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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 September 30, 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: 0-26444
FORCENERGY INC
(Exact name of registrant as specified in its charter)
<TABLE>
<CAPTION>
Delaware 65-0429338
<S> <C>
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
</TABLE>
2730 S.W. 3rd Avenue, Suite 800
Miami, Florida
33129-2356
(Address of principal executive offices)
(Zip code)
Registrant's telephone number, including area code: (305) 856-8500
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 .
--- ---
As of October 31, 1998, 24,712,337 shares of the registrant's Common
Stock, $.01 per value, were outstanding.
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FORCENERGY INC
INDEX
<TABLE>
<CAPTION>
PAGE
NUMBER
------
<S> <C>
PART I. FINANCIAL INFORMATION:
Item 1. Financial Statements (Unaudited)
a) Consolidated Balance Sheets - September 30, 1998 and
December 31, 1997............................................................... 1
b) Consolidated Statements of Operations - Three months and nine months
ended September 30, 1998 and 1997.............................................. 2
c) Consolidated Statements of Cash Flows - Nine months ended
September 30, 1998 and 1997..................................................... 3
d) Notes to Consolidated Financial Statements...................................... 4
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.................................................... 15
</TABLE>
FORWARD-LOOKING STATEMENTS
THIS QUARTERLY REPORT ON FORM 10-Q INCLUDES FORWARD-LOOKING STATEMENTS
WITHIN THE MEANING OF SECTION 27A OF THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), AND SECTION 21E OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED (THE "EXCHANGE ACT"). THE WORDS "ANTICIPATE," "BELIEVE," "EXPECT,"
"PLAN," "INTEND," "ESTIMATE," "PROJECT," "WILL," "COULD," "MAY," "PREDICT" AND
SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY FORWARD-LOOKING STATEMENTS. ALL
STATEMENTS OTHER THAN STATEMENTS OF HISTORICAL FACTS INCLUDED IN THIS FORM 10-Q,
INCLUDING STATEMENTS UNDER "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS" REGARDING PLANNED CAPITAL EXPENDITURES, THE
ABILITY TO FUND CAPITAL EXPENDITURES, ESTIMATES OF PROVED RESERVES, THE
COMPANY'S FINANCIAL POSITION, BUSINESS STRATEGY AND OTHER PLANS AND OBJECTIVES
FOR FUTURE OPERATIONS, ARE FORWARD-LOOKING STATEMENTS. ALTHOUGH THE COMPANY
BELIEVES THAT THE EXPECTATIONS REFLECTED IN THE FORWARD-LOOKING STATEMENTS ARE
REASONABLE, IT CAN GIVE NO ASSURANCE THAT ACTUAL RESULTS MAY NOT DIFFER
MATERIALLY FROM THOSE IN THE FORWARD-LOOKING STATEMENTS HEREIN FOR REASONS
INCLUDING, WITHOUT LIMITATION, THE EFFECT OF COMPETITION, THE LEVEL OF PETROLEUM
INDUSTRY EXPLORATION AND PRODUCTION EXPENDITURES, WORLD ECONOMIC CONDITIONS,
PRICES OF AND THE DEMAND FOR CRUDE OIL AND NATURAL GAS, DRILLING ACTIVITY,
WEATHER, THE LEGISLATIVE ENVIRONMENT IN THE UNITED STATES AND OTHER COUNTRIES,
OPEC POLICY, CONFLICT IN THE MIDDLE EAST AND OTHER MAJOR PETROLEUM PRODUCING
REGIONS AND THE CONDITION OF THE CAPITAL AND EQUITY MARKETS. IN ADDITION,
RESERVE ENGINEERING IS A SUBJECTIVE PROCESS OF ESTIMATING UNDERGROUND
ACCUMULATIONS OF OIL AND GAS, AND RESERVE ESTIMATES ARE GENERALLY DIFFERENT FROM
QUANTITIES OF OIL AND GAS THAT ARE ULTIMATELY RECOVERED. ALL WRITTEN AND ORAL
FORWARD-LOOKING STATEMENTS ATTRIBUTABLE TO THE COMPANY OR PERSONS ACTING ON ITS
BEHALF ARE EXPRESSLY QUALIFIED IN THEIR ENTIRETY BY SUCH FACTORS. THE COMPANY
DOES NOT INTEND TO UPDATE THESE FORWARD-LOOKING STATEMENTS.
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
FORCENERGY INC
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
(IN THOUSANDS)
-----------------------------------
SEPTEMBER 30, DECEMBER 31,
1998 1997
-------------- ---------------
<S> <C> <C>
ASSETS:
CURRENT ASSETS:
Cash............................................................ $ 2,506 $ 16,048
Accounts receivable, net........................................ 31,657 43,502
Other current assets............................................ 25,470 30,231
---------------- ---------------
Total current assets........................................ 59,633 89,781
---------------- ---------------
PROPERTY, PLANT AND EQUIPMENT, at cost (full cost
method) net of accumulated depletion, depreciation
and amortization................................................ 877,462 713,983
---------------- ---------------
OTHER ASSETS......................................................... 15,094 15,618
---------------- ---------------
$ 952,189 $ 819,382
================ ===============
LIABILITIES AND STOCKHOLDERS' EQUITY:
CURRENT LIABILITIES:
Accounts payable................................................ $ 31,568 $ 32,666
Other accrued liabilities....................................... 60,936 65,161
Current maturities of long-term debt............................ 20,712 --
---------------- ---------------
Total current liabilities................................... 113,216 97,827
---------------- ---------------
LONG-TERM DEBT....................................................... 644,588 506,564
---------------- ---------------
STOCKHOLDERS' EQUITY:
Preferred stock, $.01 par value; 5,000,000 shares authorized;
none issued or outstanding -- --
Common stock, $.01 par value; 50,000,000 shares
authorized; 24,710,429 and 25,504,617 issued
and outstanding at September 30, 1998 and December 31,
1997, respectively.......................................... 247 255
Capital in excess of par value.................................. 346,065 346,876
Accumulated deficit............................................. (151,927) (132,140)
---------------- ---------------
Total stockholders' equity.................................. 194,385 214,991
---------------- ---------------
$ 952,189 $ 819,382
================ ===============
</TABLE>
The accompanying notes are an integral part of these financial statements.
