<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------
FORM 8-K/A
(AMENDMENT NO. 1)
CURRENT REPORT
PURSUANT TO
SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED) JUNE 13, 1995
-----------
POOL ENERGY SERVICES CO.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
TEXAS 0-18437 76-0263755
(STATE OR OTHER JURISDICTION OF (COMMISSION (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) FILE NUMBER) IDENTIFICATION NO.)
10375 RICHMOND AVENUE, HOUSTON, TEXAS 77042
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (713) 954-3000
================================================================================
<PAGE> 2
This Form 8-K/A (Amendment No. 1), amending a Form 8-K filed on June 27,
1995, is being filed for the purpose of supplying the financial statements of
Golden Pacific Corp. and Subsidiaries and the pro forma financial information of
the Company reflecting the addition of Golden Pacific Corp. and Subsidiaries,
which were omitted from the Form 8-K in reliance on Item 7(a)(4) of the Form
8-K.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(A) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED
Item 7(a) Financial Statements of Business Acquired is amended to read as
follows:
Financial Statements of Golden Pacific Corp. and Subsidiaries filed as
part of this report:
Audited Financial Statements:
Independent Auditors' Report
Consolidated Balance Sheets at May 29, 1994 and May 30, 1993
Consolidated Statements of Earnings for the Years Ended
May 29, 1994 and May 30, 1993
Consolidated Statements of Stockholders' Equity for the Years
Ended May 29, 1994 and May 30, 1993
Consolidated Statements of Cash Flows for the Years Ended May
29, 1994 and May 30, 1993
Notes to Consolidated Financial Statements
Unaudited Financial Statements:
Consolidated Balance Sheet at May 28, 1995
Consolidated Statement of Earnings for the
Year Ended May 28, 1995
Consolidated Statement of Stockholders' Equity for the
Year Ended May 28, 1995
Consolidated Statement of Cash Flows for the
Year Ended May 28, 1995
Notes to Consolidated Financial Statements
(B) PRO FORMA FINANCIAL INFORMATION
Item 7(b) Pro Forma Financial Information is amended to read as follows:
Unaudited Pro Forma Financial Information of Pool Energy Services Co.
filed as part of this report:
Pro Forma Financial Information
Pro Forma Condensed Statement of Consolidated Operations for the
Six Months Ended June 30, 1995
Pro Forma Condensed Statement of Consolidated Operations for the
Year Ended December 31, 1994
Notes to Pro Forma Condensed Statements of Consolidated
Operations
2
<PAGE> 3
(C) EXHIBITS
Item 7(c) Exhibits is amended to read as follows:
<TABLE>
<CAPTION>
EXHIBIT NO. DOCUMENT
----------- --------
<S> <C>
2.1(*) - Stock Purchase Agreement dated June 13, 1995 by and among Robert D. Hillman, Barbara A. Hillman, Richard H.
Hillman, Robert D. Hillman, Jr., Golden Pacific Corp., Pool Company and Pool Energy Services Co.
2.2(*) - Agreement regarding Deferred Payment of Purchase Price dated June 13, 1995 by and among Robert D. Hillman,
Barbara A. Hillman, Richard H. Hillman, Robert D. Hillman, Jr., Golden Pacific Corp., Pool Company and Pool
Energy Services Co., including Promissory Notes, and Exhibits B, C, D and F to such agreement.
2.3(*) - Voting Agreement and Agreement Restricting Transfer dated June 13, 1995 by and among Robert D. Hillman,
Barbara A. Hillman, Richard H. Hillman, Robert D. Hillman, Jr., Golden Pacific Corp., Pool Company and Pool
Energy Services Co.
23(**) - Consent of KPMG Peat Marwick LLP
</TABLE>
(*) Previously filed with original Form 8-K dated June 13, 1995 filed with the
Commission on June 27, 1995
(**) Filed herewith
Except for Exhibits 1 and 3 to the Stock Purchase Agreement (Exhibit 2.1) and
the documents filed as Exhibits 2.2 and 2.3, the exhibits and schedules to the
Stock Purchase Agreement (Exhibit 2.1) have been omitted. The Company hereby
agrees to furnish supplementally to the Commission upon request copies of any
such omitted exhibits or schedules.
3
<PAGE> 4
POOL ENERGY SERVICES CO.
INDEX TO FINANCIAL STATEMENTS
AND PRO FORMA FINANCIAL INFORMATION
<TABLE>
<CAPTION>
DESCRIPTION PAGE
----------------------------------------------------------------------------------------- ----
<S> <C>
GOLDEN PACIFIC CORP. AND SUBSIDIARIES:
Years Ended May 29, 1994 and May 30, 1993
-----------------------------------------
Independent Auditors' Report . . . . . . . . . . . . . . . . . . . . . . . . 6
Consolidated Balance Sheets at May 29, 1994 and May 30, 1993 . . . . . . . . 7
Consolidated Statements of Earnings for the Years Ended
May 29, 1994 and May 30, 1993 . . . . . . . . . . . . . . . . . . . . . . 8
Consolidated Statements of Stockholders' Equity for the Years
Ended May 29, 1994 and May 30, 1993 . . . . . . . . . . . . . . . . . . . 9
Consolidated Statements of Cash Flows for the Years
Ended May 29, 1994 and May 30, 1993 . . . . . . . . . . . . . . . . . . . 10
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . 12
Year Ended May 28, 1995
-----------------------
Unaudited Consolidated Balance Sheet at May 28, 1995 . . . . . . . . . . . . 19
Unaudited Consolidated Statement of Earnings for the
Year Ended May 28, 1995 . . . . . . . . . . . . . . . . . . . . . . . . . 21
Unaudited Consolidated Statement of Stockholders' Equity for the
Year Ended May 28, 1995 . . . . . . . . . . . . . . . . . . . . . . . . . 22
Unaudited Consolidated Statement of Cash Flows for
the Year Ended May 28, 1995 . . . . . . . . . . . . . . . . . . . . . . . 23
Notes to Unaudited Consolidated Financial Statements . . . . . . . . . . . . 25
POOL ENERGY SERVICES CO.:
Pro Forma Financial Information . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Pro Forma Condensed Statement of Consolidated Operations for the
Six Months Ended June 30, 1995 . . . . . . . . . . . . . . . . . . . . . . . . . 33
Pro Forma Condensed Statement of Consolidated Operations for the
Year Ended December 31, 1994 . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Notes to Pro Forma Condensed Statements of Consolidated Operations . . . . . . . . . 35
</TABLE>
4
<PAGE> 5
GOLDEN PACIFIC CORPORATION
AND SUBSIDIARIES
Consolidated Financial Statements
May 29, 1994 and May 30, 1993
(With Independent Auditors' Report Thereon)
5
<PAGE> 6
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Golden Pacific Corporation:
We have audited the accompanying consolidated balance sheets of Golden Pacific
Corporation and subsidiaries as of May 29, 1994 and May 30, 1993 and the related
consolidated statements of earnings, stockholders' equity and cash flows for the
years then ended. These consolidated financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Golden Pacific
Corporation and subsidiaries as of May 29, 1994 and May 30, 1993 and the results
of their operations and their cash flows for the years then ended in conformity
with generally accepted accounting principles.
