<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1996
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File Number 1-9971
BURLINGTON RESOURCES INC.
(Exact name of registrant as specified in its charter)
Delaware 91-1413284
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
5051 Westheimer, Suite 1400, Houston, Texas 77056
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (713) 624-9500
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
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
Class Outstanding
Common Stock, par value $.01 per share,
as of March 31, 1996 126,125,935
<PAGE>
PART 1 - FINANCIAL INFORMATION
ITEM 1. Financial Statements
<TABLE>
<CAPTION>
BURLINGTON RESOURCES INC.
CONSOLIDATED STATEMENT OF INCOME
(UNAUDITED)
FIRST QUARTER
---------------------------------
1996 1995
------------ ------------
(Dollars in Millions, Except per Share Amounts)
<S> <C> <C>
Revenues ......................................... $ 255 $ 215
Costs and Expenses ............................... 192 213
----- -----
Operating Income ................................. 63 2
Interest Expense ................................. 28 26
----- -----
Income (Loss) Before Income Taxes ................ 35 (24)
Income Tax Benefit ............................... (3) (19)
----- -----
Net Income (Loss) ................................ $ 38 $ (5)
----- -----
----- -----
Earnings (Loss) per Common Share ................. $ .30 $(.04)
----- -----
----- -----
See accompanying Notes to Consolidated Financial Statements.
</TABLE>
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<PAGE>
BURLINGTON RESOURCES INC.
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
------------ ------------
(Dollars in Millions)
<S> <C> <C>
Current Assets
Cash and Short-term Investments ................................... $ 22 $ 20
Accounts Receivable ............................................... 187 210
Inventories ....................................................... 27 18
Other Current Assets .............................................. 17 17
------ ------
253 265
------ ------
Oil & Gas Properties (Successful Efforts Method) .................... 5,890 5,870
Other Properties .................................................... 507 499
------ ------
6,397 6,369
Accumulated Depreciation, Depletion and Amortization .............. 2,621 2,602
------ ------
Properties - Net ................................................ 3,776 3,767
------ ------
Other Assets ........................................................ 133 133
------ ------
Total Assets .................................................. $4,162 $4,165
------ ------
------ ------
LIABILITIES
Current Liabilities
Accounts Payable .................................................. $ 209 $ 214
Taxes Payable ..................................................... 68 59
Accrued Interest .................................................. 35 20
Dividends Payable ................................................. 18 17
Other Current Liabilities ......................................... 31 12
------ ------
361 322
------ ------
Long-term Debt ...................................................... 1,350 1,350
------ ------
Deferred Income Taxes ............................................... 93 110
------ ------
Other Liabilities and Deferred Credits .............................. 134 163
------ ------
Commitments and Contingent Liabilities
STOCKHOLDERS' EQUITY
Common Stock, Par Value $.01 Per Share
(Authorized 325,000,000 shares; Issued 150,000,000 shares) ....... 2 2
Paid-in Capital ..................................................... 2,935 2,935
Retained Earnings ................................................... 222 202
------ ------
3,159 3,139
Cost of Treasury Stock
(23,874,065 and 23,425,621 shares for 1996 and 1995, respectively) 935 919
------ ------
Common Stockholders' Equity ......................................... 2,224 2,220
------ ------
Total Liabilities and Common Stockholders' Equity ............. $4,162 $4,165
------ ------
------ ------
See accompanying Notes to Consolidated Financial Statements.
</TABLE>
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<PAGE>
BURLINGTON RESOURCES INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS
-------------------------------
1996 1995
------------ ------------
(Dollars in Millions)
<S> <C> <C>
Cash Flows From Operating Activities
Net Income (Loss) ...................................................... $ 38 $ (5)
Adjustments to Reconcile Net Income (Loss) to Net Cash
Provided By Operating Activities
Depreciation, Depletion and Amortization ............................. 81 96
Deferred Income Taxes ................................................ (17) (24)
Exploration Costs .................................................... 10 7
Working Capital Changes
Accounts Receivable ................................................ 23 33
Inventories ........................................................ (9) 16
Other Current Assets ............................................... -- (6)
Accounts Payable ................................................... (5) (63)
Taxes Payable ...................................................... 9 (9)
Accrued Interest ................................................... 15 17
Other Current Liabilities .......................................... 20 (1)
Other ................................................................. (34) 40
----- -----
Net Cash Provided By Operating Activities ...................... 131 101
----- -----
Cash Flows From Investing Activities
Additions to Properties ................................................ (122) (141)
Proceeds from Sales and Other .......................................... 37 85
----- -----
Net Cash Used In Investing Activities .......................... (85) (56)
----- -----
Cash Flows From Financing Activities
Proceeds from Long-term Financing ...................................... 150 150
Reduction in Long-term Debt ............................................ (149) (107)
Dividends Paid ......................................................... (17) (17)
Treasury Stock Transactions - Net ...................................... (16) 1
Other .................................................................. (12) (47)
----- -----
Net Cash Used In Financing Activities .......................... (44) (20)
----- -----
Increase in Cash and Short-term Investments .............................. 2 25
Cash and Short-term Investments
Beginning of Year ...................................................... 20 20
----- -----
End of Period .......................................................... $ 22 $ 45
----- -----
----- -----
See accompanying Notes to Consolidated Financial Statements.
