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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K/A
Amendment No. 1
This Form 10-K/A is being filed to revise Item 10, Item 11, Item 12 and Item 13
to Form 10-K for the fiscal year ended August 31, 1996.
(MARK ONE)
[x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended August 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from. . . . . . to. . . . . .
Commission file number 0-18656
PONDER INDUSTRIES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 75-2268672
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
5005 RIVERWAY DRIVE, SUITE 550
HOUSTON, TEXAS 77056
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (713) 965-0653
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SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
TITLE OF EACH CLASS: NAME OF EXCHANGE ON WHICH REGISTERED:
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COMMON STOCK, NATIONAL ASSOCIATION OF SECURITIES
$.01 PAR VALUE DEALERS AUTOMATED QUOTATION SYSTEM
BOSTON STOCK EXCHANGE
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: None
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 BY CHECK MARK IF DISCLOSURE OF DELINQUENT FILERS PURSUANT TO
ITEM 405 OF REGULATION S-K IS NOT CONTAINED HEREIN, AND WILL NOT BE CONTAINED,
TO THE BEST OF REGISTRANT'S KNOWLEDGE, IN DEFINITIVE PROXY OR INFORMATION
STATEMENTS INCORPORATED BY REFERENCE IN PART III OF THIS FORM 10-K OR ANY
AMENDMENT TO THIS FORM 10-K.
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THE NUMBER OF SHARES OUTSTANDING OF THE REGISTRANT'S COMMON STOCK AS
OF DECEMBER 4, 1996 IS 12,135,997 INCLUSIVE OF 289,873 SHARES HELD AS TREASURY
STOCK.
THE AGGREGATE MARKET VALUE OF THE STOCK HELD BY NON-AFFILIATES OF THE
REGISTRANT AS OF DECEMBER 4, 1996 WAS APPROXIMATELY $18,242,000.
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PART III.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The following table sets forth certain information with respect to the
directors, executive officers and certain significant employees of the Company:
<TABLE>
<CAPTION>
OFFICER
-------
NAME AGE POSITION SINCE
---- --- -------- -----
<S> <C> <C> <C>
Larry D. Armstrong 56 President, Chief Executive Officer and 1995
Chairman of the Board
Eugene L. Butler 55 Executive Vice President, Chief Financial 1996
Officer and Director
Frank J. Wall 41 Executive Vice President of Operations and 1990
Director
O.A. "Buddy" Jackson 58 Executive Vice President of Marketing 1996
John M. Le Seelleur 46 Director 1996
Bill M. Van Meter 63 Director 1996
Rittie W. Milliman, Sr. 43 Director 1994
Joe R. Nemec 53 Director 1986
John Roane 67 Director 1985
</TABLE>
There are no family relationships among any director or executive officer
listed, and there are no arrangements or understandings pursuant to which any
of them were elected as officers. In connection with the Company's acquisition
of Panther Oil Tools, Ltd., Mr. Le Seelleur was elected to serve as a Director
of the Company. Except for Mr. Le Seelleur, there are no arrangements or
understandings pursuant to which any of these persons were elected as officers
or directors. Officers are elected annually by the Board at its first meeting
following the annual meeting of stockholders, each to hold office until the
corresponding meeting of the Board in the next year or until his successor
shall have been elected or shall have been qualified.
- -------------------------
LARRY D. ARMSTRONG was employed as President and Chief Operating Officer and
Director effective June 1, 1995 and was made Chief Executive Officer in April
1996. Mr. Armstrong has been involved in the oilfield rental and fishing tool
business since 1963, in which year he founded his own company which was later
acquired by PETCO in 1978, a NASDAQ-listed company. He served PETCO in several
executive positions and as chief operating officer until 1983. After leaving
PETCO, he acted as chief executive officer of several companies until assuming
his present position.
EUGENE L. BUTLER joined the Company in February 1996 and became Executive Vice
President, Chief Financial Officer and Director in April 1996. Since 1991, Mr.
Butler has also served as chairman of the board and chief executive officer of
Intercoastal Terminal, Inc., a company engaged in operating a petrochemical
storage and terminal facility. From 1974 through 1991, Mr. Butler served in
various executive capacities for Weatherford/Enterra, Inc., a multinational
energy corporation, including director, president, chief executive officer and
chief operating officer. Mr. Butler received his degree in accounting from
Texas A&M University in 1963.