KPMG PEAT MARWICK LLP
Los Angeles, California
July 22, 1994
6
<PAGE> 7
GOLDEN PACIFIC CORPORATION
AND SUBSIDIARIES
Consolidated Balance Sheets
May 29, 1994 and May 30, 1993
<TABLE>
<CAPTION>
ASSETS 1994 1993
------------ ----------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 403,931 2,154,412
Accounts receivable (less allowance for doubtful
accounts of $137,881 in 1994 and $127,473 in 1993) 5,955,323 4,805,187
Officers, employee and affiliate receivables (note 2) 788,707 964,025
Parts and supplies, at the lower of cost (first-in,
first-out) or replacement market 271,998 264,223
Prepaid expenses and other current assets 605,428 440,826
Deferred income taxes (note 3) 728,000 773,000
------------ ----------
Total current assets 8,753,387 9,401,673
------------ ----------
Property, plant and equipment, at cost:
Land 836,607 836,607
Buildings 521,857 522,957
Machinery and tools 33,444,515 31,871,574
Automotive equipment 1,620,430 1,315,185
Furniture and fixtures 705,722 676,612
Leasehold improvements 875,931 758,927
Construction in process -- 57,089
Capitalized leasehold interest 405,447 405,447
------------ ----------
38,410,509 36,444,398
Less accumulated depreciation and amortization (28,155,243) (27,025,696)
------------ ----------
Net property, plant and equipment 10,255,266 9,418,702
------------ ----------
Receivables from officers and affiliate (note 2) 673,099 649,799
Other assets 1,084,510 833,134
------------ ----------
$ 20,766,262 20,303,308
============ ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable 1,264,407 1,238,021
Salaries and wages payable 2,174,610 2,027,857
Accrued workers' compensation and group insurance 941,934 780,843
Accrued expenses 512,498 657,319
Current installments of long-term debt (note 4) 517,879 1,293,996
Current portion of capital lease (notes 2 and 6) 29,569 25,134
------------ ----------
Total current liabilities 5,440,897 6,023,170
------------ ----------
Long-term debt, excluding current installments (note 4) 1,203,791 828,198
Notes payable to related parties - long-term (note 2) 775,000 775,000
Capital lease obligation, excluding current installments
(notes 2 and 6) 215,441 245,010
Deferred compensation (note 7) 2,317,014 1,897,206
Deferred income taxes (note 3) 1,499,000 1,631,000
Other liabilities 208,840 201,298
Commitments and contingencies (note 6)
Stockholders' equity (note 2):
Class A preferred stock 331,000 331,000
Class B preferred stock 10,233 10,233
Common stock 40,411 40,411
Retained earnings 8,724,635 8,320,782
------------ ----------
Total stockholders' equity 9,106,279 8,702,426
------------ ----------
$ 20,766,262 20,303,308
============ ==========
</TABLE>
See accompanying notes to consolidated financial statements.
7
<PAGE> 8
GOLDEN PACIFIC CORPORATION
AND SUBSIDIARIES
Consolidated Statements of Earnings
Years ended May 29, 1994 and May 30, 1993
<TABLE>
<CAPTION>
1994 1993
------------ ----------
<S> <C> <C>
Service revenues $ 50,929,027 43,690,556
------------ ----------
Costs and expenses:
Production service costs 45,126,013 38,812,742
Depreciation and amortization 1,750,675 1,433,840
Selling, general and administrative expenses 2,761,256 2,549,072
------------ ----------
Total costs and expenses 49,637,944 42,795,654
------------ ----------
Operating income 1,291,083 894,902
Interest expense:
Related parties (net of interest income of $37,500 in 1994 and
$41,659 in 1993) 100,242 22,706
Other (net of interest income of $72,322 in 1994 and $104,852 in
1993) 259,830 368,525
Other income (expense), net (23,860) 11,852
------------ ----------
Income before income taxes 907,151 515,523
Income tax expense (note 3) 476,000 66,000
------------ ----------
Net income $ 431,151 449,523
============ ==========
</TABLE>
See accompanying notes to consolidated financial statements.
8
<PAGE> 9
GOLDEN PACIFIC CORPORATION
AND SUBSIDIARIES
Consolidated Statements of Stockholders' Equity
Years ended May 29, 1994 and May 30, 1993
<TABLE>
<CAPTION>
CLASS A CLASS B TOTAL
PREFERRED PREFERRED COMMON RETAINED STOCKHOLDERS'
STOCK (A) STOCK (B) STOCK (C) EARNINGS EQUITY
---------- ------ ------ --------- ---------
<S> <C> <C> <C> <C> <C>
Balance at May 31, 1992 $ 331,000 10,233 40,411 7,898,557 8,280,201
---------- ------ ------ --------- ---------
Net income -- -- -- 449,523 449,523
Dividends declared and paid:
Class A preferred, $80 per share
-- -- -- (26,480) (26,480)
Class B preferred, $.008 per
share -- -- -- (818) (818)
---------- ------ ------ --------- ---------
Balance at May 30, 1993 331,000 10,233 40,411 8,320,782 8,702,426
Net income -- -- -- 431,151 431,151
Dividends declared and paid:
Class A preferred, $80 per share
-- -- -- (26,480) (26,480)
Class B preferred, $.008 per
share -- -- -- (818) (818)
---------- ------ ------ --------- ---------
Balance at May 29, 1994 $ 331,000 10,233 40,411 8,724,635 9,106,279
========== ====== ====== ========= =========
</TABLE>
(a) 8% cumulative Class A preferred stock of $1,000 par value, redeemable at
$1,050 plus accrued dividends, liquidation at par. Authorized 500 shares;
issued 331 shares.
(b) 8% cumulative Class B preferred stock of $.10 par value. Dividend payments
are subordinate to payments on Class A preferred stock, liquidation at
par. Authorized 125,000 shares; issued 102,333 shares.
(c) Common stock of $1 par value per share. Authorized 250,000 shares; issued
and outstanding 40,411 shares.
See accompanying notes to consolidated financial statements.
