-----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, EPcQCqp/uQI0zzdhg00rSnmSwNkJP0ApuyqC88SpKdUkI4n/XE4MyvdbcL5nOJWy uCdMmcVipTkzMFnWfimnQQ== 0000950129-96-000168.txt : 19960216 0000950129-96-000168.hdr.sgml : 19960216 ACCESSION NUMBER: 0000950129-96-000168 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19951231 FILED AS OF DATE: 19960214 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: BJ SERVICES CO CENTRAL INDEX KEY: 0000864328 STANDARD INDUSTRIAL CLASSIFICATION: OIL, GAS FIELD SERVICES, NBC [1389] IRS NUMBER: 630084140 STATE OF INCORPORATION: DE FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-10570 FILM NUMBER: 96518892 BUSINESS ADDRESS: STREET 1: 5500 NW CENTRAL DR CITY: HOUSTON STATE: TX ZIP: 77210 BUSINESS PHONE: 713-462-4239 MAIL ADDRESS: STREET 1: 5500 NORTHWEST CENTRAL DR STREET 2: 5500 NORTHWEST CENTRAL DR CITY: HOUSTON STATE: TX ZIP: 77092 10-Q 1 BJ SERVICES COMPANY - FORM 10-Q DATED 12/31/95 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 DECEMBER 31, 1995 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 1-10570 BJ SERVICES COMPANY (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) DELAWARE 63-0084140 (STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NO.) INCORPORATION OR ORGANIZATION) 5500 NORTHWEST CENTRAL DRIVE, HOUSTON, TEXAS 77092 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE) REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (713) 462-4239 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 ____ There were 28,076,896 shares of the registrant's common stock, $.10 par value, outstanding as of February 9, 1996. ================================================================================ 2 BJ SERVICES COMPANY INDEX PART I - FINANCIAL INFORMATION: Item 1. Financial Statements Consolidated Condensed Statement of Operations (Unaudited) - Three months ended December 31, 1995 and 1994 3 Consolidated Condensed Statement of Financial Position - December 31, 1995 (Unaudited) and September 30, 1995 4 Consolidated Condensed Statement of Cash Flows (Unaudited) - Three months ended December 31, 1995 and 1994 5 Notes to Unaudited Consolidated Condensed Financial Statements 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 7 PART II - OTHER INFORMATION 11
2 3 PART I FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS BJ SERVICES COMPANY CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS (UNAUDITED) (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
THREE MONTHS ENDED DECEMBER 31, 1995 1994 -------- -------- Revenue $206,501 $119,415 Operating expense: Cost of sales and services 167,086 99,599 Research and engineering 3,744 2,063 Marketing 8,283 3,944 General and administrative 8,489 6,104 Goodwill amortization 1,342 289 -------- -------- Total operating expense 188,944 111,999 -------- -------- Operating income 17,557 7,416 Interest expense (5,538) (2,307) Interest income 79 137 Other income - net 600 836 -------- -------- Income before income taxes 12,698 6,082 Income taxes 3,553 1,338 -------- -------- Net income $ 9,145 $ 4,744 ======== ======= Net income per share $ .33 $ .30 ======== ======== Average shares outstanding 28,015 15,716 ======== ========
SEE NOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS 3 4 BJ SERVICES COMPANY CONSOLIDATED CONDENSED STATEMENT OF FINANCIAL POSITION (IN THOUSANDS)
DECEMBER 31, SEPTEMBER 30, 1995 1995 ------------ ------------ (UNAUDITED) ASSETS Current assets: Cash and cash equivalents $ 3,799 $ 1,842 Receivables - net 173,633 168,771 Inventories: Finished goods 56,949 50,665 Work in process 2,543 2,394 Raw materials 13,348 13,792 ------------ ------------ Total inventories 72,840 66,851 Deferred income taxes 11,135 9,370 Other current assets 11,591 10,101 ------------ ------------ Total current assets 272,998 256,935 Property - net 414,792 416,810 Deferred income taxes 106,800 107,889 Goodwill and other assets 207,508 208,049 ------------ ------------ $ 1,002,098 $ 989,683 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 90,534 $ 85,675 Short-term borrowings and current portion of long-term debt 47,681 37,600 Accrued employee compensation and benefits 21,169 24,885 Income and other taxes 13,481 11,375 Accrued insurance 10,755 12,867 Other accrued liabilities 29,674 31,869 ------------ ------------ Total current liabilities 213,294 204,271 Long-term debt 252,181 259,566 Deferred income taxes 11,877 11,496 Accrued post retirement benefits and other 46,475 47,555 Stockholders' equity 478,271 466,795 ------------ ------------ $ 1,002,098 $ 989,683 ============ ============
SEE NOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS 4 5 BJ SERVICES COMPANY CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS (UNAUDITED) (IN THOUSANDS)
THREE MONTHS ENDED DECEMBER 31, 1995 1994 ------------ ------------ CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 9,145 $ 4,744 Adjustments to reconcile net income to cash provided by operating activities: Amortization of unearned compensation 330 330 Depreciation and amortization 14,371 6,675 Deferred income taxes (benefit) 571 (1,057) (Gain) loss on disposal of property 16 (687) Changes in: Receivables (1,918) 844 Inventories (3,958) (166) Accounts payable 4,002 (8,881) Other current assets and liabilities (9,860) 5,744 Other, net 398 1,923 ------------ ------------ Net cash provided by operating activities 13,097 9,469 CASH FLOWS FROM INVESTING ACTIVITIES: Property additions (10,408) (6,093) Proceeds from disposal of assets 319 3,328 Acquisition of business, net of cash acquired (3,700) ------------ ------------ Net cash used for investing activities (13,789) (2,765) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from borrowings 987 Reduction of borrowings (3,737) Proceeds from issuance of stock 1,662 749 ------------ ------------ Net cash provided by (used for) financing activities 2,649 (2,988) Increase in cash and cash equivalents 1,957 3,716 Cash and cash equivalents at beginning of period 1,842 3,218 ------------ ------------ Cash and cash equivalents at end of period $ 3,799 $ 6,934 ============ ============
SEE NOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS 5 6 BJ SERVICES COMPANY NOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS NOTE 1 GENERAL In the opinion of management, the unaudited consolidated condensed financial statements for BJ Services Company (the "Company") include all adjustments (consisting solely of normal recurring adjustments) necessary for a fair presentation of the financial position as of December 31, 1995, and the results of operations and cash flows for each of the three month periods ended December 31, 1995 and 1994. The consolidated condensed statement of financial position at September 30, 1995 is derived from the September 30, 1995 audited consolidated financial statements. Although management believes the disclosures in these financial statements are adequate to make the information presented not misleading, certain information and footnote disclosures normally included in annual financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission. The results of operations and the cash flows for the three-month period ended December 31, 1995 are not necessarily indicative of the results to be expected for the full year. Certain amounts for fiscal 1995 have been reclassified in the accompanying consolidated condensed financial statements to conform to the current year presentation. NOTE 2 ACQUISITION OF BUSINESS Effective December 1, 1995, the Company acquired the remaining 60% ownership of its previously unconsolidated joint venture in Brazil, for total consideration of $5.4 million consisting of $3.7 million in cash and $1.7 million in debt assumed by the Company. This acquisition was accounted for as a purchase and, accordingly, the acquired assets and liabilities have been recorded at their estimated fair values at the date of acquisition. The consolidated statement of operations includes operating results of the subsidiary acquired since the date of acquisition. This acquisition is not material to the Company's financial statements and therefore pro forma information is not presented. 6 7 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS GENERAL The Company's operations are primarily driven by the number of oil and gas wells being drilled, the depth and drilling conditions of such wells, the number of well completions and the level of workover activity worldwide. Drilling activity, in turn, is largely dependent on the price of oil and natural gas. This is especially true in the United States, where the Company generates approximately 60% of its revenues. Due to weak energy prices and lower-cost sources of oil internationally, drilling activity in the United States has declined more than 75% from its peak in 1981. Record low drilling activity levels were experienced in 1986 and 1992. As a result, pumping service companies have been unable to recapitalize their aging United States fleets due to the inability, under current market conditions, to generate adequate returns on new capital investments. The Company believes it is important to operate with a greater "critical mass" in the key U.S. markets to improve returns in this environment. This conclusion led to the decision to withdraw from certain low activity areas in the past several years and to consolidate its remaining operations with those acquired in April 1995 from The Western Company of North America ("Western"), which had a larger presence in the United States. The rig count in the United States averaged 765 active drilling rigs during the three months ended December 31, 1995, a 7% decline compared with the prior year's first fiscal quarter. Much of the activity decline was the result of a reduction in drilling for natural gas in the central U.S. International drilling activity (excluding Canada) has historically been less volatile than domestic drilling activity. International drilling activity increased by 5% during the most recent quarter compared with the prior year's first fiscal quarter on the strength of development work in Latin America, especially Argentina and Venezuela, and renewed exploration programs in the U.K. North Sea. In both the U.S. and internationally, there has been a continuing trend by oil and gas companies toward "alliances" with the service companies. These alliances take various forms including packaged or integrated services, single source suppliers and turnkey agreements. Approximately 20% of the Company's revenues are generated under such alliances. EXPANSIONS AND ACQUISITIONS Management believes the primary opportunities for geographic and service line expansion remain in international markets. As a result, other than the acquisition of Western (the "Acquisition"), the Company's capital spending and expansion efforts have been primarily focused outside of the United States. The Company's expansion efforts during the past year have included the expansion of pumping services into several key international markets, including Saudi Arabia and Vietnam; expanding tubular services and commissioning and leak detection services into geographic regions outside the North Sea; adding additional pumping service capacity in key Latin American markets and the acquisition of the remaining 60% of the Company's Brazilian joint venture. 