<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
--------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period __________________ to ___________________
Commission file number 1-9245
-----------
NABORS INDUSTRIES, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 93-0711613
- ------------------------------- ------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
515 W. Greens Road, Suite 1200, Houston, Texas 77067
----------------------------------------------------
(Address of principal executive offices)
(Zip Code)
713-874-0035
--------------------------------------------------
(Registrant's telephone number, including area code)
----------------------------------------------------------------------------
(Former name, former address and former fiscal year,
if change since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes | X | No____
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Number of shares of common stock outstanding as of July 31, 1996
totaled 86,793,238.
<PAGE> 2
NABORS INDUSTRIES, INC.
INDEX
-----
Page No.
Part I Financial Information --------
Item 1. Financial Statements
Condensed Consolidated Balance Sheets as of
June 30, 1996 and September 30, 1995 2
Condensed Consolidated Statements of
Income and Retained Earnings for the Three
Months and Nine Months Ended June 30, 1996 and
1995 3
Condensed Consolidated Statements of Cash
Flows for the Nine Months Ended June
30, 1996 and 1995 4
Notes to Condensed Consolidated
Financial Statements 5
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations 7
Part II Other Information
Item 6. Exhibits and Reports on Form 8-K 11
Signatures 11
<PAGE> 3
PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
NABORS INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
June 30, September 30,
1996 1995
------------ -------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 103,660 $ 12,038
Marketable securities 11,255 3,296
Accounts receivable, net 178,419 132,482
Inventory and supplies 16,861 14,079
Prepaid expenses and other current assets 26,925 21,550
------------ -------------
Total current assets 337,120 183,445
Property, plant and equipment, net 479,973 393,464
Marketable securities 10,969 9,645
Other long-term assets 16,248 6,718
------------ -------------
Total assets $ 844,310 $ 593,272
============ =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term obligations $ 13,259 $ 11,158
Short-term borrowings 8,778 30,684
Trade accounts payable 50,894 53,891
Accrued liabilities 70,640 48,944
Income taxes payable 8,140 4,876
------------ -------------
Total current liabilities 151,711 149,553
Long-term obligations 232,370 51,478
Other long-term liabilities 7,375 7,643
Deferred income taxes 17,270 15,848
------------ -------------
Total liabilities 408,726 224,522
------------ -------------
Commitments and contingencies
Stockholders' equity:
Preferred stock, par value $.10 per share:
Authorized 10,000 shares; none issued
or outstanding - -
Capital stock, par value $.10 per share:
Authorized common shares 200,000;
issued and outstanding 87,265 and 85,017 8,727 8,502
Authorized Class B shares 8,000,
none issued or outstanding - -
Capital in excess of par value 250,020 229,267
Cumulative translation adjustment (2,818) (2,670)
Net unrealized gain on marketable securities 2,858 354
Retained earnings since May 1, 1988 179,961 138,091
Less treasury stock, at cost, 489 and 755
common shares (3,164) (4,794)
------------ -------------
Total stockholders' equity 435,584 368,750
------------ -------------
Total liabilities and stockholders'
equity $ 844,310 $ 593,272
============ =============
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
2
<PAGE> 4
NABORS INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
AND RETAINED EARNINGS
FOR THE THREE MONTHS AND NINE MONTHS ENDED JUNE 30, 1996 AND 1995
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Three Months Nine Months
-------------------- --------------------
1996 1995 1996 1995
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Revenues $ 181,336 $ 152,673 $ 508,993 $ 422,010
--------- --------- --------- ---------
Operating expenses:
Direct costs 134,570 115,883 379,049 318,453
General and administrative expenses 14,908 12,808 41,563 37,421
Depreciation and amortization 11,308 8,850 32,310 23,186
