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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[ ] Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
or
[ ] Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarter ended September 30, 2000
Commission file number: 333-89863
GRANT GEOPHYSICAL, INC.
(Exact name of registrant as specified in its charter)
Delaware 76-0548468
(state or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
16850 Park Row, Houston, Texas 77084
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (281) 398-9503
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes [X] No [ ]
As of November 10, 2000, 14,547,055 shares of common stock, par value $.001
per share, were issued and outstanding. As of such date, there was no public
market for the common stock.
--------------------------------------------------------------------------------
* The Commission file number refers to a Form S-1 registration statement filed
by the registrant under the Securities Act of 1933, which became effective
January 12, 2000.
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GRANT GEOPHYSICAL, INC. AND SUBSIDIARIES
INDEX TO FORM 10-Q
QUARTER ENDED SEPTEMBER 30, 2000
<TABLE>
<CAPTION>
PAGE(S)
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<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets as of December 31, 1999 and
September 30, 2000........................................................ 3
Consolidated Statements of Operations for the Three and Nine
Months Ended September 30, 1999 and 2000.................................. 5
Consolidated Statements of Cash Flows for the Nine Months Ended
September 30, 1999 and 2000............................................... 6
Notes to Consolidated Financial Statements................................... 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations................................ 11
Item 3. Quantitative and Qualitative Disclosures about Market Risk.............. 17
PART II. OTHER INFORMATION
Item 1. Legal Proceedings....................................................... 18
Item 2. Changes in Securities and Use of Proceeds............................... 18
Item 6. Exhibits and Reports on Form 8-K........................................ 18
PART III. SIGNATURES............................................................ 19
</TABLE>
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GRANT GEOPHYSICAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(dollars in thousands)
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1999 2000
------------ -------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 2,703 $ 959
Restricted cash 17 17
Accounts receivable:
Trade(net of allowance for doubtful accounts of
$352 and $461 at December 31, 1999 and
September 30,
2000, respectively) 18,345 6,763
Other 736 2,228
Inventories 446 384
Prepaids 4,392 1,787
Work in process 1,570 3,857
-------- --------
Total current assets 28,209 15,995
Property, plant and equipment 95,656 93,472
Less: accumulated depreciation and amortization 42,136 54,729
-------- --------
Net property, plant and equipment 53,520 38,743
Multi-client data library, net 27,430 22,955
Goodwill, net 35,387 33,710
Other assets 5,450 2,217
-------- --------
Total assets $149,996 $113,620
======== ========
</TABLE>
(Continued on next page)
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GRANT GEOPHYSICAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(dollars in thousands)
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1999 2000
------------ -------------
(UNAUDITED)
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable, current portion of long-term debt and
capital lease obligations $ 8,247 $ 6,971
Accounts payable 12,876 7,434
Accrued expenses 6,928 5,280
Accrued interest 3,832 691
Foreign income taxes payable 1,255 203
--------- ---------
Total current liabilities 33,138 20,579
Term loan-affiliate 7,500 7,500
Long-term debt and capital lease obligations 112,209 51,598
Unearned revenue 2,167 5,749
Other liabilities and deferred credits 2,342 5,883
Stockholders' equity:
Preferred stock, $.001 par value. Authorized 5,000,000 shares
8% convertible preferred series, liquidation value $100 per share
issued and outstanding -0- shares at December 31 1999 and
561,832 shares at September 30, 2000 -- 56,183
8% exchangeable preferred series, liquidation value $100 per share;
issued and outstanding 149,677 shares at December 31 1999 and
-0- shares at September 30, 2000 14,968 --
Common stock, $.001 par value. Authorized 50,000,000 shares;
issued and outstanding 14,544,055 and 14,547,055 shares at
December 31, 1999 and September 30, 2000 15 15
Additional paid-in capital 42,111 58,867
Accumulated deficit (63,074) (90,354)
Accumulated other comprehensive income (1,380) (2,400)
--------- ---------
Total stockholders' equity (7,360) 22,311
--------- ---------
Total liabilities and stockholders' equity $ 149,996 $ 113,620
========= =========
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
4
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GRANT GEOPHYSICAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(dollars in thousands, except per share amounts)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------------- -------------------------
1999 2000 1999 2000
-------- -------- -------- --------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Revenues $ 11,513 $ 8,847 $ 44,721 $ 50,399
Expenses:
Direct operating expenses 12,796 8,332 36,378 36,442
Selling, general and administrative expenses 3,066 2,650 9,749 7,807
Depreciation and amortization 6,675 5,598 19,586 20,926
Cost of contractual rights purchase -- -- -- 3,821
Charge for asset impairment 4,726 -- 4,726 --
-------- -------- -------- --------
Total costs and expenses 27,263 16,580 70,439 68,996
-------- -------- -------- --------
Operating loss (15,750) (7,733) (25,718) (18,597)
Other income (expense):
Interest, net (3,003) (1,674) (8,811) (5,575)
Other (88) (298) 840 (773)
-------- -------- -------- --------
Total other expense (3,091) (1,972) (7,971) (6,348)
-------- -------- -------- --------
Loss before taxes (18,841) (9,705) (33,689) (24,945)
Income tax expense 35 6 456 92
-------- -------- -------- --------
Net loss (18,876) (9,711) (34,145) (25,037)
Preferred dividend requirements (68) (1,133) (68) (3,148)
-------- -------- -------- --------
Net loss applicable to common stock $(18,944) $(10,844) $(34,213) $(28,185)
======== ======== ======== ========
LOSS PER COMMON SHARE - BASIC
AND DILUTED:
Net loss $ (1.31) $ (0.67) $ (2.37) $ (1.72)
Dividend requirements on pay-in-kind preferred stock -- (0.08) -- (0.22)
-------- -------- -------- --------
Net loss per common share $ (1.31) $ (0.75) $ (2.37) $ (1.94)
======== ======== ======== ========
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
5
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GRANT GEOPHYSICAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in thousands)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
-------------------------
1999 2000
-------- --------
(UNAUDITED)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