1
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FORCENERGY INC
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
(IN THOUSANDS, EXCEPT PER SHARE DATA)
--------------------------------------------------------
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------------ ----------------------------
1998 1997 1998 1997
---------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
REVENUES:
Oil and gas sales................................... $ 67,081 $ 62,798 $ 209,459 $ 196,929
Other .............................................. 817 717 1,172 1,732
---------- ---------- ----------- -----------
67,898 63,515 210,631 198,661
---------- ---------- ----------- -----------
EXPENSES:
Lease operating..................................... 25,327 17,853 73,400 53,219
Depletion, depreciation and amortization............ 37,327 27,497 110,928 80,853
Production taxes.................................... 1,205 1,079 3,377 3,310
General and administrative.......................... 3,853 3,986 12,973 11,127
---------- ---------- ----------- -----------
67,712 50,415 200,678 148,509
---------- ---------- ----------- -----------
INCOME FROM OPERATIONS................................. 186 13,100 9,953 50,152
Interest and other income.............................. 255 973 1,042 2,721
Interest expense, net of amounts capitalized........... (13,018) (8,210) (34,935) (22,970)
---------- ----------- ------------ ------------
Income (loss) before income taxes...................... (12,577) 5,863 (23,940) 29,903
Income tax benefit (provision)......................... 0 (2,098) 4,153 (11,018)
---------- ----------- ----------- ------------
NET INCOME (LOSS) ..................................... $ (12,577) $ 3,765 $ (19,787) $ 18,885
========== ========== =========== ===========
NET INCOME (LOSS) PER SHARE: basic.................. $ (.51) $ .17 $ (.79) $ .83
========== ========== =========== ===========
diluted................ $ (.51) $ .16 $ (.79) $ .79
========== ========== =========== ===========
Weighted average shares outstanding: basic....... 24,703 22,715 24,903 22,654
diluted..... 24,703 24,051 24,903 23,974
</TABLE>
The accompanying notes are an integral part of these financial statements.
2
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FORCENERGY INC
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
(IN THOUSANDS)
----------------------------
NINE MONTHS ENDED
SEPTEMBER 30,
----------------------------
1998 1997
------------ -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss).............................................................. $ (19,787) $ 18,885
----------- -----------
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depletion, depreciation and amortization................................... 112,421 82,174
Deferred taxes............................................................. (4,153) 11,019
Equity in earnings of affiliate............................................ (649) (1,371)
Other...................................................................... -- (168)
Decrease in accounts receivable............................................ 11,845 6,089
Increase (decrease) in other current assets................................ 4,761 (16,784)
(Decrease) increase in accounts payable.................................... (1,098) 6,387
(Decrease) increase in other accrued liabilities........................... (1,094) 9,670
------------ -----------
Net cash provided by operating activities........................................... 102,246 115,901
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions................................................................... (53,868) (111,693)
Capital expenditures........................................................... (226,025) (173,365)
Proceeds from sale of assets................................................... 1,246 --
Decrease (increase) in other assets............................................ 2,453 (222)
Dividends received from affiliate.............................................. 1,380 300
----------- -----------
Net cash used in investing activities............................................... (274,814) (284,980)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under senior credit facility........................................ 314,300 193,680
Repayments under senior credit facility........................................ (155,564) (225,994)
Issuance of long-term debt, net of expenses.................................... -- 193,414
Issuance of common stock....................................................... 406 2,373
Other.......................................................................... (116) --
----------- -----------
Net cash provided by financing activities........................................... 159,026 163,473
----------- -----------
NET DECREASE IN CASH................................................................ (13,542) (5,606)
CASH AT BEGINNING OF PERIOD......................................................... 16,048 9,669
----------- -----------
CASH AT END OF PERIOD.............................................................. $ 2,506 $ 4,063
=========== ===========
Supplemental disclosures of cash flow information:
Cash paid for interest......................................................... $ 26,709 $ 18,282
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE> 6
NOTE 1 -- BASIS OF PRESENTATION
The accompanying unaudited interim consolidated financial statements
include the accounts of Forcenergy Inc and its subsidiaries (the "Company")
after elimination of intercompany balances and transactions.
The unaudited interim consolidated financial statements of the Company
for the periods indicated herein have been prepared by the Company pursuant to
the rules and regulations of the Securities and Exchange Commission and in
accordance with generally accepted accounting principles for interim financial
reporting. 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 accruals, necessary to present fairly the information in the
accompanying consolidated financial statements have been included. Interim
period results are not necessarily indicative of the results of operations or
cash flows for a full year period. Certain minor amounts previously reported in
the financial statements of the prior periods have been reclassified here to
conform to the current period presentation. Capitalized terms not defined herein
have the meanings as defined in the notes to the consolidated financial
statements included in the Company's Annual Report on Form 10-K for the year
ended December 31, 1997. For further information, refer to the consolidated
financial statements and footnotes thereto included in the Company's Annual
Report on Form 10-K for the year ended December 31, 1997.
