<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 11, 1996.
REGISTRATION STATEMENT NO. 333-04779
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- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
---------------------
PARKER DRILLING COMPANY
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
DELAWARE 1380 76-0618660
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification Number)
8 EAST THIRD STREET JAMES J. DAVIS
TULSA, OKLAHOMA 74103 8 EAST THIRD STREET
(918) 585-8221 TULSA, OKLAHOMA 74103
(Address, including zip code, (918) 585-8221
and telephone number, (Name, address, including zip code,
including area code, of registrant's principal and telephone number,
executive offices) including area code, of agent for
service)
</TABLE>
Copies to:
<TABLE>
<S> <C>
P. DAVID NEWSOME, JR., ESQ. GEORGE W. BILICIC, JR., ESQ.
CONNER & WINTERS, A PROFESSIONAL CORPORATION CRAVATH, SWAINE & MOORE
2400 FIRST PLACE TOWER, 15 EAST 5TH STREET WORLDWIDE PLAZA, 825 EIGHTH AVENUE
TULSA, OKLAHOMA 74103 NEW YORK, NEW YORK 10019
(918) 586-5711 (212) 474-1000
</TABLE>
---------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the Registration Statement becomes effective.
---------------------
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, please check the following box. / /
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act of 1933, check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / / ________________
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act of 1933, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. / / ________________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
---------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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<PAGE> 2
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.
PROSPECTUS SUBJECT TO COMPLETION, DATED JUNE 11, 1996
[LOGO] 7,000,000 SHARES
PARKER DRILLING COMPANY
COMMON STOCK
-----------------------
All of the shares of Common Stock offered hereby are being sold by Parker
Drilling Company (the "Company"). The Common Stock is listed on the New York
Stock Exchange under the symbol PKD. On June 10, 1996, the last reported sale
price of the Common Stock on the New York Stock Exchange was $6.75 per share.
See "Price Range of Common Stock and Dividends."
---------------------
SEE "RISK FACTORS" BEGINNING ON PAGE 7 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS.
---------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<S> <C> <C> <C>
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC DISCOUNT(1) COMPANY(2)
------------------------------------------------------
Per Share............................... $ $ $
Total(3)................................ $ $ $
</TABLE>
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(1) The Company has agreed to indemnify the several Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933. See
"Underwriting."
(2) Before deducting expenses payable by the Company estimated to be
$ .
(3) The Company has granted the several Underwriters a 30-day option to purchase
up to an additional 1,050,000 shares of Common Stock on the same terms and
conditions as set forth above solely to cover over-allotments, if any. If
such option is exercised in full, the total Price to Public, Underwriting
Discount and Proceeds to Company will be $ , $ , and
$ , respectively. See "Underwriting."
------------------
The shares of Common Stock are being offered by the several Underwriters
subject to prior sale, when, as and if issued to and accepted by the
Underwriters. The Underwriters reserve the right to reject orders in whole or in
part. It is expected that delivery of the shares of the Common Stock will be
made against payment therefor in New York, New York, on or about ,
1996.
------------------
JEFFERIES & COMPANY, INC.
PRUDENTIAL SECURITIES INCORPORATED
SCHRODER WERTHEIM & CO.
, 1996
<PAGE> 3
[For EDGAR filing] Information contained herein is subject to completion or
amendment. A registration statement relating to these securities has been filed
with the Securities and Exchange Commission. These securities may not be sold
nor may offers to buy be accepted prior to the time the registration statement
becomes effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
<PAGE> 4
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMPANY'S
COMMON STOCK AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE OR
OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, files reports, proxy and information statements and other information
with the Securities and Exchange Commission (the "Commission"). Such reports,
proxy and information statements and other information can be inspected and
copied at the public reference facilities maintained by the Commission at
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the
following regional offices of the Commission: Seven World Trade Center, Suite
1300, New York, New York 10048 and Citicorp Center, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661-2511. Copies of such materials can be
obtained by mail from the Public Reference Section of the Commission, at
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed
rates. Such reports, proxy and information statements and other information can
also be inspected and copied at the offices of the New York Stock Exchange, 20
Broad Street, New York, New York 10005.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, filed with the Commission by the Company pursuant
to the Exchange Act, are incorporated herein by reference and made a part of
this Prospectus:
(i) the Company's Annual Report on Form 10-K for the fiscal year ended
August 31, 1995;
(ii) the Company's Quarterly Reports on Form 10-Q for the quarters
ended November 30, 1995 and February 29, 1996; and
(iii) the description of the Common Stock contained in the Company's
registration statement on Form 8-A, dated June 16, 1969, including any
amendment or report heretofore or hereafter filed for the purpose of
updating the description of the Common Stock contained therein.
Each document filed by the Company pursuant to Sections 13(a), 13(c), 14
and 15(d) of the Exchange Act subsequent to the date of this Prospectus and
prior to the termination of this Offering shall be deemed to be incorporated by
reference in this Prospectus and to be a part hereof from the date of filing of
such document. Any statement contained in a document incorporated or deemed to
be incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained in this
Prospectus or in any other subsequently filed document which also is or is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any statement so modified or superseded shall not be deemed, except
as so modified or superseded, to constitute a part of this Prospectus.
THE COMPANY WILL PROVIDE WITHOUT CHARGE TO EACH PERSON TO WHOM A COPY OF
THIS PROSPECTUS IS DELIVERED, ON THE REQUEST OF ANY SUCH PERSON, A COPY OF ANY
OR ALL OF THE FOREGOING DOCUMENTS INCORPORATED HEREIN BY REFERENCE, OTHER THAN
EXHIBITS TO SUCH DOCUMENTS (UNLESS SUCH EXHIBITS ARE SPECIFICALLY INCORPORATED
BY REFERENCE IN SUCH DOCUMENTS). WRITTEN OR TELEPHONE REQUESTS FOR SUCH COPIES
SHOULD BE DIRECTED TO PUBLIC RELATIONS DEPARTMENT, PARKER DRILLING COMPANY, 8
EAST THIRD STREET, TULSA, OKLAHOMA 74103, TELEPHONE (918) 585-8221.
2
<PAGE> 5
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information and consolidated financial statements (including the notes thereto)
included elsewhere in this Prospectus or incorporated by reference herein.
Unless otherwise indicated, the information in this Prospectus assumes the
Underwriters' over-allotment option with respect to the sale of the Common Stock
will not be exercised. References to "Parker" or the "Company" in this
Prospectus include Parker Drilling Company and, unless the context otherwise
requires, its subsidiaries.
THE COMPANY
GENERAL
Parker Drilling Company is a leading provider of land contract drilling
services on a worldwide basis to major, independent and foreign national oil
companies. Since its inception in 1934, the Company has provided drilling
services throughout the United States and 46 foreign countries, giving it the
broadest geographical representation of any land drilling contractor. Currently,
the Company has 46 international rigs in 13 countries and 17 rigs in the United
States. The Company specializes in the drilling of deep and difficult wells and
drilling in remote and harsh environments. Parker also provides a range of
services that are ancillary to its principal drilling services, including
engineering, logistics and construction, as well as various types of project
management.
Internationally, the Company is focused primarily in South America and the
Asia Pacific region where it specializes in drilling that often requires
equipment specially designed to be transported by helicopter, barge or other
vehicles into difficult access areas such as jungle, mountainside or desert
locations. Parker's 23 heli-rigs, with technologically advanced pumps and power
generation systems that are capable of drilling difficult wells in excess of
15,000 feet, have established Parker as the dominant operator in the heli-rig
market. The Company has also historically been a pioneer in new markets or
"frontier areas" such as China, the republics of the former Soviet Union, and
more recently, Vietnam. International operations accounted for approximately 82%
of Parker's fiscal 1995 revenues. Domestically, the Company operates primarily
in the Rocky Mountain, Mid-Continent and Gulf Coast regions and the arctic
region of Alaska. Within the lower 48 states, Parker traditionally has
specialized in the drilling of deep gas wells, often in excess of 20,000 feet.
Domestic operations provided approximately 18% of the Company's fiscal 1995
revenues.
The Company has developed an international reputation for providing
efficient, quality drilling services. This reputation has allowed Parker to
develop relationships with certain major and national oil companies, many of
which the Company believes are increasingly seeking to establish preferred
contractor relationships or alliances. Management believes that these
relationships may result in longer term work and improved operating results for
the Company.
INDUSTRY OVERVIEW
In recent years, many major and independent oil companies have directed a
greater portion of their exploration budgets to foreign markets. This is
particularly true in South America and the Asia Pacific region, where the demand
for land rigs has increased significantly. The Company has benefitted from this
trend due to its long-standing presence in these markets and has been able to
deploy rigs under longer term contracts at higher dayrates and operating margins
than domestic operations. Management believes that the demand for drilling
services in international markets will continue to grow as demand for oil and
gas increases in developing countries and as countries dependent on oil and gas
revenues seek to increase their production. The Company intends to capitalize on
its global presence and substantial international experience to pursue growth
opportunities in both current and developing markets.
In the U.S., the land drilling industry is characterized by an oversupply
of rigs and a large number of competitors, which has resulted in lower
utilization and profitability for many drilling contractors. Over the past year,
however, increasing gas prices in certain areas of the U.S. have led to a marked
increase in drilling in such regions. In addition, the U.S. land drilling market
has undergone significant consolidation. Parker
3
<PAGE> 6
believes that the activity in U.S. markets will improve over time due to the
growing dependency by the U.S. on volatile foreign energy sources and the
abundance of U.S. natural gas.
BUSINESS STRATEGY
The Company's traditional business strategy has been to focus on domestic
and international markets that require the drilling of deep and difficult wells
and wells in remote areas of difficult access. The Company has pursued this
strategy by providing quality service and equipment to its customers. In 1995,
the Company refined its business strategy to adapt to changing market conditions
and build on its traditional strengths. The Company's current strategy is to:
(i) expand its presence in core markets and enter new productive markets; (ii)
increase the provision of integrated services; (iii) seek acquisitions of
complementary businesses; and (iv) further streamline operations by reducing
operating costs and eliminating non-productive assets.
Expand Core Markets and Enter New Markets
The Company has redeployed a portion of its rig fleet to concentrate its
activities and increase critical mass in its core markets worldwide. The Company
transferred rigs from Yemen, Italy, the Congo, Indonesia and the U.S. to more
active markets in Colombia and in northern and western Argentina. In the
geothermal market, Parker strengthened its position by moving a rig to New
Zealand and is currently moving two rigs to Indonesia. The Company has expanded
its role as a provider of technical expertise through a joint venture agreement
in China and a labor services agreement in Russia. Domestically, the Company has
moved three deep drilling rigs into the active Gulf Coast market.
The recent growth in drilling activity in certain markets in South America,
the Asia Pacific region and Africa has created significant growth opportunities
for the Company. In response to these recent trends, the Company intends to
increase its level of activity in countries in these regions where it currently
operates and to aggressively market additional rigs in countries such as
Venezuela and Algeria.
Increase Provision of Integrated Services
To complement its drilling services, the Company provides integrated
services, which include logistics, engineering, construction and other ancillary
services as well as various types of project management for oil and gas drilling
operations. The Company has entered into agreements for the provision of
engineering services for drilling programs in Argentina and the provision of
specialized services for the construction and mobilization of two rigs on
offshore platforms in connection with a labor contract in the South China Sea.
As oil and gas companies continue to reduce overhead, the Company believes that
opportunities will increase for it to generate revenue by providing services
ancillary to its drilling services without incurring significant capital
expenditures.
Acquisitions of Complementary Businesses
There has been a significant consolidation in the oil service industry as
companies have sought to increase market share and diversify and expand the
scope of services they offer. During 1995, Parker formally engaged the services
of an investment banking firm to assist in identifying and pursuing acquisition
candidates that would allow the Company to provide a broader range of drilling
and related oil field services to its customers. The Company intends to actively
pursue opportunities for growth and diversification within the industry.
Streamline Operations
As part of its efforts to further streamline operations and reduce costs,
the Company closed offices and other facilities in Oklahoma City, Ecuador and
Yemen and reduced overhead in southern Argentina. Certain excess worldwide
equipment and inventories and domestic real estate have been sold. In addition,
over the last 12 months, Parker reduced its rig fleet by 33 rigs. As a result of
these steps, the Company expects to realize annual cost savings, including
depreciation, of approximately $5 million.
4
<PAGE> 7
THE OFFERING
Common Stock Offered................. 7,000,000 shares
Common Stock Outstanding:
Before the Offering(1)............. 56,219,291 shares
After the Offering(1).............. 63,219,291 shares
Use of Proceeds...................... The net proceeds to the Company from
the sale of the Common Stock offered
hereby are estimated to be
approximately $44.2 million. The
Company intends to use such net
proceeds to fund its current and
planned capital expenditure program.
The Company intends to utilize any
balance of the net proceeds from this
offering, in conjunction with the
Company's cash balances, available
bank borrowings and cash flow from
operations, to fund the balance of
its capital expenditure requirements,
to facilitate the acquisition of oil
service related businesses or for
other general corporate purposes. See
"Use of Proceeds."
New York Stock Exchange Symbol....... PKD
- ---------------
(1) Excludes, as of April 30, 1996, (i) 30,000 shares of Common Stock issuable
upon exercise of outstanding options under the Company's 1994 Non-Employee
Director Stock Option Plan, and (ii) 823,348 shares of Common Stock issuable
upon exercise of options outstanding under the Company's 1994 Executive
Stock Option Plan.
5
<PAGE> 8
SUMMARY OF CONSOLIDATED FINANCIAL DATA
The following table presents for the periods indicated certain historical
consolidated financial data for the Company. The following information should be
read together with "Selected Consolidated Financial Data," "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
the consolidated financial statements and notes thereto included elsewhere in
this Prospectus. The results for the six months ended February 29, 1996 are not
necessarily indicative of results for the full year.
<TABLE>
<CAPTION>
SIX MONTHS ENDED
--------------------------- YEAR ENDED AUGUST 31,
FEBRUARY 29, FEBRUARY 28, ----------------------------------------------------
1996 1995 1995 1994 1993 1992 1991
------------ ------------ -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
STATEMENT OF OPERATIONS DATA:
Revenues...................... $ 80,639 $ 72,021 $157,371 $152,424 $100,801 $123,332 $112,818
-------- -------- -------- -------- -------- -------- --------
Operating expense:
Drilling and other.......... 56,807 54,532 118,060 121,295 75,188 82,203 85,463
Depreciation, depletion and
amortization.............. 10,712 10,926 21,643 21,950 20,400 20,550 14,712
General and
administrative............ 10,628 10,155 19,165 18,314 17,593 18,385 15,440
Provision for reduction in
carrying value of certain
assets.................... -- -- -- 19,718 -- 19,257 3,268
-------- -------- -------- -------- -------- -------- --------
78,147 75,613 158,868 181,277 113,181 140,395 118,883
-------- -------- -------- -------- -------- -------- --------
Operating income (loss)....... 2,492 (3,592) (1,497) (28,853) (12,380) (17,063) (6,065)
Other income and (expense).... 2,521 3,823 8,597 1,934 1,356 8,692 9,668
-------- -------- -------- -------- -------- -------- --------
Income (loss) from continuing
operations before income
taxes....................... 5,013 231 7,100 (26,919) (11,024) (8,371) 3,603
Income tax expense
(benefit)................... 2,775 1,255 3,184 1,887 (337) 2,795 1,626
-------- -------- -------- -------- -------- -------- --------
Income (loss) from continuing
operations.................. 2,238 (1,024) 3,916 (28,806) (10,687) (11,166) 1,977
Discontinued
operations -- gain on
disposal (net of taxes)..... -- -- -- -- -- -- 1,184
-------- -------- -------- -------- -------- -------- --------
Net income (loss)............. 2,238 (1,024) 3,916 (28,806) (10,687) (11,166) 3,161
Preferred stock dividends... -- -- -- -- 6 18 25
-------- -------- -------- -------- -------- -------- --------
Earnings (loss) applicable to
common stock................ $ 2,238 $ (1,024) $ 3,916 $(28,806) $(10,693) $(11,184) $ 3,136
======== ======== ======== ======== ======== ======== ========
Weighted average shares
outstanding................. 55,950 54,611 55,333 54,248 53,082 52,115 52,189
EARNINGS (LOSS) PER COMMON
SHARE:
Income (loss) from
continuing operations..... .04 (.02) .07 (.53) (.20) (.21) .04
Net income (loss)........... .04 (.02) .07 (.53) (.20) (.21) .06
OTHER OPERATING DATA:
EBITDA(1)..................... $ 14,048 $ 8,706 $ 22,248 $ 14,111 $ 10,996 $ 25,376 $ 12,787
</TABLE>
<TABLE>
<CAPTION>
AS OF FEBRUARY 29, 1996
---------------------------
ACTUAL AS ADJUSTED(2)
-------- --------------
<S> <C> <C>
BALANCE SHEET DATA (UNAUDITED):
Total assets............................................................... $222,466 $266,617
Working capital............................................................ 53,454 97,605
Total debt................................................................. 1,762 1,762
Total stockholders' equity................................................. 191,783 235,934
</TABLE>
- ---------------
(1) EBITDA represents operating income (loss) before depreciation, depletion,
amortization and certain other non-cash charges. EBITDA is frequently used
by securities analysts and is presented here to provide additional
information about the Company's operations. EBITDA is not a measurement
presented in accordance with generally accepted accounting principles.
EBITDA should not be considered in isolation or as a substitute for net
income, cash flow provided by operating activities or other income or cash
flow data prepared in accordance with generally accepted accounting
principles or as a measure of a company's profitability or liquidity.
(2) Reflects the issuance of 7,000,000 shares of Common Stock by the Company at
an assumed public offering price of $6.75 per share, resulting in estimated
net proceeds of $44.2 million.
6
<PAGE> 9
RISK FACTORS
Prospective purchasers of the Common Stock offered hereby should carefully
consider the following risk factors, as well as the other information set forth
in this Prospectus.
INDUSTRY CONDITIONS; IMPACT ON COMPANY'S OPERATING RESULTS
The Company's revenues and earnings are affected directly by the worldwide
level of oil and gas exploration and development activity. The level of such
activity is affected by many factors over which the Company has no control,
including, among others, the market prices of oil and gas, the volatility of
such prices, the levels of production by, and other activities of, the
Organization of Petroleum Exporting Countries and other oil and gas producers,
governmental regulation and trade restrictions, the level of worldwide economic
activity, political stability in major oil producing areas, the development of
alternate energy sources and the long-term effect of worldwide energy
conservation measures. Since the early 1980's, the contract drilling business
has been severely impacted by the decline and continued instability in the
prices of oil and natural gas. Substantial uncertainty exists as to the future
level of oil and gas drilling activity.
RISKS OF INTERNATIONAL OPERATIONS
A major portion of the Company's operations are conducted in international
markets, including significant operations in South America and the Asia Pacific
region. International activities accounted for approximately 78% and 82% of the
Company's operating revenues for the six months ended February 29, 1996 and year
ended August 31, 1995, respectively. In addition to the risks inherent in the
drilling business, the Company's international operations are subject to certain
political, economic and other uncertainties, including, among others, risks of
war and civil disturbances, expropriation, nationalization, termination of
existing contracts, taxation policies, foreign exchange restrictions and
fluctuations and other risks arising out of foreign governmental sovereignty
over certain areas in which the Company conducts operations. Although the
Company seeks to protect against many of such risks through insurance, insurance
will not be available for all these risks and for all operating areas and, to
the extent available for a particular risk, there can be no assurance that such
insurance will be sufficient to cover all losses that could be incurred with
respect to a particular covered risk. Losses from these factors could be
material in those countries which contain a significant concentration of the
Company's assets.
OPERATING HAZARDS; UNINSURED RISKS
The Company's drilling operations are subject to various hazards inherent
in the drilling of oil and gas wells, including blowouts, reservoir damage, loss
of well control, cratering, and oil and gas well fires. Such events can result
in personal injury or death, severe damage to or destruction of equipment and
facilities, suspension of operations, and substantial damage to surrounding
areas and the property of others. Generally, the Company obtains indemnification
from its customers by contract for certain of these risks. To the extent not
transferred to customers by contract, the Company seeks protection against such
risks through insurance. However, potential liabilities associated with oilfield
casualties or losses could arise in risk categories where no insurance has been
purchased, where claims exceed the applicable insurance coverage, or where
indemnification is not available or satisfied. The occurrence of events that are
not fully insured or the failure of a customer to meet its indemnification
obligations could have a material adverse effect on the Company's business,
results of operations and financial condition. In addition, there can be no
assurance that insurance will be available or, even if available, that insurance
premiums or other costs will not rise sharply in the future.
LOSSES FROM OPERATIONS
Although the Company had net income of $2.2 million and $3.9 million for
the six months ended February 29, 1996 and the year ended August 31, 1995,
respectively, the Company experienced net losses for each of the fiscal years in
the three-year period ended August 31, 1994. The profitability of the Company is
materially dependent upon the level of utilization and rates of compensation for
its drilling rigs. Accordingly, due to the volatility in oil and gas exploration
and development activity, there can be no assurance that the Company will be
profitable in the future. See "--Industry Conditions; Impact on Company's
Operating
7
<PAGE> 10
Results" and "Management's Discussion and Analysis of Financial Condition and
Results of Operations-- Liquidity and Capital Resources."
COMPETITION; CONCENTRATION OF CUSTOMER BASE
The land drilling market is highly competitive, reflecting the continuing
oversupply of drilling rigs, although this oversupply is more pronounced in
domestic than international markets. Drilling contracts are generally awarded on
a competitive bid basis and, while an operator may consider factors such as
quality of service and type and location of equipment as well as the ability to
provide ancillary services, price is generally the primary factor in determining
which contractor is awarded a job. The Company believes that the market for
drilling contracts will continue to be highly competitive for the foreseeable
future because of the worldwide oversupply of drilling rigs. Certain of the
Company's competitors have greater financial resources than the Company, which
may enable them to better withstand industry downturns, to compete more
effectively on the basis of price, to build new rigs or to acquire existing
rigs. There can be no assurance that the Company will be able to compete
successfully against its competitors in the future or that such competition will
not have a material adverse effect on the Company's business, financial
condition and results of operations.
The Company's customer base is highly concentrated, with its 20 largest
drilling customers representing approximately 91% of total revenues for the
fiscal year 1995. Two customers accounted for approximately 22% and 13% of total
revenues for the same period. There can be no assurance that these customers
will continue to request the Company's services or that the loss of such
customers would not have a material adverse effect on the Company's business,
financial condition and results of operations.
GOVERNMENTAL REGULATION AND ENVIRONMENTAL MATTERS
Many aspects of the Company's operations are affected by domestic and
foreign political developments and are subject to numerous domestic and foreign
governmental regulations that may relate directly or indirectly to the contract
drilling industry, including environmental and safety matters. The regulations
applicable to the Company's operations include certain regulations that control
the discharge of materials into the environment or require remediation of
contamination under certain circumstances. For example, the Company may be
liable for damages and costs incurred in connection with oil spills for which it
is legally responsible. Certain environmental laws and regulations impose
"strict liability," rendering a person liable without regard to negligence or
fault on the part of such person. Such environmental laws and regulations may
expose the Company to liability for the conduct of, or conditions caused by,
others, or for acts of the Company that were in compliance with all applicable
laws at the time such acts were performed.
The Company has made and will continue to make expenditures to comply with
environmental and safety requirements. Because the requirements imposed by such
laws and regulations are subject to change, the Company is unable to predict the
ultimate cost of compliance with such requirements. The modification of existing
foreign or domestic laws or regulations or the adoption of new laws or
regulations curtailing exploratory or development drilling for oil and gas for
economic, political, environmental or other reasons could materially and
adversely affect the Company's business, financial condition or results of
operations by limiting drilling opportunities. There can be no assurance that
laws and regulations enacted in the future, including changes to existing laws
and regulations, will not adversely affect the Company's business, financial
condition or results of operations.
USE OF PROCEEDS
The net proceeds to the Company from the sale of the Common Stock offered
hereby are estimated to be approximately $44.2 million, assuming a public
offering price of $6.75 per share ($50.8 million, if the Underwriters'
over-allotment option is exercised in full) and after deducting the underwriting
discount and estimated expenses payable by the Company.
The Company intends to use such proceeds to fund its current and planned
future capital expenditure program. Currently, Parker is pursuing new drilling
projects in its existing markets, as well as in new markets
8
<PAGE> 11
such as Venezuela and Algeria, that would require capital expenditures for
upgrades to existing rigs and/or acquisition of new rigs in excess of $75
million over the next several years. Of such amount, the Company is currently
committed over the next six to nine months to spending approximately $22 million
for upgrades to two rigs in Papua New Guinea, three rigs in Peru and four rigs
in Indonesia and for other ancillary capital expenditures. The Company intends
to utilize the balance of the net proceeds from this offering, in conjunction
with the Company's cash balances, available bank borrowings and cash flow from
operations, to fund any balance of its capital expenditure requirements, to
facilitate the acquisition of oil service related businesses or for other
general corporate purposes.
Pending the use of the net proceeds of this offering, such funds will be
invested in short-term interest-bearing, investment-grade securities. The
Company does not currently have any commitments or understandings with respect
to any acquisitions, although it is continuously investigating and evaluating
acquisition opportunities. There can be no assurance that the Company will be
able to identify and successfully consummate suitable capital expenditure
projects or acquisitions with respect to the net proceeds of this offering that
will produce beneficial results for the Company. To the extent the Company is
unable to obtain suitable contracts for certain of the rigs planned for upgrades
and/or acquisitions, the Company would defer the application of the funds
allocated for such purposes.
