<PAGE> 1
- --------------------------------------------------------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to ____________
Commission file number 0-22664
PATTERSON ENERGY, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
DELAWARE
(State or other jurisdiction of 75-2504748
incorporation or organization) (I.R.S. Employer Identification No.)
</TABLE>
P. O. BOX 1416, 4510 LAMESA HIGHWAY, SNYDER, TEXAS, 79550
(Address of principal executive offices) (Zip Code)
(915) 573-1104
(Registrant's telephone number, including area code)
No change
(Former name, former address and former fiscal
year, if changed since last report.)
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 May 12, 1998 the issuer had outstanding 31,667,132 shares of common stock,
$0.01 par value, its only class of voting stock.
- --------------------------------------------------------------------------------
<PAGE> 2
PATTERSON ENERGY, INC. AND SUBSIDIARIES
INDEX
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of Independent Accountants................................................................ 3
Part I - Financial Information
Item 1. Financial Statements
Unaudited condensed consolidated balance sheets............................ 4
Unaudited condensed consolidated statements of operations.................. 6
Unaudited condensed consolidated statement of stockholders' equity......... 7
Unaudited condensed consolidated statements of cash flows.................. 8
Notes to unaudited condensed consolidated financial statements............. 10
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations...................................................... 14
Cautionary Statement for Purposes of the "Safe Harbor"
Provisions of the Private Securities Litigation Reform Act of 1995......................... 17
Part II - Other Information
Item 6. Exhibits and Reports on Form 8-K............................................... 18
Signatures....................................................................................... 22
</TABLE>
2
<PAGE> 3
REPORT OF INDEPENDENT ACCOUNTANTS
The Board of Directors and Stockholders
of Patterson Energy, Inc.:
We have reviewed the accompanying condensed consolidated balance sheet of
Patterson Energy, Inc. and its Subsidiaries as of March 31, 1998, and the
related condensed consolidated statements of operations and cash flows for the
three months ended March 31, 1998 and 1997 and the related condensed
consolidated statement of stockholders' equity for the three months ended March
31, 1998. These financial statements are the responsibility of the Company's
management.
We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical review procedures to
financial data and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted in
accordance with generally accepted auditing standards, the objective of which is
the expression of an opinion regarding the financial statements taken as a
whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the accompanying condensed consolidated financial statements for them
to be in conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet as of December 31, 1997 and the
related consolidated statements of income and cash flows for the year then ended
(not presented herein); and in our report dated February 27, 1998, we expressed
an unqualified opinion on those consolidated financial statements. In our
opinion, the information set forth in the accompanying condensed consolidated
balance sheet as of December 31, 1997 is fairly stated, in all material
respects, in relation to the consolidated balance sheet from which it has been
derived.
/s/ COOPERS & LYBRAND L.L.P.
Dallas, Texas
April 30, 1998
3
<PAGE> 4
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
THE FOLLOWING UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
INCLUDE ALL ADJUSTMENTS WHICH IN THE OPINION OF MANAGEMENT ARE NECESSARY IN
ORDER TO MAKE SUCH FINANCIAL STATEMENTS NOT MISLEADING.
PATTERSON ENERGY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS
(Unaudited)
<TABLE>
<CAPTION>
December 31, March 31,
1997 1998
-----------------------
(in thousands)
<S> <C> <C>
Current assets:
Cash and cash equivalents .......................... $ 23,338 $ 16,281
Marketable securities .............................. 566 --
Accounts receivable:
Trade ....................................... 44,732 44,221
Oil and natural gas sales ................... 773 1,007
Other ......................................... -- 638
Costs of uncompleted drilling contracts in excess
of related billings ............................ -- 580
Inventory .......................................... -- 973
Deferred income taxes .............................. 2,309 1,387
Undeveloped oil and natural gas properties held
for resale ..................................... 4,781 6,720
Other current assets ............................... 515 2,680
-------- --------
Total current assets ..................... 77,014 74,487
Property and equipment, at cost, net .................. 100,405 133,444
Intangible assets, net ................................ 24,644 44,470
Other assets .......................................... 1,137 724
-------- --------
Total assets ............................. $203,200 $253,125
======== ========
</TABLE>
The accompanying notes are an integral part of these unaudited condensed
consolidated financial statements.
4
<PAGE> 5
PATTERSON ENERGY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS - CONTINUED
LIABILITIES AND STOCKHOLDERS' EQUITY
(Unaudited)
<TABLE>
<CAPTION>
December 31, March 31,
1997 1998
------------ ---------
(in thousands)
<S> <C> <C>
Current liabilities:
Current maturities of notes payable ................... $ 1,467 $ 5,463
Accounts payable:
Trade ............................................... 12,126 13,288
Revenue distribution ................................ 3,352 2,759
Other ............................................... 1,569 1,386
Accrued expenses ...................................... 5,142 7,860
Accrued state and federal income taxes payable ........ 6,874 2,778
-------- --------
Total current liabilities ................... 30,530 33,534
Deferred income taxes .................................... 3,268 3,268
Deferred liabilities ..................................... 687 167
Notes payable, less current maturities ................... 21,783 54,537
-------- --------
Total liabilities ........................... 56,268 91,506
-------- --------
Commitments and contingencies ............................ -- --
Stockholders' equity:
Preferred stock - par value $.01; authorized
1,000,000 shares, no shares issued .................. -- --
Common stock - par value $.01; authorized
50,000,000 shares with 30,967,084 and
31,622,732 issued and outstanding at
December 31, 1997 and March 31, 1998,
respectively ........................................ 310 316
Additional paid-in capital ............................ 102,306 112,454
Retained earnings ..................................... 44,316 48,849
-------- --------
Total stockholders' equity .................. 146,932 161,619
-------- --------
Total liabilities and stockholders' equity .. $203,200 $253,125
======== ========
</TABLE>
The accompanying notes are an integral part of these unaudited condensed
consolidated financial statements.
