-----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, IjaqqzEyBr2MHDz5Mk0cqfPTtG+OEiK3Xp8x4e6W2a72wiM+hCPmlcDeKGMSk/4p Aw2KF2C6fXqUTeIRwxhebQ== 0000833320-98-000032.txt : 19981118 0000833320-98-000032.hdr.sgml : 19981118 ACCESSION NUMBER: 0000833320-98-000032 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980930 FILED AS OF DATE: 19981116 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BURLINGTON RESOURCES INC CENTRAL INDEX KEY: 0000833320 STANDARD INDUSTRIAL CLASSIFICATION: CRUDE PETROLEUM & NATURAL GAS [1311] IRS NUMBER: 911413284 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-09971 FILM NUMBER: 98750065 BUSINESS ADDRESS: STREET 1: 5051 WESTHEIMER STREET 2: SUITE 1400 CITY: HOUSTON STATE: TX ZIP: 77056 BUSINESS PHONE: 7136249500 MAIL ADDRESS: STREET 1: 5051 WESTHEIMER STREET 2: STE 1400 CITY: HOUSTON STATE: TX ZIP: 77056 10-Q 1 FORM 10-Q FOR THE QUARTERLY PERIOD ENDED 09/30/98 UNITED STATES 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 September 30, 1998 OR ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number 1-9971 BURLINGTON RESOURCES INC. (Exact name of registrant as specified in its charter) Delaware 91-1413284 (State or other jurisdiction of (I.R.S. Employer incorporation ororganization) Identification Number) 5051 Westheimer, Suite 1400, Houston, Texas 77056 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (713) 624-9500 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No 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 September 30, 1998 177,231,252 PART I - FINANCIAL INFORMATION ITEM 1. Financial Statements BURLINGTON RESOURCES INC. CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)
THIRD QUARTER NINE MONTHS ----------------- ---------------- 1998 1997 1998 1997 ------ ------ ------ ------ (In Millions, Except per Share Amounts) Revenues .............................. $ 390 $ 464 $1,234 $1,459 Costs and Expenses .................... 349 348 1,030 1,043 ------ ------ ------ ------ Operating Income ...................... 41 116 204 416 Interest Expense ...................... 39 36 111 106 Other Income - Net .................... 8 2 13 55 ------ ------ ------ ------ Income Before Income Taxes ............ 10 82 106 365 Income Tax Expense (Benefit) .......... (5) 17 20 83 ------ ------ ------ ------ Net Income ............................ $ 15 $ 65 $ 86 $ 282 ====== ====== ====== ====== Basic Earnings per Common Share ....... $ .08 $ .37 $ .48 $ 1.60 ====== ====== ====== ====== Diluted Earnings per Common Share ..... $ .08 $ .37 $ .48 $ 1.59 ====== ====== ====== ======
See accompanying Notes to Consolidated Financial Statements. 2 2 BURLINGTON RESOURCES INC. CONSOLIDATED BALANCE SHEET (UNAUDITED)
September 30, December 31, 1998 1997 ------ ------ (In Millions, Except Share Data) ASSETS Current Assets Cash and Cash Equivalents ........................................ $ -- $ 152 Short-term Investments ........................................... -- 83 Accounts Receivable .............................................. 331 376 Inventories ...................................................... 41 39 Other Current Assets ............................................. 27 28 ------ ------ 399 678 ------ ------ Oil & Gas Properties (Successful Efforts Method) ................... 9,137 8,666 Other Properties ................................................... 792 689 ------ ------ 9,929 9,355 Accumulated Depreciation, Depletion and Amortization ............. 4,660 4,315 ------ ------ Properties - Net ............................................... 5,269 5,040 ------ ------ Other Assets ....................................................... 130 103 ------ ------ Total Assets ................................................. $5,798 $5,821 ====== ====== LIABILITIES Current Liabilities Accounts Payable ................................................. $ 257 $ 395 Taxes Payable .................................................... 70 71 Accrued Interest ................................................. 45 28 Dividends Payable ................................................ 24 24 Deferred Revenue ................................................. 17 19 Other Current Liabilities ........................................ 9 1 ------ ------ 422 538 ------ ------ Long-term Debt ..................................................... 1,828 1,748 ------ ------ Deferred Income Taxes .............................................. 201 203 ------ ------ Deferred Revenue ................................................... 44 56 ------ ------ Other Liabilities and Deferred Credits ............................. 270 260 ------ ------ Commitments and Contingent Liabilities STOCKHOLDERS' EQUITY Preferred Stock, Par Value $.01 Per Share (Authorized 75,000,000 Shares; No Shares Issued) ................ -- -- Common Stock, Par Value $.01 Per Share (Authorized 325,000,000 Shares; Issued 202,795,635 Shares) ...... 2 2 Paid-in Capital .................................................... 2,986 3,001 Retained Earnings .................................................. 1,063 1,051 ------ ------ 4,051 4,054 Cost of Treasury Stock (25,564,383 and 26,087,134 Shares for 1998 and 1997, respectively) 1,018 1,038 ------ ------ Stockholders' Equity ............................................... 3,033 3,016 ------ ------ Total Liabilities and Stockholders' Equity ................... $5,798 $5,821 ====== ======
See accompanying Notes to Consolidated Financial Statements. 3 BURLINGTON RESOURCES INC. CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
