-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, YXTwVsOVNpcLyTvq6egZaaq/d0azjAfTSC3S602zuB/H//UPv9iXz9fJdaznktNn VPkPTvyeMMuVF45myI2NgQ== 0000100712-95-000008.txt : 19950511 0000100712-95-000008.hdr.sgml : 19950511 ACCESSION NUMBER: 0000100712-95-000008 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950331 FILED AS OF DATE: 19950509 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: PRODUCTION OPERATORS CORP CENTRAL INDEX KEY: 0000100712 STANDARD INDUSTRIAL CLASSIFICATION: OIL, GAS FIELD SERVICES, NBC [1389] IRS NUMBER: 590827174 STATE OF INCORPORATION: DE FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-03919 FILM NUMBER: 95535692 BUSINESS ADDRESS: STREET 1: ONE PIEDMONT CENTER SUITE 515 CITY: ATLANTA STATE: GA ZIP: 30305 BUSINESS PHONE: 7134660980 FORMER COMPANY: FORMER CONFORMED NAME: UNICAPITAL CORP DATE OF NAME CHANGE: 19801229 FORMER COMPANY: FORMER CONFORMED NAME: UNITED STATES FINANCE CO INC DATE OF NAME CHANGE: 19690828 FORMER COMPANY: FORMER CONFORMED NAME: UNITED STATES SHELL HOMES INC DATE OF NAME CHANGE: 19660911 10-Q 1 SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 FORM 10-Q /X/ QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 1995 / / TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File No. 0-3919 PRODUCTION OPERATORS CORP (Exact name of registrant as specified in its charter) Delaware (State or other jurisdiction of incorporation or organization) 59-0827174 (IRS Employer Identification No.) 11302 Tanner Road Houston, Texas 77041 (Address of principal executive offices) (713) 466-0980 (Registrant's telephone number, including area code) 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 On April 27, 1995 there were 10,077,559 shares of the Company's common stock, $l.00 par value, outstanding (exclusive of treasury shares). 1 of 10 pages 2 PART I. FINANCIAL INFORMATION FINANCIAL STATEMENTS PRODUCTION OPERATORS CORP AND SUBSIDIARY The condensed consolidated financial statements included herein have been prepared by Production Operators Corp, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. The term "Company" as used herein refers to Production Operators Corp and its operating subsidiary, Production Operators, Inc., together with its subsidiaries, unless the context otherwise indicates. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading. It is suggested that these condensed consolidated financial statements be read in conjunction with the consolidated financial statements and the notes thereto included in the Company's latest annual report on Form l0-K. In the opinion of the Company all adjustments, consisting only of normal recurring adjustments, necessary to present fairly the financial position of the Company as of March 31, 1995, and the results of their operations for the six months ended March 31, 1995 and 1994 and their cash flows for the six months ended March 31, 1995 and 1994 have been included. The results of operations for such interim periods are not necessarily indicative of the results for the full year. 3 PRODUCTION OPERATORS CORP AND SUBSIDIARY CONSOLIDATED BALANCE SHEETS AS OF MARCH 31, 1995 AND SEPTEMBER 30, 1994 (000'S OMITTED)
March 31, September 30, 1995 1994 __________ _____________ (Unaudited) ASSETS Current assets: Cash and cash equivalents . . . . . . . . $ 1,618 $ 1,037 Marketable securities . . . . . . . . . . 2,571 2,589 Receivables, net of reserve of $147 at March 31, 1995 and $135 at September 30, 1994 . . . . . . . . . . . 20,702 16,279 Inventories - at cost: Compressor parts and supplies . . . . . 4,688 4,171 Construction work in progress . . . . . 727 3,524 ________ ________ Total current assets . . . . . . . . 30,306 27,600 Property and equipment, at cost, net of accumulated depreciation, depletion and amortization of $139,289 at March 31, 1995 and $133,037 at September 30, 1994. . 161,418 134,466 Long-term receivable and other assets . . . 6,201 6,051 ________ ________ $197,925 $168,117 LIABILITIES AND STOCKHOLDERS' INVESTMENT Current liabilities: Accounts payable. . . . . . . . . . . . . $ 9,155 $ 6,327 Accrued liabilities . . . . . . . . . . . 3,465 5,712 Income taxes payable. . . . . . . . . . . 493 279 ________ ________ Total current liabilities. . . . . . 13,113 12,318 Senior term notes . . . . . . . . . . . . . 28,737 6,000 Deferred income taxes . . . . . . . . . . . 17,546 16,093 Stockholders' investment: Common stock. . . . . . . . . . . . . . . 10,259 10,259 Additional paid-in capital. . . . . . . . 71,039 70,988 Retained earnings . . . . . . . . . . . . 62,286 57,362 Deferred compensation - ESOP. . . . . . . (3,456) (3,289) Treasury stock. . . . . . . . . . . . . . (1,599) (1,614) ________ ________ Total stockholders' investment . . . . 138,529 133,706 ________ ________ $197,925 $168,117