5
<PAGE> 6
PATTERSON ENERGY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
----------------------
1997 1998
-------- --------
(in thousands, except per share data)
<S> <C> <C>
Operating revenues:
Drilling .................................. $ 27,564 $ 54,297
Drilling fluids ........................... -- 4,269
Oil and natural gas sales ................. 2,633 1,795
Well operation fees ....................... 407 374
Other ..................................... 37 16
-------- --------
30,641 60,751
-------- --------
Operating costs and expenses:
Direct drilling costs ..................... 22,320 40,069
Drilling fluids ........................... -- 2,971
Lease operating and production ............ 517 527
Impairment of oil and natural gas
properties ............................. 150 300
Exploration costs ......................... 159 169
Dry holes and abandonments ................ 223 22
Depreciation, depletion and amortization .. 3,295 6,171
General and administrative expense ........ 1,337 2,661
-------- --------
28,001 52,890
-------- --------
Operating income .............................. 2,640 7,861
-------- --------
Other income (expense):
Net gain on sale of assets ................ 135 159
Interest income ........................... 284 165
Interest expense .......................... (483) (899)
Other ..................................... 19 25
-------- --------
(45) (550)
-------- --------
Income before income taxes .................... 2,595 7,311
-------- --------
Income tax expense:
Current ................................... 497 1,856
Deferred .................................. 458 922
-------- --------
955 2,778
-------- --------
Net income .................................... $ 1,640 4,533
======== ========
Net income per common share:
Basic ..................................... $ 0.06 $ 0.14
======== ========
Diluted ................................... $ 0.06 $ 0.14
======== ========
Weighted average number of common shares
outstanding:
Basic ..................................... 25,585 31,566
======== ========
Diluted ................................... 26,415 31,835
======== ========
</TABLE>
The accompanying notes are an integral part of these unaudited condensed
consolidated financial statements.
6
<PAGE> 7
PATTERSON ENERGY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(Unaudited)
(in thousands)
<TABLE>
<CAPTION>
Common Stock
---------------------
Number of Additional Retained
Shares Amount paid-in capital earnings Total
-------- -------- --------------- -------- --------
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1997 .. 30,967 $ 310 $102,306 $ 44,316 $146,932
Issuance of common stock .... 571 5 9,941 --
9,946
Exercise of stock options ... 85 1 207 --
208
Net income .................. -- -- -- 4,533 4,533
-------- -------- -------- -------- --------
Balance, March 31, 1998 ..... 31,623 $ 316 $112,454 $ 48,849 $161,619
======== ======== ======== ======== ========
</TABLE>
The accompanying notes are an integral part of these unaudited condensed
consolidated financial statements.
7
<PAGE> 8
PATTERSON ENERGY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
----------------------
1997 1998
-------- --------
(in thousands)
<S> <C> <C>
Cash flows from operating activities:
Net income ...................................................... $ 1,640 $ 4,533
Adjustments to reconcile net income to net cash
from operating activities:
Depreciation, depletion and amortization ....................... 3,295 6,171
Impairment of oil and natural gas properties ................... 150 300
Net gain on sale of assets ..................................... (135) (159)
Deferred income tax expense .................................... 458 922
Tax benefit related to exercise of stock options ............... 878 --
Decrease in deferred compensation liabilities .................. (6) (520)
Change in operating assets and liabilities:
(Increase) decrease in trade accounts receivable .. (60) 511
(Increase) decrease in oil and natural gas
sales receivable ............................. 26 (234)
Increase in inventory held for resale ............... -- (973)
Increase in undeveloped oil and natural gas
properties held for resale ................... (237) (1,939)
(Increase) decrease in other current assets ....... 240 (3,383)
Increase (decrease) in trade accounts payable ..... (2,238) 1,162
Increase (decrease) in revenue distribution
payable ...................................... 814 (593)
Decrease in accrued state and federal
income taxes payable ......................... -- (4,096)
Increase in accrued expenses ...................... 847 2,718
Decrease in other current payables ................ -- (183)
-------- --------
Net cash provided by operating activities ..... 5,672 4,237
-------- --------
Cash flows from investing activities:
Sales of investment securities ................................. -- 566
Acquisitions ................................................... -- (41,879)
Purchases of property and equipment ............................ (7,912) (7,511)
Sales of property and equipment ................................ 135 159
Change in other assets ......................................... (9) 413
-------- --------
Net cash used in investing activities ......... (7,786) (48,252)
-------- --------
Cash flows from financing activities:
Proceeds from notes payable .................................... -- 40,150
Payments of notes payable ...................................... (25,849) (3,400)
Issuance of common stock ....................................... 59,401 --
Proceeds from exercise of stock options ........................ 483 208
-------- --------
Net cash provided by financing activities ..... 34,035 36,958
-------- --------
Net increase (decrease) in cash
and cash equivalents ......................... 31,921 (7,057)
-------- --------
Cash and cash equivalents at beginning of period .................... 3,494 23,338
-------- --------
Cash and cash equivalents at end of period .......................... $ 35,415 $ 16,281
======== ========
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest ..................................................... $ 483 $ 899
Income taxes ................................................. $ -- $ 8,000
</TABLE>
The accompanying notes are an integral part of these unaudited condensed
consolidated financial statements.
8
<PAGE> 9
PATTERSON ENERGY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS- CONTINUED
(Unaudited)
Supplemental disclosure of cash flow information - continued:
During the three months ended March 31, 1998, the Company acquired
Lone Star Mud, Inc. and Robertson Onshore Drilling Company for an aggregate
purchase price of approximately $55,225,000 of which, $41,879,000 was paid in
cash as follows (See Note 2):
<TABLE>
<CAPTION>
(in thousands)
<S> <C>
Purchase price........................................... $ 55,225
Less non-cash item:
Common stock issued................................. (9,946)
Debt assumed........................................ (3,400)
--------
Total cash paid................................... $ 41,879
========
</TABLE>
The accompanying notes are an integral part of these unaudited condensed
consolidated financial statements.
