<PAGE> 1
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED
SEPTEMBER 30, 1994
COMMISSION FILE NUMBER 0-16703
CLIFFS DRILLING COMPANY
(Exact name of registrant as specified in its charter)
DELAWARE 76-0248934
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
300 CITICORP CENTER 77002
HOUSTON, TEXAS (Zip Code)
(Address of principal
executive offices)
(713) 651-9426
(Registrant's telephone number, including area code)
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
--- ---
Number of shares of Common Stock outstanding as of October 28, 1994: 4,116,104
(Exhibit Index Located on Page 21)
Page 1 of 21 Pages
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<PAGE> 2
CLIFFS DRILLING COMPANY
FORM 10-Q
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1994
<TABLE>
<CAPTION>
Page
----
<S> <C>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
Consolidated Statements of Operations (Unaudited) -
CLIFFS DRILLING COMPANY
Three and Nine Months ended September 30, 1994 and 1993. . . . . . . . . . . . 3
Consolidated Balance Sheets -
CLIFFS DRILLING COMPANY
September 30, 1994 (Unaudited) and December 31, 1993 . . . . . . . . . . . . . 4
Consolidated Statements of Cash Flows (Unaudited) -
CLIFFS DRILLING COMPANY
Three and Nine Months ended September 30, 1994 and 1993. . . . . . . . . . . . 5
Notes to Interim Consolidated Financial Statements (Unaudited) . . . . . . . . . 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS . . . . . . . . . . . . . . . . . . . . . 8
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. . . . . . . . . . . . . . . . . . . . . . . 19
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
EXHIBIT INDEX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
</TABLE>
2
<PAGE> 3
CLIFFS DRILLING COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS NINE MONTHS
ENDED SEPTEMBER 30, ENDED SEPTEMBER 30,
------------------- -------------------
1994 1993 1994 1993
---- ---- ---- ----
(In thousands, except per share amounts)
<S> <C> <C> <C> <C>
REVENUES:
Revenues . . . . . . . . . . . . . . . . . . . . . $24,397 $18,077 $56,352 $48,118
Income from Equity Investments . . . . . . . . . . 1,153 152 2,222 147
------- ------- ------- -------
25,550 18,229 58,574 48,265
COSTS AND EXPENSES:
Operating Expenses . . . . . . . . . . . . . . . . 16,765 9,725 31,868 25,714
Depreciation, Depletion and Amortization . . . . . 3,571 4,986 10,671 12,985
Contract Termination Provision . . . . . . . . . . 1,816 -- 5,193 --
Exploration Costs . . . . . . . . . . . . . . . . . 16 45 63 152
General and Administrative Expense . . . . . . . . 1,379 1,129 3,898 3,477
------- ------- ------- -------
23,547 15,885 51,693 42,328
------- ------- ------- -------
OPERATING INCOME . . . . . . . . . . . . . . . . . . . 2,003 2,344 6,881 5,937
OTHER INCOME (EXPENSE):
Gain on Disposition of Assets . . . . . . . . . . . 81 128 617 829
Interest Income . . . . . . . . . . . . . . . . . . 197 176 574 648
Interest Expense . . . . . . . . . . . . . . . . . (233) (282) (656) (1,075)
Exchange Rate Loss . . . . . . . . . . . . . . . . (119) (53) (1,114) (162)
Other, net . . . . . . . . . . . . . . . . . . . . (203) (33) (866) (410)
------- ------- ------- -------
INCOME BEFORE INCOME TAXES . . . . . . . . . . . . . . 1,726 2,280 5,436 5,767
INCOME TAX EXPENSE (BENEFIT) . . . . . . . . . . . . . (278) 121 494 479
------- ------- ------- -------
NET INCOME . . . . . . . . . . . . . . . . . . . . . . 2,004 2,159 4,942 5,288
DIVIDENDS APPLICABLE TO PREFERRED STOCK . . . . . . . . (665) (665) (1,995) (1,995)
------- ------- ------- -------
NET INCOME APPLICABLE TO COMMON
AND COMMON EQUIVALENT SHARES . . . . . . . . . . . $ 1,339 $ 1,494 $ 2,947 $ 3,293
======= ======= ======= =======
NET INCOME PER SHARE:
Primary . . . . . . . . . . . . . . . . . . . . . . $ 0.32 $ 0.33 $ 0.69 $ 0.73
======= ======= ======= =======
Assuming Full Dilution . . . . . . . . . . . . . . $ 0.32 $ 0.32 $ 0.69 $ 0.73
======= ======= ======= =======
WEIGHTED AVERAGE NUMBER OF COMMON AND
COMMON EQUIVALENT SHARES OUTSTANDING:
Primary . . . . . . . . . . . . . . . . . . . . . . 4,128 4,513 4,260 4,512
======= ======= ======= =======
Assuming Full Dilution . . . . . . . . . . . . . . 4,128 6,691 4,260 4,512
======= ======= ======= =======
</TABLE>
See accompanying notes to interim consolidated financial statements.
