SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
Quarterly report pursuant to section 13 or 15(d) of the Securities
|X| Exchange Act of 1934 for the quarterly period ended June 30, 1996.
--------------
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 1-12542
UTI ENERGY CORP.
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(Exact name of registrant as specified in its charter)
Delaware 23-2037823
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation)
Suite 112
485 Devon Park Drive
Wayne, Pennsylvania 19087
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(Address of principal executive offices) (Zip Code)
(Registrant's telephone number, including area code) (610) 971-9600
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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 ___
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each class of issuer's classes of
common stock, as of the latest practicable date. 3,466,222 shares of Common
Stock at August 5, 1996.
<PAGE>
INDEX
<TABLE>
<CAPTION>
Page
No.
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<S> <C> <C>
Part I. FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements
Condensed Consolidated Balance Sheet at June 30, 1996 and
December 31, 1995............................................... 3 - 4
Condensed Consolidated Statement of Operations
Three and Six Months ended June 30, 1996 and 1995............... 5
Condensed Consolidated Statement of Cash Flows for the
Six Months ended June 30, 1996 and 1995......................... 6
Notes to Condensed Consolidated Financial Statements.............. 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations................... 8 - 9
Part II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8 - K................................ 9
Signatures................................................................. 10
</TABLE>
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
UTI Energy Corp.
Condensed Consolidated Balance Sheets
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
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(Unaudited) (Note)
(in thousands, except share data)
<S> <C> <C>
Assets
Current assets:
Cash $ 1,691 $ 2,273
Accounts receivable--net of allowance for doubtful
accounts of $195 in 1996 and $193 in 1995 12,174 9,370
Other receivables 1,802 2,304
Materials and supplies 811 735
Mineral rights held for resale 162 68
Prepaid expenses 1,057 751
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Total current assets 17,697 15,501
Property and equipment:
Land 775 775
Buildings and improvements 1,781 1,792
Machinery and equipment 34,410 33,504
Oil and gas working interests 1,680 1,690
Construction in process 1,026 292
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39,672 38,053
Less: Accumulated depreciation and amortization 21,892 20,269
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17,780 17,784
Deferred tax asset 505 602
Other assets 131 279
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$36,113 $34,166
======= =======
</TABLE>
Note: The balance sheet at December 31, 1995 has been derived from the audited
financial statements but does not include all of the information and footnotes
required by generally accepted accounting principles for complete financial
statements. See note to condensed consolidated financial statements.
-3-
<PAGE>
June 30, December 31,
1996 1995
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(Unaudited) (Note)
(in thousands, except share data)
Liabilities, redeemable preferred stock,
and common shareholders' equity
Current liabilities:
Accounts payable $ 4,876 $ 4,244
Accrued expenses 1,969 1,889
Accrued payroll costs 1,918 1,399
Current portion of long-term debt 2,484 2,542
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Total current liabilities 11,247 10,074
Long-term debt 7,753 8,701
Deferred taxes 51 51
Other long-term liabilities 350 350
Common shareholders' equity:
Common Stock, $.001 par value,
10,000,000 shares authorized --
issued and outstanding 3,466,222 shares 3 3
Additional capital 15,095 15,095
Retained earnings 1,745 63
Restricted stock plan unearned compensation (131) (171)
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Total common shareholders' equity 16,712 14,990
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$36,113 $34,166
======== =======
Note: The balance sheet at December 31, 1995 has been derived from the audited
financial statements but does not include all of the information and footnotes
required by generally accepted accounting principles for complete financial
statements. See note to condensed consolidated financial statements.
-4-
<PAGE>
UTI Energy Corp.
Condensed Consolidated Statements of Operations (Unaudited)
(in thousands, except share data)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues:
Oil field service $ 19,586 $ 5,962 $ 39,906 $ 14,800
Other 73 81 159 158
--------- ---------- ---------- ----------
19,659 6,043 40,065 14,958
Costs and expenses:
Cost of sales:
Oil field service 16,107 5,226 32,645 12,386
Other 26 - 57 -
Selling, general and administrative 1,774 1,125 3,447 2,340
Depreciation and amortization 1,006 558 1,979 1,113
--------- ---------- ---------- ----------
18,913 6,909 38,128 15,839
--------- ---------- ---------- ----------
Operating income (loss) 746 (866) 1,937 (881)
Other income 107 20 854 157
Interest expense 209 30 432 82
--------- ---------- ---------- ----------
Income from continuing operations 644 (876) 2,359 (806)
before income taxes
Income taxes (benefit) 163 (209) 678 (193)
--------- ---------- ---------- ----------
Income (loss) from continuing operations 481 (667) 1,681 (613)
Loss from discontinued operations (less - (15) - (65)
applicable tax benefit of $5, $20)
Net income (Loss) $ 481 $ (682) $ 1,681 $ (678)
========== ========== ========== ==========
Earnings (loss) per common share
Continuing operations $ 0.13 $ (0.21) $ 0.46 $ (0.19)
Discontinued operations 0.00 0.00 0.00 (0.02)
--------- ---------- ---------- ----------
Earnings (loss) per common share $ 0.13 $ (0.21) $ 0.46 $ (0.21)
========== ========== ========== ==========
Average common shares outstanding:
Primary 3,768,627 3,244,000 3,617,425 3,244,000
========== ========== ========== ==========
Fully diluted 3,792,969 3,244,000 3,629,396 3,244,000
========== ========== ========== ==========
</TABLE>
See note to condensed consolidated financial statements.
