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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
-----------------------
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1999
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 0-22078
Dual Holding Company
(Exact name of registrant as specified in its charter)
DELAWARE 51-0327704
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
2700 Fountain Place
1445 Ross Avenue
Dallas, Texas 75202-2792
(Address of principal executive offices (Zip Code)
Registrant's telephone number, including area code: (214)922-1500
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 twelve 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 ___
There were 1,000 shares of Common Stock, $.10 par value, of the registrant
outstanding as of August 10, 1999.
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<PAGE>
DUAL HOLDING COMPANY
INDEX TO FORM 10-Q
FOR THE QUARTER ENDED JUNE 30, 1999
PAGE
- --------------------------------------------------------------------------------
PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Consolidated Statement of Operations
Three months ended June 30, 1999 and 1998............ 3
Consolidated Statement of Operations
Six months ended June 30, 1999 and 1998 ............ 4
Consolidated Balance Sheet
June 30, 1999 and December 31, 1998................. 5
Consolidated Statement of Cash Flows
Six months ended June 30, 1999 and 1998............. 6
Notes to Consolidated Financial Statements .............. 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS ........... 8
PART II OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K ........................ 12
SIGNATURES ....................................................... 13
Separate financial statements of the subsidiaries of Dual Holding Company (the
"Company") that guarantee the Company's Senior Subordinated Notes due 2004 (the
"Notes") are not included herein. Such subsidiary guarantors are jointly and
severally liable with respect to the Company's obligations pursuant to such
Notes, and the aggregate total assets, equity and net income (loss) of such
subsidiary guarantors are substantially equivalent to the total assets, equity
and net income (loss) of the Company on a consolidated basis. The total assets,
equity and net income (loss) of subsidiaries of the Company not guaranteeing the
Notes on a combined basis are not significant compared to the respective amounts
reported in the Consolidated Financial Statements of the Company and its
subsidiaries.
2
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial statements
DUAL HOLDING COMPANY AND SUBSIDIARIES
(A WHOLLY-OWNED SUBSIDIARY OF ENSCO INTERNATIONAL INCORPORATED)
CONSOLIDATED STATEMENT OF OPERATIONS
(In thousands)
(Unaudited)
Three Months Ended
June 30,
------------------------
1999 1998
-------- --------
OPERATING REVENUES
Contract drilling........................... $ 1,465 $ 13,383
ENSCO charter fees.......................... 12,338 9,201
-------- --------
13,803 22,584
-------- --------
OPERATING EXPENSES
Contract drilling........................... 1,839 7,789
Depreciation and amortization............... 7,817 5,082
ENSCO administrative charge................. 1,200 1,200
-------- --------
10,856 14,071
-------- --------
OPERATING INCOME................................ 2,947 8,513
OTHER INCOME (EXPENSE)
Interest income............................. 331 308
Interest expense, net....................... (3,298) (2,660)
Other, net.................................. (20) (62)
-------- --------
(2,987) (2,414)
-------- --------
INCOME (LOSS) BEFORE INCOME TAXES............... (40) 6,099
PROVISION FOR INCOME TAXES
Current income tax expense.................. - 603
Deferred income tax expense................. 5 2,297
-------- --------
5 2,900
-------- --------
NET INCOME (LOSS)............................... $ (45) $ 3,199
======== ========
The accompanying notes are an integral part of these financial statements.