3
<PAGE> 4
CLIFFS DRILLING COMPANY
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1994 1993
------------- ------------
(UNAUDITED)
(In thousands)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and Cash Equivalents . . . . . . . . . . . . . . . . . . . . . . . . $ 3,604 $ 10,615
Accounts Receivable, net of allowance for doubtful accounts of $408
and $697 at September 30, 1994 and December 31, 1993, respectively . . 15,860 15,743
Other Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,112 3,812
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,069 2,478
Drilling Contracts in Progress . . . . . . . . . . . . . . . . . . . . . . 8,358 485
Prepaid Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,628 1,098
Other Prepaid Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . 4,676 3,798
--------- ---------
Total Current Assets . . . . . . . . . . . . . . . . . . . . . . . . . 42,307 38,029
PROPERTY AND EQUIPMENT, AT COST:
Rigs and Related Equipment . . . . . . . . . . . . . . . . . . . . . . . . 168,674 168,059
Oil and Gas Properties ("successful efforts" method) . . . . . . . . . . . 24,703 24,888
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,043 2,534
--------- ---------
196,420 195,481
Less: Accumulated Depreciation, Depletion and Amortization . . . . . . . (113,035) (108,975)
--------- ---------
Net Property and Equipment . . . . . . . . . . . . . . . . . . . . . . 83,385 86,506
NOTES AND OTHER RECEIVABLES - LONG TERM . . . . . . . . . . . . . . . . . . . . 6,198 7,044
INVESTMENTS IN AND ADVANCES TO UNCONSOLIDATED AFFILIATES . . . . . . . . . . . 6,073 1,852
OTHER ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 951 92
--------- ---------
TOTAL ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 138,914 $ 133,523
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 14,727 $ 8,679
Accrued Expenses, Including Interest . . . . . . . . . . . . . . . . . . . 7,578 7,248
Accrued Litigation Settlement and Expenses . . . . . . . . . . . . . . . . -- 1,700
--------- ---------
Total Current Liabilities . . . . . . . . . . . . . . . . . . . . . . . 22,305 17,627
NOTES PAYABLE - LONG TERM . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,371 13,108
OTHER LIABILITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 552 659
DEFERRED INCOME . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,073 885
COMMITMENTS AND CONTINGENCIES
REDEEMABLE PREFERRED STOCK:
$2.3125 Convertible Exchangeable Preferred Stock, 3,000,000 shares
authorized; 1,150,000 shares issued and outstanding at September 30, 1994
and December 31, 1993, respectively ($28,750,000 liquidation value) . . 28,750 28,750
SHAREHOLDERS' EQUITY:
Common Stock, $.01 par value, 15,000,000 shares authorized; 4,128,104 and
4,513,104 shares issued and outstanding at September 30, 1994 and
December 31, 1993, respectively . . . . . . . . . . . . . . . . . . . . 45 45
Paid in Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99,133 99,133
Retained Earnings (Deficit) . . . . . . . . . . . . . . . . . . . . . . . (23,345) (26,292)
Less: Notes Receivable from Officers for Restricted Stock . . . . . . . . . (232) (232)
Restricted Stock . . . . . . . . . . . . . . . . . . . . . . . . . . (63) (103)
Treasury Stock, at cost, 390,000 and 5,000 shares at September 30, 1994
and December 31, 1993, respectively . . . . . . . . . . . . . . (4,675) (57)
--------- ---------
Total Shareholders' Equity . . . . . . . . . . . . . . . . . . . . . . 70,863 72,494
--------- ---------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY . . . . . . . . . . . . . . $ 138,914 $ 133,523
========= =========
</TABLE>
See accompanying notes to interim consolidated financial statements.
4
<PAGE> 5
CLIFFS DRILLING COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS NINE MONTHS
ENDED SEPTEMBER 30, ENDED SEPTEMBER 30,
------------------- -------------------
1994 1993 1994 1993
---- ---- ---- ----
(in thousands)
<S> <C> <C> <C> <C>
OPERATING ACTIVITIES:
Net Income . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,004 $ 2,159 $ 4,942 $ 5,288
ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH
PROVIDED BY (USED IN) OPERATING ACTIVITIES:
Depreciation, Depletion and Amortization . . . . . . . . . 3,571 4,986 10,671 12,985
Contract Termination Provision . . . . . . . . . . . . . . 1,816 -- 5,193 --
Mobilization Expense Amortization . . . . . . . . . . . . 129 445 398 1,485
Gain on Disposition of Assets . . . . . . . . . . . . . . (81) (128) (617) (829)
Other . . . . . . . . . . . . . . . . . . . . . . . . . . (130) (241) (330) (250)
CHANGES IN OPERATING ASSETS AND LIABILITIES:
Accounts Receivable . . . . . . . . . . . . . . . . . . 1,147 (363) 1,583 (3,863)
Inventories . . . . . . . . . . . . . . . . . . . . . . (254) 70 (3,940) (358)
Drilling Contracts in Progress . . . . . . . . . . . . 2,562 (4,297) (7,786) (3,523)
Prepaid Expenses and Other Current Assets . . . . . . . (300) (168) (1,678) (1,071)
Investments in and Advances to Unconsolidated Affiliates (4,052) 1,245 (4,221) --
Other Assets . . . . . . . . . . . . . . . . . . . . . (185) 9 (987) (13)
Accounts Payable and Other Accrued Liabilities . . . . (2,600) 2,141 5,025 245
Deferred Income . . . . . . . . . . . . . . . . . . . . -- (512) -- --
-------- -------- --------- --------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES 3,627 5,346 8,253 10,096
INVESTING ACTIVITIES:
Capital Expenditures . . . . . . . . . . . . . . . . . . . (1,654) (4,159) (8,109) (11,451)
Proceeds from Sale of Property and Equipment . . . . . . . 1,276 544 1,349 6,362
Collection of Notes Receivable . . . . . . . . . . . . . . 256 420 846 1,114
-------- -------- --------- --------
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES (122) (3,195) (5,914) (3,975)
FINANCING ACTIVITIES:
Proceeds from Borrowings . . . . . . . . . . . . . . . . . 6,500 -- 17,000 --
Payments on Borrowings . . . . . . . . . . . . . . . . . . (7,162) (4,082) (19,737) (11,202)
Acquisition of Treasury Stock . . . . . . . . . . . . . . (698) -- (4,618) --
Proceeds from Issuance of Common Stock . . . . . . . . . . -- -- -- 18
Preferred Stock Dividends . . . . . . . . . . . . . . . . (665) (665) (1,995) (1,995)
-------- -------- --------- --------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES (2,025) (4,747) (9,350) (13,179)
-------- -------- --------- --------
NET INCREASE (DECREASE) IN
CASH AND CASH EQUIVALENTS . . . . . . . . . . . . . . . . 1,480 (2,596) (7,011) (7,058)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD . . . . . . . 2,124 11,235 10,615 15,697
-------- -------- --------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD . . . . . . . . . . $ 3,604 $ 8,639 $ 3,604 $ 8,639
======== ======== ========= ========
</TABLE>
See accompanying notes to interim consolidated financial statements.
