CONFORMED COPY
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K/A
(Amendment No. 1)
ANNUAL REPORT PURSUANT TO SECTION 13 or 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1997
Commission File Number 0-7246
Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934 for the transaction period from to
PETROLEUM DEVELOPMENT CORPORATION
(Exact name of registrant as specified in its charter)
Nevada 95-2636730
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
103 East Main Street, Bridgeport, West Virginia 26330
(Address of principal executive offices) (zip code)
Registrant's telephone number, including area code (304) 842-3597
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: NONE
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF
THE ACT:
Petroleum Development Corporation Common Stock, $.01 par
value (Title of class)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months and (2) has been subject to such filing requirements
for the past 90 days. Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will be contained, to the best of
registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
As of March 16, 1998, 15,245,758 shares of the Registrant's Common Stock were
issued and outstanding, and the aggregate market value of such shares held by
non-affiliates of the Registrant on such date was $75,458,012 (based on the last
traded price of $5.875).
DOCUMENTS INCORPORATED BY REFERENCE - NONE
Item 11. Managment Remuneration and Transactions
EXECUTIVE COMPENSATION
The following table sets forth in summary form the compensation
received during each of the Company's last three fiscal years by the Chief
Executive Officer and by each other executive officer of the Company whose
salary and bonus exceeded $100,000 in 1997 (the "Named Executives").
<TABLE>
Summary Compensation Table
<S> <S> <S> <S> <S> <S> <S> <S>
Annual Compensation Long Term Compenstion
Other Securities
Annual Restricted underlying All Other
Name and Compen- stock award Options Compen-
Principal Position Year Salary($) Bonus (1)($) sation($)(2) (s)(#)(3) (#)(4) sation($)(5)
James N. Ryan 1997 170,760 210,120 10,000 108,000 10,335
Chairman and Chief 1996 164,295 153,383 10,000 10,897
Executive Officer 1995 159,330 100,000 10,000 33,750 70,000 4,111
Steven R. Williams 1997 132,360 210,120 10,000 108,000 10,200
President 1996 125,895 153,383 10,000 10,862
and Director 1995 120,930 100,000 10,000 33,750 70,000 4,125
Dale G. Rettinger 1997 132,360 210,120 10,000 108,000 10,200
Executive Vice President 1996 125,895 153,383 10,000 10,862
Treasurer, and Director 1995 120,930 100,000 10,000 33,750 70,000 4,125
</TABLE>
[FN]
(1) During 1994, the Board of Directors approved a deferred compensation
arrangement for the Named Executives. See "Employment and Other Agreements
and Arrangements." Under the arrangements, each Named Executive may choose
to defer any portion of his bonus compensation until retirement or separation
from the Company. The Named Executives voluntarily deferred $110,000 each
in 1997; $80,000, $60,000 and $60,000, respectively in 1996; and $30,000 each
in 1995. In 1997, 1996 and 1995, $30,000 of the deferred bonus compensation
of Messrs. Williams and Rettinger was utilized to pay the premiums of
split-dollar life insurance policies for Messrs. Williams and Rettinger.
(2) The respective Named Executives receive fees as directors of the Company
in the amount of $10,000 per year.
(3) In 1995, the Company granted a restricted stock award of 30,000 shares of
Common Stock to each of the Named Executives at the grant date market price of
$1.125 per share. These shares will vest upon a Named Executive's retirement
or involuntary separation from employment with the Company, or upon a change
of control of the Company. The aggregate value of the holdings of each
individual as of December 31, 1997 was $157,500.
(4) The exercise price of the options granted in 1995 is $1.125 per share.
In 1997, the Company granted each Named Executive options to purchase 108,000
shares of Common Stock at an exercise price of $5.125 per share, the fair
market value of such shares of Common Stock at the date of grant. The
options may be exercised with respect to one-half of the shares granted
thereunder on or after July 15, 1998 and with respect to one-half of the
shares granted thereunder on or after July 15, 1999, provided that the
grantee is employed with the Company on the exercise date. Such options
expire on July 15, 2007.