9
<PAGE> 10
PATTERSON ENERGY, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF CONSOLIDATION AND PRESENTATION
The consolidated financial statements include the accounts of Patterson
Energy, Inc. ("Patterson") and its wholly-owned subsidiaries, Patterson Drilling
Company, Patterson Onshore Drilling Company, Lone Star Mud, Inc., Patterson
Petroleum, Inc., Patterson Petroleum Trading Company, Inc. and Patterson
Drilling Programs, Inc. (collectively referred to hereafter as the "Company").
All significant intercompany accounts and transactions have been eliminated.
The interim condensed consolidated financial statements have been
prepared by management of the Company, without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission. Certain information and
footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been omitted
pursuant to such rules and regulations, although the Company believes the
disclosures included herein are adequate to make the information presented not
misleading. In the opinion of management, all adjustments (consisting of only
normal recurring accruals) considered necessary for presentation of the
information have been included. The unaudited condensed consolidated balance
sheet as of December 31, 1997, as presented herein, was derived from the audited
balance sheet, but does not include all disclosures required by generally
accepted accounting principles.
The results of operations for the three months ended March 31, 1998,
are not necessarily indicative of the results to be expected for the full year.
Certain reclassifications have been made to the 1997 consolidated
financial statements in order for them to conform with the 1998 presentation.
The Company's earnings per share and weighted average number of common
shares outstanding for all periods presented and, as otherwise indicated herein,
reflect two-for-one splits of the Company's common stock effected in July 1997
and in January 1998.
2. RECENT ACQUISITIONS
On January 5, 1998, the Company acquired 100% of the outstanding stock
of Lone Star Mud, Inc. ("Lone Star"), a privately-owned, non-affiliated company
based in Midland, Texas. The purchase price of approximately $12.98 million
consisted of $1.430 million in cash, 571,328 million shares of the Company's
common stock valued at $17.41 per share, which was the market price on the
acquisition date, the assumption of $1.6 million of debt and approximately
$3,300 of other direct costs incurred related to the transaction. Pursuant to
certain terms of the Company's existing loan agreement with Norwest Bank Texas,
N.A. ("Norwest"), the outstanding balance of the above mentioned note payable
was paid in full. The fair market values of the assets acquired were estimated
and the purchase price, as of the date of the acquisition, was allocated as
follows (in thousands):
<TABLE>
<S> <C>
Net assets acquired.......................... $ 3,069
Goodwill..................................... 9,911
---------
Total purchase price...................... $ 12,980
=========
</TABLE>
10
<PAGE> 11
PATTERSON ENERGY, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-CONTINUED
2. RECENT ACQUISITIONS - CONTINUED
On February 6, 1998, the Company completed the merger of Robertson
Onshore Drilling Company ("Robertson") a privately-owned, non-affiliated,
contract drilling company based in Dallas, Texas, with and into Patterson
Onshore Drilling Company, a wholly-owned subsidiary of Patterson Drilling
Company. The purchase price of approximately $42.245 million was funded using
cash on hand of approximately $3.695 million, proceeds of $36.75 million
provided by the Company's line of credit and the assumption of $1.8 million of
debt. The assets acquired consisted of 15 operable drilling rigs and a shop and
yard located in Liberty City, Texas. The purchase price, as of the date of the
acquisition, was allocated based on estimated fair values as follows (in
thousands):
<TABLE>
<S> <C>
Net assets acquired......................................... $ 31,565
Goodwill.................................................... 10,680
---------
Total purchase price..................... $ 42,245
=========
</TABLE>
On June 12, 1997, the Company consummated an acquisition to purchase
the contract drilling assets of Wes-Tex Drilling Company ("Wes-Tex"), a
privately-held, non-affiliated company based in Abilene, Texas, for a purchase
price of approximately $35.4 million; consisting of $25 million in cash, 283,000
shares of Patterson common stock valued at $31.50 per share, which represented
the approximate fair market value on the date the terms of the acquisition were
agreed to and announced, a three-year stock purchase warrant (valued at $6.24
per share) to purchase 200,000 additional shares of Patterson common stock at an
exercise price of $32.00 per share and approximately $190,000 of other direct
costs incurred relative to the transaction. The acquisition was funded using
$19.0 million of the Company's cash on hand and $6.0 million provided by the
Company's $30.0 million line of credit. The assets acquired consisted of 21
contract drilling rigs, all related rolling stock and a shop and yard. The
purchase price, as of the date of acquisition, was allocated based on estimated
fair values as follows (in thousands):
<TABLE>
<S> <C>
Contract drilling assets................................... $ 17,450
Goodwill................................................... 16,629
Covenants not to compete .................................. 1,273
---------
Total purchase price .................... $ 35,352
=========
</TABLE>
As the acquisitions of both Robertson and Wes-Tex are significant to
the Company's operations, the following summary for the three months ended March
31, 1997 and 1998, prepared on a pro forma basis, combines the consolidated
results of operations as if Robertson and Wes-Tex had been acquired on January
1, 1997, after including the impact of certain adjustments, such as restatement
of depreciation using the fair values instead of the book values of the assets
acquired, the increased interest expense on the acquisition debt, increased
amortization expense on intangible assets and the related income tax effects.
<TABLE>
<CAPTION>
1997 1998
------------------- -------------------
(in thousands, except per share data)
<S> <C> <C>
Revenues....................................... $ 49,770 $ 66,509
Net income..................................... 866 4,706
Net income per basic share..................... .03 .15
Net income per diluted share................... .03 .15
</TABLE>
The pro forma results are not necessarily indicative of what actually
would have occurred if the acquisition had been in effect for the entire periods
presented. In addition, they are not intended to be a projection of future
results and do not reflect any synergies that might be achieved from combined
operations.
The aforementioned acquisitions have been accounted for as purchases
and the results of operations and cash flows of the acquired entities have been
included in the unaudited condensed consolidated financial statements since the
date of acquisition. The purchase price allocations as detailed above are
preliminary in nature and subject to change.