5
<PAGE> 6
CLIFFS DRILLING COMPANY
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
SEPTEMBER 30, 1994
1. BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments
(consisting only of normal and recurring adjustments) necessary to present a
fair statement of the results for the period included herein have been made and
the disclosures contained herein are adequate to make the information presented
not misleading. Operating results for the three and nine months ended
September 30, 1994 are not necessarily indicative of the results that may be
expected for the year ended December 31, 1994. For further information, refer
to the consolidated financial statements and footnotes thereto included in the
Company's annual report on Form 10-K for the year ended December 31, 1993.
2. EARNINGS PER SHARE
Primary earnings per share computations are based on net income less dividends
on the Company's $2.3125 Convertible Exchangeable Preferred Stock (the
"Preferred Stock"), divided by the average number of common shares and
equivalents outstanding during the respective periods. Common stock
equivalents include the number of shares issuable upon exercise of stock
options, less the number of shares that could have been repurchased with the
exercise proceeds using the treasury stock method. The Preferred Stock is not
included in the primary earnings per share computation as it is not a common
stock equivalent. Fully diluted earnings per common share computations are
made after the assumption of conversion of the Preferred Stock when the effect
of such conversion is dilutive.
6
<PAGE> 7
CLIFFS DRILLING COMPANY
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
SEPTEMBER 30, 1994
3. TREASURY STOCK
The Company purchased on the open market 385,000 shares of its Common Stock at
an aggregate purchase price of $4,618,000, or approximately $12.00 per share,
during the nine months ended September 30, 1994 and 12,000 shares at an
aggregate purchase price of $134,000, or approximately $11.15 per share, during
October, 1994. During the fourth quarter of 1993, the Company purchased on the
open market 5,000 shares at an aggregate purchase price of $57,000, or
approximately $11.40 per share. All of the acquired shares are held as Common
Stock in treasury, less shares issued to employees under certain benefit plans.
4. NOTES PAYABLE
The Company executed the Second Restated Credit Agreement with Internationale
Nederlanden (U.S.) Capital Corporation ("INCC") during the first quarter of
1994, thereby converting its $10,000,000 working capital credit facility to a
$20,000,000 revolving line of credit subject to certain borrowing base
limitations. The revolving line of credit matures on January 1, 1996.
5. INCOME TAX EXPENSE
The Consolidated Statements of Operations reflect an income tax benefit for
the three months ended September 30, 1994 as a result of the Company recording
a deferred tax asset during the quarter in the amount of $400,000 related to
1992 and 1993 alternative minimum taxes paid. The net deferred tax asset is
included in "Other Assets" in the Consolidated Balance Sheets.
6. CHANGE IN PRESENTATION
Certain financial statement items have been reclassified in the prior year to
make them conform with the current year presentation.
7
<PAGE> 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
GENERAL
Activity in the contract drilling industry and related oil service businesses
has shown signs of improvement over the last two years due to various market
consolidations and more stable natural gas prices. Crude oil prices declined
significantly during the first quarter of 1994, but have currently returned to
higher levels. These enhanced market conditions have resulted in an
improvement in the balance of supply and demand for drilling equipment and
increased rig utilization and dayrates. Competition, however, remains intense
within the contract drilling industry. The financial condition and results of
operations of the Company and other drilling contractors are dependent upon the
price of oil and natural gas, as demand for their services is primarily
dependent upon the level of spending by oil and gas companies for exploration,
development and production activities.
The Company has endeavored to mitigate the effect of volatile product pricing
by diversifying its scope of operations beyond the domestic daywork contract
drilling market. To achieve its strategic objective, the Company established
separate but related lines of business in turnkey drilling and Mobile Offshore
Production Unit ("MOPU") operations, and pursued foreign drilling and
production opportunities. Each of the Company's business segments will
continue to be affected, however, by the unsettled energy markets, which are
influenced by a variety of factors, including general economic conditions, the
extent of worldwide oil and gas production and demand therefor, government
regulations, and environmental concerns.
RESULTS OF OPERATIONS
Three Months Ended September 30, 1994 Versus 1993
The Company recognized net income, before preferred dividends, of $2.0 million
during the third quarter of 1994 compared to net income of $2.2 million in the
same period in 1993. Operating income decreased $.3 million in the third
quarter of 1994 compared to the third quarter of 1993. The decrease in
operating income was due to a decrease in MOPU operating income of $2.9
million, a decrease in turnkey drilling operating income of $.4 million, and an
increase in corporate overhead of $.2 million. These decreases were offset in
part by an increase in foreign daywork drilling operating income of $1.6
million, a decrease in oil and gas operating losses of $.9 million, and a
decrease in domestic daywork drilling operating losses of $.7 million.