4 PRODUCTION OPERATORS CORP AND SUBSIDIARY CONSOLIDATED INCOME STATEMENTS FOR THE THREE AND SIX MONTHS ENDED MARCH 31, 1995 AND 1994 (UNAUDITED-000'S OMITTED EXCEPT PER SHARE AMOUNTS) Quarter Ended Six Months Ended March 31, March 31, 1995 1994 1995 1994 _______ _______ _______ _______ Net revenues from sales and services and other income . . . . $19,862 $18,891 $39,294 $38,092 Costs and expenses: Cost of sales and services . . . 9,589 9,189 19,133 18,904 Depreciation, depletion and amortization. . . . . . . . . . 3,510 3,663 6,963 7,062 General and administrative expenses. . . . . . . . . . . . 1,787 1,591 3,331 3,183 Interest and debt expenses . . . 337 64 445 97 _______ _______ _______ _______ 15,223 14,507 29,872 29,246 Income before income taxes and cumulative effect of change in accounting principle. . . . . . . 4,639 4,384 9,422 8,846 Provision for income taxes . . . . 1,602 1,542 3,307 3,153 Income before cumulative effect of change in accounting principle . . . . . . . . . . . . 3,037 2,842 6,115 5,693 Cumulative effect of change in accounting principle (SFAS No. 109). . . . . . . . . . . . . -- -- -- 200 _______ _______ _______ _______ Net income . . . . . . . . . . . . $ 3,037 $ 2,842 $ 6,115 $ 5,893 Net income per share: Primary and fully diluted: Income before cumulative effect of change in accounting principle. . . . . . $ .30 $ .28 $ .60 $ .56 Cumulative effect of change in accounting principle. . . . . . -- -- -- .02 Net income . . . . . . . . . . . $ .30 $ .28 $ .60 $ .58 Weighted average shares outstanding . . . . . . . . . . . 10,171 10,181 10,169 10,181 Dividends per share. . . . . . . . $ .06 $ .06 $ .12 $ .12 Average shares outstanding upon which dividends were accrued. . . 10,078 10,071 10,078 10,071
5 PRODUCTION OPERATORS CORP AND SUBSIDIARY CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS ENDED MARCH 31, 1995 AND 1994 (UNAUDITED-000'S OMITTED) Six Months Ended March 31, 1995 1994 ________ ________ Cash flows from operating activities: Cash received from customers. . . . . . . . . . $ 35,454 $ 32,242 Cash paid to suppliers and employees. . . . . . (19,208) (28,153) Interest paid . . . . . . . . . . . . . . . . . (354) (97) Income tax paid . . . . . . . . . . . . . . . . (1,619) (1,264) Interest and dividends received . . . . . . . . 393 516 Other income. . . . . . . . . . . . . . . . . . 377 273 ________ ________ 15,043 3,517 Cash flows from investing activities: Net additions to property and equipment . . . . (35,813) (23,984) Proceeds from sale of securities. . . . . . . . 720 7,411 Proceeds from sale of property and equipment. . 1,044 2,258 Purchase of securities. . . . . . . . . . . . . (677) -- Additions to other long-term assets . . . . . . (1,086) (84) ________ ________ (35,812) (14,399) Cash flows from financing activities: Additions to net borrowings on long-term senior notes. . . . . . . . . . . . . . . . . . . . . 22,737 8,970 Dividends paid. . . . . . . . . . . . . . . . . (1,209) (1,208) (Additions to) reduction of deferred compensation under Company's ESOP Plan . . . . (167) 296 Reduction of Company's ESOP bank loan . . . . . -- (250) Cash received upon exercise of stock options. . 10 130 Cash bonus paid upon exercise of stock options. (2) (79) Repurchases of stock awards . . . . . . . . . . (19) (15) ________ ________ 21,350 7,844 Net increase (decrease) in cash and cash equivalents. . . . . . . . . . . . . . . . . . . 581 (3,038) Cash and cash equivalents at beginning of year. . 1,037 3,453 ________ ________ Cash and cash equivalents at end of quarter . . . $ 1,618 $ 415
6 PRODUCTION OPERATORS CORP AND SUBSIDIARY RECONCILIATION OF NET INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES FOR THE SIX MONTHS ENDED MARCH 31, 1995 AND 1994 (UNAUDITED-000'S OMITTED) Six Months Ended March 31, 1995 1994 _______ _______ Net income. . . . . . . . . . . . . . . . . . . . .$ 6,115 $ 5,893 _______ _______ Adjustments: Depreciation, depletion and amortization. . . . . 6,963 7,062 Provision for deferred income tax . . . . . . . . 1,453 746 Provision for tax benefits on stock option exercises and ESOP dividends . . . . . . . . . . 21 116 Issuance of stock awards. . . . . . . . . . . . . 74 85 Provision for bad debts . . . . . . . . . . . . . 12 2 Gain on sale of property and equipment. . . . . . (188) (958) Gain on sale of marketable securities, net of reserve . . . . . . . . . . . . . . . . . (25) (2) Increase in receivables . . . . . . . . . . . . . (4,435) (6,161) Decrease in inventories . . . . . . . . . . . . . 3,294 6,380 (Increase) decrease in long-term receivable and other assets . . . . . . . . . . . . . . . . . . 964 (5,997) Increase (decrease) in accounts payable . . . . . 2,828 (4,057) Decrease in accrued liabilities . . . . . . . . . (2,247) (419) SFAS No. 109 adjustment . . . . . . . . . . . . . -- (200) Increase in income taxes payable. . . . . . . . . 214 1,027 _______ _______ 8,928 (2,376) _______ _______ Net cash provided by operating activities . . . . .$15,043 $ 3,517