PRICE RANGE OF COMMON STOCK AND DIVIDENDS
The Company's Common Stock commenced trading on the New York Stock Exchange
in 1975 under the symbol "PKD." The following table sets forth the high and low
sales prices per share of the Common Stock as reported on the New York Stock
Exchange for the periods indicated.
<TABLE>
<CAPTION>
HIGH LOW
------ ------
<S> <C> <C>
1994:
First Quarter.................................................... $7.750 $5.250
Second Quarter................................................... 6.250 4.875
Third Quarter.................................................... 6.250 4.875
Fourth Quarter................................................... 6.375 5.375
1995:
First Quarter.................................................... 6.250 5.000
Second Quarter................................................... 5.125 4.375
Third Quarter.................................................... 5.625 4.375
Fourth Quarter................................................... 5.625 4.625
1996:
First Quarter.................................................... 6.375 4.875
Second Quarter................................................... 6.500 5.000
Third Quarter.................................................... 8.125 5.375
Fourth Quarter (through June 7).................................. 7.375 6.625
</TABLE>
No dividends have been paid on the Common Stock since February 1987.
Restrictions contained in the Company's existing credit agreement limit the
payment of cash dividends to the lesser of 40 percent of consolidated net income
for the preceding fiscal year, or $3.0 million. The Company has no present
intention to pay dividends on its Common Stock in the foreseeable future.
9
<PAGE> 12
SELECTED CONSOLIDATED FINANCIAL DATA
The historical financial data presented in the table below for and at the
end of each of the years in the five-year period ended August 31, 1995 are
derived from the consolidated statements of the Company audited by Coopers &
Lybrand L.L.P., independent accountants. The historical financial data presented
in the table below for and at the end of each of the six-month periods ended
February 29, 1996 and February 28, 1995 are derived from the unaudited
consolidated condensed financial statements of the Company. In the opinion of
management of the Company, such unaudited consolidated condensed financial
statements include all adjustments (consisting of normal recurring adjustments)
necessary for a fair presentation of the financial data for such periods. The
results for the six months ended February 29, 1996 are not necessarily
indicative of the results to be achieved for the full year.
The data presented below should be read in conjunction with the Company's
consolidated financial statements and the notes thereto included elsewhere in
this Prospectus and "Management's Discussion and Analysis of Financial Condition
and Results of Operations."
<TABLE>
<CAPTION>
SIX MONTHS ENDED
--------------------------- YEAR ENDED AUGUST 31,
FEBRUARY 29, FEBRUARY 28, ----------------------------------------------------
1996 1995 1995 1994 1993 1992 1991
------------ ------------ -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
STATEMENT OF OPERATIONS DATA:
Revenues:
Drilling contracts..................... $ 78,280 $ 69,780 $153,075 $147,480 $ 96,719 $116,082 $107,167
Other.................................. 2,359 2,241 4,296 4,944 4,082 7,250 5,651
-------- -------- -------- -------- -------- -------- --------
80,639 72,021 157,371 152,424 100,801 123,332 112,818
-------- -------- -------- -------- -------- -------- --------
Operating expense:
Drilling............................... 53,987 51,867 113,132 114,732 69,237 74,196 80,344
Other.................................. 2,820 2,665 4,928 6,563 5,951 8,007 5,119
Depreciation, depletion and
amortization......................... 10,712 10,926 21,643 21,950 20,400 20,550 14,712
General and administrative............. 10,628 10,155 19,165 18,314 17,593 18,385 15,440
Provision for reduction in carrying
value of certain assets.............. -- -- -- 19,718 -- 19,257 3,268
-------- -------- -------- -------- -------- -------- --------
78,147 75,613 158,868 181,277 113,181 140,395 118,883
-------- -------- -------- -------- -------- -------- --------
Operating income (loss).................. 2,492 (3,592) (1,497) (28,853) (12,380) (17,063) (6,065)
Other income and (expense):
Interest income (expense) -- net....... 646 542 1,184 1,150 1,676 1,592 4,424
Minority interest...................... -- -- (227) (135) 149 596 920
Other.................................. 1,875 3,281 7,640 919 (469) 6,504 4,324
-------- -------- -------- -------- -------- -------- --------
2,521 3,823 8,597 1,934 1,356 8,692 9,668
Income (loss) from continuing operations
before income taxes.................... 5,013 231 7,100 (26,919) (11,024) (8,371) 3,603
Income tax expense (benefit)............. 2,775 1,255 3,184 1,887 (337) 2,795 1,626
-------- -------- -------- -------- -------- -------- --------
Income (loss) from continuing
operations............................. 2,238 (1,024) 3,916 (28,806) (10,687) (11,166) 1,977
Discontinued operations -- gain on
disposal (net of taxes)................ -- -- -- -- -- -- 1,184
-------- -------- -------- -------- -------- -------- --------
Net income (loss)........................ 2,238 (1,024) 3,916 (28,806) (10,687) (11,166) 3,161
Preferred stock dividends.............. -- -- -- -- 6 18 25
-------- -------- -------- -------- -------- -------- --------
Earnings (loss) applicable to common
stock.................................. $ 2,238 $ (1,024) $ 3,916 $(28,806) $(10,693) $(11,184) $ 3,136
======== ======== ======== ======== ======== ======== ========
Weighted average shares outstanding...... 55,950 54,611 55,333 54,248 53,082 52,115 52,189
EARNINGS (LOSS) PER COMMON SHARE:
Income (loss) from continuing
operations............................. .04 (.02) .07 (.53) (.20) (.21) .04
Net income (loss)........................ .04 (.02) .07 (.53) (.20) (.21) .06
OTHER OPERATING DATA:
EBITDA(1)................................ $ 14,048 $ 8,706 $ 22,248 $ 14,111 $ 10,996 $ 25,376 $ 12,787
BALANCE SHEET DATA:
Total assets............................. $222,466 $207,879 $216,959 $209,348 $236,342 $245,869 $264,794
Working capital.......................... 53,454 47,889 56,042 40,670 60,253 58,561 63,114
Total debt............................... 1,762 1,850 2,037 -- -- 932 7,116
Redeemable preferred stock............... -- -- -- -- -- 157 315
Total stockholders' equity............... 191,783 181,126 186,920 180,583 207,679 210,181 219,082
</TABLE>
- ---------------
(1) EBITDA represents operating income (loss) before depreciation, depletion,
amortization and certain other non-cash charges. EBITDA is frequently used
by securities analysts and is presented here to provide additional
information about the Company's operations. EBITDA is not a measurement
presented in accordance with generally accepted accounting principles.
EBITDA should not be considered in isolation or as a substitute for net
income, cash flow provided by operating activities or other income or cash
flow data prepared in accordance with generally accepted accounting
principles or as a measure of a company's profitability or liquidity.
10
<PAGE> 13
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OUTLOOK
The Company's operating strategy has been to actively pursue land drilling
contract opportunities in international and domestic markets. Although the
domestic market has been depressed over the last several years, international
drilling markets have generally been more active and profitable, prompting the
Company to devote the majority of its capital budget to its international fleet.
In fiscal 1995, approximately 82% of the Company's revenues came from
international operations. The Company anticipates that the international markets
will remain strong for the foreseeable future as demand for oil and gas
increases in developing countries and countries dependent on oil and gas
revenues seek to increase their production. Management believes that the Company
is favorably positioned to respond to and benefit from the continued increase in
international drilling markets.
Domestically, the Company's fleet of rigs is particularly suited for
drilling deep wells in the Rocky Mountain, Mid-Continent and Gulf Coast regions,
where the Company has focused on deep and/or difficult drilling projects. In the
arctic region of Alaska, where the Company operates one rig, the day rates are
higher due to the need for more sophisticated drilling equipment. In 1995,
drilling activity in the U.S. Gulf Coast market strengthened due to improved
natural gas prices. Three of the Company's rigs have recently been relocated to
this active Gulf Coast market, and the Company is seeking additional contracts
in this market. While the increase in prices and demand in the Gulf Coast may
eventually spread to other domestic markets, the Company is not predicting any
increase in near-term demand for domestic deep drilling services.
RESULTS OF OPERATIONS
Six Months Ended February 29, 1996 Compared to Six Months Ended February 28,
1995
The Company's net income of $2.2 million recorded for the first six months
of fiscal 1996 is an improvement of $3.3 million over the first half of the
prior fiscal year. An increase in drilling margins of $6.4 million was the
primary reason for the improvement, offset by a $1.5 million increase in tax
expense and a $1.3 million reduction in other income.
Drilling revenue of $78.3 million reflected an increase of $8.5 million
from $69.8 million for the first half of fiscal 1995. Utilization in the first
six months of the current fiscal year of 44% for the entire rig fleet and 62%
solely for the international fleet corresponds to the first six months of fiscal
1995 rates of 38% and 55%, respectively. (Utilization rates have been adjusted
for both periods for rigs removed from the rig fleet in both fiscal 1995 and the
first half of 1996.)
Drilling revenue in the Company's Western Hemisphere international
operations declined $2.9 million due to reduced utilization in Argentina
resulting from the Company's termination of operations in southern Argentina
during the second quarter of 1996. Operations in the Asia Pacific region
generated an increase in revenue of $7.8 million. This increase is attributable
to improved utilization in Papua New Guinea where the Company operated five rigs
during the first two quarters of fiscal 1996 compared to two rigs during the
corresponding period of 1995. Revenue through six months of fiscal 1996 declined
in the Asia Pacific countries of Pakistan, New Zealand and the Philippines.
Drilling revenue in Africa, the Middle East and Commonwealth of Independent
States ("CIS") declined $0.8 million due to the completion of one-rig contracts
in Chad and Kazakstan in the first half of fiscal 1995, offset by increased
revenue in the Russian Republic where the Company commenced a one-rig contract
in the first quarter of fiscal 1996. Domestic drilling revenue increased $4.6
million due primarily to the operation of Rig 245 in Alaska. This rig had been
idle during the first quarter of fiscal 1995.
Drilling margins (drilling revenues less drilling expenses) increased $6.4
million to $24.3 million for the first six months of fiscal 1996 from $17.9
million for the first half of fiscal 1995 due to improved operations in
Colombia, Argentina, Papua New Guinea and Alaska.
11
<PAGE> 14
General and administrative expense increased $0.5 million to $10.6 million
from $10.1 million due to employee severance payments made in fiscal 1996 while
other income declined $1.3 million from $3.8 million in fiscal 1995, which
included a $1.5 million gain due to a reversal of a prior year's foreign
currency accrual. Income tax expense increased $1.5 million due to increased
revenue and taxable income in certain foreign countries in which the Company
operates.
Year Ended August 31, 1995 Compared to Year Ended August 31, 1994
The fiscal 1995 net income of $3.9 million was an improvement of $32.7
million over the net loss of $28.8 million recorded in fiscal 1994. Excluding a
$19.7 million provision for reduction in carrying value of certain assets from
fiscal 1994's net loss, fiscal 1995's net income was an improvement of $13.0
million over fiscal 1994. The primary reasons for the improvement in fiscal 1995
were an increase in drilling margins of $7.2 million and an increase in other
income of $6.7 million.
Drilling contract revenue increased $5.6 million to $153.1 million from
$147.5 million even though international and domestic operating days were nearly
the same as the previous year. An increase in the utilization of larger rigs in
northern Argentina and Colombia more than offset decreased utilization of
smaller rigs in southern Argentina. Although operating days were nearly the
same, the domestic utilization rate increased from 15% to 21% due to the
retirement/disposal of 16 domestic rigs in 1994. (Rigs retired, disposed of or
reclassified as assets held for sale in fiscal 1995 and 1994 have been treated
as removed from the rig fleet as of the last day of each fiscal year.)
Western Hemisphere international drilling revenue increased $23.4 million
in fiscal 1995 when compared with fiscal 1994. In Colombia, revenue increased
$13.9 million due primarily to revenue earned by one rig relocated from
Indonesia during the year and from a full year of operations by one rig which
was added to the rig fleet in fiscal 1994. In addition, several rigs which were
either on a standby or stacked status in fiscal 1994 operated all of fiscal
1995. In Argentina, drilling revenue increased $12.6 million as two additional
deep rigs, one relocated from the Congo in fiscal 1994 and one relocated from
Yemen in fiscal 1995, operated much of the year. Additionally, one rig added to
the rig fleet in fiscal 1994 operated all of fiscal 1995 and one rig leased by
the Company commenced operations in the fourth quarter of fiscal 1995. During
fiscal 1995 and 1994, a number of shallow depth capacity rigs (10,000 feet or
less) operated in southern Argentina, many of them operating on a meterage
basis. Two of these rigs have been relocated to mid-Argentina as the Company
focuses its marketing efforts on regions of the country where operations are
generally conducted on a daywork basis. At fiscal year-end, the remaining rigs
in southern Argentina were on a stacked status. Drilling revenue declined $4.8
million in Ecuador where two rigs located in that country did not operate in
fiscal 1995 and were retired from the rig fleet at the end of the fiscal year.
Operations in the Asia Pacific region resulted in an increase in drilling
revenue of $1.5 million in fiscal 1995. Increased utilization in New Zealand and
revenue earned from a labor contract in China more than offset a decline in
revenue in Papua New Guinea and Indonesia due to lower utilization in those
countries.
International drilling revenue from operations in Africa, the Middle East
and the CIS declined $17.4 million in fiscal 1995. Utilization declined due to
the completion of contracts in Chad, the Congo, the Russian Republic, and Yemen.
The rigs which operated in the Congo and Yemen in fiscal 1994 have both been
redeployed to Argentina where they are currently operating. In Kazakstan, a
reduction in revenue from a labor contract in that country was partially offset
by operations from one rig which has been relocated from the Russian Republic.
Domestic drilling revenue declined $2.3 million due to fewer operating days
in the Rocky Mountain states and Alaska.
Drilling margins (drilling revenue less drilling expense) increased $7.2
million in fiscal 1995 to $39.9 million compared to $32.7 million in fiscal
1994. Margins improved in the Company's South American operations, including
both the countries of Colombia and Argentina. Margins had been negatively
impacted in fiscal 1994 in Colombia due to increased operating expenses and
costs associated with the start-up of two rigs. In fiscal 1995, these two rigs
operated for the full year with improved margins when compared with the
12
<PAGE> 15
previous fiscal year. In Argentina, margins also improved as two additional deep
capacity rigs began operating in the northern region of the country and two rigs
operated during the year in the country's middle region. In the Company's other
operating regions, both internationally and domestically, drilling margins as a
percentage of drilling revenue in fiscal 1995 remained relatively consistent
with fiscal 1994.
General and administrative expense increased $0.9 million to $19.2 million
in fiscal 1995 from $18.3 million in fiscal 1994 due to increased amortization
of deferred compensation and legal expenses.
Other income (expense) increased $6.7 million to $8.6 million in fiscal
1995 from $1.9 million in fiscal 1994. Gains of $6.4 million were recognized in
fiscal 1995 from the disposition of property, plant and equipment as the Company
continued its efforts to sell assets that are no longer a part of its current
marketing strategy. In addition, the reversal of a prior year foreign currency
accrual of $1.5 million was recorded in fiscal 1995. Fiscal 1994 other income
included $2.1 million from gains associated with the disposition of property,
plant and equipment, a $1.5 million gain from the reversal of a prior year
foreign payroll tax accrual and a $2.6 million charge for the settlement of
certain litigation. The $1.3 million increase in income tax expense was
primarily attributable to the reversal in 1994 of an accrued foreign tax.
Year Ended August 31, 1994 Compared to Year Ended August 31, 1993
The fiscal 1994 net loss of $28.8 million represents an increase in net
loss of $18.1 million from a $10.7 million net loss in fiscal 1993. However,
excluding the provision for reduction in carrying value of certain assets of
$19.7 million recognized in fiscal 1994, the net loss improved $1.6 million from
fiscal 1993 to fiscal 1994. The primary reasons for the improvement were an
increase in drilling margins of $5.3 million, partially offset by increases in
depreciation expense of $1.6 million and income tax expense of $2.2 million.
During the fourth quarter of fiscal 1994, management analyzed its domestic
operations and made the strategic decision to reorganize certain of these
operations and sell certain of these assets. The Company reduced the carrying
value of certain assets in Alaska, including rigs, spare parts and property to
be sold. The Company wrote down to the net realizable value certain of its
Partech(R) manufacturing operations' drilling equipment, property and
inventories that were to be disposed. Domestically, the Company wrote down to
net realizable value certain rigs and rig equipment and removed 16 mechanical
rigs from its fleet. Aggregating the items described above, the Company recorded
a $19.7 million provision during the fourth quarter of fiscal 1994.
Drilling revenue increased by $50.8 million to $147.5 million in fiscal
1994 from $96.7 million in fiscal 1993 as utilization of the Company's
international rig fleet increased from 40% in fiscal 1993 to 56% in fiscal 1994.
Domestic rig utilization increased slightly from 14% to 15%.
Western Hemisphere international drilling revenue increased $21.1 million
from fiscal 1993 to fiscal 1994. Revenue from the country of Argentina increased
$18.5 million as the Company re-entered the Argentina drilling market during the
fourth quarter of fiscal 1993. In Colombia, revenue increased $2.7 million in
fiscal 1994 as the Company engaged in more deep drilling at higher day rates
when compared to fiscal 1993.
International drilling revenue from operations in Asia and the Pacific
increased $20.9 million in fiscal 1994. The primary reasons for the increase
were the resumption of operations in Pakistan during the first quarter of fiscal
1994, and the operation of two geothermal rigs in the Philippines, a new market
for the Company in fiscal 1994. Also contributing to the increase in drilling
revenue was an increase in utilization in Papua New Guinea during fiscal 1994.
Drilling revenue from operations in Africa, the Middle East and the CIS
increased $9.6 million in fiscal 1994. During the fourth quarter of fiscal 1993,
the Company began operating in the republic of Kazakstan under a labor contract
for a major customer. Revenue from operations in Kazakstan increased $6.8
million in fiscal 1994. In the Russian Republic an increase in operating days
for two workover rigs generated an additional $2.3 million in revenue in fiscal
1994 versus fiscal 1993. In Africa, a decline in revenue from decreased
utilization in Chad was offset by revenue from a one-rig contract in the Congo.
13
<PAGE> 16
Domestic drilling revenue declined slightly in fiscal 1994 compared to
fiscal 1993. An increase in utilization in the continental United States could
not completely offset the loss of revenue from the Company's specialized Arctic
drilling rig, which was released late in the third quarter of fiscal 1994.
Although drilling revenue increased $50.8 million in fiscal 1994 versus
fiscal 1993, drilling margins (drilling revenue less drilling expense) did not
increase proportionately. Drilling margins increased to $32.7 million in fiscal
1994 from $27.5 million in fiscal 1993, an increase of $5.2 million. Drilling
margins in Colombia declined due to increased operating expenses and costs
associated with the start-up of two rigs. In Argentina, the initial start-up
costs of entering a new market and putting ten newly acquired rigs to work
negatively impacted drilling margins. Additionally, during this transition
period, the Company encountered drilling problems which resulted in slower than
expected drilling progress on some of the meterage rate contracts.
Depreciation expense increased $1.6 million in fiscal 1994, the result of
an increase in capital spending during 1994. Other income (expense) increased
$0.6 million to $1.9 million in fiscal 1994 compared to $1.4 million in fiscal
1993. Interest income, net of interest expense, decreased $0.5 million due to a
decline in cash and short-term investments during fiscal 1994.
Other income in fiscal 1994 included a $1.0 million gain recognized when
proceeds from an insurance settlement exceeded the book value of equipment
damaged in connection with a blowout on an international rig. Fiscal 1994 other
income also included the reversal of a prior year foreign payroll tax accrual
totalling $1.5 million. Offsetting this income in fiscal 1994 was a $2.6 million
charge for the settlement of litigation. See Note 9 to the Company's
consolidated financial statements included elsewhere in this Prospectus. Fiscal
1993 other expense included a $0.9 million adjustment of a prior year's workers'
compensation liability. Income tax expense increased $2.2 million primarily
because of an increase in international drilling activity, which resulted in an
increase in current tax expense.
LIQUIDITY AND CAPITAL RESOURCES
Working capital of the Company was $56.0 million as of August 31, 1995, and
$53.5 million as of February 29, 1996. Cash and short-term investments comprised
$22.1 million and $21.3 million of working capital on these respective dates.
Sources of cash for the first six months of fiscal 1996 included cash generated
from operations of $12.8 million, proceeds of $4.2 million from the sale of
property, plant and equipment and $1.6 million received upon the exercise of
stock warrants.
Capital expenditures for the first eight months of fiscal 1996 were $22.9
million, which were primarily related to international contract opportunities.
The Company is pursuing new drilling projects in its existing markets, as well
as in new markets such as Venezuela and Algeria, that would require capital
expenditures for upgrades to existing rigs and/or acquisitions of new rigs in
excess of $75 million over the next several years. Of such amount, the Company
is currently committed over the next six to nine months to spending
approximately $22 million for upgrades to two rigs in Papua New Guinea, three
rigs in Peru and four rigs in Indonesia and for other ancillary capital
expenditures. Any significant increase in capital expenditures would be subject
to restrictions imposed on the Company as specified below.
The Company has entered into a $15.0 million revolving credit and letter of
credit facility which expires on April 19, 1999 (the "Agreement"). At April 30,
1996, the Company had letters of credit totalling $10.4 million under the
Agreement. The Agreement contains restrictions on annual capital expenditures in
excess of $30 million plus proceeds from the sale of assets and certain senior
and subordinated indebtedness which can be incurred by the Company and certain
operating subsidiaries designated in the Agreement through which the Company
performs the majority of its drilling operations. The Agreement also limits
payment of dividends on Common Stock and requires the Company to maintain
certain financial ratios. The remaining subsidiaries of the Company are not a
party to the Agreement and are able to make capital expenditures with
independent financing from lenders that have no recourse to the Company and the
designated subsidiaries, subject only to an overall limitation of indebtedness.
The restrictions in the Agreement are not anticipated to restrict growth or
investment opportunities in the foreseeable future.
14
<PAGE> 17
Management believes that the current level of cash and short-term
investments, together with cash generated from operations and the net proceeds
from the sale of the Common Stock offered hereby, should be sufficient to meet
the Company's immediate capital needs as well as capital required in connection
with additional contracts which the Company is currently bidding. Should further
opportunities for growth requiring additional capital arise, the Company
believes it would be able to satisfy these needs through a combination of cash
generated from operations, borrowings under the bank credit agreement and either
equity or long-term debt financing.
OTHER MATTERS
In March 1995, Statement of Financial Accounting Standards No. 121,
"Accounting for the Impairment of Long-Lived Assets and Long-Lived Assets to be
Disposed of," was issued. The statement establishes accounting standards for the
impairment of long-lived assets, such as the Company's drilling, transportation
and other equipment, and will be effective for the Company beginning with the
year ending August 31, 1997. The Company does not believe the new standard will
have a material effect on the Company's financial position or results of
operations.
In October 1995, Statement of Financial Accounting Standards No. 123,
"Accounting for Stock-Based Compensation," was issued. The statement requires
the computation of compensation for grants of stock, stock options and other
equity instruments issued to employees based on fair value. The compensation
calculated is to be either recorded as an expense in the financial statements
or, alternatively, disclosed. The Company anticipates it will elect the
disclosure method of complying with the new standard. Under the provisions of
the new statement, it is anticipated that pro forma net income to be disclosed
will be lower than net income reported in the financial statements.
BUSINESS
GENERAL
The Company is a leading provider of land contract drilling services on a
worldwide basis to major, independent and foreign national oil companies. Since
its inception in 1934, the Company has provided drilling services throughout the
United States and 46 foreign countries, giving it the broadest geographical
representation of any land drilling contractor. Currently, the Company has 46
international rigs in 13 countries and 17 rigs in the United States. The Company
specializes in the drilling of deep and difficult wells and drilling in remote
and harsh environments. Difficult well conditions can include zones of high
pressure and/or high temperature, poisonous gases and complex geology. Parker
also provides a range of services that are ancillary to its principal drilling
services, including engineering, logistics and construction, as well as various
types of project management.
Internationally, the Company is focused primarily in South America and the
Asia Pacific region where it specializes in drilling that often requires
equipment specially designed to be transported by helicopter, barge or other
vehicles into difficult access areas such as jungle, mountainside or desert
locations. Parker's 23 heli-rigs, with technologically advanced pumps and power
generation systems that are capable of drilling difficult wells in excess of
15,000 feet, have established Parker as the dominant operator in the heli-rig
market. The Company has also historically been a pioneer in new markets or
"frontier areas" such as China, the republics of the former Soviet Union, and
more recently, Vietnam. International operations accounted for approximately 82%
of Parker's fiscal 1995 revenues. Domestically, the Company operates primarily
in the Rocky Mountain, Mid-Continent and Gulf Coast regions and the arctic
region of Alaska. Within the lower 48 states, Parker traditionally has
specialized in the drilling of deep gas wells, often in excess of 20,000 feet.
Domestic operations provided approximately 18% of the Company's fiscal 1995
revenues.
The Company has developed an international reputation for providing
efficient, quality drilling services. This reputation has allowed Parker to
develop relationships with certain major and national oil companies, many of
which the Company believes are increasingly seeking to establish preferred
contractor relationships or alliances. Management believes that these
relationships may result in longer term work and improved operating results for
the Company.
15
<PAGE> 18
The Company's principal executive offices are located at 8 East Third
Street, Tulsa, Oklahoma 74103, and its telephone number is (918) 585-8221.