--------- --------- --------- ---------
Operating expenses 160,786 137,541 452,922 379,060
--------- --------- --------- ---------
Operating income 20,550 15,132 56,071 42,950
--------- --------- --------- ---------
Other income (expense):
Interest expense (3,476) (2,049) (7,590) (6,143)
Interest income 496 292 937 1,142
Gain on sales of long-term assets 440 566 1,956 1,311
Other income, net 4,047 253 7,278 2,932
--------- --------- --------- ---------
Other income (expense) 1,507 (938) 2,581 (758)
--------- --------- --------- ---------
Income before income taxes 22,057 14,194 58,652 42,192
--------- --------- --------- ---------
Income taxes:
Current 2,637 924 6,418 3,662
Deferred 751 225 1,481 2,128
--------- --------- --------- ---------
Total income taxes 3,388 1,149 7,899 5,790
--------- --------- --------- ---------
Net income 18,669 13,045 50,753 36,402
Reclassification of pre-quasi-
reorganization tax benefit (4,183) (3,000) (8,883) (9,428)
Retained earnings, beginning of period 165,475 112,094 138,091 95,165
--------- --------- --------- ---------
Retained earnings, end of period $ 179,961 $ 122,139 $ 179,961 $ 122,139
========= ========= ========= =========
Earnings per share:
Primary $ .20 $ .15 $ .55 $ .42
========= ========= ========= =========
Fully diluted $ .20 $ .15 $ .54 $ .41
========= ========= ========= =========
Weighted average number of shares
outstanding:
Primary 94,543 88,889 92,488 87,412
========= ========= ========= =========
Fully diluted 95,164 89,539 94,446 89,446
========= ========= ========= =========
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
3
<PAGE> 5
NABORS INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED JUNE 30, 1996 AND 1995
(In thousands)
<TABLE>
<CAPTION>
1996 1995
---------- -----------
<S> <C> <C>
Net cash provided by operating activities $ 41,903 $ 44,281
---------- -----------
Cash flows from investing activities:
Purchases of marketable securities, trading (6,585) -
Sales of marketable securities, trading 2,808 -
Purchases of marketable securities, available for sale - (2,273)
Sales of marketable securities, available-for-sale 1,699 373
Purchases of marketable securities, held-to-maturity - (5,121)
Maturities of marketable securities, held-to-maturity - 21,254
Sales of marketable securities, held-to-maturity - 12,416
Payments received on notes receivable 61 59
Cash paid for acquisitions, net (33,754) (20,000)
Capital expenditures (97,464) (67,419)
Proceeds from sales of long-term assets and insurance
claims 11,316 3,666
---------- -----------
Net cash used for investing activities (121,919) (57,045)
---------- -----------
Cash flows from financing activities:
Decrease in restricted cash 889 295
Increase (decrease) in long-term borrowings, net 182,993 (13,047)
(Decrease) increase in short-term borrowings, net (21,906) 19,024
Common and treasury stock transactions 9,662 (607)
---------- -----------
Net cash provided by financing activities 171,638 5,665
---------- -----------
Net increase (decrease) in cash and cash equivalents 91,622 (7,099)
Cash and cash equivalents, beginning of period 12,038 22,563
---------- -----------
Cash and cash equivalents, end of period $ 103,660 $ 15,464
========== ===========
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
4
<PAGE> 6
NABORS INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 1 Interim Financial Information
The unaudited condensed consolidated financial statements of
Nabors Industries, Inc. (the "Company" or "Nabors") are prepared in conformity
with generally accepted accounting principles, but do not purport to be a
complete presentation inasmuch as all note disclosures required are not
included. Reference is made to the Company's 1995 Annual Report on Form 10-K for
additional note disclosures.
In the opinion of management, the condensed consolidated
financial statements contain all adjustments, consisting only of normal
recurring adjustments, necessary to present fairly the financial position of the
Company as of June 30, 1996 and the results of its operations and its cash flows
for the respective periods ended June 30, 1996 and 1995. Interim results for the
nine months ended June 30, 1996 are not necessarily indicative of results which
will be realized for the full year ending September 30, 1996.