3
<PAGE>
DUAL HOLDING COMPANY AND SUBSIDIARIES
(A WHOLLY-OWNED SUBSIDIARY OF ENSCO INTERNATIONAL INCORPORATED)
CONSOLIDATED STATEMENT OF OPERATIONS
(In thousands)
(Unaudited)
Six Months Ended
June 30,
-------------------------
1999 1998
-------- ---------
OPERATING REVENUES
Contract drilling.......................... $ 6,203 $ 25,335
ENSCO charter fees......................... 26,040 17,623
-------- --------
32,243 42,958
-------- --------
OPERATING EXPENSES
Contract drilling.......................... 6,070 12,904
Depreciation and amortization.............. 15,590 10,049
ENSCO administrative charge................ 2,400 2,400
-------- --------
24,060 25,353
-------- --------
OPERATING INCOME 8,183 17,605
OTHER INCOME (EXPENSE)
Interest income............................ 587 509
Interest expense, net...................... (6,604) (5,005)
Other, net................................. 33 (95)
-------- --------
(5,984) (4,591)
-------- --------
INCOME BEFORE INCOME TAXES 2,199 13,014
PROVISION FOR INCOME TAXES
Current income tax expense................. 32 1,952
Deferred income tax expense................ 750 3,593
-------- --------
782 5,545
-------- --------
NET INCOME .................................... $ 1,417 $ 7,469
======== ========
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
DUAL HOLDING COMPANY AND SUBSIDIARIES
(A WHOLLY-OWNED SUBSIDIARY OF ENSCO INTERNATIONAL INCORPORATED)
CONSOLIDATED BALANCE SHEET
(In thousands, except for par value and share amounts)
June 30, December 31,
1999 1998
-------- ---------
(Unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents...................... $ 18,165 $ 10,790
Receivable from ENSCO.......................... 3,500 -
Accounts receivable, net....................... 893 9,147
Other current assets........................... 9,504 9,519
-------- --------
Total current assets........................ 32,062 29,456
-------- --------
PROPERTY AND EQUIPMENT, AT COST.................... 461,136 448,756
Less accumulated depreciation.................. 67,247 53,204
-------- --------
Property and equipment, net................ 393,889 395,552
-------- --------
OTHER ASSETS, NET.................................. 106,111 108,261
-------- --------
$532,062 $533,269
======== ========
LIABILITIES AND STOCKHOLDER'S EQUITY
CURRENT LIABILITIES
Payable to ENSCO............................... $ - $ 2,083
Accounts payable............................... 16 558
Accrued liabilities and other.................. 14,159 16,542
-------- --------
Total current liabilities.................. 14,175 19,183
-------- --------
LONG-TERM DEBT..................................... 97,824 98,137
NOTES PAYABLE TO ENSCO, INCLUDING ACCRUED INTEREST. 83,828 81,827
DEFERRED INCOME TAXES.............................. 24,590 23,840
OTHER LIABILITIES.................................. 10,668 10,722
COMMITMENTS AND CONTINGENCIES......................
STOCKHOLDER'S EQUITY
Common stock ($.10 par value, 10,000 shares,
authorized, 1,000 shares issued and
outstanding)................................ - -
Additional paid-in capital..................... 264,824 264,824
Retained earnings.............................. 36,153 34,736
-------- --------
Total stockholder's equity................. 300,977 299,560
-------- --------
$532,062 $533,269
======== ========
The accompanying notes are an integral part of these financial statements.
5
<PAGE>
DUAL HOLDING COMPANY AND SUBSIDIARIES
(A WHOLLY-OWNED SUBSIDIARY OF ENSCO INTERNATIONAL INCORPORATED)
CONSOLIDATED STATEMENT OF CASH FLOWS
(In thousands)
(Unaudited)
Six Months Ended
June 30,
--------------------
1999 1998
-------- --------
OPERATING ACTIVITIES
Net income............................................. $ 1,417 $ 7,469
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization..................... 15,590 10,049
Deferred income taxes............................. 750 3,593
Other............................................. (291) (260)
Changes in assets and liabilities:
Decrease in accounts receivable............... 4,754 3,314
(Increase) decrease in other assets........... 730 (314)
Increase (decrease) in accounts payable....... (2,671) 4,871
Decrease in accrued and other liabilities..... (811) (1,910)
-------- --------
Net cash provided by operating activities. 19,468 26,812
-------- --------
INVESTING ACTIVITIES
Additions to property and equipment.................... (14,173) (73,095)
Proceeds from sale of assets........................... 79 70
-------- --------
Net cash used by investing activities..... (14,094) (73,025)
-------- --------
FINANCING ACTIVITIES
Long-term borrowings from ENSCO, including accrued
interest.............................................. 2,001 50,000
-------- --------
Net cash provided by financing activities. 2,001 50,000
-------- --------
INCREASE IN CASH AND CASH EQUIVALENTS..................... 7,375 3,787
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD............ 10,790 10,071
-------- --------
CASH AND CASH EQUIVALENTS, END OF PERIOD.................. $ 18,165 $ 13,858
======== ========
The accompanying notes are an integral part of these financial statements.