8
<PAGE> 9
<TABLE>
<CAPTION>
THREE MONTHS ENDED
SEPTEMBER 30,
------------- INCREASE
1994 1993 (DECREASE)
---- ---- ----------
(UNAUDITED)
(IN THOUSANDS)
<S> <C> <C> <C>
Revenues:
Daywork Drilling:
Domestic . . . . . . . . . . . . . . . . . . . . . . . $ 4 $ 475 $ (471)
Foreign . . . . . . . . . . . . . . . . . . . . . . . 9,459 5,367 4,092
Turnkey Drilling . . . . . . . . . . . . . . . . . . . . . 12,327 5,465 6,862
MOPU Operations . . . . . . . . . . . . . . . . . . . . . 4,281 5,646 (1,365)
Oil and Gas . . . . . . . . . . . . . . . . . . . . . . . 603 1,276 (673)
Eliminations . . . . . . . . . . . . . . . . . . . . . . . (1,124) -- (1,124)
-------- -------- --------
Consolidated . . . . . . . . . . . . . . . . . . . . . $ 25,550 $ 18,229 $ 7,321
======== ======== ========
Operating Income (Loss):
Daywork Drilling:
Domestic . . . . . . . . . . . . . . . . . . . . . . . $ 76 $ (595) $ 671
Foreign . . . . . . . . . . . . . . . . . . . . . . . 2,268 701 1,567
Turnkey Drilling . . . . . . . . . . . . . . . . . . . . . 490 929 (439)
MOPU Operations . . . . . . . . . . . . . . . . . . . . . 620 3,471 (2,851)
Oil and Gas . . . . . . . . . . . . . . . . . . . . . . . (128) (1,012) 884
Corporate Office . . . . . . . . . . . . . . . . . . . . . (1,393) (1,150) (243)
Eliminations . . . . . . . . . . . . . . . . . . . . . . . 70 -- 70
-------- -------- --------
Consolidated . . . . . . . . . . . . . . . . . . . . . $ 2,003 $ 2,344 $ (341)
======== ======== ========
</TABLE>
DAYWORK DRILLING
Domestic daywork drilling results in the third quarter of 1994 reflect the
Company's strategy to diversify away from this volatile market. As a result of
rig deployments out of the United States, domestic daywork drilling operating
losses decreased by $.7 million from the third quarter of 1993 to the third
quarter of 1994. Operating losses incurred in the third quarter of 1993 were
due primarily to stacked rig costs associated with the Company's domestic land
rigs. One of the Company's land drilling rigs, which was stacked during the
first four months of 1993, was mobilized to Venezuela during the first quarter
of 1994 and began daywork drilling operations for Corpoven, S.A. ("Corpoven")
for a three-year term. Two of the Company's land drilling rigs, which were
stacked during all of 1993, were mobilized to Venezuela during the first
quarter of 1994 and are currently drilling the second and third of 6 turnkey
wells for Corpoven.
Foreign daywork drilling revenues increased $4.1 million from $5.4 million in
the third quarter of 1993 to $9.5 million in the third quarter of 1994.
Foreign daywork drilling operating income increased $1.6 million during the
same period. Foreign daywork drilling operating results reflect increased
revenues and operating income primarily due to contributions from one of the
9
<PAGE> 10
Company's jack-up drilling rigs which was mobilized to the Bay of Tampico,
Mexico during the first quarter of 1994. This jack-up drilling rig is drilling
the second of 2 turnkey wells for Cliffs Neddrill Central Turnkey International
("CNCTI"), a joint venture in which the Company holds a one-third ownership
interest, and is expected to complete operations during the fourth quarter.
Upon completion of the current well, the Company will stack the rig until
another contract is awarded. No assurance can be given that the Company will
be able to secure a contract for the operation of this unit. Also contributing
to the improved results were increased average dayrates and an overall decrease
in operating expenses related to the Company's 2 jack-up drilling rigs working
in Venezuela during the third quarter of 1994 when compared to the same period
in 1993.
Contracts for the Company's 2 jack-up drilling rigs operating in Venezuela were
renegotiated in the first quarter of 1994 and extended to March, 1995. The
contract rates are adjusted quarterly based upon fluctuations in oil prices
from the base oil price in effect at the contract renewal date. Contracts on 2
of the 3 land drilling rigs working in eastern Venezuela expire in September,
1995, and the other contract expires in February, 1997.
TURNKEY DRILLING
Turnkey drilling revenues increased $6.9 million from $5.4 million in the third
quarter of 1993 to $12.3 million in the third quarter of 1994. Turnkey
drilling operating income decreased $.4 million during the same period. Six
turnkey contracts were completed in the third quarter of 1994 compared to 2
completed during the same period in 1993. Two of the 6 turnkey wells completed
in the third quarter of 1994 were drilled by CNCTI and recorded under the
equity method. One of the 6 turnkey wells completed in the third quarter of
1994 was drilled for Cliffs Neddrill Turnkey International ("CNTI"), a joint
venture in which the Company holds a one-half ownership interest, and also
recorded under the equity method.
The Company is currently drilling the second and third wells included in 2
packages of 3 turnkey wells for Corpoven. The 6 wells will be completed during
1994 and 1995 with revenues of approximately $36.0 million. The Company
mobilized 2 land rigs to Venezuela during the first quarter of 1994 to work on
these projects. In addition to the 2 turnkey wells being drilled
in Venezuela, the Company is currently in the process of drilling 2 additional
turnkey wells in Mexico and 2 turnkey wells in the United States. Two of the
wells currently in progress have encountered downhole problems. The Company
accrued a total of $2.8 million in the third quarter of 1994 results of
operations for expected losses on these contracts.
10
<PAGE> 11
MOPU OPERATIONS
MOPU revenues decreased $1.4 million from $5.7 million in the third quarter of
1993 to $4.3 million in the third quarter of 1994. MOPU operating income
decreased $2.9 million during the same period. The decrease in revenues was
primarily due to the expiration in May, 1994 of the two-year contract on the
Langley, one of 3 MOPUs which worked in Venezuela. Operating income decreased
primarily due to the non-cash deferral of income recognition of $1.8 million
for potential losses that would occur upon exercise of certain buyout options
on the remaining 2 MOPUs which worked in Venezuela. The expiration of the
contract on the Langley also caused a decrease in operating income. The
Langley contributed revenues of $1.5 million and operating income of $1.0
million during the third quarter of 1993. The Langley was demobilized back to
the United States and is currently being marketed. No assurance can be given
that the Company will be able to secure a contract for the operation of this
unit. The two-year contracts on each of the 2 remaining MOPUs which worked in
Venezuela expired in September, 1994. The charterer has informed the Company
of its intention to exercise its option to purchase the 2 units for a total of
$4.0 million in the fourth quarter of 1994. No gain or loss will be recognized
upon buy-out of the 2 units. See "Liquidity and Capital Resources."
