-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, IfNW8POkT5lSLWQWMk83DWe2ZKg9ZaosgJv6lNNe3ztaGJk7aG52JsupFgvpQbto BhCDsSHGmIQo+q5zYxZ/jQ== 0000100712-97-000006.txt : 19970211 0000100712-97-000006.hdr.sgml : 19970211 ACCESSION NUMBER: 0000100712-97-000006 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19961231 FILED AS OF DATE: 19970207 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: 97520953 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 / / QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended December 31, 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 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 January 24, 1997 there were 10,206,770 shares of the Company's common stock, $l.00 par value, outstanding (exclusive of treasury shares). 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 December 31, 1996 and the results of their operations for the three months ended December 31, 1996 and 1995 and their cash flows for the three months ended December 31, 1996 and 1995 have been included. The results of operations for such interim periods are not necessarily indicative of the results for the full year. 3 (TABLE> PRODUCTION OPERATORS CORP AND SUBSIDIARY CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31, 1996 AND SEPTEMBER 30, 1996 (000'S OMITTED) [CAPTION] December 31, September 30, 1996 1996 ------------ ------------- (Unaudited) ASSETS Current assets: Cash and cash equivalents . . . . . . . . $ 1,470 $ 1,466 Marketable securities . . . . . . . . . . 201 201 Receivables: Sales and services, net of reserve of $163 at December 31, 1996 and $156 at September 30, 1996 . . . . . . . . . . 21,393 20,388 Construction work in progress . . . . . 3,925 4,592 Inventories - at cost: Compressor parts and supplies . . . . . 7,215 6,486 Construction work in progress . . . . . 3,137 2,433 Prepaid expenses and other. . . . . . . . 6,766 5,866 -------- -------- Total current assets . . . . . . . . 44,107 41,432 Property and equipment, at cost, net of accumulated depreciation and amortization of $103,531 at December 31, 1996 and $100,940 at September 30, 1996 . 177,219 173,307 Long-term receivable and other assets . . . 8,175 7,952 -------- -------- $229,501 $222,691 ======== ======== LIABILITIES AND STOCKHOLDERS' INVESTMENT Current liabilities: Accounts payable. . . . . . . . . . . . . $ 7,884 $ 8,361 Accrued liabilities . . . . . . . . . . . 6,948 13,084 Income taxes payable. . . . . . . . . . . 1,748 1,283 -------- -------- Total current liabilities. . . . . . 16,580 22,728 Senior term notes . . . . . . . . . . . . . 29,636 23,131 Deferred income taxes . . . . . . . . . . . 22,458 21,178 -------- -------- Stockholders' investment: Common stock. . . . . . . . . . . . . . . 10,259 10,259 Additional paid-in capital. . . . . . . . 72,485 72,223 Retained earnings . . . . . . . . . . . . 80,854 76,294 Deferred compensation - ESOP. . . . . . . (2,110) (2,340) Treasury stock. . . . . . . . . . . . . . (661) (782) -------- -------- Total stockholders' investment . . . . 160,827 155,654 -------- -------- $229,501 $222,691 ======== ========
4 PRODUCTION OPERATORS CORP AND SUBSIDIARY CONSOLIDATED INCOME STATEMENTS FOR THE THREE MONTHS ENDED DECEMBER 31, 1996 AND 1995 (UNAUDITED-000'S OMITTED EXCEPT PER SHARE AMOUNTS)
Three Months Ended December 31 ------- ------- 1996 1995 ------- ------- Net revenues from sales and services and other income . . . . . . . . . . . . . . $26,747 $22,124 ------- ------- Costs and expenses: Cost of sales and services. . . . . . . . . 11,946 9,769 Depreciation and amortization . . . . . . . 4,398 3,727 General and administrative expenses . . . . 1,903 1,806 Interest and debt expenses. . . . . . . . . 404 588 ------- ------- 18,651 15,890 ------- ------- Income before income taxes. . . . . . . . . . 8,096 6,234 Provision for income taxes. . . . . . . . . . 2,832 2,177 ------- ------- Net income. . . . . . . . . . . . . . . . . . $ 5,264 $ 4,057 ======= ======= Net income per share: Primary and fully diluted $ .51 $ .40 Weighted average shares outstanding . . . . . 10,371 10,258 Dividends per share . . . . . . . . . . . . . $ .07 $ .07 Average shares outstanding upon which dividends were accrued . . . . . . . . . . . 10,195 10,147