NOTE 2 -- LONG TERM DEBT
During the second quarter of 1998, the Company renegotiated certain
terms of its Senior Credit Facility. The maximum loan commitment under the
facility was increased from $200 million to $320 million with the borrowing base
also increased to $320 million. The term of the facility was extended to a
maturity of March 31, 2002, at which time all advances outstanding and accrued
interest thereon become due and payable. The expanded facility provides for
interest on amounts outstanding under the revolver (at the Company's election)
at either the prime rate or LIBOR plus between .75% and 2.0%, depending on
Forcenergy's ratio of total long-term debt to total book capitalization ("Debt
to Capitalization Ratio") at the end of the previous calendar quarter. Effective
April 30, 1999, interest rates on the Company's LIBOR borrowings will be
increased by an additional margin ranging from .125% to .25% if the Company does
not reduce its Debt to Capitalization Ratio to 65% or less. The terms of the
amendment provide that the maximum loan amount will be reduced to $300 million
and $275 million on May 1, 1999, and September 1, 1999, respectively, absent
redetermination, related to the Company's ability to further grow its reserve
base prior to those dates. In connection with this provision, $20.7 million has
been classified as current of which $5.4 million relates to letters of credit
(see Note 6). As a result of the stock purchase agreement signed on November 12,
1998 (see Note 6), the Company's lenders under the facility are currently
considering an amendment that will eliminate the maximum loan reduction
provisions discussed above. The Company expects this amendment to be signed and
effective prior to year end. On October 1, 1998, the Company's LIBOR-based
borrowing rate was LIBOR plus 1.625%.
The Senior Credit Facility contains certain covenants which include
maintenance of minimum tangible net worth, certain financial ratios,
restrictions on asset sales, affiliated transactions and compensation and
certain limitations on dividends and additional debt or liens. The Company is in
compliance with these covenants, or has received waivers in the event of
non-compliance.
At September 30, 1998, the Company had approximately $24.3 million
available under the facility (see Note 6).
4
<PAGE> 7
NOTE 3 -- EARNINGS PER SHARE
The following reconciles the numerators and denominators of the basic
and diluted EPS computations (in thousands, except per share data):
<TABLE>
<CAPTION>
THREE MONTHS ENDED
SEPTEMBER 30,
--------------------------------------------------------------------------------------
1998 1997
---------------------------------------- ---------------------------------------
PER PER
LOSS SHARES SHARE INCOME SHARES SHARE
------------- ------ --------- ----------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
BASIC EPS:
Income (loss) available
to common stockholders....... $ (12,577) 24,703 $ (.51) $ 3,765 22,715 $ .17
EFFECT OF DILUTIVE SECURITIES:
Options and warrants (1)........ -- -- -- -- 1,336 (.01)
------------- ---------- --------- ----------- --------- -----------
DILUTED EPS:
Income (loss) available to
Common stockholders
and assumed exercises........ $ (12,577) 24,703 $ (.51) $ 3,765 24,051 $ .16
============= ========== ========= =========== ========= ===========
</TABLE>
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
--------------------------------------------------------------------------------------
1998 1997
---------------------------------------- ---------------------------------------
PER PER
LOSS SHARES SHARE INCOME SHARES SHARE
------------- ---------- --------- ------------ --------- ----------
<S> <C> <C> <C> <C> <C> <C>
BASIC EPS:
Income (loss) available
to common stockholders....... $ (19,787) 24,903 $ (.79) $ 18,885 22,654 $ .83
EFFECT OF DILUTIVE SECURITIES:
Options and warrants (1)........ -- -- -- -- 1,320 (.04)
------------- ---------- --------- ------------ --------- ----------
DILUTED EPS:
Income (loss) available to
Common stockholders
and assumed exercises........ $ (19,787) 24,903 $ (.79) $ 18,885 23,974 $ .79
============= ========== ========= ============ ========= ==========
</TABLE>
- - ----------
(1) Stock options and warrants, for which shares of common stock are
potentially issuable were not "in the money" during the third quarter of
1998 and the effect of 553,797 shares of common stock potentially issuable
through stock options or warrants was anti-dilutive for the nine months
ended September 30, 1998.
5
<PAGE> 8
NOTE 4 -- STOCK HOLDER RIGHTS PLAN
On May 8, 1998, the Company amended its Stockholder Rights Plan
providing that rights under the plan will now become exercisable if a person or
group acquires 15% or more of Forcenergy's outstanding voting stock or announces
a tender or exchange offer that would result in ownership of 15% or more of
Forcenergy's stock. Formerly, the plan provided for a threshold percentage of
20% of the outstanding voting common stock. In addition, as a result of the
Company's acquisition of Forcenergy AB ("FAB") in March 1998, the plan has been
amended to delete references to FAB and its successors as being excluded from
the plan's effect. The Stockholder Rights Plan now applies to all stockholders
of Forcenergy.
NOTE 5 -- FINANCIAL INSTRUMENTS
Forcenergy utilizes, from time to time, forward sales contracts and
commodity swaps on portions of its current oil and gas production to achieve
more predictable cash flows and to reduce its exposure to fluctuations in oil
and gas prices. The remaining portion of current production is not hedged so as
to provide Forcenergy the opportunity to benefit from oil and natural gas price
increases, should they occur.
The Company has entered into commodity price hedging contracts with
respect to its oil production for 1998 through 2000. These contracts, as of
September 30, 1998, are as follows:
<TABLE>
<CAPTION>
Swaps Collars
-------------------------- ------------------------------
Weighted Average
Volume in NYMEX Volume in NYMEX Contract
Bbl's Per Contract Bbl's Per Price Per Bb1-
Period Day Price Per Bbl Day Floor Ceiling
- - ------ ---------- ------------- ---------- ----- -------
<S> <C> <C> <C> <C> <C>
October 1998-December 2000 2,000 $17.25
October 1998-December 1998 3,000 $18.00 $22.60
October 1998-June 1999 1,000 $17.20 $19.10(1)
October 1998-June 1999 4,000 $16.00 $19.00(2)
October 1998-December 1999 2,000 $16.00 $19.25(3)
January 1999-December 2000 3,000 $16.50 $20.15(4)
</TABLE>
- - -----------------------
(1) If prices fall below $15.00 per Bbl in any month, the floor for that month
resets to $15.00 per Bbl.