NET LOSS $(34,145) $(25,037)
ADJUSTMENTS TO RECONCILE NET LOSS TO NET CASH
PROVIDED BY (USED IN) OPERATING ACTIVITIES:
Charge for asset impairment 4,726 --
Depreciation and amortization expense 17,377 15,826
Multi-client data library amortization expense 2,209 5,100
Cost of contractual rights purchase represented by non-cash
Consideration -- 1,470
(Gain) loss on sale of fixed assets (157) 165
Provision for doubtful accounts 450 200
Exchange (gain) loss, net (474) 476
Directors' stock compensation expense 30 --
Other non-cash items 59 387
CHANGES IN ASSETS AND LIABILITIES:
(INCREASE) DECREASE IN:
Accounts receivable 12,424 9,890
Inventories 70 62
Prepaids 1,685 2,605
Work in process 82 (2,287)
Other assets 2,627 1,094
INCREASE (DECREASE) IN:
Accounts payable (6,363) (5,442)
Accrued interest and other expenses (2,864) (4,548)
Foreign income tax payable (2,036) (1,052)
Other liabilities and deferred credits 2,099 7,123
-------- --------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES (2,201) 6,032
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures, net (4,649) (1,045)
Multi-client data library (20,329) (1,471)
Proceeds from sale of assets 239 392
Restricted cash 89 --
-------- --------
NET CASH USED IN INVESTING ACTIVITIES (24,650) (2,124)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of preferred stock 8,250 --
Preferred stock issue costs -- (462)
Common stock issue costs -- 9
Debt issue costs (940) --
Borrowings made 49,061 34,823
Repayment on borrowings (35,746) (39,476)
-------- --------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 20,625 (5,106)
-------- --------
EFFECT OF EXCHANGE RATE CHANGES ON CASH 254 (546)
-------- --------
NET DECREASE IN CASH AND CASH EQUIVALENTS (5,972) (1,744)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 7,921 2,703
-------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 1,949 $ 959
======== ========
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
6
<PAGE> 7
GRANT GEOPHYSICAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The consolidated balance sheet of Grant Geophysical, Inc. and subsidiaries
(the "Company") as of September 30, 2000 and the related consolidated statements
of operations for the three and nine months ended September 30, 1999 and 2000
and the related statements of cash flows for the nine months ended September 30,
1999 and 2000 are unaudited. In the opinion of management, the accompanying
unaudited condensed consolidated financial statements of the Company and its
consolidated subsidiaries contain all adjustments (consisting only of normal,
recurring adjustments) necessary to present fairly the Company's financial
position as of September 30, 2000, the results of its operations for the three
and nine months ended September 30, 1999 and 2000 and the results of its cash
flows for the nine months ended September 30, 1999 and 2000. Results of
operations for the interim periods included herein are not necessarily
indicative of results of operations for the full year periods. The consolidated
financial statements should be read in conjunction with the audited financial
statements and footnotes for the year ended December 31, 1999, included in the
Company's Annual Report on Form 10-K, as filed with the Securities and Exchange
Commission (the "Commission").
Business Conditions
The decrease in the price of oil and gas that occurred between the fourth
quarter of 1998 and the first quarter of 1999 significantly reduced demand for
the Company's services. Although commodity prices have since recovered and are
in fact at historically high levels, demand for land and transition zone
seismic acquisition services remains severely depressed over levels experienced
in recent years. The Company is unable to predict with any certainty when and
the extent to which the market for seismic services is likely to recover and,
until such time, will continue to experience significant operating losses. The
Company's global seismic crew count has decreased from a high of twenty during
1998 to six active crews at September 30, 2000. As a result, the Company's 2000
operating results have been adversely affected.
The Company will require substantial cash flow to continue operations on a
satisfactory basis, fund essential capital expenditures and meet its principal
and interest obligations with respect to the Senior Notes, the Loan Agreement
and its other indebtedness. The Company's ability to meet its debt service and
other obligations depends on its future performance, which in turn is subject to
general economic conditions and other factors beyond the Company's control. As
discussed in note 4, $5 million of liquidity for working capital purposes was
provided during the quarter ended September 30, 2000 from the sale of net
revenue interest in the Company's multi-client data library to Elliott. An
additional $2.5 million was received subsequent to September 30, 2000,
representing the maximum level available under the existing agreement. If the
Company is unable to generate sufficient cash flow from operations or otherwise
comply with the terms of the indenture, the Loan Agreement or its other debt
instruments, it may be required to obtain additional equity or debt financing or
sell assets. The Company has been dependent on one of its principal
stockholders, Elliot, to provide funding at times for working capital and such
needs are expected to continue. There are presently no committed funding
arrangements for future needs from Elliot or other third parties. There can be
no assurance that additional financing will be available on commercially
acceptable terms or that such financing will be available at all.
The Company believes that should low demand for data acquisition services
persist for a prolonged period, if the Company cannot obtain funding, or if
management's actions are not effective in reducing the Company's operating
losses and low level of cash flows; these conditions will have a material
adverse effect on the Company's financial position and results of operations and
its ability to continue as a going concern.
There are no adjustments in the accompanying financial statements
involving the classification or carrying amount of assets or liabilities should
the Company not be successful in obtaining necessary funding or attaining
sufficient cash flow from operations.
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of
the Company and all majority-owned subsidiaries. All significant intercompany
accounts and transactions have been eliminated.
Multi-client Data Library
The costs incurred in acquiring and processing multi-client seismic data
owned by the Company are capitalized. During the twelve-month period beginning
at the completion of the acquisition and processing of each multi-client survey,
costs are amortized based on revenues from such survey as a percentage of total
estimated revenues to be realized from such survey. Thereafter, amortization of
remaining capitalized costs is provided at the greater of the percentage of
realized revenues to total estimated revenues or straight line over four years.