6
<PAGE>
DUAL HOLDING COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1 - Unaudited Financial Statements
The consolidated financial statements included herein have been
prepared by Dual Holding Company (the "Company"), without audit, pursuant to the
rules and regulations of the Securities and Exchange Commission and in
accordance with generally accepted accounting principles and, in the opinion of
management, reflect all adjustments (which consist of normal recurring
adjustments) which are necessary for a fair presentation of the financial
position, results of operations, and of cash flows for the interim periods
presented. The December 31, 1998 consolidated balance sheet data was derived
from audited financial statements, but does not include all disclosures required
by generally accepted accounting principles.
The Company is a wholly-owned subsidiary of ENSCO International
Incorporated ("ENSCO").
Results of operations for the three and six month periods ended June
30, 1999 are not necessarily indicative of results of operations which will be
realized for the year ending December 31, 1999. It is recommended that these
financial statements be read in conjunction with the Company's consolidated
financial statements and notes thereto for the year ended December 31, 1998
included in the Company's Annual Report to the Securities and Exchange
Commission on Form 10-K.
Note 2 - Related Party Transactions
At June 30, 1999, the Company's three jackup rigs and seven platform
rigs in the Gulf of Mexico, and two jackup rigs in the Asia Pacific region, were
under bareboat charter to wholly-owned subsidiaries of ENSCO to achieve certain
operating and marketing efficencies. The terms of the bareboat charter
agreements with ENSCO provide for fixed daily rates to be paid to the Company.
The fixed daily rates of the ten rigs chartered in the Gulf of Mexico are
reduced by 50% if a rig is idle for more than 30 consecutive days. The fixed
daily rates of the rigs chartered in the Asia Pacific region are reduced to
$1,500 when the rigs are idle. The bareboat charter agreements may be terminated
with one month's prior notice given by either party.
The Company has a Master Services Agreement with ENSCO. Under the terms
of the Master Services Agreement, ENSCO provides certain shorebase and corporate
services for the Company's domestic and foreign operations. The Company pays
ENSCO a monthly fee of $400,000 for these services, which the Company believes
is reasonable for the services provided.
During 1998, the Company borrowed $80.0 million from ENSCO to meet cash
flow requirements for capital upgrades and enhancements to the Company's
drilling rigs. Interest expense on the outstanding debt totaled approximately
$2.0 million and $300,000 for the six months ended June 30, 1999 and 1998,
respectively. The Company made no payments of principal or interest during the
six months ended June 30, 1999 and 1998.
The Company is a guarantor of ENSCO's $185.0 million revolving credit
agreement established in May 1998. As of June 30, 1999 there were no borrowings
outstanding under the credit agreement.
7
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
BUSINESS ENVIRONMENT
The Company owns 15 offshore drilling rigs and provides offshore
drilling services to the oil and gas industry. The Company's drilling rigs are
located in North America and the Asia Pacific region. Demand for the Company's
services is significantly affected by expenditures for oil and gas drilling.
Expenditures for oil and gas drilling activity fluctuate based upon many factors
including world economic conditions, the legislative environment in the U.S. and
other major countries, production levels and other activities of OPEC and other
oil and gas producers, and the impact that these and other events have on the
current and expected future pricing of oil and natural gas.
Concern over excess oil supplies and the resulting curtailment or
deferral of exploration and development spending by oil companies continues to
adversely impact industry conditions. Demand for drilling rigs remains
depressed, and day rates and utilization continued to decrease during the first
and second quarters of 1999. By several measures, current industry conditions
are the worst that have been experienced since the mid-1980s.
During the first and second quarters of 1999 oil prices increased from
their low reached at the end of 1998, and recently prices for West Texas
Intermediate crude oil have exceeded $21.00 per barrel. The increase in oil
prices is due primarily to cutbacks in oil production by OPEC which were agreed
to in March 1999. Whether or not the recent increase in oil prices will be
sustained is not determinable at the present time. Although the recent increase
in oil prices improves the likelihood of oil companies increasing their
exploration and development spending, the timing of any exploration and
development spending increase and the impact on the Company's operations and
financial results are uncertain. The Company currently expects that day rates
and utilization will show little improvement domestically, and will continue to
deteriorate in the near term in international markets.
