<PAGE>
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
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FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
[ X ] SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2000
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
[ ] SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number 1-11953
Willbros Group, Inc.
(Exact name of registrant as specified in its charter)
Republic of Panama 98-0160660
(Jurisdiction of incorporation) (I.R.S. Employer Identification Number)
Dresdner Bank Building
50th Street, 8th Floor
P. O. Box 850048
Panama 5, Republic of Panama
Telephone No.: (50-7) 263-9282
(Address, including zip code, and telephone number, including
area code, of principal executive offices of registrant)
NOT APPLICABLE
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(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 [ ]
The number of shares of the registrant's Common Stock, $.05 par
value, outstanding as of May 8, 2000 was 13,999,031.
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
WILLBROS GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
March 31, December 31,
2000 1999
---------- ------------
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 4,790 $ 7,806
Accounts receivable 67,740 50,569
Contract cost and recognized income
not yet billed 16,787 13,082
Prepaid expenses 6,426 4,189
---------- ----------
Total current assets 95,743 75,646
Spare parts, net 6,483 6,581
Property, plant and equipment, net 65,859 64,813
Other assets 8,455 6,113
---------- ----------
Total assets $ 176,540 $ 153,153
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable $ 979 $ 481
Accounts payable and accrued liabilities 58,872 35,254
Accrued income taxes 4,607 4,683
Contract billings in excess of cost and
recognized income 3,045 9,427
Current maturities of long-term debt 233 -
---------- ----------
Total current liabilities 67,736 49,845
Long-term debt 21,274 15,500
Other liabilities 7,444 7,381
---------- ----------
Total liabilities 96,454 72,726
Stockholders' equity:
Class A Preferred Stock, par value $.01 per
share, 1,000,000 shares authorized, none issued - -
Common stock, par value $.05 per share,
35,000,000 shares authorized;
15,134,606 shares issued at March 31, 2000
(15,123,453 at December 31, 1999) 757 756
Capital in excess of par value 67,988 67,927
Retained earnings 21,803 29,896
Treasury stock at cost, 1,140,371 shares at
March 31, 2000 (2,175,371 shares at
December 31, 1999) (8,474) (16,164)
Notes receivable for stock purchases (307) (307)
Accumulated other comprehensive income (loss) (1,681) (1,681)
---------- ----------
Total stockholders' equity 80,086 80,427
---------- ----------
Total liabilities and stockholders' equity $ 176,540 $ 153,153
========== ==========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
2
<PAGE>
WILLBROS GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three Months
Ended March 31,
----------------------
2000 1999
---------- ----------
<S> <C> <C>
Contract revenues $ 78,773 $ 28,479
Operating expenses:
Contract 70,318 24,167
Depreciation and amortization 5,289 5,292
General and administrative 7,555 7,594
---------- ----------
83,162 37,053
---------- ----------
Operating loss (4,389) (8,574)
Other income (expense):
Interest - net (58) 218
Minority interest (332) (164)
Other - net 156 1,874
---------- ----------
(234) 1,928
---------- ----------
Loss before income taxes (4,623) (6,646)
Provision for income taxes 1,291 469
---------- ----------
Net loss $ (5,914) $ (7,115)
========== ==========
Earnings (loss) per common share:
Basic $ (.42) $ (.53)
========== ==========
Diluted $ (.42) $ (.53)
========== ==========
Weighted average number of common shares
outstanding:
Basic 13,990,054 13,319,240
========== ==========
Diluted 13,990,054 13,319,240
========== ==========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
3
<PAGE>
WILLBROS GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(In thousands, except share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Capital
Common Stock in Excess
---------------------- of Par Retained
Shares Par Value Value Earnings
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Balance,
January 1, 2000 15,123,453 $ 756 $ 67,927 $ 29,896
Comprehensive
income (loss):
Net loss - - - (5,914)
Issuance of treasury
stock in acquisition - - - (2,179)
Issuance of common
stock under
employee
benefit plan 11,153 1 61 -
---------- ---------- ---------- ----------
Balance,
March 31, 2000 15,134,606 $ 757 $ 67,988 $ 21,803
========== ========== ========== ==========
- -CONTINUED-
</TABLE>
<TABLE>
<CAPTION>
Accumulated
Notes Other
Receivable Compre- Total
for hensive Stock-
Treasury Stock Income holders'
Stock Purchases (Loss) Equity
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Balance,
January 1, 2000 $ (16,164) $ (307) $ (1,681) $ 80,427
Comprehensive
income (loss):
Net loss - - - (5,914)
Issuance of treasury
stock in acquisition 7,690 - - 5,511
Issuance of common
stock under
employee
benefit plan - - - 62
---------- ---------- ---------- ----------