11
<PAGE> 12
PATTERSON ENERGY, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-CONTINUED
3. INTANGIBLE ASSETS
Intangible assets as of the balance sheet date consist of covenants not
to compete and goodwill arising from the Company's acquisitions completed during
fiscal year 1997 and the three months ended March 31, 1998 (as described above
in Note 2). The covenants are being amortized on a straight line basis over
their contractual lives of five years. Goodwill, representing the excess of the
purchase price over the estimated fair value of the assets acquired, is being
amortized on a straight line basis over fifteen years.
Intangible assets consisted of the following at March 31, 1998 (in
thousands):
<TABLE>
<CAPTION>
<S> <C>
Goodwill...................................... $ 43,852
Covenants not to compete...................... 1,673
Other......................................... 653
---------
46,178
Less accumulated amortization................. (1,708)
---------
$ 44,470
=========
</TABLE>
Management continually reviews the carrying amounts of goodwill for
recoverability based on the anticipated undiscounted cash flows of the assets to
which it relates. The Company considers operating results, trends and prospects
of the Company, as well as competitive comparisons. The Company also takes into
consideration competition within the industry and any other events or
circumstances which might indicate potential impairment. If goodwill is
determined to not be recoverable an impairment charge will be recognized to the
extent that the carrying value of the related assets, including goodwill,
exceeds the estimated fair value.
4. NOTE PAYABLE
During February 1998, the Company amended its loan agreement with
Norwest increasing its line of credit from $60 million to $70 million. The
Company's debt to tangible net worth ratio requirement increased from 1.2:1.0 to
1.50:1.00 and the Company's current ratio requirement increased from 1.25:1.00
to 1.40:1.00. In conjunction with the increased credit facility, the Company
paid a $25,000 origination fee.
5. STOCKHOLDERS' EQUITY
On December 8, 1997, Patterson's Board of Directors authorized a
two-for-one stock split in the form of a 100% stock dividend payable on January
23, 1998. The stockholders of Patterson, at a Special Meeting of Stockholders on
December 30, 1997, approved an amendment to Patterson's Certificate of
Incorporation increasing the number of authorized shares of common stock from
18,000,000 to 50,000,000. Par value of the Company's common stock remained at
$0.01 per common share. Accordingly, earnings per share and weighted average
number of common shares outstanding for all periods presented herein reflect the
effects of the stock split.
During January 1998, the Company issued 571,328 shares of its common
stock as partial consideration for the Company's acquisition of Lone Star (See
Note 2). The common stock was valued at $17.41 per share for purposes of the
transaction.
12
<PAGE> 13
PATTERSON ENERGY, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-CONTINUED
6. RECENT ACCOUNTING STANDARDS
During the quarter ended March 31, 1998, the Company adopted Statement
of Financial Accounting Standards No. 130, "Reporting Comprehensive Income"
("Statement 130") which establishes standards for reporting and presentation of
comprehensive income and its components (revenues, expenses, gains and losses)
in a full set of general-purpose financial statements. Statement 130 requires
that all items that are required to be recognized under accounting standards as
components of comprehensive income be reported in a financial statement that is
displayed with the same prominence as other financial statements. Statement 130
requires that an enterprise (i) classify items of other comprehensive income by
their nature in a financial statement and (ii) display the accumulated balance
of other comprehensive income separately from retained earnings and additional
paid-in capital in the equity section of a statement of financial position. The
Company's adoption of Statement 130 did not result in any significant changes to
its related reporting disclosures.
During the quarter ended March 31, 1998, the Company adopted Statement
of Financial Accounting Standards No. 131, "Disclosures About Segments of an
Enterprise and Related Information" ("Statement 131"). Statement 131 establishes
revised guidelines for determining an entity's operating segments and the type
and level of financial information to be disclosed. The Company's adoption of
Statement 131 did not result in any significant changes to its related reporting
disclosures.
13
<PAGE> 14
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
LIQUIDITY AND CAPITAL RESOURCES
As of March 31, 1998, the Company had working capital of approximately
$41 million and cash and cash equivalents of approximately $16.3 million as
compared to a working capital of approximately $46.5 million and cash and cash
equivalents of approximately $23.3 million as of December 31, 1997. The decrease
in the Company's working capital at March 31, 1998 was largely attributable to
cash expended by the Company related to acquisitions completed during the three
months then ended. Approximately $5.1 million of the aggregate purchase price of
such acquisitions was funded using cash on hand at the respective dates of
acquisition. Additionally, as a result of the above mentioned transactions the
Company assumed approximately $3.4 million of debt which was subsequently paid
in full using cash on hand. For the three months ended March 31, 1998, the
Company generated net cash from operations of approximately $4.237 million,
received proceeds of approximately $208,000 from the exercise of stock options,
sold property and equipment for proceeds of approximately $159,000, received
approximately $566,000 from the sale of investment securities and borrowed
$40.15 million under an existing credit facility. These funds were used
primarily to acquire drilling and other related equipment and associated
intangible assets of approximately $48.390 million, to fund leasehold
acquisition, exploration and development of approximately $1.0 million and to
reduce certain notes payable by approximately $3.4 million.
On January 5, 1998, the Company completed the acquisition of Lone Star
Mud, Inc. ("Lone Star"), a privately-owned, non-affiliated company based in
Midland, Texas for a purchase price of approximately $12.98 million consisting
of $1.430 million in cash, 571,328 shares of the Company's common stock valued
at $17.41 per share, which was the market price on the acquisition date, the
assumption of $1.6 million of debt and approximately $3,300 of direct costs
incurred related to the acquisition. Lone Star is a provider of drilling fluids
to the oil and natural gas industry. Management of the Company viewed the
acquisition as an opportunity to enter into a related segment of the oilfield
service industry, which would integrate well with the Company's existing
operations.