The contract for MOPU No. 4, which was operating in the Gulf of Mexico, expired
at the end of April, 1994. The Company renovated the unit during the third
quarter of 1994 and is currently marketing this MOPU. No assurance can be
given that the Company will be able to secure a contract for the operation of
MOPU No. 4. The Company has secured a bareboat charter for one of its idle
MOPUs from a third party for use as a workover rig in the U.S. Gulf of Mexico.
Operations commenced on this charter during the latter part of the second
quarter of 1994. The Company has also secured a contract for another of its
idle MOPUs beginning in the fourth quarter of 1994.
OIL AND GAS
Oil and gas revenues decreased $.7 million from $1.3 million in the third
quarter of 1993 to $.6 million for the same period in 1994, primarily due to
reduced gas revenues resulting from a net revenue interest reduction upon
payout of a significant well. Operating losses in the third quarter of 1994
decreased $.9 million when compared to the same period in 1993, primarily
because decreased depreciation, depletion and amortization and other operating
expenses more than offset the revenue decrease.
CORPORATE OVERHEAD
Corporate overhead increased $.2 million from $1.2 million in the third quarter
of 1993 to $1.4 million in the third quarter of 1994. The increase was
primarily due to an overall increase in employment costs and other expenses.
11
<PAGE> 12
OTHER INCOME (EXPENSE)
Other income offset other expenses during the third quarter of 1994 compared to
$.2 million of other expense during the same period in 1993. The net decrease
in other expenses resulted primarily from decreased income tax expense. The
Company recorded a $.4 million net deferred tax asset resulting in the
recognition of an income tax benefit for the third quarter of 1994. See
"Liquidity and Capital Resources."
RESULTS OF OPERATIONS
Nine Months Ended September 30, 1994 Versus 1993
The Company recognized net income, before preferred dividends, of $4.9 million
during the first nine months of 1994 compared to net income of $5.3 million in
the same period in 1993. Operating income increased $.9 million in the first
nine months of 1994 compared to the first nine months of 1993, even though net
income was lower. The improvement in operating income was due to an increase
in foreign daywork drilling operating income of $4.6 million, a decrease in
domestic daywork drilling operating losses of $2.1 million, a decrease in oil
and gas operating losses of $1.1 million, and an increase in turnkey drilling
operating income of $.2 million. These improvements were offset in part by a
decrease in MOPU operating income of $6.7 million and an increase in corporate
overhead of $.4 million. Net income was lower in the first nine months of 1994
when compared to the same period in 1993 due primarily to exchange losses
incurred from devaluation of the Venezuelan Bolivar.
12
<PAGE> 13
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
------------- INCREASE
1994 1993 (DECREASE)
---- ---- ----------
(UNAUDITED)
(IN THOUSANDS)
<S> <C> <C> <C>
Revenues:
Daywork Drilling:
Domestic . . . . . . . . . . . . . . . . . . . . . . . $ 19 $ 695 $ (676)
Foreign . . . . . . . . . . . . . . . . . . . . . . . 25,019 15,673 9,346
Turnkey Drilling . . . . . . . . . . . . . . . . . . . . . 18,798 12,181 6,617
MOPU Operations . . . . . . . . . . . . . . . . . . . . . 14,870 16,099 (1,229)
Oil and Gas . . . . . . . . . . . . . . . . . . . . . . . 1,968 3,617 (1,649)
Eliminations . . . . . . . . . . . . . . . . . . . . . . . (2,100) -- (2,100)
------- ------- -------
Consolidated . . . . . . . . . . . . . . . . . . . . . $58,574 $48,265 $10,309
======= ======= =======
Operating Income (Loss):
Daywork Drilling:
Domestic . . . . . . . . . . . . . . . . . . . . . . . $ 14 $(2,102) $ 2,116
Foreign . . . . . . . . . . . . . . . . . . . . . . . 5,878 1,263 4,615
Turnkey Drilling . . . . . . . . . . . . . . . . . . . . . 1,655 1,409 246
MOPU Operations . . . . . . . . . . . . . . . . . . . . . 3,817 10,480 (6,663)
Oil and Gas . . . . . . . . . . . . . . . . . . . . . . . (531) (1,577) 1,046
Corporate Office . . . . . . . . . . . . . . . . . . . . . (3,952) (3,536) (416)
Eliminations . . . . . . . . . . . . . . . . . . . . . . . -- -- --
------- ------- -------
Consolidated . . . . . . . . . . . . . . . . . . . . . $ 6,881 $ 5,937 $ 944
======= ======= =======
</TABLE>
DAYWORK DRILLING
Domestic daywork drilling results in the first nine months of 1994 reflect the
Company's strategy to diversify away from this volatile market. As a result of
rig deployments out of the United States, domestic daywork drilling operating
losses decreased by $2.1 million from the first nine months of 1993 to the
first nine months of 1994. Operating losses incurred in the first nine months
of 1993 were due primarily to stacked rig costs associated with the Company's
domestic land rigs. One of the Company's land drilling rigs, which was stacked
during the first four months of 1993, was mobilized to Venezuela during the
first quarter of 1994 and began daywork drilling operations for Corpoven for a
three-year term. Two of the Company's land drilling rigs, which were stacked
during all of 1993, were mobilized to Venezuela during the first quarter of
1994 and are currently drilling the second and third of 6 turnkey wells for
Corpoven.