9
<PAGE> 10
GOLDEN PACIFIC CORPORATION
AND SUBSIDIARIES
Consolidated Statements of Cash Flows
Years ended May 29, 1994 and May 30, 1993
<TABLE>
<CAPTION>
1994 1993
----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 431,151 449,523
----------- -----------
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization 1,750,675 1,433,840
Gain on disposition of property, plant and equipment 32,699 --
(Increase) decrease in operating assets:
Accounts and notes receivable, net (1,150,136) (182,780)
Officers, employee and affiliate receivables 152,018 (104,729)
Parts and supplies (7,775) 4,016
Prepaid expenses and other current assets (164,602) (22,637)
Other assets (251,376) (158,696)
Increase (decrease) in operating liabilities:
Accounts payable 26,386 446,901
Salaries and wages payable 146,753 (118,598)
Accrued expenses 16,270 (697,578)
Other liabilities 427,350 333,708
Deferred income taxes (87,000) (12,000)
----------- -----------
Total adjustments 891,262 921,447
----------- -----------
Net cash provided by operating activities 1,322,413 1,370,970
----------- -----------
Cash flows from investing activities:
Acquisitions of property, plant and equipment (2,642,079) (1,093,653)
Proceeds from sale of property, plant and equipment 22,141 --
----------- -----------
Net cash used by investing activities (2,619,938) (1,093,653)
----------- -----------
</TABLE>
(Continued)
10
<PAGE> 11
GOLDEN PACIFIC CORPORATION
AND SUBSIDIARIES
Consolidated Statements of Cash Flows, Continued
<TABLE>
<CAPTION>
1994 1993
----------- ---------
<S> <C> <C>
Cash flows from financing activities:
Repayment of long-term debt $ (400,524) (581,366)
Principal payments under capital lease obligation
(25,134) (52,822)
Dividends paid (27,298) (27,298)
----------- ---------
Net cash used by financing activities
(452,956) (661,486)
----------- ---------
Net decrease in cash and cash equivalents (1,750,481) (384,169)
Cash and cash equivalents at beginning of year 2,154,412 2,538,581
----------- ---------
Cash and cash equivalents at end of year $ 403,931 2,154,412
=========== =========
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest $ 384,000 615,000
Income taxes 708,000 60,000
=========== =========
</TABLE>
See accompanying notes to consolidated financial statements.
11
<PAGE> 12
GOLDEN PACIFIC CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
May 29, 1994 and May 30, 1993
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of Golden
Pacific Corporation (the Company) and its wholly owned subsidiaries. The
Company engages in oil well servicing activities. All significant
intercompany accounts and transactions have been eliminated.
FISCAL YEAR
The Company's fiscal years, which end on the last Sunday of May, ended
May 29, 1994 and May 30, 1993.
REVENUE RECOGNITION
Revenue is generally recognized on the basis of hourly rates as work is
performed.
PROPERTY, PLANT AND EQUIPMENT
The Company depreciates and amortizes substantially all property, plant
and equipment by use of the straight-line method over the following
estimated useful lives:
Building 20 to 25 years
Machinery, equipment and fixtures 4 to 18 years
Leasehold improvements Life of lease
Capitalized leasehold interest 10 to 25 years
INCOME TAXES
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective
tax bases. Deferred tax assets and liabilities are measured using enacted
tax rates expected to apply to taxable income in the years in which those
temporary differences are expected to be recovered or settled. The effect
on deferred tax assets and liabilities of a change in tax rates is
recognized in income in the period that includes the enactment date.
CASH EQUIVALENTS
The Company considers all highly liquid debt instruments purchased with a
maturity of three months or less to be cash equivalents.
RECLASSIFICATIONS
Certain reclassifications have been made to the 1993 balances to conform
to the 1994 presentation.
12
<PAGE> 13
GOLDEN PACIFIC CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(2) RELATED PARTY TRANSACTIONS
The Company leases land, building and a rig from a sole proprietor and a
partnership owned by Robert D. Hillman (the Company's majority
stockholder), various family members and the Company.
The Company pays $5,625 per month for land and buildings under a 25-year
capital lease arrangement to a partnership owned by members of the
Hillman family and the Company. In May 1992, the Company loaned the
partnership $260,000 under repayment terms of $4,122 per month for 91
months, including interest of 10.25%. As of May 29, 1994 and May 30,
1993, the short-term portion amounted to $29,336 and $26,489,
respectively, and the long-term portion amounted to $180,337 and
$209,671, respectively.
The Company leases a rig for $2,300 per month on a month-to-month basis
from a sole proprietorship owned by Robert D. Hillman.
The Company has short-term and long-term receivables from Robert D.
Hillman and officers and employees of the Company. As of May 29, 1994 and
May 30, 1993, the short-term receivables amounted to $759,371 and
$937,536, respectively, and the long-term receivables amounted to
$492,762 and $440,128, respectively.
The Company has an unsecured subordinated note payable due to Barbara B.
Hillman in the amount of $775,000, with interest at prime plus 1% but not
less than 8% or greater than 10%, due July 1, 1995. The prime rate at May
29, 1994 was 7.25%.
An agreement exists that requires the Company to purchase, and Richard H.
Hillman to sell, and grants Barbara A. Hillman an irrevocable option to
sell to the Company, all common shares that they may receive from the
Harry H. Hillman Trust at a negotiated or arbitrated price. The Trust
currently holds 10,831 shares each for Richard H. Hillman and Barbara A.
Hillman.
(3) TAXES ON INCOME
The Company and subsidiaries file a consolidated Federal income tax
return. The provision for income taxes consists of the following
components:
<TABLE>
<CAPTION>
CURRENT DEFERRED TOTAL
---------- -------- -------
<S> <C> <C> <C>
1994:
Federal $ 435,000 (73,000) 362,000
State 128,000 (14,000) 114,000
---------- ------- -------
$ 563,000 (87,000) 476,000
========= ======= =======
1993:
Federal $ 68,000 (44,000) 24,000
State 10,000 32,000 42,000
---------- ------- -------
$ 78,000 (12,000) 66,000
========= ======= =======
</TABLE>
13
<PAGE> 14
GOLDEN PACIFIC CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
A reconciliation of total income tax expense for 1994 and 1993 and the
amount computed by applying the U.S. Federal income tax rate of 34% for
1994 and 1993 to income before income taxes follows:
<TABLE>
<CAPTION>
1994 1993
----------- -----------
<S> <C> <C>
Computed "expected" tax expense $ 308,000 175,000
Increase (reduction) in income taxes
resulting from:
State income tax expense, net of
Federal income tax benefit 75,000 34,000
Adjustment of prior year provision to
actual 68,000 (142,000)
Other (benefit) expense, net 25,000 (1,000)
---------- --------
$ 476,000 66,000
=========== ========
</TABLE>
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities at May
29, 1994 and May 30, 1993 are presented below:
<TABLE>
<CAPTION>
MAY 29, 1994 MAY 30, 1993
------------ ------------
<S> <C> <C>
Deferred tax assets:
Accounts receivable, principally due to allowance for
doubtful accounts $ 69,000 64,000
Deferred compensation 769,000 649,000
Workers' compensation insurance 322,000 248,000
Accrued vacation 217,000 217,000
Other 158,000 192,000
----------- --------
Net deferred tax assets 1,535,000 1,370,000
----------- --------
Deferred tax liabilities:
Plant and equipment, principally due to differences in
depreciation (1,906,000) (1,863,000)
Other (400,000) (365,000)
----------- --------
Total gross deferred tax liabilities (2,306,000) (2,228,000)
----------- --------
Net deferred tax liability $ (771,000) (858,000)
=========== ==========
</TABLE>
There was no valuation allowance for deferred tax assets for either year.