(2) The Company's downside protection below $16.00 per Bbl is limited to a
weighted average maximum of $1.93 per Bbl.
(3) The Company's downside protection below $16.00 per Bbl is limited to a
maximum of $3.00 per Bbl.
(4) The Company's downside protection below $16.50 per Bbl is limited to a
maximum of $3.50 per Bbl.
6
<PAGE> 9
The Company has entered into commodity price hedging contracts with
respect to its natural gas production for 1998 through 2000 as follows:
<TABLE>
<CAPTION>
Swaps Collars Three-Way Options
-------------------------- ---------------------------------- -----------------------------------
Weighted Average Weighted Average
Volume Weighted Volume NYMEX Contract Volume NYMEX Contract
in Average NYMEX in Price Per MMBtu in Price per MMBtu
MMBtu's Contract Price MMBtu's ----------------------- MMBtu's ----------------
Period Per Day Per MMBtu Per Day Floor Ceiling Per Day Floor Ceiling
- - ------ ------- -------------- ------- ------------- ------- -------------- ----- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
October 1998 20,000 $2.04
November 1998 30,000 $2.50
December 1998 60,000 $2.58
January 1999 30,000 $2.71
October 1998-October 2000 40,000 $2.30
November 1998-October 2000 40,000 $2.32
October 1998 30,000 $2.40 $2.79
October 1998-December 1999 20,000 $2.07 $2.75
January 1999-December 1999 20,000 $2.30 $3.08(1)
October 1998-August 2000 20,000 $2.25 $2.53(2)
April 1999-September 1999 70,000 $2.33 $2.58(3)
</TABLE>
- - ------------------
(1) The Company's downside protection below $2.30 per MMBtu is limited to a
maximum $.30 per MMBtu.
(2) If prices fall below $1.55 per MMBtu in any month, the floor for that month
resets to $1.55 per MMBtu.
(3) If prices fall below an average of $2.03 per MMBtu in any month, the floor
for that month resets to the $2.03 average.
All of these arrangements were entered into on a no-cost basis and are
settled on a monthly basis. The fair market value of all contracts in place at
September 30, 1998 was insignificant.
In June 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities" ("Statement No. 133"). The statement
requires companies to report the fair market value of derivatives on the balance
sheet and record in income or other comprehensive income, as appropriate, any
changes in the fair value of the derivative. Statement No. 133 will become
effective with respect to the Company on January 1, 2000. The Company is
currently evaluating the impact of the statement.
NOTE 6 -- SUBSEQUENT EVENT
On November 12, 1998, the Company signed a definitive stock purchase
agreement with certain funds and accounts managed by two private equity
investors under which the Company has agreed to issue up to $150 million in
convertible preferred stock. Under the terms of the agreement, $42 million of
convertible preferred stock will be issued in a private placement transaction.
Following this initial investment, Forcenergy intends to issue rights to its
common and preferred shareholders to purchase up to $108 million in similar
convertible preferred shares. The agreement also provides a commitment by the
investors to participate in the rights offering and to purchase all shares not
subscribed for and purchased by the common shareholders in the rights offering,
subject to certain limitations that preclude a triggering of a change of control
under Forcenergy's senior subordinated note indentures (defined as 50% of shares
outstanding before issuance of the convertible preferred). The preferred shares
will be convertible into Forcenergy's common shares at $8.80 per share
(representing a 28% premium over Forcenergy's closing price on November 10,
1998) at the election of the holder at anytime after purchase. The Company has
the right, beginning three years after the date of issuance, to redeem or call
for the conversion of the preferred shares if the common shares have attained
certain price levels. The preferred shares will have an 8% dividend payable
quarterly in Forcenergy common stock for a period of three years, and in
Forcenergy common stock or cash, thereafter.
The combined proceeds of the initial investment and subsequent rights
offering will be used to reduce debt outstanding under Forcenergy's existing
senior credit facility and for general corporate purposes. The initial
investment and rights offering are subject to customary closing conditions.
7
<PAGE> 10
FORCENERGY INC
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
PRODUCTION DATA
The following table sets forth the Company's historical liquids and
natural gas production data for the periods indicated:
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
-------------------------- --------------------------
1998 1997 1998 1997
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Production in thousands:
Liquids (MBbls) (1)..................... 2,039 1,959 6,414 5,924
Natural gas (MMcf)...................... 20,514 14,183 58,798 40,781
Total (MBOE)............................ 5,458 4,323 16,214 12,721
Average realized sales prices (2):
Liquids (per Bbl) (1)................... $ 12.60 $ 16.26 $ 12.85 $ 17.62
Natural gas (per Mcf)................... 2.02 2.18 2.16 2.27
Expenses (per BOE):
Lease operating......................... $ 4.64 $ 4.13 $ 4.53 $ 4.18
Depletion, depreciation and
amortization....................... 6.84 6.36 6.84 6.36
General and administrative, net......... .71 .92 .80 .87
</TABLE>
- - -------------
(1) Includes crude oil, condensate and natural gas liquids.
(2) Net of hedging results.
COMPARISON OF THE THREE MONTH PERIODS ENDED SEPTEMBER 30, 1998 AND SEPTEMBER 30,
1997
OPERATING INCOME AND NET INCOME/LOSS. Operating income was $0.2 million
for the three months ended September 30, 1998 compared to the $13.1 million
reported for the 1997 period. The net loss for the three months ended September
30, 1998 was $12.6 million compared to net income of $3.8 million reported for
the same period last year. Despite higher production and revenue, both operating
and net income declined primarily due to lower average liquids and natural gas
prices, higher total lease operating expenses associated with new properties,
and higher depletion, depreciation and amortization expense on higher production
volumes, all of which are discussed below.