The Company's revenues are derived from rigs contracted to third
parties and from charter fees from rigs contracted to wholly-owned subsidiaries
of ENSCO under bareboat charter agreements. The Company's drilling rigs that are
bareboat chartered to ENSCO are not as sensitive to day rate fluctuations as the
Company's drilling rigs contracted directly to third parties, due to the fact
that the charter rates with ENSCO are generally fixed for longer periods of time
and are not directly impacted by market day rates. However, the bareboat charter
agreements with ENSCO provide for reduced day rates when rigs are idle in the
Asia Pacific region and when rigs are idle for more than 30 consecutive days in
the Gulf of Mexico.
RESULTS OF OPERATIONS
The following is an analysis of the offshore drilling rigs owned by the
Company at June 30, 1999 and 1998:
Number of Rigs
-----------------
1999 1998
------ ------
Jackup rigs:
North America...................... 3 3
Asia Pacific....................... 5 5
-- --
Total jackup rigs............... 8 8
Platform Rigs - North America......... 7 7
-- --
Total........................... 15 15
== ==
All of the North America jackup and platform rigs were chartered to
ENSCO for the three and six month periods ended June 30, 1999 and 1998. Two of
the Company's five jackup rigs located in the Asia Pacific region are chartered
to ENSCO, effective October 1998 and April 1999, respectively. All of the
charter agreements between the Company and ENSCO are continuing. In addition,
the Company operated, until April 1999, one platform rig off the coast of China,
which was managed, but not owned by the Company. All of the Company's contract
drilling revenue in the three and six month periods ended June 30, 1999, and
1998, was generated from the jackup rigs and the one non-owned platform rig
located in the Asia Pacific region. The Company's three jackup rigs that are not
under a bareboat charter agreement with ENSCO are currently idle and stacked
offshore Singapore.
8
<PAGE>
Revenues
Contract Drilling
For the three and six months ended June 30, 1999, contract drilling
revenues decreased $11.9 million, or 89%, and $19.1 million, or 76%,
respectively, as compared to the prior year periods. The decrease results from
reduced utilization, as one additional jackup rig was idle during the first six
months of 1999 as compared to the prior year period. In addition, two jackup
rigs that operated under drilling contracts during 1998 are now chartered to
ENSCO, thereby generating charter fees instead of contract drilling revenue
during 1999.
ENSCO Charter Fees
ENSCO charter fees for the three and six months ended June 30, 1999
increased by $3.1 million, or 34%, and $8.4 million, or 48%, respectively, as
compared to the prior year periods. The increase is due in part to the
additional charter of two jackup rigs in the Asia Pacific region, bringing the
total number of jackup rigs under charter to five. Also, the increase reflects
higher charter fees for the jackup rigs and platform rigs in the Gulf of Mexico
resulting from increased rig values.
Contract Drilling Expense
For the three and six months ended June 30, 1999, contract drilling
expenses decreased by $6.0 million, or 76%, and $6.8 million, or 53%,
respectively, as compared to the prior year periods. The decrease is primarily
attributable to lower utilization and the associated cost savings resulting from
one additional idle jackup rig, and two additional jackup rigs chartered to
ENSCO during the first six months of 1999 as compared to the prior year period.
Depreciation and Amortization
Depreciation and amortization expense for the three and six months
ended June 30, 1999 increased by $2.7 million, or 54%, and $5.5 million, or 55%,
respectively, as compared to the prior year periods. The increase is due
primarily to enhancement projects that were completed subsequent to the first
quarter of 1998.
Interest Expense, Net
Interest expense, net increased by $600,000, or 24%, and $1.6 million,
or 32%, respectively, for the three and six months ended June 30, 1999 as
compared to the prior year periods. The increase is due primarily to borrowings
from ENSCO during 1998.
LIQUIDITY AND CAPITAL RESOURCES
Cash Flow and Capital Expenditures
The Company's cash provided by operations and cash used for capital
expenditures for the six months ended June 30, 1999 and 1998 were as follows (in
thousands):
1999 1998
-------- --------
Cash provided by operations...... $ 19,468 $ 26,812
======== ========
Capital expenditures............. $ 14,173 $ 73,095
======== ========
Cash flow from operations decreased by $7.3 million for the six months
ended June 30, 1999 as compared with the prior year period. The decrease in cash
flow from operations is primarily attributable to reduced cash flow from working
capital changes and the decrease in operating margin resulting from reduced
utilization.