Amortization expense associated with the Company's multi-client data library was
$1.2 million and $.3 million for the three months ended September 30, 1999 and
2000, respectively, and $2.2 million and $5.1 million for the nine months ended
September 30, 1999 and 2000, respectively. As of December 31, 1999 and September
30, 2000, accumulated amortization related to the Company's multi-client data
library was $4.8 million and $9.9 million, respectively.
On a quarterly basis, management estimates the residual value of each
survey, and additional amortization is provided if the remaining revenues
reasonably expected to be obtained from any survey are less than the carrying
value of such survey or group of surveys.
Asset Impairment
In accordance with Statement of Financial Accounting Standards ("SFAS") No.
121, "Accounting for Impairment of Long-Lived Assets and for Long-Lived Assets
To be Disposed Of", long-lived assets and certain identifiable intangibles are
written down to their current fair value whenever events or changes in
circumstances indicate that the carrying amount of these assets are not
recoverable. These events or changes in circumstances may include but are not
limited to a significant change to the extent in which an asset is used, a
significant decrease in the market value of the asset, or a projection or
forecast that demonstrated continuing losses associated with an asset. If an
impairment is determined, the asset is written down to its current fair value
and a loss is recognized. The charge for asset impairment of $4,726,000 for the
three and nine months ended September 30, 1999 to reduce the carrying value of
the multi-client data library to net realizable value, based on future licensing
prospects for such data.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
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The more significant areas requiring the use of management estimates relate
to expected future sales associated with the Company's multi-client data
library, estimated future cash flows related to long-lived assets and valuation
allowances for deferred tax assets. Actual results could differ materially from
these estimates making it reasonably possible that a change in these estimates
could occur in the near term.
Income (Loss) Per Common Share
In accordance with Statement of Financial Accounting Standards No. 128,
"Earnings per Share," basic income (loss) per common share is computed based
upon the weighted average number of common shares outstanding during each period
without any dilutive effects considered. Diluted income (loss) per common share
reflects dilution for all potentially dilutive securities, including convertible
securities. Cumulative preferred stock dividend requirements are deducted in
calculating net income (loss) applicable to the common stockholders.
Reclassifications
Certain amounts previously reported have been reclassified to conform to
current year financial statement presentations.
(2) DEBT
At December 31, 1999, the Company's primary secured credit facility was
represented by a Loan and Security Agreement (the "Loan Agreement") with
Foothill Capital Corporation ("Foothill") and Elliott Associates, L.P.
("Elliott"), one of the two principal stockholders of the Company, pursuant to
which the Company could borrow up to $6,000,000 through a revolving facility and
up to $19,000,000 through two term loans. The Loan Agreement imposes certain
limitations on the ability of the Company and its subsidiaries to, among other
things, incur additional indebtedness, incur liens, pay dividends or make other
distributions in cash or certain property, consummate certain asset sales, enter
into certain transactions with affiliates, merge or consolidate with any other
persons or sell, assign, transfer, lease, convey or otherwise dispose of all or
substantially all of the assets of the Company or its subsidiaries, make
Investments (as defined in the Loan Agreement) and maintain a minimum EBITDA
(earnings before interest, tax, depreciation and amortization) level, as defined
in the Loan Agreement.
On February 14, 2000, the Company completed significant modifications to the
Loan and Security Agreement with Foothill and Elliott whereby the credit
facility was increased from $25 million to $29 million. This was accomplished by
increasing commitments under the revolving credit facility from $6 million to
$10 million, subject to borrowing base limitations. Additionally, the term loan,
which had been reduced through periodic payments to $10.1 million, was increased
to the original outstanding balance of $11.5 million. At September 30, 2000,
$7.5 million and $9.3 million were outstanding under the Elliott term loan and
the Foothill term loan, respectively, and $2.5 million, the maximum amount then
allowable under the borrowing base computations, was outstanding at September
30, 2000 under the Foothill revolving credit line.
Pursuant to a registration statement declared effective on January 12, 2000,
the Company offered to exchange (the "Exchange Offer") $100,000,000 aggregate
principal amount of its then outstanding Senior Notes due 2008 ("Senior Notes")
for new shares of its 8% Convertible Preferred Stock ("Convertible Preferred
Stock") with an aggregate liquidation value equal to 65% of the aggregate
principal amount of the Senior Notes tendered plus 100% of the accrued and
unpaid interest thereon through the date of the exchange. On January 19, 2000, a
total of $56,320,000 of the Senior Notes, together with $2,364,000 of accrued
and unpaid interest, were exchanged for 389,722 shares of the Convertible
Preferred Stock. The Senior Notes exchanged represented all of the Senior Notes
previously held by Elliott and Westgate International, L.P. ("Westgate"), the
other principal stockholder of the Company. No other Senior Notes were tendered
and the Exchange Offer expired on February 7, 2000. The difference between the
carrying value of the Senior Notes and the Convertible Preferred Stock has been
reflected as an increase to additional paid-in capital due to the related party
nature of the exchange. The Company intends to pay dividends on the Convertible
Preferred Stock in additional shares of Convertible Preferred Stock until
further notice.
In connection with the Exchange Offer, the Company solicited consents from
the holders of its Senior Notes in order to amend definitions and to modify
certain restrictive covenants in the indenture governing the Senior Notes. Such
modifications amended the definition of permitted indebtedness to allow for the
increase of incurred debt from $25 million to $50 million, increased additional
indebtedness from $7.5 million to $10 million and permitted the payment of
dividends on the Convertible Preferred Stock in additional shares of Convertible
Preferred Stock. The consent of holders of a majority of the outstanding
principal amount of the Senior Notes held by holders other than Grant, its
subsidiaries and affiliates was required to approve the proposed amendments to
the indenture. The consent was approved on January 19, 2000. Following the
tender of the Senior Notes by Elliott and Westgate, the Company executed a First
Supplemental Indenture with LaSalle Bank National Association, the trustee,
dated January 19, 2000 that caused the approved amendments to take effect.