8
<PAGE> 11
PRODUCTION. Net liquids production increased to 2,039 thousand barrels
("MBbls") in the third quarter of 1998, from 1,959 MBbls reported for the
comparable 1997 period, a 4% improvement. Net gas production increased to 20,514
million cubic feet of natural gas ("MMcf") in the 1998 quarter, a 45% increase
over the 14,183 MMcf produced in 1997. On an equivalent unit basis, liquids and
gas production increased to 5,458 thousand barrels of oil equivalent ("MBOE") in
the third quarter of 1998, 26% more than the 4,323 MBOE produced during the 1997
period. The increase in liquids and gas production resulted primarily from new
production from the Company's 1998 and 1997 drilling programs, from the West
McArthur River (Cook Inlet, Alaska) and the Convest/Edisto acquisitions in 1997
and from a series of smaller acquisitions in 1998. These increases were realized
despite four different hurricane-related field shut-ins in the Gulf of Mexico
during the third quarter of 1998.
REVENUES. Revenues for the 1998 quarter increased to $67.9 million, a
7% improvement over the $63.5 million reported for the same period last year.
Higher production volumes were substantially offset by declines in liquids and
natural gas prices. Average net realized (net of hedging effects) liquids prices
declined to $12.60 per barrel ("Bbl") for the 1998 period, a 23% decrease
compared to the $16.26 per Bbl received during the three months ended September
30, 1997. Average net realized natural gas prices declined to $2.02 per thousand
cubic feet of natural gas ("Mcf") for the three months ended September 30, 1998,
a 7% decrease from the $2.18 per Mcf reported for the 1997 period.
Average prices received at the field level for the 1998 quarter were
$11.51 per Bbl and $1.90 per Mcf for liquids and natural gas, respectively.
After taking into account hedging activities, specifically, a $2.2 million
increase in liquids revenue and a $2.4 million increase in natural gas revenue,
net realized prices increased to $12.60 per Bbl and $2.02 per Mcf, respectively.
Average prices received at the field level for the 1997 period were $16.33 per
Bbl and $2.16 per Mcf for liquids and natural gas, respectively. After the
effects of hedging activities in 1997, specifically, a $0.1 million reduction in
liquids revenue and a $0.2 million increase in natural gas revenue, net realized
1997 prices were adjusted to $16.26 per Bbl for liquids and $2.18 per Mcf for
natural gas.
LEASE OPERATING EXPENSES. Lease operating expenses were $25.3 million
for the three months ended September 30, 1998 compared to the $17.9 million
reported for the same period last year. The increase related primarily to lease
operating expenses associated with new oil and gas properties acquired in late
1997 and early 1998. On an equivalent unit of production basis, lease operating
expenses were $4.64 and $4.13 per barrel of oil equivalent ("BOE") for the 1998
and 1997 quarters, respectively, an increase due to higher lease operating
expenses associated with new acquired properties, higher workover expenses
incurred in 1998, and the expenses and production shut-ins associated with the
hurricanes in the Gulf of Mexico.
DEPLETION, DEPRECIATION AND AMORTIZATION ("DD&A"). DD&A expense was
$37.3 million for the 1998 quarter, compared with $27.5 million reported for the
1997 period, an increase attributable to higher production levels and, to a
lesser extent, an increase in the DD&A rate per unit of production to $6.84 per
BOE, compared to $6.36 per BOE for the same period last year.
GENERAL AND ADMINISTRATIVE COSTS. General and administrative costs, net
of capitalized internal costs and overhead reimbursements, were $3.9 million for
the three months ended September 30, 1998 and $4.0 million for the 1997 quarter.
On a per BOE produced basis, general and administrative expenses decreased to
$.71 per BOE for 1998 compared with the $.92 per BOE reported for the 1997
period.
INTEREST EXPENSE. Interest expense, net of amounts capitalized, was
$13.0 million for the 1998 quarter compared to $8.2 million for the 1997 period.
The increase in interest expense in 1998 was primarily due to the increase in
long-term debt levels.
9
<PAGE> 12
COMPARISON OF THE NINE MONTH PERIODS ENDED SEPTEMBER 30, 1998 AND
SEPTEMBER 30, 1997
OPERATING INCOME AND NET INCOME/LOSS. Operating income was $10.0
million for the nine months ended September 30, 1998 compared to $50.2 million
reported for the 1997 period. The net loss for the nine months ended September
30, 1998 was $19.8 million compared to net income of $18.9 million reported for
the same period last year. The decrease in both operating and net income was
primarily due to lower average liquids and natural gas prices, higher total
lease operating expenses associated with new properties and higher depletion,
depreciation and amortization expense on higher production volumes, all of which
are discussed below.
PRODUCTION. Net liquids production increased to 6,414 MBbls in the
first nine months of 1998 from 5,924 MBbls for the comparable 1997 period, an 8%
improvement. Net gas production increased to 58,798 MMcf for the 1998 quarter, a
44% increase over the 40,781 MMcf produced in the same period last year. On an
equivalent unit basis, total production increased to 16,214 MBOE for the first
nine months of 1998, 27% more than the 12,721 MBOE produced during the 1997
period. The increase in liquids and gas production resulted primarily from new
production from the Company's 1998 and 1997 drilling programs, from the West
McArthur River (Cook Inlet, Alaska) and the Convest/Edisto acquisitions in 1997
and from a series of smaller acquisitions in 1998.
REVENUES. Revenues for the nine months of 1998 were $210.6 million, a
6% improvement over the $198.7 million reported for the same period last year.
Higher production volumes were substantially offset by decreases in liquids and
natural gas prices. Average net realized liquids prices decreased to $12.85 per
barrel for the 1998 period, a 27% decline compared to the $17.62 per Bbl
received during the first nine months of 1997. Average net realized natural gas
prices decreased to $2.16 per thousand cubic feet of natural gas in the first
nine months of 1998, a 5% decrease from the $2.27 per Mcf reported for the 1997
period.