Capital expenditures for the six months ended June 30, 1999 decreased
by $58.9 million as compared to the prior year period. In the first six months
of 1998, two of the Company's Asia Pacific jackup rigs were in the shipyard for
major modification and upgrade projects, and other modification projects were in
9
<PAGE>
progress for the Company's platform rigs in the Gulf of Mexico. The 1999 capital
expenditures relate to a platform rig upgrade project in the Gulf of Mexico,
residual charges from various prior year upgrade projects and sustaining capital
additions.
Financing and Capital Resources
The Company's liquidity position at June 30, 1999 and December 31, 1998
is summarized in the table below (in thousands, except ratios):
June 30, December 31,
1999 1998
-------- --------
Cash and cash equivalents....... $ 18,165 $ 10,790
Working capital................. 17,887 10,273
Current ratio................... 2.3 1.5
Management believes that the Company may need to supplement its cash
flow from operations in the second half of 1999 with additional borrowings from
ENSCO in order to meet its capital expenditure requirements. The Company
anticipates that capital expenditures for rig upgrades and sustaining operations
will approximate $10.0 million during the remainder of 1999.
MARKET RISK
The Company uses derivative financial instruments, on a limited basis,
to hedge against its exposure to changes in foreign currencies. The Company does
not use financial instruments for trading purposes. The Company will, however,
from time to time, hedge its known liabilities or projected payments in foreign
currencies to reduce the impact of foreign currency gains and losses in its
financial results. At June 30, 1999, the Company had no foreign currency
exchange contracts outstanding. Management believes that the Company's hedging
activities do not expose the Company to any material interest rate risk, foreign
currency exchange rate risk, commodity price risk or any other market rate or
price risk.
YEAR 2000 UPDATE
The Company's Year 2000 issues are being addressed in conjunction with
ENSCO's worldwide Year 2000 Plan. The following disclosure is from ENSCO's Form
10-Q for the quarterly period ended June 30, 1999 and addresses ENSCO's Year
2000 status.
The Company has completed its assessment of its critical information
technology (IT) systems and non-IT systems and has corrected substantially all
deficiencies identified. The Company believes that it is on schedule to complete
all required system implementations and equipment modifications necessary to
make the Company's critical systems Year 2000 complaint by September 1999.
The Company's critical IT systems are comprised primarily of a general
ledger accounting software package and related application modules, a fixed
asset system, payroll system and procurement and purchasing system. The
assessment of the Company's IT systems found that some of the IT systems were
not Year 2000 complaint. Changes to make these systems Year 2000 compliant were
made in conjunction with the Company's planned upgrade cycle, which was
completed in June 1999.
Non-IT systems are comprised primarily of computer controlled equipment
and electronic devices, including equipment with embedded microprocessors, which
are used to operate equipment on the Company's drilling rigs. With respect to
drilling rig based systems, the Company's assessment indicated that while there
were certain systems that were not Year 2000 compliant, there would be no
disruption in the operations of its drilling rigs as a result of the Year 2000
problem. The Company conducted testing of its drilling rig based equipment with
manufacture representatives during the fourth quarter of 1998 which verified the
Company's assessment. Changes to make certain drilling rig based systems Year
2000 compliant are being made in conjunction with the Company's ongoing
equipment upgrades, and should be completed by September 1999.
The Company's non-IT systems also include telephone systems and other
office based electronic equipment. With respect to office based non-IT systems,
10
<PAGE>
the Company's assessment indicated that it would be necessary to replace or
modify some existing equipment. The Company completed the necessary replacements
and modifications to its office based non-IT systems in June 1999.
The total cost to make all systems and equipment Year 2000 compliant is
currently estimated at $700,000, including software and systems replaced in the
Company's normal upgrade cycle. Approximately $500,000 has been spent in
modifying and upgrading systems and equipment to date. These estimates do not
include internal labor costs for employees who spend part of their time working
on the Company's Year 2000 project.