Foreign daywork drilling revenues increased $9.3 million from $15.7 million in
the first nine
13
<PAGE> 14
months of 1993 to $25.0 million in the first nine months of 1994. Foreign
daywork drilling operating income increased $4.6 million during the same
period. Foreign daywork drilling operating results reflect increased revenues
and operating income primarily due to contributions from one of the Company's
jack-up drilling rigs which was mobilized to the Bay of Tampico, Mexico during
the first quarter of 1994. This jack-up drilling rig is expected to complete
operations for CNCTI during the fourth quarter of 1994. Upon completion of
the current well, the Company will stack the rig until another contract is
awarded. No assurance can be given that the Company will be able to secure
a contract for the operation of this unit. Also contributing to the improved
results were increased operating income from the Company's 2 jack-up drilling
rigs working in Venezuela, primarily due to reduced operating expenses.
Contracts for the Company's 2 jack-up drilling rigs operating in Venezuela were
renegotiated in the first quarter of 1994 and extended to March, 1995. The
contract rates are adjusted quarterly based upon fluctuations in oil prices
from the base oil price in effect at the contract renewal date. Contracts on 2
of the 3 land drilling rigs working in eastern Venezuela expire in September,
1995, and the other contract expires in February, 1997.
TURNKEY DRILLING
Turnkey drilling revenues increased $6.6 million from $12.2 million in the
first nine months of 1993 to $18.8 million in the same period in 1994. Turnkey
drilling operating income increased $.2 million during the same period. Ten
turnkey contracts were completed in the first nine months of 1994 compared to 4
turnkey contracts completed in the same period in 1993. Four of the 10 turnkey
wells completed in the first nine months of 1994 and one of the 4 turnkey wells
completed in the same period in 1993 were drilled by CNCTI and recorded under
the equity method. One of the 10 turnkey wells completed in the first nine
months of 1994 was drilled for CNTI and also recorded under the equity method.
The Company is currently drilling the second and third wells included in 2
packages of 3 turnkey wells for Corpoven. The 6 wells will be completed during
1994 and 1995 with revenues of approximately $36.0 million. The Company
mobilized 2 land rigs to Venezuela during the first quarter of 1994 to work on
these projects. In addition to the 2 turnkey wells being drilled in Venezuela,
the Company is currently in the process of drilling 2 additional turnkey wells
in Mexico and 2 turnkey wells in the United States. Two of the wells
currently in progress have encountered downhole problems. The Company
accrued a total of $3.5 million in the results of operations for the first
nine months of 1994 for expected losses on these contracts.
14
<PAGE> 15
MOPU OPERATIONS
MOPU revenues decreased $1.2 million from $16.1 million in the first nine
months of 1993 to $14.9 million in the first nine months of 1994. MOPU
operating income decreased $6.7 million during the same period. The decrease
in revenues was primarily due to the expiration in May, 1994 of the two-year
contract on the Langley, one of 3 MOPUs which worked in Venezuela. The
decreased revenues were offset in part by contributions from MOPU No. 8, which
began operations during the third quarter of 1993. Operating income decreased
primarily due to the non-cash deferral of income recognition of $5.2 million
for potential losses that would occur upon exercise of certain buyout options
on the remaining 2 MOPUs which worked in Venezuela. The expiration of the
contract on the Langley also caused a decrease in operating income. The
Langley contributed revenues of $2.0 million and $4.4 million and operating
income of $1.0 million and $3.2 million during the first nine months of 1994
and 1993, respectively. The Langley was demobilized back to the United States
and is currently being marketed. No assurance can be given that the Company
will be able to secure a contract for the operation of this unit. The two-year
contracts on each of the 2 remaining MOPUs which worked in Venezuela expired in
September, 1994. The charterer has informed the Company of its intention to
exercise its option to purchase the 2 units for a total of $4.0 million in the
fourth quarter of 1994. No gain or loss will be recognized upon buy-out of the
2 units. See "Liquidity and Capital Resources."
The contract for MOPU No. 4, which was operating in the Gulf of Mexico, expired
at the end of April, 1994. The Company renovated the unit during the third
quarter of 1994 and is currently marketing this MOPU. No assurance can be
given that the Company will be able to secure a contract for the operation of
MOPU No. 4. The Company has secured a bareboat charter for one of its idle
MOPUs from a third party for use as a workover rig in the U.S. Gulf of Mexico.
Operations commenced on this charter during the latter part of the second
quarter of 1994. The Company has also secured a contract for another of its
idle MOPUs beginning in the fourth quarter of 1994.
OIL AND GAS
Oil and gas revenues decreased $1.6 million from $3.6 million in the first nine
months of 1993 to $2.0 million for the same period in 1994, primarily due to
reduced gas revenues resulting from a net revenue interest reduction upon
payout of a significant well. Operating losses in the first nine months of
1994 decreased $1.1 million when compared to the same period in 1993, primarily
because decreased depreciation, depletion and amortization and other operating
expenses more than offset the revenue decrease.
15
<PAGE> 16
CORPORATE OVERHEAD
Corporate overhead increased $.4 million from $3.6 million in the first nine
months of 1993 to $4.0 million in the first nine months of 1994. The increase
was primarily due to an overall increase in employment costs and other
expenses.
OTHER INCOME (EXPENSE)
The Company recognized $1.9 million of other expense during the first nine
months of 1994 compared to $.6 million of other expense during the same period
in 1993. The net increase in other expenses resulted primarily from increased
exchange rate losses of $1.0 million. Income tax expense for the first nine
months of 1994 was consistent with income tax expense for the same period in
1993 due primarily to the recognition of a $.4 million net deferred tax asset
during the third quarter of 1994. See "Liquidity and Capital Resources."
LIQUIDITY AND CAPITAL RESOURCES
The Company's cash and cash equivalents decreased $7.0 million from $10.6
million at December 31, 1993 to $3.6 million at September 30, 1994. The
decrease resulted from $8.1 million used to fund capital expenditures and $26.4
million used to make payments on borrowings, preferred stock dividends and
purchases of Treasury Stock, partially offset by $8.3 million provided by
operating activities, $17.0 million from borrowings, $1.4 million received from
the sale of property and equipment, and $.8 million received from the
collection of notes receivable.