Balance,
March 31, 2000 $ (8,474) $ (307) $ (1,681) $ 80,086
========== ========== ========== ==========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
4
<PAGE>
WILLBROS GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
Three Months
Ended March 31,
----------------------
2000 1999
---------- ----------
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (5,914) $ (7,115)
Reconciliation of net loss to cash provided
by (used in) operating activities:
Depreciation and amortization 5,289 5,292
Loss (gain) on sales and retirements of
property and equipment 134 (1,827)
Changes in operating assets and liabilities:
Accounts receivable (14,686) (12,491)
Contract cost and recognized income
not yet billed (3,327) 7,606
Prepaid expenses and other assets (2,524) (2,142)
Accounts payable and accrued liabilities 21,147 (1,281)
Accrued income taxes (76) (1,130)
Contract billings in excess of cost and
recognized income (6,450) 32,083
Other liabilities 63 243
---------- ----------
Cash provided by (used in) operating
activities (6,344) 19,238
Cash flows from investing activities:
Purchase of Rogers and Phillips, Inc.,
net of cash acquired 179 -
Proceeds from sales of property and equipment - 5,164
Purchase of property and equipment (1,130) (1,156)
Purchase of spare parts (1,699) (1,111)
---------- ----------
Cash provided by (used in) investing
activities (2,650) 2,897
Cash flows from financing activities:
Proceeds from long-term debt 11,000 -
Proceeds from notes payable 979 -
Proceeds from common stock 62 99
Repayments of long-term debt (5,582) -
Repayment of notes payable to banks (481) (525)
Purchase of treasury stock - (7,574)
Collection of notes receivable for
stock purchases - 22
Repayment of notes payable to
former shareholders - (116)
---------- ----------
Cash provided by (used in)
financing activities 5,978 (8,094)
---------- ----------
Cash provided by (used in) all activities (3,016) 14,041
Cash and cash equivalents, beginning of period 7,806 8,247
---------- ----------
Cash and cash equivalents, end of period $ 4,790 $ 22,288
========== ==========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
5
<PAGE>
WILLBROS GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share and per share amounts)
(Unaudited)
1. Basis of Presentation
The condensed consolidated financial statements of Willbros
Group, Inc. and its majority-owned subsidiaries (the "Company")
reflect all adjustments which are, in the opinion of management,
necessary to present fairly the financial position, results of
operations and cash flows of the Company as of March 31, 2000, and
for all interim periods presented. All adjustments are normal
recurring accruals.
Certain information and disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted. These
condensed consolidated financial statements should be read in
conjunction with the Company's December 31, 1999 audited
consolidated financial statements and notes thereto contained in
the Company's Annual Report to Stockholders for the year ended
December 31, 1999. The results of operations for the period ended
March 31, 2000, are not necessarily indicative of the operating
results to be achieved for the full year.
2. Foreign Exchange Risk
The Company attempts to negotiate contracts which provide for
payment in U.S. dollars, but it may be required to take all or a
portion of payment under a contract in another currency. To
mitigate non-U.S. currency exchange risk, the Company seeks to
match anticipated non-U.S. currency revenue with expenses in the
same currency whenever possible. To the extent it is unable to
match non-U.S. currency revenue with expenses in the same currency,
the Company may use forward contracts, options or other common
hedging techniques in the same non-U.S. currencies. The unrealized
gains or losses on financial instruments used to hedge currency
risk are deferred and recognized when realized as an adjustment to
contract revenue. The Company has no financial instruments to
hedge currency risk at March 31, 2000.
3. Earnings Per Share
Basic and diluted earnings per common share for the three months
ended March 31, 2000 and 1999, are computed as follows:
<TABLE>
<CAPTION>
2000 1999
---------- ----------
<S> <C> <C>
Net income (loss) applicable to common shares $ (5,914) $ (7,115)
========== ==========
Weighted average number of common shares out-
standing for basic earnings per share 13,990,054 13,319,240
Effect of dilutive potential common shares
from stock options - -
---------- ----------
Weighted average number of common shares out-
standing for diluted earnings per share 13,990,054 13,319,240
========== ==========
Earnings (loss) per common share:
Basic $ (.42) $ (.53)
========== ==========
Diluted $ (.42) $ (.53)
========== ==========
</TABLE>
6
<PAGE>
WILLBROS GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share and per share amounts)
(Unaudited)
3. Earnings Per Share (continued)
At March 31, 2000, there were 1,651,550 potential common shares
excluded from the computation of diluted earnings (loss) per share
because of their anti-dilutive effect.