7 8 On April 13, 1995, the Company completed the Acquisition for a total purchase price of $511.4 million (including transaction costs of $7.2 million), which was paid approximately half in cash and half in shares of the Company's common stock and warrants to purchase common stock. The Acquisition provides the Company with a greater critical mass with which to compete in domestic and international markets and the opportunity to realize significant consolidation benefits. The Acquisition has increased the Company's existing total revenue base by approximately 75% and has more than doubled the Company's domestic revenue base beginning in the June 1995 quarter. In addition, approximately $40 million of overhead and redundant operating costs have been eliminated annually by combining the two companies. RESULTS OF OPERATIONS Revenue: Revenue increased by 73% during the quarter, primarily as a result of the acquisition of Western and continued strong international operations. U.S. revenue more than doubled during the quarter as a result of adding the former Western operations. On a pro forma basis, however, U.S. revenue declined by 14%, primarily as a result of the significant activity reductions in natural gas drilling activity, especially by independent operators in the Rocky Mountain region, which comprised a significant portion of the former Western operations. In addition, weather-related disruptions in the Gulf of Mexico resulted in the loss of approximately 10 working days in that area. Management expects U.S. natural gas drilling activity to remain weak during at least the next fiscal quarter. The Company's international operations continue to show significant quarter-over-quarter revenue increases with a 25% increase from the prior year (18% on a pro forma basis). This represents the twelfth consecutive quarter of international revenue improvement. Each of the Company's international regions and service lines experienced revenue increases during the quarter. Much of the revenue improvement occurred in Latin America (up 46%) from strong activity increases in Argentina as well as revenue increases in Venezuela and Colombia from recent capital investments. Revenue from the Company's expansions into Vietnam, Saudi Arabia and Brazil, combined with improving activity in the U.K. and Nigeria, also contributed to the international revenue growth. Management expects the year over year international revenue increases to continue over the next several quarters, however, at a much lower growth rate. The Company recently decided to "warm stack" a stimulation vessel acquired from Western, the Renaissance. The vessel's hull will ultimately be liquidated with the proceeds used to reduce outstanding debt, while the vessel's fracturing equipment will be redeployed to more profitable opportunities. The Company believes that the liquidation of the vessel, if consummated, will not have a material adverse impact on the Company's operating results. Operating Income: Operating income more than doubled as a result of the revenue increase and higher operating margins resulting from efficiencies derived from the combination of the Company's and former Western operations and the continued growth of the Company's international operations. The cost of sales and services as a percentage of revenue during the quarter was 2.5% lower than the prior year's first quarter primarily as a result of cost reduction efforts implemented after the acquisition of Western and the economies of scale in having a larger U.S. operation. Other operating 8 9 expenses, excluding goodwill amortization, increased by 69% primarily as a result of additional overhead from the former Western operations, along with increased marketing expenses related to international expansions. Marketing expenses represent a higher percentage of revenue than previously due to the higher concentration of the additional revenues being in the U.S., which requires a relatively greater marketing effort. The increase in goodwill amortization also resulted from the Acquisition, which was accounted for under the purchase method of accounting. Interest expense increased by $3.2 million from the prior year's first quarter due to increased borrowings to fund the Acquisition. See "Financial Condition - - Capital Resources and Liquidity." Other income was a net gain in both periods primarily as a result of royalty income from one of the Company's proprietary products. The effective tax rate increased to 28% from 22% in the prior year's first quarter primarily due to marginal tax rates on higher U.S. profitability. FINANCIAL CONDITION Capital resources and liquidity: Net cash provided from operating activities increased by $3.6 million from the prior year's first quarter. Higher profitability and depreciation was partially offset by increased inventory levels from international expansions, payment of several large litigation settlements and the payment of merger related expenses previously accrued for. Management strives to maintain low cash balances while utilizing available credit facilities to meet the Company's capital needs. Excess cash generated is used to pay down outstanding borrowings. In April 1995, the Company replaced its existing credit facility with a committed, unsecured bank credit facility (the "Bank Credit Facility") executed to accommodate the Acquisition. The Bank Credit Facility consists of a five-year $175.0 million revolving credit facility and a six-year $225.0 million term loan, providing an aggregate of $400.0 million in available principal borrowings to the Company. At December 31, 1995, borrowings outstanding under the Bank Credit Facility amounted to $271.0 million consisting of $221.0 million under the term loan and $50.0 million borrowed under the revolver. At December 31, 1995, principal reductions of term loans under the Bank Credit Facility are due in aggregate installments of $25,600,000; $31,200,000; $43,200,000; $48,400,000; $48,400,000 and $24,200,000 in the years ending September 30, 1996, 1997, 1998, 1999, 2000 and 2001, respectively. The outstanding balance of the Company's 9.2% Notes, issued in 1991, was $18.0 million at December 31, 1995. Principal reductions of $6.0 million are required annually each August until maturity on August 1, 1998. The Company's interest-bearing debt represented 38.5% of its total capitalization at December 31, 1995, a slight decrease from 38.9% at the previous fiscal year-end. The Company's Bank Credit Facility and 9.2% Notes contain various customary covenants, including the maintenance of certain profitability and solvency ratios and restrictions on dividend payments. Management believes that the Bank Credit Facility, combined with other discretionary credit facilities and cash flow from 9 10 operations, will provide the Company with sufficient capital resources and liquidity to manage its routine operations and fund projected capital expenditures. At December 31, 1995, the Company had approximately $512 million of U.S. tax net operating loss carryforwards expiring between 2000 and 2010. With the Acquisition, the Company acquired approximately $375 million of tax net operating loss carryforwards, subject to certain limitations, expiring between 2000 and 2008. Under Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes" (SFAS 109), the Company is required to record a deferred tax asset for the future tax benefit of these tax net operating loss carryforwards, as well as other items, if realization is "more likely than not." As previously discussed, the Acquisition gives the Company a greater critical mass with which to compete in the U.S. as it has more than doubled the Company's U.S. revenue base. In addition, with the combination of the Company and Western, the Company has realized significant consolidation benefits. Management estimates that approximately $40 million of overhead and redundant operating costs have been eliminated annually as a result of the combination of the two companies. Management has concluded that the Company's future U.S. taxable income will be sufficient over the remaining carryforward periods to realize the tax benefits represented by approximately $332 million of tax net operating loss carryforwards acquired with Western and generated by the Company's operations prior to the Acquisition. The tax benefits resulting from the Acquisition have been included in the approximately $84 million net deferred tax asset recognized in the purchase price allocation at the acquisition date. Valuation allowances have been established for the benefits of the tax net operating loss carryforwards that are estimated to expire prior to their utilization. Requirements for Capital: Excluding acquisitions, capital expenditures during the quarter were $10.4 million, or $4.3 million higher than the spending in the comparable quarter of the prior year. The current quarter's spending related primarily to international expansion opportunities, primarily in Latin America, and upgrades of the Company's information systems. Other investing activities included the acquisition of the remaining 60% interest in the Company's joint venture in Brazil for total consideration of $5.4 million consisting of $3.7 million of cash and $1.7 million of debt assumed by the Company. Capital expenditures for fiscal 1996 are projected to be approximately $45 million, excluding acquisitions, and are expected to include spending for continued geographic expansions of all service lines, construction or upgrading of at least two offshore vessels, additional capacity in certain high margin locations and normal levels of replacement capital. The actual amount of fiscal 1996 capital expenditures will be primarily dependent upon the availability of expansion opportunities and will be funded by cash flows from operating activities and available credit facilities. Management believes cash flows from operating activities and available lines of credit, if necessary, will be sufficient to fund projected capital expenditures. 10 11 PART II OTHER INFORMATION Item 1. Legal Proceedings None Item 2. Changes in Securities None Item 3. Defaults upon Senior Securities None. Item 4. Submission of Matters to a Vote of Security Holders The Company held its Annual Meeting of Stockholders on January 25, 1996, in Houston, Texas. All nominated directors were elected, and the amendment of the Company's 1995 Incentive Plan was approved.