On February 6, 1998, the Company completed its merger with Robertson
Onshore Drilling Company ("Robertson"), a privately owned, non-affiliated
contract drilling company based in Dallas, Texas. The purchase price of $42.245
million consisted of $3.25 million in cash, $36.75 million provided by the
Company's line of credit, the assumption of $1.8 million of debt and
approximately $444,000 of direct costs incurred related to the acquisition. As a
result of the merger, the Company acquired 15 operable drilling rigs, increasing
the Company's rig fleet to 114 drilling rigs, and a shop and yard located in
Liberty City, Texas.
During February 1998, the Company amended its existing line of credit
agreement with Norwest Bank Texas, N.A. increasing the credit facility from $60
million to $70 million. Certain of the underlying covenants were amended;
however, the basic terms of the agreement remained unchanged. Currently, the
Company has $10 million of available credit facility remaining under the
agreement.
Management believes that the current level of cash and short-term
investments, together with cash generated from operations should be sufficient
to meet the Company's immediate capital needs. From time to time, the Company
reviews acquisition opportunities relating to its business. The timing, size or
success of any acquisition and the associated capital commitments are
unpredictable. Should further opportunities for growth requiring capital arise,
the Company believes it would be able to satisfy these needs through a
combination of working capital, cash from operations, and either debt or equity
financing. However, there can be no assurance that such capital would be
available.
14
<PAGE> 15
RESULTS OF OPERATIONS
Comparison of the three months ended March 31, 1998 and 1997
For the three months ended March 31, 1998, contract drilling revenues
were approximately $54.3 million as compared to $27.6 million for the same
period in 1997; an increase of 97%. Average rig utilization was 70% for the
three months ended March 31, 1998, as compared to 86% for the same period in
1997. Direct contract drilling expenses for the three months ended March 31,
1998 were approximately $40 million, or 74% of the contract drilling revenues,
as compared to approximately $22.3 million, or 81% of the contract drilling
revenues, for the same period in 1997. The increase in contract drilling
revenues and direct contract drilling expenses is largely attributable to the
addition of 50 drilling rigs to the Company's operable drilling fleet since
April 1997. General and administrative expense for the contract drilling segment
was approximately $1.9 million for the three months ended March 31, 1998 as
compared to $1.0 million for the same period in 1997. The increase in general
and administrative expense for the three months ended March 31, 1998 was largely
attributable to the addition of the Dallas, Texas administrative office acquired
in the Company's merger with Robertson. As a result of the Company's
acquisitions, depreciation and amortization expense for the contract drilling
segment increased from approximately $2.2 million for the three months ended
March 31, 1997 to approximately $5.1 million for the same period in 1998. For
the three months ended March 31, 1998, operating income from this segment was
approximately $7.2 million as compared to approximately $2.157 million for the
same period in 1997.
The Company derives substantially all of its operating revenues and
profit from its contract drilling operations; however, the Company realized
revenues from other operating activities of approximately $6.5 million for the
fiscal quarter ended March 31, 1998 as compared to $3.1 for the same quarter in
1997. The increase in the current year revenues was attributable to the
Company's addition of Lone Star during January 1998, which generated
approximately $4.3 million of from its drilling fluid services. For the quarter
ended March 31, 1998, the Company incurred operating costs of approximately $5.8
million related to its other operating activities, including approximately $1.1
million of depreciation, depletion and amortization and approximately $712,000
of general and administrative expense. This compares to operating costs of
approximately $2.5 million, including $1.1 million of depreciation, depletion
and amortization and approximately $337,000 of general and administrative
expense for the same period in 1997. Operating income from the Company's other
operating activities for the three months ended March 31, 1998 was approximately
$711,000 as compared to approximately $637,000 for the fiscal quarter ended
March 31, 1997.
For the three months ended March 31, 1998, interest expense was
approximately $899,000 as compared to $483,000 for the same period in 1997. The
1997 interest expense amount includes approximately $265,000 of prepayment
penalties and fees incurred as a result of the Company's early retirement of its
notes payable during the first quarter of 1997 using proceeds provided by its
equity offering completed during that time. Interest income for the first three
months of 1998 was approximately $165,000 as compared to approximately $284,000
in 1997. The Company recognized a net gain on the sale of property and equipment
of approximately $159,000 for the three months ended March 31, 1998 as compared
to a net gain of approximately $135,000 for the same period in 1997.
As a result of the Company's increased profitability and reduced
benefit of certain deferred tax assets, the Company incurred income tax expense
of approximately $2.8 million as compared to approximately $955,000 in 1997. As
previously reported, the Company fully reduced its valuation allowance existing
against its deferred tax assets in prior periods recognizing the related
benefit. To the extent the Company generates income in excess of its remaining
deferred tax assets, it will incur income tax expense at its effective statutory
rate.
VOLATILITY OF OIL AND NATURAL GAS PRICES AND ITS IMPACT ON OPERATIONS
The Company's revenue, profitability and future rate of growth are
substantially dependent upon prevailing prices for oil and natural gas, both
with respect to its contract drilling and its oil and natural gas segments.
Historically, oil and natural gas prices and markets have been extremely
volatile. Prices are affected by market supply and demand factors as well as
actions of state and local agencies, the United States and foreign governments
and international cartels. All of these are beyond the control of the Company.
Any significant or extended decline in oil and/or natural gas prices will have a
material adverse effect on the Company's financial condition and results
15
<PAGE> 16
of operations. The sharp decline in crude oil prices beginning in the fourth
quarter of 1997 has adversely impacted the Company's operations. Should oil
prices remain at current levels or continue to decline or natural gas prices
begin to decline, the Company's operations could be further adversely affected.
IMPACT OF INFLATION
The Company believes that inflation will not have a significant impact
on its financial position.
RECENT ACCOUNTING STANDARDS
During the quarter ended March 31, 1998, the Company adopted Statement
of Financial Accounting Standards No. 130, "Reporting Comprehensive Income"
("Statement 130") which establishes standards for reporting and presentation of
comprehensive income and its components (revenues, expenses, gains and losses)
in a full set of general-purpose financial statements. Statement 130 requires
that all items that are required to be recognized under accounting standards as
components of comprehensive income be reported in a financial statement that is
displayed with the same prominence as other financial statements. Statement 130
requires that an enterprise (i) classify items of other comprehensive income by
their nature in a financial statement and (ii) display the accumulated balance
of other comprehensive income separately from retained earnings and additional
paid-in capital in the equity section of a statement of financial position. The
Company's adoption of Statement 130 did not result in any significant changes in
its reporting disclosures.