4. Comprehensive Income
Comprehensive income for the Company includes net income and
foreign currency translation adjustments which are charged or
credited to the cumulative foreign currency translation adjustment
account within stockholders' equity. There were no related tax
effects associated with the Company's calculation of comprehensive
income. Comprehensive income for the three months ended March 31,
2000 and 1999, consists of:
<TABLE>
<CAPTION>
2000 1999
---------- ----------
<S> <C> <C>
Net loss $ (5,914) $ (7,115)
Other comprehensive income - foreign currency
translation adjustments - -
---------- ----------
Comprehensive income (loss) $ (5,914) $ (7,115)
========== ==========
</TABLE>
5. Contingencies, Commitments and Other Circumstances
The Company provides construction, engineering and specialty
services to the oil and gas industry. The Company's principal
markets are currently Africa, Asia, Australia, the Middle East,
South America and the United States. Operations outside the United
States may be subject to certain risks which ordinarily would not
be expected to exist in the United States, including foreign
currency restrictions, extreme exchange rate fluctuations,
expropriation of assets, civil uprisings and riots, unanticipated
taxes including income taxes, excise duties, import taxes, export
taxes, sales taxes or other governmental assessments, availability
of suitable personnel and equipment, termination of existing
contracts and leases, government instability and legal systems of
decrees, laws, regulations, interpretations and court decisions
which are not always fully developed and which may be retroactively
applied. Management is not presently aware of any events of the
type described in the countries in which it operates that have not
been provided for in the accompanying consolidated financial
statements. Based upon the advice of local advisors in the various
work countries concerning the interpretation of the laws, practices
and customs of the countries in which it operates, management
believes the Company has followed the current practices in those
countries; however, because of the nature of these potential risks,
there can be no assurance that the Company may not be adversely
affected by them in the future. The Company insures substantially
all of its equipment in countries outside the United States against
certain political risks and terrorism.
The Company has the usual liability of contractors for the
completion of contracts and the warranty of its work. Where work
is performed through a joint venture, the Company also has possible
liability for the contract completion and warranty responsibilities
of its joint venturers. Management is not aware of any material
exposure related thereto which has not been provided for in the
accompanying consolidated financial statements.
7
<PAGE>
WILLBROS GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share and per share amounts)
(Unaudited)
5. Contingencies, Commitments and Other Circumstances (continued)
Certain post contract completion audits and reviews are being
conducted by clients and/or government entities. While there can be
no assurance that claims will not be received as a result of such
audits and reviews, management does not believe a legitimate basis
for any material claims exists. At the present time it is not
possible for management to estimate the likelihood of such claims
being asserted or, if asserted, the amount or nature thereof.
6. Acquisition
On January 24, 2000, the Company acquired Rogers & Phillips, Inc.
("RPI"), a closely held United States pipeline construction
company. The consideration included 1,035,000 shares
of treasury stock valued at $5,511 and approximately $1,516 in cash. The
transaction was accounted for as a purchase. The pro forma results of
operations for this acquisition, had the acquisition occurred at the
beginning of 2000 and 1999, are not significant, and accordingly have
not been provided. The fair value of the net assets acquired was
allocated as follows:
<TABLE>
<S> <C>
Current assets $ 5,117
Property, plant and equipment 3,523
Current liabilities (2,793)
Long-term debt (335)
----------
5,512
Excess of purchase price over
net assets acquired 1,515
----------
$ 7,027
==========
</TABLE>
8
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
General
The Company derives its revenue from providing construction,
engineering and specialty services to the oil and gas industry and
government entities worldwide. The Company obtains contracts for
its work primarily by competitive bidding or through negotiations
with long-standing clients. Bidding activity, backlog and revenue
resulting from the award of contracts to the Company may vary
significantly from period to period.