Note 2 Acquisitions
On April 30, 1996, the Company completed the acquisition of
Exeter Drilling Company ("Exeter") and its subsidiary, J.W. Gibson Well Service
Company ("Gibson"), from Occidental Oil and Gas Corporation. The consideration
consisted of $18.0 million in cash, $4.0 million (266,223 shares) of Nabors
common stock, and $10.6 million paid in cash for Exeter's and Gibson's working
capital. Exeter's drilling fleet consists of 49 actively marketed rigs. The
majority of its active fleet is composed of rigs operating in the Rocky
Mountains. Gibson, currently operates 78 workover and well servicing rigs in the
Rocky Mountains, the mid-continent region of North America and New Mexico. The
acquisition was accounted for under the purchase method of accounting;
accordingly, the total purchase price was allocated to net assets based on
estimated fair values. The results of Exeter's and Gibson's operations have been
included in the consolidated financial statements of the Company commencing on
the effective date of the acquisition.
Note 3 Long-term Obligations
On May 28, 1996, the Company issued $172.5 million of 5%
Convertible Subordinated Notes with a scheduled maturity in 2006 (the "Notes").
The Notes are convertible into common shares of the Company at a conversion
price of $18.125 per share, subject to an adjustment in certain events. The
Notes are not redeemable prior to May 15, 1999. Thereafter, the Company may
redeem the notes initially at 103.5% and at decreasing prices thereafter to 100%
at maturity, in each case together with accrued and unpaid interest. The Notes
also may be repaid at the option of the holder at 101% anytime prior to May 15,
2006 if there is a Change in Control, as defined in the subordinated indenture
relative to the Notes, together with accrued and unpaid interest.
5
<PAGE> 7
Note 4 Capital Stock
During the nine month period ended June 30, 1996, 2,216,575
options were exercised at prices ranging from $0.75 to $10.000 per share. In
addition, 31,768 common shares were issued upon vesting under a stock award
plan.
During October 1995, the Company purchased for $1.0 million,
650,000 warrants that the Company had previously issued in connection with the
purchase of several drilling rigs in April 1994. The warrants were excercisable
until April 1996 at $7.92 per share.
On April 30, 1996, the Company issued 266,223 common shares,
that were previously held in treasury, to Occidental Oil and Gas Corporation in
connection with the Exeter acquisition (Note 2).
During June 1996, 1,100,000 warrants previously issued in
connection with the acquisition of the drilling assets of Grace Drilling Company
expired.
Note 5 Commitments and Contingencies
Capital Expenditures
As of June 30, 1996, the Company had capital expenditure
purchase commitments outstanding of approximately $19.2 million.
Contingencies
A petition was filed on March 4, 1994, in the 61st Judicial
Court, of Harris County, Texas, against Nealwell Drilling Limited ("Nealwell")
and Sundowner Offshore Services, Inc. ("Sundowner"), asserting that Nealwell
breached a contract, and Sundowner tortiously interfered with alleged contract
rights of Primrose Drilling Ventures, Ltd., when Sundowner purchased a jackup
workover rig from Nealwell for $2.0 million in cash. Sundowner was merged with a
subsidiary of Nabors during October 1994. Primrose has alleged approximately
$34.5 million in actual damages, as well as exemplary damages not less than its
actual damages. Company management believes that the litigation instituted by
Primrose is without merit and intends to vigorously defend all claims of
Primrose. The case is in the discovery stages.
The Company is a defendant or otherwise involved in a number
of lawsuits. In the opinion of management, the Company's ultimate liability with
respect to these lawsuits is not expected to have a significant or material
adverse effect on the Company's consolidated financial position or results of
operations.
6
<PAGE> 8
ITEM 2.