INDUSTRY OVERVIEW
In recent years, many major and independent oil companies have directed a
greater portion of their exploration budgets to foreign markets. This is
particularly true in South America and the Asia Pacific region, where the demand
for land rigs has increased significantly. The Company has benefitted from this
trend due to its long-standing presence in these markets and has been able to
deploy rigs under longer term contracts at higher dayrates and operating margins
than domestic operations. Management believes that the demand for drilling
services in international markets will continue to grow as demand for oil and
gas increases and countries dependent on oil and gas revenues seek to increase
their production. The Company intends to capitalize on its global presence and
substantial international experience to pursue growth opportunities in both
current and developing markets.
In the U.S., the land drilling industry is characterized by an oversupply
of rigs and a large number of competitors, which has resulted in lower
utilization and profitability for many drilling contractors. Over the past year,
however, increasing gas prices in certain areas of the U.S. have led to a marked
increase in drilling in such regions. In addition, the U.S. land drilling market
has undergone significant consolidation. Parker believes that the activity in
U.S. markets will improve over time due to the growing dependency by the U.S. on
volatile foreign energy sources and the abundance of U.S. natural gas.
BUSINESS STRATEGY
The Company's traditional business strategy has been to focus on domestic
and international markets that require the drilling of deep and difficult wells
and wells in remote areas of difficult access. The Company has pursued this
strategy by providing quality service and equipment to its customers. In 1995,
the Company refined its business strategy to adapt to changing market conditions
and build on its traditional strengths. The Company's current strategy is to:
(i) expand its presence in core markets and enter new productive markets; (ii)
increase the provision of integrated services; (iii) seek acquisitions of
complementary businesses; and (iv) further streamline operations by reducing
operating costs and eliminating non-productive assets.
Expand Core Markets and Enter New Markets
The Company has redeployed a portion of its rig fleet to concentrate its
activities and increase critical mass in its core markets worldwide. The Company
transferred rigs from Yemen, Italy, the Congo, Indonesia and the U.S. to more
active markets in Colombia and in northern and western Argentina. In the
geothermal market, Parker strengthened its position by moving a rig to New
Zealand and is currently moving two rigs to Indonesia. The Company has expanded
its role as a provider of technical expertise through a joint venture agreement
in China and a labor services agreement in Russia. Domestically, the Company has
moved three deep drilling rigs into the active Gulf Coast market.
The recent growth in drilling activity in certain markets in South America,
the Asia Pacific region and Africa has created significant growth opportunities
for the Company. In response to these recent trends, the Company intends to
increase its level of activity in countries in these regions where it currently
operates and to aggressively market additional rigs in countries such as
Venezuela and Algeria.
Increase Provision of Integrated Services
To complement its drilling services, the Company provides integrated
services, which include logistics, engineering, construction and other ancillary
services as well as various types of project management for oil and gas drilling
operations. The Company has entered into agreements for the provision of
engineering services for drilling programs in Argentina and the provision of
specialized services for the construction and mobilization of two rigs on
offshore platforms in connection with a labor contract in the South China Sea.
As oil and gas companies continue to reduce overhead, the Company believes that
opportunities will increase for
16
<PAGE> 19
it to generate revenue by providing services ancillary to its drilling services
without incurring significant capital expenditures.
Acquisitions of Complementary Businesses
There has been a significant consolidation in the oil service industry as
companies have sought to increase market share and diversify and expand the
scope of services they offer. During 1995, Parker formally engaged the services
of an investment banking firm to assist in identifying and pursuing acquisition
candidates that would allow the Company to provide a broader range of drilling
and related oil field services to its customers. The Company intends to actively
pursue opportunities for growth and diversification within the industry.
Streamline Operations
As part of its efforts to further streamline operations and reduce costs,
the Company closed offices and other facilities in Oklahoma City, Ecuador and
Yemen and reduced overhead in southern Argentina. Certain excess worldwide
equipment and inventories and domestic real estate have been sold. In addition,
over the last 12 months, Parker reduced its rig fleet by 33 rigs. As a result of
these steps, the Company expects to realize annual cost savings, including
depreciation, of approximately $5 million.
RIG FLEET
The Company provides contract drilling services through its rig fleet. The
sections which follow describe the characterization and utilization of that
fleet and its current status. See "Utilization," "-- International Operations"
and "-- Domestic Operations." The following table sets forth, as of May 31,
1996, the locations of the Company's rigs and their drilling depth ratings.
<TABLE>
<CAPTION>
DRILLING DEPTH RATING IN FEET
-----------------------------------------------------------------
10,000
OR OVER
LESS 15,000 20,000 25,000 25,000 TOTAL
------ ------ ------ ------ ------ -----
<S> <C> <C> <C> <C> <C> <C>
INTERNATIONAL:
South America........................ 1 2 9 2 5 19
Africa, Middle East and CIS.......... 3 2 2 -- -- 7
Asia Pacific......................... 4 4 9 3 -- 20
-- -- -- -- -- --
Total International.................... 8 8 20 5 5 46
DOMESTIC:
Alaska............................... -- -- -- -- 1 1
Mid-Continent........................ -- -- 4 -- 1 5
Rocky Mountains...................... 1 -- 4 -- 3 8
Gulf Coast........................... -- -- 1 -- 2 3
-- -- -- -- -- --
Total Domestic......................... 1 -- 9 -- 7 17
-- -- -- -- -- --
Total.................................. 9 8 29 5 12 63
== == == == == ==
</TABLE>
UTILIZATION
The following table sets forth the utilization rates of the Company's rigs
during each of the periods shown. Changes in utilization reflect reductions in
the Company's rig fleet in addition to changes in rig activity. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED AUGUST 31,
FEBRUARY 29, ----------------------------
1996 1995 1994 1993 1992
------------ ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
International utilization................................ 62% 54% 56% 40% 52%
Domestic utilization..................................... 25%* 21% 15% 14% 13%
</TABLE>
- ---------------
* Domestic utilization during the six-month period ending February 29, 1996,
would have been 55% as adjusted to reflect the removal of 22 domestic rigs
from the Company's rig fleet subsequent to February 29, 1996.
17
<PAGE> 20
The Company calculates its rig utilization rates on a weighted average
basis assuming 365 days availability for all of its rigs. Rigs retired, disposed
of or reclassified as assets held for sale have been treated as removed from the
rig fleet as of the last day of each fiscal period. Rigs which are in operation
or fully or partially staffed and on a revenue-producing standby status are
considered to be utilized. Rigs under contract that generate revenues during
moves between locations or during mobilization/demobilization are also
considered to be utilized.
INTERNATIONAL OPERATIONS
International land drilling markets have continued to improve since the
late 1980's, resulting in increased margins and utilization rates in several
areas, primarily in South America and the Asia Pacific region and to a lesser
extent in China and the CIS. The international market differs from the domestic
market in terms of its competition, its customers, the equipment requirements
and experience required. The majority of international drilling projects have
the following characteristics: (i) a small number of competitors; (ii) customers
who are major, large independent or foreign national oil companies; (iii) remote
locations requiring drilling equipment with a large inventory of spare parts and
often other ancillary equipment; and (iv) drilling of difficult wells requiring
considerable experience. In contrast, a domestic project usually involves: (i)
numerous competitors; (ii) customers who are small, independent operators; (iii)
rig specifications that can be satisfied by small mechanical rigs of which there
is an oversupply; and (iv) drilling of shallow to medium depth wells. See "Risk
Factors -- Risks of International Operations."
South America. Approximately 50% of the Company's drilling revenue was
generated by operations in South America in fiscal 1995. The Company currently
has 19 rigs located in the South American drilling markets of Colombia,
Argentina and Peru. These rigs have been upgraded to meet the demands of deep,
difficult drilling in these areas. Most of these rigs are currently under
contract to major or national oil companies with attractive dayrates. The
Company anticipates it will continue to relocate rigs to the South American
market to meet increased demand for drilling in Colombia, Argentina and Peru as
well as other countries, including Venezuela.
Asia Pacific Region. The Company operates 15 of its fleet of 23 helicopter
transportable rigs in the Asia Pacific region due to the remoteness of the
mountainside and jungle drilling performed in this region. Approximately 30% of
the Company's fiscal 1995 worldwide revenue was generated by operations in the
countries of Papua New Guinea, Indonesia, Philippines, Pakistan and New Zealand.
This region also contains all of the Company's present geothermal operations,
with the Company entering the Philippine geothermal market in 1993 and Indonesia
in 1995. In 1996, the Company became the first land drilling contractor to enter
the Vietnam market subsequent to the liberalization of Vietnam's trading policy
and the lifting of restrictions many countries had placed on doing business with
Vietnam. Also, in 1996, the Company formed an alliance with the national
drilling company in China, pursuant to which the Company will provide project
management assistance and rig supervisory personnel to western oil companies in
conjunction with the Company's Chinese partner. Parker has the longest presence
of any foreign drilling contractor in China, beginning with its first contract
in 1980.
Africa, Middle East and CIS. Seven of the Company's rigs are currently
located in the Africa, Middle East and CIS markets, which accounted for 5% of
the Company's drilling revenue in fiscal 1995. After becoming the first western
drilling contractor to enter the markets of the former Soviet Union in 1991,
expansion of the Company's business in the former republics which now comprise
the CIS has been hampered by bureaucratic inefficiencies, constantly changing
tax and other laws and political issues that have retarded the investment of
capital by major and large independent oil companies. The Company anticipates
that the recently announced agreement regarding the pipeline to be built to
accommodate incremental production from the Tengiz field in Kazakstan will
increase exploration efforts in this region; however, drilling may be delayed
pending resolution of technical, logistical and other issues. The Company is
also currently evaluating reentering the Algerian market as many major companies
and large independents have recently executed agreements to make considerable
investments in existing and new fields in Algeria. Management believes all of
these areas have promise for significant expansion of operations with
accompanying revenues, although the Company's success in these regions is
contingent upon factors over which the Company has no control.
18
<PAGE> 21
DOMESTIC OPERATIONS
The U.S. land drilling market is highly fragmented with numerous
competitors and an oversupply of rigs. During the past few years, this market
has undergone significant consolidation; however, rig supply continues to exceed
rig demand which has resulted in depressed dayrates and utilization. The
oversupply of rigs is especially prevalent in the market for mechanical rigs,
which has allowed oil companies to demand rigs equipped with more sophisticated
equipment such as diesel-electric power and/or top-drive systems. Consequently,
the Company recently has decided to remove 22 of its mechanical rigs from its
domestic rig fleet of 39 rigs and place such mechanical rigs on the market for
sale.
Of the Company's remaining 17 rigs located in the U.S., 16 are
diesel-electric, two are equipped with top drive units and 16 are capable of
drilling in excess of 15,000 feet. Traditionally, the Company has differentiated
itself from its domestic competitors by specializing in the drilling of deep
and/or difficult wells. The Company also offers drilling services for
development drilling on the North Slope of Alaska with a state of the art arctic
drilling unit that is completely enclosed and transportable on giant "crawlers."
SPECIALTY DRILLING SERVICES
Helicopter Transportable Rigs. The Company specializes in difficult wells
and drilling in remote areas and harsh environments, primarily in international
locations. A significant factor contributing to the Company's success in
obtaining drilling contracts in remote areas is the use of rigs which are
transportable by air, land and water. These rigs have been specially designed
and constructed by the Company for quick assembly and disassembly under the
proprietary designations "Heli-Hoist(R)" rig, Transportable By Anything(R)
("TBA(R)") rig and All-Terrain ("AT2000E(R)") rig. It is the opinion of
management that the Company's 23 helicopter transportable rigs comprise
approximately 75% of the operational helicopter transportable rigs worldwide.
The Heli-Hoist(R), TBA(R) and AT2000E(R) rigs allow the Company to perform
drilling operations in remote and otherwise inaccessible locations such as
jungle areas, mountainous areas and offshore platforms.
Deep Drilling. During the U.S. drilling boom of the late 1970's and early
1980's, the Company developed its specialty of deep difficult drilling,
primarily in the Anadarko Basin of Western Oklahoma and the Overthrust Region in
the Rocky Mountains. The majority of the expansion of the Company's domestic
fleet was built around this deep gas drilling, during which time the Company
established several drilling depth records approaching 30,000 feet. The
Company's largest drilling rig is rated in excess of 35,000 feet.
During the last several years, drilling activity has shifted from domestic
deep gas drilling to international deep oil and gas drilling. While
international deep drilling is generally in the range of 15,000 feet to 20,000
feet as opposed to the domestic deep drilling which often exceeded 20,000 feet,
the Company has benefitted in the international arena from the development of
this expertise, particularly in the deep drilling markets of the Cusiana and
Cupiagua fields of Colombia and in northern Argentina.
Arctic Drilling. The Company has been one of the pioneers in arctic
drilling conditions and continues to offer new technology to meet the demand for
increased drilling in an ecologically sensitive manner. The Company's most
recent development has been the introduction of a self-contained mobile drilling
unit capable of being moved in one unit by giant "crawlers" similar to the
system used to move rocket thrusters for the space program. The environmentally
sensitive rig also has a complete closed-loop mud system and cuttings processing
system that eliminate the need for mud pits.
Geothermal Drilling. The Company also has developed expertise in the area
of geothermal drilling. Geothermal operations involve drilling into a pocket of
geothermal energy, tapping the source of this energy in the form of steam, hot
water or hot rocks and converting this heat into usable forms of energy. The
market for geothermal drilling is expanding into several areas of the world,
including the Philippines, New Zealand and Indonesia, as various countries elect
to access this alternative form of energy.
Integrated Services. As major oil companies continue to downsize their
engineering and other support staffs, the Company believes the need for drilling
contractors to assume more ancillary duties will increase. As one of the leading
drilling companies with experience in all aspects of land drilling worldwide,
the Company is well positioned to provide different types of integrated services
from logistics and engineering to complete
19
<PAGE> 22
project management services required by its customers. Parker provided project
management for an exploration project in Papua New Guinea and coordinated the
fabrication and testing of two rigs for offshore platforms in the South China
Sea. In addition, Parker's engineers are working with customers to provide well
design programs in Argentina. The Company has also provided logistics and
construction services for a remote drilling project in Chad and supervision,
training and related management services for workover operations in Kazakstan
and drilling operations in China.
CERTAIN OTHER OPERATIONS
Parker Technology, Inc. ("Partech"), a wholly owned subsidiary of the
Company, is a drilling equipment and manufacturing concern which gives the
Company the ability to design, construct and modify rigs to meet its own unique
needs and, to a lesser extent, to construct rigs and components for other
customers. Partech successfully designed and built the first drilling rig in its
AT2000E(R) series of heli-rigs in 1989. This all-electric rig series features a
proprietary design that provides for additional power and drilling capacity in
remote locations.
COMPETITION
The land drilling market is highly competitive. Management believes
competition for drilling services is based on a number of factors, including:
(i) price; (ii) the type, condition and location of equipment available; (iii)
quality of service, including experience; and (iv) the ability to provide
ancillary services. Management believes that the Company has for many years
ranked at or near the top of the drilling industry in the last three categories.
Since fiscal 1983, the prevailing factor in obtaining contracts domestically has
been price due to the surplus of available rigs in the drilling industry. In
international markets, experience in operating in certain environments and the
developing trend of alliances have also been factors in the selection of the
Company in certain cases, as well as the Company's patented drilling equipment
for remote drilling projects. See "Risk Factors -- Competition; Concentration of
Customer Base."
CUSTOMERS
The Company believes it has developed an international reputation for
providing efficient, quality drilling services. A key for advancing the
Company's business strategy is maintaining and developing relationships and
strategic alliances with its customers. An increasing number of the Company's
customers have been seeking to establish exploration or development drilling
programs based on partnering relationships or alliances with a limited number of
preferred drilling contractors. Such relationships or alliances can result in
longer term work and higher efficiencies that increase profitability for
drilling contractors at a lower overall well cost for oil companies. The Company
is currently a preferred contractor for operators in certain domestic and
international locations, which management believes is a result of the Company's
quality service and experience.
The Company's drilling customer base consists of major, independent and
foreign national oil and gas companies. The Company's 20 largest customers
accounted for approximately 91% of total revenue during fiscal 1995. During
1995, two customers accounted for approximately 22% and 13% of total revenue. In
fiscal 1994, three customers accounted for approximately 14%, 12% and 11% of
total revenue. In fiscal 1993, three customers accounted for approximately 22%,
14% and 10% of total revenue. See "Risk Factors -- Competition; Concentration of
Customer Base."
20
<PAGE> 23
LEGAL PROCEEDINGS
A judgment in the amount of $4,860,000 was entered against a subsidiary of
the Company by a judge of the First Civil Specialized Court in Maynas, Peru on
May 10, 1996. The judgment was based on a claim by former union employees of the
Company's subsidiary alleging that such subsidiary impaired their employment
opportunities with that subsidiary and other employers. The Company disputes the
basis for the claim and the judgment and has appealed the decision. Because the
Company believes there was a lack of evidence and irregularities in the
proceedings, the Company also intends to seek to overturn the decision through
other appropriate proceedings. The Company does not believe that the judgment
will have a material adverse effect on its financial condition, results of
operations or its operations in South America.
In the opinion of Company counsel, there are no pending legal proceedings
to which the Company is a party that could have a material adverse effect upon
its business, results of operations or financial condition.
MANAGEMENT
The following table sets forth certain information regarding the directors
and executive officers of the Company.
<TABLE>
<CAPTION>
NAME AGE POSITION
- --------------------------------------------- --- ------------------------------------------
<S> <C> <C>
Robert L. Parker............................. 73 Chairman of the Board of Directors
Robert L. Parker Jr. ........................ 48 President, Chief Executive Officer and
Director
James W. Linn................................ 51 Executive Vice President, Chief Operating
Officer and Director
James J. Davis............................... 49 Vice President of Finance and Chief
Financial Officer
I. E. Hendrix, Jr. .......................... 51 Vice President and Treasurer
Kenneth R. Hoit.............................. 58 Vice President, Planning and Accounting
Leslie D. Rosencutter........................ 40 Vice President, Administration and
Corporate Secretary
T. Bruce Blackman............................ 45 Vice President, Asia Pacific Operations
John R. Gass................................. 44 Vice President, Frontier Areas
Donald D. Goodson............................ 42 Vice President, Latin America Operations
Thomas L. Wingerter.......................... 43 Vice President, North America Operations
Randy L. Ellis............................... 44 Controller
David L. Fist................................ 64 Director
Earnest F. Gloyna............................ 74 Director
R. Rudolph Reinfrank......................... 40 Director
</TABLE>
The following is a brief description of the background and principal
occupation of each director and executive officer:
Mr. Parker, Chairman of the Board, has been a Director since 1954 and
served as President of the Company from 1954 until October 1977, when he was
elected Chairman and Chief Executive Officer. Since December 1991, he has
retained the position of Chairman. He serves on the board of directors of MAPCO,
Inc., a diversified energy company; Clayton Williams Energy, Inc., a company
engaged in exploration and production of oil and natural gas; and BOK Financial
Corporation, a bank holding company organized under the laws of the State of
Oklahoma. Mr. Parker also serves on the board of directors of the American
Petroleum Institute and the National Petroleum Council. He is the father of
Robert L. Parker Jr.
Mr. Parker Jr. has been a Director since 1973 and is President and Chief
Executive Officer. He joined the Company in 1973 and was elected President and
Chief Operating Officer in 1977 and Chief Executive Officer in December 1991. He
was elected Vice President in 1973 and Executive Vice President in 1976. He
currently serves on the board of directors of Alaska Air Group, Inc., the
holding company for Alaska Airlines and Horizon Air Industries. He is the son of
Robert L. Parker.
21
<PAGE> 24
Mr. Linn has been a Director since 1986, is Executive Vice President and
Chief Operating Officer of the Company and has general charge of the Company's
business affairs and its officers. He joined the Company in 1973 in the
Company's international department. He then served in the Company's domestic
operations, being named northern U.S. district manager in 1976. Mr. Linn was
elected Vice President of U.S. and Canada operations in 1979, was promoted to
Senior Vice President in September 1981 and was elected to his present position
in December 1991.
Mr. Davis has served as Vice President of Finance and Chief Financial
Officer since joining Parker in November 1991. From 1986 through 1991, Mr. Davis
was vice president and treasurer of MAPCO, Inc., a diversified energy company
with interests in coal production and marketing, natural gas liquids production,
marketing and transportation, oil refining and retail motor fuel marketing. He
serves as a member of the board of directors of Dollar Rent A Car Finance
Company.
Mr. Hendrix is Vice President and Treasurer of the Company. He joined
Parker in 1976 as manager of the Company's treasury department and was elected
Treasurer in 1978. Mr. Hendrix was elected Vice President of the Company in
April 1983. He serves as a member of the board of directors of American
Performance Mutual Fund.
Mr. Hoit serves as Vice President, Planning and Accounting of the Company.
He joined Parker in 1973. He served as financial analyst and manager of budgets
and analysis prior to being elected a Vice President in April 1983. In June
1991, Mr. Hoit was given additional management responsibilities over corporate
accounting and information systems departments.
Ms. Rosencutter serves as Corporate Secretary and Vice President,
Administration. She has responsibility for the public relations and human
resources departments. She previously had served as Assistant Vice President,
Administration since 1987. Ms. Rosencutter joined Parker in 1974 as secretary to
the Controller and later was secretary to the Robert L. Parker Trust. She has
served as executive secretary and administrative assistant to the Chairman prior
to being elected an officer. She was elected Corporate Secretary in April 1996.
Mr. Blackman serves as Vice President, Asia Pacific Operations. He joined
the Company in 1977 and held management positions in Africa, Singapore and Tulsa
as international accounting manager. In 1983 he was the division manager for the
Indonesian operations. In 1989, he was promoted to contract manager, Asia
Pacific region. He was elected to his current position in January 1996.
Mr. Gass is Vice President, Frontier Areas. He joined the Company in 1977
and has served in various management positions in the Company's international
division. In 1985 he became the division manager of Africa and the Middle East.
In 1987 he directed the Company's mining operations in South Africa. In 1989 he
was promoted to international contract manager. In January 1996, he was
appointed to his current position.
Mr. Goodson serves as Vice President, Latin America Operations. He joined
the Company in 1976 and held various accounting and finance positions prior to
being named contract manager for U.S. operations in 1981. In June 1989, Mr.
Goodson was named Indonesian division manager. In July 1993, he served as
contract manager for the Middle East, Africa and Colombia. In January 1996, he
was elected to his current position.
Mr. Wingerter serves as Vice President, North America Operations. He joined
Parker in 1979, and in 1983 he was named contracts manager for the Rocky
Mountain division. He was promoted to Rocky Mountain division manager in 1984, a
position he held until September 1991 when he was elected a Vice President.
Mr. Ellis was elected Corporate Controller in June 1991. He joined Parker
in 1979 as general accounting supervisor and was named manager of general
accounting in May 1983.
Mr. Fist, a Director since 1986, is a member of the law firm of Rosenstein,
Fist & Ringold, Tulsa, Oklahoma, having been associated with the firm since
1955. He serves as a director of Peoples State Bank and Alliance Business
Investment Company, a federally licensed small business investment company.
Dr. Gloyna has been a Director since 1978 and is presently a chaired
professor in Environmental Engineering at The University of Texas at Austin. He
served as dean, College of Engineering, from April 1970
22
<PAGE> 25
to August 1987. He is also a consultant in environmental engineering through
Earnest F. Gloyna Enterprises, and is president of Gloyna Properties, Inc. Dr.
Gloyna serves as a member of the board of trustees of Southwest Research
Institute, a nonprofit research institute that does contract research work for
government and industry.
Mr. Reinfrank has been a Director since 1993. Since May 1993, Mr. Reinfrank
has been managing director of the Davis Companies, the holding company for the
Marvin Davis family. Mr. Reinfrank also serves as a managing general partner of
Davis Reinfrank Company. From January 1, 1988 through June 30, 1993, Mr.
Reinfrank was executive vice president of Shamrock Holdings, Inc., the holding
company for the Roy E. Disney family. From January 1990 through December 1992,
Mr. Reinfrank also served as managing director of Trefoil Investors, Inc. and
Shamrock Capital Advisors, Inc., the general partner and management services
company respectively, for Trefoil Capital Investors, L.P. Mr. Reinfrank is a
director of Weatherford Enterra, Inc., an international provider of services and
specialized equipment to the oil and gas industry.
DESCRIPTION OF CAPITAL STOCK
The Company has 71,942,000 authorized shares of stock, consisting of (a)
70,000,000 shares of Common Stock, having a par value of $.16 2/3 per share and
(b) 1,942,000 shares of Preferred Stock, having a par value of $1.00 per share.
COMMON STOCK
As of April 30, 1996, there were 56,219,291 shares of Common Stock
outstanding. All of such outstanding shares of Common Stock are fully paid and
nonassessable. Each share of Common Stock has an equal and ratable right to
receive dividends when, as and if declared by the Board of Directors of the
Company out of assets legally available therefor and subject to the dividend
obligations of the Company to the holders of any Preferred Stock then
outstanding. The Company is subject to certain restrictions on the payment of
dividends on, and the repurchase or redemption of, the Common Stock under the
provisions of its existing credit agreement. See "Price Range of Common Stock
and Dividends."
In the event of a liquidation, dissolution or winding up of the Company,
the holders of Common Stock are entitled to share equally and ratably in the
assets available for distribution after payment of all liabilities, and subject
to any prior rights of any holders of Preferred Stock that at the time may be
outstanding.
The holders of Common Stock have no preemptive, subscription, conversion or
redemption rights, and are not subject to further calls or assessments by the
Company. There are no sinking fund provisions applicable to the Common Stock.
Each share of Common Stock is entitled to one vote in the election of directors
and on all other matters submitted to a vote of stockholders. Holders of Common
Stock have no right to cumulate their votes in the election of directors.
