10-Q/A 1 doc1.txt -------------------------------------------------------------------------------- ================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q/A (Amendment No. 1) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2003 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: 000-22433 BRIGHAM EXPLORATION COMPANY (Exact name of registrant as specified in its charter)
DELAWARE 1311 75-2692967 (State of other jurisdiction (Primary Standard Industrial (I.R.S. Employer of incorporation or organization) Classification Code Number) Identification Number)
6300 BRIDGEPOINT PARKWAY, BUILDING 2, SUITE 500, AUSTIN, TEXAS 78730 (Address of principal executive offices) (512) 427-3300 (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 [ ] Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12 b-2 of the Act). Yes [ ] No [X] Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Class Outstanding ----- ----------- Common Stock, par value $.01 per share as of May 10, 2003 19,935,700 ================================================================================ EXPLANATORY NOTE This Amendment No. 1 on Form 10-Q/A (this "Amendment") is being filed to amend the quarterly report on Form 10-Q of Brigham Exploration Company filed with the Securities and Exchange Commission on May 15, 2003 (the "Original Form 10-Q"). The purpose of this Amendment is to reclassify certain amounts within the changes in working capital and other items section of the Consolidated Statements of Cash Flows for the three months ended March 31, 2002 to conform to classifications used in the current year presentation. Net cash provided by operating activities in the Consolidated Statements of Cash Flows for the three months ended March 31, 2002 was not changed by this Amendment. This Amendment does not reflect events occurring after the filing of the Original Form 10-Q, and does not modify or update the disclosures therein in any way other than as required to reflect the amendments as described above and set forth below.
BRIGHAM EXPLORATION COMPANY CONSOLIDATED BALANCE SHEETS (IN THOUSANDS, EXCEPT SHARE DATA) (UNAUDITED) MARCH 31, DECEMBER 31, 2003 2002 ----------- -------------- ASSETS Current assets: Cash and cash equivalents $ 16,485 $ 15,318 Accounts receivable 15,342 11,361 Other current assets 5,419 6,643 ----------- -------------- Total current assets 37,246 33,322 ----------- -------------- Oil and natural gas properties, net (full cost method) 171,119 164,980 Other property and equipment, net 1,245 1,234 Deferred loan fees 3,126 2,391 Other noncurrent assets 607 132 ----------- -------------- $ 213,343 $ 202,059 =========== ============== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 15,956 $ 14,486 Royalties payable 7,455 4,508 Accrued drilling costs 1,988 2,727 Participant advances received 1,361 1,955 Other current liabilities 13,221 10,334 ----------- -------------- Total current liabilities 39,981 34,010 ----------- -------------- Senior credit facility 56,000 60,000 Senior subordinated notes 22,093 21,797 Other noncurrent liabilities 2,223 186 Commitments and contingencies Series A Preferred Stock, mandatorily redeemable, $.01 par value, $20 stated and redemption value, 2,250,000 shares authorized, 1,799,955 and 1,765,132 shares issued and outstanding at March 31, 2003 December 31, 2002, respectively 20,329 19,540 Series B Preferred Stock, mandatorily redeemable, $.01 par value, $20 stated and redemption value, 1,000,000 shares authorized, 511,116 and 501,226 shares issued and outstanding at March 31, 2003 and December 31, 2002, respectively 4,983 4,777 Stockholders' equity: Preferred stock, $.01 par value, 10 million shares authorized, of which 2,250,000 and 1,000,000 shares are designated as Series A and Series B, respectively - - Common stock, $.01 par value, 50 million shares authorized, 21,037,989 and 20,618,161 shares issued and 19,893,707 and 19,479,979 shares outstanding at March 31, 2003 and December 31, 2002, respectively 210 206 Additional paid-in capital 92,850 93,436 Treasury stock, at cost; 1,144,282 and 1,138,182 shares at March 31, 2003 and December 31, 2002, respectively (4,292) (4,282) Unearned stock compensation (163) (212) Accumulated other comprehensive (loss) income (3,030) (3,047) Accumulated deficit (17,841) (24,352) ----------- -------------- Total stockholders' equity 67,734 61,749 ----------- -------------- $ 213,343 $ 202,059 =========== ============== The accompanying notes are an integral part of these consolidated financial statements.