NINE MONTHS -------------- 1998 1997 ----- ----- (In Millions) Cash Flows From Operating Activities Net Income ................................................. $ 86 $ 282 Adjustments to Reconcile Net Income to Net Cash Provided By Operating Activities Depreciation, Depletion and Amortization ................. 401 409 Deferred Income Taxes .................................... (3) 38 Exploration Costs ........................................ 187 175 Gain on Sales of Oil and Gas Properties .................. -- (50) Working Capital and Other Changes .......................... (65) 40 ----- ----- Net Cash Provided By Operating Activities .......... 606 894 ----- ----- Cash Flows From Investing Activities Additions to Properties .................................... (818) (792) Short-term Investments ..................................... 83 (51) Proceeds from Sales and Other .............................. (27) 432 ----- ----- Net Cash Used In Investing Activities .............. (762) (411) ----- ----- Cash Flows From Financing Activities Proceeds from Long-term Debt ............................... 80 -- Reduction in Long-term Debt ................................ -- (23) Dividends Paid ............................................. (73) (57) Common Stock Purchases ..................................... (15) (58) Other ...................................................... 12 22 ----- ----- Net Cash Provided By (Used In) Financing Activities 4 (116) ----- ----- Increase (Decrease) in Cash and Cash Equivalents ............. (152) 367 Cash and Cash Equivalents Beginning of Year .......................................... 152 77 ----- ----- End of Period .............................................. $ -- $ 444 ===== =====
See accompanying Notes to Consolidated Financial Statements. 4 BURLINGTON RESOURCES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 1. BASIS OF PRESENTATION The 1997 Annual Report on Form 10-K of Burlington Resources Inc. (the "Company") includes certain definitions and a summary of significant accounting policies and should be read in conjunction with this Quarterly Report on Form 10-Q ("Quarterly Report"). The financial statements for the periods presented herein are unaudited, condensed and do not contain all information required by generally accepted accounting principles to be included in a full set of financial statements. In the opinion of management, all material adjustments necessary to present fairly the results of operations have been included. All such adjustments are of a normal, recurring nature. The results of operations for any interim period are not necessarily indicative of the results of operations for the entire year. The consolidated financial statements include certain reclassifications that were made to conform to current presentation. Amounts related to the third quarter and first nine months of 1997 have been restated to include the combined business activities for the Company and The Louisiana Land and Exploration Company ("LL&E"). Basic earnings per common share ("EPS") is computed by dividing income available to common stockholders by the weighted average number of common shares outstanding for the period. The weighted average number of common shares outstanding for computing basic EPS was 177 million and 176 million for the third quarter of 1998 and 1997, respectively, and 177 million for the first nine months of 1998 and 1997. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock. The weighted average number of common shares outstanding for computing diluted EPS, including dilutive stock options, was 178 million and 177 million for the third quarter of 1998 and 1997, respectively, and 178 million for the first nine months of 1998 and 1997. No adjustments were made to reported net income in the computation of EPS. EPS discussions within this document are in reference to basic EPS. 2. COMMITMENTS AND CONTINGENT LIABILITIES The Company and its subsidiaries are involved in several proceedings challenging the Company's payment of royalties for its crude oil and natural gas production. The Company has entered into settlement agreements in two private class action lawsuits with respect to the payment of royalties for natural gas and crude oil. On May 25, 1995, the 270th Judicial District Court of Harris County, Texas entered an order in a lawsuit styled Caroline Altheide, et al. v. Meridian Oil Inc., et al., which allowed the suit to be maintained as a class action on behalf of all royalty and overriding royalty interest owners in all of the properties of Burlington Resources Oil & Gas Company, a subsidiary of the Company which was formerly known as Meridian Oil Inc. ("BROG"), and all working interest owners in properties operated by BROG who received payments from BROG at any time from and after December 1, 1986 based upon wellhead sales of natural gas to its affiliate Burlington Resources Trading Inc. ("BRTI"). The lawsuit involves claims for unspecified actual and punitive damages based upon alleged breaches of duties owed to interest owners because of the use of corporate affiliates to gather, treat and market natural gas. The plaintiffs allege that BROG's gas producing affiliates have sold natural gas to marketing affiliates at below market prices which were then used as the basis for accounting to interest 5 owners. Plaintiffs also allege that BROG's pricing includes inappropriate deductions of gathering and transportation costs. BROG has consistently denied liability. On August 6, 1996, the parties