Votes in Votes Favor Withheld -------- -------- 25,186,916 341,702
(i) Directors elected at the Annual Meeting: Class III Directors ------------------- L. William Heiligbrodt James E. McCormick J.W. Stewart Directors with terms of office continuing after the Annual Meeting: Class I Directors ----------------- John R. Huff R. A. LeBlanc Michael E. Patrick Class II Directors ------------------ William J. Johnson Don D. Jordan Michael McShane
Votes in Votes Broker Favor Against Abstain Nonvotes -------- ------- ------- -------- (ii) Amendment of Article IV of the Company's 1995 Incentive Plan 19,712,850 5,661,782 153,986 0
Item 5. Other Information None Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits. 3.1 Bylaws, as amended, effective December 7, 1995. 21.1 Subsidiaries of the Registrant. 27.1 Financial Data Schedule (b) Reports on Form 8-K. A Current Report on Form 8-K was filed by the Company on February 6, 1996, to report the pro forma statement of operations of the Company and The Western Company of North America as of September 30, 1995. 11 12 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. BJ Services Company (Registrant) Date: February 14, 1996 BY /s/ Margaret Barrett Shannon ---------------------------------- Margaret Barrett Shannon Vice President and General Counsel Date: February 14, 1996 BY /s/ Matthew D. Fitzgerald ---------------------------------- Matthew D. Fitzgerald Controller and Chief Accounting Officer 12 13 EXHIBIT INDEX 3.1 Bylaws, as amended, effective December 7, 1995. 21.1 Subsidiaries of the Registrant. 27 Financial Data Schedule EX-3.1 2 BYLAWS, AS AMENDED, EFFECTIVE 12/07/95 1 AMENDED AND RESTATED BYLAWS OF BJ SERVICES COMPANY AS OF DECEMBER 7, 1995 2 Table of Contents
Page No. -------- ARTICLE I - Offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Section 1. Registered Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Section 2. Other Offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 ARTICLE II - Meetings of Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Section 1. Place of Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Section 2. Annual Meeting of Stockholders . . . . . . . . . . . . . . . . . . . . . . 1 Section 3. Quorum; Adjourned Meetings and Notice Thereof . . . . . . . . . . . . . . . 1 Section 4. Voting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Section 5. Proxies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Section 6. Special Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Section 7. Notice of Stockholders' Meetings . . . . . . . . . . . . . . . . . . . . . 2 Section 8. Waiver of Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Section 9. Maintenance and Inspection of Stockholder List . . . . . . . . . . . . . . 3 Section 10. Stockholder Action by Written Consent Without a Meeting . . . . . . . . . . 3 Section 11. Inspectors of Election . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Section 12. Procedure for Stockholders' Meetings . . . . . . . . . . . . . . . . . . . 4 Section 13. Order of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Section 14. Procedures for Bringing Business before an Annual Meeting . . . . . . . . . 4 Section 15. Procedures for Nominating Directors . . . . . . . . . . . . . . . . . . . . 5 ARTICLE III - Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Section 1. Number and Qualification of Directors . . . . . . . . . . . . . . . . . . . 6 Section 2. Election and Term of Office . . . . . . . . . . . . . . . . . . . . . . . . 6 Section 3. Resignation and Removal of Directors . . . . . . . . . . . . . . . . . . . 7 Section 4. Vacancies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Section 5. Powers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Section 6. Place of Directors' Meetings . . . . . . . . . . . . . . . . . . . . . . . 8 Section 7. Regular Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Section 8. Special Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Section 9. Quorum . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Section 10. Action Without Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Section 11. Telephonic Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Section 12. Meetings and Action of Committees . . . . . . . . . . . . . . . . . . . . . 9 Section 13. Special Meetings of Committees . . . . . . . . . . . . . . . . . . . . . . 10 Section 14. Minutes of Committee Meetings . . . . . . . . . . . . . . . . . . . . . . . 10
3 Section 15. Compensation of Directors . . . . . . . . . . . . . . . . . . . . . . . . . 10 Section 16. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 ARTICLE IV - Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Section 1. Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Section 2. Election of Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Section 3. Subordinate Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Section 4. Removal and Resignation of Officers . . . . . . . . . . . . . . . . . . . . 12 Section 5. Vacancies in Offices . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Section 6. Chairman of the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Section 7. Vice Chairman of the Board . . . . . . . . . . . . . . . . . . . . . . . . 12 Section 8. President . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Section 9. Vice Presidents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Section 10. Secretary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 Section 11. Chief Financial Officer . . . . . . . . . . . . . . . . . . . . . . . . . . 13 Section 12. Treasurer and Controller . . . . . . . . . . . . . . . . . . . . . . . . . 13 ARTICLE V - Certificates of Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Section 1. Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Section 2. Signature on Certificates . . . . . . . . . . . . . . . . . . . . . . . . . 14 Section 3. Statement of Stock Rights, Preferences, Privileges . . . . . . . . . . . . 14 Section 4. Lost Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Section 5. Transfers of Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 Section 6. Fixing Record Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 Section 7. Registered Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . 15 ARTICLE VI - General Provisions - Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 Section 1. Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 Section 2. Payment of Dividends; Directors' Duties . . . . . . . . . . . . . . . . . . 15 Section 3. Checks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Section 4. Corporate Contracts and Instruments . . . . . . . . . . . . . . . . . . . . 16 Section 5. Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Section 6. Manner of Giving Notice . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Section 7. Waiver of Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Section 8. Annual Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 ARTICLE VII - Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Section 1. Amendment by Directors . . . . . . . . . . . . . . . . . . . . . . . . . 17 Section 2. Amendments by Stockholders . . . . . . . . . . . . . . . . . . . . . . . . 17
4 BYLAWS OF BJ SERVICES COMPANY ARTICLE I Offices Section 1. The registered office shall be in the City of Wilmington, County of New Castle, State of Delaware. Section 2. The Corporation may also have offices at such other places both within and without the State of Delaware as the Board of Directors may from time to time determine or the business of the Corporation may require. ARTICLE II Meetings of Stockholders Section 1. All meetings of the stockholders shall be held at such place either within or without the State of Delaware as shall be designated from time to time by the Board of Directors and stated in the notice of the meeting. Section 2. An annual meeting of stockholders shall be held on the fourth Thursday in January in each year, if not a legal holiday, and if a legal holiday, then on the next business day following, at 2:00 p.m. or at such other date and time as may be determined from time to time by resolution adopted by the Board of Directors, for the purpose of electing, subject to Article III, Section 17 hereof, one class of the directors of the Corporation, and transacting such other business as may properly be brought before the meeting. Section 3. A majority of the stock issued and outstanding and entitled to vote at any meeting of stockholders, the holders of which are present in person or represented by proxy, without regard to class or series, shall constitute a quorum for the transaction of business except as otherwise provided by law, by the Certificate of Incorporation of the Corporation (the "Certificate of Incorporation"), or by these Bylaws. A quorum, once established, shall not be broken by the withdrawal of enough votes to leave less than a quorum and the votes present may continue to transact business until adjournment provided that any action taken (other than adjournment) is approved by at least a majority of the shares required to constitute a quorum. If, however, such quorum shall not be present or represented at any meeting of the stockholders, a majority of the voting stock represented in person or by proxy may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present or represented. At such adjourned meeting at which a quorum shall be present or represented, any business may be transacted which might have been transacted at the meeting as originally noticed. If the adjournment 5 is for more than thirty days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote thereat. Section 4. When a quorum is present at any meeting, the vote of the holders of a majority of the stock having voting power present in person or represented by proxy and entitled to vote shall decide any question brought before such meeting, unless the question is one upon which by express provision of the statutes or the Certificate of Incorporation or these Bylaws, a different vote is required, in which case such express provision shall govern and control the decision of such question. Section 5. At each meeting of the stockholders, each