Cash provided by operating activities of $8.3 million included $12.0 million
used for working capital and other requirements, primarily to fund the
Company's foreign daywork drilling and turnkey drilling operations.
"Inventories" increased from December 31, 1993 to September 30, 1994 due
primarily to the purchase of casing and other supplies for turnkey and daywork
drilling operations in Venezuela. The increases in "Drilling Contracts in
Progress" and "Accounts Payable" were due primarily to the Company's expanded
turnkey operations.
Cash was used during the first nine months of 1994 to fund $8.1 million of
capital expenditures, which primarily related to the upgrade of the 3
additional land rigs mobilized to Venezuela, one jack-up rig mobilized for
drilling operations in Mexico, modifications to an idle MOPU in preparation for
workover operations in the U.S. Gulf of Mexico, and drill pipe purchases for
the expanded drilling operations in Venezuela.
During the fourth quarter of 1992, the Company acquired 5 jack-up drilling rigs
at a cost of $6.0 million, with plans to convert them to MOPUs. The first
unit, MOPU No. 8, was converted and commenced operations on July 19, 1993. The
second of the 5 rigs acquired was also converted to a MOPU. The Company has
secured a contract for this unit, MOPU No. 10, which is expected to commence
operations in the first quarter of 1995. One of the acquired rigs is currently
being
16
<PAGE> 17
used as a mobile offshore supply unit to facilitate the Company's joint venture
turnkey drilling operations in Mexico. The Company upgraded and mobilized
another of the acquired rigs into Mexico during the first quarter of 1994 for
turnkey drilling operations in the Bay of Tampico. The Company has secured a
bareboat charter on the final unit from a third party for use as a workover rig
in the U.S. Gulf of Mexico. The Company refurbished this final rig during 1994
at a cost of $1.4 million, with operations commencing during the latter part of
the second quarter of 1994.
The Langley, one of 3 MOPUs which worked in Venezuela, ended its two-year
contract in May, 1994, and the contract was not extended. The rig was
demobilized back to the United States. The demobilization costs will be
reimbursed to the Company by the charterer. No assurance can be given that the
Company will be able to secure a contract for this unit. Each of the 2
remaining MOPUs which worked in Venezuela had an initial contract term of two
years which expired in September, 1994, subject to certain buyout options. The
charterer has informed the Company of its intention to exercise its option to
purchase the 2 MOPUs in the fourth quarter of 1994. The loss of future
operating income associated with these units could have a material adverse
effect on the Company's future results of operations. Because the Company
believed there was a reasonable likelihood that the buyout options on the 2
units would be exercised in 1994 or 1995, the Company deferred income
recognition on these 2 units to the extent of losses that would occur upon
exercise of the options. At September 30, 1994, the Company had provided an
aggregate of $5.8 million of reserves to fully offset the losses on the 2 units
when the buyout options are exercised.
Approximately 61% of the Company's revenues and a substantial portion of its
operating income were sourced from its Venezuelan operations during the first
nine months of 1994. These operations are subject to customary political and
foreign currency risks in addition to operational risks. The Company has
attempted to reduce these risks through insurance and the structure of its
Venezuelan contracts. Exchange losses increased substantially in the first
nine months of 1994 compared to the same period in 1993 due to significant
devaluation of the Venezuelan Bolivar during the period. Venezuela instituted
currency exchange controls during June, 1994. These exchange controls could
impair the Company's ability to convert its Venezuelan cash flow into U.S.
dollars in the future. The inability to convert Venezuelan currency into U.S.
dollars could have a material adverse effect on the Company's liquidity.
Despite the current economic volatility in Venezuela, the Company believes that
the country continues to be a favorable market for its services.
In conjunction with the redelivery to the owner of 3 offshore drilling rigs
under long-term charters, a dispute existed as to whether or not the Company
complied with the terms of the charters regarding maintenance and repair of the
rigs during the charter period, as well as the condition of the rigs upon
redelivery. Following a trial in February, 1994, a judgment was entered in the
United States District Court, Southern District of Texas, Houston Division,
which awarded the owner $3.5 million, plus court costs, offset by a partial
summary judgment of $1.8 million. The Company reported this litigation
settlement and expenses in the Consolidated Statements of Operations during the
fourth quarter of 1993. The Company paid the owner $1.7 million in February,
1994 as a final settlement of all disputed issues.
17
<PAGE> 18
At December 31, 1993, the Company's credit agreement with INCC, formerly
Internationale Nederlanden Bank N.V., provided for a $10.0 million working
capital credit facility which had a maturity date of January 1, 1995 and a
$30.0 million term loan which matures January 1, 1995. As of September 30,
1994, the outstanding balance of the Company's term loan with INCC was $1.4
million. The Company paid the outstanding balance of the term loan on October
17, 1994. The Company executed the Second Restated Credit Agreement with INCC
during March, 1994, thereby converting its $10.0 million working capital credit
facility to a $20.0 million revolving line of credit subject to certain
borrowing base limitations. The revolving line of credit matures on January 1,
1996. As of September 30, 1994, the outstanding balance of the Company's
revolving line of credit with INCC was $9.0 million.
The Company from time to time purchases its Common Stock in the open market.
The Company purchased 385,000 shares of its Common Stock at an aggregate
purchase price of $4.6 million, or approximately $12.00 per share, during the
nine months ended September 30, 1994 and 12,000 shares at an aggregate purchase
price of $.1 million, or approximately $11.15 per share, during October, 1994.
A total of 5,000 shares, at an aggregate purchase price of $.1 million, or
approximately $11.40 per share, was acquired in the fourth quarter of 1993.