NABORS INDUSTRIES, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Third Quarter and First Nine Months of Fiscal Year 1996 Compared to Third
Quarter and First Nine Months of Fiscal Year 1995
Company revenues for the third quarter of fiscal year 1996
("Current Quarter") and the first nine months of fiscal year 1996 ("Current
Period") totaled $181.3 million and $509.0 million, respectively, representing a
19% and 21% increase over the prior year comparable period amounts. Operating
income during the Current Quarter and Current Period totaled $20.6 million and
$56.1 million, respectively, compared to $15.1 million and $43.0 million in the
prior year comparable periods. Net income totaled $18.7 million ($.20 per share)
and $50.8 million ($.54 per share) during the Current Quarter and Current
Period, respectively, compared to $13.0 million ($.15 per share) and $36.4
million ($.41 per share) during the prior year comparable periods. The
significant improvement in operating results during the Current Quarter and
Current Period was due primarily to improved results of the Company's operations
in Alaska, the Gulf of Mexico, the US Lower 48, and South and Central America.
The following tables set forth certain financial information
with respect to the Company and its subsidiaries on a consolidated basis by
geographical area :
<TABLE>
<CAPTION>
Third Quarter First Nine Months
--------------------------------------------------- ----------------------------------------------------
(In thousands, except percentages)
1996 1995 Variance 1996 1995 Variance
--------------- --------------- --------------- --------------- --------------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues:
North America $133,495 74% $111,268 73% $22,227 20% $373,087 73% $308,123 73% $64,964 21%
International 47,841 26% 41,405 27% 6,436 16% 135,906 27% 113,887 27% 22,019 19%
--------------- --------------- --------------- --------------- --------------- ----------------
$181,336 100% $152,673 100% $28,663 19% $508,993 100% $422,010 100% $86,983 21%
=============== =============== =============== =============== =============== ================
Operating income:
North America $15,704 65% $12,697 69% $3,007 24% $43,705 67% $36,716 71% $6,989 19%
International 8,590 35% 5,758 31% 2,832 49% 21,819 33% 15,321 29% 6,498 42%
--------------- --------------- --------------- --------------- --------------- ----------------
24,294 100% 18,455 100% 5,839 32% 65,524 100% 52,037 100% 13,487 26%
Corporate expenses (3,744) (3,323) (421) (13%) (9,453) (9,087) (366) (4%)
--------------- --------------- --------------- --------------- --------------- ----------------
$20,550 $15,132 $5,418 36% $56,071 $42,950 $13,121 31%
=============== =============== =============== =============== ============== ================
</TABLE>
<TABLE>
<CAPTION>
Third Quarter First Nine Months
----------------------------------------- ----------------------------------------
1996 1995 1996 1995
------------------- ------------------- -------------------- ------------------
Rig Rig Rig Rig Rig Rig Rig Rig
Rig activity (1): Years Utilization Years Utilization Years Utilization Years Utilization
------ ----------- ----- ----------- ----- ----------- ----- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
North America 150.8 55% 135.2 55% 146.6 57% 129.2 55%
International 28.9 61% 27.8 64% 27.9 61% 25.9 61%
----------------------------------------- ---------------------------------------
179.7 56% 163.0 56% 174.5 58% 155.1 56%
========================================= =======================================
</TABLE>
(1) Excludes labor contracts and Gibson workover and well servicing rigs.
North America (including Canada) revenues totaled $133.5
million and $373.1 million during the Current Quarter and Current Period,
respectively, representing a 20% and 21% increase over the prior year comparable
periods. Alaska operation revenues increased by 20% and 30% during the Current
Quarter and Current Period, respectively. Revenues for Peak Oilfield Services,
the Company's Alaskan construction and logisitics joint venture, increased
during the Current Quarter and Current Period as a result of the October 1995
acquisition of Alaska Interstate Construction ("AIC"). Additionally, Alaskan
drilling results were flat during the Current Quarter, but improved during the
Current Period as 1.3 additional rigs worked as compared to the prior year. Gulf
of Mexico operation revenues increased
7
<PAGE> 9
during the Current Quarter and Current Period by 19% and 25%, respectively as a
result of increased equivalent rig years and higher dayrates for the Company's
platform drilling rigs and platform workover rigs, as well as increased
equivalent rig years for the Company's jackup workover rigs as compared to the
prior year comparable periods. Platform drilling rig equivalent rig years
increased in part as a result of the purchase of rig 85 from Mayronne
Enterprises, Inc. during fiscal 1995, as this rig commenced operations in the
first quarter of fiscal year 1996. Additionally, the newly constructed MASE(TM)
rig 802 began working in June 1996. Platform workover rig equivalent rig years
increased due to the addition of the newly constructed Super Sundowner XVI rig,
which commenced operations in September 1995. Additionally, Sundowner XII was
redeployed from Australia to the Gulf of Mexico in May 1995. Revenues for the
Company's US Lower 48 operations increased during the Current Quarter and
Current Period by 25% and 22% respectively. The increase in revenues was
primarily attributable to increased equivalent rig years associated with the
addition of the Delta Drilling Company rigs acquired in January 1995, and the
Exeter Drilling Company rigs acquired in April 1996. Equivalent North America
rig years during the Current Quarter and Current Period totaled 150.8 years and
146.6 years, respectively, as compared to 135.2 years and 129.2 years during the
prior year comparable periods.
