<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15 (D)
OF THE
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT: MAY 30, 1996
(DATE OF EARLIEST EVENT REPORTED): APRIL 13, 1995
BJ SERVICES COMPANY
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
Delaware 1-10570 63-0084140
(STATE OR OTHER JURISDICTION (COMMISSION FILE NUMBER) (IRS EMPLOYER
OF INCORPORATION) IDENTIFICATION NO.)
</TABLE>
5500 Northwest Central Drive
Houston, Texas 77092
(ADDRESS OF PRINCIPAL
EXECUTIVE OFFICES, INCLUDING ZIP CODE)
(713) 462-4239
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
<PAGE> 2
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) FINANCIAL STATEMENTS OF BUSINESSES ACQUIRED.
2
<PAGE> 3
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE BOARD OF DIRECTORS AND STOCKHOLDERS OF
THE WESTERN COMPANY OF NORTH AMERICA
In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of operations, of stockholders' equity and of cash
flows present fairly, in all material respects, the financial position of The
Western Company of North America and its subsidiaries at December 31, 1994 and
1993, and the results of their operations and their cash flows for each of the
three years in the period ended December 31, 1994, in conformity with generally
accepted accounting principles. These financial statements are the
responsibility of the Company's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with generally accepted auditing
standards which 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, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.
As discussed in Note 7 to the consolidated financial statements, The Western
Company of North America changed its method of accounting for income taxes by
adopting Statement of Financial Accounting Standards No. 109 in 1993. Also in
1993, The Western Company of North America adopted Statement of Financial
Accounting Standards No. 106, discussed in Note 8, and accordingly changed its
method of accounting for postretirement benefits other than pensions.
PRICE WATERHOUSE LLP
Houston, Texas
February 22, 1995
3
<PAGE> 4
THE WESTERN COMPANY OF NORTH AMERICA
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARES)
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------
1994 1993
---------- --------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash (including cash equivalents of $10,459 in
1994 and $134,467 in 1993) ....................... $ 12,650 $141,279
Marketable securities ............................. -- 18,868
Receivables (less allowances of $4,273 in
1994 and $4,373 in 1993) ......................... 74,080 63,853
Inventories ....................................... 20,065 16,887
Assets held for sale, net - discontinued
operations ....................................... 35,060 --
Other current assets .............................. 5,154 9,464
-------- --------
Total current assets ............................ 147,009 250,351
-------- --------
PROPERTY AND EQUIPMENT, AT COST:
Pressure pumping equipment ........................ 199,720 183,172
Offshore drilling equipment ....................... -- 69,668
Buildings and other ............................... 56,395 45,098
Construction in progress .......................... 6,676 8,775
-------- --------
262,791 306,713
Less - Accumulated depreciation and
amortization ................................... 76,696 77,897
-------- --------
186,095 228,816
-------- --------
OTHER ASSETS ........................................ 20,597 9,218
-------- --------
$353,701 $488,385
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt ................. $ -- $ 97,784
Accounts payable .................................. 29,996 33,112
Accrued liabilities ............................... 38,389 51,184
--------- --------
Total current liabilities ....................... 68,385 182,080
--------- --------
LONG-TERM DEBT ...................................... 90,909 90,910
--------- --------
OTHER LONG-TERM LIABILITIES AND DEFERRED CREDITS .... 15,258 14,948
--------- --------
STOCKHOLDERS' EQUITY:
Common stock -- par value $.10; authorized
50,000,000 shares, issued 18,279,914 and
18,198,285 shares at December 31, 1994
and 1993, respectively ........................... 1,828 1,820
Additional paid-in capital ........................ 193,991 193,451
Cumulative translation adjustment ................. (317) --
Retained earnings (accumulated deficit),
since May 12, 1989 ............................... (16,353) 5,176
--------- --------
179,149 200,447
--------- --------
COMMITMENTS AND CONTINGENCIES (NOTE 6)
$ 353,701 $488,385
========= ========
</TABLE>
The accompanying notes are an integral part of these balance sheets.
4
<PAGE> 5
THE WESTERN COMPANY OF NORTH AMERICA
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
--------------------------------------
1994 1993 1992
---------- ---------- ----------
<S> <C> <C> <C>
REVENUES:
Pressure pumping ............................. $ 307,511 $ 294,073 $ 225,353
Production chemicals ......................... 34,990 -- --
---------- ---------- ----------
342,501 294,073 225,353
---------- ---------- ----------
OPERATING COSTS AND EXPENSES:
Pressure pumping ............................. 270,737 250,471 200,532
Production chemicals ......................... 31,027 -- --
Depreciation and amortization ................ 18,814 14,589 14,887
General and administrative ................... 8,846 9,022 8,076
---------- ---------- ----------
329,424 274,082 223,495
---------- ---------- ----------
Operating income ........................... 13,077 19,991 1,858
---------- ---------- ----------
OTHER INCOME (EXPENSE):
Interest expense, net of interest capitalized (10,032) (13,505) (10,407)
Interest income .............................. 1,236 4,653 1,059
Merger related expenses ...................... (21,118) -- --
Writedown of pressure pumping assets and other -- (7,132) --
---------- ---------- ----------
Total other income (expense) ............... (29,914) (15,984) (9,348)
---------- ---------- ----------
INCOME (LOSS) FROM CONTINUING OPERATIONS
BEFORE PROVISION FOR INCOME TAXES AND
EXTRAORDINARY LOSSES .......................... (16,837) 4,007 (7,490)
Provision for income taxes ................... 495 627 353
---------- ---------- ----------
INCOME (LOSS) FROM CONTINUING OPERATIONS
BEFORE EXTRAORDINARY LOSSES ................... (17,332) 3,380 (7,843)
DISCONTINUED OPERATIONS ........................ (4,197) 35,321 9,510
EXTRAORDINARY LOSSES ........................... -- (25,713) (1,223)
---------- ---------- ----------
NET INCOME (LOSS) .............................. $ (21,529) $ 12,988 $ 444
========== ========== ==========
EARNINGS (LOSS) PER SHARE:
Primary:
Income (loss) from continuing
operations before extraordinary
losses .................................... $ (0.95) $ 0.18 $ (0.44)
Discontinued operations .................... (0.23) 1.90 0.53
Extraordinary losses ....................... -- (1.38) (0.07)
---------- ---------- ----------
Net income (loss) .......................... $ (1.18) $ 0.70 $ 0.02
========== ========== ==========
Fully diluted:
Income (loss) from continuing operations
before extraordinary losses ............... $ * $ * $ *
Discontinued operations .................... * 1.48 *
Extraordinary losses ....................... * * *
---------- ---------- ----------
Net income (loss) .......................... $ * $ * $ *
========== ========== ==========
</TABLE>
* Fully diluted computation is not reflected because per share effect is
antidilutive
The accompanying notes are an integral part of these statements.
5
<PAGE> 6
THE WESTERN COMPANY OF NORTH AMERICA
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
----------------------------------------
1994 1993 1992
---------- ---------- ----------
<S> <C> <C> <C>
CASH FLOWS ASSOCIATED WITH OPERATING ACTIVITIES:
Net income (loss) ................................... $ (21,529) $ 12,988 $ 444
Reconciliation of net income (loss) to net
cash provided by operating activities --
Depreciation and amortization ..................... 22,846 24,294 26,891
(Gains)/losses on sales of offshore
drilling rigs .................................... 4,818 (59,161) --
Writedown of offshore drilling rigs ............... -- 18,328 --
Writedown of pressure pumping assets .............. -- 3,500 --
Extraordinary losses .............................. -- 25,713 1,223
Non-cash provision for income taxes ............... -- 6,630 825
Provision for doubtful accounts receivable ........ (207) (450) --
Other, net ........................................ 1,439 2,146 457
Changes in assets and liabilities --
Accounts receivable .............................. 1,721 10,935 (3,177)
Inventory ........................................ (1,319) (4,689) 1,869
Accounts payable ................................. (5,778) 5,077 (2,066)
Accrued interest payable ......................... (1,049) (448) 572
Accrued merger related expenses .................. 10,386 -- --
Other, net ....................................... 1,523 (246) (2,512)
---------- ---------- ----------
Net cash provided by operating activities ...... 12,851 44,617 24,526
---------- ---------- ----------
CASH FLOWS ASSOCIATED WITH INVESTING ACTIVITIES:
Additions to property and equipment ................. (21,313) (53,312) (38,773)
Acquisitions, net of cash acquired .................. (27,535) (10,400) --
Proceeds from sales of offshore drilling rigs ....... 5,340 169,250 --
Disposition costs for rig sales ..................... -- (4,406) --
Proceeds from sales of marketable securities ........ 18,711 153,458 --
Purchases of marketable securities .................. -- (173,687) --
Other, net .......................................... 964 347 367
---------- ---------- ----------
Net cash provided (used) in investing activities (23,833) 81,250 (38,406)
---------- ---------- ----------
CASH FLOWS ASSOCIATED WITH FINANCING ACTIVITIES:
Debt incurred ....................................... 7,000 7,000 114,801
Debt payments ....................................... (124,946) (7,000) (106,118)
Proceeds from exercise of stock options ............. 486 2,243 --
Other, net .......................................... (187) (10) (307)
---------- ---------- ----------
Net cash provided (used) by financing activities (117,647) 2,233 8,376
---------- ---------- ----------
Net increase (decrease) in cash and
cash equivalents ............................ (128,629) 128,100 (5,504)
CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR ......... 141,279 13,179 18,683
---------- ---------- ----------
CASH AND CASH EQUIVALENTS - END OF YEAR ............... $ 12,650 $ 141,279 $ 13,179
========== ========== ==========
SUPPLEMENTAL CASH FLOW DISCLOSURES:
Interest paid, net of interest capitalized .......... $ 11,007 $ 14,182 $ 10,577
Income taxes paid ................................... 1,804 1,965 1,345
</TABLE>
NONCASH INVESTING AND FINANCING ACTIVITIES (NOTES 1, 3, 4 AND 8)
The accompanying notes are an integral part of these statements.
6
<PAGE> 7
THE WESTERN COMPANY OF NORTH AMERICA
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(IN THOUSANDS)
<TABLE>
<CAPTION>
COMMON STOCK RETAINED
PAR VALUE $.10 ADDITIONAL CUMULATIVE EARNINGS
------------------------- PAID-IN TRANSLATION (ACCUMULATED
SHARES AMOUNT CAPITAL ADJUSTMENT DEFICIT) TOTAL
---------- ---------- ----------- ----------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C>
BALANCE DECEMBER 31, 1991 .............. 17,741 $ 1,774 $ 180,618 -- $ (8,256) $ 174,136
Net income ........................... -- -- -- -- 444 444
Realization of pre-reorganization net
operating losses .................... -- -- 825 -- -- 825
Other, net ........................... 1 -- -- -- -- --
------- -------- --------- ------ --------- ----------
BALANCE DECEMBER 31, 1992 .............. 17,742 1,774 181,443 -- (7,812) 175,405
Net income ........................... -- -- -- -- 12,988 12,988
Realization of pre-reorganization net
operating losses .................... -- -- 6,013 -- -- 6,013
Exercise of stock options ............ 455 46 5,374 -- -- 5,420
Tax benefit of stock options exercised -- -- 617 -- -- 617
Other, net ........................... 1 -- 4 -- -- 4
------- -------- --------- ------ --------- ----------
BALANCE DECEMBER 31, 1993 .............. 18,198 1,820 193,451 -- 5,176 200,447
Net loss ............................. -- -- -- -- (21,529) (21,529)
Exercise of stock options ............ 90 9 539 -- -- 548
Cumulative translation adjustment .... -- -- -- (317) -- (317)
Other, net ........................... (9) (1) 1 -- -- --
------- -------- --------- ------ --------- ----------
BALANCE DECEMBER 31, 1994 .............. 18,279 $ 1,828 $ 193,991 $ (317) $ (16,353) $ 179,149
======= ======== ========= ====== ========= ==========
</TABLE>
The accompanying notes are an integral part of these statements.