The Company has initiated or received communication from most
significant suppliers, customers and financial service providers on the Year
2000 issue. This communication has been used to determine the extent to which
the Company is vulnerable to these third parties' failure to remedy their own
Year 2000 issues. Although there is currently no indication that these business
partners will not achieve their Year 2000 compliance plans, there can be no
guarantee that the systems of other companies on which the Company relies will
be timely converted. Additionally, there can be no guarantee that the Company
will not experience Year 2000 problems. If the Company or its business partners
experience Year 2000 compliance problems, material adverse business consequences
could result. The Company believes that the most likely negative effects, if
any, could include delays in payments to the Company from customers or payments
by the Company to suppliers and disruptions in shipments of equipment and
materials required to operate the Company's drilling rigs.
The Company has begun contingency planning for its Year 2000 issues and
is expected to have such plans completed during the third quarter of 1999. The
Company's contingency planning will primarily focus on precautionary measures
related to safety response requirements for operating assets, the shipment of
equipment to foreign countries and rig crew changes on or around January 1,
2000.
FORWARD-LOOKING STATEMENTS
This report contains forward-looking statements based on current
expectations that involve a number of risks and uncertainties. Generally,
forward-looking statements include words or phrases such as "management
anticipates," "the Company believes," "the Company anticipates" and words and
phrases of similar impact, and include but are not limited to statements
regarding future operations and business environment. The forward-looking
statements are made pursuant to safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. The factors that could cause actual results to
differ materially from the forward-looking statements include the following: (i)
industry conditions and competition, (ii) the cyclical nature of the industry,
(iii) worldwide expenditures for oil and gas drilling, (iv) operational risks
and insurance, (v) risks associated with operating in foreign jurisdictions,
(vi) environmental liabilities which may arise in the future which are not
covered by insurance or indemnity, (vii) the impact of current and future laws
and government regulation, as well as repeal or modification of same, affecting
the oil and gas industry and the Company's operations in particular, (viii) and
the risks described from time to time in the Company's reports to the Securities
and Exchange Commission, which include the Company's Annual Report on Form 10-K
for the year ended December 31, 1998.
NEW ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities." This statement requires companies to record
derivatives on the balance sheet as assets and liabilities, measured at fair
value. Gains and losses resulting from changes in the values of those
derivatives would be accounted for depending on the use of the derivative and
whether it qualifies for hedge accounting. This statement is not expected to
have a material impact on the Company's consolidated financial statements. This
statement, as amended by Statement of Financial Accounting Standards No. 137
"Accounting for Derivative Instruments and Hedging Activities-Deferral of the
Effective Date of FASB Statement No.133," is effective for fiscal years
beginning after June 15, 2000, with earlier adoption encouraged. The Company
will adopt this accounting standard as required by January 1, 2001.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Information required under Item 3. has been incorporated into
Management's Discussion and Analysis of Financial Condition and Results of
Operations - Market Risk.
11
<PAGE>
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits Filed with this Report
Exhibit No.
27.1 Financial Data Schedule. (Exhibit 27.1 is
being submitted as an exhibit only in the
electronic format of this Quarterly Report
on Form 10-Q being submitted to the
Securities and Exchange Commission.)
(b) Reports on Form 8-K
None.
12
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
DUAL HOLDING COMPANY
Date: August 11, 1999 /s/ C. Christopher Gaut
--------------------------------
C. Christopher Gaut
President
(Principal Executive Officer and
Financial Officer)
/s/ H. E. Malone
--------------------------------
H.E. Malone
Secretary
(Principal Accounting Officer)
13
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the June 30,
1999 financial statements and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<CIK> 0000907245
<NAME> DUAL HOLDING COMPANY
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> JUN-30-1999
<CASH> 18,165
<SECURITIES> 0
<RECEIVABLES> 4,393
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 32,062
<PP&E> 461,136
<DEPRECIATION> 67,247
<TOTAL-ASSETS> 532,062
<CURRENT-LIABILITIES> 14,175
<BONDS> 181,652
0
0
<COMMON> 0
<OTHER-SE> 300,977
<TOTAL-LIABILITY-AND-EQUITY> 532,062
<SALES> 0
<TOTAL-REVENUES> 32,243
<CGS> 0
<TOTAL-COSTS> 6,070
<OTHER-EXPENSES> 17,990
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 6,604
<INCOME-PRETAX> 2,199
<INCOME-TAX> 782
<INCOME-CONTINUING> 1,417
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,417
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