The Company has alternative minimum tax credit carryforwards of $39,000
and $9,000 which are available to reduce future Federal and state income
taxes, respectively, if any, over an indefinite period.
14
<PAGE> 15
GOLDEN PACIFIC CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(4) DEBT
LONG-TERM DEBT
A summary of long-term debt follows:
<TABLE>
<CAPTION>
1994 1993
----------- ----------
<S> <C> <C>
Note payable to bank, due in monthly installments of $4,719 plus interest
of 10.5% through January 30, 1994, secured by real
property $ -- 773,996
Note payable to William B. Erwin, due in semiannual installments
of $10,000, with interest at 10% under deferred compensation
agreement, due April 1, 1996, unsecured 36,541 56,541
Note payable to a bank, payable in monthly installments of $38,298 plus
interest at prime plus .75%, due January 1,
1998, secured by equipment 1,685,129 1,291,657
----------- ----------
1,721,670 2,122,194
Less current installments (517,879) (1,293,996)
----------- ----------
$ 1,203,791 828,198
=========== ==========
</TABLE>
Long-term debt maturities are as follows:
<TABLE>
<S> <C> <C>
1995 $ 517,879
1996 514,420
1997 497,879
1998 191,492
Thereafter --
----------
$1,721,670
==========
</TABLE>
SHORT-TERM FINANCING
At May 29, 1994, a subsidiary of the Company has credit facilities
aggregating $3,500,000 with a bank, which can be used as short-term lines
of credit up to $1,000,000 with interest at prime plus 3/4% or as letters
of credit for a 1-1/4% fee per year up to the maximum amount of the
unused credit facilities. At May 29, 1994, outstanding letters of credit
were $2,779,015, and there were no outstanding borrowings under the
facilities.
The credit agreement contains certain restrictive covenants; for both
years, all restrictions and covenants had been met.
Common stock dividends are not allowed under the credit agreement,
accordingly, no dividends were declared in 1994 or 1993.
15
<PAGE> 16
GOLDEN PACIFIC CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(5) SIGNIFICANT REVENUE SOURCE
The majority of the Company's business is conducted with major oil
companies under contracts of various lengths up to three years. During
the year ended May 29, 1994, revenues generated from two significant
customers as a percentage of total revenues were approximately 20.6% and
27.0%. During fiscal year 1993, sales to the same two customers generated
approximately 23.5% and 26.0%. The revenues generated from the two
customers in the respective years comprise several separate contracts in
different geographic areas.
(6) COMMITMENTS AND CONTINGENCIES
The Company and its subsidiaries use certain vehicles, equipment and
property under capital and operating lease arrangements. Certain property
has been leased from related parties as discussed in note 2. Rental
expense under operating leases was $664,165 in 1994 and $635,420 in 1993.
Future minimum payments under all leases, together with the present value
of the net minimum lease payments, as of May 29, 1994 were as follows:
<TABLE>
<CAPTION>
CAPITAL OPERATING
LEASE LEASE
--------- -----------
<S> <C> <C>
1995 $ 67,500 368,048
1996 67,500 311,471
1997 67,500 287,295
1998 67,500 217,589
1999 67,500 141,690
Thereafter 33,750 27,564
---------- -----------
Net minimum lease payments 371,250 $ 1,353,657
===========
Less amount representing interest 126,240
----------
Present value of net lease payments $ 245,010
==========
</TABLE>
The interest rate used to calculate the capital lease was approximately
14.3%.
As part of the agreement for credit facilities with a bank discussed in
note 4, the Company is a guarantor of these facilities in the amount of
$7,000,000.
The Company is currently involved in various litigation arising in the
normal course of business. In the opinion of management, the ultimate
outcome of such litigation will not have a material effect on the
consolidated financial statements.
16
<PAGE> 17
GOLDEN PACIFIC CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(7) EMPLOYEE BENEFIT PLANS
The Company has a 401(k) plan whereby employees may contribute up to a
maximum of 15% of their annual compensation to the plan. The Company will
match 15% of employee contributions up to 6% of the employee
compensation, with such matched funds vesting immediately. Total expense
for the years ended May 29, 1994 and May 30, 1993 was approximately
$86,000 and $83,000, respectively.
In 1988, the Company authorized a Performance Share Plan awarding 4,041
"Performance Shares," equivalent to phantom shares, to key employees. As
of June 1, 1993, the Plan was amended to set up a new four-year vesting
period. The Company has expensed $96,068 and $0 under this amended Plan
in 1994 and 1993, respectively, and has included $754,418 and $697,165,
respectively, in other liabilities as of May 29, 1994 and May 30, 1993.
In 1989, the Company initiated an Executive Retirement Plan and the
Managerial Retirement Plan for senior management executives and
managerial employees of the Company. The plans allow participants to
defer to retirement a portion of their annual compensation up to $520 and
$260, respectively. In addition, the plans provide for basic
contributions by the Company in the amount of $2,500 and $1,500, annually
for the first five years, for the respective plans, and additional
optional incentive contributions as determined by the Company's
compensation committee.
Participants will become fully vested in the Company contributions upon
the earlier of completion of five full years of service after the initial
date of participation in the plan or the participant's termination of
employment due to death, disability or retirement. Total expense in 1994
and 1993 was approximately $10,000 and $12,000, respectively, for the
Executive Retirement Plan and $6,000 and $7,000, respectively, for the
Managerial Retirement Plan. The Company has included $138,000 and
$128,000 for the Executive Retirement Plan and $83,000 and $78,000 for
the Managerial Retirement Plan as of May 29, 1994 and May 30, 1993,
respectively, in other liabilities.
In 1990, the Company authorized a second Performance Share Plan awarding
an unspecified number of "Performance Shares," equivalent to phantom
shares, to key employees. The employees will become vested in the shares
in December 2000, at which time the minimum future value of the vested
shares will be $2,090,000. The Company accrues for the liability annually
and is required to make defined contributions to a trust at the end of
each plan year. The trust was established to fund future distributions.
In 1994 and 1993, the Company made contributions to the fund of $123,000
and $82,000, respectively. The Company has expensed $277,225 and $271,177
under this plan in 1994 and 1993, respectively, and has included $928,402
and $651,177, respectively, in other liabilities as of May 29, 1994 and
May 30, 1993.
17
<PAGE> 18
GOLDEN PACIFIC CORP.
AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
AS OF MAY 28, 1995
AND FOR THE YEAR THEN ENDED
18
<PAGE> 19
GOLDEN PACIFIC CORP. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED BALANCE SHEET - MAY 28, 1995
ASSETS
<TABLE>
<CAPTION>
1995
-------------
<S> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 2,847,386
Accounts and notes receivable (less allowance
for doubtful accounts of $161,075) 5,397,979
Officers, employee and affiliate receivables (note 2) 1,163,095
Other receivables 706,799
Parts and supplies, at the lower of cost
(first-in, first-out) or replacement market 269,202
Prepaid expenses and other current assets 368,233
Deferred income taxes (note 3) 940,753
-------------
Total current assets 11,693,447
-------------
PROPERTY, PLANT AND EQUIPMENT, at cost:
Land 836,607
Buildings 521,857
Machinery and tools 33,827,102
Automotive equipment 1,568,564
Furniture and fixtures 666,087
Leasehold improvements 890,458
Construction in process 155,155
Capitalized leasehold interest 405,447
-------------
38,871,277
Less--Accumulated depreciation
and amortization (29,528,849)
-------------
Net property, plant and equipment 9,342,428
-------------
RECEIVABLES FROM OFFICERS AND AFFILIATE (note 2) 635,708
OTHER ASSETS 1,302,797
-------------
$ 22,974,380
=============
</TABLE>
The accompanying notes are an integral part of this
consolidated balance sheet.
19
<PAGE> 20
GOLDEN PACIFIC CORP. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED BALANCE SHEET - MAY 28, 1995
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
1995
------------
<S> <C>
CURRENT LIABILITIES:
Accounts payable $ 1,610,940
Salaries and wages payable 2,182,799
Accrued workers' compensation, group insurance
and other insurance 1,043,852
Accrued expenses 736,375
Note payable to related party (note 2) 775,000
Current portion of long-term debt (note 4) 459,581
Current portion of capital lease (notes 2 and 6) 35,260
------------
Total current liabilities 6,843,807
------------
LONG-TERM DEBT, excluding current
portion (note 4) 765,967
CAPITAL LEASE OBLIGATION, excluding current
portion (notes 2 and 6) 177,494
DEFERRED INCOME TAXES (note 3) 2,490,042
OTHER LIABILITIES (note 7) 3,107,169
COMMITMENTS AND CONTINGENCIES (note 6)
STOCKHOLDERS' EQUITY (note 2):
Class A preferred stock 331,000
Class B preferred stock 10,233
Common stock 40,411
Retained earnings 9,208,257
------------
Total stockholders' equity 9,589,901
------------
$ 22,974,380
============
</TABLE>
The accompanying notes are an integral part of this
consolidated balance sheet.
20
<PAGE> 21
GOLDEN PACIFIC CORP. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENT OF EARNINGS
FOR THE YEAR ENDED MAY 28, 1995
<TABLE>
<CAPTION>
1995
------------
<S> <C>
SERVICE REVENUES $ 49,797,944
COSTS AND EXPENSES:
Production service costs 43,857,611
Depreciation and amortization 1,911,459
Selling, general and administrative expenses 2,938,474
------------
Total costs and expenses 48,707,544
------------
Operating income 1,090,400
INTEREST EXPENSE (502,727)
INTEREST INCOME 189,479
OTHER INCOME (EXPENSE), net 50,914
------------
Income before income taxes 828,066
INCOME TAX EXPENSE (note 3) 317,146
------------
NET INCOME $ 510,920
============
</TABLE>
The accompanying notes are an integral part of this
consolidated financial statement.
21
<PAGE> 22
GOLDEN PACIFIC CORP. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE YEAR ENDED MAY 28, 1995
<TABLE>
<CAPTION>
Class A Class B Total
preferred preferred Common Retained stockholders'
stock (a) stock (b) stock (c) earnings equity
----------- ----------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C>
BALANCE, May 29, 1994 $ 331,000 $ 10,233 $ 40,411 $ 8,724,635 $ 9,106,279
Net income -- -- -- 510,920 510,920
Dividends declared
and paid:
Class A preferred,
$80 per share -- -- -- (26,480) (26,480)
Class B preferred,
$.008 per share -- -- -- (818) (818)
----------- ----------- ----------- ----------- -----------
BALANCE, May 28, 1995 $ 331,000 $ 10,233 $ 40,411 $ 9,208,257 $ 9,589,901
=========== =========== =========== =========== ===========
</TABLE>
(a) 8 percent cumulative Class A preferred stock of $1,000 par value,
redeemable at $1,050 plus accrued dividends, liquidation at par.
Authorized 500 shares; issued 331 shares.
(b) 8 percent cumulative Class B preferred stock of $.10 par value.
Dividend payments are subordinate to payments on Class A preferred
stock, liquidation at par. Authorized 125,000 shares; issued 102,333
shares.
(c) Common stock of $1 par value per share. Authorized 250,000 shares;
issued and outstanding 40,411 shares.
The accompanying notes are an integral part of this
consolidated financial statement.
22
<PAGE> 23
GOLDEN PACIFIC CORP. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED MAY 28, 1995
<TABLE>
<CAPTION>
1995
------------
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 510,920
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 1,911,459
Gain on disposition of property, plant and
equipment (7,016)
(Increase) decrease in operating assets:
Accounts and notes receivable, net 557,344
Officers, employee and affiliate receivables (366,333)
Other receivables (677,464)
Parts and supplies 2,796
Prepaid expenses and other current assets 237,195
Other assets (218,287)
Increase in operating liabilities:
Accounts payable 346,533
Salaries and wages payable 8,190
Accrued expenses 325,995
Other liabilities 581,315
Deferred income taxes 778,289
------------
Total adjustments 3,480,016
------------
Net cash provided by operating activities 3,990,936
------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions of property, plant and equipment (1,032,465)
Proceeds from sale of property, plant and
equipment 40,660
------------
Net cash used in investing activities (991,805)
------------
</TABLE>
(Continued on next page)
23
<PAGE> 24
GOLDEN PACIFIC CORP. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS (CONTINUED)
FOR THE YEAR ENDED MAY 28, 1995
<TABLE>
<CAPTION>
1995
------------
<S> <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of long-term debt (496,122)
Principal payments under capital lease obligations (32,256)
Dividends paid (27,298)
------------
Net cash used in financing activities (555,676)
------------
Net increase in cash and cash
equivalents 2,443,455
CASH AND CASH EQUIVALENTS, beginning of year 403,931
------------
CASH AND CASH EQUIVALENTS, end of year $ 2,847,386
============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION-- Cash paid during
the year for:
Interest $ 502,727
Income taxes $ 4,000
</TABLE>
The accompanying notes are an integral part of this
consolidated financial statement.
24
<PAGE> 25
GOLDEN PACIFIC CORP. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
MAY 28, 1995
1. Summary of Significant Accounting Policies
Principles of Consolidation
The consolidated financial statements include the accounts of Golden
Pacific Corp. (the Company) and its wholly owned subsidiaries. The
Company engages in oil well servicing activities. All significant
intercompany accounts and transactions have been eliminated.