</TABLE>
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<PAGE>
BURLINGTON RESOURCES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. BASIS OF PRESENTATION
The 1995 Annual Report on Form 10-K of Burlington Resources Inc. (the
"Company") includes certain definitions and a summary of significant accounting
policies and should be read in conjunction with this Quarterly Report on Form
10-Q. The statements for the periods presented herein are unaudited, condensed
and do not contain all information required by generally accepted accounting
principles to be included in a full set of financial statements. In the opinion
of management, all material adjustments necessary to present fairly the results
of operations have been included. All such adjustments are of a normal,
recurring nature. The results of operations for any interim period are not
necessarily indicative of the results of operations for the entire year.
Earnings (loss) per common share is based on the weighted average
number of common shares outstanding during the year. The weighted average number
of common shares outstanding was 127 million for the first three months of 1996
and 1995.
2. COMMITMENTS AND CONTINGENT LIABILITIES
On May 25, 1995, the 270th Judicial District Court of Harris County,
Texas entered an order in a lawsuit styled Caroline Altheide, et al. v. Meridian
Oil Inc., et al. which allows the suit to be maintained as a class action on
behalf of all royalty and overriding royalty interest owners in all Meridian
properties and all working interest owners in properties operated by Meridian
who have received payments from Meridian at any time from and after December 1,
1986 based upon wellhead sales of natural gas to Meridian Oil Trading Inc. The
lawsuit involves claims for unspecified actual and punitive damages based upon
alleged breaches of duties owed to interest owners because of the use of
Meridian corporate affiliates to gather, treat and market natural gas. The
plaintiffs allege that Meridian's gas producing affiliates have sold natural gas
to marketing affiliates at low inter-affiliate settlement prices which are then
used as the basis for accounting to interest owners. Plaintiffs also allege that
Meridian's pricing includes inappropriate deductions of inflated gathering and
transportation costs. Meridian is vigorously defending this litigation and
perfected an interlocutory appeal of the class certification order on May 30,
1995. This appeal effectively stays class action proceedings in the trial court
until the appeal is completed. Oral argument in this appeal was held February
28, 1996, however, no ruling has been made.
The Company and its subsidiaries are named defendants in numerous
lawsuits and named parties in numerous governmental proceedings arising in the
ordinary course of business. While the outcome of lawsuits and other proceedings
cannot be predicted with certainty, management expects these matters, including
the above-described Altheide litigation, will not have a materially adverse
effect on the consolidated financial position or results of operations of the
Company.
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<PAGE>
ITEM 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Financial Condition and Liquidity
The total long-term debt to capital (total long-term debt and
stockholders' equity) ratio at March 31, 1996 and December 31, 1995 was 38
percent. In February 1996, the Company issued $150 million of 6.875% Debentures
due February 15, 2026. The net proceeds were used for general corporate
purposes, including acquisition of oil and gas properties, repayment of
commercial paper, capital expenditures and repurchases of the Company's common
stock.
The Company's credit facilities are comprised of a $600 million
revolving credit agreement that expires in July 2000 and a $300 million
revolving credit agreement that expires July 1996. The $300 million revolving
credit agreement is renewable annually by mutual consent and was renewed in July
1995. As of March 31, 1996, there were no borrowings outstanding under the
credit facilities, although borrowing capacity is reduced by outstanding
commercial paper. At March 31, 1996, the Company had outstanding commercial
paper borrowings of $2 million at an average interest rate of 5.70 percent. The
Company also has the capacity to issue $200 million of debt securities under
shelf registration statements filed with the Securities and Exchange Commission.