7
<PAGE> 8
THE WESTERN COMPANY OF NORTH AMERICA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include all accounts of The Western
Company of North America and its wholly-owned subsidiaries (the "Company"). All
significant intercompany transactions have been eliminated in consolidation.
PLAN OF REORGANIZATION
On February 2, 1988, The Western Company of North America ("WCNA") filed a
voluntary petition for reorganization under chapter 11 of the federal
Bankruptcy Code. On May 12, 1989 the WCNA Third Amended Plan of Reorganization
was consummated.
The Company adopted reorganization accounting to record the effects of
consummating the Plan of Reorganization.
REVENUE RECOGNITION
Revenue related to pressure pumping, production chemicals and offshore drilling
services and sales of pressure pumping and production chemical products are
recognized as services are provided and products are shipped or delivered.
The Company uses the percentage-of-completion method for equipment sales
contracts to recognize revenues and expenses as the earnings process
progresses.
CONCENTRATION OF CREDIT RISK
The Company's customers consist primarily of major integrated international oil
companies and independent oil and gas companies, including companies owned in
whole or in part by foreign governments. The Company performs ongoing credit
evaluations of its customers and generally does not require material
collateral. The Company maintains reserves for potential credit losses, and
historically such losses have been within its expectations. No single customer
accounted for 10% or more of the Company's consolidated revenues during 1994,
1993 and 1992.
CASH EQUIVALENTS AND MARKETABLE SECURITIES
Cash equivalents represent highly liquid investments with a maturity of three
months or less. Marketable securities represent highly liquid investments with a
maturity in excess of three months but less than one year. Cash equivalents and
marketable securities are carried at cost, which approximates market value at
December 31, 1994 and 1993. During 1994, proceeds from the sales of marketable
securities classified as available for sale totaled $18.7 million. Loss on the
sales of these securities was immaterial.
INVENTORIES
Inventories are comprised principally of materials and supplies and are stated
at lower of cost or market. Cost is determined using the first-in, first-out
method for pressure pumping inventories and the average cost method for
production chemicals and offshore drilling rig inventories.
8
<PAGE> 9
THE WESTERN COMPANY OF NORTH AMERICA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
PROPERTY AND EQUIPMENT
Except for offshore drilling rigs and associated equipment and a well
stimulation vessel and associated equipment, property and equipment is
depreciated or amortized using the straight-line method over their estimated
useful lives.
The Company uses the units-of-service method to calculate depreciation expense
associated with offshore drilling rigs and its well stimulation vessel. Under
this method, depreciation is reduced to 20% of its normal rate while the rigs
and the well stimulation vessel are not being utilized.
The Company capitalizes renewals and improvements which significantly enhance
the value or extend the useful life of an asset. Expenditures for normal
maintenance and repairs are charged to expense as incurred. The cost of pressure
pumping equipment retired or sold and related accumulated depreciation are
removed from the accounts, and gains and losses are reflected in operations.
Normal retirements of offshore drilling equipment are reflected in accumulated
depreciation accounts; gains or losses arising from unusual retirements are
reflected in earnings, and asset cost and related accumulated depreciation are
removed from the accounts.
INTEREST EXPENSE
The Company capitalizes interest expense applicable to significant capital
projects which require a period of time to construct. In 1994, 1993 and 1992,
total interest incurred was $10.0 million, $19.3 million and $14.0 million,
respectively, and interest of $5.8 million in 1993 and $2.3 million in 1992 was
capitalized. No interest was capitalized in 1994. Included in the 1992 income
from discontinued operations is $1.3 million of interest expense associated
with certain rig debt.
IMPAIRMENT OF LONG-LIVED ASSETS
An impairment writedown on long-lived assets is recorded whenever events or
changes in circumstances indicate that market value is less than net book value.
Market value is determined by either independent appraisals or calculation of
future undiscounted net cash flows.
A 1993 writedown of pressure pumping assets and other included a $3.5 million
writedown of older pressure pumping equipment and idle facilities to net
realizable value in anticipation of disposal.
GOODWILL
Goodwill represents the excess of cost of acquisitions over the fair value of
identifiable assets acquired less liabilities assumed. Goodwill is included as a
component of other assets and is amortized on a straight-line basis over 15
years. As of December 31, 1994 and 1993, goodwill was
$18.4 million and $1.2 million, respectively, net of accumulated amortization
of $1.4 million and $0.2 million, respectively. Impairment of goodwill is
evaluated in the same manner as other long-lived assets.
9
<PAGE> 10
THE WESTERN COMPANY OF NORTH AMERICA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
ACCRUED LIABILITIES
At December 31, 1994 and 1993, accrued liabilities included the following:
<TABLE>
<CAPTION>
1994 1993
-------- -------
(In thousands)
<S> <C> <C>
Accrued extraordinary loss (see Note 5).................. $ -- $23,408
Accrued merger related expenses.......................... 10,386 --
Accrued payroll and related expenses..................... 11,371 10,356
Income taxes payable..................................... 4,495 5,806
Accrued interest......................................... 3,127 4,022
</TABLE>
ENVIRONMENTAL COSTS
Environmental costs that relate to current operations are expensed or
capitalized as appropriate. Expenditures that relate to an existing condition
caused by past operations and that do not contribute to current or future
revenue generation are expensed. Liabilities are recorded when remedial efforts
are probable and the costs can be reasonably estimated. Generally, the timing of
these accruals coincides with the completion of an environmental evaluation or
the Company's commitment to a formal plan of action. At December 31, 1994 and
1993, liabilities for environmental costs were $2.6 million and $2.4 million,
respectively.
INTEREST RATE SWAP
During 1993, the Company entered into an interest rate swap agreement to manage
its interest rate exposure. This agreement involves the exchange of fixed rate
interest payments for floating rate interest payments based on the six month
London Interbank Offering Rate ("LIBOR"). The estimated differential to be paid
or received at each semiannual settlement date is charged or credited to
interest expense as interest rates change.
This agreement was entered into with a major financial institution. Management
believes the risk of incurring losses related to nonperformance by the financial
institution is remote and any such losses would be immaterial.
FOREIGN CURRENCY TRANSLATION
The financial statements of certain foreign operations are translated from the
functional currencies to U.S. dollars. Adjustments resulting from the
translation process totaled $0.3 million in 1994 and are reflected as a
cumulative translation adjustment in stockholders' equity.
EARNINGS (LOSS) PER SHARE
Primary earnings (loss) per share is based on the weighted average number of
shares of Common Stock, $.10 par value ("Common Stock") and Common Stock
equivalent shares (when dilutive) outstanding during the year. Common stock
equivalent shares relate to options to purchase shares under various stock
option plans (see Note 9). Additionally, the fully diluted earnings per share
computation assumes the conversion of the Company's 7 1/4% Convertible
Subordinated Debentures (see Note 5).
10
<PAGE> 11
THE WESTERN COMPANY OF NORTH AMERICA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
The weighted average number of shares used in computing earnings (loss) per
share are as follows:
<TABLE>
<CAPTION>
1994 1993 1992
---- ---- ----
(In thousands)
<S> <C> <C> <C>
Primary........................................ 18,236 18,591 17,757
Fully diluted.................................. 23,958 23,794 23,136
</TABLE>
RESEARCH AND DEVELOPMENT
During the years ended December 31, 1994, 1993 and 1992, expenditures classified
as research and development costs incurred by the Company were $8.4 million,
$6.5 million and $5.5 million, respectively.
RECLASSIFICATIONS
Certain amounts in the prior years' consolidated financial statements and notes
thereto have been reclassified to conform to the current year's presentation
including the presentation of discontinued operations.
NOTE 2 - MERGER
In November 1994, the Company and BJ Services Company ("BJ Services") entered
into a definitive merger agreement. Subject to certain conditions and to
appraisal rights under Delaware law, this agreement provides that stockholders
of the Company will receive $20 in cash or in shares of BJ Services common stock
for each outstanding share of Company Common Stock they own. Additionally, for
each share of Common Stock they hold, each stockholder will receive .2 of a
five-year warrant to purchase one share of BJ Services common stock for $30 per
share. Pursuant to the merger agreement, stockholders may elect to receive any
proportion of cash and BJ Services common stock, provided that the total number
of shares of Common Stock for which such elections are made will be adjusted so
that the total shares for which each type of election is made will be
approximately equal. The transaction is subject to the approval of both
companies' stockholders, antitrust review and other customary closing
conditions, and is expected to close during the first half of 1995. Merger
related expenses of $21.1 million represent costs associated with the expected
merger with BJ Services and include investment banker, legal and accounting
fees, certain severance costs and other miscellaneous expenses. In addition to
the expenses recorded in 1994, additional legal fees and other expenses related
to the merger are expected to be incurred and recorded in 1995.
NOTE 3 - ACQUISITIONS
The Company completed the acquisitions, in February 1994, of substantially all
of the assets of the production and process chemical business of Unichem
International, Inc. ("Unichem") for $19.8 million in cash and in June 1994, of
substantially all of the oilfield chemicals business and assets of Betz Energy
Chemicals, Inc. ("Betz") for $4.8 million in cash. The businesses acquired from
Unichem and Betz are substantially the same. In July 1994, the Company completed
the
11
<PAGE> 12
THE WESTERN COMPANY OF NORTH AMERICA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
acquisition of the coiled tubing business of Coiltech, Inc. ("Coiltech") for
$3.1 million in cash. All three acquisitions were accounted for using the
purchase method of accounting. Goodwill associated with these transactions
totaled $18.4 million (see Note 1). The Unichem, Betz and Coiltech results of
operations have been included in the consolidated financial statements since
January 1994, July 1994 and July 1994, respectively. In April 1993, the Company
completed a $10.4 million cash acquisition of the assets of the Smith Energy
Services division of Allied Products Corporation. This acquisition was accounted
for using the purchase method of accounting.
NOTE 4 - DISCONTINUED OPERATIONS
The Company formalized a plan in November 1994 (the "Measurement Date") to
dispose of the remaining assets of its offshore drilling segment. These assets
consisted primarily of two semi-submersible offshore drilling rigs and related
equipment and inventory. As a result, the offshore drilling segment has been
reclassified in the consolidated statements of operations as discontinued
operations.
The results of the discontinued operations were as follows:
<TABLE>
<CAPTION>
1994 1993 1992
--------- --------- ---------
(In thousands)
<S> <C> <C> <C>
Revenues ..................................... $ 22,609 $ 64,676 $ 89,613
========= ========= =========
Income from discontinued operations:
Operating income ........................... $ 2,429 $ 4,161 $ 13,919
Other income (loss):
Gains on sales of offshore drilling
rigs .................................... -- 59,161 --
Writedowns of offshore drilling rigs ..... -- (18,328) --
Interest expense ......................... -- -- (1,333)
--------- --------- ---------
Income from discontinued operations before
income taxes .............................. 2,429 44,994 12,586
Provision for income taxes ................. 152 9,673 3,076
--------- --------- ---------
2,277 35,321 9,510
--------- --------- ---------
Loss on disposal, net of income tax benefit in
1994 of $(152) .............................. (6,474) -- --
--------- --------- ---------
$ (4,197) $ 35,321 $ 9,510
========= ========= =========
</TABLE>
The loss on disposal includes operating results subsequent to the Measurement
Date including shut-down expenses and gain (loss) from the disposal of the two
semi-submersible offshore drilling rigs, ALASKAN STAR and PACESETTER IV. In
December 1994, the Company completed the sale of the ALASKAN STAR for $11.8
million, of which $6.3 million is a bankers' acceptance drawn on a U.S. bank due
within one year. This rig sale resulted in a gain of $0.3 million. In December
1994, the Company signed a letter of intent to sell the PACESETTER IV. The
Company completed the sale in early February 1995 for $37.2 million which
resulted in a loss of $6.7 million (see Note 13). At December 31, 1994, Assets
held for sale, net - discontinued operations primarily consists of the net
realizable value of the PACESETTER IV.