International revenues totaled $47.8 million and $135.9
million during the Current Quarter and Current Period, respectively,
representing a 16% and 19% increase over the prior year comparable periods.
Revenues for the Company's South and Central America operations increased during
the Current Quarter and Current Period by 50% and 46%, respectively, primarily
due to higher dayrates and increased activity in Venezuela, where equivalent rig
years totaled 14.6 years and 14.2 years, respectively, as compared to 12.1 years
and 11.4 years during the prior year comparable periods. Additionally, South and
Central American revenues increased as a result of the newly constructed
MASE(TM) rig 801, which began operations in Trinidad during January 1996, and a
one rig drilling contract in Colombia, which commenced during the first quarter
of fiscal year 1996. UK North Sea revenues increased during the Current Quarter
and Current Period by 8% and 11%, respectively, as a result of additional labor
contracts as compared to the prior year comparable periods. Equivalent
international rig years during the Current Quarter and Current Period totaled
28.9 years and 27.9 years, respectively, as compared with 27.8 years and 25.9
years in the prior year comparable periods.
The following table sets forth selected consolidated financial
information of the Company expressed as a percentage of total operating
revenues:
<TABLE>
<CAPTION>
Third Quarter First Nine Months
-------------------- ---------------------
1996 1995 1996 1995
------- ------- -------- -------
<S> <C> <C> <C> <C>
Revenues 100.0% 100.0% 100.0% 100.0%
------- ------- -------- -------
Operating expenses:
Direct costs 74.2% 75.9% 74.5% 75.4%
General and administrative expenses 8.2% 8.4% 8.2% 8.9%
Depreciation and amortization 6.3% 5.8% 6.3% 5.5%
------- ------- -------- -------
Operating expenses 88.7% 90.1% 89.0% 89.8%
------- ------- -------- -------
Operating income 11.3% 9.9% 11.0% 10.2%
Other income (expense) 0.8% (0.6%) 0.5% (0.2%)
------- ------- -------- -------
Income before income taxes 12.1% 9.3% 11.5% 10.0%
Income taxes 1.8% 0.8% 1.5% 1.4%
------- ------- -------- -------
Net income 10.3% 8.5% 10.0% 8.6%
======= ======= ======== =======
</TABLE>
Direct costs as a percentage of revenues decreased during the
Current Quarter and Current Period as compared to the prior year comparable
periods. The increase in operating margins is largely due to improved margins
for the Company's South and Central American operations, primarily Venezuela and
the contribution of the newly constructed MASE(TM) rig 801, which began
operations in Trinidad in January 1996. Depreciation and amortization expense as
a percentage of revenues increased during the Current Quarter and Current Period
as a result of capital expenditures and acquisitions made during fiscal years
1995 and 1996.
8
<PAGE> 10
Interest expense increased during the Current Quarter and
Current Period primarily as a result of short-term borrowings in Venezuela at a
high interest rate, for foreign currency hedging purposes, as well as interest
associated with the $172.5 million 5% Subordinated Notes issued on May 28, 1996.