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(3) STOCKHOLDERS' EQUITY
On August 13, 1999, the board of directors of the Company created a series
of 120,000 shares of preferred stock, amended to 150,000 shares on October 13,
1999 and amended to 160,000 shares on January 1, 2000, designated as "8%
Exchangeable Preferred Stock". The shares of 8% Exchangeable Preferred Stock
have a liquidation preference of $100 per share. The 8% Exchangeable Preferred
Stock was entitled to receive cumulative dividends at the rate of 8% per annum
of the liquidation preference. The dividends were payable quarterly in cash or,
at the Company's option, in shares of 8% Exchangeable Preferred Stock. The
shares of 8% Exchangeable Preferred Stock could be exchanged at the option of
the holder into such new securities as the Company might from time to time
propose to sell or issue. Between August 13, 1999 and February 7, 2000, the
Company issued a total of 153,194 shares of 8% Exchangeable Preferred Stock to
Elliott at a price of $100 per share. Of these shares 4,194 were issued as
dividends in lieu of cash. The proceeds from the sale of the preferred stock
totaled an aggregate of $14,900,000, and were used to meet the Company's cash
needs.
In connection with the Exchange Offer, the Company issued 389,722 shares of
8% Convertible Preferred Stock in exchange for $56,320,000 aggregate principal
amount of Senior Notes, together with $2,364,000 of accrued unpaid interest. On
February 7, 2000 the Company issued 153,194 shares of 8% Convertible Preferred
Stock in exchange for all the outstanding shares of 8% Exchangeable Preferred
Stock.
(4) CONTRACTUAL RIGHTS PURCHASE
On March 17, 2000, the Company completed the purchase of contractual rights
held by a broker having multiple-year marketing rights for certain of the
Company's multi-client data surveys. Further data sales and transfer fee
commissions will not be payable to this broker, except for two designated data
surveys. Consideration provided by the Company for the purchase of such
contractual interests included $2.3 million cash paid at closing; a $700,000 8%
promissory note payable in 12 quarterly installments; assignments to the broker
of interests held in certain of the Company's data surveys, partially offset by
assignment to the Company of the broker's interest in a data survey; and,
assignment of a portion of an overriding royalty interest held by the Company in
one designated data survey. For financial reporting purposes, the Company
recorded in the three month period ended March 31, 2000 a non-recurring charge
to operations of $3.8 million, consisting of the monetary consideration paid of
$3 million and the net estimated fair value of property interests exchanged of
$.8 million.
(5) MULTI-CLIENT DATA LIBRARY NET REVENUE INTEREST SALE
In August 2000, the Company, entered into an agreement with Elliott to
assign, from time to time, a net revenue interest in certain geological and
geophysical data included in the U.S. multi-client data library for an amount up
to $7.5 million. Proceeds from net revenue interest sales, together with a
computed preferred return of 1% per month are payable from future sales of
multi-client data.
For financial reporting purposes, at September 30, 2000 proceeds to the
Company of $5,000,000 have been classified as other liabilities and deferred
credits in the accompanying consolidated balance sheet. Additional net revenue
interest sales of $2,500,000 have been made subsequent to September 30, 2000,
which represents the maximum level available under the existing agreement.
(6) SUPPLEMENTAL SCHEDULES TO CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
----------------------
1999 2000
------ --------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
CASH PAID FOR INTEREST AND TAXES WAS AS FOLLOWS:
Taxes, net of refunds $ 547 $ 241
Interest, net 10,671 4,568
</TABLE>
As discussed in Note 2, on January 19, 2000 a total of $56,320,000 aggregate
principal amount of the Company's then outstanding Senior Notes, together with
$2,364,000 of accrued and unpaid interest, were exchanged for 389,722 shares of
the Company's 8% Convertible Preferred Stock. The difference between the
carrying value of the Senior Notes exchanged and the Convertible Preferred Stock
has been reflected as an increase in additional paid-in capital due to the
related party nature of the exchange.
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(7) SEGMENT INFORMATION
Grant has determined that its reportable segments are those based on the
Company's method of internal reporting, which disaggregates its one
product/service line (geophysical services) into four geographic regions: the
United States, Canada, Latin America and the Far East.
The accounting policies of the segments are the same as those described in
Note 1 - Summary of Significant Accounting Policies for Segment Information.
Grant evaluates the performance of its segments and allocates resources to them
based on operating income (loss). There are no intersegment revenues.
The tables below present information about the Company's reported segments
for the periods indicated (dollars in thousands):
<TABLE>
<CAPTION>
UNITED LATIN
STATES CANADA AMERICA FAR EAST TOTAL
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000:
Revenues....................................... $ 21,710 $ 13,612 $ 10,916 $ 4,161 $ 50,399
Operating Income (Loss)(1)..................... (13,084) (748) (1,763) (3,002) (18,597)
Depreciation and Amortization.................. 13,243 4,211 1,616 1,856 20,926
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999:
Revenues....................................... $ 26,606 $ 7,907 $ 3,912 $ 6,296 $ 44,721
Operating Income (Loss)........................ (15,504) (1,125) (6,180) (2,908) (25,718)
Depreciation and Amortization.................. 12,029 3,119 1,881 2,557 19,586
</TABLE>
(1) Includes $3,821 non-recurring charge to operations in the U.S. from
contractual rights purchase (see Note 4).
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
OVERVIEW
Grant Geophysical, Inc., a Delaware corporation (together with its
subsidiaries, "Grant," or the "Company"), is a provider of seismic data
acquisition services in land and transition zone environments in selected
markets, including the United States, Canada, Latin America and the Far East.
The Company has conducted operations in each of these markets in the past three
years. The Company's seismic data acquisition services typically are provided on
an exclusive contract basis to domestic and international oil and gas companies
and seismic data marketing companies. The Company utilizes sophisticated
equipment to perform specialized 3D and 2D seismic surveys. All of the Company's
seismic data acquisition crews are capable of performing surveys in land
environments, and four are equipped to perform surveys in transition zone
environments. Transition zone environments include swamps, marshes and shallow
water areas that require specialized equipment and must be surveyed with minimal
disruption to the natural environment.