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O.A. "BUDDY" JACKSON joined the Company in August 1995 as East Texas Regional
Vice President of Ponder's Fishing Tool Division and was made Executive Vice
President of Marketing in June 1996. Prior to joining the Company, Mr. Jackson
served as a salesman for Armstrong PETCO and in various other capacities in the
oil and gas drilling and production business.
RITTIE W. MILLIMAN, SR. was elected a Director in August 1994. Since 1993, Mr.
Milliman has served as Vice President in charge of wireline services for Ponder
International Services, Inc., a subsidiary of the Company. From 1984 to 1993
he was an independent consultant and equipment supplier for wireline logging
and perforating of wells.
JOE R. NEMEC has been a Director of the Company since 1986. From 1987 through
1995 Mr. Nemec served as Secretary of the Company. Mr. Nemec is a Certified
Public Accountant and has owned his own accounting practice in Alice, Texas
since July 1972.
JOHN ROANE has been a Director of the Company since March 1985. He became a
fishing tool supervisor for the Company in 1981 and was one of the original
stockholders. Prior to joining the Company in 1981, Mr. Roane was a fishing
tool supervisor for Wilson Downhole. His experience includes all aspects of
the drilling and production of oil and gas as a consultant and drilling
superintendent.
FRANK J. WALL has served as a Director of the Company since August 1990 and an
officer since 1982. Mr. Wall has 18 years of experience in the fishing tool
industry and has been with the Company since 1981. Since joining the Company,
Mr. Wall has served in various executive capacities including President, Chief
Operating Officer and Senior Vice President.
JOHN M. LE SEELLEUR has been a Director of the Company since October 1996 and
is the owner of Petresearch International, Inc., an oil exploration joint
venture and farm-out advisory firm headquartered in Aberdeen, Scotland. Mr. Le
Seelleur is the former chairman of Panther Oil Tools, Ltd., a wholly-owned
subsidiary of the Company. Mr. Le Seelleur has over 20 years of experience in
oilfield operations and management throughout the North Sea and Middle East.
Mr. Le Seelleur holds a diploma in business studies from Kingston College,
London.
BILL M. VAN METER has been a Director of the Company since October 1996. Mr.
Van Meter recently retired from Energy Companies of ONEOK, Inc., a gas
exploration, production and marketing company based in Tulsa, Oklahoma, where
he had been president since 1986. He is also a former executive vice president
of Natomas Energy Company. Mr. Van Meter earned a degree in petroleum
engineering from the University of Oklahoma.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's directors, executive officers and
holders of more than 10% of the Common Stock to file with the Commission
initial reports of ownership and reports of changes in ownership of Common
Stock and other equity securities of the Company. The Company believes that
through the end of its fiscal year ended August 31, 1996, its officers,
directors and holders of more than 10% of the Common Stock complied with the
Section 16(a) filing requirements with the following exceptions: Larry D.
Armstrong and Mack Ponder each filed one Form 4 late.
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ITEM 11. EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth information with respect to the cash
compensation awarded to, earned by, or paid to the Company's Chief Executive
Officer and the remaining most highly compensated executive officers of the
Company whose total annual salary and bonus for the fiscal year ended August
31, 1994, August 31, 1995 and August 31, 1996, was at least $100,000.
<TABLE>
<CAPTION>
Long-Term Compensation
-----------------------------
Awards
-----------------------------
Annual Compensation Other
------------------- Annual Stock All Other
Name and Principal Position Year Salary Bonus Compensation(1) Options(#) Compensation($)
- --------------------------- ---- ------ ----- --------------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Mack Ponder(2) 1994 $120,000 -- $46,432 -- $1,531(3)
Chairman of the Board and 1995 $120,000 -- $46,432 -- $1,238(3)
Chief Executive Officer 1996 $120,000 -- $55,553 -- $401,422(4)
Larry D. Armstrong(5) 1994 -- -- -- -- --
Chairman of the Board, 1995 $15,185 -- $8,116 -- $186,604(7)
Chief Executive Officer 1996 $111,538 -- $21,032 5,500(6)
and President
- ----------
</TABLE>
(1) Premium on life insurance, vehicle allowance and directors' fees.