7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Results of Operations - Net revenues for the three and six months ended March 31, 1995 were $19.9 million and $39.3 million, respectively, reflecting increases of $971,000 (5%) and $1.2 million (3%) over the same periods in the prior year. Revenues from contract gas handling services increased $1,932,000 (13%) and $3,342,000 (11%), respectively, during the second quarter and six months ended March 31, 1995 as compared to the year ago periods. The Company's revenue producing compression fleet, including contract operated units, averaged 314,000 and 305,000 horsepower, respectively, during the second quarter and six months of the current fiscal year as compared to 274,000 and 265,000 horsepower last year, increases of 15% for both comparative periods. The increased revenue reflected the growth in revenue producing compression equipment which was at a record 329,000 horsepower with an order backlog of owned equipment totaling 53,000 horsepower as of March 31, 1995. Construction, installation, demobilization, enhanced oil recovery and associated asset sales were essentially unchanged from the preceding year. Subsequent to quarter end, 18,000 horsepower started up in Argentina and Venezuela resulting in revenue producing horsepower of 347,000 and a backlog of 43,000. Average realized price per horsepower remained virtually unchanged from the prior year. Revenues from oil and gas operations declined $1,282,000 (37%) and $2,101,000 (32%) for the three and six months of the current fiscal year, respectively, compared to the preceding year. Oil production for the second quarter was 107,164 barrels at an average price of $16.01 per barrel versus 150,434 barrels at $12.59 per barrel during the fiscal 1994 second quarter. Gas production for the three months ended March 31, 1995 was 337,457 Mcf at an average price of $1.41 per Mcf compared to 730,595 Mcf at $2.16 a year ago. For the six months ended March 31, 1995 oil production totaled 220,623 barrels at an average price of $15.78 per barrel as compared to 299,721 barrels at $13.27 during the same period last year. Gas production during the first six months of the current year was 720,638 Mcf at $1.49 as compared to 1,246,083 Mcf at $2.15 a year ago. As noted in the Company's fiscal 1995 first quarter report, the decline in production is related to a combination of lower gas well development efforts in light of unfavorable market conditions, natural production decline rates and the sale of a producing property at yearend fiscal 1994. Other revenues, comprised principally of rents, interest, dividends and net gains on the sales of equipment and marketable securities totaled $572,000 and $801,000, respectively, for the three and six months ended March 31, 1995 as compared to $251,000 and $840,000 for the comparable periods last year. Total operating income from sales and services (revenues less cost of sales and services and depreciation, depletion and amortization) for the three and six month periods ended March 31, 1995 increased $403,000 (7%) and $1,111,000 (10%), respectively, compared to the year ago periods. Operating income from contract gas handling services increased $901,000 (17%) and $1,892,000 (18%), respectively, for the second quarter and first half of the current fiscal year versus the same periods a year ago. During the second quarter, the Company began engineering and design work in connection with a 16,000 horsepower compression facility in Argentina. In April the construction of eight sites and the shipment of equipment and materials commenced with operations currently scheduled to begin gradual phase in during the fourth quarter. In addition, the Company's Venezuelan subsidiary substantially completed construction and installation of a large water injection plant which began operations in April. Management believes prospects continue to be favorable for additional expansion in both the United States and South America for our primary business segment as the large integrated petroleum and