A number of factors relating to the Company's business affect
the Company's recognition of contract revenue. Revenue from fixed-
price construction and engineering contracts is recognized on the
percentage-of-completion method. Under this method, estimated
contract revenue is accrued based generally on the percentage that
costs to date bear to total estimated costs, taking into
consideration physical completion. Generally, the Company does not
recognize income on a fixed-price contract until the contract is
approximately 10% complete. Costs which are considered to be
reimbursable are excluded before the percentage-of-completion
calculation is made. Accrued revenue pertaining to reimbursables is
limited to the cost of the reimbursables. If a current estimate of
total contract cost indicates a loss on a contract, the projected
loss is recognized in full when determined. Revenue from unit-price
contracts is recognized as earned. Revenue from change orders,
extra work, variations in the scope of work and claims is
recognized when realization is assured.
The Company derives its revenue from contracts with durations
from a few weeks to several months or in some cases more than a
year. Unit-price contracts provide relatively even quarterly
results; however, major projects are usually fixed-price contracts
that may result in uneven quarterly financial results due to the
nature of the work and the method by which revenue is recognized.
These financial factors, as well as external factors such as
weather, client needs, client delays in providing approvals, labor
availability, governmental regulation and politics, may affect the
progress of a project's completion and thus the timing of revenue
recognition. The Company believes that its operating results should
be evaluated over a relatively long time horizon during which major
contracts in progress are completed and change orders, extra work,
variations in the scope of work and cost recoveries and other
claims are negotiated and realized.
All U.S. government contracts and many of the Company's other
contracts provide for termination of the contract for the
convenience of the client. In addition, many contracts are subject
to certain completion schedule requirements with liquidated damages
in the event schedules are not met as the result of circumstances
within the control of Willbros. The Australian project, which is
currently behind schedule and over budget, is subject to liquidated
damages if the project is not complete by July 1, 2000. The
Company believes that it is possible to complete the Australian
project before this deadline if there are no further weather delays
or labor difficulties. Recovery of some of the cost overruns on
this project may also be possible; but until realization is
assured, no recoveries will be recognized.
The world's economies have begun their recovery following the
downturn of 1997-98. That fact, along with the recent run-up in
oil prices, suggests that many significant development projects and
energy infrastructure projects will now likely proceed, including a
number of projects in emerging markets which were put on hold over
the past two to three years.
The Company recognizes anticipated contract revenue as backlog
when the award of a contract is reasonably assured. Anticipated
revenue from post-contract award processes, including change
orders, extra work, variations in the scope of work and the effect
of escalation or currency fluctuation formulas, is not added to
backlog until realization is reasonably assured. New contract
awards totaled $84.2 million during the quarter ended March 31,
2000. Additions to backlog during the period were as follows:
construction, $37.8 million; engineering, $40.3 million; and
specialty services, $6.1 million. Backlog decreases by type of
service during the period were as follows: construction, $51.7 million;
engineering, $14.8 million; and specialty services, $13.5 million.
Backlog at the end of the quarter was up $4.2 million (2%) to
$257.3 million and consisted of the following: (a) construction,
$126.9 million, down $13.9 million; (b) engineering, $56.5 million, up
$25.5 million; and (c) specialty services, $73.9 million, down
$7.4 million. Construction backlog consists primarily of an
engineering, procurement and construction project in Nigeria. Specialty
9
<PAGE>
services backlog is primarily attributable to two major
contracts: a 16-year water injection contract awarded in 1998 to a
consortium in which the Company has a 10 percent interest in Venezuela
and a three-year dredging contract awarded in 1998 in Nigeria.
On January 24, 2000, the Company acquired Rogers & Phillips,
Inc. ("RPI"), a closely held pipeline construction company in
Houston, Texas with an experienced management team and a strong
market position in the Gulf Coast area. Founded in 1992, RPI
provides a full range of construction services for pipeline
operating companies, including station and piping projects in
congested urban areas and inside plants, as well as cross-country
pipelines. The consideration included 1,035,000 shares of the
Company's common stock and approximately $1.5 million in cash. The
transaction was accounted for as a purchase. The acquisition
resulted in the addition of $13.9 million to backlog. RPI
contributed approximately $6.0 million of revenue during the
quarter.
On March 6, 2000, the Company announced that Willbros USA,
Inc.'s administrative headquarters and some construction support
will be moved from Tulsa, Oklahoma, to Houston, Texas, during 2000.
The total cost of the move and termination benefits is currently
estimated to be between $3.5 million and $4.5 million, of which
approximately $0.5 million had been incurred at March 31, 2000.