BRIGHAM EXPLORATION COMPANY CONSOLIDATED STATEMENTS OF OPERATIONS (IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED) THREE MONTHS ENDED MARCH 31, ------------------------- 2003 2002 ----------- ------------ Revenues: Oil and natural gas sales $ 14,639 $ 6,434 Other revenue 38 10 ----------- ------------ 14,677 6,444 ----------- ------------ Costs and expenses: Lease operating 974 871 Production taxes 938 353 General and administrative 1,139 964 Depletion of oil and natural gas properties 4,102 3,137 Depreciation and amortization 97 103 Accretion of discount on asset retirement obligations 34 - ----------- ------------ 7,284 5,428 ----------- ------------ Operating income 7,393 1,016 ----------- ------------ Other income (expense): Interest income 21 19 Interest expense (1,282) (1,421) Other income (expense) 111 (248) ----------- ------------ (1,150) (1,650) ----------- ------------ Income (loss) before income taxes and cumulative effect of change in accounting principle 6,243 (634) Income taxes - - ----------- ------------ Income (loss) before cumulative effect of change in accounting principle 6,243 (634) Cumulative effect of change in accounting principle 268 - ----------- ------------ Net income (loss) 6,511 (634) Less accretion and dividends on redeemable preferred stock 995 698 ----------- ------------ Net income (loss) available to common stockholders $ 5,516 $ (1,332) =========== ============ Net income (loss) per share available to common stockholders: Basic Income (loss) before cumulative effect of change in accounting principle $ 0.27 $ (0.08) Cumulative effect of change in accounting principle 0.01 - ----------- ------------ $ 0.28 $ (0.08) =========== ============ Diluted Income (loss) before cumulative effect of change in accounting principle $ 0.19 $ (0.08) Cumulative effect of change in accounting principle 0.01 - ----------- ------------ $ 0.20 $ (0.08) =========== ============ Weighted average shares outstanding: Basic 19,707 16,016 =========== ============ Diluted 32,111 16,016 =========== ============ The accompanying notes are an integral part of these consolidated financial statements.
BRIGHAM EXPLORATION COMPANY CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (IN THOUSANDS) (UNAUDITED) ACCUMULATED COMMON STOCK ADDITIONAL UNEARNED OTHER ---------------- PAID IN TREASURY STOCK COMPREHENSIVE ACCUMULATED SHARES AMOUNTS CAPITAL STOCK COMPENSATION INCOME (LOSS) DEFICIT ------ -------- --------- ---------- -------------- --------------- ------------- Balance, December 31, 2002 20,618 $ 206 $ 93,436 $ (4,282) $ (212) $ (3,047) $ (24,352) Comprehensive income: Net income - - - - - - 6,511 Unrealized gain on cash flow hedges - - - - - 128 - Net gains included in net income - - - - - (111) - Comprehensive income Exercise of employee stock options 172 2 430 - - - - Expiration of employee stock options - - (19) - - - - Forfeitures of restricted stock - - - (10) 2 - - Warrants exercised for common stock 248 2 (2) - - - - In kind dividends on Series A mandatorily redeemable preferred stock - - (696) - - - - Accretion on Series A mandatorily redeemable preferred stock - - (92) - - - - In kind dividends on Series B mandatorily redeemable preferred stock - - (198) - - - - Accretion on Series B mandatorily redeemable preferred stock - - (9) - - - - Amortization of unearned stock compensation - - - - 47 - - ------ -------- --------- ---------- -------------- --------------- ------------- Balance, March 31, 2003 21,038 $ 210 $ 92,850 $ (4,292) $ (163) $ (3,030) $ (17,841) ====== ======== ========= ========== ============== =============== ============= TOTAL STOCKHOLDERS' EQUITY --------------- Balance, December 31, 2002 $ 61,749 Comprehensive income: Net income 6,511 Unrealized gain on cash flow hedges 128 Net gains included in net income (111) --------------- Comprehensive income 6,528 Exercise of employee stock options 432 Expiration of employee stock options (19) Forfeitures of restricted stock (8) Warrants exercised for common stock - In kind dividends on Series A mandatorily redeemable preferred stock (696) Accretion on Series A mandatorily redeemable preferred stock (92) In kind dividends on Series B mandatorily redeemable preferred stock (198) Accretion on Series B mandatorily redeemable preferred stock (9) Amortization of unearned stock compensation 47 --------------- Balance, March 31, 2003 $ 67,734 ===============
The accompanying notes are an integral part of these consolidated financial statements.