In December 1995, the Venezuela bolivar devalued by
approximately 71%, from an official fixed exchange rate of 170 bolivars to the
US dollar, to 290 bolivars to the US dollar, due to the deterioration in that
country's economic condition. As a result of the devaluation, the Company
recognized a translation gain of $.3 million during the first quarter of fiscal
year 1996, as the Company had a bolivar denominated net monetary liability
position. In April 1996, the Venezuelan government, as a part of moving towards
a free market economy, eliminated exchange rate control policies that had been
established in June 1994. As a result, the bolivar was allowed to float, and
devalued by an additional 55% to 70% as the exchange rate ranged from 450 to 500
bolivars to the US dollar. The Company recognized an insignificant translation
gain during the Current Quarter as a result of the devaluation. The Company
currently maintains a bolivar denominated net monetary liability position as a
result of bolivar denominated borrowings in Venezuela, and does not expect to
recognize a significant loss from any future devaluations.
Other income increased during the Current Quarter and Current
Period primarily as a result of gains on insurance claims amounting to $2.2
million and $2.5 million during the Current Quarter and Current Period,
respectively. Additionally, realized and unrealized gains on marketable
securities amounted to $1.6 million and $4.1 million during the Current Quarter
and Current Period, respectively. Other income during the prior year periods
consisted primarily of realized and unrealized gains on marketable securities
amounting to $.2 million and $2.5 million during the prior year quarter and nine
month period, respectively.
The current and deferred income tax provisions for all the
periods presented primarily relate to foreign operations including Canada, as
substantially all of the US taxable income is offset by available net operating
loss carryforwards ("US NOL"). As a result of the Company's available US NOL,
the Company does not expect to pay any regular US federal income taxes until the
Company's US NOL has been fully utilized, or expires unutilized. For US federal
income tax purposes, the Company has net operating loss carryforwards of
approximately $150 million that, if not utilized will expire from 1999 to 2009.
For accounting purposes, the Company expects to begin sometime during the
beginning of fiscal year 1997, to record non-cash US federal deferred income
taxes depending on the relationship between the amount of the Company's unused
US federal net operating loss carryforward and the temporary differences between
the book and tax basis in the Company's assets. The temporary differences arise
from taking accelerated depreciation for tax return purposes as compared to a
lower depreciation amount recorded for financial statement purposes. As a
result, the Company's effective book tax rate during fiscal year 1997 and
thereafter should be in the 30% to 35% range. Non-cash deferred taxes should
represent approximately 70% of this amount until the point in time when the US
NOL has been fully utilized or expires. At current earnings and capital
expenditure levels, the Company does not expect to pay any regular US federal
income taxes until fiscal year 1999 or later.
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents increased by $91.6 million during
the Current Period as compared to a decrease of $7.1 million during the prior
year comparable period.
Net cash provided by operating activities totaled $41.9
million during the Current Period compared to $44.3 million during the prior
year comparable period. During the Current Period and prior year comparable
period, net income, as adjusted for non-cash items such as depreciation, was
partially offset by the negative impact on cash from changes in the Company's
working capital accounts.
Net cash used for investing activities totaled $121.9 million
during the Current Period compared to $57.0 million during the prior year
comparable period. Capital expenditures, cash paid for the Exeter Drilling
Company and AIC acquisitions, as well as purchases of marketable securities
represented the primary uses of cash during the Current Period, partially offset
by cash provided from the sales of marketable securities and fixed assets and
insurance claims. During the prior year comparable period, capital expenditures,
cash paid for the acquisition of Delta Drilling Company and the purchase of
marketable securities represented the primary uses of cash, partially offset by
maturities and sales of marketable securities.
Financing activities provided cash totaling $171.6 million
during the Current Quarter compared to $5.7 million during the prior year
comparable period. During the Current Period cash was provided by long-term
borrowings,
9
<PAGE> 11
including the $172.5 million Convertible Subordinated Notes issued
during May 1996 (Note 3), and common stock transactions, partially offset by a
reduction in short-term borrowings. In the prior year period, cash was provided
by short-term borrowings, partially offset by cash used for scheduled principal
payments on long-term obligations, and treasury stock transactions.