1
(5) This amount includes contributions made by the Company under the Company's
Employee Profit Sharing Plan and 401(k) plan. In 1997, 1996, and 1995 the
Company contributed $15,500, $50,000, and $28,500, respectively, to the
Employee Profit Sharing Plan. Of these contributions, each of the Named
Executives was credited $952 in 1997, $3,071 in 1996; $1,815 in 1995. The
Company provided a matching of 401(k) contribution based upon varying rates
of the Named Executives' respective contributions. Of the total Company
matching contribution of $171,300, $139,800 and $71,800 in 1997, 1996 and 1995,
the Named Executives were credited with matching contributions of $9,383,
$9,248, and $9,248, respectively in 1997; $7,826, $7,791 and $7,791,
respectively in 1996; and $4,111, $4,125 and $4,125, respectively, in 1995.
</FN>
OPTIONS GRANTED IN LAST FISCAL YEAR
The following table sets forth stock options granted in 1997 under the
Employee Incentive Stock Option Plan to the persons named in the Summary
Compensation table.
<TABLE>
<S> <S> <S> <S> <S> <S>
% of Total
Number of Options Granted to
Options Employees during Exercise Expiration Grant Date
Granted the fiscal year Price($) Date Value($)
James N. Ryan 108,000 22% 5.125 7/15/07 356,400
Steven R. Williams 108,000 22% 5.125 7/15/07 356,400
Dale G. Rettinger 108,000 22% 5.125 7/15/07 356,400
</TABLE>
Aggregated Option Exercises in Last Fiscal Year
and Fiscal Year-End Option Values
The following table provides certain information with respect to options
exercised during 1997 by the persons named in the summary compensation under
the Company's stock option plans. The table also represents information as
to the number of options outstanding as of December 31, 1997 with respect to
options granted pursuant to the Company's Employee Stock Option Plans.
<TABLE>
<S> <S> <S> <S> <S> <S> <S>
Number Value of Unexercised
of Shares Value Number of Unexercised Options In-The-Money Options
Exercised Realized ($) at Year-end at Year-End(1)($)
Exercisable Unexercisable Exercisable Unexercisable
James N. Ryan - - 401,000 108,000 1,716,187 13,500
Steven R. Williams - - 391,000 108,000 1,673,062 13,500
Dale G. Rettinger - - 391,000 108,000 1,673,062 13,500
</TABLE>
[FN]
(1) For all unexercised options held as of December 31, 1997, the aggregate
dollar value is equal to the of excess of the market value of the stock
underlying those options over the exercise price of those unexercised
options. On December 31, 1997, the closing sales price of the Common
Stock was $5.25 per share.
</FN>
Employment and Other Agreements and Arrangements
The Company has entered into employment agreements with each of the Named
Executives, each of which has a term that has been extended to December 31,
2000. Pursuant to the respective terms of the employment agreements, each of
the Named Executives is entitled to receive the basic annual salary set forth
therein that is subject to increase, but not decrease (unless dire economic
circumstances as declared by the Board of Directors requires a reduction for
all senior executive employees of the Company), as the Board of Directors
may determine to reflect changes in the cost of living, the financial success
of the Company and the performance of such Named Executive. For 1997, the
basic salary has been set by the Board of Directors
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under the respective agreements as $170,760 for Mr. Ryan, $132,360 for Mr.
Williams and $132,360 for Mr. Rettinger. Each Named Executive is also
entitled to be paid an annual bonus equal to 2.5% of the Company's net
pre-tax earnings for any year in which the Company's net pre-tax earnings
exceed $300,000. The Company has been required to establish a deferred
compensation plan, described below, for the Named Executives and to fund
such plan with an annual contribution of $30,000 commencing in 1994, subject to
adjustment for inflation.
In the event of a change in control of the Company, each Named Executive
has the right within six months after such change of control to elect to
terminate his employment under his employment agreement and receive severance
compensation equal to the sum of his basic salary plus an amount equal to the
average bonus paid to him over the preceding three years as provided in the
agreement multiplied by the remaining years of the employment agreement,
provided, however, that the minimum severance compensation must not be less than
the amount equal to three years of basic compensation plus an amount equal to
three times the average bonus paid to such person over the preceding three-year
period.