During the quarter ended March 31, 1998, the Company adopted Statement
of Financial Accounting Standards No. 131, "Disclosures About Segments of an
Enterprise and Related Information" ("Statement 131"). Statement 131 establishes
revised guidelines for determining an entity's operating segments and the type
and level of financial information to be disclosed. The Company's adoption of
Statement 131 did not result in any significant changes in its reporting
disclosures.
YEAR 2000 COMPLIANCE PROGRAM
The Company has conducted a review of its computer systems to identify
the systems that could be affected by the Year 2000 Issue (as defined below) and
has developed an implementation plan. The "Year 2000 Issue" is whether the
Company's computer systems will properly recognize date sensitive information
when the year changes to 2000, or "00." Systems that do not properly recognize
such information could generate erroneous data or cause a system to fail. The
Company uses purchased software programs for a variety of functions, including
general ledger, accounts payable and accounts receivable accounting packages.
The companies providing these software programs have represented that they are
Year 2000 compliant. The Company's Year 2000 implementation plan also includes
ensuring that all individual workstations are Year 2000 compliant. Costs
associated with ensuring the Company's systems are Year 2000 compliant are not
expected to be material to the Company's operations. Additionally, the Company
does not anticipate an interruption in its operations relative to Year 2000
concerns of its customers and vendors. The Company believes that the Year 2000
Issue will not pose significant operational problems for the Company's computer
systems and, therefore, will not have a significant impact on the operations of
the Company.
16
<PAGE> 17
---------------
CAUTIONARY STATEMENT FOR PURPOSES OF THE "SAFE HARBOR" PROVISIONS OF THE
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
"Management's Discussion and Analysis of Financial Condition and
Results of Operations" included in Item 2 of this Report contains
forward-looking statements which are made pursuant to the "safe harbor"
provisions of The Private Securities Litigation Reform Act of 1995. These
statements include, without limitation, statements relating to: liquidity;
financing of operations; continued volatility of oil and natural gas prices;
source and sufficiency of funds required for immediate capital needs and
additional rig acquisitions (if further opportunities arise); and such other
matters. The words "believes," "plans," "intends," "expected" or "budgeted" and
similar expressions identify forward-looking statements. The forward-looking
statements are based on certain assumptions and analyses made by the Company in
light of its experience and its perception of historical trends, current
conditions, expected future developments and other factors it believes are
appropriate in the circumstances. The Company does not undertake to update,
revise or correct any of the forward-looking information. Factors that could
cause actual results to differ materially from the Company's expectations
expressed in the forward-looking statements include, but are not limited to, the
following: intense competition in the contract drilling industry; volatility of
oil and natural gas prices; market conditions for contract drilling services;
drill-pipe shortage; operational risks (such as blow outs, fires and loss of
production); labor shortage, primarily qualified drilling rig personnel;
insurance coverage limitations and requirements; potential liability imposed by
government regulation of the contract drilling industry (including environmental
regulation); the substantial capital expenditures required to fund its
operations; no assurance of additional growth through acquisitions; risk
associated with recent rapid growth; and the loss of key personnel, particularly
Cloyce A. Talbott and A. Glenn Patterson, the Chairman and Chief Executive
Officer and the President and Chief Operating Officer of the Company,
respectively. For a more complete explanation of these various factors, see
"Cautionary Statement for Purposes of the 'Safe Harbor' Provisions of the
Private Securities Litigation Reform Act of 1995" included in the Company's
Annual Report on Form 10-K for the year ended December 31, 1997, beginning on
page 10.
---------------
17
<PAGE> 18
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) EXHIBITS.
The following exhibits are filed herewith or incorporated by reference:
2.1 Plan and Agreement of Merger dated October 14, 1993, between
Patterson Energy, Inc., a Texas corporation, and Patterson
Energy, Inc., a Delaware corporation, together with related
Certificates of Merger. (1)
2.2 Agreement and Plan of Merger, dated April 22, 1996 among
Patterson Energy, Inc., Patterson Drilling Company and Tucker
Drilling Company, Inc. (2)
2.2.1 Amendment to Agreement and Plan of Merger, dated May 16, 1996
among Patterson Energy, Inc., Patterson Drilling Company and
Tucker Drilling Company, Inc. (3)
2.3 Asset Purchase Agreement, dated April 22, 1997, among and
between Patterson Drilling Company and Ziadril, Inc. (4)
2.4 Asset Purchase Agreement, dated June 4, 1997, among Patterson
Energy Inc., Patterson Drilling Company and Wes-Tex Drilling
Company. (5)
2.4.1 Amendment to Asset Purchase Agreement, dated June 4, 1997,
among Patterson Energy Inc., Patterson Drilling Company and
Wes-Tex Drilling Company. (5)
2.5 Agreement, dated June 4, 1997, among Patterson Energy Inc.,
Patterson Drilling Company, Greathouse Foundation and Myrle
Greathouse, Trustee under Agreement dated June 2, 1997. (5)
2.6 Asset Purchase Agreement, dated September 4, 1997, among
Patterson Energy Inc., Patterson Drilling Company and McGee
Drilling Company. (4)
2.7 Asset Purchase Agreement dated November 14, 1997 among
Patterson Energy, Inc., Patterson Drilling Company and V & B
Drilling Company. (6)
2.8 Asset Purchase Agreement dated November 20, 1997 among
Patterson Drilling Company and Circle R Drilling, Ltd.