Average prices received at the field level for the 1998 period were
$12.15 per Bbl and $2.07 per Mcf for liquids and natural gas, respectively.
After taking into account hedging activities, specifically, a $4.5 million
increase in liquids revenue and a $5.1 million increase in natural gas revenue,
net realized prices increased to $12.85 per Bbl and $2.16 per Mcf, respectively.
Average prices received at the field level for the first nine months of 1997
were $18.10 per Bbl and $2.36 per Mcf for liquids and natural gas, respectively.
After the effects of hedging activities in 1997, specifically a $2.8 million
reduction in liquids revenue and a $3.9 million reduction in natural gas
revenue, net realized 1997 prices were reduced to $17.62 per Bbl and $2.27 per
Mcf for liquids and natural gas, respectively.
LEASE OPERATING EXPENSES. Lease operating expenses were $73.4 million
for the nine months ended September 30, 1998 compared to $53.2 million reported
for the same period last year. The increase related primarily to lease operating
expenses associated with new oil and gas properties acquired in late 1997 and
early 1998. On an equivalent unit of production basis, expenses were $4.53 per
BOE for the 1998 nine-month period compared with $4.18 per BOE in the same 1997
period, an increase attributable to new properties acquired and higher 1998
workover costs.
DEPLETION, DEPRECIATION AND AMORTIZATION. DD&A expense was $110.9
million for the 1998 period compared with $80.9 million reported for the 1997
period, an increase attributable to the higher production levels and, to a
lesser extent, an increase in the DD&A rate per unit of production to $6.84 per
BOE, compared to $6.36 per BOE for the same period last year.
10
<PAGE> 13
GENERAL AND ADMINISTRATIVE COSTS. General and administrative costs, net
of capitalized internal costs and overhead reimbursements, were $13.0 million
for the nine months ended September 30, 1998 compared with $11.1 million
reported for the 1997 period, an increase attributable primarily to the overall
growth of the Company. On a per BOE produced basis, general and administrative
expenses decreased to $.80 per BOE compared with $.87 per BOE reported for the
1997 period.
INTEREST EXPENSE. Interest expense, net of amounts capitalized, was
$34.9 million for the 1998 period compared to $23.0 million for the first nine
months of 1997. The increase in interest expense in 1998 was primarily due to
the increase in long-term debt levels.
LIQUIDITY AND CAPITAL RESOURCES
The Company has historically funded its operations, acquisitions,
capital expenditures and working capital requirements through cash flow from
operations, bank borrowings and private and public placements of debt and equity
securities. The Company's primary sources of funds for each of the periods
indicated herein were as follows:
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
---------------------------
1998 1997
--------- ---------
<S> <C> <C>
Net cash provided by operating activities............ $ 102,246 $ 115,901
Borrowings under the Senior Credit Facility........ 314,300 193,680
Repayments under the Senior Credit Facility....... (155,564) (225,994)
Issuance of long-term debt, net of expenses......... -- 193,414
</TABLE>
Working capital was a negative $53.6 million at September 30, 1998,
compared with a negative $8.0 million at December 31, 1997. This decrease in
working capital relates primarily to the expenditure of cash balances at the
beginning of 1998, a decrease in accounts receivable balances related to revenue
declines associated with commodity price decreases, and the reflection of $20.1
million in current maturities of long-term debt at September 30, 1998.
Cash flow from operations, before changes in working capital, was $87.8
million for the nine-month period ended September 30, 1998, compared with $110.5
million for the comparable 1997 period. The decrease in cash flow resulted
primarily from the lower oil and gas prices and higher interest expense.
During the second quarter, the Company renegotiated certain terms of
its Senior Credit Facility. The maximum loan commitment under the facility was
increased from $200 million to $320 million with the borrowing base also
increased to $320 million. The term of the facility was extended to a maturity
of March 31, 2002, at which time all advances outstanding and accrued interest
thereon become due and payable. The expanded facility provides for interest on
amounts outstanding under the revolver (at the Company's election) at either the
prime rate or LIBOR plus between .75% and 2.0%, depending on Forcenergy's ratio
of total long-term debt to total book capitalization ("Debt to Capitalization
Ratio") at the end of the previous calendar quarter. Effective April 30, 1999,
interest rates on the Company's LIBOR borrowings will be increased by an
additional margin ranging from .125% to .25% if the Company does not reduce its
Debt to Capitalization Ratio to 65% or less. The terms of the amendment provide
that the maximum loan amount will be reduced to $300 million and $275 million on
May 1, 1999, and September 1, 1999, respectively, absent redetermination related
to the Company's ability to continue to grow its reserve base prior to those
dates. In connection with this provision, $20.7 million has been classified as
current of which $5.4 million relates to letters of credit. As a result of the
stock purchase agreement signed on November 12, 1998 (see below), the Company's
lenders under the facility are currently considering an amendment which will
eliminate the maximum loan reduction provisions discussed above. The Company
expects this amendment to be signed and effective prior to year end. On October
1, 1998, the Company's LIBOR-based borrowing rate was LIBOR plus 1.625%.
11
<PAGE> 14
The Senior Credit Facility contains certain covenants which include
maintenance of a minimum tangible net worth, certain financial ratios,
restrictions on asset sales, affiliated transactions and compensation and
certain limitations on dividends and additional debt or liens. The Company is in
compliance with these covenants, or has received waivers in the event of
non-compliance.
At September 30, 1998, the Company had approximately $24.3 million
available under the facility.
On November 12, 1998, the Company signed a definitive stock purchase
agreement with certain funds and accounts managed by two private equity
investors under which the Company has agreed to issue up to $150 million in
convertible preferred stock. Under the terms of the agreement, $42 million of
convertible preferred stock will be issued in a private placement transaction.