Results of Operations
The Company's contract revenue and contract costs are primarily
related to the timing and location of development projects in the
oil and gas industry worldwide. Contract revenue and cost
variations by country from year to year are the result of (a)
entering new countries as part of the Company's strategy for
geographical diversification, (b) the execution of new contract
awards, (c) the completion of contracts, and (d) the overall level
of activity in the Company's services.
The Company's ability to be successful in obtaining and
executing contracts can be affected by the relative strength or
weakness of the U.S. dollar compared to the currencies of its
competitors, its clients and its work locations. The Company does
not believe that its revenue or results of operations were
adversely affected in this regard during the periods ended
March 31, 2000 or 1999.
Three Months Ended March 31, 2000, Compared to Three Months Ended
March 31, 1999
Contract revenue increased $50.3 million (176%) to $78.8 million
due to (a) $43.2 million of increased construction revenue
resulting primarily from new construction contracts in Nigeria,
Australia and the United States; (b) increased engineering revenue
of $6.1 million due to an increase of engineering services in the
United States; and (c) an increase of $1.0 million in specialty
services revenue principally from operations in Oman and Venezuela.
Nigeria revenue increased $32.3 million (302%) due to revenue from
work performed on a pipeline engineering, procurement and
construction project. Australia revenue increased $12.0 million
(100%) due to a construction contract begun in 1999. Revenue in
the United States increased $7.6 million (90%) primarily due to an
increase in construction revenue from projects in Indiana and
Illinois resulting from the acquisition of RPI. Venezuela revenue
increased $2.2 million (100%) due to work performed on a water
injection platform construction contract and several new service
contracts. Oman revenue increased $0.9 million (45%) due to
increased construction and service revenues. Revenue from the Ivory
Coast decreased $2.0 million (100%) due to the completion of work
in 1999 on pipeline projects in that country. Offshore West Africa
revenue decreased $1.4 million (74%) due to a decline in offshore
services; however, work has begun on an engineering, procurement
and construction project to install offshore pipelines and
facilities valued at $12.9 million. Indonesia revenue decreased
$1.3 million (100%) due to the completion in 1999 of construction
projects in that country.
Contract costs increased $46.2 million (192%) to $70.3 million
due to an increase of $42.4 million in construction services cost
and an increase of $5.4 million in engineering services cost,
offset by a decrease of $1.6 million in specialty services cost.
Variations in contract cost by country were closely related to the
variations in contract revenue.
10
<PAGE>
General and administrative expense remained constant at
$7.6 million. Increases due to increased activity in United States
construction and Nigeria were offset by a reduction in costs
related to personnel reductions.
Operating loss decreased $4.1 million (49%) to an operating loss
of $4.4 million. An increase in operating income in Nigeria, which
improved $12.8 million to $8.5 million compared to an operating
loss of $4.3 million in 1999, was offset by recognizing an
additional $8.4 million loss on a pipeline construction project in
Australia that has been impacted by unanticipated labor
difficulties and weather delays.
Interest - net decreased $0.3 million to $0.1 million expense due
to an increase in borrowings during the period.
Minority interest expense increased 50% to $0.3 million due to an
increase in activity in countries where minority interest partners
were involved.
Other - net decreased $1.7 million to $0.2 million due to gains
on disposals of equipment in 1999 not repeated in 2000.
The provision for income taxes increased $0.8 million (160%) due
to the increase in activity in Nigeria. Although the Company has a
loss before income taxes, a provision for income taxes is required
due to income taxes in certain countries being based on revenue
rather than income and the fact that losses in one country cannot
be used to offset taxable income in another country.
Liquidity and Capital Resources
The Company's primary requirements for capital are to acquire,
upgrade and maintain its equipment, provide working capital for
current projects, finance the mobilization of employees and
equipment to new projects, establish a presence in countries where
the Company perceives growth opportunities and finance the possible
acquisition of new businesses and equity investments. Historically
the Company has met its capital requirements primarily from
operating cash flows.
Cash and cash equivalents decreased $3.0 million (38%) to $4.8 million
at March 31, 2000, from $7.8 million at December 31, 1999.
The decrease was due to negative cash flows of $6.3 million from
operations and $8.2 million from investing activities (including
$5.3 million for the acquisition of RPI and $2.9 million for the
purchase of other equipment and spare parts), offset by $11.5 million
cash provided by financing activities.