PREFERRED STOCK
As of the date of the Prospectus, there were no shares of Preferred Stock
outstanding. Preferred Stock may be issued from time to time in one or more
series at the discretion of the Board of Directors without shareholder approval.
The Board of Directors is also authorized without further approval of the
stockholders to fix the designations, dividends rates, conversion rights,
redemption rights, liquidation price, and sinking fund rights. Depending upon
the rights of such Preferred Stock, its issuance could have an adverse effect on
holders of the Common Stock by delaying or preventing a change in control of the
Company, making removal of the present management of the Company more difficult
or restricting the payment of dividends and other distributions to the holders
of the Common Stock.
POSSIBLE ANTI-TAKEOVER PROVISIONS
The Company's Restated Certificate of Incorporation (the "Company's
Charter") contains certain provisions that might be characterized as
anti-takeover provisions. Such provisions may render more difficult
23
<PAGE> 26
certain possible takeover proposals to acquire control of the Company and make
removal of management of the Company more difficult.
The Company's Charter provides for the Board of Directors to be divided
into three classes of directors serving staggered three-year terms, with each
class as nearly equal in number as possible. Directors of the Company may only
be removed for cause and only by the affirmative vote of a majority of the then
outstanding shares of stock entitled to vote on the matter. Any stockholder
wishing to submit a nomination to the Board of Directors must follow certain
procedures outlined in the Company's By-Laws. In addition, the By-Laws require
written application by the holders of 75% of the Company's outstanding voting
stock to call a Special Stockholder's Meeting.
Certain outstanding contracts binding on the Company with respect to
certain employees may render more difficult the removal of management or
attempts to acquire control of the Company.
As described above, the Company's Charter authorizes a class of
undesignated Preferred Stock consisting of 1,942,000 shares. Preferred Stock may
be issued from time to time in one or more series, and the Board of Directors,
without further approval of the stockholders, is authorized to fix the rights,
preferences, privileges and restrictions applicable to each series of Preferred
Stock. One possible result of authorizing the Board of Directors to determine
such rights, preferences, privileges and restrictions is to eliminate delays
associated with a stockholder vote on specific issuance. The issuance of
Preferred Stock, while providing flexibility in connection with possible
acquisitions and other corporate purposes, could, among other things, adversely
affect the voting power of the holders of Common Stock and, under certain
circumstances, make it more difficult for a third party to gain control of the
Company.
The company is incorporated under the laws of State of Delaware. Section
203 of the Delaware General Corporation Law prevents an "interested stockholder"
(defined as a stockholder owning 15% or more of a corporation's voting stock)
from engaging in a business combination with such corporation for a period of
three years from the date such stockholder became an interested stockholder
unless (a) the corporation's board of directors had earlier approved either the
business combination or the transaction by which the stockholder became an
interested stockholder, or (b) upon attaining that status, the interested
stockholder had acquired at least 85% of the corporations's voting stock (not
counting shares owned by persons who are directors and also officers), or (c)
the business combination is later approved by the board of directors and
authorized by a vote of two-thirds of the stockholders (not including the shares
held by the interested stockholder). Since the Company has not amended its
Restated Certificate of Incorporation or By-Laws to exclude the application of
Section 203, such section does apply to the Company and thus may inhibit an
interested stockholder's ability to engage in a business combination with the
Company.
TRANSFER AGENT AND REGISTRAR
The Transfer Agent and Registrar for the Common Stock is Chemical Bank.
24
<PAGE> 27
UNDERWRITING
Subject to the terms and conditions set forth in the Underwriting
Agreement, the Company has agreed to sell to the Underwriters named below (the
"Underwriters"), for whom Jefferies & Company, Inc., Prudential Securities
Incorporated and Schroder Wertheim & Co. Incorporated are acting as the
Representatives, and the Underwriters have severally agreed to purchase the
number of shares of Common Stock set forth opposite their respective names in
the table below at the public offering price less the underwriting discount set
forth on the cover page of this Prospectus:
<TABLE>
<CAPTION>
NUMBER
UNDERWRITERS OF SHARES
- --------------------------------------------------------------------------------- ----------
<S> <C>
Jefferies & Company, Inc. .......................................................
Prudential Securities Incorporated ..............................................
Schroder Wertheim & Co. Incorporated.............................................
---------
Total.................................................................. 7,000,000
=========
</TABLE>
The Underwriting Agreement provides that the obligation of the Underwriters
to purchase the shares of Common Stock offered hereby is subject to certain
conditions. The Underwriters are committed to purchase all of the shares of
Common Stock offered hereby (other than those covered by the over-allotment
option described below), if any are purchased.
The Underwriters propose to offer the shares of Common Stock to the public
at the offering price set forth on the cover page of this Prospectus and to
certain dealers at such price less a concession not in excess of $ per
share. The Underwriters may allow, and such dealers may reallow, a discount not
in excess of $ per share to certain other dealers. After the public
offering of the Common Stock, the public offering price, the concession to
selected dealers and the reallowance to other dealers may be changed by the
Representatives.
The Company has granted the Underwriters an option, exercisable for 30 days
from the date of this Prospectus, to purchase up to 1,050,000 additional shares
of Common Stock at the public offering price, less the underwriting discount. To
the extent such option is exercised, each Underwriter will become obligated,
subject to certain conditions, to purchase additional shares of Common Stock
proportionate to such Underwriter's initial commitment as indicated in the
preceding table. The Underwriters may exercise such right of purchase only for
the purpose of covering over-allotments, if any, made in connection with the
shares of Common Stock offered by this Prospectus.
The Company and all executive officers and directors of the Company have
agreed not to offer for sale, sell or otherwise dispose of any shares of Common
Stock or any securities convertible into or exchangeable for shares of Common
Stock for a period of 90 days from the date of this Prospectus, without the
prior written consent of Jefferies & Company, Inc.; provided, however, that the
Company may issue and sell Common
25
<PAGE> 28
Stock pursuant to any stock bonus plan, stock grant plan or stock option plan in
effect as of the date of this Prospectus.
The Company has agreed to indemnify the Underwriters against certain
liabilities that may be incurred in connection with the sale of the Common Stock
offered hereby, including liabilities under the Securities Act of 1933, as
amended (the "Securities Act"), or to contribute to payments that the
Underwriters may be required to make in respect thereof.
Pursuant to a letter agreement between the Company and Jefferies & Company,
Inc., Jefferies & Company, Inc. has acted and will continue to act as a
financial advisor to the Company in connection with the acquisition of, merger
or other combination with certain potential acquisition targets. If the Company
completes a transaction with any such target, the Company will pay Jefferies &
Company, Inc. certain usual and customary fees for such services. The Company
has not paid Jefferies & Company, Inc. and is not obligated to pay Jefferies &
Company, Inc., any compensation for services rendered under this agreement to
date.
FORWARD-LOOKING STATEMENTS
This Prospectus includes "forward-looking statements" within the meaning of
Section 27A of the Securities Act, and Section 21E of the Exchange Act. All
statements, other than statements of historical facts, included in this
Prospectus which address activities, events or developments which the Company
expects or anticipates will or may occur in the future, including such things as
future capital expenditures (including the amount and nature thereof), expansion
and other development trends of the land contract drilling industry, business
strategy, expansion and growth of the Company's businesses and operations, and
other such matters are forward-looking statements. These statements are based on
certain assumptions and analyses made by the Company in light of its experience
and its perception of historical trends, current conditions and expected future
developments as well as other factors it believes are appropriate in the
circumstances. However, whether actual results and developments will conform
with the Company's expectations and predictions is subject to a number of risks
and uncertainties, including the risk factors discussed in this Prospectus;
general economic, market or business conditions; the business opportunities (or
lack thereof) that may be presented to and pursued by the Company; changes in
laws or regulations; and other factors, most of which are beyond the control of
the Company. Consequently, all of the forward-looking statements made in this
Prospectus are qualified by these cautionary statements and there can be no
assurance that the actual results or developments anticipated by the Company
will be realized or, even if substantially realized, that they will have the
expected consequences to or effects on the Company or its business or
operations.
LEGAL MATTERS
Certain legal matters with respect to the validity of the Common Stock
offered hereby will be passed upon for the Company by Conner & Winters, A
Professional Corporation, Tulsa, Oklahoma. Certain legal matters related to the
offering of the Common Stock will be passed upon for the Underwriters by
Cravath, Swaine & Moore, New York, New York.
INDEPENDENT ACCOUNTANTS
The consolidated balance sheet as of August 31, 1995 and 1994, and the
consolidated statements of operations, redeemable preferred stock and
stockholders' equity, and cash flows for each of the three years in the period
ended August 31, 1995, incorporated by reference or included in this Prospectus,
have been included herein in reliance on the report of Coopers & Lybrand L.L.P.,
independent accountants, given on the authority of that firm as experts in
auditing and accounting. With respect to the unaudited interim financial
26
<PAGE> 29
information for the periods ended November 30, 1995 and 1994 and February 29,
1996 and February 28, 1995, incorporated by reference or included in this
Prospectus, the independent accountants have reported that they have applied
limited procedures in accordance with professional standards for a review of
such information. However, their separate reports included in the Company's
quarterly reports on Form 10-Q for the periods ended November 30, 1995 and
February 29, 1996, and incorporated by reference or included herein, state that
they did not audit and they do not express an opinion on that interim financial
information. Accordingly, the degree of reliance on their reports on such
information should be restricted in light of the limited nature of the review
procedures applied. The accountants are not subject to the liability provisions
of Section 11 of the Securities Act for their report on the unaudited interim
financial information because that report is not a "report" or a "part" of the
registration statement prepared or certified by the accountants within the
meaning of Sections 7 and 11 of the Securities Act.
27
<PAGE> 30
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
PARKER DRILLING COMPANY AND SUBSIDIARIES
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
AUDITED FINANCIAL STATEMENTS OF PARKER DRILLING COMPANY AND SUBSIDIARIES:
Report of Independent Accountants................................................... F-2
Consolidated Balance Sheet as of August 31, 1995 and 1994........................... F-3
Consolidated Statement of Operations for the years ended August 31, 1995, 1994 and
1993............................................................................. F-4
Consolidated Statement of Redeemable Preferred Stock and Stockholders' Equity for
the years ended August 31, 1995, 1994 and 1993................................... F-5
Consolidated Statement of Cash Flows for the years ended August 31, 1995, 1994 and
1993............................................................................. F-6
Notes to Consolidated Financial Statements for the years ended August 31, 1995, 1994
and 1993......................................................................... F-7
UNAUDITED CONDENSED FINANCIAL STATEMENTS OF PARKER DRILLING COMPANY AND SUBSIDIARIES:
Report of Independent Accountants................................................... F-16
Unaudited Consolidated Condensed Balance Sheets as of February 29, 1996, and
August 31, 1995.................................................................. F-17
Unaudited Consolidated Condensed Statements of Operations for the six months ended
February 29, 1996 and February 28, 1995.......................................... F-18
Unaudited Consolidated Condensed Statements of Cash Flows for the six months ended
February 29, 1996 and February 28, 1995.......................................... F-19
Notes to Unaudited Consolidated Condensed Financial Statements for the six months
ended February 29, 1996 and February 28, 1995.................................... F-20
</TABLE>
F-1
<PAGE> 31
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders
Parker Drilling Company
We have audited the accompanying consolidated balance sheet of Parker
Drilling Company and subsidiaries as of August 31, 1995 and 1994, and the
related consolidated statements of operations, redeemable preferred stock and
stockholders' equity and cash flows for each of the three years in the period
ended August 31, 1995. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Parker Drilling
Company and subsidiaries as of August 31, 1995 and 1994, and the consolidated
results of their operations and their cash flows for each of the three years in
the period ended August 31, 1995, in conformity with generally accepted
accounting principles.
COOPERS & LYBRAND L.L.P.
Tulsa, Oklahoma
October 17, 1995
F-2
<PAGE> 32
PARKER DRILLING COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
AUGUST 31,
---------------------
1995 1994
-------- --------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents...................................................... $ 20,752 $ 10,660
Other short-term investments................................................... 1,372 3,811
Accounts and notes receivable, net of allowance for bad debts of $726 in 1995
and $826 in 1994............................................................. 39,578 34,675
Rig materials and supplies..................................................... 11,532 9,117
Other current assets........................................................... 5,146 4,029
-------- --------
Total current assets.................................................... 78,380 62,292
-------- --------
Property, plant and equipment, at cost:
Drilling equipment............................................................. 506,130 538,025
Buildings, land and improvements............................................... 13,259 14,270
Other.......................................................................... 20,470 24,399
Construction in progress....................................................... 14,759 5,247
-------- --------
554,618 581,941
Less accumulated depreciation, depletion and amortization...................... 432,360 454,763
-------- --------
Net property, plant and equipment....................................... 122,258 127,178
-------- --------
Rig materials and supplies....................................................... 6,895 9,127
-------- --------
Deferred charges and other assets:
Assets held for disposition (Note 2)........................................... 2,486 3,518
Notes receivable, net of allowance of $70 in 1995 and $224 in 1994............. 1,817 2,871
Other.......................................................................... 5,123 4,362
-------- --------
Total deferred charges and other assets................................. 9,426 10,751
-------- --------
Total assets............................................................ $216,959 $209,348
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt.............................................. $ 289 $ --
Accounts payable............................................................... 9,539 9,233
Accrued liabilities............................................................ 7,401 7,336
Accrued income taxes........................................................... 5,109 5,053
-------- --------
Total current liabilities............................................... 22,338 21,622
-------- --------
Long-term debt (Note 3).......................................................... 1,748 --
-------- --------
Deferred income tax (Note 4)..................................................... -- 294
-------- --------
Other long-term liabilities...................................................... 5,953 3,596
-------- --------
Minority interest................................................................ -- 3,253
-------- --------
Commitments and contingencies (Note 9)
Preferred stock, $1 par value, 1,942,000 shares authorized, no shares
outstanding.................................................................... -- --
-------- --------
Stockholders' equity:
Common stock, $.16 2/3 par value, authorized 70,000,000 shares, issued and
outstanding 55,722,183 shares (55,112,749 shares in 1994).................... 9,287 9,185
Capital in excess of par value................................................. 205,310 202,403
Retained earnings (accumulated deficit)........................................ (24,391) (28,307)
Other.......................................................................... (3,286) (2,698)
-------- --------
Total stockholders' equity.............................................. 186,920 180,583
-------- --------
Total liabilities and stockholders' equity.............................. $216,959 $209,348
======== ========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-3
<PAGE> 33
PARKER DRILLING COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
(IN THOUSANDS EXCEPT EARNINGS (LOSS) PER SHARE
AND WEIGHTED AVERAGE SHARES OUTSTANDING)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED AUGUST 31,
----------------------------------------
1995 1994 1993
---------- ---------- ----------
<S> <C> <C> <C>
Revenue:
Drilling contracts................................... $ 153,075 $ 147,480 $ 96,719
Other................................................ 4,296 4,944 4,082
---------- ---------- ----------
157,371 152,424 100,801
---------- ---------- ----------
Operating expense:
Drilling............................................. 113,132 114,732 69,237
Other................................................ 4,928 6,563 5,951
Depreciation, depletion and amortization............. 21,643 21,950 20,400
General and administrative........................... 19,165 18,314 17,593
Provision for reduction in carrying value of certain
assets (Note 2)................................... -- 19,718 --
---------- ---------- ----------
158,868 181,277 113,181
---------- ---------- ----------
Operating income (loss)................................ (1,497) (28,853) (12,380)
---------- ---------- ----------
Other income and (expense):
Interest expense..................................... (88) (11) (53)
Interest income...................................... 1,272 1,161 1,729
Minority interest.................................... (227) (135) 149
Other................................................ 7,640 919 (469)
---------- ---------- ----------
8,597 1,934 1,356
---------- ---------- ----------
Income (loss) before income taxes...................... 7,100 (26,919) (11,024)
---------- ---------- ----------
Income tax expense (benefit)........................... 3,184 1,887 (337)
---------- ---------- ----------
Net income (loss)...................................... $ 3,916 $ (28,806) $ (10,687)
========== ========== ==========
Earnings (loss) per share, primary and fully diluted... $ .07 $ (.53) $ (.20)
========== ========== ==========
Weighted average shares outstanding (fully diluted).... 55,332,541 54,247,664 53,082,078
========== ========== ==========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-4
<PAGE> 34
PARKER DRILLING COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF REDEEMABLE PREFERRED
STOCK AND STOCKHOLDERS' EQUITY
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
OTHER
---------------------------
REDEEMABLE CAPITAL RETAINED UNEARNED
PREFERRED IN EXCESS EARNINGS CURRENCY RESTRICTED
STOCK COMMON OF PAR (ACCUMULATED TRANSLATION STOCK PLAN
SERIES C STOCK VALUE DEFICIT) ADJUSTMENT COMPENSATION
---------- ------ --------- ------------ ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Balances, August 31, 1992............ $ 157 $9,005 $ 197,467 $ 11,192 $(739) $ (6,744)
Redemption of preferred stock...... (157)
Activity in employees' stock
plans........................... 16 524 2,976
Acquisition of stock from certain
employees....................... (11) (373)
Issuance of 925,000 common shares
upon exercise of a warrant at
$4.67 per share................. 154 4,166
Net income (loss).................. (10,687)
Cash dividends on preferred
stock -- $.75 per share......... (6)
Currency translation adjustments
associated with assets of
subsidiary sold................. 866
Cumulative foreign exchange
translation adjustments......... (127)
------ ------ --------- -------- ----- --------
Balances, August 31, 1993............ -- 9,164 201,784 499 -- (3,768)
Activity in employees' stock
plans........................... 28 916 1,070
Acquisition of stock from certain
employees....................... (7) (297)
Net income (loss).................. (28,806)
------ ------ --------- -------- ----- --------
Balances, August 31, 1994............ -- 9,185 202,403 (28,307) -- (2,698)
Activity in employees' stock
plans........................... 111 3,175 (588)
Acquisition of stock from certain
employees....................... (9) (268)
Net income......................... 3,916
------ ------ --------- -------- ----- --------
Balances, August 31, 1995............ $ -- $9,287 $ 205,310 $(24,391) $ -- $ (3,286)
====== ====== ========= ======== ===== ========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-5
<PAGE> 35
PARKER DRILLING COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED AUGUST 31,
--------------------------------
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss).......................................... $ 3,916 $(28,806) $(10,687)
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Depreciation, depletion and amortization................ 21,643 21,950 20,400
Loss (gain) on disposition of property, plant and
equipment............................................. (6,395) (2,083) (852)
Provision for reduction in carrying value of certain
assets................................................ -- 19,718 --
Deferred tax expense (benefit).......................... (294) (904) (1,431)
Amortization of deferred compensation and other......... 1,820 2,490 5,197
Change in assets and liabilities:
Accounts and notes receivable......................... (4,105) (10,889) 2,305
Rig materials and supplies............................ (627) (313) 1,696
Other current assets.................................. (1,364) (1,356) (1,934)
Accounts payable and accrued liabilities................ 3,319 1,109 573
Accrued income taxes.................................... 56 (238) (1,349)
Minority interest....................................... 227 135 (149)
Other assets............................................ (260) 137 (48)
-------- -------- --------
Net cash provided by operating activities.......... 17,936 950 13,721
-------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from the sale of property, plant and equipment.... 11,711 4,740 7,150
Capital expenditures....................................... (21,540) (34,764) (18,717)
Proceeds from sale of a subsidiary......................... -- -- 2,353
Investments in affiliates.................................. (501) (140) (177)
Decrease (increase) in other short-term and
long-term investments................................... 2,439 27,608 (7,388)
Other...................................................... 121 -- --
-------- -------- --------
Net cash provided by (used in) investing
activities....................................... (7,770) (2,556) (16,779)
-------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of debt............................. $ 187 $ -- $ --
Principal payments under debt obligations.................. -- -- (777)
Repurchase of common stock................................. (277) (304) (384)
Proceeds from exercise of stock warrant.................... -- -- 4,320
Other...................................................... 16 -- (819)
-------- -------- --------
Net cash provided (used) by financing activities... (74) (304) 2,340
-------- -------- --------
Net increase (decrease) in cash and cash equivalents......... 10,092 (1,910) (718)
Cash and cash equivalents at beginning of year............... 10,660 12,570 13,288
-------- -------- --------
Cash and cash equivalents at end of year..................... $ 20,752 $ 10,660 $ 12,570
======== ======== ========
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest................................................ $ 2 $ 11 $ 47
Income taxes............................................ $ 3,422 $ 3,029 $ 2,361
</TABLE>
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.
In May 1995, the Company received rig materials and supplies valued at
$556,000 in lieu of payment on a note due the Company.
The accompanying notes are an integral part of the consolidated financial
statements.
F-6
<PAGE> 36
PARKER DRILLING COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Consolidation -- The consolidated financial statements include the accounts
of Parker Drilling Company ("Parker Drilling") and all of its majority-owned
subsidiaries (collectively, the "Company").
Drilling Contracts -- The Company recognizes revenue and expenses on day
rate contracts as the drilling progresses (percentage-of-completion method)
because the Company does not bear the risk of completion of the well. For
meterage contracts, the Company recognizes the revenue and expenses upon
completion of the well (completed-contract method).
Cash and Cash Equivalents -- For purposes of the balance sheet and the
statement of cash flows, the Company considers cash equivalents to be all highly
liquid debt instruments that had a remaining maturity of three months or less at
the date of purchase.
Other Short-term Investments -- Other short-term investments include
primarily certificates of deposit, U.S. government securities and commercial
paper having remaining maturities of greater than three months at the date of
purchase and are stated at the lower of cost or market.
Property, Plant and Equipment -- The Company provides for depreciation of
property, plant and equipment primarily on the straight-line method over the
estimated useful lives of the assets after provision for salvage value. When
properties are retired or otherwise disposed of, the related cost and
accumulated depreciation are removed from the accounts and any gain or loss is
included in operations. Management periodically evaluates the Company's assets
to determine if they are not in excess of their net realizable value. Management
considers a number of factors such as estimated future cash flows, appraisals
and current market value analysis in determining net realizable value. Assets
are written down to reflect any decrease in net realizable value below their net
carrying value (see Note 2).
Rig Materials and Supplies -- Since the Company's foreign drilling
generally occurs in remote locations, making timely outside delivery of spare
parts unlikely, a complement of parts and supplies is maintained for each rig
either at the drilling site or in warehouses close to the operations. During
periods of high rig utilization, these parts are generally consumed and
replenished within a one-year period. During a period of lower rig utilization
in a particular location, the parts, like the related idle rigs, are generally
not transferred to other foreign locations until new contracts are obtained
because of the significant transportation costs which would result from such
transfers. The Company classifies those parts which are not expected to be
utilized in the following year as long-term assets.
Income Taxes and Change in Accounting Policy -- During fiscal 1993, the
Company adopted Statement of Financial Accounting Standards (SFAS) No. 109:
Accounting for Income Taxes. Prior to the change the Company followed SFAS No.
96: Accounting for Income Taxes. Similar to SFAS No. 96, SFAS No. 109 utilizes
the liability method and deferred income taxes (assets) are recorded to reflect
the expected tax consequences in future years of differences between the tax
basis of assets and liabilities and their financial reporting amounts at each
year end. The change in this accounting policy had no effect upon net income for
the year ended August 31, 1993.
Earnings (Loss) Per Share -- Earnings (loss) per share is computed by
dividing net income (loss), as adjusted for dividends on preferred stock, by the
weighted average number of common shares outstanding during the period. Common
shares issued under the 1969 Key Employees Stock Grant Plan, 1980 Incentive
Career Stock Plan and the 1991 Stock Grant Plan are issued and outstanding and
are only considered in the computation of weighted average shares outstanding
when their effect on earnings per share is dilutive.
Concentrations of Credit Risk -- Financial instruments which potentially
subject the Company to concentrations of credit risk consist primarily of trade
receivables with a variety of national and international oil and natural gas
companies. The Company generally does not require collateral on its trade
receivables. Such credit risk is considered by management to be limited due to
the large number of customers comprising
F-7
<PAGE> 37
PARKER DRILLING COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
the Company's customer base. The Company places substantially all its
interest-bearing investments with major financial institutions and, by policy,
limits the amount of its credit exposure with respect to any single financial
institution. At August 31, 1995, the Company had deposits in domestic banks in
excess of federally insured limits of approximately $.3 million. In addition,
the Company had deposits in foreign banks of $6.2 million which are not
federally insured.
Fair Market Value of Financial Instruments -- The carrying amount of the
Company's cash and short-term investments and short-term and long-term debt had
fair values that approximated their carrying amounts.
NOTE 2 -- PROVISION FOR REDUCTION IN CARRYING VALUE OF CERTAIN ASSETS
During the fourth quarter of fiscal 1994, management analyzed its domestic
operations and made the strategic decision to reorganize certain of these
operations and sell certain of these assets. In Alaska, the Company decided to
reduce operating and administrative costs and to look for opportunities to enter
into joint ventures or combine operations with other drilling companies. As a
result, the Company reduced the carrying value of certain assets in Alaska,
including rigs, spare parts and property that were to be sold. The Company's
Partech(R) manufacturing operations were downsized by the sale of land,
buildings, equipment and excess inventories, and accordingly, the Company wrote
down to net realizable value certain drilling equipment, property and
inventories that were sold. In the lower 48 divisions, the Company disposed of a
number of mechanical rigs and certain rig equipment which also were written down
to net realizable value. Write-offs relating to the lower 48 and Alaska rigs
resulted in the removal of 16 rigs from the Company's fleet. Aggregating the
items described above, the Company recorded a $19,718,000 provision during the
fourth quarter of fiscal 1994.