-5-
<PAGE>
UTI Energy Corp.
Condensed Consolidated Statements of Cash Flows
(in thousands)
Six Months ended June 30,
1996 1995
---- ----
Operating activities
Income (loss) from continuing operations $ 1,681 $ (613)
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Depreciation and amortization 1,979 1,113
Deferred income taxes (credit) 97 (19)
(Recovery) provision for bad debts 17 (60)
Gain on disposal of fixed assets (38) (81)
Changes in operating assets and liabilities:
Accounts receivable and prepaids (2,624) (127)
Inventories and mineral rights held for resale (171) (18)
Accounts payable, accrued expenses, and
customer deposits 1,233 (1,297)
Other 162 61
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Net cash (used in) provided by continuing operations 2,336 (1,041)
Net cash (used in) discontinued operations -- (641)
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Net cash (used in) provided by operating activities 2,336 (1,682)
Investing activities
Purchase of property and equipment (2,074) (574)
Proceeds from sale of property and equipment 163 77
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Net cash used in investing activities (1,911) (497)
Financing activities
Long-term debt borrowed 34 90
Long-term debt repaid (1,041) (726)
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Net cash used in financing activities (1,007) (636)
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Decrease in cash and cash equivalents (582) (2,815)
Cash and cash equivalents at beginning of year 2,273 3,785
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Cash and cash equivalents at end of quarter $ 1,691 $ 970
======= =======
See note to condensed consolidated financial statements
-6-
<PAGE>
UTI Energy Corp.
Notes to Condensed Consolidated Financial Statements
June 30, 1996
1. Interim Financial Statements
The accompanying unaudited consolidated financial statements at June
30, 1996 have been prepared in accordance with generally accepted
accounting principles for interim financial information and with the
instructions to Form 10 - Q and Article 10 of Regulation S - X.
Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments
(consisting of normal recurring adjustments) considered necessary for a
fair presentation of the financial position and operating results for
the interim periods have been included. The results of operations for
the three and six months ended June 30, 1996 are not necessarily
indicative of the results for the entire year ending December 31, 1996.
For further information, refer to the Consolidated Financial Statements
and footnotes hereto included in the Company's Annual Report on Form 10
- K for the year ended December 31, 1995.
2. Acquisitions
Effective November 1, 1995, the Company purchased all of the capital
stock of FWA Drilling Company, Inc. (FWA) for $14,000,000 in cash. FWA
is engaged in contract drilling in Texas. The acquisition was accounted
for using the purchase method and FWA's operating results since
November 1, 1995 have been consolidated with the operating results of
the Company. The estimated fair market value of the assets acquired
exceeded the purchase price by $4.9 million, which reduced long-term
assets acquired.
The following pro forma operating results assume FWA had been acquired
as of the beginning of each fiscal year:
<TABLE>
<CAPTION>
Three Months Three Months Six Months Six Months
Ended Ended Ended Ended
June 30, 1996 June 30, 1995 June 30, 1996 June 30, 1995
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Revenue $19,659 $17,173 $40,065 $36,134
======== ======== ======== ========
Net income $ 481 $ (122) $ 1,681 $ 366
======== ======== ======== ========
Earnings per share $ 0.13 $ (0.04) $ 0.46 $ 0.11
from continuing operations ======== ======== ======== ========
</TABLE>
-7-
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Comparison of Three Months Ended June 30, 1996 and 1995
REVENUES: Revenues increased 225.3% to $19.7 million in 1996 from $6.0
million in 1995. The increase was due to the acquisition of FWA and a 73.6%
increase in the revenues of the Company's other oil field service operations.
Contract drilling operating days increased 1,983 to 2,531 in the second quarter
of 1996. Revenue per contract drilling operating day decreased 9.4% primarily
due to contract mix. Pressure pumping jobs increased 0.2% and revenue per job
increased 21.0%. The increase in revenue per job was primarily due to a shift in
mix toward stimulation jobs, which generate more revenue per job than do cement
jobs.
The average number of drilling rigs active in the United States was 759
during the second quarter of 1996. This is a 12.4% increase from the second
quarter of 1995.