12
<PAGE> 13
THE WESTERN COMPANY OF NORTH AMERICA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
Income from discontinued operations includes operating results prior to the
Measurement Date. Income from discontinued operations during 1993 included the
following sales of offshore drilling rigs and writedowns of offshore drilling
rigs. In March 1993, the Company completed the sale of the TRITON III jack-up
drilling rig for $17.8 million in cash. This sale resulted in a gain of $9.1
million. In July 1993, the Company completed the sale of the DELTA jack-up
drilling rig for $1.5 million in cash which resulted in a gain of $0.4 million.
In October 1993, the Company completed the sale of nine jack-up drilling rigs
and associated equipment and inventories for $150.0 million cash that resulted
in a 1993 fourth quarter gain of $49.7 million. The rigs sold were: APOLLO I,
APOLLO II, APOLLO IV, NIKE I, POLARIS I, POLARIS II, TRITON I, TRITON II and
TRITON IV. In March 1993, the Company wrote down the net book value of its three
mat-supported jack-up rigs by $8.8 million. This writedown reflected the low
utilization experienced by these types of rigs and the expectation of lower
future utilization for them. In December 1993, the Company wrote down the net
book value of the ALASKAN STAR semi-submersible drilling rig by $9.5 million.
This writedown reflected the Company's lower expectation of future operating
cash flow opportunities for second generation semi-submersibles like the ALASKAN
STAR.
Included in the 1992 income from discontinued operations is $1.3 million
of interest expense associated with certain rig debt.
NOTE 5 - LONG-TERM DEBT
At December 31, 1994 and 1993, long-term debt consisted of the following:
<TABLE>
<CAPTION>
1994 1993
-------- ---------
(In thousands)
<S> <C> <C>
Senior Unsecured:
12 7/8% Senior Notes................................ $ 2,212 $ 100,000
Subordinated Unsecured:
7 1/4% Convertible Subordinated Debentures.......... 88,746 88,746
-------- ---------
90,958 188,746
Less: Unamortized portion of original issue discount.. 49 52
-------- ---------
90,909 188,694
Less: Current portion................................. -- 97,784
-------- ---------
$ 90,909 $ 90,910
======== =========
</TABLE>
The 12 7/8% Senior Notes, Due 2002 (the "Notes"), are unsecured and were issued
in November 1992 in the face amount of $100 million. During March 1994, the
Company purchased, through a tender offer, and retired $97.8 million face amount
of the Notes. The aggregate purchase price of these Notes was $117.3 million,
resulting in an extraordinary loss of $25.7 million ($1.38 per share) including
unamortized original debt issuance costs of $3.2 million, unamortized original
issue discount of $2.3 million and offering costs of $0.7 million. This
extraordinary loss was recognized in December 1993. The carrying value of the
Notes represents the face amount less unamortized original issue discount.
Interest at 12 7/8% per annum is payable semiannually. The effective interest
rate associated with the Notes, after considering amortization of original issue
discount, is 13.33%.
13
<PAGE> 14
THE WESTERN COMPANY OF NORTH AMERICA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
The Notes mature December 1, 2002, and there are no sinking fund requirements.
The indenture governing the Notes contains restrictions and requirements
relating to mergers.
During the fourth quarter of 1992, the Company issued the Notes and used the net
proceeds to prepay secured debt totaling $94.6 million associated with bank loan
facilities, ship financing bonds and a note relating to an offshore drilling
rig. As a result, it incurred a $1.2 million ($0.07 per share) extraordinary
loss primarily representing prepayment penalties and the write-off of
unamortized debt issuance costs.
In 1990, the Company issued $90 million face amount of 7 1/4% Convertible
Subordinated Debentures, due January 15, 2015 (the "Debentures"). Interest at
7 1/4% per annum is payable semiannually. Annual payments equal to 5% of the
principal amount of the Debentures commence in 2001; such payments are
calculated to retire 70% of principal prior to maturity. The Debentures, unless
previously redeemed, are convertible into Common Stock at $17 per share at the
option of the holder at any time prior to maturity. The indenture governing the
Debentures contains restrictions and requirements relating to mergers.
The Company has a $30 million revolving credit facility which had no borrowings
outstanding at December 31, 1994 and 1993. Borrowings under this revolving
credit facility are secured by the Company's accounts receivable and are limited
to a percentage of such receivables. The revolving credit facility bears
interest at 1 1/2% over LIBOR or 1/2% over prime and matures December 31, 1995.
Commitment fees on the unused portion of the revolving credit facility are 1/2%
per annum. The revolving credit facility contains restrictions and requirements
relating to, among other things, mergers and maintenance of certain financial
ratios.
The Company has entered into an interest rate swap agreement which effectively
changes fixed-rate debt into floating-rate debt. Under the agreement, the
Company receives a fixed rate of 5.26% on a notional principal amount of $100
million and pays a floating rate based on LIBOR, as determined in six month
intervals. On June 1, 1995 the notional principal amount will be reduced from
$100 million to $75 million until the agreement expires on June 1, 1996. The
Company may elect from time to time to terminate the swap agreement. Had it
elected to do so at December 31, 1994, it would have been required to make a
termination payment of $4.1 million.
At December 31, 1994, there were no required principal payments associated with
long-term debt until 2001.
14
<PAGE> 15
THE WESTERN COMPANY OF NORTH AMERICA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
At December 31, 1994, the fair value of the Company's long-term debt, determined
based on quoted market prices, was as follows:
<TABLE>
<CAPTION>
Amount
--------------
(In thousands)
<S> <C>
12 7/8% Senior Notes............................................ $ 2,349
7 1/4% Convertible Subordinated Debentures...................... 91,519
---------
$ 93,868
=========
</TABLE>
Such market prices are subject to changing market conditions; therefore, the
fair value of the Company's long-term debt at December 31, 1994 is not
indicative of future fair market value.
NOTE 6 - COMMITMENTS AND CONTINGENCIES
The Company's operating leases include rental commitments associated with
office buildings, equipment and vehicles. As of December 31, 1994, the Company
had lease commitments for future minimum rental payments as follows:
<TABLE>
<CAPTION>
Amount
--------------
(In thousands)
<S> <C>
1995.............................................................. $ 7,570
1996.............................................................. 5,281
1997.............................................................. 3,070
1998.............................................................. 1,791
1999.............................................................. 1,528
Thereafter........................................................ 5,452
-------
$24,692
=======
</TABLE>
Rental expense for the years ended December 31, 1994, 1993 and 1992 was
approximately $9 million, $7 million and $7 million, respectively.
At December 31, 1994, the Company was contingently liable for outstanding
letters of credit, not reflected in the accompanying consolidated financial
statements, in the amount of $3.5 million.
Actions for well damage and loss of oil and gas production alleging negligence,
breach of contract and fraud, under common law as well as state and federal
statutes, are incidental to the pressure pumping business. Actions for personal
injury are also incidental to that business and the offshore drilling business
where federal statutes permit employees who work on rigs to sue their employers
instead of pursuing workmen's compensation remedies. Increasingly, plaintiffs in
both property damage and personal injury litigation allege damages for which
insurance coverage generally does not exist or is prohibited, such as punitive
damages, treble damages or damages for breach of contract. Numerous such
incidental lawsuits are pending against the Company which include claims covered
by insurance and which are being defended by the Company's insurance carriers.
To the extent a plaintiff is ultimately successful on an uninsured portion of a
claim, the Company would be responsible for satisfying such judgment. To date,
the Company has not, by judgment or through
15
<PAGE> 16
THE WESTERN COMPANY OF NORTH AMERICA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
settlement, incurred a material uninsured liability arising out of personal
injury or property damage litigation.
From time to time it has been alleged by competitors of the Company that the use
by the Company of certain products or methods to perform particular pressure
pumping services constitutes infringement of patents they hold. Such claims
could result in payment by the Company of damages or royalties and the Company
could be enjoined from performing services in which such products or services
are used. To date, the Company has not experienced a material reduction in
revenues or incurred a material loss as a result of such allegations.
Shortly after the public announcement by BJ Services in September 1994 of a
proposal to acquire the Company ("BJS Proposal"), four actions were commenced
against the Company and its directors in the Delaware Court of Chancery styled
CROYDEN ASSOCIATES VS. SHELDON R. ERIKSON, ET AL. AND THE WESTERN COMPANY OF
NORTH AMERICA, C. A. No. 13740, filed September 13, 1994, REGGIE P. JUDICE VS.
SHELDON R. ERIKSON, ET AL. AND THE WESTERN COMPANY OF NORTH AMERICA, C. A. No.
13742, filed September 14, 1994, WILLIAM T. HENDERSON VS. SHELDON R. ERIKSON,
ET AL. AND THE WESTERN COMPANY OF NORTH AMERICA, C. A. No. 13743, filed
September 14, 1994, and RUSS SEGER VS. SHELDON R. ERIKSON, ET AL. AND THE
WESTERN COMPANY OF NORTH AMERICA, C. A. No. 13769, filed September 27, 1994.
The allegations in these lawsuits, all of which were filed as class action
complaints, are substantially the same and relate to the rejection of the BJS
Proposal by the Company's Board of Directors. The purported class of plaintiffs
on whose behalf the class action complaints were filed is all stockholders of
the Company. It is claimed in these lawsuits, INTER ALIA, that by failing to
accept the BJS Proposal the Company and its directors breached their fiduciary
duties to the stockholders of the Company. The plaintiffs seek equitable relief
to compel the Company and its directors to perform their fiduciary duties, as
such are construed by the plaintiffs, and unspecified damages. The Company
believes the allegations in these lawsuits are untrue and that the claims they
assert are totally without merit. A motion to consolidate the four actions is
pending.
16
<PAGE> 17
THE WESTERN COMPANY OF NORTH AMERICA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
NOTE 7 - INCOME TAXES
Components of the provision for income taxes consisted of the following:
<TABLE>
<CAPTION>
1994 1993 1992
------- ------- ------
(In thousands)
<S> <C> <C> <C>
Current tax expense:
U.S. federal................................ $ -- $ -- $ --
Foreign..................................... 495 241 353
------- ------- ------
495 241 353
------- ------- ------
Noncash tax expense:
U.S. federal................................ -- 386 --
Foreign..................................... -- -- --
------- ------- ------
-- 386 --
------- ------- ------
$ 495 $ 627 $ 353
======= ======= ======
</TABLE>
The non-cash taxes are due primarily to the utilization of prereorganization tax
benefits which are recorded directly to stockholders' equity and, therefore, are
not reflected as a reduction of income tax expense.
The total provision for income taxes is reflected in the consolidated statements
of operations under the following components:
<TABLE>
<CAPTION>
1994 1993 1992
------- ------- ------
(In thousands)
<S> <C> <C> <C>
Continuing operations......................... $ 495 $ 627 $ 353
Discontinued operations........................ -- 9,673 3,076
------- ------- ------
$ 495 $10,300 $3,429
======= ======= ======
</TABLE>
The deferred tax assets (liabilities) consisted of the following:
<TABLE>
<CAPTION>
December 31,
----------------- January 1,
1994 1993 1993
-------- -------- -------
(In thousands)
<S> <C> <C> <C>
Gross deferred tax assets:
Loss carryforwards.......................... $144,388 $129,346 $157,080
Stock of foreign affiliates................. 28,055 23,247 20,625
Property and equipment...................... 7,433 6,202 5,800
Inventory reserves.......................... 3,201 4,818 5,637
Allowances for doubtful accounts receivable. -- -- 5,449
Other....................................... 16,010 13,566 10,614
-------- -------- -------
199,087 177,179 205,205
Gross deferred tax liabilities:
Property and equipment...................... (13,569) (10,301) (27,050)
Deferred tax asset valuation allowance......... (185,518) (166,878) (178,155)
-------- -------- --------
$ -- $ -- $ --
======== ======== ========
</TABLE>
17
<PAGE> 18
THE WESTERN COMPANY OF NORTH AMERICA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
The differences between the provision for income taxes and income taxes computed
using the U.S. federal income tax rate and income (loss) from continuing
operations before provision for income taxes and extraordinary losses were as
follows:
<TABLE>
<CAPTION>
1994 1993 1992
------- ------ --------
(In thousands)
<S> <C> <C> <C>
Income taxes computed using the U.S. federal rate.. $(5,893) $ 1,402 $(2,547)
Losses not receiving income tax benefits........... 2,350 -- 2,491
Foreign taxes, net of foreign tax deduction taken.. 327 159 233
Merger related costs not deductible................ 2,720 -- --
Noncash taxes due to carryover tax benefits
recorded directly to stockholders' equity......... -- 386 --
Net benefit of operating loss carryforwards........ -- (1,605) --
Other, net......................................... 991 285 176
------- ------ -------
$ 495 $ 627 $ 353
======= ======= =======
</TABLE>
In 1993, current taxable income was reduced by $84.5 million of net operating
loss carryforwards. The financial statement impact was limited to $14.2 million
due to the change in deferred tax assets and liabilities.