1981-A. (6)
2.9 Asset Purchase Agreement, dated May 23, 1995, between Perry E.
Esping and Patterson Energy, Inc., together with related Stock
Purchase Warrant and Registration Rights Agreement. (13)
2.10 Agreement and Plan of Merger dated January 20, 1998, among
Patterson Energy, Inc., Patterson Onshore Drilling Company and
Robertson Onshore Drilling Company. (7)
2.11 Agreement and Plan of Merger, dated January 20, 1998, among
Patterson Energy, Inc., Patterson Onshore Drilling Company and
Robertson Onshore Drilling Company. (18)
3.1 Restated Certificate of Incorporation. (8)
3.1.1 Certificate of Amendment to the Certificate of Incorporation.
(9)
3.1.2 Certificate of Amendment to the Certificate of
Incorporation. (19)
3.2 Bylaws. (1)
18
<PAGE> 19
4.1 Excerpt from Restated Certificate of Incorporation of
Patterson Energy, Inc. regarding authorized Common Stock and
Preferred Stock. (10)
4.2 Registration Rights Agreement, dated June 12, 1997, among
Patterson Energy Inc. and Wes-Tex Drilling Company, Greathouse
Foundation and Myrle Greathouse, Trustee under Agreement dated
June 2, 1997. (11)
4.3 Stock Purchase Warrant of Patterson Energy, Inc., dated June
12, 1997. (11)
10.1 Credit Agreement dated December 9, 1997 among Patterson
Energy, Inc., Patterson Drilling Company, Patterson Petroleum,
Inc., Patterson Trading Company, Inc. and Norwest Bank Texas,
N.A. (6)
10.1.1 Promissory Note dated December 9, 1997 among Patterson Energy,
Inc. and Norwest Bank Texas, N.A. (6)
10.1.2 Security Agreement dated December 9, 1997 between Patterson
Drilling Company and Norwest Bank Texas, N.A. (6)
10.1.4 Corporate Guarantees of Patterson Drilling Company, Patterson
Petroleum, Inc. and Patterson Petroleum Trading Company, Inc.
(6)
10.2 Aircraft Lease, dated January 15, 1998, (effective January 1,
1998) between Talbott Aviation, Inc. and Patterson Energy,
Inc.(19)
10.3 Participation Agreement, dated October 19, 1994, between
Patterson Petroleum Trading Company, Inc. and BHT Marketing,
Inc. (12)
10.3.1 Participation Agreement dated October 24, 1995, between
Patterson Petroleum Trading Company, Inc. and BHT Marketing,
Inc. (13)
10.4 Crude Oil Purchase Contract, dated October 19, 1994, between
Patterson Petroleum, Inc. and BHT Marketing, Inc. (14)
10.4.1 Crude Oil Purchase Contract, dated October 24, 1995, between
Patterson Petroleum, Inc. and BHT Marketing, Inc. (13)
10.5 Patterson Energy, Inc. 1993 Stock Incentive Plan, as amended
(15)
10.6 Patterson Energy, Inc. Non-Employee Directors' Stock Option
Plan, as amended. (16)
10.7 Consulting and Stock Option Agreement, dated as of November
15, 1994, between Patterson Energy, Inc. and E. Peter Hoffman,
Jr. (13)
10.8 Consulting and Stock Option Agreement, dated as of February
15, 1995, between Patterson Energy, Inc. and E. Peter Hoffman,
Jr. (13)
10.9 Consulting and Stock Option Agreement, dated as of August 2,
1995, between Patterson Energy, Inc. and E. Peter Hoffman, Jr.
(13)
10.10 Model Form Operating Agreement. (17)
10.11 Form of Drilling Bid Proposal and Footage Drilling Contract.
(17)
10.12 Form of Turnkey Drilling Agreement. (17)
19
<PAGE> 20
11.1 Statement re Computation of Per Share Earnings.
15.1 Awareness letter of Independent Accountants; Coopers & Lybrand
L.L.P.
21.1 Subsidiaries of the registrant.(19)
27.1 Financial Data Schedule as of March 31, 1998 and for the three
months ended March 31, 1997 and 1998.
-----------------------
(1) Incorporated herein by reference to Item 27, "Exhibits" to Amendment
No. 2 to Registration Statement on Form SB-2 (File No. 33-68058-FW);
filed October 28, 1993.
(2) Incorporated by reference to Item 7, "Financial Statements and
Exhibits" to Form 8-K dated April 22, 1996 and filed on April 30, 1996.
(3) Incorporated by reference to Item 7, "Financial Statements and
Exhibits" to Form 8-K dated May 16, 1996 and filed on May 22, 1996.
(4) Incorporated herein by reference to Item 16, "Exhibits" to Amendment
No. 1 to Registration Statement on Form S-3 (File No. 333-29035); filed
August 5, 1997.
(5) Incorporated herein by reference to Item 7, "Financial Statements and
Exhibits", to Form 8-K dated September 3, 1997; filed September 11,
1997.
(6) Incorporated herein by reference to Item 7, "Financial Statements and
Exhibits" to Form 8-K dated November 14, 1997 and filed December 24,
1997.
(7) Incorporated herein by reference to Item 7, "Financial Statements and
Exhibits," to Form 8-K dated January 23, 1998; filed February 3, 1998.
(8) Incorporated herein by reference to Item 6, "Exhibits and Reports on
Form 8-K" to Form 10-Q for the quarterly period ended September 30,
1996; filed August 12, 1996.
(9) Incorporated herein by reference to Item 6. "Exhibits and Reports on
Form 8-K" to Form 10-Q for the quarterly period ended June 30, 1997;
filed August 14, 1997.
(10) Incorporated by reference to Item 16, "Exhibits" to Registration
Statement on Form S-3 filed with the Securities Exchange Commission on
December 18, 1996.
(11) Incorporated herein by reference to Item 7, "Financial Statements and
Exhibits", to Form 8-K dated September 12, 1997; filed September 19,
1997.
(12) Incorporated by reference to Item 27, "Exhibits" to Post Effective
Amendment No. 1 to Registration Statement on Form SB-2 (File No.
33-68058-FW).
(13) Incorporated by reference to Item 7, "Financial Statements and
Exhibits" to Form 10-KSB for the year ended December 31, 1995.