NOTE 3 -- LONG-TERM DEBT
<TABLE>
<CAPTION>
AUGUST 31,
----------------
1995 1994
------ ---
(DOLLARS IN
THOUSANDS)
<S> <C> <C>
Parker Drilling
Note payable annually until November 2001 with interest at
5.75%....................................................... $1,850 $--
Parker Drilling International of New Zealand, Ltd.
Note payable monthly through February 2003 to bank with interest
at bank's business lending rate plus margin (total rate at
August 31, 1995 was 11.5%)..................................... 187 --
------ ---
Total debt....................................................... 2,037 --
Less current portion............................................. 289 --
------ ---
Total long-term debt................................... $1,748 $--
====== ===
</TABLE>
The Company's long-term debt matures $289,000 each year for the years 1996
through 2000.
The Company has a credit agreement which provides a $7,500,000 revolving
credit facility through March 1, 1996. The credit agreement was subsequently
amended in the fourth quarter of fiscal 1995 to extend the expiration date to
May 31, 1996. Interest on the revolving credit facility is at prime plus 3/4 of
one percent and commitment fees on the unused credit facility are 1/2 of one
percent. The agreement requires, among other things, maintenance of minimum
working capital and restricts capital expenditures and creation of additional
indebtedness. Under this agreement, the payment of dividends on the Company's
common stock is limited to the lesser of 40 percent of consolidated net income
for the preceding fiscal year or $2,600,000. At August 31, 1995, all of the
credit facility was available for drawdown.
F-8
<PAGE> 38
PARKER DRILLING COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 4 -- INCOME TAXES
Income (loss) before income taxes (in thousands) is summarized as follows:
<TABLE>
<CAPTION>
YEARS ENDED AUGUST 31,
--------------------------------
1995 1994 1993
------ -------- --------
<S> <C> <C> <C>
United States........................................ $1,180 $(33,929) $(11,318)
Foreign.............................................. 5,920 7,010 294
------ -------- --------
$7,100 $(26,919) $(11,024)
====== ======== ========
</TABLE>
Income tax expense (benefit) (in thousands) is summarized as follows:
<TABLE>
<CAPTION>
YEARS ENDED AUGUST 31,
-----------------------------
1995 1994 1993
------ ------ -------
<S> <C> <C> <C>
Current:
United States:
Federal............................................ $ -- $ -- $ (110)
State.............................................. -- (246) 6
Foreign............................................... 3,478 3,037 1,198
Deferred:
United States:
Federal............................................ -- (326) --
State.............................................. -- -- --
Foreign............................................... (294) (578) (1,431)
------ ------ -------
$3,184 $1,887 $ (337)
====== ====== =======
</TABLE>
During fiscal 1993, the Company adopted the provisions of Statement of
Financial Accounting Standards (SFAS) No. 109: Accounting for Income Taxes. SFAS
No. 109 requires recognition of deferred tax liabilities and assets for the
expected future tax consequences of events that have been included in the
financial statements or tax returns. Under this method, deferred tax liabilities
and assets are determined based on the difference between the financial
statement and tax basis of assets and liabilities using enacted tax rates in
effect for the year in which the differences are expected to reverse.
Total income tax expense (benefit) differs from the amount computed by
multiplying income (loss) before income taxes by the U.S. federal income tax
statutory rate. The reasons for this difference (dollars in thousands) are as
follows:
<TABLE>
<CAPTION>
YEARS ENDED AUGUST 31,
----------------------------------------------------------
1995 1994 1993
---------------- ----------------- -----------------
% OF % OF % OF
PRETAX PRETAX PRETAX
INCOME INCOME INCOME
AMOUNT (LOSS) AMOUNT (LOSS) AMOUNT (LOSS)
------ ------ ------- ------ ------- ------
<S> <C> <C> <C> <C> <C> <C>
Computed expected tax expense (benefit)... $2,414 34% $(9,153) (34)% $(3,748) (34)%
Foreign tax at rates different than
U.S..................................... 1,171 16% 76 -- (333) (3)%
Utilization of loss carryforwards......... (401) (5)% -- -- -- --
Limitation on recognition of tax
benefit................................. -- -- 11,536 43% 3,848 35%
Other..................................... -- -- (572) (2)% (104) (1)%
--
------ ------- --- ------- ---
Actual tax expense (benefit).............. $3,184 45% $ 1,887 7% $ (337) (3)%
====== == ======= === ======= ===
</TABLE>
F-9
<PAGE> 39
PARKER DRILLING COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The components of the Company's tax assets and (liabilities) as of August
31, 1995 and 1994, are shown below (in thousands):
<TABLE>
<CAPTION>
1995 1994
-------- --------
<S> <C> <C>
Domestic:
Deferred tax assets:
Net operating loss and tax credit carryforwards................... $ 67,259 $ 67,379
Reserves established against realization of certain assets........ 1,089 1,455
Accruals not deducted for tax purposes............................ 4,169 4,561
Depreciation of property, plant and equipment..................... 3,385 8,913
-------- --------
75,902 82,308
Deferred tax liabilities:
Depreciation of property, plant and equipment..................... (8,408) (13,503)
-------- --------
Net deferred tax asset............................................... 67,494 68,805
Valuation allowance.................................................. (67,494) (68,805)
-------- --------
$ -- $ --
======== ========
Foreign:
Depreciation of property, plant and equipment........................ $ -- $ 294
-------- --------
Deferred tax liability............................................... $ -- $ 294
======== ========
</TABLE>
At August 31, 1995, the Company had $137,500,000 net operating loss
carryforwards for tax purposes which expire over a fifteen year period beginning
in the year 2000. In addition, the Company had $13,600,000 investment tax credit
carryforwards for tax purposes which expire over a fifteen year period beginning
in the year 1997.
NOTE 5 -- REDEEMABLE PREFERRED STOCK
In January 1984, the Company began redeeming annually one-tenth of the $.75
cumulative Series C preferred stock shares then outstanding and completed the
redemption in January 1993.
NOTE 6 -- COMMON STOCK AND STOCK OPTIONS
The Company's 1969 Key Employees Stock Grant Plan (formerly the 1969 Key
Employees Stock Option Plan) was amended in December 1990 to provide for the
issuance of 223,000 shares of common stock for no cash consideration to key
non-officer employees. Each employee receiving a grant of shares may dispose of
15 percent of his/her grant on each annual anniversary date from the date of
grant for the first four years. On the fifth year anniversary, the employee may
dispose of the remaining 40 percent of his/her grant. No shares were granted in
fiscal 1995 and 1994. In fiscal 1995, 1,375 shares were cancelled leaving 1,375
shares reserved for issuance or available for granting as of August 31, 1995.
The Company's 1980 Incentive Career Stock Plan ("1980 Plan") provides for
the issuance of 2,100,000 shares of common stock for no cash consideration to
key employees. Each employee receiving a grant of shares may dispose of 15
percent of his/her grant on each annual anniversary date from the date of grant
for the first four years. On the fifth year anniversary, the employee may
dispose of the remaining 40 percent of his/her grant. No shares were granted and
no shares were cancelled in fiscal 1994. No shares were granted in fiscal 1995
and 3,500 shares were cancelled leaving 6,250 shares reserved for issuance and
available for granting at August 31, 1995.
The Company's 1991 Stock Grant Plan ("1991 Plan") provides for the issuance
to officers and key employees of up to 3,160,000 shares of common stock for no
cash consideration. Shares granted under the
F-10
<PAGE> 40
PARKER DRILLING COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
1991 Plan are fully vested no earlier than 24 months from the effective date of
the grant and not later than 36 months. The specific vesting schedule for each
grant is determined at the time of grant. During fiscal 1994, 45,000 shares were
granted and no shares were cancelled. In fiscal 1995, 545,000 shares were
granted and no shares were cancelled leaving 1,580,195 shares reserved for
issuance and available for granting at August 31, 1995.
The fair market value of the common stock at date of grant for the Plans is
recorded as deferred compensation and amortized to expense over the period
during which the restrictions lapse. Deferred compensation is shown as a
deduction from stockholders' equity.
During fiscal 1995, 1994 and 1993, the Company purchased 51,279, 41,638 and
64,173 Parker Drilling shares, respectively, from certain of its employees who
had received stock grants under the 1991 and 1980 Plans. The Company acquired
the shares at the market price (weighted average price was $5.40 per share in
fiscal 1995, $7.31 per share in fiscal 1994 and $5.98 per share in fiscal 1993).
The proceeds were used to pay the employees' tax withholding obligations arising
from the vesting of shares under the Plans.
The 1994 Non-Employee Director Stock Option Plan ("Director Plan") was
approved by shareholders of the Company on December 14, 1994. The Director Plan
provides for the issuance of options to purchase up to 200,000 shares of the
Company's common stock. The option price per share is equal to the fair market
value of a Parker Drilling share on the date of grant. The term of each option
is ten years, and an option first becomes exercisable six months after the date
of grant. Under the Plan, on the first trade day of each calendar year, each
person who is then a non-employee director of the Company will be automatically
granted an option to purchase 5,000 shares of common stock.
The 1994 Executive Stock Option Plan ("Option Plan") was approved by
shareholders of the Company on December 14, 1994. The Option Plan provides for
the granting of a maximum of 2,400,000 shares to key employees and consultants
of the Company and its subsidiaries through the granting of stock options, stock
appreciation rights and restricted and deferred stock awards. The option price
per share may not be less than 50% of the fair market value of a share on the
date the option is granted. The maximum term of a non-qualified option may not
exceed fifteen years and the maximum term of an incentive option is ten years.
Information regarding the Company's stock option plans is summarized below:
<TABLE>
<CAPTION>
1994 OPTION PLAN
----------------------
1994 NON-
DIRECTOR INCENTIVE QUALIFIED
PLAN OPTIONS OPTIONS
-------- --------- ---------
<S> <C> <C> <C>
Shares under option:
Outstanding at September 1, 1994....................... -- -- --
Granted................................................ 15,000 733,000 147,000
Exercised.............................................. -- -- (7,000)
Cancelled.............................................. -- -- --
-------- --------- ---------
Outstanding at August 31, 1995......................... 15,000 733,000 140,000
Average option price per share at August 31, 1995........ $4.56 $4.50 $2.25
Options exercisable at August 31, 1995................... 15,000 733,000 42,000
</TABLE>
F-11
<PAGE> 41
PARKER DRILLING COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The following is a summary of common stock reserved for issuance at fiscal
year end:
<TABLE>
<CAPTION>
1995 1994
--------- ---------
<S> <C> <C>
Key employee stock plans...................................... 4,180,820 2,127,945
Stock Bonus Plan.............................................. 186,279 79,867
Warrants(1)................................................... 400,000 400,000
--------- ---------
Total shares reserved for issuance.................. 4,767,099 2,607,812
========= =========
</TABLE>
- ---------------
(1) Warrants for 400,000 shares are exercisable at $3.88 per share, subject to
certain adjustments, no later than October 24, 1995.
NOTE 7 -- EMPLOYEE BENEFIT PLANS
The Parker Drilling Company Stock Bonus Plan ("Plan") was adopted effective
September 1980 for employees of Parker Drilling and its subsidiaries who are
U.S. citizens and who have completed one year of service with the Company. It
was amended in 1983 to qualify as a 401(k) plan under the Internal Revenue Code
which permits a specified percentage of an employee's salary to be voluntarily
contributed on a before-tax basis and to provide for a Company matching feature.
Participants may contribute from one percent to 15 percent of eligible earnings
and direct contributions to one or more of seven investment funds. The Company
presently makes dollar-for-dollar matching contributions up to three percent of
a participant's compensation. The Company's matching contribution is made in
Parker Drilling common stock. The Plan was amended in 1989 to change the vesting
schedule to no percent vesting if a participant has less than five years of
service and 100 percent vesting if a participant has five or more years of
service. Each Plan year, Company contributions can be made, at the discretion of
the Board of Directors, in amounts not exceeding the permissible deductions
under the Internal Revenue Code. The Company issued 113,399 shares to the Plan
in 1995, 123,619 shares in 1994 and 95,177 shares in 1993.
F-12
<PAGE> 42
PARKER DRILLING COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 8 -- BUSINESS SEGMENTS
Information regarding the Company's operations by geographic area is as
follows:
<TABLE>
<CAPTION>
1995 1994 1993
-------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Operations by Geographic Area
Revenue:
United States...................................... $ 28,487 $ 30,975 $ 30,936
Other Western Hemisphere........................... 76,115 52,722 31,604
Asia Pacific....................................... 44,911 43,445 22,556
Africa, Middle East and C.I.S...................... 7,858 25,282 15,705
-------- -------- --------
Total revenue.............................. $157,371 $152,424 $100,801
======== ======== ========
Operating income (loss):
United States...................................... $ (7,609) $(30,518) $(11,355)
Other Western Hemisphere........................... (921) (5,937) 792
Asia Pacific....................................... 8,701 6,771 (1,240)
Africa, Middle East and C.I.S...................... (1,668) 831 (577)
-------- -------- --------
Total operating income (loss).............. $ (1,497) $(28,853) $(12,380)
======== ======== ========
Identifiable assets:
United States...................................... $ 71,233 $ 64,337 $121,130
Other Western Hemisphere........................... 83,345 73,688 39,420
Asia Pacific....................................... 49,223 43,456 43,176
Africa, Middle East and C.I.S...................... 13,158 27,867 32,616
======== ======== ========
Total identifiable assets.................. $216,959 $209,348 $236,342
======== ======== ========
</TABLE>
Two customers accounted for approximately 22 percent and 13 percent,
respectively, of total revenue in 1995. Three customers accounted for
approximately 14 percent, 12 percent and 11 percent, respectively, of total
revenue in 1994. Three customers accounted for approximately 22 percent, 14
percent and 10 percent, respectively, of total revenue in 1993. Operating income
(loss) is total revenue less operating expenses including depreciation,
depletion and amortization and an allocation of general corporate expenses based
on rig operating days. Operating income (loss) excludes interest expense,
interest capitalized, non-operating income or expense and income taxes.
NOTE 9 -- COMMITMENTS AND CONTINGENCIES
At August 31, 1995, the Company had letters of credit facilities of
$17,651,000 of which $7,277,000 had been issued.
Certain officers have entered into a Severance Compensation and Consulting
Agreement ("the Agreement") with the Company. The Agreement has an initial ten
year term and provides certain benefits upon a change in control. A change in
control includes certain mergers, sale of all of the Company's assets,
liquidation of the Company or a third party acquiring a greater percentage of
stock than the aggregate ownership of Robert L. Parker, Robert L. Parker Jr. and
Robert L. Parker Trust. After a change in control occurs, if an officer is
terminated other than for cause or resigns for good reason, the Agreement
provides for a payment of three times the annual cash compensation, a one year
consulting agreement at the officer's annual cash compensation, miscellaneous
executive benefits and extended life and health benefits for four years.
A former employee ("Plaintiff") was injured while working for the Company
on a rig owned and operated by another firm ("Defendant") for which he sought
damages against the firm. Pursuant to the
F-13
<PAGE> 43
PARKER DRILLING COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
indemnity provision in the contract between the Company and the Defendant, the
Company agreed to defend and indemnify the Defendant. The litigation ultimately
resulted in a settlement in favor of the Plaintiff totalling $6,750,000. Because
certain findings of fact by the jury created a dispute over the obligations of
the Company under the indemnity provision, the Defendant and the Company entered
into litigation to determine liability for funding the settlement. This
ancillary proceeding also resulted in a settlement, with the Defendant agreeing
to pay $1,687,000 and the Company $5,063,000.
The Company has filed suit against its excess insurer claiming
reimbursement of the compensatory portion of the settlement with the Plaintiff.
The Company has also commenced legal proceeding against the counsel retained to
defend the Defendant claiming that the Company was damaged in having to
indemnify the Defendant for the balance of the settlement with the Plaintiff due
to the malpractice/misrepresentation of the counsel. During fiscal 1994, the
Company recorded a $2,562,000 expense related to this litigation.
In addition, the Company is a party to various other lawsuits and claims
arising out of the ordinary course of business. Management, after review and
consultation with legal counsel, considers that any liability resulting from
these matters would not materially affect the results of operations or the
financial position of the Company.
NOTE 10 -- RELATED PARTY TRANSACTIONS
At August 31, 1995, the Company owned an insurance policy on the life of
Mr. R. L. Parker, chairman and a principal stockholder. The Company is the
beneficiary of this policy which was issued pursuant to a Stock Purchase
Agreement ("Agreement") approved by vote of the stockholders at the 1975 Annual
Meeting on December 10, 1975. This Agreement was entered into between the
Company and the Robert L. Parker Trust and provides that upon the death of
Robert L. Parker, the Company would be required, at the option of the Trust, to
purchase from the Trust at a discounted price the amount of Parker Drilling
common stock which could be purchased with the proceeds of the policy of
$7,000,000. On August 3, 1994, the Company and the Trust modified this Agreement
so that the Company will have the option but not the obligation to purchase the
stock at a discounted price with the proceeds or to retain the entire proceeds
upon the death of Robert L. Parker. If action under the agreement had been
required at August 31, 1995, and the Company elected to purchase Parker Drilling
common stock from the Trust, Parker Drilling's outstanding common stock would
have been reduced by approximately three percent.
As a part of the agreement to terminate the option held by the Trust and to
grant the Company a limited option to purchase stock at a discounted price, the
Company has also agreed to pay a premium of $655,019 annually for a split dollar
last-to-die life insurance policy on Robert L. Parker and Mrs. Robert L. Parker.
Upon the deaths of Mr. Parker and Mrs. Parker, the Company will be reimbursed by
the Robert L. Parker Sr. and Catherine M. Parker Family Trust from the proceeds
of the policy for the full amount of premiums paid plus interest at the one-year
treasury bill rate on the premiums paid after fiscal year 1999. Additionally,
Robert L. Parker Jr., Chief Executive Officer of the Company and son of Robert
L. Parker, will receive as a beneficiary of the Trust one-third of the net
proceeds of this policy. The face value of the policy is $13,200,000.
NOTE 11 -- SUPPLEMENTARY INFORMATION
Maintenance and repairs expense for the years ended August 31, 1995, 1994
and 1993 was $14,364,000, $15,548,000 and $10,149,000, respectively.
Advertising, royalties, taxes other than payroll and income taxes, depreciation
and amortization of intangible assets, pre-operating costs and similar deferrals
were each less than one percent of total revenue. At August 31, 1995, accrued
liabilities included $1,178,000 of workers' compensation liabilities and
$2,981,000 of accrued payroll and payroll taxes. At August 31, 1994, accrued
liabilities included $2,236,000 of workers' compensation liabilities and
$2,714,000 of accrued payroll and
F-14
<PAGE> 44
PARKER DRILLING COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
payroll taxes. Other long-term liabilities included $1,679,000 and $1,179,000 of
workers' compensation liabilities as of August 31, 1995 and 1994, respectively.
NOTE 12 -- SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
<TABLE>
<CAPTION>
QUARTER
--------------------------------------------------------
FIRST SECOND THIRD FOURTH TOTAL
------- ------- ------- ------- --------
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
Fiscal 1995
Revenue............................... $33,283 $38,738 $43,259 $42,091 $157,371
Gross profit(2)....................... $ 1,558 $ 5,005 $ 5,666 $ 5,439 $ 17,668
Operating income (loss)............... $(3,457) $ (135) $ 1,016 $ 1,079 $ (1,497)
Net income (loss)..................... $(1,093) $ 69 $ 2,050 $ 2,890 $ 3,916
Primary and fully diluted earnings
(loss) per share................... $ (.02) $ .00 $ .04 $ .05 $ .07
</TABLE>
<TABLE>
<CAPTION>
QUARTER
----------------------------------------------------------
FIRST SECOND THIRD FOURTH(1) TOTAL
------- ------- ------- --------- --------
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
Fiscal 1994
Revenue.............................. $40,043 $40,732 $36,679 $ 34,970 $152,424
Gross profit(2)...................... $ 6,044 $ 3,751 $ 1,049 $ (1,665) $ 9,179
Operating income(loss)............... $ 1,994 $(1,163) $(2,936) $ (26,748) $(28,853)
Net income (loss).................... $ 1,608 $ (750) $(2,791) $ (26,873) $(28,806)
Primary and fully diluted earnings
(loss) per share.................. $ .03 $ (.01) $ (.05) $ (.49) $ (.53)(3)
</TABLE>
- ---------------
(1) The fourth quarter of fiscal 1994 includes a $19,718,000 provision for
reduction in carrying value of certain assets and a $2,562,000 charge for
litigation discussed in Notes 2 and 9, respectively.
(2) Gross profit is calculated by excluding general and administrative expense
and provision for reduction in carrying value of certain assets from
operating income (loss), as reported in the consolidated statement of
operations.
(3) As a result of shares issued during the year, earnings (loss) per share for
the year's four quarters, which are based on average shares outstanding
during each quarter, do not equal the annual earnings (loss) per share,
which is based on the average shares outstanding during the year.
F-15
<PAGE> 45
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 February 29, 1996, and the related
consolidated condensed statements of operations for the six months periods ended
February 29, 1996 and February 28, 1995 and consolidated condensed statements of
cash flows for the six month periods ended February 29, 1996 and February 28,
1995. 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
standards, the consolidated balance sheet as of August 31, 1995, 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 17, 1995, 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, 1995, 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
April 12, 1996
F-16
<PAGE> 46
PARKER DRILLING COMPANY AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
(UNAUDITED)
ASSETS
<TABLE>
<CAPTION>
FEBRUARY 29, AUGUST 31,
1996 1995
------------ ----------
<S> <C> <C>
Current assets:
Cash and cash equivalents........................................... $ 14,766 $ 20,752
Other short-term investments........................................ 6,581 1,372
Accounts and notes receivable....................................... 38,994 39,578
Rig materials and supplies.......................................... 11,127 11,532
Other current assets................................................ 4,441 5,146
-------- --------
Total current assets........................................ 75,909 78,380
Property, plant and equipment less accumulated depreciation, depletion
and amortization of $414,814 at February 29, 1996, and $432,360 at
August 31, 1995..................................................... 122,342 122,258
Other noncurrent assets............................................... 24,215 16,321
-------- --------
Total assets................................................ $222,466 $ 216,959
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt................................... $ 289 $ 289
Accounts payable and accrued liabilities............................ 15,616 16,940
Accrued income taxes................................................ 6,550 5,109
-------- --------
Total current liabilities................................... 22,455 22,338
-------- --------
Long-term debt........................................................ 1,473 1,748
-------- --------
Other long-term liabilities........................................... 6,755 5,953
-------- --------
Common stock, $.16 2/3 par value...................................... 9,364 9,287
Capital in excess of par value........................................ 207,095 205,310
Retained earnings (accumulated deficit)............................... (22,153) (24,391)
Other................................................................. (2,523) (3,286)
-------- --------
Total stockholders' equity.................................. 191,783 186,920
-------- --------
Total liabilities and stockholders' equity.................. $222,466 $ 216,959
======== ========
</TABLE>
See accompanying notes to consolidated condensed financial statements.
F-17
<PAGE> 47
PARKER DRILLING COMPANY AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
-----------------------------
FEBRUARY 29, FEBRUARY 28,
1996 1995
------------ ------------
<S> <C> <C>
Revenue:
Drilling contracts................................................ $ 78,280 $ 69,780
Other............................................................. 2,359 2,241
-------- --------
Gross operating revenue................................... 80,639 72,021
-------- --------
Operating expense:
Drilling.......................................................... 53,987 51,867
Other............................................................. 2,820 2,665
Depreciation, depletion and amortization.......................... 10,712 10,926
General and administrative........................................ 10,628 10,155
-------- --------
78,147 75,613
-------- --------
Operating income (loss)............................................. 2,492 (3,592)
-------- --------
Other income and (expense):
Interest expense.................................................. (53) (35)
Interest income................................................... 699 577
Other income (expense) -- net..................................... 1,875 3,281
-------- --------
2,521 3,823
-------- --------
Income before income taxes.......................................... 5,013 231
-------- --------
Income tax expense.................................................. 2,775 1,255
-------- --------
Net income (loss)................................................... 2,238 (1,024)
-------- --------
Earnings (loss) per share, primary and fully diluted................ $ .04 $ (.02)
======== ========
Number of common shares used in computing earnings (loss) per share:
Primary........................................................... 55,863,977 54,610,611
Fully diluted..................................................... 55,950,437 54,610,611
</TABLE>
See accompanying notes to consolidated condensed financial statements.
F-18
<PAGE> 48
PARKER DRILLING COMPANY AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
-----------------------------
FEBRUARY 29, FEBRUARY 28,
1996 1995
------------ ------------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss)................................................. $ 2,238 $ (1,024)
Adjustments to reconcile net income (loss) to net cash provided by
operating activities:
Depreciation, depletion and amortization....................... 10,712 10,926
Expenses not requiring cash.................................... 917 (180)
Change in operating assets and liabilities..................... 847 720
Other -- net................................................... (1,926) (1,552)
-------- -------
Net cash provided by operating activities................. 12,788 8,890
-------- -------
Cash flows from investing activities:
Capital expenditures.............................................. (17,850) (6,174)
Proceeds from the sale of equipment............................... 4,234 5,427
Decrease (increase) in short-term investments..................... (5,209) 2,781
Other -- net...................................................... (1,140) 121
-------- -------
Net cash provided (used) by investing activities.......... (19,965) 2,155
-------- -------
Cash flows from financing activities:
Proceeds from exercise of stock warrants.......................... 1,552 --
Other............................................................. (361) (106)
-------- -------
Net cash provided (used) by financing activities.......... 1,191 (106)
-------- -------
Net change in cash and cash equivalents............................. (5,986) 10,939
Cash and cash equivalents at beginning of period.................... 20,752 10,660
-------- -------
Cash and cash equivalents at end of period.......................... $ 14,766 $ 21,599
======== =======
Supplemental disclosure:
Interest paid..................................................... $ 109 $ 2
Taxes paid........................................................ $ 1,334 $ 1,641
</TABLE>
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.