(2) Mr. Ponder resigned as Chairman of the Board and Chief Executive Officer of
the Company in April 1996.
(3) Royalty fees paid.
(4) Includes $400,000 representing the fair market value of 500,000 shares of
the Company's restricted Common Stock issued to Mr. Ponder during the fiscal
year ended August 31, 1996. The 500,000 shares were issued to Mr. Ponder in
consideration of the cancellation of warrants issued to Mr. Ponder to
purchase 2,000,000 shares of the Company's Common Stock at $5.25 per share,
the cancellation of options granted to Mr. Ponder to purchase up to
2,000,000 shares of the Company's Common Stock at an exercise price of
$5.25 per share, in consideration of his years of service to the Company
and his continued personal guarantees of certain Company indebtedness.
The issuance of the 500,000 shares of the Company's restricted Common Stock
was authorized in April 1996. Also includes $1,422 of royalty fees paid.
(5) Mr. Armstrong became President and Chief Operating Officer in June 1995 and
was made Chairman of the Board, President and Chief Executive Officer in
April 1996. Effective September 1, 1995, the Company entered into an
employment agreement with Mr. Armstrong which provides for an annual salary
of $100,000 over the next four years.
(6) Issued to Mr. Armstrong in consideration of his services as a director
pursuant to the Company's 1994 Directors' Stock Option Plan.
(7) Before his employment and not as an employee and prior to his election as
President, Chief Operating Officer and Director in June 1995, Mr. Armstrong
personally guaranteed a promissory note of the Company in the amount of
$2,500,000 and a revolving line of credit for $500,000 and performed various
services for the Company in the auction sale of excess tools and equipment.
Mr. Armstrong was paid for such services by the issue of 459,333 shares of
the restricted Common Stock of the Company with a fair market value at the
date of grant of $186,604.
OPTION GRANTS IN LAST FISCAL YEAR
The following table provides information concerning grants of stock options
by the Company to the named executive officers in fiscal 1996. The Company has
not granted any stock appreciation rights.
<TABLE>
<CAPTION>
Individual Grants Potential Realizable
- ------------------------------------------------------------------------------------- Value at Assumed
Percentage of Annual Rates of Stock
Total Options Price Appreciation
Granted to for the Option Term
Options Employees in Exercise Expiration ---------------------
Name Granted (#) Fiscal Year ($/Share) Date 5% 10%
- --------------------- ----------- ------------- ---------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Larry D. Armstrong(1) 5,500 16.7% $3.6875 2/16/06 $12,755 $32,323
</TABLE>
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(1) Mr. Armstrong's options, granted in February 1996, were granted under the
Company's 1994 Directors' Stock Option Plan and are fully exercisable.
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AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
The following table provides information on option exercises in fiscal
1996 by the named executive officers and the value of such officers'
unexercised options at August 31, 1996.
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
SHARES OPTIONS/SARS IN-THE-MONEY
ACQUIRED <SAT FISCAL YEAR-END (#) AT FISCAL YEAR-END(1)
ON EXERCISE VALUE --------------------------- ---------------------------------
NAME (#) REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ------------- -------- ----------- ------------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Larry D. Armstrong -0- -0- 5,500 -0- -0- -0-
</TABLE>
- --------------------------
1. The "value" of any option set forth in the table above is determined by
subtracting the amount which must be paid upon exercise of the options
from the market value of the underlying Common Stock as of August 31, 1996
(based on the closing sales price as reported by the NASDAQ Small-Cap
Market).
COMPENSATION OF DIRECTORS
Directors who are officers or employees of the Company receive $500
compensation per meeting for their services as members of the Board. In
addition, directors are entitled to receive options to acquire 5,500 shares of
the Company's Common Stock on the date of each annual stockholders' meeting
pursuant to the Company's 1994 Directors' Stock Option Plan. The Company also
reimburses its non-employee Directors for expenses incurred in attending each
Board meeting.
Notwithstanding anything to the contrary set forth in any of the
Company's previous filings under the Securities Act of 1933, as amended, or the
Exchange Act that might incorporate future filings, in whole or in part, the
following reports and the Performance Graph shall not be incorporated by
reference into any such filings.
COMPENSATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
During fiscal 1996, the Company had no formal compensation policies
with respect to executive officers. Because there are no formal compensation
policies in place, the compensation of executive officers was determined based
generally on the qualifications and prior experience of the executive officers.
The following paragraphs set forth the basis of the compensation paid in fiscal
1996 to Mack Ponder and Larry D. Armstrong.
In April 1996, the Board elected Larry D. Armstrong as Chairman of the
Board, President and Chief Executive Officer of the Company. At that time, the
Board established Mr. Armstrong's salary at $111,538 per year for the remainder
of fiscal year 1996. The Board set Mr. Armstrong's compensation package based
on the key role he was to hold within the Company and in view of competitive
compensation packages offered to his peer group in the industry.
For fiscal year 1996, the Board set Mr. Ponder's salary at $120,000
per year. The Board set Mr. Ponder's compensation package based on the key
role he was to hold within the Company and in view of competitive compensation
packages offered to his peer group in the industry.
COMPENSATION COMMITTEE
Michael Morgan
Joe R. Nemec
Larry D. Armstrong
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PERFORMANCE GRAPH
The following performance graph compares the performance of the Common
Stock to the NASDAQ Stock Market (US Companies) and to a Peer Group of other
public companies. The information was provided by the Center for Research in
Security Prices of The University of Chicago Graduate School of Business. The
Peer Group Index is comprised of NASDAQ- listed companies having the three
digit standard industry classification codes 7350-7359 (Miscellaneous Equipment
Rental and Leasing). The graph assumes that the value of the investment in the
Common Stock and each Index was 100 at August 30, 1991, and that all dividends
were reinvested.
[GRAPH]
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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information concerning any person who
was the beneficial owner of five percent or more of the Company's outstanding
Common Stock as of December 27, 1996. The table also shows information
concerning beneficial ownership by all directors and nominees, by each of the
executive officers named in the Summary Compensation Table and by all directors
and executive officers as a group. The number of shares beneficially owned by
each director or executive officer is determined under rules of the Securities
and Exchange Commission (the "Commission"), and the information is not
necessarily indicative of beneficial ownership for any other purpose. Under
such rules, beneficial ownership includes any shares as to which the individual
has the sole or shared voting power or investment power and also any shares
which the individual has the right to acquire within 60 days of December 27,
1996 through the exercise of any stock option or other right. Unless otherwise
indicated, each person has the sole investment and voting power (or shares such
powers with his or her spouse) with respect to the shares set forth in the
following table.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENT
BENEFICIAL OWNERSHIP OF CLASS
-------------------- --------
<S> <C> <C>
Mack Ponder (1)(2) . . . . . . . . . . . . . . . . . . . . 1,115,640 9.2%
Mohsen Hekmat(3) . . . . . . . . . . . . . . . . . . . . . 740,000 6.1%
Panther Oil Tools, Ltd(4). . . . . . . . . . . . . . . . . 1,200,000 9.9%
Sydney Vane House
P. O. Box 201
Rue Du Commerce
St. Peter Port
Guernsey, Channel Islands
Larry D. Armstrong(5)(6) . . . . . . . . . . . . . . . . . 468,833 3.9%
Eugene L. Butler(6) . . . . . . . . . . . . . . . . . . . . 6,500 *
O.A. "Buddy" Jackson . . . . . . . . . . . . . . . . . . . -0- -0-
Frank J. Wall(2) . . . . . . . . . . . . . . . . . . . . . 29,858 *
Rittie W. Milliman, Sr.(7) . . . . . . . . . . . . . . . . 17,000 *
Joe R. Nemec(8) . . . . . . . . . . . . . . . . . . . . . . 16,500 *
John Roane(6) . . . . . . . . . . . . . . . . . . . . . . . 33,767 *
John M. Le Seelleur(9) . . . . . . . . . . . . . . . . . . 83,333 *
Bill M. Van Meter . . . . . . . . . . . . . . . . . . . . . -0- -0-
All directors and executive officers as a group (10 655,791 5.4%
persons)(10)
</TABLE>
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*Less than one percent
(1) Mr. Ponder's ownership of shares of the Company's Common Stock is
determined based on the best of the Company's knowledge and the
information contained in a Form 4 filed March 6, 1996. Includes
500,000 shares of Common Stock issued to Mr. Ponder in consideration
of the
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<PAGE> 8
cancellation of options and warrants previously issued to Mr. Ponder
to purchase up to 4,000,000 shares of the Company's Common Stock and
for services rendered on behalf of the Company.