The Company provides seismic data processing services through offices
located in Dallas and Houston, Texas.
The Company began its multi-client data acquisition activities in the United
States and Canada during 1998 continuing through December 1999. During that
time, 17 projects were completed in Texas, California, Wyoming and Canada
covering a total of 1,648 square miles. The cost of these projects was $41.3
million with approximately $18.4 million, or 44.5%, underwritten by third
parties. Due to the continued depressed demand for seismic services, an
inability to secure adequate initial customer underwriting and a lack of
sufficient liquidity, the Company, in the first quarter of 2000, curtailed its
strategy of building a multi-client data library in the southern United States.
As long as these factors persist, the Company will be very selective in its
decision to participate in projects only partially funded by customers.
The decrease in the price of oil and gas that occurred between the fourth
quarter of 1998 and the first quarter of 1999 significantly reduced demand for
the Company's services. Although commodity prices have since recovered and are
in fact at historically high levels, demand for land and transition zone seismic
acquisition services remains severely depressed over levels experienced in
recent years. The Company is unable to predict with any certainty when and the
extent to which the market for seismic services is likely to recover and, until
such time, will continue to experience significant operating losses. The
Company's global seismic crew count has decreased from a high of twenty during
1998 to six active crews at September 30, 2000. As a result, the Company's 2000
operating results have been adversely affected.
As of September 30, 2000, the Company was operating or mobilizing two crews
in the United States, three crews in Latin America, and one crew in Canada. For
the three months ended September 30, 2000 the Company's total revenues were $8.8
million, with approximately 31.8% from the United States, 42.0% from Latin
America, and 26.2% from Canada.
For the nine months ended September 30, 2000 the Company's total revenues
were $50.4 million, with approximately 43.1% from the United States, 21.6% from
Latin America, 8.3% from the Far East and 27.0% from Canada.
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RESULTS OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, 2000 COMPARED WITH THREE MONTHS ENDED
SEPTEMBER 30, 1999
Revenues. Revenues for the three months ended September 30, 2000 were $8.8
million, compared with $11.5 million for the three months ended September 30,
1999. The decrease of $2.7 million, or 23.5%, was primarily the result of
decreased data acquisition revenue in the U.S., lower sales from the Company's
multi-client data library, partially offset by increased data acquisition
activities in Latin America.
Revenues from United States data acquisition operations decreased $4.8
million, or 70.6%, from $6.8 million for the three months ended September 30,
1999 to $2.0 million for the three months ended September 30, 2000. This sharp
decline in data acquisition revenues is due to reduced industry demand discussed
above.
Revenues from seismic data processing operations were $.1 million for the
third quarter of 2000 compared to $.3 million for the third quarter of 1999. The
Company operated seismic data processing centers which processed both
third-party and Company-owned multi-client data during 1999 in Midland, Dallas
and Houston, Texas. In January 2000, the Company completed the consolidation of
its Midland center with operations in the Houston seismic data processing
center. The significant decline in revenues is due to reduced data acquisition
activities.
Revenues from the Canadian data acquisition operations increased $.7
million, or 50%, from $1.4 million for the third quarter ended September 30,
1999 to $2.1 million for the three months ended September 30, 2000. This was a
continuation of the increased seismic activity which started during the fourth
quarter of 1999. During the third quarter of 2000, a range of one to four land
seismic crews were operating in Canada as compared with one to two during the
third quarter of 1999.
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<PAGE> 13
Revenues from sales of the data library for the third quarter of 2000 was
$.7 million, compared to $1.2 million for the third quarter of 1999. This
decrease is due to the timing of sales.
Revenues from data acquisition operations in Latin America increased $2.2
million, or 137.5%, from $1.6 million for the third quarter of 1999 to $3.8
million for the third quarter of 2000; primarily due to increased activity in
Mexico.
Data acquisition operations in the Far East were essentially inactive for
both the 1999 and 2000 quarters.
Expenses. Direct operating expenses for the three months ended September 30,
2000 decreased $4.5 million, or 35.2%, to $8.3 million, compared to $12.8
million for the three months ended September 30, 1999. This is primarily a
result of higher levels of data acquisition activities in the third quarter of
1999 and losses on certain Latin American contracts during the 1999 quarter.
Selling, general and administrative expenses decreased $.4 million, or 12.9%
to $2.7 million for the three months ended September 30, 2000 from $3.1 million
for the three months ended September 30, 1999. This reduction is the result of
the Company's ongoing efforts to reduce support and overhead personnel in all of
its operating regions and at the corporate office level.
Depreciation and amortization decreased $1.1 million, or 16.4%, to $5.6
million in the third quarter of 2000 from $6.7 million for the third quarter of
1999. This decrease reflects a reduction in the Company's net depreciable asset
base for the year 2000. Capital expenditures were $.2 million and $1.0 million
for the third quarter of 2000 and 1999, respectively.
Other Income (Expenses). Interest expense, net, decreased $1.3 million to
$1.7 million in the third quarter of 2000 from $3.0 million in the third quarter
of 1999. This decrease is primarily related to Elliott and Westgate exchanging
$56,320,000 aggregate principal amount of Senior Notes for Convertible Preferred
Stock, effective January 19, 2000.
Tax Provision. The income tax provision consisted of foreign income taxes.
No benefit for United States federal income tax loss carryforwards was recorded
in either period, given the uncertainty of realization of such tax benefits.
NINE MONTHS ENDED SEPTEMBER 30, 2000 COMPARED WITH NINE MONTHS ENDED
SEPTEMBER 30, 1999
Revenues. Revenues for the nine months ended September 30, 2000 were $50.4
million, compared with $44.7 million for the nine months ended September 30,
1999. The increase of $5.7 million, or 12.75%, was primarily the result of
increased sales from the Company's multi-client data library and increased
Canadian and Latin American data acquisition revenues during the first nine
months of 2000.