stockholder having the right to vote may vote in person or may authorize another person or persons to act for him by proxy appointed by an instrument in writing subscribed by such stockholder and bearing a date not more than three years prior to said meeting, unless said instrument provides for a longer period. All proxies must be filed with the Secretary of the Corporation at the beginning of each meeting in order to be counted in any vote at the meeting. A proxy shall be deemed signed if the stockholder's name is placed on the proxy (whether by manual signature, telegraphic transmission or otherwise) by the stockholder or the stockholder's attorney in fact. Except as otherwise set forth in the Certificate of Incorporation, each stockholder shall have one vote for each share of stock having voting power, registered in his name on the books of the Corporation on the record date set by the Board of Directors as provided in Article V, Section 6 hereof. Section 6. Special meetings of the stockholders, for any purpose, or purposes, unless otherwise prescribed by statute or by the Certificate of Incorporation, may be called at any time by the Board of Directors or by a committee of the Board of Directors and whose powers and authority, as provided in a resolution of the Board of Directors or in these Bylaws, include the power to call meetings. Special meetings of stockholders of the corporation may not be called by any other person or persons. Business transacted at any special meeting of stockholders shall be limited to the purposes stated in the notice. Section 7. Any notice requested to be given to stockholders by statute, the Certificate of Incorporation or these Bylaws, including notice of any meeting of stockholders, shall be given personally, by first-class mail or by telegraphic communication, charges prepaid, addressed to the stockholder at the address of such stockholder appearing on the books of the Corporation or given by the stockholder to the Corporation for the purpose of notice. If no such address appears on the Corporation's books or has been so given, notice shall be deemed to have been given if sent by first-class mail or telegraphic communication to the Corporation's principal executive office, or if published at least once in a newspaper of general circulation in the county where such principal executive office is located. Notice shall be deemed to have been given at the time when delivered personally or deposited in the mail or sent by telegram. -2- 6 If any notice addressed to a stockholder at the address of such stockholder appearing on the books of a Corporation is returned to the Corporation by the United States Postal Service marked to indicate that the United States Postal Service is unable to deliver the notice to the stockholder at such address, all further notices shall be deemed to have been duly given without further mailing if the same shall be available to the stockholder upon written demand of the stockholder at the principal executive office of the Corporation for a period of one year from the date of the giving of such notice. Section 8. Attendance of a person at a meeting shall constitute a waiver of notice to such person of such meeting, except when the person objects at the beginning of the meeting to the transaction of any business because the meeting is not lawfully called or convened, or objects to the consideration of matters not included in the notice of the meeting. Section 9. The officer or agent who has charge of the stock ledger of the Corporation shall prepare and make, at least ten days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten days prior to the meeting, either at a place within the city where their meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept open at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present. The stock ledger of the Corporation shall be the only evidence as to who are the stockholders entitled to examine such list or to vote at any meetings of stockholders. Section 10. No action shall be taken by stockholders except at an annual or special meeting of stockholders, and stockholders may not act by written consent. Section 11. Before any meeting of stockholders, the Board of Directors may appoint any persons other than nominees for office to act as inspectors of election at the meeting or its adjournment. If no inspectors of election are so appointed, the chairman of the meeting may, and on the request of any stockholder or a stockholder's proxy shall, appoint inspectors of election at the meeting. The number of inspectors shall be either one or three. If inspectors are appointed at a meeting on the request of one or more stockholders or proxies, the holders of a majority of shares or their proxies present at the meeting shall determine whether one or three inspectors are to be appointed. If any person appointed as inspector fails to appear or fails or refuses to act, the chairman of the meeting may, and upon the request of any stockholder or a stockholder's proxy shall, appoint a person to fill such vacancy. -3- 7 The duties of these inspectors shall be as follows: (a) Determine the number of shares outstanding and the voting power of each, the shares represented at the meeting, the existence of a quorum, and the authenticity, validity and effect of proxies; (b) Receive votes or ballots; (c) Hear and determine all challenges and questions in any way arising in connection with the right to vote; (d) Count and tabulate all votes; (e) Determine when the polls shall close; (f) Determine the results; and (g) Do any other acts that may be proper to conduct the election or vote with fairness to all stockholders. Section 12. Meetings of the stockholders shall be presided over by the Chairman of the Board of Directors, or in his absence, by the Vice Chairman, the President or by any Vice President, or, in the absence of any of such officers, by a chairman to be chosen by a majority of the stockholders entitled to vote at the meeting who are present in person or by proxy. The Secretary, or, in his absence, any person appointed by the Chairman, shall act as secretary of all meetings of the stockholders. Section 13. The order of business at all meetings of stockholders shall be as determined by the chairman of the meeting. Section 14. Notwithstanding anything in these Bylaws to the contrary, no business shall be conducted at an annual meeting of the stockholders except in accordance with the procedures hereinafter set forth in this Section 14; provided, however, that nothing in this Section 14 shall be deemed to preclude discussion by any stockholder of any business properly brought before the annual meeting in accordance with said procedures. At an annual meeting of the stockholders, only such business shall be conducted as shall have been properly brought before the meeting. To be properly brought before an annual meeting, business must be (1) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the Board, (2) otherwise properly brought before the meeting by or at the direction of the Board, or (3) otherwise properly brought before the meeting by a stockholder. In addition to any other applicable requirements, for business to be properly brought before an annual meeting by a stockholder, the stockholder must have given timely notice thereof in writing to the Secretary of -4- 8 the Corporation. To be timely, a stockholder's notice must be delivered to or mailed and received at the principal executive offices of the Corporation not less than 30 days nor more than 60 days prior to the meeting as originally scheduled; provided, however, that in the event that less than 40 days' notice or prior public disclosure of the date of the meeting is given or made to stockholders, notice by the stockholder to be timely must be so received not later than the close of business on the 10th day following the day on which such notice of the date of the annual meeting was mailed or such public disclosure was made. Any adjournment(s) or postponement(s) of the original meeting whereby the meeting will reconvene within 30 days from the original date shall be deemed for purposes of notice to be a continuation of the original meeting and no business may be brought before any such reconvened meeting unless timely notice of such business was given to the Secretary of the Corporation for the meeting as originally scheduled. A stockholder's notice to the Secretary shall set forth as to each matter the stockholder proposes to bring before the annual meeting (i) a brief description of the business desired to be brought before the annual meeting and their reasons for conducting such business at the annual meeting, (ii) the name and record address of the stockholder proposing such business, (iii) the class and number of shares of the Corporation which are beneficially owned by the stockholder, and (iv) any material interest of the stockholder in such business. The Chairman of an annual meeting shall, if the facts warrant, determine and declare to the meeting that business was not properly brought before the meeting in accordance with the provisions of this Section 14, and if he should so determine, he shall so declare to the meeting and any such business not properly brought before the meeting shall not be transacted. Section 15. Notwithstanding anything in these Bylaws to the contrary, only persons who are nominated in accordance with the procedures hereinafter set forth in this Section 15 shall be eligible for election as directors of the Corporation. Nominations of persons for election to the Board of Directors of the Corporation may be made at a meeting of stockholders only (1) by or at the direction of the Board of Directors or (2) by any stockholder of the Corporation entitled to vote for the election of directors at the meeting who complies with the notice of procedures set forth in this Section 15. Such nominations, other than those made by or at the direction of the Board of Directors, shall be made pursuant to timely notice in writing to the Secretary of the Corporation. To be timely, a stockholder's notice shall be delivered to or mailed and received at the principal