Fiscal Year
The Company's fiscal year, which ends on the last Sunday of May, ended
May 28, 1995.
Revenue Recognition
Revenue is generally recognized on the basis of hourly rates as work is
performed.
Property, Plant and Equipment
The Company depreciates and amortizes substantially all property, plant
and equipment by use of the straight-line method over the following
estimated useful lives:
<TABLE>
<S> <C>
Building 20 to 25 years
Machinery, equipment and fixtures 4 to 18 years
Leasehold improvements Life of lease
Capitalized leasehold interest 10 to 25 years
</TABLE>
Repairs that extend the life of assets are capitalized and depreciated
over their useful life; other repairs and maintenance charges are
expensed as incurred.
Income Taxes
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and their
respective tax bases. Deferred tax assets and liabilities are measured
using enacted tax rates expected to apply to taxable income in the
years in which those temporary differences are expected to be recovered
or settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period that includes
the enactment date.
25
<PAGE> 26
Cash Equivalents
The Company considers all highly liquid debt instruments
purchased with a maturity of three months or less to be cash
equivalents. There were no significant realized or unrealized
gains or losses from cash equivalent investments during the
year ended May 28, 1995. The cost of these investments
approximate market value.
2. Related Party Transactions
The Company leases land, building and a rig from a sole proprietor and
a partnership owned by Robert D. Hillman (the Company's majority
stockholder), various family members and the Company.
The Company pays $5,625 per month for land and buildings under a
25-year capital lease arrangement to a partnership owned by members of
the Hillman family, the Company and one other. In May 1992, the Company
loaned the partnership $260,000 under repayment terms of $4,122 per
month for 91 months, including interest of 10.25 percent. As of May 28,
1995, the short-term portion amounted to $32,488 and the long-term
portion amounted to $147,848.
The Company leases a rig for $2,300 per month on a month-to-month basis
from a sole proprietorship owned by Robert D. Hillman.
The Company has short-term and long-term receivables from Robert D.
Hillman and officers and employees of the Company. As of May 28, 1995,
the short-term receivables amounted to $1,130,607 and the long-term
receivables amounted to $487,860.
The Company has an unsecured, subordinated note payable to Barbara B.
Hillman (a shareholder of the Company) of $775,000 at May 28, 1995. The
note bears interest at the prime rate (9 percent at May 28, 1995) plus
1%, but is not to be less than 8 percent or greater than 10 percent and
is due July 1, 1995.
In connection with the stock purchase agreement entered into subsequent
to year-end (see note 8), certain related party receivables and all of
the Company's debt was paid off in June 1995.
3. Taxes on Income
The Company and subsidiaries file a consolidated Federal income tax
return. The provision (benefit) for income taxes consists of the
following components:
<TABLE>
<CAPTION>
Current Deferred Total
--------- --------- --------
<S> <C> <C> <C>
Federal $(465,143) $411,140 $(54,003)
State 4,000 367,149 371,149
--------- --------- --------
$(461,143) $ 778,289 $317,146
========= ========= ========
</TABLE>
26
<PAGE> 27
A reconciliation of total income tax expense for 1995 and the amount computed by
applying the U.S. Federal income tax rate of 34 percent for 1995 to income
before income taxes follows:
<TABLE>
<CAPTION>
1995
---------
<S> <C>
Computed "expected" tax expense $ 281,542
Increase (reduction) in income taxes
resulting from:
State taxes 83,273
State net operating loss limitation 55,723
Adjustment of prior year provision
to actual (129,758)
Officers' life insurance 17,070
Fuel tax credit (16,558)
Other 25,854
---------
$ 317,146
=========
</TABLE>
The tax effects of temporary differences that give rise to significant portions
of the deferred tax assets and deferred tax liabilities at May 28, 1995 are
presented below:
<TABLE>
<CAPTION>
1995
------------
<S> <C>
Deferred tax assets:
Accounts receivable, principally due
to allowance for doubtful accounts $ 64,656
Group insurance 88,308
Workers' compensation insurance 382,247
Accrued vacation 217,276
Environmental reserve 159,037
Other 29,229
------------
Deferred tax assets 940,753
------------
Deferred tax liabilities:
Plant and equipment, principally due
to differences in depreciation (2,323,994)
Other (166,048)
------------
Deferred tax liabilities (2,490,042)
------------
Net deferred tax liability $ (1,549,289)
============
</TABLE>
The Company has state net operating loss carryforwards of $1,198,342 of which
$599,171 is available to reduce future state income taxes, if any, through the
year 2000.
The Company has state alternative minimum tax credit carryforwards of $7,072
which are available to reduce future state income taxes, if any, which have no
expiration date.
27
<PAGE> 28
4. Debt
A summary of long-term debt follows:
<TABLE>
<CAPTION>
1995
-----------
<S> <C>
Note payable to a bank, payable in
monthly installments of $38,298
plus interest at prime* plus
.75 percent, due January 1, 1998,
secured by equipment $ 1,225,548
Less current portion 459,581
-----------
$ 765,967
===========
</TABLE>
*Prime rate at May 28, 1995 was 9 percent.
Long-term debt maturities are as follows:
<TABLE>
<S> <C>
1996 $ 459,581
1997 459,581
1998 306,386
-----------
$ 1,225,548
===========
</TABLE>
In connection with the stock purchase agreement entered into subsequent to
year-end (see note 8), all of the Company's debt was paid off in June 1995.
Short-Term Financing
At May 28, 1995, a subsidiary of the Company has credit facilities aggregating
$3,500,000 with a bank, which can be used as short-term lines of credit up to
$1,000,000 with interest at prime plus 1/2 percent or as letters of credit for a
1-1/4 percent fee per year up to the maximum amount of the unused credit
facilities. At May 28, 1995, outstanding letters of credit were $2,616,460, and
there were no outstanding borrowings under these facilities.
The credit agreement contains certain restrictive covenants, including
restrictions on common stock dividends, which have been met as of year-end.
28
<PAGE> 29
5. Significant Revenue Source
The majority of the Company's business is conducted with major oil companies
under contracts of various lengths up to three years. During the year ended May
28, 1995, revenues generated from three significant customers as a percentage of
total revenues were as follows:
Customer A 23%
Customer B 23%
Customer C 21%
The revenues generated from the three customers comprise several separate
contracts in different geographic areas within California.
6. Commitments and Contingencies
The Company and its subsidiaries use certain vehicles, equipment and property
under operating lease and capital lease arrangements (see note 2). Rental
expense under operating leases was $408,995 for the year ended May 28, 1995.