Following this initial investment, Forcenergy intends to issue rights to its
common and preferred shareholders to purchase up to $108 million in similar
convertible preferred shares. The agreement also provides a commitment by the
investors to participate in the rights offering and to purchase all
shares not subscribed for and purchased by the common shareholders in the rights
offering, subject to certain limitations that preclude a triggering of a change
of control under Forcenergy's senior subordinated note indentures (defined as
50% of shares outstanding before issuance of the convertible preferred). The
preferred shares will be convertible into Forcenergy's common shares at $8.80
per share (representing a 28% premium over Forcenergy's closing price on
November 10, 1998) at the election of the holder at anytime after purchase. The
Company has the right, beginning three years after the date of issuance, to
redeem or call for the conversion of the preferred shares, if the common shares
have attained certain price levels. The preferred shares will have an 8%
dividend payable quarterly in Forcenergy common stock for a period of three
years, and in Forcenergy common stock or cash, thereafter.
The combined proceeds of the initial investment and subsequent rights
offering will be used to reduce outstanding debt under Forcenergy's existing
senior credit facility and for general corporate purposes. The initial
investment and rights offering are subject to customary closing conditions.
Revenues generated from operations are highly dependent upon the price
of, and demand for, oil and natural gas. Historically, the markets for oil and
natural gas have been volatile and are likely to continue to be volatile in the
future as prices are subject to wide fluctuations in response to factors that
are beyond the control of the Company. These uncontrollable factors include the
level of consumer product demand, weather conditions, domestic and foreign
governmental regulations, the price and availability of alternative fuels and
political and economic conditions in the Middle East, Asia, Russia, Mexico and
Canada that can affect the supply and price of foreign oil and natural gas. It
is impossible to predict future oil and natural gas price movements with any
certainty. Declines in oil and natural gas prices may adversely affect the
Company's financial condition, liquidity and results of operations. Lower prices
also may reduce the amount of reserves that can be produced economically, as
well as limit the ability to continue to exploit and develop the existing
reserve base.
Forcenergy utilizes, from time to time, forward sales contracts and
commodity swaps on portions of its current oil and gas production to achieve
more predictable cash flows and to reduce its exposure to fluctuations in oil
and gas prices. The remaining portion of current production is not hedged so as
to provide Forcenergy the opportunity to benefit from oil and natural gas price
increases, should they occur.
12
<PAGE> 15
The Company has entered into commodity price hedging contracts with
respect to its oil production for 1998 through 2000 as follows:
<TABLE>
<CAPTION>
Swaps Collars
---------------------------- ---------------------------------------
Weighted Average
NYMEX Contract
Volume in NYMEX Volume in Price Per Bbl -
Bbl's Per Contract Bbl's Per ---------------------
Period Day Price Per Bbl Day Floor Ceiling
- - ------ ----------- ------------- ---------- ----- -------
<S> <C> <C> <C> <C> <C>
October 1998-December 2000 2,000 $17.25
October 1998-December 1998 3,000 $18.00 $22.60
October 1998-June 1999 1,000 $17.20 $19.10(1)
October 1998-June 1999 4,000 $16.00 $19.00(2)
October 1998-December 1999 2,000 $16.00 $19.25(3)
January 1999-December 2000 3,000 $16.50 $20.15(4)
</TABLE>
- - ------------------
(1) If prices fall below $15.00 per Bbl in any month, the floor for that month
resets to $15.00 per Bbl.
(2) The Company's downside protection below $16.00 per Bbl is limited to a
weighted average maximum of $1.93 per Bbl.
(3) The Company's downside protection below $16.00 per Bbl is limited to a
maximum of $3.00 per Bbl.
(4) The Company's downside protection below $16.50 per Bbl is limited to a
maximum of $3.50 per Bbl.
The Company has entered into commodity price hedging contracts with
respect to its natural gas production for 1998 through 2000. These contracts,
as of September 30, 1998, are as follows:
<TABLE>
<CAPTION>
Swaps Collars Three-Way Options
-------------------------- ---------------------------------- -----------------------------------
Weighted Average Weighted Average
Volume Weighted Volume NYMEX Contract Volume NYMEX Contract
in Average NYMEX in Price Per MMBtu in Price per MMBtu
MMBtu's Contract Price MMBtu's ----------------------- MMBtu's ----------------
Period Per Day Per MMBtu Per Day Floor Ceiling Per Day Floor Ceiling
- - ------ ------- -------------- ------- ------------- ------- -------------- ----- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
October 1998 20,000 $2.04
November 1998 30,000 $2.50
December 1998 60,000 $2.58
January 1999 30,000 $2.71
October 1998-October 2000 40,000 $2.30
November 1998-October 2000 40,000 $2.32
October 1998 30,000 $2.40 $2.79
October 1998-December 1999 20,000 $2.07 $2.75
January 1999-December 1999 20,000 $2.30 $3.08(1)
October 1998-August 2000 20,000 $2.25 $2.53(2)
April 1999-September 1999 70,000 $2.33 $2.58(3)
</TABLE>
- - ------------------
(1) The Company's downside protection below $2.30 per MMBtu is limited to a
maximum $.30 per MMBtu.
(2) If prices fall below $1.55 per MMBtu in any month, the floor for that month
resets to $1.55 per MMBtu.
(3) If prices fall below an average of $2.03 per MMBtu in any month, the floor
for that month resets to the $2.03 average.
All of these arrangements were entered into on a no-cost basis and are
settled on a monthly basis. The fair market value of all contracts in place at
September 30, 1998 was insignificant.