The net change in the deferred tax asset valuation allowance was an increase of
$18.6 million in 1994 and a decrease of $11.3 million in 1993. The portion of
the deferred tax asset valuation allowance which, if realized, will be recorded
directly to stockholders' equity was $114 million at December 31, 1994, $114
million at December 31, 1993 and $120 million at January 1, 1993.
The Company has net operating loss carryforwards for federal income tax purposes
of $372 million. If not utilized, these carryforwards will expire between 2001
and 2009. As a result of the Company having experienced changes in control as
defined in Internal Revenue Code Section 382 in prior years, the usage of
approximately $219 million of these carryforwards is subject to an annual
limitation. The entire $372 million of carryforwards could be subject to an
annual limitation due to the pending merger with BJ Services (see Note 2). For
United Kingdom income tax purposes, the Company at December 31, 1994 had tax
attribute carryforwards amounting to (pound)43 million which are not subject to
an annual limitation. However, these United Kingdom tax benefits will be reduced
substantially as a result of the sale of the PACESETTER IV in 1995 (see Note
13).
Effective January 1, 1993, the Company adopted Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes" ("SFAS 109"). The Company
elected to adopt SFAS 109 prospectively. The initial adoption did not materially
affect results of operations.
18
<PAGE> 19
THE WESTERN COMPANY OF NORTH AMERICA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
Income (loss) before provision for income taxes and extraordinary items
consisted of the following:
<TABLE>
<CAPTION>
1994 1993 1992
--------- --------- ---------
(In thousands)
<S> <C> <C> <C>
Domestic income (loss)...................... $ (13,303) $ 37,245 $ (20,457)
Foreign income (loss)....................... (7,731) 11,756 25,553
--------- --------- ---------
$ (21,034) $ 49,001 $ 5,096
========= ========= =========
</TABLE>
NOTE 8 - RETIREMENT AND OTHER BENEFIT PROGRAMS
PENSION PLAN
The Company has a defined benefit pension plan (the "Pension Plan") covering all
employees with one year of service. Pension benefits are based on years of
service and average compensation for each employee's five consecutive highest
paid years during the last ten years worked. Pension benefits are fully vested
after five years of service.
Generally, the Company makes annual contributions to the Pension Plan to the
extent they are tax deductible and, at a minimum, funds the amount necessary to
meet minimum funding requirements under the Employees' Retirement Income
Security Act, as amended.
Net pension expense for 1994, 1993 and 1992 included the following components:
<TABLE>
<CAPTION>
1994 1993 1992
------- ------- ------
(In thousands)
<S> <C> <C> <C>
Service cost - benefits earned during the
period ...................................... $ 1,309 $ 1,153 $ 1,240
Interest cost on projected benefit obligation.. 2,822 2,697 2,513
Actual return on plan assets................... 448 (3,485) (1,614)
Net gain (loss) deferred....................... (3,132) 1,106 (566)
------- ------- -------
$ 1,447 $ 1,471 $ 1,573
======= ======= =======
</TABLE>
Assumptions used in determining 1994, 1993 and 1992 net pension expense were:
<TABLE>
<CAPTION>
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Discount rate..................................... 7.0% 7.75% 8.0%
Rate of increase in compensation levels........... 5.0% 5.0% 5.0%
Expected long-term rate of return on assets....... 9.0% 9.0% 9.0%
</TABLE>
Pension Plan assets consist primarily of government debt securities, corporate
equities, money market instruments and long-term corporate debt obligations,
both domestic and foreign.
The following table sets forth as of December 31, 1994 and 1993 the Pension
Plan's estimated funded status, amounts recognized in the Company's consolidated
balance sheets and actuarial present value of benefit obligations. The discount
rates used to determine all benefit obligations at December 31, 1994 and 1993
were 8.00% and 7.00%, respectively.
19
<PAGE> 20
THE WESTERN COMPANY OF NORTH AMERICA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
<TABLE>
<CAPTION>
1994 1993
-------- --------
(In thousands)
<S> <C> <C>
Projected benefit obligation............................. $ 37,849 $ 39,732
Pension Plan assets at fair value........................ 28,994 29,675
-------- --------
Projected benefit obligation in excess of
Pension Plan assets .................................... 8,855 10,057
Net unrecognized prior service cost and gain/loss from
past experience......................................... (1,608) (1,879)
-------- --------
Accrued pension liability................................ $ 7,247 $ 8,178
======== ========
Accumulated benefit obligation, including vested benefits
of $33.4 million in 1994 and $36.5 million in 1993...... $ 34,684 $ 37,416
======== ========
</TABLE>
POSTRETIREMENT BENEFITS
The Company provides postretirement life insurance and medical benefits to
retired employees between the ages of 55 and 65. Certain life insurance benefits
are also provided to retired employees over 65 years of age. The life insurance
is funded by insurance premiums paid entirely by the Company. The medical
benefits are funded by a capped self insurance program with contributions made
by retirees for themselves and their covered dependents. Effective January 1,
1993, the Company adopted Statement of Financial Accounting Standards No. 106,
"Employers' Accounting for Postretirement Benefits Other Than Pensions," which
requires the accrual method of accounting for the expected costs of providing
such benefits. Under such accounting method, the future costs of postretirement
benefits are recorded during the years employees render service to earn
eligibility for such benefits.
Net periodic postretirement benefit cost for 1994 and 1993 included the
following components:
<TABLE>
<CAPTION>
1994 1993
------ ------
(In thousands)
<S> <C> <C>
Service cost - benefits attributed to service during
the period............................................ $ 282 $ 232
Actual return on plan assets............................. -- --
Interest cost on accumulated postretirement benefit
obligation........................................ 349 336
Amortization of transition obligation.................... 99 117
Other, net............................................... 21 214
------ ------
$ 751 $ 899
====== ======
</TABLE>
The discount rates used to determine postretirement benefit costs were 7% in
1994 and a weighted average of 7.75% in 1993.
20
<PAGE> 21
THE WESTERN COMPANY OF NORTH AMERICA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
The following table sets forth the status of postretirement benefit obligations
at December 31, 1994 and 1993:
<TABLE>
<CAPTION>
1994 1993
------ -------
(In thousands)
<S> <C> <C>
Accumulated postretirement benefit obligation
Retirees.............................................. $ 1,741 $ 1,746
Other fully eligible participants..................... 1,160 1,134
Other active participants............................. 2,180 2,237
------- -------
Total accumulated postretirement benefit obligation...... 5,081 5,117
Unrecognized actuarial loss.............................. (44) (546)
Unrecognized transition obligation....................... (1,782) (1,881)
Plan assets at fair value................................ -- --
------- -------
Accrued postretirement benefit cost...................... $ 3,255 $ 2,690
======= =======
</TABLE>
The discount rate used to determine postretirement benefit obligations at
December 31, 1994 and 1993 were 8% and 7%, respectively. There were no plan
assets.
For measurement purposes, a 9% annual rate of increase for covered health care
benefits was assumed for 1994. The rate is assumed to decrease gradually to 5%
by 2026 and remain at that level thereafter.
Increasing the health care cost trend rates by one percentage point in each year
would increase the accumulated postretirement benefit obligation as of December
31, 1994 by $279,000 and the aggregate of the service and interest cost
components of net postretirement health care cost for fiscal year 1994 by
$59,000.
NON-EMPLOYEE DIRECTOR RETIREMENT PLAN
During 1994, the Company adopted an unfunded retirement plan for non-employee
directors. To be eligible for benefits under the plan, a director must have
retired from the Board of Directors after having served for at least 10
consecutive years and reached the age of 65. Benefits are payable for 10 years
and at December 31, 1994, the Company accrued $250,000 related to the plan.
RETIREMENT SAVINGS PLAN
All employees with one year of service are eligible to participate in the
Company's Retirement Savings Plan. Subject to certain Internal Revenue Code
limitations, participants may contribute up to 15% of their annual compensation.
Effective March 1, 1994, the Company began matching employee contributions to
the Plan up to 6% of compensation at the rate of 25 cents for each dollar the
employee contributes. In addition, the Company has the option of providing an
additional match at the end of each year at the rate of 1 cent to 25 cents for
each dollar the employee has contributed to the Plan during the year up to 6% of
compensation. In February 1995, the Company elected to make an additional match
at the 25 cents level for the 1994 plan year. Matching contributions made or
accrued in 1994 were $656,000.
21
<PAGE> 22
THE WESTERN COMPANY OF NORTH AMERICA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
POSTEMPLOYMENT BENEFITS
Effective January 1, 1994, the Company adopted the Financial Accounting
Standards Board Statement of Financial Accounting Standards No. 112, "Employers'
Accounting for Postemployment Benefits" which requires accrual accounting for
postemployment benefits such as disability-related and workers' compensation
payments. The effect of this adoption on 1994 operating income was immaterial,
as the Company has historically accrued for most of these costs incurred by the
Company. At December 31, 1994, the Company's liability for these benefits was
$5.1 million.
NOTE 9 - STOCK INCENTIVE PLANS
The Company maintains a long-term management incentive plan and a non-employee
Director stock option plan. Up to 1,837,500 shares of Common Stock may be or
have been issued under this long-term management incentive plan. Of such number,
1,112,500 shares were allocated to an employee stock option plan, 375,000 shares
were allocated for restricted stock awards and 350,000 shares were allocated for
performance share awards. Under the non-employee Director stock option plan,
75,000 shares of Common Stock were reserved for issuance.
Under the employee stock option plan, shares of Common Stock may be purchased at
a price determined by the Executive Development and Compensation Committee (the
"Committee") of the Board of Directors, but in no case less than 90% of market
price on date of grant for nonqualified options and 100% of market price on date
of grant for incentive stock options. Options which have been granted expire up
to ten years after date of grant and are exercisable on a cumulative basis equal
to either 25% or 33% for each year outstanding or such other basis as may be
determined by the Committee. At December 31, 1994, options to purchase 693,538
shares were outstanding under this plan at option prices ranging from $4.50 to
$19.00 per share.
Under the non-employee Director stock option plan, shares of Common Stock may be
purchased at 100% of market price on date of grant. During 1989, options to
purchase 2,500 shares were granted to each non-employee Director, thereafter,
pursuant to the plan options to purchase 1,250 shares have been granted to each
Director at each annual meeting of the Company's stockholders. This plan is, in
most other respects, similar in its operation to the employee stock option plan
discussed above. At December 31, 1994, options to purchase 37,500 shares were
outstanding under this plan at option prices ranging from $4.00 to $15.38 per
share; options to purchase 18,750 shares were exercisable at that date.
As a result of the merger agreement signed by BJ Services and the Company (see
Note 2), all stock options outstanding under the long-term management incentive
plan became fully vested and exercisable for a period of ninety days. At the end
of the ninety day period, all options still outstanding will revert back to the
original terms of the option plans until consummation of the merger, at which
time they will again become fully vested and exercisable.