Future minimum payments under all leases, together with the present value of the
net minimum lease payments, as of May 28, 1995 were as follows:
<TABLE>
<CAPTION>
Capital Operating
Lease Lease
------- ---------
<S> <C> <C>
1996 $ 67,500 $ 329,903
1997 67,500 304,284
1998 67,500 233,107
1999 67,500 106,059
Thereafter 33,750 63,276
-------- ----------
Net minimum lease payments $303,750 $1,036,629
==========
Less amount representing interest (90,996)
--------
Present value of net lease payments $212,754
========
</TABLE>
The interest rate used to calculate the amount representing interest for capital
leases was approximately 16.4 percent.
As part of the agreement for credit facilities with a bank discussed in note 4,
the Company is a guarantor of these credit facilities in the amount of
$7,000,000.
The Company is currently involved in various litigation arising in the normal
course of business. In the opinion of management, the ultimate outcome of such
litigation will not have a material effect on the financial position or results
of operations of the Company.
29
<PAGE> 30
7. Employee Benefit Plans
The Company has a 401(k) plan whereby employees may contribute up to a
maximum of 15 percent of their annual compensation to the plan. The Company
will match the 15 percent of employee contributions up to 6 percent of the
employee compensation, with such matched funds vesting immediately. Total
expense for the year ended May 28, 1995 was $80,332.
In 1988, the Company authorized a Performance Share Plan awarding 4,041
"Performance Shares," equivalent to phantom shares, to key employees. As of
June 1, 1993, the Plan was amended to set up a new four-year vesting
period. The Company has expensed $77,127 under this amended plan in 1995
and has included $928,324 in other liabilities as of May 28, 1995.
In 1989, the Company initiated an Executive Retirement Plan and the
Managerial Retirement Plan for senior management executives and managerial
employees of the Company. The plans allow participants to defer to
retirement a portion of their annual compensation up to $520 and $260,
respectively. In addition, the plans provide for basic contributions by the
Company in the amount of $2,500 and $1,500, annually for the first five
years, for the respective plans, and additional optional incentive
contributions as determined by the Company's compensation committee.
Participants will become fully vested in the Company contributions upon the
earlier of completion of five full years of service after the initial date
of participation in the plan or the participant's termination of employment
due to death, disability or retirement. No expense was incurred by the
Company under the Executive or Managerial Retirement Plans for the year
ended 1995. The Company has included approximately $138,000 for the
Executive Retirement Plan and approximately $83,000 for the Managerial
Retirement Plan as of May 28, 1995 in other liabilities.
In 1990, the Company authorized a second Performance Share Plan awarding an
unspecified number of "Performance Shares," equivalent to phantom shares,
to key employees. The employees will become vested in the shares in
December 2000, at which time the minimum future value of the vested shares
will be $2,090,000. The Company accrues for the liability annually and is
required to make defined contributions to a trust at the end of each plan
year. The trust was established to fund future distributions. In 1995, the
Company made contributions to the fund of $163,636. The Company has
expensed $314,802 under this plan in 1995 and has included $1,243,204 in
other liabilities as of May 28, 1995.
30
<PAGE> 31
8. Stock Purchase Agreement
On June 13, 1995, Robert D. Hillman, Barbara A. Hillman, Richard H. Hillman
and Robert D. Hillman, Jr. (the Sellers) and the Company entered into a
stock purchase agreement (the Agreement) with Pool Company (Pool) and Pool
Energy Services Company (PESCO) (an indirect parent corporation of Pool).
Pursuant to the Agreement, Pool purchased all of the stock of the Company
for $18,000,000 which consisted of $2,300,000 in cash, 493,543 shares of
PESCO common stock equivalent to $4,200,000 and $11,500,000 in promissory
notes of Pool. The purchase price paid at closing is subject to certain
adjustments, principally including adjustments based on the Company's
earnings subsequent to May 29, 1994.
In connection with the Agreement, certain related party receivables,
long-term debt and deferred compensation were forgiven, paid by the
Company, or promissory notes issued subsequent to May 28, 1995.
31
<PAGE> 32
ITEM 7(B) PRO FORMA FINANCIAL INFORMATION
POOL ENERGY SERVICES CO.
PRO FORMA FINANCIAL INFORMATION (UNAUDITED)
On June 13, 1995, Pool Energy Services Co. (the "Company") purchased all
the outstanding capital stock of Golden Pacific Corp. ("GPC"), a privately-owned
corporation, for approximately $18 million, consisting of long-term notes in the
amount of $11.5 million, 493,543 shares of the Company's common stock valued at
$4.2 million and $2.3 million in cash. The acquisition was accounted for under
the purchase method, and accordingly the results of GPC have been included in
the Company's consolidated results of operations from the date of acquisition.
The purchase price paid at closing is subject to certain adjustments,
principally adjustments based on GPC's earnings subsequent to May 28, 1994. The
purchase price is expected to be finalized during 1995.
The accompanying unaudited pro forma condensed statements of consolidated
operations were prepared as if the acquisition of GPC had occurred at the
beginning of the respective periods indicated. The unaudited pro forma condensed
statements of consolidated operations are based upon (i) the historical
statements of consolidated operations of the Company for the six months ended
June 30, 1995 and for the year ended December 31, 1994 and (ii) the unaudited
historical consolidated earnings of GPC for the interim period that commenced
January 9, 1995 and ended June 13, 1995 and the twelve-month period ended
January 8, 1995. The unaudited historical consolidated earnings of GPC for the
interim period ended June 13, 1995 include results for the last 140 days of
GPC's 1995 fiscal year ended May 28, 1995 and the first sixteen days of GPC's
1996 fiscal year (through the date of acquisition). The unaudited historical
consolidated earnings of GPC for the twelve-month period ended January 8, 1995
include results for the last 140 days of GPC's 1994 fiscal year ended May 29,
1994 and the first 224 days of GPC's 1995 fiscal year ended May 28, 1995. The
unaudited condensed statements of consolidated operations should be read in
conjunction with the Company's historical statements of consolidated operations
for the six months ended June 30, 1995 and for the year ended December 31, 1994
and the related notes thereto as well as GPC's consolidated financial statements
for the fiscal years ended May 28, 1995 and May 29, 1994 and the related notes
thereto which are contained elsewhere herein.
The pro forma adjustments are based upon available information and upon
certain assumptions and estimates, described in the notes to these unaudited pro
forma condensed consolidated statements of operations, which the management of
the Company believes are reasonable in the circumstances. The unaudited pro
forma condensed consolidated statements of operations are not necessarily
indicative either of the results of operations that would have occurred had the
transaction been effected at the beginning of the respective periods indicated
or of future results of operations.
32
<PAGE> 33
POOL ENERGY SERVICES CO.