Revenues from United States data acquisition operations decreased $11.6
million, or 49.2%, from $23.6 million for the nine months ended September 30,
1999 to $12.0 million for the nine months ended September 30, 2000. This sharp
decline in data
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<PAGE> 14
acquisition revenues is due to reduced U.S. demand for seismic services
discussed above. During the first nine months of 2000, the Company performed
$6.1 million of data acquisition services for an affiliated oil and gas
exploration and production company.
Revenues from seismic data processing operations were $.4 million for the
first nine months of 2000 compared to $1.2 million for the first nine months of
1999. The Company operated seismic data processing centers which processed both
third-party and Company-owned multi-client data during 1999 in Midland, Dallas
and Houston, Texas. In January 2000, the Company completed the consolidation of
its Midland center with operations in the Houston seismic data processing
center. The significant decline in revenues is due to reduced data acquisition
activities.
Revenues from the Canadian data acquisition operations increased $4.9
million, or 67.1% from $7.3 million for the first nine months of 1999 to $12.2
million for the first nine months of 2000. This was a continuation of the
increased seismic activity in Canada which started during the fourth quarter of
1999. During the first three quarters of 2000, there were additional crews
operating on larger contracts in Canada as compared with the same period of
1999.
Revenues from sales of the data library for the first nine months of 2000
were $10.7 million, compared to only $2.4 million for the first nine months of
1999. During the 2000 period, the Company sold a license in one of its
multi-client data surveys to an affiliated oil and gas exploration and
production company for approximately $2.3 million.
Revenues from data acquisition operations in Latin America increased $7.0
million, or 179.5%, from $3.9 million in the first nine months of 1999 to $10.9
million in the first nine months of 2000. These revenue fluctuations are
attributable to changes in working crew levels in the respective geographic
areas resulting from activity levels of customers' exploration operations.
Revenues from data acquisition operations in the Far East decreased $2.1
million, or 33.3%, from $6.3 million in the nine months ended September 30, 1999
to 4.2 million in the nine months ended September 30, 2000. During the first
nine months of 1999, the Company operated two crews in Bangladesh, and there was
no significant activity in Indonesia. During the first six months of 2000, the
Company operated one crew in Indonesia.
Expenses. Direct operating expenses for the nine months ended September 30,
2000 were flat compared to the nine months ended September 30, 1999.
Selling, general and administrative expenses decreased $1.9 million, or
19.6%, to $7.8 million for the nine months ended September 30, 2000 from $9.7
million for the nine months ended September 30, 1999. This reduction is the
result of the Company's ongoing efforts to reduce support and overhead personnel
in all of its operating regions and at the corporate office level.
Depreciation and amortization increased $1.3 million, or 6.6%, to $20.9
million in the first nine months of 2000 from $19.6 million for the first nine
months of 1999. This increase reflects additional amortization of the Company's
multi-client projects resulting from the $8.3 million increase in data library
sales in the first nine months of 2000 over 1999. Capital expenditures were $1.0
million and $4.6 million for the first nine months of 2000 and the first nine
months of 1999, respectively.
As discussed in Note 4 to the accompanying financial statements, on March
17, 2000 the Company completed the purchase of contractual rights held by a
broker having multiple-year marketing rights for certain of the Company's
multi-client data surveys. For financial reporting purposes, the Company
recorded, during the quarter ended March 31, 2000, a non-recurring charge to
operations of $3.8 million consisting of the monetary consideration paid of $3
million and the net estimated fair value of property interests exchanged of $.8
million. The Company expects to recoup the contract rights purchase through
increased future data sales with a
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<PAGE> 15
reduced brokerage commission structure.
Other Income (Expenses). Interest expense, net, decreased $3.2 million to
$5.6 million in the first nine months of 2000 from $8.8 million in the first
nine months of 1999. This decrease is primarily related to Elliott and Westgate
exchanging $56,320,000 of purchased Senior Notes for Convertible Preferred
Stock, effective January 19, 2000.
Tax Provision. The income tax provision consisted of foreign income taxes.
No benefit for United States federal income tax loss carryforwards was recorded
in either period, given the uncertainty of realization of such tax benefits.
LIQUIDITY AND CAPITAL RESOURCES
The Company's internal sources of liquidity are its working capital and, to
the extent generated, cash flow from operations, including multi-client data
library sales. On February 14, 2000, the Company completed significant
modifications to its Loan and Security Agreement with Foothill and Elliott dated
May 11, 1999. Initial available borrowings under this secured credit facility
were increased from $25 million to $29 million. This was accomplished by
increasing commitments under the revolving credit facility from $6 million to
$10 million, subject to borrowing base limitations. Additionally, the term loan,
which had been reduced through periodic payments to $10.1 million, was increased
to the original outstanding balance of $11.5 million. Substantially all of
available borrowings under the revolving credit facility are drawn at the
current time.
In August 2000, the Company, entered into an agreement with Elliott to
assign, from time to time, a net revenue interest in certain geological and
geophysical data included in the U.S. multi-client data library for an amount up
to $7.5 million. Proceeds from net revenue interest sales, together with a
computed preferred return of 1% per month are payable from future sales of
multi-client data. For financial reporting purposes, at September 30, 2000
proceeds to the Company of $5,000,000 have been classified in other liabilities
and deferred credits in the accompanying consolidated balance sheet. Additional
net revenue interest sales of $2,500,000 have been made subsequent to
September 30, 2000.
The Company generated $6.0 million of cash from operating activities during
the nine months ended September 30, 2000 compared to $2.2 million of cash used
in operating activities during the nine months ended September 30, 1999.
Although operating cash flows improved in the first three quarters of 2000,
primarily as a result of the transaction with Elliott described above, the
Company will need to attain profitable operating levels in order to provide
sufficient cash flow to fund operating requirements and debt service
obligations. During the nine months ended September 30, 2000, the Company had
data acquisition service revenues of $6.1 million and a multi-client data survey
license sale of $2.3 million to an affiliated oil and gas exploration company.