GROSS PROFIT: Gross profit increased 331.6% to $3.5 million in the second
quarter of 1996 compared to $0.8 million for the same period in 1995. The
increase was due to the acquisition of FWA and a 130.0% increase in gross profit
in the Company's other oil field service operations. Gross profit as a
percentage of sales increased from 13.5% in the second quarter of 1995 to 17.7%
for the same period in 1996 because the FWA acquisition reduced the impact on
consolidated results of the company's Appalachian operations which are adversely
affected by the seasonal slow down in the Appalachian Basin during the second
quarter.
DEPRECIATION AND AMORTIZATION: Depreciation and amortization expense
increased $448,000 due to the acquisition of FWA.
SELLING, GENERAL AND ADMINISTRATIVE: Selling, general, and administrative
expenses increased $649,000 primarily due to the acquisition of FWA and higher
performance based bonus accruals.
OTHER INCOME: Other income increased $87,000.
INTEREST EXPENSE: Interest expense increased $179,000 primarily due to
interest on the term debt associated with the FWA acquisition.
NET INCOME: Net income for the second quarter of 1996 was $481,000 compared
to a loss of $667,000 for the same period in 1995.
Comparison of Six Months Ended June 30, 1996 and 1995
REVENUES: Revenues increased $25.1 million, or 167.8%, from $15.0 million
for the first six months of 1995 to $40.1 million for the same period in 1996
due to the FWA acquisition and a 30.2% increase in revenue in the company's
other oil field service operations. Contract drilling operating days increased
219.7% to 4,923. Revenue per contract drilling operating day increased 8.5% due
to a change of mix and firmer prices. Pressure pumping jobs increased 2.7% and
revenue per pressure pumping job increased 11.5% primarily due to a change in
mix toward stimulation jobs.
-8-
<PAGE>
The average number of drilling rigs active in the United States increased
6.1% to 734 for the first six months of 1996.
GROSS PROFIT: Gross profit increased 186.3% to $7.4 million in 1996 from
$2.6 million in 1995 due to the acquisition of FWA and a 48.0% increase in gross
profit at the company's other oil field service operations. Gross margin as a
percentage of sales increased to 18.4% for the first six months of 1996 compared
to 16.3% for the same period in 1995.
DEPRECIATION AND AMORTIZATION: Depreciation and amortization expense
increased $886,000 due to the FWA acquisition.
SELLING, GENERAL AND ADMINISTRATIVE: Selling, general and administrative
expenses increased $1.1 million as a result of the FWA acquisition and higher
performance based bonus accruals.
OTHER INCOME: Other income increased $697,000 primarily due to a favorable
resolution of a dispute with the United States government over mineral rights
owned by the company in Southeast New Mexico.
INTEREST EXPENSE: Interest expense increased $350,000 due to interest on
the term debt associated with the FWA acquisition.
NET INCOME: Net income was $1.7 million for the first six months of 1996
compared to a loss of $613,000 for the same period in 1995.
LIQUIDITY AND CAPITAL RESOURCES: The Company's net working capital was $6.5
million at June 30, 1996 compared to $5.4 million at December 31, 1995. Accounts
receivable increased $2.8 million, prepaid expenses $306,000 and accounts
payable $632,000, all primarily due to the FWA acquisition.
Capital expenditures for the quarter ended June 30, 1996 were $2.1 million.
The Company expects capital expenditures to be approximately $4.0 million in
1996.
Management believes its cash balance, internally generated cash, and its
credit facility will be sufficient to meet its working capital, capital
expenditure and debt service requirements for the next twelve months assuming
that working capital and capital expenditure requirements are of a nature and
magnitude consistent with the Company's past experience.
Part II. OTHER INFORMATION
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) No exhibits are filed as part of this report on Form 10-Q.
(B) No reports on Form 8-K were filed during the quarter ended June 30,
1996.
-9-
<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.
UTI ENERGY CORP.
----------------------------
(REGISTRANT)
Date: August 8, 1996
/s/ VAUGHN E. DRUM
------------------------------
Vaughn E. Drum, President and Chief
Executive Officer
-10-
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 1,691
<SECURITIES> 0
<RECEIVABLES> 14,171
<ALLOWANCES> 195
<INVENTORY> 811
<CURRENT-ASSETS> 17,697
<PP&E> 39,672
<DEPRECIATION> 21,892
<TOTAL-ASSETS> 36,113
<CURRENT-LIABILITIES> 11,247
<BONDS> 0
0
0
<COMMON> 3
<OTHER-SE> 16,709
<TOTAL-LIABILITY-AND-EQUITY> 36,113
<SALES> 40,065
<TOTAL-REVENUES> 40,065
<CGS> 32,702
<TOTAL-COSTS> 5,426
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 17
<INTEREST-EXPENSE> 432
<INCOME-PRETAX> 2,359
<INCOME-TAX> 678
<INCOME-CONTINUING> 1,681
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,681
<EPS-PRIMARY> .46
<EPS-DILUTED> .46
</TABLE>