The Company anticipates that its capital expenditures for 1998,
exclusive of acquisitions, will be approximately $250 million, $226 million of
which has been expended through September 30, 1998. The Company has also spent
$53.9 million for the acquisition of properties in 1998. Funding for these
expenditures was provided through cash flow from operations and borrowings under
the Company's Senior Credit Facility. Forcenergy will continue to evaluate its
capital spending plans throughout the year. Actual levels of capital
expenditures may vary significantly due to a variety of factors, including
drilling results, oil and gas prices, industry conditions and outlook, future
acquisitions of properties and the availability of capital. A majority of the
Company's capital expenditures for the remainder of the year are discretionary
and can be delayed, if necessary. Although the 1998 budget does not incorporate
any future acquisitions, the Company will continue to selectively seek
acquisition opportunities where it believes significant exploration and
development potential exists.
13
<PAGE> 16
In connection with the rights offering and to make share capital
available for future needs, the Company will seek the approval of its
stockholders to increase the authorized number of shares of common stock and
preferred stock from 50,000,000 shares of common stock and 5,000,000 shares of
preferred stock to 100,000,000 shares of common stock and 10,000,000 shares of
preferred stock, respectively. In the event such approval is not received, the
Company will not be permitted to consummate fully the rights offering and may be
limited in its ability to raise additional capital through future equity
financings.
Management believes that cash flow from operations and the borrowing
capacity available under the Senior Credit Facility after funding from the
convertible preferred stock issuance discussed above should be sufficient to
meet its anticipated capital expenditures and other operating requirements for
the remainder of 1998 and 1999. In the event the rights offering is not
consummated, the Company believes it would need to seek alternate debt or equity
financings to meet its anticipated capital expenditures and other operating
requirements for 1999. However, because future cash flows and the availability
of financing are subject to a number of variables, such as oil and gas prices,
production operations, drilling results and the number and size of acquisitions
made by the Company, there can be no assurance that the Company's capital
resources will be sufficient to maintain currently planned levels of capital
expenditures and to fund future acquisitions. Additional debt and equity
financings may be required in connection with future capital expenditures.
Additionally, a majority of planned capital expenditures for the remainder of
the year are discretionary and can be delayed if necessary. The availability of
these capital sources will depend on prevailing market conditions and interest
rates and the then-existing financial condition of the Company.
YEAR 2000 COMPLIANCE
Forcenergy has established a "Year 2000" project (the "Project") to
assess, to the extent possible, its Year 2000 risk exposure, to take remedial
actions necessary to minimize the Year 2000 risk exposure to Forcenergy and to
test its systems and processes once remedial actions have been taken. Because of
the importance of occurrence dates in the oil and gas industry, the consequences
of not pursuing Year 2000 modifications could be critical to Forcenergy's
ability to manage and report operating activities. The costs to the Company
associated with the Project are not expected to have a material financial impact
on the Company.
The assessment phase of the Project is 80% complete as of September 30,
1998, with the remainder being the assessment of risk related to Year 2000
failure on the part of the Company's customers and vendors. This phase includes,
among other procedures, the assessment of information technology applications
and systems; the assessment of non-information technology exposures; the
initiation of inquiry and dialogue with significant third party business
partners, customers and suppliers in an effort to understand their Year 2000
readiness and its potential impact on Forcenergy; and, the formulation of
contingency plans for mission-critical information technology systems.
Forcenergy expects to complete the assessment phase of its Year 2000 project by
the end of the first quarter of 1999 but is being delayed by limited responses
to inquiries made to third party businesses. The remedial phase of the Project
is approximately 80% complete as of September 30, 1998, subject to the results
of third party inquiry assessments. The remediation of non-information
technology is expected to be completed by mid-1999. The testing phase of the
Project is expected to be completed by mid-1999, subject to the Company's
assessment of customer and vendor inquiries.
Although Forcenergy is making every effort to mitigate the risks
associated with the Year 2000 problem, there can be no assurance that the
Project or resulting contingency plans will have anticipated all Year 2000
scenarios. A failure to remedy a critical Year 2000 problem could result in
information and non-information technology failures, the receipt or transmission
of erroneous data, lost data or a combination of similar problems of a magnitude
that cannot be accurately assessed at this time.
14
<PAGE> 17
NEW ACCOUNTING PRONOUNCEMENT
In June 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities" ("Statement No. 133"). The statement
requires companies to report the fair market value of derivatives on the balance
sheet and record in income or other comprehensive income, as appropriate, any
changes in the fair value of the derivative. Statement No. 133 will become
effective with respect to the Company on January 1, 2000. The Company is
currently evaluating the impact of the statement.
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
27 -- Financial Data Schedule
(b) No reports on Form 8-K were filed by the Company during the quarter
ended September 30, 1998.
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, in the City of Miami, State of Florida,
on the 14th day of November, 1998.
FORCENERGY INC
By: /s/ E. JOSEPH GRADY
--------------------------------
E. Joseph Grady
Vice President - Chief Financial Officer
15
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE UNAUDITED
INTERIM SEPTEMBER 30, 1998 BALANCE SHEET AND STATEMENT OF OPERATIONS OF
FORCENERGY INC. FOR THE NINE-MONTH PERIOD ENDED SEPTEMBER 30, 1998 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 2,506
<SECURITIES> 0
<RECEIVABLES> 31,657
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 59,633
<PP&E> 877,462
<DEPRECIATION> 0
<TOTAL-ASSETS> 952,189
<CURRENT-LIABILITIES> 113,216
<BONDS> 644,588
0
0
<COMMON> 247
<OTHER-SE> 194,138
<TOTAL-LIABILITY-AND-EQUITY> 952,189
<SALES> 209,459
<TOTAL-REVENUES> 210,631
<CGS> 0
<TOTAL-COSTS> 200,678
<OTHER-EXPENSES> (1,042)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 34,935
<INCOME-PRETAX> (23,940)
<INCOME-TAX> (4,153)
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (19,787)
<EPS-PRIMARY> (.79)
<EPS-DILUTED> (.79)
</TABLE>