The Company has a $150.0 million credit agreement that matures
on February 20, 2003 with a syndicated bank group including
ABN AMRO Bank N.V., as agent, and Credit Lyonnais, New York Branch, as
co-agent. The credit agreement provides for a $100.0 million
revolving credit facility, part of which can be used for
acquisitions and equity investments. The entire facility, less
amounts used under the revolving portion of the facility, may be
used for standby and commercial letters of credit. Principal is
payable at termination on all revolving loans except qualifying
acquisition and equity investment loans which are payable quarterly
over the remaining life of the credit agreement. Interest is
payable quarterly at prime or other alternative interest rates. A
commitment fee is payable quarterly based on an annual rate of one
fourth percent of the unused portion of the credit facility. The
Company's obligations under the credit agreement are secured by the
stock of the principal subsidiaries of the Company. The credit
agreement requires the Company to maintain certain financial
ratios, restricts the amount of annual dividend payments to the
greater of 25 cents per share or 25 percent of net income and
limits the Company's ability to purchase its own stock. At
March 31, 2000, outstanding letters of credit totaled $36.7 million
and borrowings amounted to $21.0 million, leaving $92.3 million
available under this facility.
The Company has unsecured credit facilities with banks in
certain countries outside the United States. Borrowings under
these lines, in the form of short-term notes and overdrafts, are
made at competitive local interest rates. Generally, each line is
available only for borrowings related to operations in a specific
country. Credit available under these facilities was
approximately $4.7 million at March 31, 2000.
The Company believes that cash flows from operations and
borrowing under existing credit facilities will be sufficient to
finance working capital and capital expenditures for ongoing
operations at least through the
11
<PAGE>
end of 2000. The Company estimates total capital expenditures for
equipment and spare parts to be approximately $10.0 to $15.0 million
during 2000.
New 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 for
derivative instruments, including derivative instruments embedded in
other contracts, and for hedging activities. In June 1999, the FASB
issued SFAS No. 137, "Accounting for Derivative Instruments and Hedging
Activities Deferral of Effective Date of FASB Statement No. 133,"
which deferred the effective date of SFAS No. 133 to all fiscal
quarters of fiscal years beginning after June 15, 2000. The Company does
not expect SFAS No. 133 or SFAS No. 137 to have an impact on its results of
operations, financial position or cash flows as it currently does not
have any derivative instruments or hedging activities.
In December 1999, the Securities and Exchange Commission ("SEC") issued
Staff Accounting Bulletin ("SAB") 101, "Revenue Recognition in Financial
Statements." This document expresses the views of the SEC in applying
generally accepted accounting principles while recognizing revenue. In
March 2000, the SEC issued SAB 101A, "Deferral of the Effective Date of
SAB 101 and Implementation Issues Related to SAB 101," which deferred the
effective date of SAB 101 to the second fiscal quarter of fiscal years
beginning after December 15, 1999. The Company is evaluating the impact
of adoption of this SAB and currently does not anticipate that adoption of
the views expressed in this document will have a material impact on the
methodology the Company uses to recognize revenue.
Forward-Looking Statements
This Form 10-Q includes "forward-looking statements" within the
meaning of Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Securities Exchange Act of 1934, as amended.
All statements, other than statements of historical facts, included
in this Form 10-Q which address activities, events or developments
which the Company expects or anticipates will or may occur in the
future, including such things as future capital expenditures
(including the amount and nature thereof), oil and gas prices and
demand, expansion and other development trends of the oil and gas
industry, business strategy, expansion and growth of the Company's
business and operations, movement of the Willbros USA, Inc.'s Tulsa,
Oklahoma administrative offices to Houston, Texas, and other such
matters are forward-looking statements. These 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 and expected future developments as well as other
factors it believes are appropriate in the circumstances. However,
whether actual results and developments will conform with the
Company's expectations and predictions is subject to a number of
risks and uncertainties which could cause actual results to differ
materially from the Company's expectations including the timely
award of one or more projects; exceeding project cost and scheduled
targets; failing to realize cost recoveries from projects completed
or in progress within a reasonable period after completion of the
relevant project; identifying and acquiring suitable acquisition
targets on reasonable terms; the demand for energy diminishing;
political circumstances impeding the progress of work; general
economic, market or business conditions; changes in laws or
regulations; the risk factors listed from time to time in the
Company's filings with the Securities and Exchange Commission; and
other factors, most of which are beyond the control of the Company.