(2) Includes 16,500 shares of Common Stock issuable upon exercise of
options granted pursuant to the Company's 1994 Directors' Stock Option
Plan.
(3) Based on the information provided to the Company in a letter dated
December 9, 1996 from a broker representing Mr. Hekmat.
(4) Mr. Le Seelleur, a director of the Company, is the owner of 70% of the
issued and outstanding shares of capital stock of Panther Oil Tools,
Ltd. and may be deemed to be the beneficial owner of such shares.
(5) Includes 459,333 shares of the Company's restricted Common Stock
issued to Mr. Armstrong in consideration for services rendered to the
Company prior to his employment with the Company.
(6) Includes 5,500 shares of Common Stock issuable upon exercise of
options granted pursuant to the Company's 1994 Directors' Stock Option
Plan.
(7) Includes 11,000 shares of Common Stock issuable upon exercise of
options granted pursuant to the Company's 1994 Directors' Stock Option
Plan.
(8) Shares of Common Stock issuable upon exercise of options granted
pursuant to the Company's 1994 Directors' Stock Option Plan
(9) Does not include 1,200,000 shares of the Company's Common Stock issued
to Panther Oil Tools, Ltd., a Jersey, Channel Islands corporation
("Panther"). Mr. Le Seelleur is the owner of 70% of the outstanding
capital stock of Panther.
(10) Includes 60,500 shares of Common Stock issuable upon exercise of
options granted pursuant to the Company's 1994 Directors' Stock Option
Plan.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During the year ended August 31, 1995, the Board rescinded warrants
issued to the Company's former Chairman of the Board and Chief Executive
Officer, Mack Ponder. On April 4, 1996, 500,000 shares of the Company's
restricted Common Stock were issued to Mr. Ponder in consideration of his years
of service to the Company, continued personal guarantees of Company
indebtedness and his return to the Company of the warrants to purchase
2,000,000 shares of the Company's Common Stock at $5.25 per share and options
to purchase up to 2,000,000 shares of the Company's Common Stock at an exercise
price of $5.25 per share.
Effective April 1, 1996, the Company acquired Panther Oil Tools (UK),
Ltd., an England corporation ("Panther (UK)", and substantially all of the
assets of Villain, Ltd., a Guernsey corporation ("Villain"). Panther Oil
Tools, Ltd., a Jersey, Channel Islands corporation ("Panther"), as the sole
stockholder of Panther (UK), received 1,200,000 shares of the Company's
restricted Common Stock and $250,000 in cash in exchange for all of the issued
and outstanding capital stock of Panther (UK). Panther was also granted
certain "piggy-back" registration rights and an undertaking by the Company to
provide the stockholders of Panther with equivalent registration rights as
those granted to Panther in the event that Panther should be dissolved and such
Common Stock is distributed to the stockholders of Panther. Additionally,
$1,000,000 in cash was paid for the acquisition of substantially all of the
assets of Villain. All of the outstanding shares of capital stock of Villain,
were owned by John M. Le Seelleur, a director and stockholder of the Company.
Mr. Le Seelleur also owns 70% of the outstanding capital stock of Panther. In
addition, Mr. Le Seelleur purchased, pursuant to a Subscription Agreement dated
May 23, 1996, 83,333 shares of the Company's Common Stock for an aggregate
purchase price of $250,000.
In September 1995, the Company acquired Armstrong Tool, Inc. from
Martha Gale Armstrong, the wife of Larry D. Armstrong, the President and Chief
Executive Officer of the Company. The consideration for the assets of
Armstrong Tool, Inc. consisted of the issuance of a promissory note for
$400,000 to Mr. Armstrong and the assumption by the Company of approximately
$450,000 of liabilities.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this amendment to be
signed on its behalf by the undersigned, thereunto duly authorized, in Houston,
Texas, on December 30, 1996.
PONDER INDUSTRIES, INC.
By /s/ Eugene L. Butler
-------------------------------------------------
Eugene L. Butler, Executive Vice President and
Chief Financial Officer
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