22
<PAGE> 23
THE WESTERN COMPANY OF NORTH AMERICA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
A summary of transactions relating to these stock option plans during 1994, 1993
and 1992 is as follows:
<TABLE>
<CAPTION>
Number of Total Option
Options Price
--------- ------------
(In thousands)
<S> <C> <C>
Outstanding at December 31, 1991........................ 320,700 $ 3,472
Granted ($4.00 to $7.00 per share)................... 251,125 1,257
Cancelled ($5.88 to $19.13 per share)................ (96,450) (1,348)
-------- --------
Outstanding at December 31, 1992........................ 475,375 3,381
Granted ($4.88 to $12.13 per share).................. 338,500 3,114
Exercised ($4.50 to $9.00 per share)................. (155,937) (898)
Cancelled ($7.00 to $18.25 per share)................ (11,281) (101)
-------- --------
Outstanding at December 31, 1993........................ 646,657 5,496
Granted ($12.50 to $14.50 per share)................. 238,500 3,076
Exercised ($4.50 to $12.13 per share)................ (69,994) (425)
Cancelled ($4.50 to $15.50 per share)................ (84,125) (777)
-------- --------
Outstanding at December 31, 1994........................ 731,038 $ 7,370
======== ========
</TABLE>
The number of shares of Common Stock available for future granting of options
under these stock option plans was 178,406, 332,781 and 60,000 at December 31,
1994, 1993 and 1992, respectively.
In addition to the stock options included in the preceding table, an executive
of the Company was granted an option to purchase 268,750 shares of Common Stock
at a price of $3.02 per share in connection with his employment in 1987.
Compensation associated with these options was recorded pursuant to
reorganization accounting. The option agreement expires December 31, 1998. At
December 31, 1994, such option was outstanding and exercisable for 248,750
shares.
During 1989, the 375,000 shares of Common Stock reserved for restricted stock
awards were issued. Compensation associated with such awards was recorded
pursuant to reorganization accounting. With one exception, 50% of the shares
issued were issued without forfeiture restrictions, and, generally, the
remaining restrictions lapsed as to 12.5% of the shares awarded on each of the
first four anniversaries of the date the restricted stock awards were issued. At
December 31, 1994, no shares remained subject to forfeiture restrictions.
The 350,000 performance shares were awarded during 1989 subject to vesting over
four years upon the attainment of specified performance objectives or at earlier
dates under certain conditions relating to the reduction of principal and
interest outstanding under a long-term debt agreement. During 1990, the
performance share awards became vested and 140,000 shares of Common Stock were
issued. The remainder of the performance share awards were converted into
options to purchase 298,945 shares of Common Stock based on the value of such
performance share awards. During 1993, all 298,945 options were exercised. This
resulted in a 1993 non-cash reclassification of the difference between $4.50,
the exercise price, and the value of the share awards when vested from other
long-term liabilities to additional paid-in capital.
23
<PAGE> 24
THE WESTERN COMPANY OF NORTH AMERICA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
NOTE 10 - STOCKHOLDER PROTECTION RIGHTS PLAN
In March 1990, the Company's Board of Directors (the "Board") adopted a
Stockholder Protection Rights Plan (the "Rights Plan") designed to protect
against attempts to acquire control of the Company that the Board believes are
not in the best interest of the stockholders. The Rights Plan provides for the
distribution of one Right for each outstanding share of Common Stock. Such
Rights will separate from the Common Stock upon the earlier of (i) the date any
person or group becomes the beneficial owner of 15% or more outstanding Common
Stock, or (ii) the tenth business day (or a later date designated by the Board)
after any person makes a tender or exchange offer for 15% or more of outstanding
Common Stock.
Upon separation from Common Stock, each Right will entitle the holder thereof to
purchase 1/100th share of Participating Preferred Stock at an exercise price of
$70, subject to adjustment (the "Exercise Price"). Each 1/100th share of the
Participating Preferred Stock is the economic and voting equivalent to one share
of Common Stock. Additionally, if any person or group becomes the beneficial
owner of 15% or more of outstanding Common Stock, each Right will entitle the
holder thereof to purchase, for the Exercise Price, Common Stock having a value
of twice the Exercise Price. Rights held by such person or group would become
void. Under certain circumstances, without action by the holders of Rights, the
Board may exchange each Right for one share of Common Stock or 1/100th share of
Participating Preferred Stock. The Board can terminate the Rights anytime before
a person or group acquires 15% or more of outstanding Common Stock.
The Company amended the Rights Plan in November 1994 to provide that BJ Services
would not be a beneficial owner of Company securities for purposes of the Rights
Plan by reason of entering into the merger agreement with the Company or
consummating the transactions contemplated therein (see Note 2).
24
<PAGE> 25
THE WESTERN COMPANY OF NORTH AMERICA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
NOTE 11 - SEGMENT INFORMATION AND FOREIGN OPERATIONS
Following is a summary of the Company's domestic and foreign operations by
business segment:
<TABLE>
<CAPTION>
PRESSURE PRODUCTION OFFSHORE ELIMINA-
PUMPING CHEMICALS DRILLING TIONS CONSOLIDATED
-------- ---------- -------- ------- ------------
(In thousands)
<S> <C> <C> <C> <C> <C>
1994
REVENUES:
Domestic .................................... $ 291,441 $ 34,990 $ -- $ -- $ 326,431
Foreign and export sales .................... 16,070 -- -- -- 16,070
Intersegment sales .......................... -- 963 -- (963) --
---------- --------- ---------- ---------- ----------
$ 307,511 $ 35,953 $ -- $ (963) $ 342,501
========== ========= ========== ========== ==========
OPERATING INCOME:
Domestic .................................... $ 29,258 $ 1,861 $ -- $ -- $ 31,119
Foreign and export sales .................... (8,086) -- -- -- (8,086)
---------- --------- ---------- ---------- ----------
$ 21,172 $ 1,861 $ -- $ -- 23,033
---------- --------- ---------- ----------
General and administrative .................. (9,956)
----------
Operating income ............................ 13,077
Interest expense, net of interest
capitalized ................................ (10,032)
Interest income ............................. 1,236
Merger related expenses ..................... (21,118)
----------
Loss from continuing operations before
provision for income taxes ................. $ (16,837)
==========
IDENTIFIABLE ASSETS:
Domestic .................................... $ 234,031 $ 29,112 $ -- $ -- $ 263,143
Foreign ..................................... 25,517 -- 39,655 -- 65,172
---------- --------- ---------- ----------- ----------
$ 259,548 $ 29,112 $ 39,655 $ -- 328,315
---------- --------- ---------- -----------
Corporate assets ............................ 25,386
----------
$ 353,701
==========
1993
REVENUES:
Domestic..................................... $ 278,131 $ -- $ -- $ -- $ 278,131
Foreign and export sales..................... 15,942 -- -- -- 15,942
---------- --------- ---------- ---------- ----------
$ 294,073 $ -- $ -- $ -- $ 294,073
========== ========= ========== ========== ==========
OPERATING INCOME:
Domestic .................................... $ 35,409 $ -- $ -- $ -- $ 35,409
Foreign and export sales .................... (5,744) -- -- -- (5,744)
---------- --------- ---------- ---------- ----------
$ 29,665 $ -- $ -- $ -- 29,665
---------- --------- ---------- ----------
General and administrative ................ (9,674)
----------
Operating income .......................... 19,991
Interest expense, net of interest
capitalized .............................. (13,505)
Interest income ........................... 4,653
Writedown of pressure pumping assets
and other ................................ (7,132)
-----------
Income from continuing operations
before provision for income tax and
extraordinary loss ....................... $ 4,007
==========
IDENTIFIABLE ASSETS:
Domestic .................................. $ 157,031 $ -- $ 894 $ -- $ 157,925
Foreign ................................... 96,932 -- 62,311 -- 159,243
---------- --------- ---------- ---------- ----------
$ 253,963 $ -- $ 63,205 $ -- 317,168
---------- --------- ---------- ----------
Corporate assets .......................... 171,217
----------
$ 488,385
==========
</TABLE>
25
<PAGE> 26
THE WESTERN COMPANY OF NORTH AMERICA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
NOTE 11 - SEGMENT INFORMATION AND FOREIGN OPERATIONS - (CONTINUED)
<TABLE>
<CAPTION>
PRESSURE PRODUCTION OFFSHORE ELIMINA-
PUMPING CHEMICALS DRILLING TIONS CONSOLIDATED
---------- ---------- ---------- ---------- ------------
(In thousands)
<S> <C> <C> <C> <C> <C>
1992
REVENUES:
Domestic................................... $ 211,576 $ -- $ -- $ -- $ 211,576
Foreign and export sales................... 13,777 -- -- -- 13,777
---------- --------- ---------- ---------- ----------
$ 225,353 $ -- $ -- $ -- $ 225,353
========== ========= ========== ========== ==========
OPERATING INCOME:
Domestic................................... $ 10,640 $ -- $ -- $ -- $ 10,640
Foreign and export sales................... 23 -- -- -- 23
---------- --------- ---------- ---------- ----------
$ 10,663 $ -- $ -- $ -- 10,663
---------- --------- ---------- ----------
General and administrative ................ (8,805)
----------
Operating income........................... 1,858
Interest expense, net of interest..........
capitalized.............................. (10,407)
Interest income............................ 1,059
----------
Loss from continuing operations before
provision for income taxes and
extraordinary loss....................... $ (7,490)
==========
IDENTIFIABLE ASSETS:
Domestic................................... $ 145,828 $ -- $ 27,990 $ -- $ 173,818
Foreign.................................... 64,969 -- 166,648 -- 231,617
---------- --------- ---------- ---------- ----------
$ 210,797 $ -- $ 194,638 $ -- 405,435
---------- --------- ---------- ----------
Corporate assets........................... 26,535
----------
$ 431,970
==========
</TABLE>
26
<PAGE> 27
THE WESTERN COMPANY OF NORTH AMERICA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
NOTE 11 - SEGMENT INFORMATION AND FOREIGN OPERATIONS - (CONTINUED)
In November 1994, the Company formalized a plan to dispose of the remaining
assets of its offshore drilling segment. These assets consisted primarily of two
semi-submersible offshore drilling rigs and related equipment and inventory. As
a result, the business segment data for 1993 and 1992 has been restated to
exclude the offshore drilling segment (see Note 4).