5 PRODUCTION OPERATORS CORP AND SUBSIDIARY CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED DECEMBER 31, 1996 AND 1995 (UNAUDITED-000'S OMITTED) Quarter Ended December 31, -------------------- 1996 1995 -------- -------- Cash flows from operating activities: Cash received from clients. . . . . . . . . . . $ 23,684 $ 19,650 Cash paid to suppliers and employees. . . . . . (22,194) (14,235) Interest paid . . . . . . . . . . . . . . . . . (388) (468) Income tax paid . . . . . . . . . . . . . . . . (1,014) (15) Interest and dividends received . . . . . . . . 103 133 Other income. . . . . . . . . . . . . . . . . . 151 210 -------- -------- 342 5,275 -------- -------- Cash flows from investing activities: Net additions to property and equipment . . . . (9,145) (6,905) Proceeds from sale of property and equipment. . 3,687 1,830 Other . . . . . . . . . . . . . . . . . . . . . (1,038) (332) -------- -------- (6,496) (5,407) -------- -------- Cash flows from financing activities: Additions to net borrowings on long-term senior notes . . . . . . . . . . . . . . . . . 6,505 1,229 Dividends paid. . . . . . . . . . . . . . . . . (714) (710) Decrease in deferred compensation under Company's ESOP Plan. . . . . . . . . . . . . . 230 311 Cash received upon exercise of stock options. . 161 216 Cash bonus paid upon exercise of stock options. (23) (49) Repurchases of stock awards . . . . . . . . . . (1) (32) -------- -------- 6,158 965 -------- -------- Net increase in cash and cash equivalents . . . . 4 833 Cash and cash equivalents at beginning of year. . 1,466 985 -------- -------- Cash and cash equivalents at end of quarter . . . $ 1,470 $ 1,818 ======== ========
6 PRODUCTION OPERATORS CORP AND SUBSIDIARY RECONCILIATION OF NET INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES FOR THE THREE MONTHS ENDED DECEMBER 31, 1996 AND 1995 (UNAUDITED-000'S OMITTED)
Quarter Ended December 31, ------------------- 1996 1995 ------- ------- Net income. . . . . . . . . . . . . . . . . . . . .$ 5,264 $ 4,057 ------- ------- Adjustments: Depreciation and amortization . . . . . . . . . . 4,398 3,727 Provision for deferred income tax . . . . . . . . 1,280 1,529 Provision for tax benefits on stock option exercises and ESOP dividends . . . . . . . . . . 73 78 Issuance of stock awards. . . . . . . . . . . . . 183 206 Provision for bad debts . . . . . . . . . . . . . 7 6 Gain on sale of property and equipment. . . . . . (1,278) (972) Increase in receivables . . . . . . . . . . . . . (1,933) (1,551) (Increase) decrease in inventories. . . . . . . . (1,433) 1,759 Increase in prepaid expenses and other. . . . . . (900) (346) Decrease in long-term receivable and other assets . . . . . . . . . . . . . . . . . . 829 732 Decrease in accounts payable. . . . . . . . . . . (477) (4,199) Decrease in accrued liabilities . . . . . . . . . (6,136) (306) Decrease in current tax benefit . . . . . . . . . -- 555 Increase in income taxes payable. . . . . . . . . 465 -- ------- ------- (4,922) 1,218 ------- ------- Net cash provided by operating activities . . . . .$ 342 $ 5,275 ======= =======
7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Results of Operations - The Company reported net revenues from sales and services and other income of $26,747,000 during its fiscal 1997 first quarter ended December 31, 1996 as compared to $22,124,000 for the first quarter of fiscal 1996. Current year first quarter revenues from contract gas handling services were $26,620,000, an improvement of $4,884,000 (22%) over the prior year first quarter level of $21,736,000. The Company's fleet of revenue producing compression equipment, including operations of client owned units, averaged 458,000 horsepower for the three months ended December 31, 1996, a 20% increase over the previous year's same quarter average of 381,000 horsepower. At its December 31, 1996 quarter end, the Company had operating horsepower of 470,000 with a backlog, including client owned units, of 73,000 horsepower. Average realized price per horsepower for domestically owned equipment increased slightly for the current fiscal quarter as compared to the prior year first quarter while total fleet average realized price per horsepower decreased 3% due to a substantial increase in client owned revenue producing horsepower where the revenue per horsepower is lower. Revenues from installation, demobilization, construction