Net cash provided by operating activities for the first three months of
1996 was $131 million compared to $101 million in 1995. The increase was
primarily due to higher operating income in 1996. Net cash provided by operating
activities in 1995 included the sale of gas-in-storage inventory for
approximately $20 million.
The Company continues to divest marginal and non-strategic assets to
maintain its high quality asset base. The Company divested over 300 working
interest wells for approximately $27 million during the first three months of
1996.
The Company is involved in certain environmental proceedings and other
related matters. Although it is possible that new information or future
developments could require the Company to reassess its potential exposure
related to these matters, the Company believes, based upon available
information, the resolution of these issues will not have a materially adverse
effect on the consolidated financial position or results of operations of the
Company.
Capital Expenditures
Capital expenditures for the first three months of 1996 totaled $122
million compared to $141 million in 1995. Capital expenditures are currently
projected to be approximately $530 million for all of 1996 and are expected to
be primarily for the development and exploration of oil and gas properties,
reserve acquisitions, and plant and pipeline expenditures. Capital expenditures
will be funded from internal cash flow supplemented, if needed, by external
financing.
-6-
<PAGE>
Dividends
On April 11, 1996, the Board of Directors declared a common stock
quarterly dividend of $.1375 per share, payable July 1, 1996.
Results of Operations - First Quarter 1996 Compared to First Quarter 1995
The Company reported net income of $38 million or $.30 per share for
the first quarter of 1996 compared to a net loss of $5 million or $.04 per share
in 1995. Operating income for the first quarter of 1996 was $63 million compared
to $2 million in 1995.
Revenues were $255 million for the first quarter of 1996 compared to
$215 million in 1995. Natural gas sales prices improved 26 percent to $1.55 per
MCF and gas sales volumes improved 3 percent to 1,180 MMCF per day which
increased revenues $34 million and $4 million, respectively. Average oil sales
prices improved 9 percent to $17.94 per barrel and oil sales volumes improved 2
percent to 48.0 MBbls per day which increased revenues $7 million and $1
million, respectively. Gas and oil sales volumes increased primarily due to
continued development of the Company's oil and gas properties and producing
property acquisitions. The revenue increases were partially offset by a $6
million decrease in intrastate natural gas sales and other revenues primarily
resulting from the sale of the intrastate pipeline systems in February 1995.
Costs and expenses were $192 million for the first quarter of 1996
compared to $213 million in 1995. The decrease is primarily due to the Company's
adoption of SFAS No. 121, effective September 30, 1995 which reduced
unit-of-production depletion and depreciation costs by $12 million.
Additionally, general and administrative expenses declined $6 million and
intrastate natural gas purchases decreased $3 million.
Interest expense was $28 million for the first quarter of 1996 compared
to $26 million in 1995. The increase was primarily due to additional debt issued
in March 1995 and February 1996 partially offset by lower outstanding commercial
paper borrowings in 1996.
The effective income tax rate was a benefit of 8 percent for the first
quarter of 1996 compared to a benefit of 80 percent in 1995. The 1996 beneficial
tax rate is due to the benefit of non-conventional fuel tax credits being
greater than tax expense at statutory rates. The 1995 beneficial tax rate is due
to a 1995 pre-tax loss and the effect of non-conventional fuel tax credits.
-7-
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. Legal Proceedings
See Note 2 of Notes to Consolidated Financial Statements.
ITEM 4. Submission of Matters to a Vote of Security Holders
The Annual Meeting of Stockholders was held on March 21, 1996. The
following were nominated and elected to serve as Directors of
Burlington Resources Inc. for a term of one year or until their
successors shall have been duly elected and qualified:
Nominee For Withheld
J. V. Byrne 109,297,703 668,028
S. P. Gilbert 108,283,766 1,681,965
J. F. McDonald 109,337,393 628,338
T. H. O'Leary 109,309,031 656,700
D. M. Roberts 109,334,002 631,729
W. Scott, Jr. 109,302,403 663,328
B. S. Shackouls 109,327,112 638,619
W. E. Wall 109,280,500 685,231
ITEM 6. Exhibits and Reports on Form 8-K
A. Exhibits
The following exhibits are filed as part of this report.
Exhibit Nature of Exhibit Page
4.1 The Company and its subsidiaries either *
have filed with the Securities and Exchange
Commission or upon request will furnish
a copy of any instrument with respect to
long-term debt of the Company.