(14) Incorporated by reference to Item 5, "Other Items" to Form 8-K dated
December 1, 1995 and filed on January 16, 1996.
(15) Incorporated herein by reference to Item 8, "Exhibits" to Registration
Statement on Form S-8 (File No. 333-47917); filed March 13, 1998.
20
<PAGE> 21
(16) Incorporated herein by reference to Item 8, "Exhibits" to Registration
Statement on Form S-8 (File No. 33-39471); filed November 4, 1997.
(17) Incorporated by reference to Item 27, "Exhibits" to Registration
Statement filed with the Securities and Exchange Commission on August
30, 1993.
(18) Incorporated by reference to Item 7, "Financial Statements and
"Exhibits," of Form 8-K dated January 23, 1998.
(19) Incorporated by reference to Item 14, "Exhibits, Financial Statement
Schedules and Reports on Form 8-K" to Form 10-K dated December 31,
1997.
(b) REPORTS ON FORM 8-K.
The following reports on Form 8-K were filed with the Securities and
Exchange Commission during the fiscal quarter ended March 31, 1998 related
to:
(1) Report dated January 23, 1998 reporting the execution of a
definitive purchase agreement with Robertson Onshore Drilling
Company; filed February 3, 1998.
(2) Report dated February 6, 1998 announcing the completion of the
acquisition of Robertson Onshore Drilling Company; filed February
20, 1998.
(3) Report dated March 3, 1998 announcing the Company's results from
operations for the year and quarter ended December 31, 1997; filed
March 6, 1998.
21
<PAGE> 22
SIGNATURE
In accordance with the requirements of the Securities Exchange Act of 1934,
the registrant has caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
PATTERSON ENERGY, INC.
By: /s/ CLOYCE A. TALBOTT
---------------------------------
Cloyce A. Talbott
Chairman of the Board and
Chief Executive Officer
By: /s/ JAMES C. BROWN
---------------------------------
James C. Brown
Vice President-Finance
DATED: May 15, 1998
22
<PAGE> 23
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------
<S> <C>
11.1 Statement Re: Computation of Per Share Earnings
15.1 Awareness Letter of Independent Accountants, Coopers & Lybrand
L.L.P
27.1 Financial Data Schedule as of March 31, 1998
27.2 Financial Data Schedule for three months ended March 31, 1997
</TABLE>
<PAGE> 1
EXHIBIT 11.1
PATTERSON ENERGY, INC. AND SUBSIDIARIES
STATEMENT RE COMPUTATION OF PER SHARE EARNINGS
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
-------------------------------------------
1997 1998
------------------ ------------------
(in thousands, except per share data)
<S> <C> <C>
BASIC
Net income ............................................... $ 1,640 $ 4,533
Shares:
Weighted average number of common shares outstanding... 25,585 31,566
=========== ===========
Net income per share:
Basic.................................................. $ 0.06 $ 0.14
=========== ===========
DILUTED
Net income................................................ $ 1,640 $ 4,533
Shares:
Weighted average number of common shares outstanding... 25,585 31,566
Dilutive effect of outstanding options and
redeemable warrants (as determined by the
application of the treasury stock method)............ 830 269
----------- -----------
Weighted average number of common shares outstanding,
as adjusted............................................ 26,415 31,835
=========== ===========
Net income per share:
Diluted................................................ $ 0.06 $ 0.14
=========== ===========
</TABLE>
<PAGE> 1
EXHIBIT 15.1
May 14, 1998
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Patterson Energy, Inc.
We are aware that our report dated April 30, 1998 on our review of consolidated
financial information of Patterson Energy, Inc. for the period ended March 31,
1998 and included in the Company's Quarterly report on Form 10-Q for the quarter
then ended is incorporated by reference in the Registration Statements of
Patterson Energy, Inc. on Forms S-8 (File No.'s 333-47917, 33-97972, 33-39471
and 33-35399) and Forms S-3, as amended (File No.'s 333-43739 and 333-39537).
/s/ Coopers & Lybrand L.L.P.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FORM THE
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEET AS OF MARCH 31, 1998 AND RELATED
STATEMENTS OF OPERATIONS AND CASH FLOWS FOR THE THREE MONTHS ENDED MARCH 31,
1997 AND 1998. THIS FINANCIAL INFORMATION IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO FILING OF FORM 10-Q FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1998.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 16,821
<SECURITIES> 0
<RECEIVABLES> 45,866
<ALLOWANCES> 0
<INVENTORY> 973
<CURRENT-ASSETS> 74,487
<PP&E> 211,999
<DEPRECIATION> 78,555
<TOTAL-ASSETS> 253,125
<CURRENT-LIABILITIES> 33,534
<BONDS> 0
0
0
<COMMON> 316
<OTHER-SE> 161,303
<TOTAL-LIABILITY-AND-EQUITY> 253,125
<SALES> 0
<TOTAL-REVENUES> 60,751
<CGS> 0
<TOTAL-COSTS> 52,890
<OTHER-EXPENSES> 349
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 899
<INCOME-PRETAX> 7,311
<INCOME-TAX> 2,778
<INCOME-CONTINUING> 4,533
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,533
<EPS-PRIMARY> .14
<EPS-DILUTED> .14
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEET AS OF MARCH 31, 1998 AND RELATED
STATEMENTS OF OPERATIONS AND CASH FLOWS FOR THE THREE MONTHS ENDED MARCH 31,
1997 AND 1998. THIS FINANCIAL INFORMATION IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO FILING OF FORM 10-Q FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1998.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 0
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 0
<SALES> 0
<TOTAL-REVENUES> 30,641
<CGS> 0
<TOTAL-COSTS> 28,001
<OTHER-EXPENSES> 438
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 483
<INCOME-PRETAX> 2,595
<INCOME-TAX> 955
<INCOME-CONTINUING> 1,640
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,640
<EPS-PRIMARY> .06
<EPS-DILUTED> .06
</TABLE>