Each employment agreement also provides that if the Company obtains the
right to sell working interests in any drilling program, the Named Executive
is entitled to participate as an investor in such oil and gas drilling
project subject to the prior approval by the Board of Directors of the
terms of any such participation.
Each employment agreement contains a standard non-disclosure covenant.
Each employment agreementalso provides that the Named Executive is prohibited
during the term of his employment and for a period ofone year following his
termination from engaging in any business that is competitive with the
Company's oiland gas drilling business in West Virginia, unless his
termination results from a change of control of the Company. During
any period for which the non-competition provision prohibits the officer
from pursuing activities that would compete with the Company's business as
provided in the agreement following termination of the agreement, the Company
is required to pay the officer his basic salary and bonus as provided in the
agreement.
In the event of termination under the terms of the agreement, the Company
will be required to loan to the officer funds equal to the exercise price of all
options held by the Named Executive under the Company's stock option plans,
which loan, if made, must be repaid within nine months and will bear interest
at the prime rate then in effect.
Each employment agreement may be terminated for cause for willful
misfeasance or malfeasance, disregard of the Named Executive's duties or
negligence related to the performance of his duties, if so determined by
a court of competent jurisdiction. Also, the Company may terminate the
employment agreement without cause, in which case the Company must either
(i) reassign the Named Executive to a comparable executive position or
designate him as a consultant for the remaining term of his agreement (ii)
pay him liquidated damages in an amount equal to his then basic salary for
the remaining term of the employment agreement, with a minimum payment equal
to twelve months of basic salary.
The Company has entered into stock redemption agreements with each of the
Named Executives. The agreements require the Company to maintain life insurance
policies on each of them in the amount of $1 million. At the election of the
Named Executive's estate or heirs made within one year of such person's death,
the Company must utilize the proceeds from such insurance policies to purchase
from his estate or heirs all or a portion of his shares of the Company's Common
Stock owned by him, including shares subject to outstanding stock options or
warrants owned by such Named Executive at the time of his death, up to an
aggregate sale price of $1 million. The purchase price for such shares of
Common Stock will be based upon the average closing asked price for the
Company's Common Stock as quoted by Nasdaq during a specified period. The
Company is not required to purchase any shares in excess of the amount provided
by such insurance policies. If the Named Executive's estate or heirs elect not
to sell any or all of the shares to the Company, the estate or heirs will be
precluded from selling the shares to anyone for a period of two years after
the date of the person's death, except that the shares may be transferred
into the names of the decedent's heirs and beneficiaries and the stock sold
pursuant to Rule 144 under the Securities Act. If the Named Executive
terminates his employment with the Company or disposes of all of all or
substantially all of his shares of Common Stock in the Company, the Named
Executive has the right to purchase his respective insurance policy
for a price equal to the cash surrender value of the policy as of the date
of such event. If the Named Executive fails to purchase the policy within
ninety days after such event, the Company may cancel all policies
covering the life of the Name Executive. The stock redemption agreements
will terminate upon bankruptcy or cessation of business by the Company.
3
Mr. Ryan, Mr. Williams and Mr. Rettinger are also the participants in the
Company's deferred bonus compensation plan. Under this plan, the Company's
Board of Directors must declare a year-end bonus for each participant, the
receipt of which is automatically deferred pursuant to the plan, unless prior
to the beginning of a particular year, the participant enters into a
voluntary bonus compensation agreement under which he irrevocably elects
to receive his year-end bonus as cash compensation, payable as soon as
practicable following the end of the year. The amount of the participant's
year-end bonus is a minimum of $30,000 or such greater amount as may be
declared by the Board of Directors. The participant also has the right to
elect to defer receipt of his other bonus compensation under this plan. Any
bonus compensation deferred under this plan will not be paid until such
participant's retirement, or upon termination of employment, disability
or death or upon hardship, as provided in the plan. A trustee selected by
the Board of Directors maintains accounts for each participant under the
plan. The Company has reserved the right to terminate the deferred bonus
compensation plan, in whole or in part, at any time and without liability
for such termination or discontinuance.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
The following table sets forth certain information regarding ownership of the
Company's Common Stock as of December 31, 1997 by (a) each person known by the
Company to own beneficially more than 5% of the outstanding shares of Common
Stock; (b) each director of the Company; (c) each Named Executive; (d) all
directors and executive officers as a group.