PRO FORMA CONDENSED STATEMENT OF CONSOLIDATED OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1995
(IN THOUSANDS EXCEPT NUMBER OF SHARES AND PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
HISTORICAL
------------------------------------------
POOL ENERGY GOLDEN PRO FORMA PRO FORMA
SERVICES CO. PACIFIC CORP. COMBINED ADJUSTMENTS (1) CONSOLIDATED
----------- ------------- ----------- ---------------- ------------
<S> <C> <C> <C> <C> <C>
Revenues ....................... $ 126,659 $ 21,020 $ 147,679 $ 147,679
Earnings Attributable to
Unconsolidated Affiliates ... 1,418 -- 1,418 1,418
----------- ----------- ----------- -----------
Total ................... 128,077 21,020 149,097 149,097
----------- ----------- ----------- -----------
Costs and Expenses:
Operating expenses .......... 100,626 19,119 119,745 $ (1,802)(a) 117,943
Selling, general and
administrative expenses .. 18,877 4,137 23,014 (3,755)(a) 19,259
Depreciation and amortization 6,824 834 7,658 250 (b) 7,908
GPC acquisition related costs 600 -- 600 (600)(c) --
----------- ----------- ----------- ----------- -----------
Total ................... 126,927 24,090 151,017 (5,907) 145,110
----------- ----------- ----------- ----------- -----------
Other Income (Expense) - Net ... 634 126 760 (126)(d) 634
Interest Expense ............... 418 242 660 348 (e) 1,008
----------- ----------- ----------- ----------- -----------
Income (Loss) Before
Income Taxes ................ 1,366 (3,186) (1,820) 5,433 3,613
Income Tax Provision (Credit) .. 596 (1,672) (1,076) 2,593 (f) 1,517
----------- ----------- ----------- ----------- -----------
Net Income (Loss) .............. $ 770 $ (1,514) $ (744) $ 2,840 $ 2,096
=========== =========== =========== =========== ===========
Earnings Per Share of
Common Stock ................ $ .06 $ .15
=========== ===========
Average Common Shares
Outstanding ................. 13,612,787 444,461 (g) 14,057,248
=========== =========== ===========
</TABLE>
See Notes to Pro Forma Condensed Statements of Consolidated Operations.
33
<PAGE> 34
POOL ENERGY SERVICES CO.
PRO FORMA CONDENSED STATEMENT OF CONSOLIDATED OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1994
(IN THOUSANDS EXCEPT NUMBER OF SHARES AND PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
HISTORICAL
--------------------------------------------
POOL ENERGY GOLDEN PRO FORMA PRO FORMA
SERVICES CO. PACIFIC CORP. COMBINED ADJUSTMENTS (1) CONSOLIDATED
----------- ------------- ----------- ---------------- ------------
<S> <C> <C> <C> <C> <C>
Revenues ....................... $ 229,175 $ 49,656 $ 278,831 $ 278,831
Earnings Attributable to
Unconsolidated Affiliates ... 5,016 -- 5,016 5,016
------------ ------------ ------------ ------------
Total ................... 234,191 49,656 283,847 283,847
------------ ------------ ------------ ------------
Costs and Expenses:
Operating expenses .......... 182,071 43,857 225,928 $ (3,269)(a) 222,659
Selling, general and
administrative expenses .. 36,868 2,934 39,802 (1,815)(a) 37,987
Depreciation and amortization 13,760 1,934 15,694 460 (h) 16,154
Provision for leasehold
impairment ............... 23,551 -- 23,551 -- 23,551
------------ ------------ ------------ ------------ ------------
Total ................... 256,250 48,725 304,975 (4,624) 300,351
------------ ------------ ------------ ------------ ------------
Other Income (Expense) - Net ... 1,202 143 1,345 (143)(d) 1,202
Interest Expense ............... 253 504 757 789 (e) 1,546
------------ ------------ ------------ ------------ ------------
Income (Loss) Before
Income Taxes ................ (21,110) 570 (20,540) 3,692 (16,848)
Income Tax Provision (Credit) .. (8,381) 301 (8,080) 1,446 (f) (6,634)
------------ ------------ ------------ ------------ ------------
Net Income (Loss) .............. $ (12,729) $ 269 $ (12,460) $ 2,246 $ (10,214)
============ ============ ============ ============ ============
Earnings (Loss) Per Share of
Common Stock ................ $ (.94) $ (.73)
============ ============
Average Common Shares
Outstanding ................. 13,559,108 493,543 (g) 14,052,651
============ ============ ============
</TABLE>
See Notes to Pro Forma Condensed Statements of Consolidated Operations.
34
<PAGE> 35
POOL ENERGY SERVICES CO.
NOTES TO PRO FORMA CONDENSED STATEMENTS OF CONSOLIDATED OPERATIONS
(UNAUDITED)
Note 1 - The unaudited pro forma condensed statements of consolidated
operations are based on the financial statements of the Company and
GPC after giving effect to the following pro forma adjustments:
(a) Reflects estimated cost savings in (i) incentive and bonus
expense for the GPC plans terminated upon acquisition, (ii)
salaries, benefits and vehicle expenses from an expected
reduction in workforce, (iii) insurance and benefit expense
resulting from including acquired entities in the Company's
insurance policies and benefit plans and (iv) elimination of
expenses related to certain transactions with affiliates of
GPC that would not occur after the acquisition.
(b) Reflects additional depreciation expense ($78,000),
amortization of goodwill ($159,000) and amortization of a
covenant not to compete ($13,000).
(c) Reflects elimination of non-recurring costs related to the
acquisition.
(d) Reflects elimination of GPC's other income (expense) - net
related to affiliate transactions and short-term investments.
(e) Reflects estimated increase in interest expense resulting from
issuance of long-term notes in connection with the
acquisition.
(f) Reflects estimated income taxes for GPC and the pro forma
adjustments, using a combined federal and state income tax
rate of 41%.
(g) Reflects issuance of 493,543 shares of the Company's common
stock on June 13, 1995 in connection with the acquisition.
(h) Reflects additional depreciation expense ($80,000),
amortization of goodwill ($350,000) and amortization of a
covenant not to compete ($30,000).
35
<PAGE> 36
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.
POOL ENERGY SERVICES CO.
(Registrant)
August 25, 1995 /S/ E. J. SPILLARD
--------------------- ---------------------------------
(Date) E. J. Spillard
Senior Vice President, Finance
(principal financial officer)
36
<PAGE> 37
POOL ENERGY SERVICES CO.
INDEX TO EXHIBITS
Exhibit No. Document
----------- --------
23 - Consent of KPMG Peat Marwick LLP
37
<PAGE> 1
[LETTERHEAD] EXHIBIT NO. 23
The Board of Directors
Golden Pacific Corporation:
We consent to the inclusion of our report dated July 22, 1994, with respect to
the consolidated balance sheets of Golden Pacific Corporation and Subsidiaries
as of May 29, 1994 and May 30, 1993 and the related consolidated statements of
earnings, stockholders' equity, and cash flows for each of the years then ended,
which report appears in the Form 8-K/A of Pool Energy Services Co. dated June
13, 1995.
KPMG PEAT MARWICK LLP
Los Angeles, California
August 17, 1995
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