executed a settlement agreement and the trial court entered a Judgment giving final approval to the terms of the settlement agreement on November 12, 1996. Four class members who objected to the settlement filed a motion for a new trial or, in the alternative, to modify, alter or amend judgment. On December 16, 1996, the trial court entered an order denying the motion. The objectors purported to perfect an appeal of the Judgment and on July 24, 1997, the Fourteenth Court of Appeals of the State of Texas dismissed the appeal. On October 17, 1997, the objectors filed a Petition for Review with The Supreme Court of Texas ("Court"), and on June 23, 1998, the Court denied the Petition. The Judgement is now final, and the Company has commenced the disbursement of the settlement proceeds. On November 20, 1997, the Company and numerous other defendants entered into a settlement agreement in a lawsuit styled as The McMahon Foundation, et al. v. Amerada Hess Corporation, et al. This lawsuit is a proposed class action consisting of both working interest owners and royalty owners against numerous defendants, all of which are oil companies and/or purchasers of oil from oil companies, including BROG and LL&E, also a subsidiary of the Company. The plaintiffs allege that the defendants conspired to fix, depress, stabilize and maintain at artificially low levels the prices paid for oil by, among other things, setting their posted prices at arbitrary levels below competitive market prices, and that the defendants paid royalties based on the purchase by the oil companies' marketing affiliates at posted prices rather than the gross proceeds ultimately received by such marketing affiliates. Cases involving similar allegations have been filed in federal courts in other states. On January 14, 1998, the United States Judicial Panel on Multidistrict Litigation issued an order consolidating these cases and transferring the McMahon case to the United States District Court for the Southern District of Texas in Corpus Christi. The Company, LL&E, BROG and certain of the plaintiffs entered into a Settlement Agreement which received preliminary approval by the Court on October 28, 1998. The Court set a hearing to finally determine the fairness, accuracy and reasonableness of the Settlement Agreement for January 25, 1999. The Company is also involved in several governmental proceedings relating to the payment of royalties. Various administrative proceedings are pending before the Minerals Management Service ("MMS") of the United States Department of the Interior with respect to the proper valuation of oil and gas produced on federal and Indian lands for purposes of paying royalties on production sold by BROG to its marketing affiliate, BRTI, or gathered by its affiliate, Burlington Resources Gathering Inc. ("BRGI"). In general, these proceedings stem from regular MMS audits of the Company's royalty payments over various periods of time and involve the interpretation of the relevant federal regulations. Most of these administrative proceedings currently have been suspended pending negotiations between the Company and the MMS to resolve their disputes regarding the appropriate valuation methodology. In late February 1998, the Company and numerous other oil and gas companies received a complaint filed in a lawsuit in the United States District Court for the Eastern District of Texas in Lufkin styled as United States of America ex rel J. Benjamin Johnson, Jr., et al v. Shell Oil Company, et al. alleging violations of the civil False Claims Act. The United States has intervened in this lawsuit as to some of the defendants, including the Company, and has filed a separate complaint. This suit alleges that the Company underpaid royalties for crude oil produced on federal and Indian lands through the use of below-market posted prices in the sale of oil from BROG to BRTI. The suit alleges that royalties paid by BROG based on these posted prices were lower than the royalties allegedly required to be paid under federal regulations, and that the forms filed by BROG with the MMS reporting the royalties paid were false, thereby violating the civil False Claims Act. In addition, the Company has been advised that it is a target of an investigation and has responded to various grand jury document subpoenas in connection with an investigation by the United States Attorney for the District of Wyoming into the alleged underpayment of oil and gas royalties. The Company is cooperating with the investigation. 6 Based on the Company's present understanding of the various governmental proceedings, the Company believes that it has substantial defenses to these claims and the Company intends to vigorously assert such defenses. The Company and its subsidiaries are named defendants in numerous lawsuits and named parties in numerous governmental and other proceedings arising in the ordinary course of business. While the outcome of lawsuits and other proceedings cannot be predicted with certainty, management expects these matters, including the above-described litigation, will not have a materially adverse effect on the consolidated financial position or results of operations of the Company. 3. COMMODITIES HEDGING ACTIVITIES The Company utilizes options, futures and swaps to hedge anticipated future crude oil and natural gas production. The resulting gains and losses are recognized when the hedged commodity is produced. The following table summarizes information related to the hedging program as of September 30, 1998.