<TABLE>
<S> <S> <S>
Beneficial Ownership (1)
Name and Address Number Percent
Fidelity Management. . . . . . . . . . . . . . . . . . . . . . . 1,255,000 8.2
82 Devonshire Street
Boston, MA 02109
James N. Ryan(2) . . . . . . . . . . . . . . . . . . . . . . . 971,434 6.4
103 East Main Street
Bridgeport, WV 26330
Steven R. Williams(3). . . . . . . . . . . . . . . . . . . . . . . 562,560 3.6
103 East Main Street
Bridgeport, WV 26330
Dale G. Rettinger(3) . . . . . . . . . . . . . . . . . . . . . . . 517,834 3.3
103 East Main Street
Bridgeport, WV 26330
Roger J. Morgan(4) . . . . . . . . . . . . . . . . . . . . . . . . 132,504 *
Vincent F. D'Annunzio(5) . . . . . . . . . . . . . . . . . . . . . .53,600 *
Jeffrey C. Swoveland(6). . . . . . . . . . . . . . . . . . . . . . .22,094 *
All directors and executive officers as a
group (6 persons)(7). . . . . . . . . . . . . . . . . . . . . . 2,260,026 13.7
</TABLE>
[FN]
* Less than 1%
(1) Includes shares over which the person currently holds or shares voting or
investment power. Unless otherwise indicated in the footnotes to this table,
the persons named in this table have sole voting and investment power with
respect to the shares benefically owned.
(2) Includes 200,000 shares owned jointly with Mr. Ryan's wife, 200,369 shares
owned by Mr. Ryan's wife and 64,258 shares owned by Mr. Ryan's wife as guardian
for their minor grandchildren. The balance of the shares are owned solely by
Mr. Ryan. Also includes options to purchase 401,000 shares of Common Stock
that Mr. Ryan can currently exercise or that will become exercisable within
60 days. Excludes 108,000 shares underlying options granted on July 15, 1997
exercisable after such 60-day period.
4
(3) Includes options to purchase 391,000 shares that such person can currently
exercise or that will become exercisable within 60 days. Excludes 108,000
shares underlying options granted to such person on July 15, 1997 exercisable
after such 60-day period.
(4) Includes options to purchase 47,500 shares that Mr. Morgan can currently
exercise or that will become exercisable within 60 days.
(5) Includes options to purchase 13,600 shares that Mr. D'Annunzio can currently
exercise or that will become exercisable within 60 days.
(6) Includes options to purchase 3,550 shares that Mr. Swoveland can currently
exercise or that will become exercisable within 60 days.
(7) Includes options to purchase 1,247,650 shares that such persons can
currently exercise or that will become exercisable within 60 days.
</FN>
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires the Company's officers and
directors, and persons who own more than 10% of a Company's equity securities,
to file reports of ownership and changes in ownership with the Securities and
Exchange Commission. Officers, directors and holders of more than 10% of the
Common Stock are required by regulations promulgated by the Commission pursuant
to the Exchange Act to furnish the Company with copies of all Section 16(a)
forms they file. The Company assists officers and directors, and will assist
beneficial owners, if any, of more than 10% of the Common Stock, in complying
with the reporting requirements of Section 16(a) of the Exchange Act.
Based solely on its review of the copies of such forms received by it, the
Company believes that since January 1, 1997, all Section 16(a) filing
requirements applicable to its directors, officers and greater than 10%
beneficial owners were met.
5
<PAGE>
CONFORMED COPY
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
PETROLEUM DEVELOPMENT CORPORATION
By /s/ James N. Ryan
James N. Ryan, Chairman
April 29, 1998
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated:
Signature Title Date
/s/ James N. Ryan Chairman, Chief Executive April 29, 1998
James N. Ryan Officer and Director
/s/ Steven R. Williams President and Director April 29, 1998
Steven R. Williams
/s/ Dale G. Rettinger Chief Financial Officer April 29, 1998
Dale G. Rettinger Executive Vice President,
Treasurer and Director
(principal financial and
accounting officer)
/s/ Roger J. Morgan Secretary and Director April 29, 1998
Roger J. Morgan
6