executive offices of the Corporation not less than 30 days nor more than 60 days prior to the meeting; provided, however, that in the event that less than 40 days' notice or prior public disclosure of the date of the meeting is given or made to stockholders, notice by the stockholder to be timely must be so received not later than the close of business on the 10th day following the day on which such notice of the date of the meeting was mailed or such public disclosure was made. Any adjournment(s) or postponement(s) of the original meeting whereby the meeting will reconvene within 30 days from the original date shall be deemed for purposes of notice to be a continuation of the original meeting and no nominations by a shareholder of persons to be elected directors of the Corporation may be made at any such reconvened meeting other than pursuant to a notice that was timely for the meeting on the date originally scheduled. -5- 9 Such stockholder's notice shall set forth: (i) as to each person whom the stockholder proposes to nominate for election or re-election as a director, all information relating to such person that is required to be disclosed in solicitations of proxies for election of directors, or is otherwise required, in each case pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended, or any successor regulation thereto (including such person's written consent to being named in the proxy statement as a nominee and to serving as a director if elected); and (ii) as to the stockholder giving the notice (A) the name and address, as they appear on the Corporation's books, of such stockholder, and (B) the class and number of shares of the Corporation which are beneficially owned by such stockholder. At the request of the Board of Directors, any person nominated by the Board of Directors for election as a director shall furnish to the Secretary of the Corporation that information required to be set forth in a stockholder's notice of nomination which pertains to the nominee. The Chairman of the meeting shall, if the facts warrant, determine and declare to the meeting that a nomination was not made in accordance with the procedures prescribed by this Section 15, and if he should so determine, he shall so declare to the meeting and the defective nomination shall be disregarded. ARTICLE III Directors Section 1. The Board of Directors shall consist of a minimum of four (4) and a maximum of ten (10) directors. The number of directors shall be fixed from time to time within the minimum and the maximum number established by the then elected Board of Directors. The number of directors until changed by the Board shall be seven (7). The maximum number of directors may not be increased by the Board of Directors to exceed ten (10) without the affirmative vote of 75% of the members of the entire Board. The directors need not be stockholders. No officer of the Corporation may serve on a board of directors of any company having a present or retired employee on the Corporation's Board of Directors. No person may stand for election as a director if within the previous one (1) year he has resigned from the Board as a result of the tenure provisions of Article III, Section 3 hereof regarding service for more than 10, 11 or 12 consecutive years on the Board. No person associated with an organization whose services are contracted by the Corporation shall serve on the Corporation's Board of Directors, provided however that this prohibition may be waived by a majority of the members of the whole Board if the Board in its judgment determines that such waiver would be in the best interest of the Corporation. Section 2. The Board of Directors shall be divided into three classes, Class I, Class II and Class III. The number of directors in each class shall be the whole number contained in the quotient arrived at by dividing the authorized number of directors by three, and if a fraction is also contained in such quotient then if such fraction is one-third (1/3), the extra director shall be a member of Class III, and if the fraction is two-thirds (2/3), one of the extra directors shall be a member of Class III and the other a member of Class II. Each director shall serve for a term ending on the date -6- 10 of the third annual meeting following the annual meeting at which such director was elected; provided, however, that the directors initially appointed to Class I shall serve for a term ending on the date of the first annual meeting next following September 30, 1990, the directors initially appointed to Class II shall serve for a term ending on the date of the second annual meeting next following September 30, 1990, and the directors initially appointed to Class III shall serve for a term ending on the date of the third annual meeting next following September 30, 1990. One class of the directors shall be elected at each annual meeting of the stockholders. If any such annual meeting is not held or the directors are not elected thereat, the directors may be elected at any special meeting of stockholders held for that purpose. All directors shall hold office until their respective successors are elected and qualified or until their earlier death, resignation or removal. Section 3. Directors who are employees of the Corporation must resign from the Board of Directors at the time of any diminution in their duties or responsibilities as an officer, at the time they leave the employ of the Corporation for any reason or on their 70th birthday. A director's term of office shall automatically terminate on the date of the annual meeting of stockholders following: (i) his 70th birthday; (ii) the third anniversary of his retirement from his principal occupation; (iii) unless he is an officer of the Corporation, the date on which he has served on the Corporation's Board of Directors for a consecutive period of (a) twelve (12) complete years or more prior to the Corporation's 1991 annual meeting of stockholders, (b) eleven (11) complete years or more prior to the Corporation's 1992 annual meeting of stockholders, or (c) commencing with the 1993 annual meeting of stockholders, a total of ten (10) complete years or more thereafter; (iv) any fiscal year in which he has failed to attend at least 66% of the meetings of the Board of Directors and any committees of the Board of Directors on which such director serves; or (v) the first anniversary of any change in his employment (other than a promotion or lateral movement within the same organization). The requirements of sections 3(i) and 3(ii) of this Article III shall not apply to a director who was 68 years old and serving on the Company's Board of Directors on December 1, 1995. The requirements of Section 3(v) of Article III may be waived by a majority of the members of the whole Board (excluding the director whose resignation would otherwise be required) if the Board in its judgment determines that such waiver would be in the best interest of the Corporation. Any director may be removed for cause by the holders of a majority of the shares of the Corporation entitled to vote in the election of directors; stockholders may not remove any director without cause. The Board of Directors may not remove any director for or without cause, and no recommendation by the Board of Directors that a director be removed for cause may be made to the stockholders except by the affirmative vote of not less than 75% of the members of the whole Board; provided that the Board may remove any director who fails to resign as required by the provisions of these Bylaws. Section 4. Except as otherwise provided by statute or the Certificate of Incorporation, in the case of any increase in the number of directors, such additional director or directors shall be proposed for election to terms of office that will most nearly result in each Class of directors containing one-third of the entire number of members of the whole Board, and, unless such position is to be filled by a vote of the stockholders at an annual or special meeting, shall be elected by a majority vote of the directors in such Class or Classes, voting separately by Class. In the case of any -7- 11 vacancy in the Board of Directors, however created, the vacancy or vacancies shall be filled by majority vote of the directors remaining in the Class in which the vacancy occurs or, if only one such director remains, by such director. In the event one or more directors shall resign, effective at a future date, such vacancy or vacancies shall be filled as provided herein. Directors so chosen or elected shall hold office for the remaining term of the directorship to which appointed. Any director elected or chosen as provided herein shall serve for the unexpired term of office or until his successor is elected and qualified or until his earlier death, resignation or removal. In the event of any decrease in the authorized number of directors, (a) each director then serving as such shall nevertheless continue as a director of the class of which he is a member until the expiration of this current term, or his prior death, resignation or removal, and (b) the newly eliminated directorships resulting from such decrease shall be apportioned by the board of directors to such class or classes as shall, so far as possible, bring the number of directors in the respective classes into conformity with the formula in Section 2 hereof as applied to the new authorized number of directors. Section 5. The property and business of the Corporation shall be managed by or under the direction of its Board of Directors. In addition to the powers and authorities by these Bylaws expressly conferred upon them, the Board may exercise all such powers of the corporation and do all such lawful acts and things as are not by statute, by the Certificate of Incorporation or by these Bylaws directed or required to be exercised or done by the stockholders. Meetings of the Board of Directors Section 6. The directors may hold their meetings and have one or more offices, and keep the books of the Corporation outside the state of Delaware. Section 7. Regular meetings of the Board of Directors may be held without notice at such time and place as