Percent of Deferred Production Transaction Hedge Current Gain (Loss) Period Type Commodity Volumes Production Prices (In Millions) - -------- ------------ ------------ -------- ----------- ----------- ------------ 1998 Futures Oil 30 MBbls 0 $ 20.60 $ 0 1998 Put Option Oil 122 MBbls 2 % $ 21.26 $ 1 1998 Put Option Oil 215 MBbls 3 % $ 19.18 $ 0 1998 Swap Gas 31 BCF 21 % $ 2.51 $ 2 1998 Put Option Gas 12 BCF 8 % $ 2.46 $ 0 1999 Swap Gas 164 BCF 28 % $ 2.40 $11 1999 Put Option Gas 5 BCF 1 % $ 2.16 $(1) 1999 Put Option Gas 34 BCF 6 % $ 1.80 $(1) 2000 Swap Gas 201 BCF 34 % $ 2.33 $10 2001 Swap Gas 76 BCF 13 % $ 2.37 $ 3
ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Financial Condition and Liquidity The total long-term debt to capital (total long-term debt and stockholders' equity) ratio at September 30, 1998 and December 31, 1997 was 38 percent and 37 percent, respectively. The Company's credit facilities are comprised of a $600 million revolving credit agreement that expires in February 2003 and a $400 million revolving credit agreement that expires in February 1999. The $400 million revolving credit agreement is renewable annually by mutual consent. As of September 30, 1998, there were no borrowings outstanding under the credit facilities. As of September 30, 1998, the Company had outstanding commercial paper borrowings of $80 million at an average interest rate of 6 percent. The Company also has the 7 capacity to issue $1 billion of securities under a shelf registration statement filed with the Securities and Exchange Commission. In July 1998, the Company's Board of Directors approved the repurchase of up to two million shares of the Company's Common Stock. During the third quarter of 1998, the Company repurchased 400,000 shares of its common stock for $15 million. Since December 1988, the Company has repurchased approximately 32 million shares. In conjunction with the Company's stock repurchase program, the Company sold put options ("options") during the third quarter of 1998. The options entitled the holders, upon exercise on the expiration dates, to sell shares of BR Common Stock to the Company at specified prices. Alternatively, the Company retained the ability to settle the options in cash. During the quarter, the Company sold 400,000 options with an average strike price of $37.25 per share and received an average premium of $2.67 per option. During the quarter, 75,000 options were exercised, 25,000 expired and 300,000 remained outstanding at September 30, 1998 with expiration dates between December 1998 and March 1999. Net cash provided by operating activities for the first nine months of 1998 was $606 million compared to $894 million in 1997. The decrease was primarily due to significantly lower operating income, principally as a result of lower commodity prices, and lower working capital and other changes. The Company is involved in certain lawsuits, environmental proceedings and other related matters. Although it is possible that new information or future developments could require the Company to reassess its potential exposure related to these matters, the Company believes, based upon available information, the resolution of these issues will not have a materially adverse effect on the consolidated financial position or results of operations of the Company. Capital Expenditures Capital expenditures for the first nine months of 1998 totaled $818 million compared to $792 million in 1997. Capital expenditures, excluding proved property acquisitions, are currently projected to be approximately $1.15 billion for all of 1998 and are expected to be primarily for the development and exploration of oil and gas properties and plant and pipeline expenditures. Capital expenditures will be funded from internal cash flows, supplemented, if needed, by external financing. Dividends On October 8, 1998, the Board of Directors declared a common stock quarterly dividend of $.1375 per share, payable January 4, 1999. Results of Operations - Third Quarter 1998 Compared to Third Quarter 1997 The Company reported net income of $15 million or $.08 per share for the third quarter of 1998 compared to $65 million or $.37 per share in 1997. Operating income for the third quarter of 1998 was $41 million compared to $116 million in 1997. Revenues were $390 million for the third quarter of 1998 compared to $464 million for the third quarter of 1997. Natural gas sales prices decreased 3 percent to $1.89 per MCF which decreased revenues $10 million. Natural gas sales volumes decreased 2 percent to 1,630 MMCF per day which decreased revenues $7 million. Average oil sales prices decreased 31 percent to $12.60 per barrel which decreased revenues $43 million. Oil sales volumes decreased 7 percent to 8 82.2 MBbls per day which decreased revenues $11 million. Gas and oil sales volumes decreased primarily due to adverse weather conditions and third-party plant outages. Costs and expenses were $349 million for the third quarter of 1998 compared to $348 million in 1997. The increase was primarily due to an $8 million increase in exploration costs and a $2 million increase in