The Company's cash and cash equivalents and short-term
investments in marketable securities totaled $114.9 million as of June 30, 1996.
In addition, the Company had long-term investments in marketable securities of
$11.0 million as of June 30, 1996. The Company currently has credit facility
arrangements with a number of banks totaling $64.6 million. As of June 30,
1996, remaining availability, after borrowings on the facilities and
outstanding letters of credit, totaled approximately $44.0 million.
As of June 30, 1996, the Company had capital expenditure
purchase commitments outstanding of approximately $19.2 million.
The Company currently has authorization from the Board of
Directors to repurchase $40.0 million of its common stock in the open market or
by privately negotiated transactions.
On April 12, 1996, Nabors filed a shelf registration statement
on Form S-3 with the Securities and Exchange Commission to allow for offerings
from time to time of up to $250 million in debt securities, preferred stock,
common stock, depository shares, or warrants. On May 28, 1996 the Company issued
$172.5 million of the Notes due 2006. The Notes yield 5% and are convertible
into common shares of the Company at a conversion price of $18.125 per share.
The current cash and cash equivalents, short-term investments,
credit facility position, and projected cash flow generated from current
operations are expected to adequately finance the Company's non-discretionary
capital and debt service requirements for the next twelve months.
OTHER MATTERS
The Company's financial condition and results of operations
are dependent upon the level of spending by oil and gas companies for
exploration, development and production activities. Therefore, a sustained
increase or decrease in the price of oil or natural gas, which could have a
material impact on exploration, development and production activities, could
materially affect the Company's financial condition and results of operations.
Generally, a sustained change in the price of oil would have a greater impact on
the Company's Alaska and International operations, while a sustained change in
the price of natural gas would have a greater impact on the US Lower 48, Gulf of
Mexico, and Canadian operations.
10
<PAGE> 12
PART II OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27 Financial Data Schedule
(b) Reports on Form 8-K
A Form 8-K was filed on May 28, 1996 that included; (i) the
underwriting agreement between the Registrant and Solomon Brothers
Inc, Goldman Sachs & Co., Merrill Lynch, Pierce, Fenner & Smith and
Simmons & Company International, as representatives of the several
underwriters named therein, in connection with the offering of
$172.5 million aggregate principal amount of the Notes due 2006,
(ii) the form of indenture pertaining to certain of the Company's
subordinated debt securities (including the Notes) and (iii) the
form of supplemental indenture to said indenture, establishing the
terms of the Notes.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
NABORS INDUSTRIES, INC.
/s/ Anthony G. Petrello
-------------------------------------
Anthony G. Petrello
President and Chief Operating Officer
/s/ Bruce P. Koch
-------------------------------------
Bruce P. Koch
Vice President of Finance
Dated: August 14, 1996
11
<PAGE> 13
INDEX TO EXHIBITS
27 -- Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-START> OCT-01-1995
<PERIOD-END> JUN-30-1996
<CASH> 103,660
<SECURITIES> 11,255
<RECEIVABLES> 178,419
<ALLOWANCES> 0
<INVENTORY> 16,861
<CURRENT-ASSETS> 337,120
<PP&E> 717,583
<DEPRECIATION> 237,610
<TOTAL-ASSETS> 844,310
<CURRENT-LIABILITIES> 151,711
<BONDS> 232,370
<COMMON> 8,727
0
0
<OTHER-SE> 426,857
<TOTAL-LIABILITY-AND-EQUITY> 844,310
<SALES> 508,993
<TOTAL-REVENUES> 508,993
<CGS> 379,049
<TOTAL-COSTS> 379,049
<OTHER-EXPENSES> 73,873
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 7,590
<INCOME-PRETAX> 58,652
<INCOME-TAX> 7,899
<INCOME-CONTINUING> 50,753
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 50,753
<EPS-PRIMARY> .55
<EPS-DILUTED> .54
</TABLE>