Consequently, all of the forward-looking statements made in this
Form 10-Q are qualified by these cautionary statements and there
can be no assurance that the actual results or developments
anticipated by the Company will be realized or, even if
substantially realized, that they will have the expected
consequences to or effects on the Company or its business or
operations. The Company assumes no obligation to update publicly
any such forward-looking statements, whether as a result of new
information, future events or otherwise.
12
<PAGE>
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Financial Risk Management
The Company's primary market risk is its exposure to changes in
non-U.S. currency exchange rates. The Company attempts to
negotiate contracts which provide for payment in U.S. dollars, but
it may be required to take all or a portion of payment under a
contract in another currency. To mitigate non-U.S. currency
exchange risk, the Company seeks to match anticipated non-U.S.
currency revenue with expenses in the same currency whenever
possible. To the extent it is unable to match non-U.S. currency
revenue with expenses in the same currency, the Company may use
forward contracts, options or other common hedging techniques in
the same non-U.S. currencies. The Company had no forward contracts
or options at March 31, 2000.
The carrying amounts for cash and cash equivalents, accounts
receivable, notes payable and accounts payable and accrued
liabilities shown in the consolidated balance sheets approximate
fair value at March 31, 2000 due to the generally short maturities
of these items. The Company invests primarily in short-term dollar
denominated bank deposits, and at March 31, 2000 did not have any
investment in instruments with a maturity of more than a few days
or in any equity securities. The Company has the ability and
expects to hold its investments to maturity.
13
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
- ------- -----------------
Not applicable
Item 2. Changes in Securities and Use of Proceeds
- ------- -----------------------------------------
On January 24, 2000, the Company acquired Rogers & Phillips, Inc.
("RPI"), a closely held pipeline construction company in Houston,
Texas. As part of the consideration for this acquisition, the Company
issued an aggregate of 1,035,000 shares of the Company's common stock
to the stockholders of RPI. The Company effected such issuance of shares
in accordance with Rule 506 of Regulation D under the Securities Act of
1933, as amended. Each of the stockholders was an "accredited investor"
for purposes of such rule.
Item 3. Defaults upon Senior Securities
- ------- -------------------------------
Not applicable
Item 4. Submission of Matters to a Vote of Security Holders
- ------- ---------------------------------------------------
Not applicable
Item 5. Other Information
- ------- -----------------
Not applicable
Item 6. Exhibits and Reports on Form 8-K
- ------- --------------------------------
(a) Exhibits:
The following document is included as an exhibit to this
Form 10-Q. The exhibit below incorporated by reference herein is
indicated as such by the information supplied in the parenthetical
thereafter. If no parenthetical appears after an exhibit, such
exhibit is filed herewith.
27 Financial Data Schedule.
(b) Reports on Form 8-K
There were no current reports on Form 8-K filed during the three
months ended March 31, 2000.
14
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
WILLBROS GROUP, INC.
Date: May 12, 2000 By: /s/ Melvin F. Spreitzer
-------------------------------------
Melvin F. Spreitzer
Executive Vice President,
Chief Financial Officer and Treasurer
(Principal Financial Officer and
Principal Accounting Officer)
15
<PAGE>
EXHIBIT INDEX
The following document is included as an exhibit to this
Form 10-Q. The exhibit below incorporated by reference herein is
indicated as such by the information supplied in the parenthetical
thereafter. If no parenthetical appears after an exhibit, such
exhibit is filed herewith.
Exhibit
Number Description
- ----------- ----------------------------------------------------------------
27 Financial Data Schedule.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S MARCH 31, 2000 FORM 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 4,790
<SECURITIES> 0
<RECEIVABLES> 71,365
<ALLOWANCES> 3,625
<INVENTORY> 0
<CURRENT-ASSETS> 95,743
<PP&E> 140,058
<DEPRECIATION> 74,199
<TOTAL-ASSETS> 176,540
<CURRENT-LIABILITIES> 67,736
<BONDS> 0
0
0
<COMMON> 757
<OTHER-SE> 79,329
<TOTAL-LIABILITY-AND-EQUITY> 176,540
<SALES> 78,773
<TOTAL-REVENUES> 78,773
<CGS> 70,318
<TOTAL-COSTS> 83,162
<OTHER-EXPENSES> 234
<LOSS-PROVISION> (106)
<INTEREST-EXPENSE> 324
<INCOME-PRETAX> (4,623)
<INCOME-TAX> 1,291
<INCOME-CONTINUING> (5,914)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (5,914)
<EPS-BASIC> .42
<EPS-DILUTED> .42
</TABLE>