The Company's principal uses of liquidity will be to provide working
capital, finance capital expenditures, and to make principal and interest
payments required by the terms of its indebtedness. Because of the traditionally
longer period required to collect receivables and the high costs associated with
equipping and operating crews outside of the United States and Canada, the
Company requires significant levels of working capital to fund its international
operations. International operations accounted for 57% of total revenues for the
nine months ended September, 2000.
Capital expenditures for the three and nine months ended September 30, 2000
were $.2 million and $1.0 million respectively. Capital expenditures are used
primarily to maintain the Company's seismic data acquisition and recording
equipment. The original planned capital budget for 2000 was $5.1 million,
although subsequently reduced to approximately $3 million to take into account
anticipated crew activity and availability of capital resources.
As a result of continuing low U.S. demand for land seismic data acquisition
services, net losses for the nine months ended September 30, 2000 were $25
million compared to $34.1 million for the comparable 1999 period. Initiatives
taken during 1999 and 2000 to reduce costs have consisted of: (a) closing and or
consolidating certain U.S. field offices and foreign operations; (b) reducing
personnel levels; and (c) consolidating certain administrative functions.
Primarily because of increased sales of multi-client data, increased
operating activity in Canada and Latin America, cost reduction steps discussed
above, the Elliott net revenue interest sale discussed above and working capital
management improvements; $6 million in cash was generated from operating
activities for the nine months ended September 30, 2000, compared to $2.2
million of cash utilized in operating activities for the nine months ended
September 30, 1999.
The Company will require substantial cash flow to continue operations on a
satisfactory basis, fund essential capital expenditures and meet its principal
and interest obligations with respect to the Senior Notes, the Loan Agreement
and its other indebtedness. The Company's ability to meet its debt service and
other obligations depends on its future performance, which in turn is subject to
general economic conditions and other factors beyond the Company's control. As
discussed above, $5 million of liquidity for working capital purposes was
provided during the quarter ended September 30, 2000 from the sale of net
revenue interest in the Company's multi-client data library to Elliott. An
additional $2.5 million was received subsequent to September 30, 2000,
representing the maximum level available under the existing agreement. If the
Company is unable to generate sufficient cash flow from operations or otherwise
comply with the terms of the indenture, the Loan Agreement or its other debt
instruments, it may be required to obtain additional equity or debt financing or
sell assets. The Company has been dependent on one of its principal
stockholders, Elliot, to provide funding at times for working capital and such
needs are expected to continue. There are presently no committed funding
arrangements for future needs from Elliot or other third parties. There can be
no assurance that additional financing will be available on commercially
acceptable terms or that such financing will be available at all.
The Company believes that should low demand for data acquisition services
persist for a prolonged period, if the Company cannot obtain funding, or if
management's actions are not effective in reducing the Company's operating
losses and low level of cash flows; these conditions will have a material
adverse effect on the Company's financial position and results of operations and
its ability to continue as a going concern. There are no adjustments in the
accompanying financial statements involving the classification or carrying
amount of assets or liabilities should the Company not be successful in
obtaining necessary funding or attaining sufficient cash flow from operations.
FOREIGN CURRENCY RISK
The Company conducts a substantial portion of its business in currencies
other than the U.S. or Canadian dollars, particularly various Latin American
currencies, and its international operations are subject to fluctuations in
foreign currency exchange rates. Accordingly, the Company's international
contracts could be significantly affected by fluctuations in exchange rates.
International contracts requiring payment in currency other than U.S. or
Canadian dollar typically are indexed to inflationary tables and generally
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<PAGE> 16
are used for local expenses. The Company attempts to structure the majority of
its international contracts to be billed and paid at a favorable U.S. dollar
conversion rate.
The Company's operating results were positively impacted by foreign exchange
gains of approximately $.5 million for the nine months ended September 30, 1999,
and negatively impacted by $.5 million of foreign exchange losses for the nine
months ended September 30, 2000.
RECENT ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 133 "Accounting for
Derivative Instruments and Hedging Activities." SFAS No. 133 establishes
accounting and reporting standards requiring that every derivative financial
instrument be recorded in the balance sheet as either an asset or a liability
measured at its fair value, with changes in fair value recognized currently in
earnings. On July 7, 1999, the FASB delayed the effective date of SFAS No. 133
for one year. The delay, published as SFAS No. 137, applies to quarterly and
annual financial statements, SFAS No. 133, as revised by SFAS No. 137, is
effective for all fiscal quarters of all fiscal years beginning after June 15,
2000. The Company is in the process of assessing the impact of adoption.
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
From time to time, information provided by the Company, statements by its
employees or information included in written material, such as press releases
and filings (including this Form 10-Q Quarterly Report) with the Commission
(including portions of the "Management's Discussion and Analysis of Financial
Condition and Results of Operations," "Business" and certain other sections
contained in such filings) may contain "forward-looking" statements within the
meaning of Section 27A of the Securities Exchange Act of 1934.
Although the Company believes that the expectations reflected in such
forward-looking statements are reasonable; it can give no assurance that such
expectations will prove to be correct. Such forward-looking statements are
subject to certain risks, uncertainties and assumptions. Should one or more of
these risks or uncertainties materialize, or should any of the underlying
assumptions prove incorrect, actual results of current and future operations may
vary materially from those anticipated, estimated or projected. Investors are
cautioned not to place undue reliance on these forward-looking statements, which
speak only as of their dates.
Among the factors that will have a direct bearing on the Company's results
of operations and the oil and gas services industry in which it operates are the
effects of rapidly changing technology; the presence of competitors with greater
financial resources; operating risks inherent in the oil and gas services
industry; regulatory uncertainties; potential liability under the Plan;
worldwide political stability and economic conditions and other risks associated
with international operations, including foreign currency exchange risk; and the
Company's successful execution of its strategy and internal operating plans.