F-19
<PAGE> 49
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 February 29, 1996 and August 31, 1995, (2) the
results of operations for the six months ended February 29, 1996 and February
28, 1995, and (3) cash flows for the six months ended February 29, 1996 and
February 28, 1995. Results for the six months ended February 29, 1996, are
not necessarily indicative of the results which will be realized for the year
ending August 31, 1996. 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, 1995.
2. Earnings per common share are 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
and are only considered in the computation of weighted average shares
outstanding when their effect on earnings per share is dilutive.
3. In March 1995, Statement of Financial Accounting Standards No. 121,
"Accounting for the Impairment of Long-Lived Assets and Long-Lived Assets to
be Disposed of" was issued. The statement establishes accounting standards
for the impairment of long-lived assets, such as the Company's drilling,
transportation and other equipment and will be effective for the Company
beginning with the year ending August 31, 1997. The Company does not believe
the new standard will have a material effect on the Company's financial
position or results of operations.
In October 1995, Statement of Financial Accounting Standards No. 123,
"Accounting for Stock-Based Compensation" was issued. The statement requires
the computation of compensation for grants of stock, stock options and other
equity instruments issued to employees based on fair value. The compensation
calculated is to be either recorded as an expense in the financial statements
or, alternatively, disclosed. The Company anticipates it will elect the
disclosure method of complying with the new standard. Under the provisions of
the new statement, it is anticipated pro forma net income to be disclosed
will be lower than net income reported in the financial statements.
F-20
<PAGE> 50
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS IN CONNECTION WITH THE OFFER MADE
BY THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS
MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY OF THE
UNDERWRITERS. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS
BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER OR SOLICITATION BY ANYONE IN ANY
JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH
THE PERSON MAKING SUCH OFFER IS NOT QUALIFIED TO DO SO OR TO ANY PERSON TO WHOM
IT IS UNLAWFUL TO MAKE SUCH SOLICITATION.
---------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information..................... 2
Incorporation of Certain Documents By
Reference............................... 2
Prospectus Summary........................ 3
Summary of Consolidated Financial Data.... 6
Risk Factors.............................. 7
Use of Proceeds........................... 8
Price Range of Common Stock and
Dividends............................... 9
Selected Consolidated Financial Data...... 10
Management's Discussion and Analysis of
Financial Condition and Results of
Operations.............................. 11
Business.................................. 15
Management................................ 21
Description of Capital Stock.............. 23
Underwriting.............................. 25
Forward-Looking Statements................ 26
Legal Matters............................. 26
Independent Accountants................... 26
Index to Consolidated Financial
Statements.............................. F-1
</TABLE>
7,000,000 SHARES
[LOGO]
PARKER
DRILLING
COMPANY
COMMON STOCK
PROSPECTUS
JEFFERIES & COMPANY, INC.
PRUDENTIAL SECURITIES INCORPORATED
SCHRODER WERTHEIM & CO.
, 1996
<PAGE> 51
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
All amounts, which are payable by the Registrant, are estimated except for
the SEC and NASD fees.
<TABLE>
<S> <C>
SEC registration fee.................................................... $ 20,472
NASD filing fee......................................................... 6,437
New York Stock Exchange additional listing fee.......................... 24,675
Accounting fees and expenses............................................ 65,000
Legal fees and expenses................................................. 80,000
Blue Sky fees and expenses (including legal fees)....................... 11,500
Printing and shipping costs............................................. 175,000
Miscellaneous........................................................... 16,916
-------
Total......................................................... $400,000
=======
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Registrant's By-Laws provide that each person who was or is made a
party to, or is involved in, any action, suit or proceeding by reason of the
fact that he or she was a director or officer of the Registrant (or was serving
at the request of the Registrant as a director, officer, employee or agent for
another entity) will be indemnified and held harmless by the Registrant, to the
full extent authorized by the Delaware General Corporation Law.
Under Section 145 of the Delaware General Corporation Law, a corporation
may indemnify a director, officer, employee or agent of the corporation against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him or her if he or she acted in
good faith and in a manner he or she reasonably believed to be in or not opposed
to the best interests of the corporation and, with respect to any criminal
action or proceeding, had no reasonable cause to believe his or her conduct was
unlawful. In the case of an action brought by or in the right of a corporation,
the corporation may indemnify a director, officer, employee or agent of the
corporation against expenses (including attorneys' fees) actually and reasonably
incurred by him or her if he or she acted in good faith and in a manner he or
she reasonably believed to be in the best interests of the corporation, except
that no indemnification shall be made in respect of any claim, issue or matter
as to which such person shall have been adjudged to be liable to the corporation
unless a court finds that, in view of all the circumstances of the case, such
person is fairly and reasonably entitled to indemnity for such expenses as the
court shall deem proper.
The Registrant's Certificate of Incorporation provides that to the fullest
extent permitted by Delaware General Corporation Law as the same exists or may
hereafter be amended, a director of the Registrant shall not be liable to the
Registrant or its stockholders for monetary damages for breach of fiduciary duty
as a director. The Delaware General Corporation Law permits Delaware
corporations to include in their certificates of incorporation a provision
eliminating or limiting director liability for monetary damages arising from
breaches of their fiduciary duty. The only limitations imposed under the statute
are that the provision may not eliminate or limit a director's liability (i) for
breaches of the director's duty of loyalty to the corporation or its
stockholders, (ii) for acts or omissions not in good faith or involving
intentional misconduct or known violations of law, (iii) for the payment of
unlawful dividends or unlawful stock purchases or redemptions, or (iv) for
transactions in which the director received an improper personal benefit.
The Registrant is insured against liabilities which it may incur by reason
of its indemnification of officers and directors in accordance with its By-Laws.
In addition, directors and officers are insured, at the Registrant's
II-1
<PAGE> 52
expense, against certain liabilities which might arise out of their employment
and are not subject to indemnification under the By-Laws.
The form of Underwriting Agreement included as Exhibit 1.1 provides for
indemnification of the Registrant and certain controlling persons under certain
circumstances, including liabilities under the Securities Act of 1933.
The foregoing summaries are necessarily subject to the complete text of the
statute, Certificate of Incorporation, By-Laws and agreements referred to above
and are qualified in their entirety by reference thereto.
ITEM 16. EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- -------------------- ------------------------------------------------------------------------
<S> <C>
1.1* -- Form of Underwriting Agreement.
4.1* -- Form of stock certificate for Common Stock, par value $.16 2/3 per
share.
5.1* -- Opinion of Conner & Winters, A Professional Corporation, as to
legality of Common Stock.
15.1** -- Letter re: Unaudited interim financial information.
23.1** -- Consent of Independent Accountants.
23.2* -- Consent of Conner & Winters, A Professional Corporation (included in
Exhibit 5.1).
24.1** -- Power of Attorney.
</TABLE>
- ---------------
* Filed herewith.
** Previously filed as an exhibit to this Registration Statement.
ITEM 17. UNDERTAKINGS.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's Annual Report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in this
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(h) Insofar as indemnification of liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the provisions referred to in Item 15 of this
Registration Statement, or otherwise, the Registrant has been advised that in
the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other
than the payment by the Registrant of expenses incurred or paid by a director,
officer or controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the Registrant will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
(i) The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as a
part of this Registration Statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the Registrant pursuant to Rule
424(b)(1) or
II-2
<PAGE> 53
(4) or 497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
II-3
<PAGE> 54
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Amendment to the
Registration Statement to be signed on its behalf by the undersigned, thereunto
duty authorized, in the City of Tulsa, State of Oklahoma, on June 11, 1996.
PARKER DRILLING COMPANY
By /s/ ROBERT L. PARKER JR.
-------------------------------------------
Robert L. Parker Jr.
President and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this Amendment
to the Registration Statement has been signed below by the following persons in
the capacities and on the dates indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------------------- ---------------------------- -----------------
<S> <C> <C>
ROBERT L. PARKER* Chairman of the Board and June 11, 1996
- ----------------------------------- Director
Robert L. Parker
/s/ ROBERT L. PARKER JR. President and Chief June 11, 1996
- ----------------------------------- Executive Officer and
Robert L. Parker Jr. Director (Principal
Executive Officer)
/s/ JAMES J. DAVIS Vice President of Finance June 11, 1996
- ---------------------------------- and Chief Financial
James J. Davis Officer (Principal
Financial Officer)
RANDY L. ELLIS* Corporate Controller June 11, 1996
- --------------------------------- (Principal Accounting
Randy L. Ellis Officer)
/s/ JAMES W. LINN Executive Vice President and June 11, 1996
- --------------------------------- Chief Operating Officer
James W. Linn and Director
EARNEST F. GLOYNA* Director June 11, 1996
- ---------------------------------
Earnest F. Gloyna
DAVID L. FIST* Director June 11, 1996
- ---------------------------------
David L. Fist
R. RUDOLPH REINFRANK* Director June 11, 1996
- ---------------------------------
R. Rudolph Reinfrank
*By: /s/ JAMES J. DAVIS
- ---------------------------------
James J. Davis
Attorney-in-Fact
</TABLE>
II-4
<PAGE> 55
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ---------- ----------------------------------------------------------------------
<S> <C>
1.1* -- Form of Underwriting Agreement.
4.1* -- Form of stock certificate for Common Stock, par value $.16 2/3 per
share.
5.1* -- Opinion of Conner & Winters, A Professional Corporation, as to
legality of Common Stock.
15.1** -- Letter re: unaudited interim financial information.
23.1** -- Consent of Independent Accountants.
23.2* -- Consent of Conner & Winters, A Professional Corporation (included
in Exhibit 5.1).
24.1** -- Power of Attorney.
</TABLE>
- ---------------
* Filed herewith.
** Previously filed as an exhibit to this Registration Statement.
<PAGE> 1
EXHIBIT 1.1
PARKER DRILLING COMPANY
(a Delaware corporation)
7,000,000 Shares of Common Stock
UNDERWRITING AGREEMENT
, 1996
Jefferies & Company, Inc.
Prudential Securities Incorporated
Schroder Wertheim & Co. Incorporated
As Representatives of
the Several Underwriters
c/o Jefferies & Company, Inc.
Attn: Syndicate Department
650 Fifth Avenue, 4th Floor
New York, New York 10019
Dear Sirs:
Parker Drilling Company, a Delaware corporation (the
"Company"), hereby confirms its agreement with you, as representatives (the
"Representatives") of the underwriters named in Schedule I hereto (the
"Underwriters"), with respect to the sale by the Company and the purchase by
the Underwriters, acting severally and not jointly, of an aggregate of
7,000,000 shares (the "Firm Shares") of the Company's Common Stock, $.16 2/3
par value (the "Common Stock"). The Company also has agreed to sell up to
1,050,000 shares (the "Additional Shares") of Common Stock to cover
over-allotments, if any. The Firm Shares and the Additional Shares are
hereinafter collectively referred to as the "Shares".
You have advised us that you desire to purchase the Shares and
that you propose to make a public offering of the Shares as soon as you deem
advisable after the Registration Statement referred to below becomes effective
upon the terms set forth in the Prospectus referred to below.
The terms that follow, when used in this Agreement, shall have
the meanings indicated. The term "the Effective Date" shall mean each date
that the Registration Statement and any post-effective amendment or amendments
<PAGE> 2
2
thereto became or become effective and each date after the date hereof on which
a document incorporated by reference in the Registration Statement is filed.
"Preliminary Prospectus" shall mean any preliminary prospectus referred to in
Section 1(a)(i) below and any preliminary prospectus included in the
Registration Statement at the Effective Date that omits Rule 430A Information
(as defined below). "Registration Statement" shall mean the registration
statement referred to in Section 1(a)(i) below, including incorporated
documents, exhibits and financial statements, as amended at the Representation
Date (as defined below) (or, if not effective at the Representation Date, in
the form in which it shall become effective) and, in the event any
post-effective amendment thereto becomes effective prior to the Closing Date
(as defined in Section 2 hereof), shall also mean such registration statement
as so amended. Such term shall include Rule 430A Information deemed to be
included therein at the Effective Date as provided by Rule 430A (as defined
below). The prospectus constituting a part of the Registration Statement
(including the Rule 430A Information), as from time to time amended or
supplemented, is hereinafter referred to as the "Prospectus", except that if
any revised prospectus shall be provided to the Underwriters by the Company
that differs from the prospectus on file at the Securities and Exchange
Commission (the "Commission") at the Effective Date (whether or not such
revised prospectus is required to be filed by the Company pursuant to Rule 424
of the Act Regulations), the term "Prospectus" shall refer to each such revised
prospectus from and after the time it is first provided to the Underwriters for
such use. "Rule 158", "Rule 415", "Rule 424", "Rule 430A" and "Regulation S-K"
refer to such rules or regulation under the Securities Act of 1933 (the "Act";
and the rules and regulations under the Act, the "Act Regulations"). "Rule
430A Information" means information with respect to the Shares and the offering
thereof permitted to be omitted from the Registration Statement when it becomes
effective pursuant to Rule 430A. "Exchange Act" refers to the Securities
Exchange Act of 1934 and the rules and regulations of the Commission
promulgated thereunder. Any reference herein to the Registration Statement, a
Preliminary Prospectus or the Prospectus shall be deemed to refer to and
include the documents incorporated by reference therein pursuant to Item 12 of
Form S-3 which were filed under the Exchange Act on or before the Effective
Date of the Registration Statement or the issue date of such Preliminary
Prospectus or the Prospectus, as the case may be; and any reference herein to
the terms "amend",
<PAGE> 3
3
"amendment" or "supplement" with respect to the Registration Statement, any
Preliminary Prospectus or the Prospectus shall be deemed to refer to and
include the filing of any document under the Exchange Act after the Effective
Date of the Registration Statement, or the issue date of any Preliminary
Prospectus or the Prospectus, as the case may be, deemed to be incorporated
therein by reference.
SECTION 1. Representations and Warranties.
(a) The Company represents and warrants to the Underwriters
as of the date hereof (such date being referred to as the "Representation
Date") and as of the Closing Date, as follows:
(i) the Company meets the requirements for use of Form S-3
under the Act and has filed with the Commission a registration
statement on such Form (Registration No. 333-04779), including a
related preliminary prospectus, and one or more amendments thereto,
including the related preliminary prospectus, each of which has
previously been furnished to the Underwriters, for the registration
under the Act of the offering and sale of the Shares. The Company
will file with the Commission either (A) prior to effectiveness of
such registration statement, a further amendment to such registration
statement (including the form of final prospectus), (B) after
effectiveness of such registration statement, a final prospectus in
accordance with Rules 430A and 424(b)(1) or (4) or Rule 434 of the Act
Regulations or (C) after effectiveness of such registration statement,
a final prospectus in accordance with Rules 415 and 424(b)(2) or (5).
The Company has included in such registration statement, as amended at
the Effective Date, all information (other than Rule 430A Information
in the case of clause (B)) required by the Act and the Act Regulations
to be included in the prospectus with respect to the Shares and the
offering thereof. As filed, such amendment and form of final
prospectus, or such final prospectus, shall contain all Rule 430A
Information, together with all other such required information, with
respect to the Shares and the offering thereof and, except to the
extent the Underwriters shall agree in writing to a modification,
shall be in all substantive respects in the form furnished to the
Underwriters prior to the date hereof;
<PAGE> 4
4
(ii) on the Effective Date, the Representation Date and the
Closing Date, the Registration Statement did and will, and when the
Prospectus is first filed (if required) in accordance with Rule 424(b)
the Prospectus will, comply in all material respects with the
applicable requirements of the Act and the Act Regulations and the
Exchange Act; on the Effective Date, the Representation Date and the
Closing Date, the Registration Statement did not and will not contain
any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the
statements therein not misleading; and, on the Effective Date, the
Representation Date and the Closing Date, and on the date of any
filing pursuant to Rule 424(b), the Prospectus did not and will not
contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which
they were made, not misleading; provided, that the Company makes no
representation or warranty as to the information provided in writing
to the Company by or on behalf of the Underwriters, expressly for use
in the Registration Statement or the Prospectus, and the Company
agrees that the only information provided in writing by or on behalf
of the Underwriters to the Company, expressly for use in the
Registration Statement or the Prospectus, is that information
contained in the table and the second, fifth and seventh paragraphs
following the table in the section of the Prospectus entitled
"Underwriting" and the last paragraph on the cover page of the
Prospectus;
(iii) the Company is a corporation duly organized and validly
existing in good standing under the laws of the State of Delaware,
with full corporate power and authority to own, lease and operate its
properties and to conduct its business as described in the
Registration Statement and the Prospectus, and is duly registered and
qualified to conduct its business and is in good standing in each
jurisdiction where the nature or location of its properties (owned or
leased) or the conduct of its business requires such registration or
qualification, except where the failure so to register or qualify
would not have a Material Adverse Effect. As used herein, the term
"Material Adverse Effect" shall mean an adverse effect on the
condition (financial or other), business, properties, net worth
<PAGE> 5
5
or results of operations of the Company or any of the Subsidiaries (as
hereinafter defined) that would be, singly or in the aggregate,
material to the Company and the Subsidiaries, taken as a whole,
whether or not occurring in the ordinary course of business (a
"Material Adverse Effect");
(iv) the only subsidiaries (as defined in the Act Regulations)
of the Company are the subsidiaries listed on Schedule II hereto
(collectively, the "Subsidiaries"). Each of the Subsidiaries is a
corporation duly organized and validly existing in good standing under
the laws of its jurisdiction of its incorporation with full corporate
power and authority to own, lease and operate its properties and to
conduct its business as described in the Registration Statement and in
the Prospectus, and is duly registered and qualified to conduct its
business and is in good standing in each jurisdiction where the nature
or location of its properties (owned or leased) or the conduct of its
business requires such registration or qualification, except where the
failure so to register or qualify would not have a Material Adverse
Effect;
(v) each of the Company and the Subsidiaries has all necessary
authorizations, approvals, orders, licenses, rights-of-way, operating
rights, easements, certificates and permits of and from, and has made
all declarations and filings with, all regulatory or governmental
officials and bodies, all self-regulatory organizations and all courts
and other tribunals ("Permits"), to own or lease its respective
properties and to conduct its respective businesses described in the
Prospectus and the Registration Statement, except where failure to
have obtained or made the same would not have a Material Adverse
Effect, and neither the Company nor any of the Subsidiaries has
received any notice of proceedings relating to the revocation or
modification of any such Permits, if the failure to be so licensed or
approved or if the subject of an unfavorable decision, ruling or
finding, would have a Material Adverse Effect; the Company and each of
the Subsidiaries has fulfilled and performed all its current material
obligations with respect to such Permits and no event has occurred
that allows, or after notice or lapse of time, or both, would allow,
revocation or termination thereof or result in any other material
impairment of the rights of the holder of any
<PAGE> 6
6
such Permit; and such Permits contain no restrictions that are
materially burdensome to the Company and the Subsidiaries; and the
Company and each of the Subsidiaries is in compliance with all
applicable laws, rules, regulations, orders and consents, the
violation of which could have a Material Adverse Effect. The property
and business of the Company and the Subsidiaries conform in all
material respects to the descriptions thereof contained in the
Prospectus and the Registration Statement;
(vi) all of the Company's authorized and outstanding capital
stock has been duly authorized, validly issued and is fully paid and
nonassessable and the capitalization of the Company conforms to the
descriptions thereof and the statements made with respect thereto in
the Registration Statement and the Prospectus as of the date set forth
therein. There are no outstanding securities convertible into or
exchangeable for, and no outstanding options, warrants or other rights
to purchase, any shares of the capital stock of the Company, nor any
agreements or commitments to issue any of the same, except as
described in the Registration Statement and the Prospectus, and there
are no preemptive or other rights to subscribe for or to purchase, and
no restrictions upon the voting or transfer of, any capital stock of
the Company pursuant to the Company's articles of incorporation or
by-laws or any agreement or other instrument to which the Company is a
party, except as described in the Registration Statement and the
Prospectus;
(vii) all the outstanding shares of capital stock of each
Subsidiary have been duly authorized and are validly issued, fully
paid and nonassessable and were not issued in violation of or subject
to any preemptive or similar rights. Except as otherwise set forth in
the Registration Statement and the Prospectus, all outstanding shares
of capital stock of the Subsidiaries are owned by the Company,
directly or indirectly through another Subsidiary, free and clear of
any security interests, liens, encumbrances, equities or other claims;
(viii) each of the Company and the Subsidiaries has good and
indefeasible title to all real property and good and marketable title
to all personal property owned by it, including those properties
described in
<PAGE> 7
7
the Registration Statement and Prospectus, in each case free and clear
of all liens, charges, encumbrances and restrictions, except such as
are described in the Registration Statement and Prospectus or such as
would not have a Material Adverse Effect. Each of the Company and the
Subsidiaries has valid, subsisting and enforceable leases for the
properties described in the Registration Statement and the Prospectus
as leased by it, with such exceptions as are described in the
Registration Statement and the Prospectus or that in the aggregate
would not have a Material Adverse Effect;
(ix) the Company has all requisite power, authority,
authorizations, approvals, orders, licenses, certificates and permits
to enter into this Agreement and to carry out the provisions and
conditions hereof, and to issue and deliver the Shares to the
Underwriters as provided herein. This Agreement has been duly
authorized, executed and delivered by the Company and constitutes a
legal, valid and binding agreement of the Company, enforceable against
it in accordance with the terms hereof, except to the extent rights to
indemnity hereunder may be limited by federal or state securities laws
or public policy underlying such laws and except to the extent the
enforcement hereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or
affecting creditors' rights generally or by equitable principles;
(x) each of the Company and the Subsidiaries owns, or
possesses adequate rights to use, all trademarks, service marks and
other rights necessary for the conduct of its business as described in
the Registration Statement and the Prospectus, and neither the Company
nor any of the Subsidiaries has received a notice, or knows of any
basis, of any conflict with the asserted rights of others in any such
respect that could have a Material Adverse Effect;
(xi) the Shares have been duly and validly authorized for
issuance by the Company, and the Company has full corporate power and
authority to issue, sell and deliver the Shares; and, when such Shares
are issued and delivered against payment therefor as provided by this
Agreement, the Shares will have been validly issued, fully paid and
nonassessable, and the issuance of such Shares will not be subject to
any statutory preemptive rights or similar statutory rights or any
<PAGE> 8
8
other preemptive or similar rights. All corporate action required to
be taken by the Company for the authorization, issuance and sale of
the Shares has been duly and validly taken;
(xii) Coopers & Lybrand L.L.P. are independent accountants
with respect to the Company and the Subsidiaries as required by the
Act;
(xiii) the consolidated financial statements and related notes
and schedules included in the Registration Statement or in the
Prospectus present fairly the financial position of the Company and
the Subsidiaries, on the basis stated in the Registration Statement,
as of the respective dates thereof and the consolidated statements of
income, shareholders' equity and cash flows of the Company and the
Subsidiaries, for the respective periods covered thereby; and such
financial statements and the related schedules and notes have been
prepared in conformity with generally accepted accounting principles
applied on a consistent basis throughout the entire period involved,
except as otherwise disclosed in the Registration Statement and the
Prospectus. The selected financial information included in the
Registration Statement or the Prospectus presents fairly the
information shown therein and has been compiled on a basis consistent
with that of the audited financial statements of the Company included
therein. The pro forma financial information in the Registration
Statement or in the Prospectus complies in all material respects with
the applicable accounting requirements of Article 11 of Regulation S-X
promulgated by the Commission and presents fairly the information
shown therein; the assumptions used in the preparation thereof are
reasonable and the adjustments used therein are appropriate to give
effect to the transactions or circumstances referred to therein. No
other financial statements or schedules of the Company and the
Subsidiaries are required by the Exchange Act, the Act or the Act
Regulations to be included in the Registration Statement or
Prospectus;
(xiv) the Shares conform in all material respects to the
descriptions thereof in the Registration Statement and Prospectus;
(xv) since the respective dates as of which information is
provided in the Registration Statement and
<PAGE> 9
9
Prospectus, except as otherwise specifically stated therein, there has
been no change or development with respect to the condition (financial
or otherwise) or business of the Company and the Subsidiaries, taken
as a whole, whether or not arising in the ordinary course of
business, that would have a Material Adverse Effect;
(xvi) neither the Company nor any Subsidiary is in violation
of its articles of incorporation or by- laws or other organizational
documents. Neither the Company nor any Subsidiary is, nor with the
passage of time or the giving of notice or both would be, in violation
of any law, ordinance, administrative or governmental rule or
regulation applicable to the Company or any of the Subsidiaries, or of
any judgment, order or decree of any court or governmental agency or
body or of any arbitrator having jurisdiction over the Company or any
of the Subsidiaries, or in default in the performance or observance of
any obligation, agreement, covenant or condition contained in any
mortgage, loan agreement, note, bond, debenture, credit agreement or
any other evidence of indebtedness or in any agreement, contract,
indenture, lease or other instrument to which the Company or any of
the Subsidiaries is a party or by which it may be bound, or to which
any of the property or assets of the Company or any of the
Subsidiaries is subject, the effect of which violation or default in
performance or observance would have a Material Adverse Effect;
(xvii) there is no action, suit or proceeding pending before
or by any court, arbitrator or governmental agency or body or, to the
Company's knowledge, threatened against the Company or any of the
Subsidiaries or to which any of their respective property is subject
(A) that is required to be described in the Registration Statement or
the Prospectus but is not described as required or (B) that, if
adversely determined, could reasonably be expected to have a Material
Adverse Effect. There is no agreement, contract, indenture, lease or
other document or instrument that is required to be described in the
Registration Statement or Prospectus or to be filed as an exhibit to
the Registration Statement that is not described or filed as required;
(xviii) no person has any right to the registration of any
security of the Company by reason of the filing of
<PAGE> 10
10
the Registration Statement with the Commission or the consummation of
the transactions contemplated hereby, which right has not been waived
or lapsed;
(xix) the Company is not an "investment company" within the
meaning of the Investment Company Act of 1940 and is not subject to
registration under such Act;
(xx) as of the date of the Prospectus, neither the Company nor
any of the Subsidiaries is currently planning any probable
acquisitions for which disclosure of pro forma financial information
would be required by the Act;
(xxi) since the respective dates as of which information is
given in the Registration Statement and the Prospectus (or any
amendment or supplement thereto), except as otherwise stated therein,
(A) neither the Company nor any of the Subsidiaries (1) has issued any
securities other than in connection with the exercise of any
outstanding options, (2) incurred any material liability or
obligations, direct or contingent, for borrowed money, (3) entered
into any transaction, not in the ordinary course of business, that is
material to the Company and the Subsidiaries, taken as a whole, (4)
entered into any transaction with an affiliate of the Company (as the
term "affiliate" is defined in Rule 405 of the Act Regulations) that
would otherwise be required to be disclosed in the Prospectus or the
Registration Statement, or (5) declared or paid any dividend on its
capital stock, or made any other distribution to its equity holders,
(B) there has not been any material change in the capital stock or
other equity, or material increase in the short-term or long-term
debt, of the Company or any of the Subsidiaries and (C) there has been
no change or development with respect to the condition (financial or
otherwise) or business of the Company and the Subsidiaries, taken as a
whole, whether or not arising in the ordinary course of business, that
would have a Material Adverse Effect;
(xxii) the Company has not distributed and, prior to the later
to occur of (A) the Closing Date and (B) completion of the
distribution of the Shares, will not distribute without your prior
written consent any offering material in connection with the offering
and sale of the Shares other than the Registration State-
<PAGE> 11
11
ment, the Prospectus or other materials, if any, permitted by the Act;
(xxiii) prior to the Closing Date, the Shares will be duly
authorized for listing on the New York Stock Exchange upon official
notice of issuance;
(xxiv) neither the Company nor any Subsidiary is involved in
any labor dispute and, to the knowledge of the Company, no such
dispute is threatened.
