accounting principles. The financial statements should
be read in conjunction with the Company's Form 10-K for the year ended
August 31, 1994.
The Company reclassified division office expenses of $1,913,000 and
$1,762,000 from general and administrative expense to either drilling or
other operating expense for the three months ended November 30, 1994 and
1993 respectively.
2. Earnings per common share is based on the weighted average number of
common shares and common share equivalents outstanding during the period.
Common shares granted under the 1969 Key Employee Stock Grant Plan, 1980
Incentive Career Stock Plan and the 1991 Stock Grant Plan are issued and
outstanding but are not considered in the computation of weighted average
shares outstanding until the restrictions lapse. However, they are
considered common stock equivalents.
3. In November 1994 the Company acquired a limited partner's ownership
interest in two consolidated partnerships, PCA I Limited ("PCA I") and PCA
II Limited ("PCA II"), in exchange for a promissory note of $1.8 million.
Through this transaction the Company acquired all of the limited
partnership interest in PCA I and the Partnership was dissolved.
The acquisition was accounted for under the purchase method of accounting.
The estimated fair value of the net assets acquired exceeded the cost of
acquisition. After the net book value of long-term assets acquired was
written down to zero, negative goodwill of $1.2 million was recorded.
This negative goodwill is being amortized on the straight-line basis over
3 years, which is the remaining estimated useful lives of the assets
acquired.
The promissory note is payable in seven equal annual installments
beginning November 1995, with interest at 5 3/4%.
In December 1994, the Company acquired the remaining limited partnership
interest in PCA II and dissolved the partnership.
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Report of Independent Accountants
To the Board of Directors and Shareholders
Parker Drilling Company
We have reviewed the consolidated condensed balance sheet of Parker
Drilling Company and subsidiaries as of November 30, 1994, and the related
consolidated condensed statements of operations for the three month periods
ended November 30, 1994 and 1993 and consolidated condensed statements of cash
flows for the three month periods ended November 30, 1994 and 1993. These
financial statements are the responsibility of the Company's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures
to financial data and making inquiries of persons responsible for financial
and accounting matters. It is substantially less in scope than an audit
conducted in accordance with generally accepted auditing standards, the
objective of which is the expression of an opinion regarding the financial
statements taken as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that
should be made to the condensed consolidated financial statements referred to
above for them to be in conformity with generally accepted accounting
principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet as of August 31, 1994, and the
related consolidated statements of operations, redeemable preferred stock and
stockholders' equity and cash flows for the year then ended (not presented
herein); and in our report, dated October 18, 1994, we expressed an
unqualified opinion on those consolidated financial statements. In our
opinion, the information set forth in the accompanying condensed consolidated
balance sheet as of August 31, 1994, is fairly stated in all material respects
in relation to the consolidated balance sheet from which it has been derived.
COOPERS & LYBRAND L.L.P.
Tulsa, Oklahoma
January 12, 1995
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
- ---------------------
The Company's net loss of $1.1 million for the first quarter of fiscal
1995 represented a decline of $2.7 million from fiscal 1994's first quarter
net income of $1.6 million. The decline was primarily attributable to a
decline in drilling margin and an increase in general and administrative
expense, partially offset by an increase in other income.
Drilling revenue in the first quarter of fiscal 1995 was $32.1 million, a
decline of $7.3 million from the first quarter of fiscal 1994. International
utilization for the first quarter of fiscal 1995 was 53% compared to 61% in
the first quarter of fiscal 1994 and overall utilization declined from 44% to
39%. (Fiscal 1994 utilization has been adjusted to reflect rigs removed from
the rig fleet at the end of fiscal 1994.)
Western Hemisphere international drilling revenue in the first quarter of
fiscal 1995 increased $5.1 million over the comparable period of the prior
year. The increase in revenue was the result of an increase in utilization in
Colombia and an increase in the number of operating rigs in the country of
Argentina. This increase was partially offset by a decline in utilization in
Ecuador and Peru.
Drilling revenue from operations in Africa, the Middle East and
Commonwealth of Independent States ("CIS") declined a combined $7.1 million in
the first quarter of fiscal 1995 when compared to the first quarter of fiscal
1994. In fiscal 1994 the Company completed one rig contracts in the Congo and
Yemen and both of these rigs have been redeployed to the Argentina market. In
addition, during the first quarter of fiscal 1994 the Company had two workover
rigs operating in the Russian Republic. These rigs completed their contracts
in fiscal 1994 and were redeployed to the country of Kazakhstan in the first
quarter of fiscal 1995.
International drilling revenue from operations in Asia and the Pacific
declined $2.3 million due primarily to a decline in utilization in Papua New
Guinea. Domestic drilling revenue declined $3.1 million as the Company's
specialized arctic rig did not operate during the first three months of fiscal
1995. This rig resumed operations again at the beginning of the second
quarter of fiscal 1995.
Drilling margin (drilling revenue less drilling expense) as a percent of
drilling revenue was 23% for the first three months of fiscal 1995 compared to
29% for the same period of fiscal 1994. The primary reason for the decline is
operations in Argentina where the Company has encountered drilling problems
which have resulted in slower-than-expected drilling progress on some of the
footage rate contracts. Management continues to take steps to resolve the
drilling problems and improve drilling margins in this country.