The results of operations for the offshore drilling segment for 1993 and 1992
were as follows:
<TABLE>
<CAPTION>
1993 1992
------- -------
(In thousands)
<S> <C> <C>
Revenues................................................... $64,676 $89,613
------- -------
Operating income........................................... $ 4,161 $13,919
Interest expense........................................... -- (1,333)
Gains on sales of offshore drilling rigs................... 59,161 --
Writedowns of offshore drilling rigs....................... (18,328) --
------- -------
Income before income taxes and extraordinary losses........ $44,994 $12,586
======= =======
</TABLE>
<TABLE>
<CAPTION>
1994 1993 1992
------------------------------ ------------------------------ -----------------------------
DEPRECIATION CAPITAL DEPRECIATION CAPITAL DEPRECIATION CAPITAL
AND AMORTIZATION EXPENDITURES AND AMORTIZATION EXPENDITURES AND AMORTIZATION EXPENDITURES
---------------- ------------ ---------------- ------------ ---------------- ------------
(In thousands)
<S> <C> <C> <C> <C> <C> <C>
Pressure pumping ................... $ 15,601 $ 21,353 $ 13,937 $ 50,166 $ 14,158 $ 29,921
Production chemicals ............... 2,103 5,722 -- -- -- --
Offshore drilling .................. -- 66 -- 11,526 -- 8,765
Corporate .......................... 1,110 861 652 2,020 729 87
-------- -------- -------- -------- -------- --------
$ 18,814 $ 28,002 $ 14,589 $ 63,712 $ 14,887 $ 38,773
======== ======== ======== ======== ======== ========
</TABLE>
27
<PAGE> 28
THE WESTERN COMPANY OF NORTH AMERICA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
NOTE 11 - SEGMENT INFORMATION AND FOREIGN OPERATIONS - (CONTINUED)
Amounts reported above for 1994, 1993 and 1992 foreign and export sales include
operations in the following geographic areas:
<TABLE>
<CAPTION>
1994 1993 1992
---------- ---------- ----------
(In thousands)
<S> <C> <C> <C>
Revenues:
Northwest Europe .......... $ 1,130 $ 434 $ --
West Africa ............... 3,280 3,995 5,997
South America ............. 4,420 1,171 2,014
Far East .................. 1,774 9,355 4,949
Eastern Europe and Former
Soviet Union ............. 5,231 814 602
Other ..................... 235 173 215
---------- ---------- ----------
$ 16,070 $ 15,942 $ 13,777
========== ========== ==========
Operating income (loss):
Northwest Europe .......... $ (4,362) $ (4,193) $ (1,260)
West Africa ............... (1,452) (1,029) 767
South America ............. 1,034 140 561
Far East .................. (1,016) (152) 327
Eastern Europe and Former
Soviet Union ............. (2,062) (408) (206)
Other ..................... (228) (102) (166)
---------- ---------- ----------
$ (8,086) $ (5,744) $ 23
========== ========== ==========
Identifiable assets:
Northwest Europe .......... $ 41,676 $ 116,232 $ 86,458
West Africa ............... 5,442 5,338 89,097
South America ............. 4,835 16,737 45,040
Far East .................. 5,975 11,982 9,886
Eastern Europe and Former
Soviet Union ............. 6,528 7,095 1,023
Other ..................... 716 1,859 113
---------- ---------- ----------
$ 65,172 $ 159,243 $ 231,617
========== ========== ==========
</TABLE>
The pressure pumping business provides two major services, stimulation and
cementing. During 1994, 1993 and 1992, stimulation services accounted for
approximately 71%, 73% and 68%, respectively, of the segment's revenues,
exclusive of export sales of equipment and products of approximately $5 million,
$9 million and $7 million in 1994, 1993 and 1992, respectively.
The production chemical business was acquired in 1994 (see Note 3). This segment
provides specialty chemicals and services to the upstream oil and gas industry
as well as downstream to the refinery, petrochemical, gas processing, pipeline
and power generation industries.
The Company's well stimulation vessel, WESTERN RENAISSANCE, moved from foreign
to domestic operations during the third quarter of 1994.
Offshore drilling foreign identifiable assets represent all assets associated
with offshore drilling rigs which are operating in foreign waters at the end of
each year (see Note 4).
Capital expenditures represent cash expended on property and equipment,
including interest capitalized.
Corporate assets are comprised principally of cash and other assets.
28
<PAGE> 29
THE WESTERN COMPANY OF NORTH AMERICA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
NOTE 12 - QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
Company operating results by quarter for the year ended December 31, 1994 were
as follows:
<TABLE>
<CAPTION>
QUARTER
------------------------------------------------------------
FIRST SECOND THIRD FOURTH TOTAL
-------- -------- -------- --------- ---------
(In thousands, except per share amounts)
<S> <C> <C> <C> <C> <C>
1994
Revenues:
Pressure pumping ................ $ 70,278 $ 70,901 $ 82,052 $ 84,280 $ 307,511
Production chemicals ............ 7,773 7,867 9,700 9,650 34,990
-------- -------- -------- --------- ---------
78,051 78,768 91,752 93,930 342,501
-------- -------- -------- --------- ---------
Operating costs and expenses:
Pressure pumping ................ 64,677 63,139 71,107 71,814 270,737
Production chemicals ............ 7,092 7,215 8,108 8,612 31,027
Depreciation and amortization ... 4,577 4,347 4,832 5,058 18,814
General and administrative ...... 2,234 2,366 1,953 2,293 8,846
-------- -------- -------- --------- ---------
78,580 77,067 86,000 87,777 329,424
-------- -------- -------- --------- ---------
Operating income (loss) ...... (529) 1,701 5,752 6,153 13,077
-------- -------- -------- --------- ---------
Other income (expense):
Interest expense ................ (3,746) (1,950) (1,954) (2,382) (10,032)
Interest income ................. 772 174 109 181 1,236
Merger related expenses(1) ...... -- -- -- (21,118) (21,118)
-------- -------- -------- --------- ---------
Total other income
(expense) .................. (2,974) (1,776) (1,845) (23,319) (29,914)
-------- -------- -------- --------- ---------
Income (loss) from continuing
operations before provision for
income taxes and extraordinary
loss .............................. (3,503) (75) 3,907 (17,166) (16,837)
Provision for income taxes ...... 103 2 205 185 495
-------- -------- -------- --------- ---------
Income (loss) from continuing
operations ........................ (3,606) (77) 3,702 (17,351) (17,332)
Discontinued operations ............ 318 978 1,142 (6,635) (4,197)
-------- -------- -------- --------- ---------
Net income (loss) .................. $ (3,288) $ 901 $ 4,844 $ (23,986) $ (21,529)
======== ======== ======== ========= =========
Earnings (loss) per share:
Income (loss) from continuing
operations ..................... $ (0.20) $ 0.00 $ 0.20 $ (0.95) $ (0.95)
Discontinued operations ......... 0.02 0.05 0.06 (0.36) (0.23)
-------- -------- -------- --------- ---------
Net income (loss) ............... $ (0.18) $ 0.05 $ 0.26 $ (1.31) $ (1.18)
======== ======== ======== ========= =========
</TABLE>
(1) Merger related expenses of $21.1 million represent costs associated with
the expected merger with BJ Services and include investment banker, legal
and accounting fees, certain severance costs and other miscellaneous
expenses. In addition to the expenses recorded in 1994, additional legal
fees and other expenses related to the merger are expected to be incurred
and recorded in 1995 (see Note 2).
29
<PAGE> 30
THE WESTERN COMPANY OF NORTH AMERICA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
NOTE 12- QUARTERLY FINANCIAL INFORMATION (UNAUDITED) - (CONTINUED)
The Company formalized a plan in November 1994 to dispose of the remaining
assets of its offshore drilling segment. These assets consisted primarily of two
semi-submersible offshore drilling rigs and related equipment and inventory. As
a result, the offshore drilling segment has been reclassified in the
consolidated statements of operations as discontinued operations (see Note 4).
The results of the discontinued operations by quarter for the year ended
December 31, 1994 were as follows:
<TABLE>
<CAPTION>
QUARTER
-------------------------------------------
FIRST SECOND THIRD FOURTH TOTAL
-------- -------- -------- -------- --------
(In thousands)
<S> <C> <C> <C> <C> <C>
Revenues ................................................. $ 5,495 $ 6,056 $ 6,115 $ 4,943 $ 22,609
======== ======== ======== ======== ========
Income from discontinued operations ...................... $ 345 $ 1,081 $ 1,172 (169) $ 2,429
Provision for income taxes ............................... 27 103 30 (8) 152
-------- -------- -------- -------- --------
318 978 1,142 (161) 2,277
-------- -------- -------- -------- --------
Loss on disposal, net of income tax benefit of $(152) .... -- -- -- (6,474) (6,474)
-------- -------- -------- -------- --------
$ 318 $ 978 $ 1,142 $ (6,635) $ (4,197)
======== ======== ======== ======== ========
</TABLE>
Income from discontinued operations includes operating results prior to the
Measurement Date.
The loss on disposal includes operating results subsequent to the Measurement
Date including shut-down expenses and gain (loss) from the disposal of the two
semi-submersible offshore drilling rigs, ALASKAN STAR and PACESETTER IV. In
December 1994, the Company completed the sale of the ALASKAN STAR for $11.8
million, of which $6.3 million is a bankers' acceptance drawn on a U.S. bank due
within one year. This rig sale resulted in a gain of $0.3 million. In December
1994, the Company signed a letter of intent to sell the PACESETTER IV. The
Company completed the sale in early February 1995 for $37.2 million (see Note
13). At December 31, 1994, Assets held for sale, net - discontinued operations
primarily consists of the net book value and inventory of the PACESETTER IV, net
of the loss on sale of such rig.
30
<PAGE> 31
THE WESTERN COMPANY OF NORTH AMERICA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
NOTE 12 - QUARTERLY FINANCIAL INFORMATION (UNAUDITED) - (CONTINUED)
Company operating results by quarter for the year ended December 31, 1993 were
as follows:
<TABLE>
<CAPTION>
QUARTER
------------------------------------------------------------
FIRST SECOND THIRD FOURTH TOTAL
-------- -------- -------- --------- ---------
(In thousands, except per share amounts)
<S> <C> <C> <C> <C> <C>
1993
Revenues:
Pressure pumping. . . . . . . . . . . . $ 74,901 $ 67,361 $ 71,545 $ 80,266 $ 294,073
Operating costs and expenses:
Pressure pumping. . . . . . . . . . . . 62,921 57,487 60,778 69,285 250,471
Depreciation and amortization . . . . . 3,508 3,984 3,596 3,501 14,589
General and administrative. . . . . . . 1,955 1,926 2,029 3,112 9,022
-------- -------- -------- --------- ---------
68,384 63,397 66,403 75,898 274,082
-------- -------- -------- --------- ---------
Operating income . . . . . . . . . . 6,517 3,964 5,142 4,368 19,991
-------- -------- -------- --------- ---------
Other income (expense):
Interest expense. . . . . . . . . . . . (3,631) (3,432) (2,962) (3,480) (13,505)
Interest income . . . . . . . . . . . . 146 1,575 383 2,549 4,653
Writedown of pressure pumping assets
and other (1) . . . . . . . . . . . . (248) -- -- (6,884) (7,132)
-------- -------- -------- --------- ---------
Total other income (expense). . . . . (3,733) (1,857) (2,579) (7,815) (15,984)
-------- -------- -------- --------- ---------
Income (loss) from continuing operations
before provision for income taxes and
extraordinary loss. . . . . . . . . . . 2,784 2,107 2,563 (3,447) 4,007
Provision for income taxes. . . . . . 180 309 538 (400) 627
-------- -------- -------- --------- ---------
Income (loss) from continuing operations
before extraordinary loss 2,604 1,798 2,025 (3,047) 3,380
Discontinued operations . . . . . . . . . (114) 166 2,131 33,138 35,321
Extraordinary loss (2). . . . . . . . . . -- -- -- (25,713) (25,713)
-------- -------- -------- --------- ---------
Net income . . . . . . . . . . . . . . . $ 2,490 $ 1,964 $ 4,156 $ 4,378 $ 12,988
======== ======== ======== ========= =========
Earnings (loss) per share:
Primary:
Income (loss) from continuing
operations. . . . . . . . . . . . . $ 0.15 $ 0.10 $ 0.11 $ (0.16) $ 0.18
Discontinued operations . . . . . . . (0.01) 0.01 0.11 1.77 1.90
Extraordinary loss. . . . . . . . . . -- -- -- (1.38) (1.38)
-------- -------- -------- --------- ---------
Net income (loss) . . . . . . . . . . $ 0.14 $ 0.11 $ 0.22 $ 0.23 $ 0.70
======== ======== ======== ========= =========
Fully diluted:
Income (loss) from continuing
operations. . . . . . . . . . . . . $ * $ * $ * $ * $ *
Discontinued operations . . . . . . . * * * 1.39 1.48
Extraordinary loss. . . . . . . . . . * * * * *
-------- -------- -------- --------- ---------
Net income (loss) . . . . . . . . . . $ * $ * $ * $ * $ *
======== ======== ======== ========= =========
</TABLE>
- -------------
*Fully diluted computation is not reflected because per share effect is
antidilutive.
(1) The writedown of pressure pumping assets and other totaled $7.1 million
and included a $3.5 million writedown of older pressure pumping equipment
and idle facilities to net realizable value in anticipation of disposal
and various other non-operating costs.
(2) During March 1994, the Company purchased through a tender offer $97.8
million face amount of Notes. The aggregate purchase price of these Notes
was $117.3 million, resulting in an extraordinary loss of $25.7 million
($1.38 per share) including unamortized original issue costs of $3.2
million, unamortized original issue discount of $2.3 million and offering
costs of $.7 million. The anticipated extraordinary loss was accrued
during the fourth quarter of 1993.