production and processing expenses partially offset by a $7 million decrease in administrative expense and a $2 million decrease in depreciation, depletion and amortization expense. Interest expense was $39 million for the third quarter of 1998 compared to $36 million in 1997. The increase was primarily due to higher commercial paper borrowings in 1998. The effective income tax rate was a benefit of 59 percent for the third quarter of 1998 compared to an expense of 20 percent in 1997. The decreased tax expense in 1998 is primarily a result of lower pretax income offset by lower benefits from nonconventional fuel tax credits. Results of Operations - Nine Months 1998 Compared to Nine Months 1997 The Company reported net income of $86 million or $.48 per share for the first nine months of 1998 compared to $282 million or $1.60 per share in 1997. Operating income for the first nine months of 1998 was $204 million compared to $416 million in 1997. Revenues were $1,234 million for the first nine months of 1998 compared to $1,459 million in 1997. Natural gas sales prices decreased 6 percent to $1.95 per MCF and gas sales volumes decreased 2 percent to 1,646 MMCF per day which decreased revenues $54 million and $22 million, respectively. Average oil sales prices decreased 29 percent to $13.77 per barrel and oil sales volumes decreased 4 percent to 84.4 MBbls per day which decreased revenues $132 million and $21 million, respectively. Gas and oil sales volumes decreased primarily due to the sales of oil and gas properties associated with the Company's 1996 divestiture program which was completed during the second quarter of 1997. Gas and oil sales volumes also decreased due to adverse weather conditions and third-party plant outages in the third quarter. Costs and expenses were $1,030 million for the first nine months of 1998 compared to $1,043 million in 1997. The decrease was primarily due to an $8 million decrease in production and processing expenses, a $9 million decrease in depreciation, depletion, and amortization resulting from a 3 percent decrease in 1998 production levels and an $8 million decrease in administrative expense. These decreases were partially offset by a $12 million increase in exploration costs. Interest expense was $111 million for the first nine months of 1998 compared to $106 million in 1997. The increase was primarily due to higher commercial paper borrowings in 1998. Other income - net was $13 million for the first nine months of 1998 compared to $55 million in 1997 primarily due to the $50 million gain recognized last year related to the sales of oil and gas properties associated with the Company's 1996 divestiture program. The effective income tax rate was an expense of 19 percent for the first nine months of 1998 compared to 23 percent in 1997. The decreased tax expense in 1998 is primarily a result of lower pretax income offset by lower benefits from nonconventional fuel tax credits. 9 Other Matters The Company began a program during 1996 to assess computer software and hardware (hereafter referred to as information technology) for Year 2000 compliance. The Company determined that because significant portions of information technology were scheduled for replacement before the Year 2000 that its exposure with respect to information technology was not material. The Company's Year 2000 project plan involves four phases; assessment, remediation, testing, and implementation. The Company has completed its assessment of all material systems that could be affected by the Year 2000 issue. The assessment confirmed that information technology exposures were not material, however, assets used in producing, gathering and transporting hydrocarbons (hereafter referred to as operating equipment) are at risk. For its operating equipment, the Company has completed 80 percent of the remediation phase for all operationally significant equipment and expects to complete testing and implementation in the second quarter of 1999. The total cost of the Year 2000 project is being funded through operating cash flows and is estimated at $5 million of which $3 million has been incurred. The Company has contacted all third-party vendors and suppliers of products and services that it considers critical to its operations in order to ascertain their level of Year 2000 readiness. The Company has no means of ensuring that all customers and suppliers will be Year 2000 ready. The inability of these parties to complete their Year 2000 resolution process could materially impact the Company. As a result, the Company will consider new business relationships with alternate providers of products and services as necessary and to the extent alternatives are available. The Company's plan to complete the Year 2000 modifications is based on management's best estimates, which were derived utilizing numerous assumptions of future events including the continued availability of certain resources and other factors. However, there can be no guarantee that these estimates will be achieved and actual results could differ materially from those plans. Specific factors that might cause such