shall from time to time be determined by the Board. Except as otherwise provided by statute, any business may be transacted at any regular meeting of the Board of Directors. Section 8. Special meetings of the Board of Directors may be called by the Chairman of the Board, the Vice Chairman or the President on at least forty-eight hours' notice to each director. Special meetings shall be called by the President or the Secretary in like manner and on like notice on the written request of any two directors unless the Board consists of only one director, in which case special meetings shall be called by the President or Secretary in like manner and on like notice on the written request of the sole director. Section 9. At all meetings of the Board of Directors a majority of the authorized number of directors shall be necessary and sufficient to constitute a quorum for the transaction of business, and the vote of a majority of the directors present at any meeting at which there is a quorum, shall be the act of the Board of Directors, except as may be otherwise specifically provided by statute, by the Certificate of Incorporation or by these Bylaws. If a quorum shall not be present at any meeting of -8- 12 the Board of Directors, the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present. If only one director is authorized, such sole director shall constitute a quorum. A meeting at which a quorum is initially present may continue to transact business notwithstanding the withdrawal of directors, if any action is approved by at least a majority of the required quorum for such meeting. Section 10. Unless otherwise restricted by statute, the Certificate of Incorporation or these Bylaws, any action required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof may be taken without a meeting, if all members of the Board or committee, as the case may be, consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the Board or committee. Section 11. Unless otherwise restricted by the Certificate of Incorporation or these Bylaws, members of the Board of Directors, or any committee designated by the Board of Directors, may participate in a meeting of the Board of Directors, or any committee, by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and such participation in a meeting shall constitute presence in person at such meeting. Committees of Directors Section 12. The Board of Directors may, by resolution passed by a majority of the whole Board, designate one or more committees, each such committee to consist of one or more of the directors of the Corporation. The Board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. If no alternate members have been appointed, the committee member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any absent or disqualified member. The Board of Directors shall, by resolution passed by a majority of the whole Board, designate one member of each committee as chairman of such committee. Each such chairman shall hold such office for a period not in excess of five years, and shall upon surrender of such chairmanship resign from membership on such committee. Any such committee, to the extent provided in the resolution of the Board of Directors, shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the Corporation, but no such committee shall have the power or authority to authorize an amendment to the Certificate of Incorporation, adopt an agreement of merger or consolidation, recommend to the stockholders the sale, lease or exchange of all or substantially all of the Corporation's property and assets, recommend to the stockholders a dissolution of the Corporation or a revocation of a dissolution, or amend the Bylaws of the Corporation; and, unless the resolution or the Certificate of Incorporation expressly so provide, no such committee shall have the power or authority to declare a dividend or to authorize the issuance of stock. -9- 13 Section 13. Special meetings of committees may be called by the Chairman of such committee, the Chairman of the Board or the President, on at least 48 hours notice to each member and alternate member. Alternate members shall have the right to attend all meetings of the committee. The Board of Directors may adopt rules for the government of any committee not inconsistent with the provisions of these Bylaws. If a committee is comprised of an odd number of members, a quorum shall consist of a majority of that number. If the committee is comprised of an even number of members, a quorum shall consist of one-half of that number. If a committee is comprised of two members, a quorum shall consist of both members. Section 14. Each committee shall keep regular minutes of its meetings and report the same to the Board of Directors when requested. Compensation of Directors Section 15. Unless otherwise restricted by the Certificate of Incorporation or these Bylaws, the Board of Directors shall have the authority to fix the compensation of directors. The directors may be paid their expenses, if any, of attendance at each meeting of the Board of Directors and may be paid a fixed sum for attendance at each meeting of the Board of Directors or a stated salary as director. No such payment shall preclude any director from serving the Corporation in any other capacity and receiving compensation therefor. Members of special or standing committees may be allowed like compensation for attending committee meetings. Indemnification Section 16. (a) The Corporation shall indemnify every person who is or was a party or is or was threatened to be made a party to any action, suit, or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that he is or was a director, officer, employee or agent of the Corporation or any of its direct or indirect wholly-owned subsidiaries or, while a director, officer, employee or agent of the Corporation or any of its direct or indirect wholly-owned subsidiaries, is or was serving at the request of the Corporation or any of its direct or indirect wholly-owned subsidiaries, as a director, officer, employee, agent or trustee of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise, against expenses (including counsel fees), judgments, fines, and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding, to the full extent permitted by applicable laws provided that the Corporation shall not be obligated to indemnify any such person against any such action, suit or proceeding which is brought by such person against the Corporation or any of its direct or indirect wholly-owned subsidiaries or the directors of the Corporation or any of its direct or indirect wholly-owned subsidiaries, other than an action brought by such person to enforce his rights to indemnification hereunder, unless a majority of the Board of Directors of the Corporation shall have previously approved the bringing of such action, suit or proceeding. The Corporation shall indemnify every person who is or was a party or is or was threatened to be made a party to any action, suit, or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that he is or was licensed to practice law and an employee (including an employee -10- 14 who is or was an officer) of the Corporation or any of its direct or indirect wholly-owned subsidiaries and, while acting in the course of such employment committed or is alleged to have committed any negligent acts, errors or omissions in rendering professional legal services at the request of the Corporation or pursuant to his employment (including, without limitation, rendering written or oral legal opinions to third parties) against expenses (including counsel fees), judgments, fines, and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding, to the full extent permitted by applicable law; provided that the Corporation shall not be obligated to indemnify any such person against any action, suit or proceeding arising out of any adjudicated criminal, dishonest or fraudulent acts, errors or omissions of such person or any adjudicated willful, intentional or malicious acts, errors or omissions of such person. (b) Expenses incurred by an officer or director of the Corporation or any of its direct or indirect wholly-owned subsidiaries in defending a civil or criminal action, suit or proceeding shall be paid by the Corporation in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of such director or officer to repay such amount if it shall ultimately be determined that he is not entitled to be indemnified by the Corporation as authorized in this Section 16. Such expenses incurred by other employees and agents may be so paid upon such terms and conditions, if any, as the Board of Directors deems appropriate. (c) The indemnification and advancement of expenses provided by, or granted pursuant to, this Section 16 shall not be deemed exclusive of any other rights to which those seeking indemnification or advancement of expenses may be entitled under any provision of law, the Corporation's Certificate of Incorporation, the Certificate of Incorporation or bylaws or other governing documents of any direct or indirect wholly-owned subsidiary of the Corporation, or any agreement, vote of stockholders or disinterested directors or otherwise, both as to action in his official capacity and as to action in another capacity while holding any of the positions or having any of the relationships referred to in this Section 16. ARTICLE IV Officers Section 1. The officers of the Corporation shall be a Chairman of the Board, a President, a Chief Financial Officer, a Vice President, a Secretary, a Treasurer and a Controller. The Corporation may also have, at the discretion of the Board of Directors, a Vice Chairman of the Board, one or more additional Vice Presidents, and such other officers as may be appointed in accordance with the provisions of Section 3 of this Article. Section 2. The officers of the Corporation, except such officers as may be appointed in accordance with the provisions of Section 3 or Section 5 of this Article, shall be chosen by the Board of Directors, and each shall serve at the pleasure of the Board, subject to the rights, if any, of any officer under any contract of employment. -11- 15 