and equipment sales grew more rapidly than horsepower principally due to increased activity with domestic alliances. Other income consisting principally of rents, interest and sales of miscellaneous assets were $127,000 for the fiscal 1997 first quarter as compared to $388,000 in the fiscal 1996 first quarter. The decrease in other income was due to a charge related to the retirement of certain computer hardware during the fiscal 1997 first quarter. Operating income from contract gas handling services (revenues less cost of services and depreciation) was $10,276,000 in the most recent quarter, an improvement of $2,036,000 (25%) over the prior year quarter of $8,240,000. This growth continues to be driven by the growth in revenue producing horsepower from the expansion of the Company's domestic alliance relationships, the continued growth in international operations and improvement in operating expense margins. During the fiscal 1997 first quarter, depreciation expense increased $671,000 (18%) to $4,398,000 as compared to the previous year's same quarter due primarily to the increase in horsepower previously noted. General and administrative expenses increased $97,000 (5%) to $1,903,000 as compared to the prior year quarter. Interest expense improved to $404,000 in the fiscal 1997 first quarter as compared to $588,000 in the prior year period due to lower average borrowings. Income tax expense for the fiscal 1997 first quarter was $2,832,000 as compared to $2,177,000 in the prior year's first quarter, an effective tax rate of 35% for both periods. 8 Liquidity and Capital Resources - As of December 31, 1996, the Company's cash position was unchanged at $1,470,000 versus $1,466,000 at the close of the prior fiscal year ended September 30, 1996. The principal sources of cash during the period resulted from the sale of property and equipment of $3,687,000 and bank borrowings totaling $6,505,000. The primary uses of cash were capital expenditures of $9,145,000 and payment of dividends amounting to $714,000. Net cash flow from operations during the fiscal 1997 first quarter was not a principal source of funds as cash received from clients was used to satisfy vendor obligations, some of which were related to certain contractual arrangements for the fabrication of client owned units for which prepayment was received in earlier fiscal quarters. Cash flow from operations for the remainder of the fiscal year is expected to provide the principal source of cash. Accounts receivable for sales and services increased $1,005,000 to $21,393,000 at December 31, 1996 as compared to yearend 1996 principally due to the increased revenue during the quarter from the additional revenue producing horsepower previously noted. Accounts receivable from construction work in progress decreased $667,000 to $3,925,000 as certain domestic projects were completed and collected during the quarter. Inventories of compressor parts and supplies increased $729,000 to $7,215,000 primarily due to continued expansion internationally and construction work in progress increased $704,000 to $3,137,000 due to activity related to fabrication of client owned units which will be billed during the fiscal 1997 second quarter. Accounts payable decreased $477,000 to $7,884,000 and accrued liabilities decreased $6,136,000 to $6,948,000 due to the completion of obligations under certain contractual arrangements for the fabrication of client owned units. Bank borrowings increased $6,505,000 to $29,636,000 to meet cash requirements for operating expenditures and capital expenditures not provided by cash flow from operations. Management expects cash requirements for the remainder of fiscal 1997 to be satisfied from cash on hand, cash flow from operations and additional bank borrowings as required. 9 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 October 1, 1996 and December 31, 1996. 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/ John B. Simmons John B. Simmons Principal Financial and Accounting Officer Date: February 7, 1997 EX-27 2
5 1,000 3-MOS SEP-30-1997 DEC-31-1996 1,470 201 25,481 163 10,352 44,107 280,750 103,531 229,501 16,580 29,636 0 0 10,259 150,568 229,501 26,620 26,747 11,946 11,946 6,301 0 404 8,096 2,832 5,264 0 0 0 5,264 .51 .51
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