material differences include, but are not limited to, the availability and cost of personnel trained in this area, the ability to locate and correct all relevant computer codes and similar uncertainties. The Company's goal is to ensure that all critical systems and processes under its direct control remain operational. However, because certain systems and processes may be linked with systems outside of the Company's control, there can be no assurance that all implementations will be successful. As a result, the Company is developing a contingency plan, which will be complete at the end of the first quarter 1999, to respond to any failures that may occur. The cost estimates associated with the contingency plan are currently being developed. Management does not expect the costs of the Company's Year 2000 project to have a material adverse effect on the Company's financial position or results of operations. Presently, based on information available, the Company cannot conclude that any failure of the Company or third-parties to achieve Year 2000 compliance will not adversely effect the Company. 10 In March 1998, the Financial Accounting Standards Board, ("FASB") issued Statement of Financial Accounting Standard ("SFAS") No. 132, Employers' Disclosures about Pensions and Other Postretirement Benefits, which is effective for fiscal years beginning after December 15, 1997. SFAS No. 132 revises employers' disclosures about pension and other postretirement benefit plans. It standardizes the disclosure requirements for pensions and other postretirement benefits to the extent practicable, requires additional information on changes in the benefits obligations and fair values of plan assets and eliminates certain disclosures. The Company plans to adopt SFAS No. 132 for the year ended December 31, 1998. In June 1998, the FASB issued SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities, which is effective for fiscal years beginning after June 15, 1999. SFAS No. 133 establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities. It also requires that an entity recognize all derivatives as either assets or liabilities in the balance sheet and measure those items at fair value. If certain conditions are met, a derivative may be specifically designated as (a) a hedge of the exposure to changes in the fair value of a recognized asset or liability or an unrecognized firm commitment, (b) a hedge of the exposure to variable cash flows of a forecasted transaction or (c) a hedge of the foreign currency exposure of a net investment in a foreign operation, an unrecognized firm commitment, an available-for-sale security, or a foreign-currency-denominated forecasted transaction. The Company plans to adopt SFAS No. 133 for the first quarter of the year ended December 31, 2000 and is currently evaluating the effects of this pronouncement. Forward-looking Statements This Quarterly Report contains projections and other forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934. These projections and statements reflect the Company's current views with respect to future events and financial performance. No assurances can be given, however, that these events will occur or that these projections will be achieved and actual results could differ materially from those projected as a result of certain factors. A discussion of these factors is included in the Company's 1997 Annual Report on Form 10-K. 11 PART II - OTHER INFORMATION ITEM 1. Legal Proceedings See Note 2 of Notes to Consolidated Financial Statements. ITEM 6. Exhibits and Reports on Form 8-K A. Exhibits The following exhibits are filed as part of this report. Exhibit Nature of Exhibit Page 4.1 The Company and its subsidiaries either * have filed with the Securities and Exchange Commission or upon request will furnish a copy of any instrument with respect to long-term debt of the Company. 27.1 Financial Data Schedule ** * Exhibit incorporated by reference. ** Exhibit required only for filings made electronically using the Securities and Exchange Commission's EDGAR System. B. Reports on Form 8-K The Company filed no reports on Form 8-K during the third quarter of 1998. Items 2, 3, 4 and 5 of Part II are not applicable and have been omitted. 12 Pursuant to the requirements of Section 13 or 15(d) 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. BURLINGTON RESOURCES INC. (Registrant) By /s/ John E. Hagale John E. Hagale Executive Vice President and Chief Financial Officer By /s/ Philip W. Cook Philip W. Cook Vice President, Controller and Chief Accounting Officer Date: November 16, 1998 13 EX-27 2 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY INFORMATION EXTRACTED FROM THE BURLINGTON RESOURCES INC. CONSOLIDATED BALANCE SHEET AS OF SEPTEMBER 30, 1998 AND THE RELATED CONSOLIDATED STATEMENT OF INCOME FOR THE NINE MONTH PERIOD ENDED SEPTEMBER 30, 1998, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000,000 9-MOS DEC-31-1998 SEP-30-1998 0 0 331 0 41 399 9,929 4,660 5,798 422 0 2 0 0 3,031 5,798 1,234 1,234 1,030 1,030 (13) 0 111 106 20 86 0 0 0 86 0.48 0.48
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