BRIGHAM EXPLORATION COMPANY CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS) (UNAUDITED) THREE MONTHS ENDED MARCH 31, ------------------------- 2003 2002 ----------- ------------ Cash flows from operating activities: Net income (loss) $ 6,511 $ (634) Adjustments to reconcile net income to cash provided by operating activities: Depletion of oil and natural gas properties 4,102 3,137 Depreciation and amortization 97 103 Interest paid through issuance of additional senior subordinated notes 296 227 Amortization of deferred loan fees and debt issuance costs 253 286 Market value adjustment for derivative instruments (111) 251 Accretion of discount on asset retirement obligations 34 - Cumulative effect of change in accounting principle (268) - Changes in working capital and other items: Accounts receivable (3,981) 966 Other current assets 1,318 (238) Accounts payable 1,470 (609) Royalties payable 2,947 86 Participant advances received (594) 588 Other current liabilities 3,017 (143) Other noncurrent assets and liabilities (29) 11 ----------- ------------ Net cash provided by operating activities 15,062 4,031 ----------- ------------ Cash flows from investing activities: Additions to oil and natural gas properties (8,921) (4,909) Proceeds from sale of oil and natural gas properties 151 - Additions to other property and equipment (98) (91) Decrease in drilling advances paid (471) - ----------- ------------ Net cash used by investing activities (9,339) (5,000) ----------- ------------ Cash flows from financing activities: Repayment of senior credit facility (4,000) - Deferred loan fees paid (988) (310) Proceeds from issuance of senior subordinated notes - 4,000 Proceeds from exercise of employee stock options 432 - Principal payments on capital lease obligations - (13) ----------- ------------ Net cash provided (used) by financing activities (4,556) 3,677 ----------- ------------ Net increase in cash and cash equivalents 1,167 2,708 Cash and cash equivalents, beginning of year 15,318 5,112 ----------- ------------ Cash and cash equivalents, end of period $ 16,485 $ 7,820 =========== ============
The accompanying notes are an integral part of these consolidated financial statements. 1. ORGANIZATION AND NATURE OF OPERATIONS Brigham Exploration Company ("Brigham"), a Delaware corporation formed on February 25, 1997, explores and develops onshore domestic oil and natural gas properties using 3-D seismic imaging and other advanced technologies. Brigham focuses its exploration and development of onshore oil and natural gas properties primarily in the Anadarko Basin, the Texas Gulf Coast and West Texas. 2. BASIS OF PRESENTATION The accompanying financial statements include the accounts of Brigham and its wholly-owned subsidiaries, and its proportionate share of assets, liabilities and income and expenses of the limited partnerships in which Brigham, or any of its subsidiaries, has a participating interest. All significant intercompany accounts and transactions have been eliminated. The accompanying consolidated financial statements are unaudited, and in the opinion of management, reflect all adjustments that are necessary for a fair presentation of the financial position and results of operations for the periods presented. All such adjustments are of a normal and recurring nature. The results of operations for the periods presented are not necessarily indicative of the results to be expected for the entire year. The unaudited consolidated financial statements should be read in conjunction with Brigham's 2002 Annual Report on Form 10-K pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. Certain reclassifications have been made to prior year amounts to conform to current year presentation. 