Depreciation expense increased $.6 million, the result of an increase in
the level of capital expenditures during fiscal 1994. General and
administrative expense increased $1.0 million due primarily to an increase in
the amortization of deferred compensation and an increase in legal expense.
Other income (expense) in the first quarter of fiscal 1995 increased $2.8
million as the Company recognized a $1.5 million gain on reversal of a prior
years foreign currency accrual. In addition, gain on sale of fixed assets
increased $1.1 million over the first quarter of fiscal 1994. Income tax
expense consists primarily of foreign income taxes.
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LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
During the first three months of fiscal 1995, cash generated from
operations and sale of fixed assets were the primary reasons for an increase
of $9.1 million in cash and other short-term investments. Proceeds from the
sale of fixed assets included $2.9 million from the sale of one domestic and
one international rig.
Capital expenditures in the first quarter of fiscal 1995 totalled $3.2
million. The Company's capital spending is below fiscal 1994 levels
reflecting a decline in international activity. Management currently
forecasts capital expenditures for fiscal 1995 to be approximately $14.0
million. In the event the Company obtains additional contracts that require
the purchase or construction of new or specialized rigs, or significant
modifications to existing rigs, capital expenditures could increase further.
Any significant increase in capital expenditures would be subject to any
restrictions imposed on the Company as specified below.
The Company has a credit agreement with a bank which provides for a $7.5
million revolving credit facility, all of which was available for drawdown as
of November 30, 1994. The credit agreement, which expires March 1, 1996,
contains restrictions on annual capital expenditures and certain senior and
subordinated indebtedness which can be incurred by Parker Drilling Company and
certain subsidiaries designated in the credit agreement. These designated
subsidiaries comprise the operating subsidiaries through which the Company
performs the majority of its drilling operations. The credit facility also
limits payment of dividends on the Company's common stock to the lesser of 40%
of consolidated net income for the preceding year, or $2.6 million. The
remaining subsidiaries of the Company are not a party to the credit facility
and are able to make capital expenditures and obtain independent financing
from lenders that have no recourse to Parker Drilling Company and the
designated subsidiaries, subject only to an overall limitation of
indebtedness.
The restrictions in the credit agreement are not anticipated to restrict
growth or investment opportunities in the foreseeable future.
In November 1994, the Company acquired a limited partner's ownership
interest in two consolidated partnerships in exchange for a promissory note
totalling $1.8 million. (See Note 3 of Notes to Unaudited Consolidated
Condensed Financial Statements.) The promissory note is payable in seven
equal annual installments beginning November 1995, with interest at 5 3/4%.
Management believes that the current level of cash and short-term
investments, together with cash generated from operations, should be
sufficient to meet the company's immediate capital needs. However, in the
event the Company obtains additional contracts requiring further significant
capital expenditures or acquires equipment or companies in the drilling
service industry, management believes the Company would likely meet both
short-term and long-term capital needs through a combination of cash generated
from operations, borrowings under the bank credit agreement and either equity
or long-term debt financing.
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PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a)Exhibits:
Page
Exhibit 15 Letter re Unaudited Interim Financial Information 11
Exhibit 27 Financial Data Schedule
(b)Reports on Form 8-K - There were no reports on Form 8-K filed
during the three months ended November 30, 1994.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Parker Drilling Company
-----------------------
Registrant
Date: January 12, 1995
By: /s/James J. Davis
-----------------------------
James J. Davis
Vice President, Finance and
Chief Financial Officer
By: /s/Randy Ellis
-----------------------------
Randy Ellis
Controller and
Chief Accounting Officer
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Exhibit 15
January 12, 1995
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 10549
Re: Parker Drilling Company
Registration on Form S-8
We are aware that our report dated January 12, 1995, on our review of the
interim financial information of Parker Drilling Company for the period ended
November 30, 1994, and included in this Form 10-Q is incorporated by reference
in the Company's registration statements on Form S-8 (File No. 2-87944, 33-
24155 and 33-56698). Pursuant to Rule 436(c) under the Securities Act of
1933, this report should not be considered a part of the registration
statement prepared or certified by us within the meaning of Section 7 and 11
of that Act.
COOPERS & LYBRAND L.L.P.
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<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED CONDENSED BALANCE SHEET AS OF NOVEMBER 30,1994 AND THE CONSOLIDATED
CONDENSED STATEMENT OF OPERATIONS FOR THE THREE MONTHS ENDED NOVEMBER 30,1994
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
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<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> AUG-31-1995
<PERIOD-END> NOV-30-1994
<CASH> 19697
<SECURITIES> 3825
<RECEIVABLES> 29781
<ALLOWANCES> 826
<INVENTORY> 0
<CURRENT-ASSETS> 66381
<PP&E> 562276
<DEPRECIATION> 439587
<TOTAL-ASSETS> 207362
<CURRENT-LIABILITIES> 20905
<BONDS> 1586
<COMMON> 9187
0
0
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<TOTAL-LIABILITY-AND-EQUITY> 207362
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<TOTAL-REVENUES> 33283
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<NET-INCOME> (1093)
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</TABLE>