31
<PAGE> 32
THE WESTERN COMPANY OF NORTH AMERICA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
NOTE 12- QUARTERLY FINANCIAL INFORMATION (UNAUDITED) - (CONTINUED)
The Company formalized a plan in November 1994 to dispose of the remaining
assets of its offshore drilling segment. These assets consisted primarily of two
semi-submersible offshore drilling rigs and related equipment and inventory. As
a result, the offshore drilling segment has been reclassified in the
consolidated statements of operations as discontinued operations.
The results of the discontinued operations by quarters for the year ended
December 31, 1993 were as follows:
<TABLE>
<CAPTION>
QUARTER
----------------------------------------------
FIRST SECOND THIRD FOURTH TOTAL
-------- -------- -------- -------- --------
(In thousands)
<S> <C> <C> <C> <C> <C>
Revenues ....................................... $ 18,629 $ 19,186 $ 19,870 $ 6,991 $ 64,676
======== ======== ======== ======== ========
Income from discontinued operations
Operating income ............................. $ 462 $ 896 $ 2,406 $ 397 $ 4,161
-------- -------- -------- -------- --------
Other income (loss):
Gains on sales of offshore drilling rigs.... 9,076 -- 372 49,713 59,161
Writedowns of offshore drilling rigs ....... (8,828) -- -- (9,500) (18,328)
-------- -------- -------- -------- --------
248 -- 372 40,213 40,833
-------- -------- -------- -------- --------
Income from discontinued
operations before income taxes .............. 710 896 2,778 40,610 44,994
Provision for income taxes ..................... 824 730 647 7,472 9,673
-------- -------- -------- -------- --------
$ (114) $ 166 $ 2,131 $ 33,138 $ 35,321
======== ======== ======== ======== ========
</TABLE>
Income from discontinued operations includes operating results prior to the
Measurement Date. Income from discontinued operations during 1993 included the
following sales of offshore drilling rigs and writedowns of offshore drilling
rigs. In March 1993, the Company completed the sale of the TRITON III jack-up
drilling rig for $17.8 million in cash. This sale resulted in a gain of $9.1
million. In July 1993, the Company completed the sale of the DELTA jack-up
drilling rig for $1.5 million in cash which resulted in a gain of $0.4 million.
In October 1993, the Company completed the sale of nine jack-up drilling rigs
and associated equipment and inventories for $150.0 million cash that resulted
in a 1993 fourth quarter gain of $49.7 million. The rigs sold were: APOLLO I,
APOLLO II, APOLLO IV, NIKE I, POLARIS I, POLARIS II, TRITON I, TRITON II and
TRITON IV. In March 1993, the Company wrote down the net book value of its
three mat-supported jack-up rigs by $8.8 million. This writedown reflected the
low utilization experienced by these types of rigs and the expectation of lower
future utilization for them. In December 1993, the Company wrote down the net
book value of the ALASKAN STAR semi-submersible drilling rig by $9.5 million.
This writedown reflected the Company's lower expectation of future operating
cash flow opportunities for second generation semi-submersibles like the
ALASKAN STAR.
32
<PAGE> 33
THE WESTERN COMPANY OF NORTH AMERICA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
NOTE 13 - SUBSEQUENT EVENT (UNAUDITED)
The Company completed the sale of the PACESETTER IV in early February 1995 for
$37.2 million which resulted in a loss of $6.7 million. At December 31, 1994,
Assets held for sale, net - discontinued operations primarily consists of the
net book value and inventory of the PACESETTER IV, net of the loss on sale of
such rig.
33
<PAGE> 34
Financial information for The Western
Company of North America for the
quarter ended March 31, 1995 (unaudited)
34
<PAGE> 35
THE WESTERN COMPANY OF NORTH AMERICA
CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS (UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
-----------------------
1995 1994
--------- --------
<S> <C> <C>
Revenue . . . . . . . . . . . . . . . . . . . . . . . . $ 79,992 $ 78,051
Operating Expenses:
Cost of sales and services . . . . . . . . . . . . . . 79,560 76,346
General and administrative . . . . . . . . . . . . . . 2,356 2,234
--------- --------
Operating loss . . . . . . . . . . . . . . . . . . . . . . (1,924) (529)
Other income (expense):
Interest expense . . . . . . . . . . . . . . . . . . . (2,217) (3,746)
Interest income . . . . . . . . . . . . . . . . . . . 181 772
--------- --------
Loss from continuing operations before income taxes . . . . (3,960) (3,503)
Income tax expense . . . . . . . . . . . . . . . . . . . . 100 103
--------- --------
Loss from continuing operations . . . . . . . . . . . . . . (4,060) (3,606)
Income from discontinued operations . . . . . . . . . . . . 1,303 318
--------- --------
Net loss . . . . . . . . . . . . . . . . . . . . . . . . $ (2,757) $ (3,288)
========= ========
Weighted average shares outstanding . . . . . . . . . . . . 18,533 18,220
Net loss per share:
Loss per share from continuing operations . . . . . . $ (0.22) $ (0.20)
Income per share from discontinued operations . . . . $ 0.07 $ 0.02
--------- --------
Net loss per share . . . . . . . . . . . . . . . . . . $ (0.15) $ (0.18)
========= ========
</TABLE>
SEE NOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
35
<PAGE> 36
THE WESTERN COMPANY OF NORTH AMERICA
CONSOLIDATED CONDENSED STATEMENT OF FINANCIAL POSITION
(IN THOUSANDS)
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1995 1994
----------- ---------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . $ 44,567 $ 12,650
Receivables - net . . . . . . . . . . . . . . . . . . . . . . . 63,926 74,080
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . 20,094 20,065
Deferred income taxes and other . . . . . . . . . . . . . . . . 4,535 40,214
--------- ---------
Total current assets . . . . . . . . . . . . . . . . . . . . 133,122 147,009
Property - net . . . . . . . . . . . . . . . . . . . . . . . . . . . 185,045 186,095
Goodwill 18,111 18,400
Investments and other assets . . . . . . . . . . . . . . . . . . . . 3,043 2,197
--------- ---------
$ 339,321 $ 353,701
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . $ 23,359 $ 29,996
Accrued liabilities . . . . . . . . . . . . . . . . . . . . . . 33,492 38,389
--------- ---------
Total current liabilities . . . . . . . . . . . . . . . . . 56,851 68,385
Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . 77,718 90,909
Other long-term liabilities . . . . . . . . . . . . . . . . . . . . . 14,751 15,258
Stockholders' equity . . . . . . . . . . . . . . . . . . . . . . . . 190,001 179,149
--------- ---------
$339,321 $ 353,701
========= =========
</TABLE>
SEE NOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
36
<PAGE> 37
THE WESTERN COMPANY OF NORTH AMERICA
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS (UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
-----------------------------
1995 1994
--------- ----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . $( 2,757) $( 3,288)
Adjustments to reconcile net loss to cash
provided by operating activities:
Depreciation and amortization . . . . . . . . . . . . . . . . 5,304 5,654
Changes in assets and liabilities . . . . . . . . . . . . . . . . (4,283) (10,192)
Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,178) 212
-------- --------
Net cash used for operating activities . . . . . . . . . . . . (2,914) (7,614)
CASH FLOWS FROM INVESTING ACTIVITIES:
Property additions . . . . . . . . . . . . . . . . . . . . . . . (2,787) (5,118)
Proceeds from disposal of assets . . . . . . . . . . . . . . . . 37,200 317
Proceeds from sale of marketable securities . . . . . . . . . . . 18,711
Acquisition of business . . . . . . . . . . . . . . . . . . . . . (19,769)
-------- ---------
Net cash provided by (used for) investing activities . . . . . 34,413 (5,859)
CASH FLOWS FROM FINANCING ACTIVITIES:
Debt repayments . . . . . . . . . . . . . . . . . . . . . . . . . (117,946)
Proceeds from issuance of stock . . . . . . . . . . . . . . . . . 418
Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
-------- --------
Net cash provided by (used for) investing activities . . . . . 418 (117,847)
Increase (decrease) in cash and cash equivalents . . . . . . . . 31,917 (131,320)
Cash and cash equivalents at beginning of period . . . . . . . . 12,650 141,279
-------- --------
Cash and cash equivalents at end of period . . . . . . . . . . . $ 44,567 $ 9,959
======== ========
</TABLE>
SEE NOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
37
<PAGE> 38
NOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
NOTE 1 GENERAL
The accompanying unaudited consolidated condensed financial statements
have been prepared in accordance with Rule 10-01 of Regulation S-X, "Interim
Financial Statements," and do not include all the information and footnotes
required by generally accepted accounting principles for complete financial
statements. The consolidated condensed financial statements have been prepared
in conformity with accounting principles and practices (including consolidation
practices) reflected in the Company's Annual Report on Form 10-K for the year
ended December 31, 1994, and in the opinion of BJ Services Company
("BJ Services"), include all adjustments (which consist only of normal recurring
adjustments) necessary for a fair presentation of the Company's financial
position as of March 31, 1995, and the results of its operations and its cash
flows for the three months ended March 31, 1995 and 1994. Operating results
for the three months ended March 31, 1995 are not necessarily indicative of the
results that could be expected for a full year.
NOTE 2 SALE OF OFFSHORE DRILLING RIG
In December 1994, the Company signed a letter of intent to sell the Pacesetter
IV offshore drilling rig for $37.2 million and recorded a net loss of $6.7
million. In February 1995, the sale was completed and the Company received the
agreed upon $37.2 million.
NOTE 3 CONVERTIBLE SUBORDINATED DEBENTURES
In March 1995, holders of $13.2 million in principal amount of the Company's
convertible subordinated debentures elected to convert their debentures into
775,991 shares of common stock at the conversion price of $17.00.
NOTE 4 SUBSEQUENT EVENT
In April 1995, the Company was acquired by BJ Services for a total purchase
price of $511.4 million (including transaction costs of $7.2 million),
consisting of 12.0 million shares of BJ Services common stock, cash of $247.9
million and warrants to purchase 4.8 million shares of BJ Services common stock
at an exercise price of $30 per share, exercisable until the close of business
on April 13, 2000. Each stockholder of the Company received $20.00 in cash or
1.003 shares of BJ common stock for each outstanding share of the Company's
common stock owned. Additionally, for each share of common stock held, each
stockholder received .2 of a five-year warrant to purchase one share of BJ
common stock for $30 per share.
38
<PAGE> 39
(b) PRO FORMA FINANCIAL INFORMATION
The following pro forma information is based upon certain assumptions as of May
30, 1995, and does not reflect financial or other information subsequent to such
date with respect to the merger of The Western Company of North America
("Western") with and into BJ Services Company ("BJ Services" or the
"Company").
PRO FORMA FINANCIAL INFORMATION (UNAUDITED)
The pro forma financial statements are based on the historical financial
information of BJ Services and Western giving effect, under the purchase method
of accounting, to certain adjustments. The pro forma financial statements are
derived from BJ Services' and Western's historical consolidated financial data
for the indicated periods, which, in the case of the statement of operations of
Western, differs from those periods used for presentation of Western's financial
statements included in this Report on Form 8-K/A. In the case of Western, the
statement of operations for the year ended September 30, 1994 was derived by
combining the last three months of its fiscal year ended December 31, 1993 with
the first nine months of its fiscal 1994. The pro forma statement of financial
position was prepared as if the Merger occurred on March 31, 1995. The pro
forma statements of operations were prepared as if the Merger had occurred as
of October 1, 1993 and do not include any estimate for loss of revenue from
overlapping locations or the effect of any modifications in operations that
might have occurred had BJ Services owned and operated the businesses during
the periods presented except as described in the Notes to the Pro Forma
Financial Statements. The statements also do not reflect the disposition of
assets from BJ Services' Brighton, Colorado and Cortland, Ohio operations.