(xxv) neither the Company nor any Subsidiary nor, to the best
of its knowledge, any employee or agent of the Company or any
Subsidiary has made any payment of funds of the Company or any
Subsidiary or received or retained any funds of a character required
to be disclosed in the Prospectus;
(xxvi) the Company and each of the Subsidiaries have filed (or
have obtained extensions thereto) all federal, state and local or
foreign tax returns that are required to be filed, which returns are
complete and correct in all material respects, and have paid all taxes
shown on such returns and all assessments with respect thereto to the
extent that the same have become due;
(xxvii) except for the shares of capital stock of each of the
Subsidiaries, neither the Company nor any of the Subsidiaries owns any
shares of stock or any other securities of any corporation or has any
equity interest in any firm, partnership, association or other entity
other than as reflected in the consolidated financial statements
included in the Registration Statement and the Prospectus;
(xxviii) neither the execution, delivery or performance of
this Agreement, the offer, issuance, sale or delivery of the Shares
nor the consummation by the Company of the terms of this Agreement (A)
requires the consent, approval, authorization or order of any court or
governmental agency or body, except such as have been obtained under
the Act and such as may be required under the blue sky laws of any
jurisdiction in connection with the purchase and distribution of the
Shares by the Underwriters or such as may be required by the National
Association of Securities Dealers, Inc. (the "NASD") and such other
approvals as have been obtained,
<PAGE> 12
12
(B) will conflict with, result in a breach of, or constitute a default
under the terms of any indenture, agreement, lease or other instrument
to which the Company or any of the Subsidiaries is a party or by which
any of them or any of their respective properties may be bound, or
will result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Company or any of the
Subsidiaries pursuant to the terms of any agreement or instrument to
which any of them is a party or by which any of them may be bound or
to which any of the property or assets of any of them is subject, (C)
will conflict with or violate any law, order, statute, regulation,
consent or memorandum of understanding applicable to the Company or
any Subsidiary of any court, regulatory body, administrative agency,
governmental body or arbitrator having jurisdiction over the Company
or any of the Subsidiaries (in the case of (B) or (C) above, where
such conflict, breach, default or violation, individually or in the
aggregate, would have a Material Adverse Effect), or (D) will conflict
with or violate the articles of incorporation or by-laws of the
Company or any Subsidiary;
(xxix) the Company has not taken, directly or indirectly, any
action designed to cause or result in or that has constituted or that
might reasonably be expected to constitute, the stabilization or
manipulation of the price of the shares of Common Stock to facilitate
the sale or resale of the Shares;
(xxx) the Company is not required to comply with Section
517.075 of the Florida statutes;
(xxxi) the Company and each of the Subsidiaries (A) are in
compliance with any and all applicable federal, state, local and
foreign laws and regulations relating to the protection of human
health and safety, the environment or hazardous or toxic substances or
wastes, pollutants or contaminants ("Environmental Laws"), (B) have
received all permits, licenses or other approvals required of them
under applicable Environmental Laws to conduct their business and (C)
are in compliance with all terms and conditions of any such permit,
license or approval, except where such noncompliance with
Environmental Laws, failure to receive required permits, licenses or
approvals or failure to comply with the terms and conditions of such
<PAGE> 13
13
permits, licenses or approvals would not have a Material Adverse
Effect; and
(xxxii) there are no costs or liabilities, to the Company's
knowledge after due inquiry, associated with the effect of
Environmental Laws on the business, operations and properties of the
Company and its Subsidiaries that would have a Material Adverse
Effect.
(b) Any certificate signed by any officer of the Company
delivered to the Underwriters or to counsel for the Underwriters pursuant to
the terms of this Agreement shall be deemed a representation and warranty by
the Company to each Underwriter as to the matters covered thereby.
SECTION 2. Sale and Delivery to the Underwriters; Closing.
(a) Subject to the terms and conditions set forth herein, the
Company agrees to sell to each Underwriter, severally and not jointly, and, on
the basis of the representations and warranties herein contained and subject to
the terms and conditions herein set forth, each Underwriter, severally and not
jointly, agrees to purchase from the Company, at a purchase price of $[
] per share (the "Initial Price"), the aggregate number of Firm Shares set
forth in Schedule I hereto opposite the name of such Underwriter. The Company
will have no obligation to sell the Underwriters any of the Firm Shares
hereunder unless the Underwriters purchase all of the Firm Shares hereunder.
(b) The Company grants to the Underwriters an option to
purchase all or any part of the Additional Shares at the Initial Price.
Additional Shares shall be purchased from the Company, severally and not
jointly, for the accounts of the Underwriters in proportion to the number of
Firm Shares set forth in Schedule I hereto opposite the name of such
Underwriter. Such option may be exercised only to cover over-allotments in the
sale of the Firm Shares by the Underwriters and may be exercised in whole or in
part at any time on or before 12:00 noon, New York City time, on the business
day before the Firm Shares Closing Date (as hereinafter defined), and only once
thereafter within 30 days after the date of the Prospectus, in each case upon
written or telegraphic notice, or verbal or telephonic notice confirmed by
written or facsimile notice, by the Underwriters to the Company no later than
12:00 noon, New York City time, on the business day before the Firm Shares
<PAGE> 14
14
Closing Date or at least two business days before the Additional Shares Closing
Date (as hereinafter defined), as the case may be, setting forth the number of
Additional Shares to be purchased and the time and date (if other than the Firm
Shares Closing Date) of such purchase.
(c) Payment of the purchase prices for, and delivery of, the
Firm Shares to be purchased by the Underwriters shall be made at the offices of
Jefferies & Company, Inc., 39 Broadway, New York, New York 10006, or at such
other place as shall be agreed upon by the Underwriters and the Company, at
10:00 A.M., New York City time, on the third or fourth business day following
the date of the Registration Statement becomes effective (or, if the Company
elected to rely upon Rule 430A, the fourth business day after the date of
execution of this Agreement), or such other time not later than ten business
days after such date as shall be agreed upon by the Underwriters and the
Company (such time and date of payment and delivery being herein called the
"Firm Shares Closing Date"). Payment shall be made to the Company by certified
or official bank check or checks drawn in New York Clearing House funds (or
similar next day funds) payable to the order of the Company against delivery to
the Underwriters of the Firm Shares.
(d) Payment of the purchase price for, and delivery of, the
Additional Shares to be purchased by the Underwriters shall be made at the
office as set forth above or at such other place as shall be agreed upon by the
Underwriters and the Company at the time and on the date (which may be the same
as, but in no event shall be earlier than, the Firm Shares Closing Date)
specified in the notice referred to in Section 2(b) (such time and date of
delivery and payment being herein called the "Additional Shares Closing Date").
The Firm Shares Closing Date and the Additional Shares Closing Date are called,
individually, the "Closing Date" and together, the "Closing Dates". Payment
shall be made to the Company by certified or official bank check or checks
drawn in New York Clearing House funds (or similar next day funds) payable to
the order of the Company against delivery to the Underwriters of the Additional
Shares.
(e) Certificates representing the Shares shall be in such
denominations and registered in such names as the Underwriters may request in
writing at least two business days before the Firm Shares Closing Date or, in
the case of Additional Shares, on the day of notice of exercise of the
<PAGE> 15
15
option as described in Section 2(b). The certificates representing the Shares
will be made available for examination and packaging by the Underwriters not
later than 1:00 P.M., New York City time, on the last business day prior to the
Firm Shares Closing Date (or the Additional Shares Closing Date in the case of
the Additional Shares) at such place as is designated by the Underwriters.
SECTION 3. Covenants of the Company.
The Company covenants with each of the Underwriters as
follows:
(a) the Company will use its best efforts to cause the
Registration Statement, if not effective at the Representation Date,
and any amendment thereof, to become effective, as promptly as
possible after the filing thereof. The Company will not file any
amendment to the Registration Statement or any amendment or supplement
to the Prospectus to which the Underwriters shall reasonably object in
writing after a reasonable opportunity to review such amendment or
supplement. Subject to the foregoing sentences in this clause (a), if
the Registration Statement has become or becomes effective pursuant to
Rule 430A, or filing of the Prospectus or supplement to the Prospectus
is otherwise required under Rule 424(b), the Company will cause the
Prospectus, properly completed, or such supplement thereto to be filed
with the Commission pursuant to the applicable paragraph of Rule
424(b) within the time period prescribed and will provide evidence
satisfactory to the Underwriters of such timely filing. The Company
will promptly advise the Underwriters (i) when the Registration
Statement, if not effective at the Representation Date, and any
amendment thereto, shall have become effective, (ii) when the
Prospectus, and any supplement thereto, shall have been filed (if
required) with the Commission pursuant to Rule 424(b), (iii) when any
amendment to the Registration Statement shall have been filed or
become effective, (iv) of any request by the Commission for any
amendment of the Registration Statement or supplement to any
Prospectus or for any additional information, (v) of the receipt by
the Company of any notification of, or if the Company otherwise has
knowledge of, the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or the
institution or threatening of any proceeding for that purpose and
<PAGE> 16
16
(vi) of the receipt by the Company of any notification with respect to
the suspension of the qualification of the Shares for sale in any
jurisdiction or the initiation or threatening of any proceeding for
such purpose. The Company will use its best efforts to prevent the
issuance of any such stop order and, if issued, to obtain as soon as
possible the lifting thereof;
(b) if, at any time when a prospectus relating to the Shares
is required to be delivered under the Act or the Act Regulations, any
event occurs as a result of which the Prospectus as then amended or
supplemented would contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, or if it
shall be necessary to amend the Registration Statement or amend or
supplement the Prospectus to comply with the Act or the Act
Regulations, the Company promptly will prepare and file with the
Commission, subject to the second sentence of paragraph (a) of this
Section 3, an amendment or supplement that will correct such statement
or omission or effect such compliance. Neither your consent to, nor
your delivery of, any such amendment or supplement shall constitute a
waiver of any of the conditions set forth in Section 5;
(c) the Company consents to the use of the Prospectus in
accordance with the provisions of the Act and with the securities or
blue sky laws of the jurisdictions in which the Shares are offered by
the Underwriters and by all dealers to whom Shares may be sold, both
in connection with the offering and sale of the Shares and for such
period of time thereafter as the Prospectus is required by the Act to
be delivered in connection with the sales by any Underwriter or
dealer. The Company will comply with all requirements imposed upon it
by the Act, as now and hereafter amended, so far as necessary to
permit the continuance of sales of or dealing in the Shares in
accordance with the provisions hereof and the Prospectus;
(d) as soon as practicable, the Company will make generally
available to its securityholders and to the Underwriters a
consolidated earnings statement or statements of the Company and the
Subsidiaries covering
<PAGE> 17
17
a twelve-month period beginning after the Effective Date that will
satisfy the provisions of Section 11(a) of the Act and Rule 158 under
the Act Regulations;
(e) the Company will furnish to the Representatives, without
charge, three signed copies of the Registration Statement (including
exhibits thereto and all documents incorporated by reference therein)
and, so long as delivery of a prospectus by an Underwriter or dealer
may be required by the Act, or the Act Regulations, as many copies of
the Prospectus and all amendments and supplements thereto as the
Underwriters may reasonably request;
(f) during the period of five years hereafter, the Company
will furnish to you, as soon as practicable after the end of each
fiscal year, a copy of its annual report to shareholders for such
year; and the Company will furnish to you (i) as soon as available, a
copy of each report or definitive proxy statement of the Company filed
with the Commission under Exchange Act or mailed to shareholders, and
(ii) from time to time, such other information concerning the Company
as you may reasonably request, provided that prior to the Company's
furnishing any such other information that is nonpublic you shall
enter into such agreement respecting the confidentiality thereof as
the Company may reasonably request;
(g) the Company will not, and will cause each of its executive
officers and directors to enter into agreements with the Underwriters
in the form set forth in Exhibit A to the effect that they will not,
for a period of 90 days following the date of the Prospectus, without
prior written consent of Jefferies & Company, Inc., offer, sell or
contract to sell, or otherwise dispose of, directly or indirectly, or
announce the offering of, any shares of Common Stock or any securities
convertible into, or exchangeable for, shares of Common Stock;
provided, however, that the Company may issue and sell Common Stock
pursuant to any stock bonus plan, stock grant plan or stock option
plan in effect as of the date of the Prospectus;
(h) the Company will comply with all the provisions of any
undertakings contained in the Registration Statement;
<PAGE> 18
18
(i) the Company will not at any time, directly or indirectly,
take any action intended, or that might reasonably be expected, to
cause or result in, or that will cause, stabilization of the price of
the shares of Common Stock to facilitate the sale or resale of any of
the Shares;
(j) the Company will apply the net proceeds from the offering
and sale of the Shares to be sold by the Company in accordance with
the description set forth in the "Use of Proceeds" section of the
Prospectus and shall file such reports with the Commission with
respect to the sale of the Shares and the application of the proceeds
therefrom as may be required by Rule 463 under the Act. The Company
shall provide you a draft of each such report prior to its filing for
your approval, and shall furnish you with a signed copy of each such
report;
(k) the Company will cooperate with the Underwriters and their
counsel in connection with endeavoring to obtain and maintain the
qualification or registration, or exemption from qualification, of the
Shares for offer and sale under the applicable securities laws of such
states and other jurisdictions of the United States as the
Underwriters may designate; provided, that in no event shall the
Company be obligated to qualify to do business in any jurisdiction
where it is not now so qualified or to take any action that would
subject it to taxation or general service of process in any
jurisdiction where it is not now so subject; and
(l) the Company will cause the Shares to be (i) duly listed on
the New York Stock Exchange and (ii) registered under the Exchange
Act.
SECTION 4. Payment of Expenses.
The Company will pay, or reimburse if paid by the
Underwriters, all actual and reasonable costs and expenses incident to the
performance of the obligations of the Company under this Agreement, including
(i) the fees, disbursements and expenses of counsel and accountants for the
Company and all other expenses in connection with the preparation, printing and
filing of the Registration Statement, any Preliminary Prospectus, the
Prospectus, and any amendments or supplements thereto, and the mailing and
<PAGE> 19
19
delivery of copies thereof to the Underwriters and dealers, (ii) the cost of
printing the Agreement Among Underwriters, this Agreement, the Selling
Agreement, any Dealer Agreements, the Underwriters' Questionnaire and the Blue
Sky Memorandum (in both preliminary and final form); (iii) all expenses in
connection with qualification of the Shares for offering and sale under state
securities laws as provided in Section 3(a) hereof, including filing and
registration fees and the fees, disbursements and expenses of counsel for the
Underwriters in connection with such qualification and in connection with Blue
Sky surveys; (iv) the filing fees incident to securing any required review by
the NASD; (v) the cost of preparing stock certificates; (vi) all fees of the
Company's transfer agent and registrar; (vii) any fees for including the Shares
on the New York Stock Exchange; and (viii) all other costs and expenses
incident to the performances of its obligations hereunder that are not
otherwise specifically provided for in this Section.
If this Agreement is terminated by the Underwriters because of
any failure or refusal on the part of the Company to comply with the terms or
fulfill any of the conditions of this Agreement, the Company shall reimburse
the Underwriters for all of their reasonable out-of-pocket expenses, including
the reasonable fees and disbursements of counsel for the Underwriters. The
Company shall not in any event be liable to any of the Underwriters for
consequential damages including loss of anticipated profits from the
transactions covered by this Agreement.
SECTION 5. Conditions of the Underwriters' Obligation.
The obligation of the Underwriters to purchase the Shares
hereunder is subject to the continued accuracy of the representations and
warranties of the Company herein contained, to the accuracy of the statements
of the Company made in any certificates pursuant to the provisions hereof, to
the performance by the Company of its obligations hereunder and to the
following further conditions:
(a) the Registration Statement shall have become effective,
and you shall have received notice thereof, not later than 5:30 p.m.,
Washington D.C. time, on the date hereof, or such later time and date
as shall be approved by the Representatives and the Company and shall
remain effective at the Closing Date. No stop order suspending the
effectiveness of the Registration
<PAGE> 20
20
Statement shall have been issued under the Act or proceedings therefor
initiated or threatened by the Commission. No order suspending the
effectiveness of the Registration Statement or the qualification or
registration of the Shares under the securities or blue sky laws of
any jurisdiction shall be in effect or proceedings therefor initiated
or threatened by the Commission or the authorities of any such
jurisdiction. If the Company has elected to rely upon Rule 430A, the
price of the Shares and any price-related or other information
previously omitted from the effective Registration Statement pursuant
to Rule 430A shall have been transmitted to the Commission for filing
pursuant to Rule 424(b) within the prescribed time period, and, prior
to the Closing Date, the Company shall have provided evidence
satisfactory to the Underwriters of such timely filing, or a
post-effective amendment providing such information shall have been
promptly filed and declared effective in accordance with the
requirement of Rule 430A;
(b) subsequent to the execution and delivery of this
Agreement, there shall not have occurred (i) any change, or any
development involving a prospective change, in or affecting
particularly the business, properties, condition (financial or other)
or results of operations of the Company and the Subsidiaries, taken as
a whole, which, in the reasonable judgment of the Underwriters,
materially impairs the investment quality of the Shares and
constitutes a Material Adverse Effect; (ii) any material loss or
interference with the business or properties of the Company or any of
the Subsidiaries from fire, explosion, flood or other casualty,
whether or not covered by insurance, or from any labor dispute or any
court or legislative or other governmental action, order or decree,
that is not set forth in the Registration Statement and the
Prospectus, if in the reasonable judgment of the Underwriters any such
development makes it impracticable or inadvisable to proceeding with
completion of the sale of and payment for the Shares; (iii) any
suspension or limitation of trading in securities generally on the New
York Stock Exchange or the Nasdaq National Market System, or any
setting of minimum prices for trading on such exchange or system, or
any suspension of trading of any securities of the Company on any
exchange or system or in the over-the-counter market; (iv) any banking
moratorium declared by federal or New York
<PAGE> 21
21
authorities; or (v) any outbreak or escalation of major hostilities in
which the United States is involved, any declaration of war by
Congress or any other substantial national or international calamity
or emergency if, in the reasonable judgment of the Underwriters, the
effect of any such outbreak, escalation, declaration, calamity or
emergency makes it impractical or inadvisable to proceed with
completion of the sale of and payment for the Shares;
(c) since the respective dates as of which information is
given in the Registration Statement and the Prospectus, there shall
have been no litigation or other proceeding instituted against the
Company or any of the Subsidiaries or any of their respective officers
or directors in their capacities as such, before or by any federal,
state or local court, commission, regulatory body, administrative
agency or other governmental body, domestic or foreign, or arbitrator,
in which litigation or proceeding an unfavorable ruling, decision or
finding would have a Material Adverse Effect;
(d) each of the representations and warranties of the Company
contained herein shall be true and correct in all material respects at
the Closing Date, as if made at the Closing Date, and all covenants
and agreements contained herein to be performed on the part of the
Company, and all conditions contained herein to be fulfilled or
complied with by the Company at or prior to the Closing Date, shall
have been duly performed, fulfilled or complied with;
(e) the Underwriters shall have received an opinion from
Conner & Winters, A Professional Corporation, counsel for the Company,
satisfactory in form and substance to counsel for the Underwriters,
dated as of each Closing Date, to the effect set forth in Exhibit B;
(f) the Underwriters shall have received a favorable opinion,
dated as of each Closing Date, of Cravath, Swaine & Moore, counsel for
the Underwriters, with respect to such matters as may be reasonably
requested by the Underwrites, and you shall have provided such counsel
with such papers and information as they may reasonably request to
enable them to provide such opinion;
<PAGE> 22
22
(g) the following conditions contained in clauses (i), (ii)
and (iii) of this Section 5(g) shall have been satisfied on and as of
each Closing Date and the Company shall have furnished to the
Underwriters a certificate of the Company, signed by the President and
the principal financial or accounting officer of the Company, dated
such Closing Date to the effect that the signers of such certificate
have carefully examined the Registration Statement, the Prospectus,
any supplement or amendment to the Prospectus, and this Agreement and
that:
(i) the representations and warranties of the Company
in this Agreement are true and correct in all material
respects on and as of the Closing Date with the same effect as
if made on the Closing Date and the Company has complied with
all the agreements and satisfied all the conditions under this
Agreement on its part to be performed or satisfied at or prior
to the Closing Date;
(ii) no stop order suspending the effectiveness of
the Registration Statement has been issued and no proceedings
for that purpose have been instituted or, to the Company's
knowledge, threatened; and
(iii) since the date of the most recent financial
statements included in the Prospectus, there has been no
change that would have a Material Adverse Effect.
(h) At the Representation Date and at each Closing Date,
Coopers & Lybrand L.L.P. shall have furnished to the Underwriters a letter or
letters, dated respectively as of the date of this Agreement and each Closing
Date, in form and substance satisfactory to the Underwriters, containing
statements and information of the type customarily included in accountants'
"comfort letters" to underwriters with respect to the financial statements and
certain financial and statistical information pertaining to the Company and the
Subsidiaries contained in the Registration Statement and the Prospectus.
(i) At the Representation Date, the Company shall have
furnished to the Underwriters a letter substantially in the form of Exhibit A
hereto from each executive officer and director of the Company, addressed to
the Underwriters, in
<PAGE> 23
23
which each such person agrees not to offer, sell or contract to sell, or
otherwise dispose of, directly or indirectly, or announce an offering of, any
shares of Common Stock beneficially owned by such person or any securities
convertible into, or exchangeable for, shares of Common Stock for a period of
90 days following the date of the Prospectus without the prior written consent
of Jefferies & Company, Inc.
(j) At the Closing Date, counsel for the Underwriters shall
have been furnished with such information, certificates and documents as they
may reasonably require for the purpose of enabling them to pass upon the
issuance and sale of the Shares as contemplated herein and related proceedings,
or to evidence the accuracy of any of the representations or warranties, or the
fulfillment of any of the conditions, herein contained, or otherwise in
connection with the offering contemplated hereby; and all opinions and
certificates mentioned above or elsewhere in this Agreement shall be reasonably
satisfactory in form and substance to the Underwriters and counsel for the
Underwriters.
If any condition specified in this Section 5 shall not have
been fulfilled in all material respects when and as required to be fulfilled,
this Agreement may be terminated by the Underwriters by notice to the Company
and such termination shall be without liability of any party to any other party
except as provided in Section 4.
SECTION 6. Indemnification and Contribution.