11.1 Earnings (Loss) Per Share 10
12.1 Ratio of Earnings to Fixed Charges 11
27.1 Financial Data Schedule **
* Exhibit incorporated by reference.
** Exhibit required only for filings made electronically using the Securities
and Exchange Commission's EDGAR System.
-8-
<PAGE>
ITEM 6. Exhibits and Reports on Form 8-K, Continued
B. Reports on Form 8-K
During the quarter covered by this report, there were no reports
filed on Form 8-K.
Items 2, 3, and 5 of Part II are not applicable and have been omitted.
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.
BURLINGTON RESOURCES INC.
(Registrant)
By /s/ John E. Hagale
John E. Hagale
Executive Vice President and
Chief Financial Officer
By /s/ Hays R. Warden
Hays R. Warden
Senior Vice President and Controller,
and Chief Accounting Officer
Date: May 13, 1996
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BURLINGTON RESOURCES INC.
EARNINGS (LOSS) PER SHARE
EXHIBIT 11.1
(UNAUDITED)
<TABLE>
<CAPTION>
FIRST QUARTER
---------------------------------------------------------
1996 1995
--------------------------- ---------------------------
Earnings Shares Loss Shares
----------- -------------- --------- ---------------
(Dollars in Millions, Except per Share Amounts)
<S> <C> <C> <C> <C>
Primary earnings (loss) per common share
Net earnings (loss) available for common stock and
weighted average number of common
shares outstanding ............................................. $ 38 126,340,882 $ (5) 126,513,332
Stock options assumed exercised - net ............................. -- 401,011 -- 461,577
------------ ------------ ------------ ------------
Total net earnings (loss) and primary common shares ............... $ 38 126,741,893 $ (5) 126,974,909
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Primary earnings (loss) per common share .......................... $ .30 $ (.04)
------------ ------------
------------ ------------
Fully diluted earnings (loss) per common share
Net earnings (loss) available for common stock and
weighted average number of common
shares outstanding ............................................. $ 38 126,340,882 $ (5) 126,513,332
Stock options assumed exercised - net ............................. -- 444,218 -- 658,802
------------ ------------ ------------ ------------
Total net earnings (loss) and fully diluted common shares ......... $ 38 126,785,100 $ (5) 127,172,134
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Fully diluted earnings (loss) per common share .................... $ .30 $ (.04)
------------ ------------
------------ ------------
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</TABLE>
BURLINGTON RESOURCES INC.
RATIO OF EARNINGS TO FIXED CHARGES
EXHIBIT 12.1
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-----------------------------
1996 1995
----------- -----------
(Dollars in Millions, Except Ratio Amounts)
<S> <C> <C>
Earnings
Income (Loss) Before Income Taxes ............................. $ 35 $(24)
Add
Interest and fixed charges ................................. 28 26
Portion of rent under long-term operating
leases representative of an interest factor ............. 1 1
---- ----
Total Earnings Available for Fixed Charges .................... $ 64 $ 3
---- ----
---- ----
Fixed Charges
Interest and fixed charges .................................... $ 28 $ 26
Portion of rent under long-term operating
leases representative of an interest factor ................ 1 1
Capitalized interest .......................................... 1 1
---- ----
Total Fixed Charges ........................................... $ 30 $ 28
---- ----
---- ----
Ratio of Earnings to Fixed Charges ................................ 2.12x .12x
---- ----
---- ----
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</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
BURLINGTON RESOURCES INC. CONSOLIDATED BALANCE SHEET AS OF MARCH 31, 1996, AND
THE RELATED CONSOLIDATED STATEMENT OF INCOME FOR THE THREE MONTH PERIOD ENDED
MARCH 31, 1996, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1000000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 22
<SECURITIES> 0
<RECEIVABLES> 187
<ALLOWANCES> 0
<INVENTORY> 27
<CURRENT-ASSETS> 253
<PP&E> 6397
<DEPRECIATION> 2621
<TOTAL-ASSETS> 4162
<CURRENT-LIABILITIES> 361
<BONDS> 1350
0
0
<COMMON> 2
<OTHER-SE> 2222
<TOTAL-LIABILITY-AND-EQUITY> 4162
<SALES> 255
<TOTAL-REVENUES> 255
<CGS> 192
<TOTAL-COSTS> 192
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 28
<INCOME-PRETAX> 35
<INCOME-TAX> (3)
<INCOME-CONTINUING> 38
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 38
<EPS-PRIMARY> .30
<EPS-DILUTED> .30
</TABLE>