Section 3. The Board of Directors may appoint, and may empower the President to appoint, such other officers as the business of the Corporation may require, each of whom shall hold office for such period, have such authority and perform such duties as are provided in the Bylaws or as the Board of Directors may from time to time determine. Section 4. Any officer may be removed, either with or without cause, by the Board of Directors, at any regular or special meeting thereof, or except in case of an officer chosen by the Board of Directors, by any officer upon whom such power of removal may be conferred by the Board of Directors, provided that such removal shall not prejudice the remedy of such officer for breach of any contract of employment. Any officer may resign at any time by giving written notice to the Corporation. Any such resignation shall take effect on receipt of such notice or at any later time specified therein. Unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. Any such resignation is without prejudice to the rights, if any, of the Corporation under any contract to which the officer is a party. Section 5. A vacancy in any office because of death, resignation, removal, disqualification or any other cause shall be filled in the manner prescribed in these Bylaws for regular appointments to such office. Section 6. The Chairman of the Board shall, if present, preside at all meetings of the Board of Directors and of the stockholders, and shall exercise and perform such other powers and duties as may be from time to time assigned to him by the Board of Directors or prescribed by the Bylaws. Section 7. The Vice Chairman of the Board shall exercise and perform such powers and duties as may be from time to time assigned to him by the Board of Directors or prescribed in these Bylaws. In the absence of the Chairman of the Board, the Vice Chairman of the Board shall preside at all meetings of the stockholders and the Board of Directors. Section 8. The President shall be the chief executive officer of the Corporation and shall, subject to the control of the Board of Directors, have general supervision, direction and control of the business and the officers of the Corporation. In the absence of the Chairman of the Board and the Vice Chairman of the Board, the President shall preside at all meetings of the stockholders and the Board of Directors. He shall have the general powers and duties of management usually vested in the office of President of a Corporation, and shall have such other powers and duties as may be prescribed by the Board of Directors or the Bylaws. Section 9. In the absence or disability of the President, the Vice Presidents, if any, in order of their rank as fixed by the Board of Directors, or if not ranked, the Vice President designated by the President, shall perform all the duties of the President, and when so acting shall have all the powers of, and be subject to all the restrictions upon, the President. The Vice Presidents shall have -12- 16 such other powers and perform such other duties as from time to time may be prescribed for them respectively by the Board of Directors, these Bylaws or the President. Section 10. The Secretary shall keep or cause to be kept, at the principal office or such other place as the Board of Directors may order, a book of minutes of all meetings and actions of directors, committees of directors and stockholders, with the time and place of holding, whether regular or special, and, if special, how authorized, the notice thereof given, the names of those present at directors' and committee meetings, the number of shares present or represented at stockholders' meetings, and the proceedings thereof. The Secretary shall keep, or cause to be kept, at the principal office or at the office of the Corporation's transfer agent or registrar, a share register, or a duplicate share register, showing the names of all stockholders and their addresses, the number and classes of shares held by each, the number and date of certificates issued for the same, and the number and date of cancellation of every certificate surrendered for cancellation. The Secretary shall give, or cause to be given, notice of all meetings of the stockholders and of the Board of Directors required by these Bylaws or by law to be given, and he shall keep the seal of the Corporation, if one be adopted, in safe custody, and shall have such other powers and perform such other duties as may be prescribed by the Board of Directors or by the Bylaws. Section 11. The Chief Financial Officer shall keep and maintain, or cause to be kept and maintained, adequate and correct books and records of accounts of the properties and business transactions of the Corporation, including accounts of its assets, liabilities, receipts, disbursements, gains, losses, capital, retained earnings and shares. The books of account shall be open at all times to inspection by any director. The Chief Financial Officer shall deposit all moneys and other valuables in the name and to the credit of the Corporation with such depositaries as may be designated by the Board of Directors. He shall disburse the funds of the Corporation as may be ordered by the Board of Directors, shall render to the President and Directors, whenever they request it, an account of all of his transactions as Chief Financial Officer and of the financial condition of the Corporation, and shall have other powers and perform such other duties as may be prescribed by these Board of Directors or these Bylaws. Section 12. The Treasurer and the Controller shall each have such powers and perform such duties as from time to time may be prescribed for him by the Board of Directors, the President or these Bylaws. -13- 17 ARTICLE V Certificate of Stock Section 1. Every holder of stock of the Corporation shall be entitled to have a certificate signed by, or in the name of the Corporation by, the Chairman or Vice Chairman of the Board of Directors, or the President or a Vice President, and by the Secretary or an Assistant Secretary, if one be appointed, or the Treasurer or an Assistant Treasurer, if one be appointed, of the Corporation, certifying the number of shares represented by the certificate owned by such stockholder in the Corporation. Section 2. Any or all of the signatures on the certificate may be a facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if he were such officer, transfer agent or registrar at the date of issue. Section 3. If the Corporation shall be authorized to issue more than one class of stock or more than one series of any class, the powers, designations, preferences and relative, participating, optional or other special rights of each class of stock or series thereof and the qualification, limitations or restrictions of such preferences and/or rights shall be set forth in full or summarized on the face or back of the certificate which the Corporation shall issue to represent such class or series of stock, provided that, except as otherwise provided by statute, in lieu of the foregoing requirements, there may be set forth on the face or back of the certificate which the Corporation shall issue to represent such class or series of stock, a statement that the Corporation will furnish without charge to each stockholder who so requests the powers, designations, preferences and relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights. Lost, Stolen or Destroyed Certificates Section 4. The Board of Directors, the Secretary and the Treasurer each may direct a new certificate or certificates to be issued in place of any certificate or certificates theretofore issued by the Corporation alleged to have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the owner of such certificate, or his legal representative. When authorizing such issue of a new certificate or certificates, the Board of Directors may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen or destroyed certificate or certificates, or his legal representative, to advertise the same in such manner as it shall require and/or to furnish the Corporation a bond in such form and substance and with such surety as it may direct as indemnity against any claim that may be made against the Corporation with respect to the Certificate alleged to have been lost, stolen or destroyed. -14- 18 Transfers of Stock Section 5. Upon surrender to the Corporation, or the transfer agent of the Corporation, of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignation or authority to transfer, it shall be the duty of the Corporation to issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon its books. Fixing Record Date Section 6. In order that the Corporation may determine the stockholders entitled to notice of or to vote at any meeting of the stockholders, or any adjournment thereof, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the Board of Directors may fix a record date which shall not be more than 60 nor less than 10 days before the date of such meeting, nor more than 60 days prior to any other action. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting. Registered Stockholder Section 7. The Corporation shall be entitled to treat the holder of record of any share or shares of stock as the holder in fact thereof and, accordingly, shall not be bound to recognize any equitable or other claim or interest in such share on the part of any other person, whether or not it shall have express or other notice thereof, save as expressly provided by the laws of the State of Delaware. ARTICLE VI General Provisions Dividends Section 1. Dividends upon the capital stock of the Corporation, subject to the provisions of the Certificate of Incorporation, if any, may be declared by the Board of Directors at any regular or special meeting, pursuant to law. Dividends may be paid in cash, in property or in shares of the Corporation's capital stock, subject to the provisions of the Certificate of Incorporation. Section 2. Before declaration of any dividend, there may be set aside out of any funds of the Corporation available for dividends such sum or sums as the Board of Directors from time to time, in their absolute discretion, thinks proper as a reserve fund to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the Corporation, or for such other purpose -15- 19 as the Board of Directors shall think conducive to the interests of the Corporation, and the Board of Directors may thereafter abolish any such reserve in its absolute discretion. Checks Section 3. All checks, drafts or other orders for payment of money, notes or other evidences of indebtedness, issued in the name of or payable to the Corporation shall be signed by such officer or officers as the Board of Directors or the President or any Vice President, acting jointly, may from time to time designate. Section 4. The President, any Vice President, the Secretary or the Treasurer may enter into contracts and execute instruments on behalf of the Corporation. The Board of Directors, the President or any Vice President may authorize any officer or officers, and any employee or employees or agent or agents of the Corporation or any of its subsidiaries, to enter into any contract or execute any instrument in the name of and on behalf of the Corporation, and such authority may be general or confined to specific instances. Fiscal Year Section 5. The fiscal year of the Corporation shall be October 1 through September 30, unless otherwise fixed by resolution of the Board of Directors. Notices Section 6. Whenever, under the provisions of the statutes, the Certificate of Incorporation or these Bylaws, notice is required to be given to any director, it shall not be construed to require personal notice, but such notice may be given in writing, by mail, addressed to such director, at his address as it appears on the records of the Corporation (unless prior to the mailing of such notice he shall have filed with the Secretary a written request that notices intended for him be mailed to some other address, in which case such notice shall be mailed to the address designated in the request) with postage thereon prepaid, and such notice shall be deemed to be given at the time when the same shall be deposited in the United States mail; provided, however, that, in the case of notice of a special meeting of the Board of Directors, if such meeting is to be held within seven calendar days after the date of such notice, notice shall be deemed given as of the date such notice shall be accepted for delivery by a courier service that provides "opening of business next day" delivery, so long as at least one attempt shall have been made, on or before the date such notice is accepted for delivery by such courier service, to provide notice by telephone to each director at his principal place of business and at his principal residence. Notice to directors may also be given by telegram, by personal delivery or telephone. Section 7. Whenever any notice is required to be given under the provisions of the statutes, the Certificate of Incorporation or these Bylaws, a waiver thereof in writing, or by telegraph, cable -16- 20 or other written form of recorded communication, signed by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent thereto. Annual Statement Section 8. The Board of Directors shall present at each annual meeting, and at any special meeting of the stockholders when called for by vote of the stockholders, a full and clear statement of the business and condition of the Corporation. ARTICLE VII Amendments Section l. Except any amendment to this Article VII and to Article II, Section 6, Article II, Section 10, Article III, Section 1 (as it relates to increases in the number of directors), Article III, Section 2, the last sentence of Article III, Section 3 (as it relates to removal of directors), Article III, Section 4, Article III, Section 16 and Article VI, Section 6 of these Bylaws, or any of such provisions, which shall require approval by the affirmative vote of directors representing at least 75% of the number of directors provided for in accordance with Article III, Section 1, and except as otherwise expressly provided in a bylaw adopted by the stockholders as hereinafter provided, the directors, by the affirmative vote of a majority of the whole Board and without the assent or vote of the stockholders, may at any meeting, make, repeal, alter, amend or rescind any of these Bylaws, provided the substance of the proposed amendment or other action shall have been stated in a notice of the meeting. Section 2. These Bylaws may not be altered, amended or rescinded, and new Bylaws may not be adopted, by the stockholders of the Corporation except by the vote of the holders of not less than 75% of the total voting power of all shares of stock of the Corporation entitled to vote in the election of directors, considered for such purpose as one class. -17- EX-21.1 3 SUBSIDIARIES OF THE REGISTRANT 1 EXHIBIT 21.1 BJ SERVICES COMPANY SUBSIDIARIES
Name of Entity/Jurisdiction of Organization Percentage Owned By - ------------------------------------------- ------------------- Registrant Subsidiary ---------- ---------- BJ Services Company Middle East (Delaware) . . . . . . . . . . . . . . . . . . . . . 100% Gulf Well Services Company (Kuwait) (Joint Venture) . . . . . . . . . . . . . . . 40% BJ Services Company Overseas (Delaware) . . . . . . . . . . . . . . . . . . . . . . . 100% BJ Services Company, U.S.A. (Delaware) . . . . . . . . . . . . . . . . . . . . . . . 100% Western Petroleum Services, Inc. (Delaware) . . . . . . . . . . . . . . . . . . . 100% Western Petroleum Services International Company (Delaware) . . . . . . . . . . . 100% Western Petroleum Services International Nigeria Ltd. (Nigeria) (Joint Venture) 80% P.T. Western Petroleum Servindo (Indonesia) (Joint Venture) . . . . . . . . . . 64% Western Rotary Petroleum Services KFT (Hungary) (Joint Venture) . . . . . . . . 50% Western Oceanic (Nigeria) Ltd. (Nigeria) (Joint Venture) . . . . . . . . . . . . . 60% Colony Drilling Company Limited (UK) . . . . . . . . . . . . . . . . . . . . . . . 100% Western Petroleum Services (U.K.) Ltd. (UK) . . . . . . . . . . . . . . . . . . 100% Western Oceanic Services, Inc. (Delaware) . . . . . . . . . . . . . . . . . . . . 100% Western Services International, Inc. (Delaware) . . . . . . . . . . . . . . . . . 100% Western Oilfield Supply & Rental, Inc. (Delaware) . . . . . . . . . . . . . . . . 100% Western Oceanic, Inc. (Delaware) . . . . . . . . . . . . . . . . . . . . . . . . . 100% Western Oceanic International, Inc. (Panama) . . . . . . . . . . . . . . . . . 100% Altomar Perfuracoes Maritimas Ltda. (Brazil) . . . . . . . . . . . . . . . 99.99% Saturn Energy Company (Delaware) . . . . . . . . . . . . . . . . . . . . . . . . 100% Offshore International Ltd. (Delaware) . . . . . . . . . . . . . . . . . . . . . 100% WOI, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100% BJ Service International, Inc. (Delaware) . . . . . . . . . . . . . . . . . . . . . . 100% BJ-Hughes C.I. Ltd. (Cayman Islands) . . . . . . . . . . . . . . . . . . . . . . . 100% BJ Oilwell Services (Malaysia) Sdn. Bhd. (Joint Venture) . . . . . . . . . . . . . 65% BJ Service International (Thailand) Ltd. . . . . . . . . . . . . . . . . . . . . . 100% BJ Service Arabia Ltd. (Saudi Arabia) (Joint Venture) . . . . . . . . . . . . . . 70% BJ Services C.I., Ltd. (Cayman Islands) . . . . . . . . . . . . . . . . . . . . . 100% BJ Services Canada Inc. (Alberta) . . . . . . . . . . . . . . . . . . . . . . . . 100% BJ Services Company B.V. (Netherlands) . . . . . . . . . . . . . . . . . . . . . . 100% BJ Services Company GmbH (Germany) . . . . . . . . . . . . . . . . . . . . . . 100% BJ Services AS (Norway) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100% BJ COMTEC AS (Norway . . . . . . . . . . . . . . . . . . . . . . . . . . . 100% BJ Services Company Italia S.r.l. (Italy) . . . . . . . . . . . . . . . . . . . 100% BJ Services Company Mexicana S.A. de C.V. (Mexico) . . . . . . . . . . . . . . . . 100% BJ Services Company (Nigeria) Limited (Joint Venture) . . . . . . . . . . . . . . 60% BJ Services Company S.A. (Panama) . . . . . . . . . . . . . . . . . . . . . . . . 100% BJ Services Company Limited (Scotland) . . . . . . . . . . . . . . . . . . . . . . 100% BJ Services Company (UK) Limited (Scotland) . . . . . . . . . . . . . . . . . . 100% BJ Leasing Company Limited (Scotland-Vestfonn) . . . . . . . . . . . . . . . . 100% BJS Oilfield Technology Limited . . . . . . . . . . . . . . . . . . . . . . . . 100% BJS Services International Limited (Scotland) (Eastern Europe) . . . . . . . . 100% BJ Services Company (Singapore) Pte. Ltd. Singapore) . . . . . . . . . . . . . . . 100% BJ Services de Venezuela IV, C.A. (Venezuela) . . . . . . . . . . . . . . . . . . 100% BJ Services de Venezuela, C.A. (Venezuela) . . . . . . . . . . . . . . . . . . 100% BJ Services de Venezuela II, C.A. (Venezuela) . . . . . . . . . . . . . . 100% BJ Services de Venezuela III, C.A. (Venezuela) . . . . . . . . . . . . 100% BJ Services International S.A. (Panama) . . . . . . . . . . . . . . . . . . . . . 100% BJ Pumping Services Company S.A. (Panama) (Joint Venture) . . . . . . . . . . . . 65% BJ Services S.A. (Argentina) . . . . . . . . . . . . . . . . . . . . . . . . . . . 100% Compania de Servicios Petroleros BJ Boliviana S.A. (BJ Boliviana S.A.) (Bolivia) (Joint Venture) . . . . . . . . . . . . . . 49% Hughes Services Eastern Hemishpere S.A.R.L. (France) . . . . . . . . . . . . . . . 100% International Specialty Chemicals Ltd. (Cayman Islands) (Joint Venture) . . . . . 75% P.T. BJ-Hughes Services Indonesia (Indonesia) (Joint Venture) . . . . . . . . . . 75% SEBEP (Servicios Brasileiros Especializados em Petroleo S.A.) (Brazil) . . . . . . 100% SEBEP Quimica Industria e Comercio Ltda. (Brazil) . . . . . . . . . . . . . . . 100% SEBEX Oil Well Services, S.A. (Brazil) . . . . . . . . . . . . . . . . . . . . 100% Societe Algerienne de Cimentation (ALCIM) (Algeria) (Joint Venture) . . . . . . . 49%
EX-27 4 FINANCIAL DATA SCHEDULE
5 1,000 3-MOS SEP-30-1996 OCT-1-1995 DEC-31-1995 3,799 0 173,633 6,623 72,840 272,998 749,802 335,010 1,002,098 213,294 0 2,805 0 0 475,466 1,002,098 0 206,501 0 167,086 21,858 387 5,538 12,698 3,553 9,145 0 0 0 9,145 .33 0
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