Management of the Company believes that the Common Stock is trading at prices
which do not reflect the value of the Company and has determined that the
acquisition of such stock would be in the best interest of the Company and its
shareholders. All of the acquired shares are held as Common Stock in treasury,
less shares issued to employees under certain benefit plans.
The ability of the Company to fund working capital, capital expenditures, debt
service and dividends in excess of cash on hand will be dependent upon the
success of the Company's domestic and foreign operations. To the extent that
internal sources are insufficient to meet those cash requirements, the Company
can draw on its available credit facility or seek other debt or equity
financing; however, the Company can give no assurance that such other debt or
equity financing would be available on terms acceptable to the Company.
In any case, the satisfaction of long-term capital requirements will depend
upon successful implementation by the Company of its business strategy and
future results of operations. Management believes it has successfully
implemented the strategy to achieve results of operations commensurate with its
immediate and near-term liquidity requirements.
18
<PAGE> 19
PART II
OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
11.1 -- Statement re computation of per share earnings
27 -- Financial Data Schedule
(b) Reports on Form 8-K
None.
19
<PAGE> 20
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.
CLIFFS DRILLING COMPANY
Date: October 28, 1994 By /s/ Edward A. Guthrie
Edward A. Guthrie
Vice President - Finance
Date: October 28, 1994 By /s/ Cindy B. Taylor
Cindy B. Taylor
Corporate Controller
20
<PAGE> 21
EXHIBIT INDEX
11.1 -- Statement re computation of per share earnings
27 -- Financial Data Schedule
21
<PAGE> 1
EXHIBIT 11.1
CLIFFS DRILLING COMPANY
STATEMENT RE COMPUTATION OF PER SHARE EARNINGS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
THREE MONTHS NINE MONTHS
ENDED SEPTEMBER 30, ENDED SEPTEMBER 30,
------------------- -------------------
1994 1993 1994 1993
---- ---- ---- ----
<S> <C> <C> <C> <C>
PRIMARY:
Average Shares Outstanding . . . . . . . . . . . . . . . . 4,128 4,512 4,260 4,511
Net Effect of Dilutive Stock Options - Based on the
Treasury Stock Method Using Average Market Price . . . -- 1 -- 1
-------- -------- --------- --------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . 4,128 4,513 4,260 4,512
======== ======== ========= ========
Net Income . . . . . . . . . . . . . . . . . . . . . . . . . . 2,004 2,159 4,942 5,288
Less: Cumulative Preferred Stock Dividends . . . . . . . . . . (665) (665) (1,995) (1,995)
-------- -------- --------- --------
Net Income Applicable to Common and Common
Equivalent Shares . . . . . . . . . . . . . . . . . . . 1,339 1,494 2,947 3,293
-------- -------- --------- --------
Net Income Per Share . . . . . . . . . . . . . . . . . . . . . $ 0.32 $ 0.33 $ 0.69 $ 0.73
======== ======== ========= ========
ASSUMING FULL DILUTION:
Average Shares Outstanding . . . . . . . . . . . . . . . . 4,128 4,512 4,260 4,511
Net Effect of Dilutive Stock Options - Based on the
Treasury Stock Method Using Average Market Price . . . -- 1 -- 1
Assumed Conversion of Cumulative Preferred Stock . . . . . 2,178 2,178 2,178 2,178
-------- -------- --------- --------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . 6,306 6,691 6,438 6,690
======== ======== ========= ========
Net Income . . . . . . . . . . . . . . . . . . . . . . . . . . 2,004 2,159 4,942 5,288
Less: Cumulative Preferred Stock Dividends . . . . . . . . . . (665) (665) (1,995) (1,995)
Add: Cumulative Preferred Stock Dividends . . . . . . . . . . 665 665 1,995 1,995
-------- -------- --------- --------
Net Income Applicable to Common and Common
Equivalent Shares . . . . . . . . . . . . . . . . . . . 2,004 2,159 4,942 5,288
-------- -------- --------- --------
Net Income Per Share . . . . . . . . . . . . . . . . . . . . . $ 0.32 $ 0.32 $ 0.77 $ 0.79
======== ======== ========= ========
(a) (a) (a)
</TABLE>
(a) The assumed conversion of the cumulative preferred stock for the period
would have an anti-dilutive effect on the computation of earnings per
common and common equivalent shares; therefore, conversion has not been
assumed for this period.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Consolidated Statements of Operations and the Consolidated Balance Sheets and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> QTR-3 9-MOS
<FISCAL-YEAR-END> DEC-31-1994 DEC-31-1994
<PERIOD-START> JUL-01-1994 JAN-01-1994
<PERIOD-END> SEP-30-1994 SEP-30-1994
<CASH> 3,604 3,604
<SECURITIES> 0 0
<RECEIVABLES> 18,380 18,380
<ALLOWANCES> 408 408
<INVENTORY> 6,069 6,069
<CURRENT-ASSETS> 42,307 42,307
<PP&E> 196,420 196,420
<DEPRECIATION> 113,035 113,035
<TOTAL-ASSETS> 138,914 138,914
<CURRENT-LIABILITIES> 22,305 22,305
<BONDS> 0 0
<COMMON> 45 45
28,750 28,750
0 0
<OTHER-SE> 94,163 94,163
<TOTAL-LIABILITY-AND-EQUITY> 138,914 138,914
<SALES> 25,550 58,574
<TOTAL-REVENUES> 25,550 58,574
<CGS> 16,765 31,868
<TOTAL-COSTS> 23,547 51,693
<OTHER-EXPENSES> 322 1,780
<LOSS-PROVISION> 0 200
<INTEREST-EXPENSE> 233 656
<INCOME-PRETAX> 1,726 5,436
<INCOME-TAX> (278) 494
<INCOME-CONTINUING> 2,004 4,942
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 2,004 4,942
<EPS-PRIMARY> .32 .69
<EPS-DILUTED> .32 .69
</TABLE>