Revenue generated from these operations was $5.6 million for the year ended
September 30, 1994 and $4.7 million for the six months ended March 31, 1995.
The pro forma financial statements should be read in conjunction with the Notes
to Pro Forma Financial Statements and with the Consolidated Financial
Statements of BJ Services and the related notes thereto as previously filed and
the Consolidated Financial Statements of Western and the related notes thereto,
contained elsewhere in this Report on Form 8-K/A. The pro
forma financial information has been prepared based upon assumptions deemed
appropriate by management of BJ Services. This information is prepared for
informational purposes only and is not necessarily indicative of the actual
results or financial condition that would have been achieved had the Merger and
related financing occurred at these dates or of future results. Actual results
of Western's operations are included with BJ Services' results beginning
April 1, 1995.
39
<PAGE> 40
PRO FORMA STATEMENT OF FINANCIAL POSITION (UNAUDITED)
MARCH 31, 1995
(IN THOUSANDS)
<TABLE>
<CAPTION>
Historical Pro Forma
-------------------------- ----------------------------
BJ Services Western Adjustments Combined
----------- ------- ----------- --------
<S> <C> <C> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 5,698 $ 44,567 ($44,567)(2) $ 5,698
Receivables - net 98,053 63,926 161,979
Inventories 42,813 20,094 62,907
Deferred income taxes and other 14,260 4,535 18,795
-------- -------- -------- --------
Total current assets 160,824 133,122 (44,567) 249,379
Property - net 197,033 185,045 53,000 (1) 435,078
Goodwill 20,413 18,111 153,097 (1) 191,621
Deferred income taxes 22,690 60,000 (1) 82,690
Investments and other assets 12,658 3,043 15,701
-------- -------- -------- --------
$413,618 $339,321 $221,530 $974,469
======== ======== ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 48,913 $ 23,359 $ 72,272
Short-term borrowings and current
portion of long-term debt 29,291 (29,291)(2)
Accrued liabilities 36,568 33,492 17,398 (1)
22,000 (8) 109,458
-------- -------- -------- --------
Total current liabilities 114,772 56,851 10,107 181,730
Long-term debt 74,700 77,718 (75,554)(1)
234,851 (2) 311,715
Other long-term liabilities 27,000 14,751 41,751
Stockholders' equity 197,146 190,001 74,126 (1)
(22,000)(8) 439,273
-------- -------- -------- --------
$413,618 $339,321 $221,530 $974,469
======== ======== ======== ========
</TABLE>
See Notes to Pro Forma Financial Statements
40
<PAGE> 41
PRO FORMA STATEMENT OF OPERATIONS (UNAUDITED)
SIX MONTHS ENDED MARCH 31, 1995
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
Historical Pro Forma
------------------------- -----------------------
BJ Services Western Adjustments Combined
----------- ------- ----------- --------
<S> <C> <C> <C> <C>
Revenue $226,083 $173,922 $400,005
Operating Expenses:
Cost of sales and services 202,490 164,660 $ 4,438 (3) 371,588
General and administrative 12,453 5,033 17,486
Amortization of goodwill 1,914 (5) 1,914
-------- -------- -------- --------
214,943 169,693 6,352 390,988
Operating income 11,140 4,229 (6,352) 9,017
Other income (expense):
Interest expense (4,618) (4,599) (3,900) (4) (13,117)
Interest income 334 362 696
Write-downs and other 940 (21,118) 21,118 (7) 940
-------- -------- -------- --------
Income (loss) from continuing operations
before income taxes 7,796 (21,126) 10,866 (2,464)
Income tax expense (benefit) 1,674 285 (3,206) (6) (1,247)
-------- -------- -------- --------
Income (loss) from continuing
operations $ 6,122 $(21,411) 14,072 $ (1,217)
======== ======== ======== ========
Weighted average shares outstanding 15,716 12,040 (1) 27,756
======== ======== ======== =========
Income (loss) per share from continuing
operations $ 0.39 $ (0.04)
======== ======== ======== =========
</TABLE>
See Notes to Pro Forma Financial Statements
41
<PAGE> 42
PRO FORMA STATEMENT OF OPERATIONS (UNAUDITED)
YEAR ENDED SEPTEMBER 30, 1994
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
Historical Pro Forma
----------------------- --------------------------
BJ Services Western Adjustments Combined
----------- ------- ----------- --------
<S> <C> <C> <C> <C>
Revenue $434,476 $328,837 $763,313
Operating Expenses:
Cost of sales and
services 391,022 306,947 $ 8,875 (3) 706,844
General and administrative 22,709 10,598 33,307
Amortization of goodwill 3,827 (5) 3,827
-------- -------- -------- --------
413,731 317,545 12,702 743,978
-------- -------- -------- --------
Operating income 20,745 11,292 (12,702) 19,335
Other income (expense):
Interest expense (7,383) (11,130) (4,325)(4) (22,838)
Interest income 729 3,604 4,333
Write-downs and other (1,315) (6,884) (8,199)
-------- -------- -------- --------
Income (loss) from continuing
operations before income taxes 12,776 (3,118) (17,027) (7,369)
Income tax expense (benefit) 2,006 (90) (5,620)(6) (3,704)
-------- -------- -------- --------
Income (loss) from continuing
operations before
extraordinary loss and
cumulative effect of
accounting change $ 10,770 $ (3,028) $(11,407) $ (3,665)
======== ======== ======== ========
Weighted average shares
outstanding 15,665 12,040 (1) 27,705
======== ======== ========
Income (loss) per share from
continuing operations before
extraordinary loss and
cumulative effect of
accounting change $ 0.69 $ (0.13)
========= ======== ======== ========
</TABLE>
See Notes to Pro Forma Financial Statements
42
<PAGE> 43
NOTES TO PRO FORMA FINANCIAL STATEMENTS (UNAUDITED)
(IN THOUSANDS)
(1) The pro forma financial statements reflect the purchase of 100% of the
outstanding shares of Western common stock in exchange for total
consideration of $514.3 million ($21.00 per share), consisting of 12.0
million shares of BJ Common Stock, cash of $240.1 million and warrants to
purchase 4.8 million shares of BJ Common Stock. For purposes of
determining Western's outstanding shares, it is assumed that such
debentures, which had a face value of $75.6 million at March 31, 1995 were
converted into 4.4 million shares of Western common stock prior to the
transaction (as of May 1995, substantially all of the debentures had been
converted). The BJ Common Stock to be issued was valued at $19.94, the
average closing price prior to the closing date calculated in accordance
with the Merger Agreement. In addition, BJ Services incurred transaction
costs of approximately $10.0 million, resulting in a total purchase price
of $514.3 million.
In accordance with purchase accounting, the assets and liabilities of
Western will be recorded on BJ Services' books at estimated fair market
value with the remaining purchase price reflected as goodwill. For
purposes of these Pro Forma Financial Statements, the allocation of the
purchase price has been made based upon valuations and other studies which
have not been finalized. Accordingly, the allocation of the purchase price
is preliminary. The following adjustments reflect management's estimates
of the necessary adjustments to Western's historical Statement of Financial
Position to reflect fair market value:
<TABLE>
<S> <C>
BJ Consideration Paid:
Cash $ 240,127
Stock 240,127
Warrants 24,000
Transaction costs 10,000
-----------
514,254
Less: Western stockholders' equity 190,001
Conversion of Western debentures 75,554
-----------
265,555
-----------
Net Adjustment $ 248,699
===========
</TABLE>
43
<PAGE> 44
<TABLE>
<S> <C>
Allocation of adjustment:
Property $ 53,000
Deferred tax asset - net operating loss carryforwards 60,000
Accrual for severance, facility closings and other
nonrecurring costs associated
with the acquisition (9,400)
Accrual for buyout of Western stock options (4,598)
Accrual of past service costs - benefit plans (3,400)
Goodwill 153,097
-------------
$ 248,699
=============
</TABLE>
(2) Assumes that immediately upon consummation of the Merger, BJ Services
will utilize a new credit facility to retire all of its then outstanding
debt and, after utilizing $44.6 million in available excess cash held by
Western, pay the cash portion of the merger consideration as discussed
in Note (1).
(3) Reflects increased depreciation expense due to the net write-up of
property depreciated over its average estimated remaining useful life.
(4) Reflects the interest expense on the borrowings under the new credit
facility described in Note (2) at an average assumed rate of 5.125% for
the fiscal year and 6.625% for the six-month period. The effect of each
.125% change in the assumed rate would change interest expense by
$390,000 per annum.
(5) Reflects amortization of increase to goodwill over a 40-year period.
(6) Adjustment to reflect 35% effective tax rate for Western and the tax
effect of the pro forma adjustments, with the exception of goodwill
amortization.
(7) Adjustment to eliminate expenses incurred by Western which are directly
attributable to the Merger.
(8) The pro forma statement of operations has not been adjusted for the
following nonrecurring charges which are estimated and are expected to
be incurred by BJ Services within the 12 month period following the
Merger:
Severance and special incentive costs $ 10,500
Facility closings, equipment relocation, etc. 8,000
Legal, accounting and other 3,500
---------
$ 22,000
=========
44
<PAGE> 45
These items have been reflected in the pro forma statement of financial
position as an addition to accrued liabilities and a reduction to
stockholders' equity.
45
<PAGE> 46
(c) Exhibits.
<TABLE>
<CAPTION>
Exhibit Number Description
- -------------- -----------
<S> <C>
*10.1 Credit Agreement dated as of April 13, 1995, among BJ
Services Company, BJ Services Company, U.S.A., BJ Service
International, Inc., BJ Services Company Middle East,
Bank of America National Trust and Savings Association,
as agent, and the other financial institutions parties
thereto (the "Credit Agreement").
*10.2 Parent Guaranty Agreement dated as of April 13, 1995, by
BJ Services Company, in favor of the banks and the agent
under the Credit Agreement.
*10.3 Form of Guaranty Agreement dated as of April 13, 1995, by
each of BJ Services Company, U.S.A., BJ Service
International, Inc., BJ Services Company Middle East, and
Western Petroleum Services International Company, in
favor of the banks and the agent under the Credit
Agreement.
**23.1 Consent of Price Waterhouse LLP.
</TABLE>
- --------------------
* Previously filed.
** Filed herewith.
46
<PAGE> 47
SIGNATURE
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 hereunto duly authorized.
BJ SERVICES COMPANY
By /s/ MATTHEW D. FITZGERALD
_______________________
Matthew D. Fitzgerald
Controller
Date: May 30, 1996
47
<PAGE> 48
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description
------ -----------
<S> <C>
*10.1 Credit Agreement dated as of April 13, 1995, among BJ
Services Company, BJ Services Company, U.S.A., BJ Service
International, Inc., BJ Services Company Middle East,
Bank of America National Trust and Savings Association,
as agent, and the other financial institutions parties
thereto (the "Credit Agreement").
*10.2 Parent Guaranty Agreement dated as of April 13, 1995, by
BJ Services Company, in favor of the banks and the agent
under the Credit Agreement.
*10.3 Form of Guaranty Agreement dated as of April 13, 1995, by
each of BJ Services Company, U.S.A., BJ Service
International, Inc., BJ Services Company Middle East, and
Western Petroleum Services International Company, in
favor of the banks and the agent under the Credit
Agreement.
**23.1 Consent of Price Waterhouse LLP.
</TABLE>
- -----------
* Previously filed.
** Filed herewith.
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the
Registration Statements on Form S-8 (Nos. 33-36754, 33-52506, 33-62098,
33-58637 and 33-58639) of BJ Services Company and in the Post-Effective
Amendment on Form S-3 to the Company's Registration Statement on Form S-4 (No.
33-58017), the Company's Registration Statement on Form S-4 (No. 333- 02287)
and the Company's Registration Statement on Form S-3 (No. 333-02731) of our
report dated February 22, 1995 relating to the financial statements of The
Western Company of North America, which appears in this Current Report on Form
8-K/A of BJ Services Company.
PRICE WATERHOUSE LLP
Houston, Texas
May 22, 1996