3. COMMITMENTS AND CONTINGENCIES Brigham is, from time to time, party to certain lawsuits and claims arising in the ordinary course of business. While the outcome of lawsuits and claims cannot be predicted with certainty, management does not expect these matters to have a materially adverse effect on the financial condition, results of operations or cash flows of Brigham. On June 1, 2001, Leonel Garcia, a landowner in Brooks County, Texas, filed suit against Brigham claiming that Brigham transported natural gas under his property through an existing pipeline without his consent. Mr. Garcia claimed $1.2 million in actual damages and $3 million in exemplary damages. In May 2002, Brigham settled the case through mediation for a cash payment of $125,000. Subsequently, Brigham began using an alternate pipeline. On November 20, 2001, Brigham filed a lawsuit in the District Court of Travis County, Texas against Steve Massey Company, Inc. ("Massey") for breach of contract. The Petition claims Massey furnished defective casing to Brigham, which ultimately led to the casing failure of the Palmer "347" No. 5 well (the "Palmer #5") and the loss of the Palmer #5 as a producing well. Brigham believes the amount of damages incurred due to the loss of the Palmer #5 may exceed $5 million. Massey joined as additional defendants to the lawsuit other parties that had responsibility for the manufacture, importation or fabrication of the casing for its use in the Palmer #5. The case is currently in discovery. A trial has been set for August 2003. On February 20, 2002, Massey filed an Original Petition to Foreclose Lien in Brooks County, Texas. Massey's Petition claims Brigham breached its contract for failure to pay for the casing it furnished Brigham for the Palmer #5 (and that Brigham's claim is defective, forming the basis of the lawsuit described in the paragraph above). Massey's Petition claims Brigham owes Massey a total of $445,819. Brigham's Motion to Transfer Venue to Travis County, Texas, and Motion to Consolidate Massey's claim with Brigham's suit against Massey pending in Travis County, were recently granted. If Massey is successful in its claim, Massey would have the right to foreclose its lien against the well, associated equipment and Brigham's leasehold interest. At this point in time, Brigham cannot predict the outcome of either its Travis County case or Massey's claim. On July 11, 2002, an employee of a contractor on Brigham's Burkhart #1-R location, Matagorda County, Texas, was involved in a fatal accident. The United States Department of Labor Occupational Safety & Health Administration investigated the accident and issued three citations and imposed a total of $168,000 in fines. Brigham is appealing the citations, but at this time, cannot predict the outcome of that appeal. On October 8, 2002, relatives of the contractor's employee filed a wrongful death action in the district court for Matagorda County, Texas, against Brigham and three of Brigham's contractors in connection with his accidental death on July 11, 2002. Plaintiffs are seeking unspecified both actual and punitive damages. Brigham cannot predict the outcome of this case, however Brigham believes it has sufficient insurance to cover the claim. 4. NET INCOME (LOSS) PER SHARE Basic earnings per share are computed by dividing net income (loss) available to common stockholders by the weighted average number of common shares outstanding for the period. The computation of diluted net income (loss) per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that would then share in the earnings of Brigham. The following table reconciles the numerators and denominators of the basic and diluted earnings per common share computations for net income (loss) available to common stockholders for the three months ended March 31, 2003 and 2002:
THREE MONTHS ENDED MARCH 31, --------------------------------- 2003 2002 --------------- ---------------- (In thousands, except per share amounts) Basic EPS: Income (loss) available to common stockholders before cumulative change in accounting principle $ 5,248 $ (1,332) Cumulative change in accounting principle 268 - --------------- ---------------- Income (loss) available to common stockholders $ 5,516 $ (1,332) =============== ================ Common shares outstanding 19,707 16,016 =============== ================ Basic EPS Income (loss) available to common stockholders before change in accounting principle $ 0.27 $ (0.08) Cumulative change in accounting principle 0.01 - --------------- ---------------- $ 0.28 $ (0.08) =============== ================ Diluted EPS: Income (loss) available to common stockholders before cumulative change in accounting principle $ 5,248 $ (1,332) Cumulative change in accounting principle 268 - --------------- ---------------- Income (loss) available to common stockholders 5,516 (1,332) Adjustments for assumed conversions: Dividends and accretion on mandatorily redeemable preferred stock (1) 890 - --------------- ---------------- 890 - --------------- ---------------- Income (loss) available to common stockholders before change in accounting principle-diluted 6,138 (1,332) Cumulative change in accounting principle 268 - --------------- ---------------- Income (loss) available to common stockholders-diluted $ 6,406 $ (1,332) =============== ================ Common shares outstanding 19,707 16,016 Effect of dilutive securities: Warrants 744 - Mandatorily redeemable preferred stock 11,071 - Stock options 589 - --------------- ---------------- Potentially dilutive common shares 12,404 - --------------- ---------------- Adjusted common shares outstanding-diluted 32,111 16,016 =============== ================ Diluted EPS Income (loss) available to common stockholders before change in accounting principle $ 0.19 $ (0.08) Change in accounting principle 0.01 - --------------- ---------------- $ 0.20 $ (0.08) =============== ================
(1) The amount of dividends included in dividends and accretion on mandatorily redeemable preferred stock includes only the dividends paid in kind on the $40 million of mandatorily redeemable preferred stock (2.0 million shares) that were issued with warrants whose exercise price is payable in either cash or in shares of mandatorily redeemable preferred stock. At March 31, 2003 and 2002, options and warrants to purchase 13,000 and 18.9 million shares of common stock, respectively, were outstanding but were not included in the computation of diluted income (loss) per share because the effects would have been antidilutive. 5. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES Brigham utilizes various commodity swap and option contracts to (i) reduce the effects of volatility in price changes on the oil and natural gas commodities it produces and sells, (ii) support its capital budgeting plans, and (iii) lock-in prices to protect the economics related to certain capital projects. At March 31, 2003, the fair value of hedging contracts included in other current assets was approximately $0.3 million and the fair value of hedging contracts included in other liabilities was approximately $3.1 million of which approximately $0.1 million was classified as noncurrent. For the three months ended March 31, 2003 and 2002, Brigham recognized cash settlement gains (losses) of $(3.3) million and $0.3 million which were recorded as an increase (reduction) of oil and natural gas sales. For the three months ended March 31, 2003 and 2002, ineffectiveness associated with Brigham's derivative commodity instruments designated as cash flow hedges increased (decreased) earnings by approximately $0.1 million and $0, respectively. These amounts are included in other income and expense. Based on market prices at March 31, 2003, approximately $(2.7) million of the balance in accumulated other comprehensive income (loss) would be expected to transfer to earnings during the next 12 months. Derivative instruments not qualifying as hedging contracts are recorded at fair value on the balance sheet. At each balance sheet date, the value of derivatives not qualifying as hedging contracts is adjusted to reflect current fair value and any gains or losses are recognized as other income or expense. At March 31, 2003 and 2002, the fair value of these derivatives included in other current liabilities was $0 and $0.6 million, respectively. For the three months ended March 31, 2003, and 2002, other income (expense) included $0 and $0.3 million, respectively, in non-cash losses related to changes in the fair values of these derivative contracts. There were no cash settlement payments made by Brigham to the counterparty for the three months ended March 31, 2003 and 2002. NATURAL GAS DERIVATIVE CONTRACTS The following table sets forth Brigham's outstanding natural gas hedging contracts and the weighted average NYMEX prices for those contracts as of March 31, 2003:
FIRST SECOND THIRD FOURTH OUTSTANDING QUARTER QUARTER QUARTER QUARTER AVERAGE -------- -------- -------- -------- ------------ 2003-Swap Contracts Volume (MMbtu) 819,000 598,000 414,000 610,333 Price per MMBtu $ 3.85 $ 3.87 $ 4.04 $ 3.90 2003-Floors Volume (MMbtu) 150,000 460,000 460,000 356,667 Price per MMBtu $ 4.50 $ 4.50 $ 4.50 $ 4.50 2004-Swap Contracts Volume (MMbtu) 295,750 227,500 138,000 92,000 188,313 Price per MMBtu $ 4.96 $ 4.25 $ 4.18 $ 4.36 $ 4.53
The following table sets forth the natural gas hedging contracts Brigham entered subsequent to March 31, 2003 and the weighted average NYMEX prices for those contracts:
FIRST SECOND THIRD FOURTH QUARTER QUARTER QUARTER QUARTER -------- -------- -------- -------- 2004-Collars Volume (MMbtu) 273,000 182,000 138,000 92,000 Ceiling price per Mmbtu $ 9.90 $ 5.45 $ 5.39 $ 5.62 Floor price per Mmbtu $ 4.00 $ 4.00 $ 4.00 $ 4.00
OIL DERIVATIVE CONTRACTS The following table sets forth Brigham's outstanding oil hedging contracts and the weighted average NYMEX prices for those contracts as of March 31, 2003:
FIRST SECOND THIRD FOURTH OUTSTANDING QUARTER QUARTER QUARTER QUARTER AVERAGE -------- -------- -------- -------- ------------ 2003-Swap Contracts Volume (Bbl) 61,425 55,200 41,400 52,675 Price per Bbl $ 25.22 $ 23.77 $ 23.21 $ 24.18 2003-Collars Volume (Bbl) 22,750 - - Ceiling price per Bbl $ 22.56 $ - $ - Floor price per Bbl $ 18.00 $ - $ - 2004-Swap Contracts Volume (Bbl) 29,575 20,475 13,800 9,200 18,263 Price per Bbl $ 25.35 $ 24.52 $ 23.91 $ 23.80 $ 24.65
Brigham reports average oil and natural gas prices and revenues including the net results of hedging activities. The following table sets forth Brigham's oil and natural gas prices including and excluding the hedging gains and losses and the increase or decrease in oil and natural gas revenues as a result of the hedging activities for the three month periods ended March 31, 2003 and 2002:
THREE MONTHS ENDED MARCH 31, ------------------------ 2003 2002 ----------- ----------- NATURAL GAS Average price per Mcf as reported (including hedging results) $ 5.53 $ 2.49 Average price per Mcf realized (excluding hedging results) $ 7.23 $ 2.24 Increase (decrease) in revenue (in thousands) $ (2,506) $ 339 OIL Average price per Bbl as reported (including hedging results) $ 29.16 $ 19.93 Average price per Bbl realized (excluding hedging results) $ 32.88 $ 20.25 Decrease in revenue (in thousands) $ (828) $ (50)
6. ASSET RETIREMENT OBLIGATIONS On January 1, 2003, Brigham adopted the provisions of Statement of Financial Accounting Standards No. 143, "Accounting for Asset Retirement Obligations" ("SFAS 143"). SFAS No. 143 requires entities to record the fair value of a liability for an asset retirement obligation in the period in which it is incurred and a corresponding increase in the carrying amount of the related long-lived asset. The liability is accreted to its present value each period, and the capitalized cost is depreciated over the useful life of the related asset. If the liability is settled for an amount other than the recorded amount, a gain or loss is recognized. Brigham has asset retirement obligations associated with the future plugging and abandonment of proved properties and related facilities. Prior to the adoption of SFAS 143, Brigham assumed salvage value approximated plugging and abandonment costs. As such, estimated salvage value was not excluded from depletion and plugging and abandonment costs were not accrued for over the life of the oil and gas properties. The adoption of SFAS 143 resulted in a January 1, 2003 cumulative effect adjustment to record (i) a $1.4 million increase in the carrying values of proved properties, (ii) a $0.8 million decrease in accumulated depletion of oil and natural gas properties and (iii) a $1.9 million increase in noncurrent abandonment liabilities. The net impact of items (i) through (iii) was to record a gain of $0.3 million as a cumulative effect adjustment of a change in accounting principle in Brigham's consolidated statements of operations upon adoption on January 1, 2003. The following pro forma data summarizes Brigham's net income (loss) and net income (loss) per share as if Brigham had adopted the provisions of SFAS 143 on January 1, 2002, including an associated pro forma asset retirement obligation on that date of $1.8 million:
THREE MONTHS ENDED MARCH 31, --------------------------- 2003 2002 ------------- ------------ (In thousands, except per share amounts) Net income (loss), as reported $ 5,516 $ (1,332) Pro forma adjustments to reflect retroactive adoption of SFAS 143 (268) 184 Pro forma adjustments to reflect accretion expense - (32) ============= ============ Pro forma net income (loss) $ 5,248 $ (1,180) ============= ============ Net income (loss) per share: Basic - as reported $ 0.28 $ (0.08) ============= ============ Basic - pro forma $ 0.27 $ (0.07) ============= ============ Diluted - as reported $ 0.20 $ (0.08) ============= ============ Diluted - pro forma $ 0.19 $ (0.07) ============= ============
Brigham has no assets that are legally restricted for purposes of settling asset retirement obligations. The following table summarizes Brigham's asset retirement obligation transactions recorded in accordance with the provisions of SFAS 143 during the three months ended March 31, 2003:
THREE MONTHS ENDED MARCH 31, 2003 ----------------- (In thousands) Beginning asset retirement obligations upon adoption at January 1, 2003 $ 1,931 Accretion expense 34 ----------------- Ending asset retirement obligations $ 1,965 =================
7. STOCK BASED COMPENSATION Brigham accounts for employee stock-based compensation using the intrinsic value method prescribed by Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees". Accordingly, Brigham has adopted the disclosure-only provisions of Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based Compensation" ("SFAS 123"). Had compensation cost for Brigham's stock options been determined based on the fair market value at the grant dates of the awards consistent with the methodology prescribed by SFAS 123 as amended by SFAS 148, Brigham's net income (loss) and net income (loss) per share for the three month periods ended March 31, 2003 and 2002 would have been the pro forma amounts indicated below:
THREE MONTHS ENDED MARCH 31, --------------------------- 2003 2002 ------------- ------------ (In thousands, except per share amounts) Net income (loss) available to common stockholders - basic: As reported $ 5,516 $ (1,332) Add back: Stock compensation expense previously included in net income 11 3 Effect of total employee stock-based compensation expense, determined under fair value method for all awards (101) (71) ------------- ------------ Pro forma $ 5,426 $ (1,400) ============= ============ Net income (loss) available to common stockholders - diluted: As reported $ 6,406 $ (1,332) Add back: Stock compensation expense previously included in net income 11 3 Effect of total employee stock-based compensation expense, determined under fair value method for all awards (101) (71) ------------- ------------ Pro forma $ 6,316 $ (1,400) ============= ============ Net income per share: Basic: As reported $ 0.28 $ (0.08) Pro forma 0.28 (0.09) Diluted: As reported $ 0.20 $ (0.08) Pro forma 0.20 (0.09)
PART II - OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits: 99.1 Certification accompanying Quarterly Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 executed by Ben M. Brigham, President, Chief Executive Officer and Chairman of the Board of the Company 99.2 Certification accompanying Quarterly Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 executed by Eugene B. Shepherd, Jr., Chief Financial Officer of the Company (b) Reports on Form 8-K: We submitted a report on Form 8-K on March 6, 2003, to announce we had issued a press release announcing financial results for the fourth quarter and year ended December 31, 2002. The Form 8-K included a copy of the press release that provided this announcement. 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 on June 12, 2003. BRIGHAM EXPLORATION COMPANY By:/s/ BEN M. BRIGHAM --------------------------- Ben M. Brigham Chief Executive Officer, President and Chairman of the Board