pipeline companies seek outsourcing solutions to their gas handling requirements. Oil and gas operating income declined $498,000 (93%) and $781,000 (89%) for the second quarter and first six months ended March 31, 1995, respectively, as compared to the prior year periods. The erosion of profits in this operating segment are due to the continued negative impact of the various factors mentioned in the preceding discussion of revenues. Interest expense for the second quarter and six months ended March 31, 1995 was $337,000 and $445,000, respectively, compared to $64,000 and $97,000 a year ago. These changes are the result of higher bank borrowings to fund increased capital spending as further discussed in the following section on liquidity and capital resources. The provision for depreciation, depletion and amortization declined $153,000 (4%) and $99,000 (1%), respectively, for the second quarter and six months ended March 31, 1995 reflecting a reduction in oil and gas depletion expense as a result of substantially lower production volumes. Depreciation expense related to compression equipment increased significantly primarily due to the increase in revenue producing horsepower. Liquidity and Capital Resources - As of March 31, 1995 the Company had cash and cash equivalents in the amount of $1,618,000 versus $1,037,000 at September 30, 1994, the end of its preceding fiscal year. The principal sources of cash during the current year's first six months were $15,043,000 from operations, $22,737,000 in bank borrowings and $1,764,000 on sales of property, equipment and marketable securities. The chief uses of cash were $35,813,000 in capital additions and $1,209,000 for dividend payments. Accounts receivable increased $4,423,000 during the first six months of fiscal 1995 to $20,702,000 primarily related to two construction projects. The inventory balance during the same period declined $2,280,000 principally due to the start up of a project which included equipment fabrication and construction work that had been carried in the construction-work in progress inventory account. Property, plant and equipment, net of accumulated depreciation, depletion and amortization, showed an increase of $26,952,000 in the first half of the year as capital spending in the Company's core contract gas handling services segment remained at record levels. Capital expenditures for the six months totaled $35,813,000 with $33,805,000 applied to contract gas handling services; $910,000 for our oil and gas production segment and $1,098,000 for additions to all other areas. During the first six months of 1995, the Company mobilized a very large amount of horsepower. The additional capital expenditures required to mobilize our present backlog are estimated at $10,000,000 to $12,000,000. During the most recent quarter, the Company renegotiated its revolving credit agreement with two banks increasing the available line from $20,000,000 to $50,000,000. Additionally, a credit facility with another bank was increased from $5,000,000 to $10,000,000. The Company's liquidity requirements for the remainder of its current fiscal year are expected to be satisfied principally from operating cash flows and additional bank borrowings. Other Items On April 26, 1995 Production Operators Corp announced that Production Operators, Inc. (POI) and Amoco Production Company's U.S. operating group (Amoco) have agreed to form an alliance for domestic field compression operations. Under the alliance Amoco and Production Operators will work together to maximize efficiency for Amoco's field compression assets and operations covering units up to 2,500 horsepower. The goal of this strategic alliance is to make Amoco and POI more competitive and profitable, while building a unique infrastructure to meet Amoco's compression needs for the future. PART II. OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K The Registrant made no filing on Form 8-K during the period January 1, 1995 and March 31, 1995. All other items are inapplicable or have negative answers and are therefore omitted from this report. 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. PRODUCTION OPERATORS CORP (Registrant) /s/ D. John Ogren D. John Ogren President /s/ William S. Robinson, Jr. William S. Robinson, Jr. Treasurer Chief Financial Officer Date: May 9, 1995 EX-27 2
5 1,000 6-MOS SEP-30-1995 MAR-31-1995 1,618 2,571 20,849 147 5,415 30,306 300,707 139,289 197,925 13,113 28,737 10,259 0 0 128,270 197,925 38,493 39,294 19,133 19,133 10,294 0 445 9,422 3,307 6,115 0 0 0 6,115 .60 .60
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