(a) The Company agrees to indemnify, defend and hold harmless
each Underwriter and its respective officers, shareholders, employees,
directors and agents and any person who controls any Underwriter within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act from and
against any loss, expense, damage, liability or claim (including the reasonable
cost of investigating such claim) that, jointly or severally, any such
Underwriter or any such officer, shareholder, employee, director, agent or
controlling person may incur under the Act, the Exchange Act or otherwise, as
such expenses are incurred, insofar as such loss, expense, damage, liability or
claim arises out of or is based upon any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement (or in the
Registration Statement as amended by any post-effective amendment thereof) or
any omission or alleged omission to state a material fact required to be
<PAGE> 24
24
stated in such Registration Statement or necessary to make the statements made
therein not misleading or any untrue statement or alleged untrue statement of a
material fact contained in a Prospectus (the term Prospectus for the purpose of
this Section 6 being deemed to include any Preliminary Prospectus, the
Prospectus, the Prospectus as amended or supplemented and any document filed
under the Exchange Act and incorporated by reference into the Prospectus) or
any omission or alleged omission therefrom of a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; provided, however,
the Company will not be liable in any such case to the extent any such loss,
expense, damage, liability or claim arises out of or is based upon any untrue
statement or omission or alleged untrue statement or omission that has been
made therein or omitted therefrom in reliance upon and in conformity with the
information provided in writing to the Company by or on behalf of any
Underwriter, expressly for use in the Registration Statement or the Prospectus;
and provided, further that with respect to any untrue statement or omission or
alleged untrue statement or omission made in any Preliminary Prospectus the
indemnity agreement contained in this Section 6(a) shall not inure to the
benefit of any such indemnified Underwriter or its respective officers,
shareholders, employees, directors and agents, and the Company shall not be
liable to any such indemnified Underwriter or its respective officers,
shareholders, employees, directors and agents, from whom the person asserting
any such losses, claims, expense, damage, or liabilities purchased the Shares
concerned, to the extent that any such loss, claim, expense, damage or
liability of such indemnified Underwriter or its respective officers,
shareholders, employees, directors, and agents results from the fact that there
was not sent or given to such person at or prior to the written confirmation of
the sale of such shares to such person, a copy of the Prospectus, as the same
may be amended or supplemented, and the untrue statement or alleged untrue
statement of a material fact or omission or alleged omission to state a
material fact in such Preliminary Prospectus was corrected in such Prospectus
and the Company had previously furnished copies thereof to such indemnified
Underwriter on a timely basis to permit the Prospectus (as the same may be
amended or supplemented) to be sent or given. The Company agrees that the only
such information provided in writing by or on behalf of any Underwriter to the
Company, expressly for use in the Registration Statement or the Prospectus, is
that
<PAGE> 25
25
information contained in the table and the second, fifth and seventh paragraphs
following the table in the section of the Prospectus entitled "Underwriting"
and the last paragraph on the cover page of the Prospectus. The foregoing
indemnity agreement shall be in addition to any liability that the Company may
otherwise have.
(b) Each Underwriter agrees to indemnify, defend and hold
harmless the Company and its officers, shareholders, employees and directors
and any person who controls the Company within the meaning of Section 15 of the
Act or Section 20 of the Exchange Act from and against any loss, expense,
damage, liability or claim (including the reasonable cost of investigating such
claim) that the Company or any such officer, shareholder, employee, director or
controlling person may incur under the Act, the Exchange Act or otherwise to
the same extent as the provisions of Section 6(a) above, but only insofar as
such loss, expense, damage, liability or claim arises out of or is based upon
any untrue statement or omission or alleged untrue statement or omission made
in reliance or in conformity with information relating to such Underwriter
furnished in writing to the Company by or on behalf of such Underwriter,
expressly for use in the Registration Statement or the Prospectus. The Company
agrees that the only information provided in writing by or on behalf of the
Underwriters to the Company, expressly for use in the Registration Statement or
the Prospectus, is that information contained in the table and the second,
fifth and seventh paragraphs following the table in the section of the
Prospectus entitled "Underwriting" and the last paragraph on the cover page of
the Prospectus.
(c) If any action is brought against an indemnified party
under this Section 6, the indemnified party or parties shall promptly notify
the indemnifying party in writing of the institution of such action (provided
that the failure to give such notice shall not relieve the indemnifying party
of any liability that it may have pursuant to this Agreement, unless and to the
extent the indemnifying party did not otherwise learn of such action and such
failure has resulted in the forfeiture of substantive rights or defenses by the
indemnifying party) and the indemnifying party shall assume the defense of such
action, including the employment of counsel and payment of reasonable expenses.
The indemnified party or parties shall have the right to employ its or their
own counsel in any such case, but the fees and expenses of such counsel shall
be at the expense of
<PAGE> 26
26
the indemnified party or parties unless (i) the employment of such counsel
shall have been authorized in writing by the indemnifying party in connection
with the defense of such action, (ii) the indemnifying party shall not have
employed counsel reasonably satisfactory to the indemnified party to take
charge of the defense of such action within a reasonable time after notice of
the institution of such action, (iii) such indemnified party or parties shall
have reasonably concluded that there may be defenses available to it or them
that are different from or additional to those available to the indemnifying
party or (iv) the use of counsel chosen by the indemnifying party to represent
the indemnified party would present such counsel with a conflict of interest
(in which case the indemnifying party shall not have the right to direct the
defense of such action on behalf of the indemnified party or parties), in any
of which events such fees and expenses shall be borne by the indemnifying party
and paid as incurred; provided that the indemnifying party shall only be
responsible for the fees and expenses of one counsel for the indemnified party
or parties hereunder. Anything in this paragraph to the contrary
notwithstanding, the indemnifying party shall not be liable for any settlement
of any such claim or action effected without its written consent, which consent
shall not be unreasonably withheld.
(d) If the indemnification provided for in this Section 6 is
unavailable to an indemnified party under subsection (a) or (b) of this Section
6 in respect of any losses, damages, expenses, liabilities or claims referred
to therein, then each applicable indemnifying party shall contribute to the
amount paid or payable by such indemnified party as a result of such losses,
damages, expenses, liabilities or claims (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company on the one
hand and the Underwriters on the other hand from the offering of the Shares or
(ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault
of the Company on the one hand and the Underwriters on the other hand in
connection with the statements or omissions that resulted in such losses,
damages, expenses, liabilities or claims, as well as any other relevant
equitable considerations. The relative benefits received by the Company on the
one hand and the Underwriters on the other hand shall be deemed to be in the
same proportion as the total proceeds from the
<PAGE> 27
27
offering (net of underwriting discounts and commissions but before deducting
expenses) received by the Company bear to the total underwriting discounts and
commissions received by the Underwriters. The relative fault of the Company on
the one hand and of the Underwriters on the other hand shall be determined by
reference to, among other things, whether the untrue statement or alleged
untrue statement of a material fact or omission or alleged omission relates to
information supplied by the Company or by the Underwriters and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The amount paid or payable by a party as a
result of the losses, damages, expenses, liabilities and claims referred to
above shall be deemed to include any legal or other fees or expenses reasonably
incurred by such party in connection with investigating or defending any claim
or action.
(e) The Company and the Underwriters agree that it would not
be just and equitable if contribution pursuant to this Section 6 were
determined by pro rata allocation or by any other method of allocation that
does not take account of the equitable considerations referred to in Section
6(d) above. Notwithstanding the provisions of this Section 6, no Underwriter
shall be required to contribute any amount in excess of the underwriting
discount received by it by reason of such untrue statement or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation.
SECTION 7. Representations, Warranties and Agreements to
Survive Delivery. The respective indemnity and contribution agreements
contained in Section 6, and the covenants, representations and warranties of
the Company contained in this Agreement or contained in certificates of
officers of the Company submitted pursuant hereto, shall remain in full force
and effect, regardless of any investigation, or statement as to the results
thereof, made by or on behalf of any Underwriter or any of its respective
officers, employees, directors, shareholders, agents or any person who controls
any Underwriters, or by or on behalf of the Company or any of the officers or
directors or any controlling person of the Company, and will survive delivery
of and payment for the Shares.
<PAGE> 28
28
SECTION 8. Default of Underwriters. If any Underwriter or
Underwriters default in their obligations to purchase Shares hereunder on
either the Firm Shares Closing Date or the Additional Shares Closing Date and
the aggregate number of Shares that such defaulting Underwriter or Underwriters
agreed but failed to purchase does not exceed 10% of the total number of Shares
that the Underwriters are obligated to purchase on such Closing Date, the
Representatives may make arrangements satisfactory to the Company for the
purchase of such Shares by other persons, including any of the Underwriters,
but if no such arrangements are made by such Closing Date the non-defaulting
Underwriters shall be obligated severally, in proportion to their respective
commitments hereunder, to purchase the Shares that such defaulting Underwriters
agreed but failed to purchase on such Closing Date. If any Underwriter or
Underwriters so default and the aggregate number of Shares with respect to
which such default or defaults occur exceeds 10% of the total number of Shares
that the Underwriters are obligated to purchase on such Closing Date and
arrangements satisfactory to the Representatives and the Company for the
purchase of such Shares by other persons are not made within 36 hours after
such default, this Agreement will terminate without liability on the part of
any non-defaulting Underwriter or the Company, except as provided in this
Section 8 (provided that if such default occurs with respect to the Additional
Shares after the Firm Shares Closing Date, this Agreement will not terminate as
to the Firm Shares). As used in this Agreement, the term "Underwriter"
includes any person substituted for an Underwriter under this Section. Nothing
herein will relieve a defaulting Underwriter from liability for its default.
SECTION 9. Notices. All notices and other communications
hereunder will be in writing and shall be deemed to have been duly given if
mailed or transmitted by standard form of telecommunication. Notices to the
Underwriters shall be directed to the Underwriters in care of:
Jefferies & Company, Inc.
11100 Santa Monica Boulevard
Los Angeles, California 90071
Attention of Jerry Gluck, Esq.
<PAGE> 29
29
with a copy to: George W. Bilicic, Jr., Esq.
Cravath, Swaine & Moore
Worldwide Plaza
825 Eighth Avenue
New York, New York 10019
or, if sent to the Company, directed to:
Parker Drilling Company
Parker Building
Eight East Third Street
Tulsa, Oklahoma 74103
Attention of Ronald C. Potter, Esq.
with a copy to: P. David Newsome, Jr., Esq.
Conner & Winters
A Professional Corporation
2400 First Place Tower
15 East 5th Street
Tulsa, Oklahoma 74103
SECTION 10. Parties. This Agreement shall inure to the
benefit of and be binding upon the Underwriters, the Company and their
respective successors and legal representatives. Nothing expressed or
mentioned in this Agreement is intended or shall be construed to provide any
person, firm or corporation, other than the Underwriters, the Company and their
respective successors and legal representatives and the controlling persons,
officers, employees, directors and shareholders referred to in Sections 6 and 7
and their respective heirs and legal representatives, any legal or equitable
right, remedy or claim under or in respect of this Agreement or any provision
herein or therein contained. This Agreement and all conditions and provisions
hereof are intended to be for the sole and exclusive benefit of the
Underwriters, the Company and their respective successors and legal
representatives, and such controlling persons, shareholders, officers and
directors and their respective heirs and legal representatives, and for the
benefit of no other person, firm or corporation. No purchaser of Shares from
any Underwriter shall be deemed to be a successor by reason merely of such
purchase.
SECTION 11. Governing Law and Time. This Agreement shall be
governed and construed in accordance with the laws of the State of New York
applicable to agreements made
<PAGE> 30
30
and to be performed in such State. Specified times of day refer to New York
time, unless otherwise specified.
SECTION 12. Counterparts. This Agreement may be executed in
two or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
If the foregoing is in accordance with your understanding of
our agreement, please sign and return to the Company a counterpart hereof,
whereupon this instrument, along with all counterparts, will become a binding
agreement among the Company and the Underwriters in accordance with its terms.
Very truly yours,
PARKER DRILLING COMPANY
by
---------------------------
Name:
Title:
The foregoing Agreement is
hereby confirmed and accepted
as of the date first above
written.
JEFFERIES & COMPANY, INC.
PRUDENTIAL SECURITIES INCORPORATED
SCHRODER WERTHEIM & CO.
INCORPORATED
As Representatives of the Several Underwriters
JEFFERIES & COMPANY, INC.
by
------------------------------
Name:
Title:
<PAGE> 31
SCHEDULE I
UNDERWRITERS
Number of
Firm Shares
Name of Underwriter to be Purchased
-------------------- ---------------
Jefferies & Company, Inc.
Prudential Securities Incorporated
Schroder Wertheim & Co. Incorporated
----------
Total 7,000,000
==========
<PAGE> 32
SCHEDULE II
SUBSIDIARIES
Name Jurisdiction Ownership (%)
<PAGE> 33
EXHIBIT A
, 1996
Jefferies & Company, Inc.
Prudential Securities Incorporated
Schroder Wertheim & Co. Incorporated
c/o Jefferies & Company, Inc.
11100 Santa Monica Boulevard
Los Angeles, CA 90025
Dear Sirs:
The undersigned has been informed that you, as representatives
of the underwriters (the "Underwriters"), are planning to enter into an
Underwriting Agreement with Parker Drilling Company, a Delaware corporation
(the "Company"), providing for the purchase by the Underwriters of 7,000,000
shares of the Company's common stock, $.16 2/3 par value (the "Common Stock"),
with the right to purchase up to 1,050,000 additional shares of Common Stock to
cover over-allotments.
To induce you to enter into this Underwriting Agreement and in
consideration of the purchase and public offering by you of such shares of
Common Stock (which the undersigned considers to be in the best interests of
the Company and its shareholders and to the undersigned's benefit), the
undersigned agrees with the Underwriters that for a period of 90 days from the
date of the final Prospectus relating to such sale of Common Stock covered by
the Underwriting Agreement, the undersigned will not without the prior written
consent of Jefferies & Company, Inc., or unless pursuant to bona fide gifts to
persons or entities who agree to be bound by the provisions of this letter,
offer, sell or contract to sell, or otherwise dispose of, directly or
indirectly, or announce an offering of, any shares of Common Stock beneficially
owned by the undersigned or any securities convertible into, or exchangeable
for, shares of Common Stock.
Very truly yours,
<PAGE> 34
EXHIBIT B
(i) the Company has been duly organized and is validly
existing as a corporation in good standing under the laws of the State
of Delaware, with full corporate power and authority to own, lease and
operate its properties and to conduct its business as described in the
Registration Statement and the Prospectus;
(ii) each Subsidiary has been duly organized and is validly
existing as a corporation in good standing under the laws of its
jurisdiction of incorporation and has full corporate power and
authority to own, lease and operate its properties and to conduct its
business as described in the Registration Statement and the
Prospectus;
(iii) each of the Company and the Subsidiaries is duly
registered and qualified to conduct its business and is in good
standing in each jurisdiction where the nature or location of its
properties (owned or leased) or the conduct of its business requires
such registration or qualification, except where the failure so to
register or qualify would not have a Material Adverse Effect;
(iv) all the outstanding shares of capital stock of
each Subsidiary have been duly authorized and validly issued and are
fully paid and nonassessable, and, except as otherwise set forth in
the Prospectus, all outstanding shares of capital stock of each such
Subsidiary are owned of record and, to such counsel's knowledge,
beneficially by the Company, either directly or through a wholly owned
subsidiary of the Company, free and clear of any perfected security
interests and, to such counsel's knowledge, any other security
interests, liens, encumbrances, equities, other rights to purchase or
other claims;
(v) there are no preemptive or other rights to subscribe for
or to purchase shares of capital stock of the Company pursuant to any
statute, the articles of incorporation or by-laws of the Company or,
to such counsel's knowledge, any agreement or other instrument to
which the Company is a party as to which any person can successfully
maintain an action, suit or proceeding against the Company for
violation of his or her preemptive rights with respect to the issuance
of any share of capital stock of the Company;
<PAGE> 35
2
(vi) to such counsel's knowledge, there is no pending or
threatened action, suit or proceeding before any court or governmental
agency, authority or body or any arbitrator involving the Company or
any of the Subsidiaries required to be disclosed in the Prospectus
that is not adequately disclosed in the Prospectus;
(vii) to such counsel's knowledge, there is no contract or
other document required to be described in the Registration Statement
or Prospectus, or to be filed as an exhibit, that is not described or
filed as required;
(viii) all of the Company's issued and outstanding capital
stock has been duly authorized and validly issued and is fully paid
and nonassessable as of the date hereof and the authorized capital
stock of the Company conforms in all material respects to the
descriptions thereof under the caption "Description of Capital Stock"
in the Prospectus;
(ix) the Registration Statement has become effective under the
Act; any required filing of the Prospectus, and any supplements
thereto, pursuant to Rule 424(b) has been made in the manner and
within the time period required by Rule 424(b); to such counsel's
knowledge, no stop order suspending the effectiveness of the
Registration Statement has been issued, no proceedings for that
purpose have been instituted or threatened, and the Registration
Statement and the Prospectus (other than the financial statements and
supporting schedules contained therein as to which such counsel need
express no opinion) comply as to form in all material respects with
the requirements of the Act and the applicable Act Regulations; and
such counsel has no reason to believe that at the Effective Date the
Registration Statement contained any untrue statement of a material
fact or omitted to state any material fact required to be stated
therein or necessary to make the statements therein not misleading or
that the Prospectus includes any untrue statement of a material fact
or omits to state a material fact necessary to make the statements
therein, in the light of the circumstances under which they were made,
not misleading;
<PAGE> 36
3
(x) the statements in the Registration Statement and
Prospectus, insofar as they are descriptions of contracts, agreements
or other legal documents, are accurate in all material respects and
present fairly the information required to be shown;
(xi) this Agreement has been duly authorized, executed and
delivered by the Company and the Company has full corporate power and
authority to enter into this Agreement;
(xii) no consent, approval, authorization or order of any court
or governmental agency or body is required in connection with the
consummation of the transactions contemplated hereby, except such as
have been obtained under the Act and such as may be required under the
blue sky laws of any jurisdiction in connection with the purchase and
distribution of the Shares by the Underwriters and such other
approvals (specified in such opinion) as have been obtained;
(xiii) neither the execution and delivery of this Agreement,
nor the consummation of any other of the transactions herein
contemplated, nor the fulfillment of the terms hereof, will result in
a breach of, or constitute a default under, (a) the terms of any
indenture or other agreement or instrument (i) to which the Company or
any of the Subsidiaries is a party or by which it is bound and (ii)
that is either filed as an exhibit to the Registration Statement or is
identified to such counsel as being material to the Company and the
Subsidiaries, taken as a whole, and listed on a schedule to such
counsel's opinion, (b) any law, statute, rule, order, regulation or
decree of any court, regulatory body, administrative agency,
governmental body or arbitrator having jurisdiction over the Company
or any of the Subsidiaries of which such counsel is aware and that is
known by such counsel to be applicable to the Company or any of the
Subsidiaries (where such conflict, breach or default would have a
Material Adverse Effect) or (c) the articles of incorporation or
by-laws of the Company;
(xiv) the Shares have been duly and validly authorized by the
Company for issuance, and the Company has full corporate power and
authority to issue, sell and deliver the Shares; and, when the Shares
are issued and delivered against payment therefor as provided by
<PAGE> 37
4
this Agreement, the Shares will have been validly issued and will be
fully paid and nonassessable, and the issuance of such Shares will not
be subject to any statutory preemptive rights or similar statutory
rights or, to such counsel's knowledge, any other preemptive or
similar rights;
(xv) the certificates for the Shares are in due and proper
form under Delaware law and the by-laws of the Company and conform
with the form of certificates duly authorized by the Board of
Directors of the Company;
(xvi) the Shares, when issued, will conform in all material
respects to the description thereof contained in the Prospectus and
the Registration Statement under the caption "Description of Capital
Stock";
(xvii) to such counsel's knowledge, no holder of any
securities of the Company or any other person has the right,
contractual or otherwise, to cause the Company to sell or otherwise
issue to such person, or to permit such person to underwrite the sale
of, any of the Shares or the right to have any Common Stock or other
securities of the Company included in the Registration Statement or
the right, as a result of the filing of the Registration Statement, to
require registration under the Act of any shares of Common Stock or
other securities of the Company that has not been waived or lapsed;
and
(xviii) the Company is not an "investment company" as defined
under the Investment Company Act or subject to registration under such
Act.
In addition, such counsel shall also state that such counsel
has participated in conferences with representatives of the Underwriters,
officers and other representatives of the Company and representatives of the
independent certified public accountants of the Company and the Subsidiaries at
which conferences the contents of the Registration Statement and the Prospectus
and related matters were discussed and that, although such counsel is not
passing upon and does not assume any responsibility for the accuracy,
completeness or fairness of the statements contained in the Registration
Statement and the Prospectus (except as set forth in clauses (viii), (x) and
(xvi) of this Exhibit B), on the basis of the foregoing (relying as to
materiality upon officers and other representatives of
<PAGE> 38
5
the Company), no facts have come to the attention of such counsel that lead
such counsel to believe that the Registration Statement at the time it became
effective or at the Representation Date and the Closing Date contained or
contains an untrue statement of a material fact or omitted or omits to state a
material fact required to be stated therein or necessary in order to make the
statements therein not misleading or that the Prospectus, at the Representation
Date (unless the term "Prospectus" refers to a prospectus that has been
provided to the Underwriters by the Company for use in connection with the
offering of the Shares that differs from the Prospectus on file at the
Commission at the Representation Date, in which case at the time it is first
provided to the Underwriters for such use) or at the Closing Date, contained or
contains an untrue statement of a material fact or omitted or omits to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; provided, that such counsel need not express any comment
with respect to the financial statements and schedules contained therein,
including the notes thereto, the auditors' report thereon and the related
summary of accounting policies.
The opinions of such counsel relate solely to, are based
solely upon and are limited exclusively to the laws of the State of Delaware
and the federal laws of the United States of America, to the extent applicable.
<PAGE> 1
EXHIBIT 4.1
COMMON STOCK
COMMON STOCK
SHARES
SEE REVERSE FOR
CERTAIN DEFINITIONS
CUSIP ______________
PARKER DRILLING COMPANY
INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE
THIS CERTIFIES THAT
IS OWNER OF
FULLY PAID AND NONASSESSABLE SHARES OF THE COMMON STOCK OF
Parker Drilling Company (hereinafter called the "Corporation") transferable on
the books of the Corporation by the holder hereof, in person or by duly
authorized attorney, upon surrender of this Certificate properly endorsed.
This Certificate and the shares represented thereby are issued and shall be
held subject to all the provisions of the Restated Certificate of Incorporation
and By-laws of the Corporation as amended from time to time, copies of which
are on file with the Transfer Agent, to all of which the holder by acceptance
hereof assents. This Certificate is not valid until countersigned by the
transfer agent and registered by the registrar.
Witness the facsimile seal of the Corporation and the facsimile
signatures of its duly authorized officers.
DATED:
[SEAL]
<PAGE> 2
PARKER DRILLING COMPANY
THE CORPORATION WILL FURNISH WITHOUT CHARGE TO EACH STOCKHOLDER WHO SO
REQUESTS, A FULL STATEMENT OF THE PREFERENCES, PRIVILEGES, RESTRICTIONS,
PARTICIPATING, OPTIONAL OR OTHER SPECIAL RIGHTS OF EACH CLASS OF STOCK OR
SERIES THEREOF AND QUALIFICATIONS, LIMITATIONS OR RESTRICTIONS OF SUCH
PREFERENCES AND/OR OTHER RIGHTS. SUCH STATEMENT MAY BE OBTAINED BY A REQUEST
IN WRITING TO THE OFFICE OF THE CORPORATION OR TO THE OFFICE OF THE TRANSFER
AGENT.
The following abbreviations, when used in the inscription on the face
of this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM -as tenants in common UNIF GIFT MIN ACT - Custodian
--------- -------
(Cust) (Minor)
TEN ENT -as tenants by the entities Under Uniform Gifts to Minors
Act
JT TEN -as joint tenants with right of ---------------------
survivorship and not as tenants (State)
in common
Additional abbreviations may also be used though not on the above
list.
For value received, _______________________________ hereby sell,
assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER BY ASSIGNEE
[ ]
-----------------------------------------------------
- -------------------------------------------------------------------------------.
Please print or typewrite name and address including postal zip code of assignee
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Shares of the capital stock represented by the within certificate, and do
hereby irrevocably constitute and appoint
- --------------------------------------------------------------------------------
Attorney to transfer the said stock on the books of the within-named
Corporation with full power of substitution in the premises.
Dated
--------------------------
--------------------------------------------
The signature to this assignment must
correspond with the name a written upon the
face of the Certificate, in every
particular, without alteration or
enlargement, or any change whatever.
SIGNATURE GUARANTEED:
By:
------------------------------------
-2-
<PAGE> 1
[CONNER & WINTERS LETTERHEAD]
June 11, 1996
Parker Drilling Company
Eight East Third Street
Tulsa, Oklahoma 74103
Re: Registration Statement on Form S-3 (File No. 333-04779)
(the "Registration Statement")
------------------------------------------------------------
Gentlemen:
We have acted as counsel for Parker Drilling Company a Delaware
corporation (the "Company"), in connection with the proposed public offering of
an aggregate of up to 8,050,000 shares of the Company's Common Stock, par value
$0.16-2/3 per share (the "Shares"), to be sold by the Company. As described
in the Registration Statement, the Company is selling the shares pursuant to an
Underwriting Agreement (the "Underwriting Agreement") to be entered into among
the Company and Jefferies & Company, Inc.,Prudential Securities Incorporated
and Schroder Wertheim & Co. Incorporated, as representatives of the
underwriters.
In reaching the conclusions expressed in this opinion, we have (a)
examined such certificates of public officials and of corporate officers and
directors and such other documents and matters as we have deemed necessary or
appropriate, (b) relied upon the accuracy of facts and information set forth in
all such documents, and (c) assumed the genuineness of all signatures, the
authenticity of all documents submitted to us as originals, the conformity to
original documents of all documents submitted to us as copies, and the
authenticity of the originals from which all such copies were made.
Based on the foregoing, we are of the opinion that the Shares to be
sold by the company have been duly authorized and, when issued, delivered and
paid for in accordance with the terms
<PAGE> 2
June 11, 1996
Page -2-
and conditions of the Underwriting Agreement, will be validly issued, fully
paid and non-assessable shares of Common Stock of the Company.
We consent to the use of this opinion as an exhibit to the
Registration Statement and to the reference to our firm in the Registration
Statement and the Prospectus covering the Shares constituting a part thereof
under the caption "Legal Matters."
Very truly yours,
CONNER & WINTERS
A Professional Corporation