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<PAGE> 17
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
Etica Valdez and Marta G. Garza, on behalf of themselves and all others
similarly situated v. Grant Geophysical, Inc. and Millennium Seismic, Inc.,
No. DC-00-214 on the docket of the 229th Judicial District, Starr County, Texas.
On August 18, 2000, two residents of Starr County filed this purported class
action against the Company and Millennium Seismic, Inc., seeking to represent
a class of all owners of any mineral estate located in Texas from which
three-dimensional (3-D) geophysical information was extracted by either or
both of the defendants.
The plaintiffs generally allege that the Company and Millennium
conducted 3-D seismic surveys in Texas without obtaining permission from the
mineral estate owners and sold the information obtained from those surveys to
third parties. The plaintiffs seek remedies including unspecified damages,
injunctive relief, and attorneys fees from the Company and Millennium. The
Company and Millennium have each answered the plaintiffs' complaint, denying
all liability.
This litigation is in the earliest stages, and its outcome and the
costs of defending it cannot be predicted at this time. The Company believes
that the claims are without merit and intends to defend itself vigorously.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
During the three months ended September 30, 2000, the Company issued
10,987 shares of its 8% convertible preferred stock to satisfy payment-in-kind
dividend requirements on such stock issue. The issuance of these securities
were deemed to be exempt from registration under the Securities Act of 1933, as
amended, in reliance on Section 4(2)/4(6) of the Securities Act.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company's debt consists of both fixed-interest and variable-interest
rate debt; consequently, the Company's results of operations and cash flows, as
well as the fair values of its fixed-rate debt instruments, are subject to
interest-rate risk. The Company has performed sensitivity analyses to assess the
impact of this risk based on a hypothetical ten-percent increase in market
interest rates. Market rate volatility is dependent on many factors that are
impossible to forecast, and actual interest rate increases could be more severe
than the hypothetical ten-percent increase. The Company estimates that if
prevailing market interest rates had been ten percent higher throughout the
three quarters of 2000 and all other factors affecting the Company's debt
remained the same, the Company's pretax loss would have been increased by
approximately $182,000 and $589,000 respectively, for the three and nine months
ended September 30, 2000. With respect to the fair value of the Company's
fixed-interest rate debt, if prevailing market interest rates had been ten
percent higher during first nine months of 2000, and all other factors affecting
the Company's debt remained the same, the fair value of the Company's fixed-rate
debt, as determined on a present-value basis, would have been lower by
approximately $2.5 million at September 30, 2000. Given the composition of the
Company's debt structure, the Company generally does not actively manage its
interest rate risk, the relative magnitude of which has not changed materially
since December 31, 1999.
Due to a significant portion of the Company's current international
operating activities being derived from Canada during the three quarters of
2000, there has not been a material change in exposure to foreign currency rate
fluctuations since December 31, 1999.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) List of Exhibits
EXHIBIT NO.
3.1 Amended and Restated Certificate of Incorporation of the
Registrant (incorporated by reference to Exhibit 3.1 of the
Registrant's Current Report on Form 8-K filed with the Commission
on August 19, 1999).
3.2 Articles of Amendment to the Amended and Restated Certificate of
Incorporation of the Registrant (incorporated by reference to
Exhibit 3.2 of the Registrant's Registration Statement on Form
S-1, File No. 333-89863, originally filed with the Commission on
October 28, 1999).
3.3 Amended and Restated By-Laws of the Registrant (incorporated by
reference to Exhibit 3.2 of the Registrant's Current Report on
Form 8-K filed with the Commission on August 19, 1999).
4.1 Certificate of Designations of 8% Exchangeable Preferred Stock of
the Registrant (incorporated by reference to Exhibit 4.1 of the
Registrant's Current Report on Form 8-K filed with the Commission
on August 19, 1999).
4.2 Certificate of Designations of 8% Convertible Preferred Stock of
the Registrant (incorporated by reference to Exhibit 4.2 of the
Registrant's Registration Statement on Form S-1, File No.
333-89863, originally filed with the Commission on October 28,
1999).
4.3 Specimen Certificate for the Common Stock, par value $.001 per
share, of the Registrant (incorporated by reference to Exhibit 4.1
of the Registrant's Registration Statement on Form S-1, File No.
333-43219, originally filed with the Commission on December 24,
1997).
4.4 Specimen Certificate for the 8% Exchangeable Preferred Stock, par
value $.001 per share, of the Registrant (incorporated by
reference to Exhibit 4.4 of the Registrant's Registration
Statement on Form S-1, File No. 333-89863, originally filed with
the Commission on October 28, 1999).
4.5 Specimen Certificate for the 8% Convertible Preferred Stock, par
value $.001 per share, of the Registrant (incorporated by
reference to Exhibit 4.5 of the Registrant's Registration
Statement on Form S-1, File No. 333-89863, originally filed with
the Commission on October 28, 1999).
4.6 Indenture dated as of February 18, 1998, by and among the
Registrant, LaSalle National Bank, as trustee, and the subsidiary
guarantors, as defined therein (incorporated by reference to
Exhibit 4.6 of the Registrant's Registration Statement on Form
S-1, File No. 333-43219, originally filed with the Commission on
December 24, 1997).
10.01 Amended and Restated Receipt, Assignment and Conveyance of Net
Revenue Interest as of August 30, 2000 by Grant Geophysical Corp.
and Elliott Associates, L.A.
27.01 Financial data schedule (filed herein)
(b) Reports on Form 8-K - On August 22, 2000, a report on Form 8-K was filed
reporting the discontinuance of PriceWaterhouseCoopers as the Company's
independent auditors.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized on the 20th day of November, 2000.
GRANT GEOPHYSICAL, INC.
By: /s/ THOMAS L. EASLEY
--------------------
Thomas L. Easley
Executive Vice President - Finance &
Administration (Principal Financial and
Accounting Officer)
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EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- -----------------------
<S> <C>
10.01 Amended and Restated Receipt, Assignment and Conveyance
of Net Revenue Interest
27.01 Financial Data Schedule
</TABLE>
