-----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, QPtMlrg1L6wnxdskwaIe9kbjMmEulNAgrnNVhQ9eLHJXk/QezX4X5acjzJ+Ci5Ea pnARs9sT4KRQFn1h45lxOw== 0000100712-96-000006.txt : 19960209 0000100712-96-000006.hdr.sgml : 19960209 ACCESSION NUMBER: 0000100712-96-000006 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19951231 FILED AS OF DATE: 19960208 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: PRODUCTION OPERATORS CORP CENTRAL INDEX KEY: 0000100712 STANDARD INDUSTRIAL CLASSIFICATION: OIL, GAS FIELD SERVICES, NBC [1389] IRS NUMBER: 590827174 STATE OF INCORPORATION: DE FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-03919 FILM NUMBER: 96513384 BUSINESS ADDRESS: STREET 1: ONE PIEDMONT CENTER SUITE 515 CITY: ATLANTA STATE: GA ZIP: 30305 BUSINESS PHONE: 7134660980 FORMER COMPANY: FORMER CONFORMED NAME: UNICAPITAL CORP DATE OF NAME CHANGE: 19801229 FORMER COMPANY: FORMER CONFORMED NAME: UNITED STATES FINANCE CO INC DATE OF NAME CHANGE: 19690828 FORMER COMPANY: FORMER CONFORMED NAME: UNITED STATES SHELL HOMES INC DATE OF NAME CHANGE: 19660911 10-Q 1 SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 FORM 10-Q /X/ QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended December 31, 1995 / / TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File No. 0-3919 PRODUCTION OPERATORS CORP (Exact name of registrant as specified in its charter) Delaware (State or other jurisdiction of incorporation or organization) 59-0827174 (IRS Employer Identification No.) 11302 Tanner Road Houston, Texas 77041 (Address of principal executive offices) (713) 466-0980 (Registrant's telephone number, including area code) Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding twelve months (or for such shorter period that the Registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. YES X NO On January 26, 1996 there were 10,146,230 shares of the Company's common stock, $l.00 par value, outstanding (exclusive of treasury shares). 2 PART I. FINANCIAL INFORMATION FINANCIAL STATEMENTS PRODUCTION OPERATORS CORP AND SUBSIDIARY The condensed consolidated financial statements included herein have been prepared by Production Operators Corp, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. The term "Company" as used herein refers to Production Operators Corp and its operating subsidiary, Production Operators, Inc., together with its subsidiaries, unless the context otherwise indicates. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading. It is suggested that these condensed consolidated financial statements be read in conjunction with the consolidated financial statements and the notes thereto included in the Company's latest annual report on Form l0-K. In the opinion of the Company all adjustments, consisting only of normal recurring adjustments, necessary to present fairly the financial position of the Company as of December 31, 1995, and the results of their operations for the three months ended December 31, 1995 and 1994 and their cash flows for the three months ended December 31, 1995 and 1994 have been included. The results of operations for such interim periods are not necessarily indicative of the results for the full year. 3 PRODUCTION OPERATORS CORP AND SUBSIDIARY CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31, 1995 AND SEPTEMBER 30, 1995 (000'S OMITTED)
December 31, September 30, 1995 1995 (Unaudited) ASSETS Current assets: Cash and cash equivalents . . . . . . . . $ 1,818 $ 985 Marketable securities . . . . . . . . . . 202 202 Receivables: Sales and services, net of reserve of $165 at December 31, 1995 and $159 at September 30, 1995 . . . . . . . . . . 23,032 16,492 Construction work in progress . . . . . 1,840 6,835 Inventories - at cost: Compressor parts and supplies . . . . . 3,855 4,852 Construction work in progress . . . . . 1,690 2,452 Prepaid expenses and other. . . . . . . . 5,302 4,956 Current tax benefit . . . . . . . . . . . 2,230 2,785 Net assets of discontinued operations . . 8,981 8,981 Total current assets . . . . . . . . 48,950 48,540 Property and equipment, at cost, net of accumulated depreciation and amortization of $94,938 at December 31, 1995 and $91,386 at September 30, 1995 . . 165,301 162,995 Long-term receivable and other assets . . . 8,311 8,697 $222,562 $220,232 LIABILITIES AND STOCKHOLDERS' INVESTMENT Current liabilities: Accounts payable. . . . . . . . . . . . . $ 5,768 $ 9,967 Accrued liabilities . . . . . . . . . . . 7,523 7,829 Total current liabilities. . . . . . 13,291 17,796 Senior term notes . . . . . . . . . . . . . 47,234 46,005 Deferred income taxes . . . . . . . . . . . 19,310 17,781 Stockholders' investment: Common stock. . . . . . . . . . . . . . . 10,259 10,259 Additional paid-in capital. . . . . . . . 71,459 71,156 Retained earnings . . . . . . . . . . . . 64,960 61,601 Deferred compensation - ESOP. . . . . . . (2,891) (3,202) Treasury stock. . . . . . . . . . . . . . (1,060) (1,164) Total stockholders' investment . . . . 142,727 138,650 $222,562 $220,232
4 PRODUCTION OPERATORS CORP AND SUBSIDIARY CONSOLIDATED INCOME STATEMENTS FOR THE THREE MONTHS ENDED DECEMBER 31, 1995 AND 1994 (UNAUDITED-000'S OMITTED EXCEPT PER SHARE AMOUNTS)
Three Months Ended December 31 1995 1994 Net revenues from sales and services and other income . . . . . . . . . . . . . . $22,124 $16,810 Costs and expenses: Cost of sales and services. . . . . . . . . 9,769 7,860 Depreciation and amortization . . . . . . . 3,727 2,542 General and administrative expenses . . . . 1,806 1,544 Interest and debt expenses. . . . . . . . . 588 (56) 15,890 11,890 Income before income taxes. . . . . . . . . . 6,234 4,920 Provision for income taxes. . . . . . . . . . 2,177 1,753 Income from continuing operations . . . . . . 4,057 3,167 Loss from discontinued operations . . . . . . -- (89) Net income. . . . . . . . . . . . . . . . . . $ 4,057 $ 3,078 Net income per share: Primary and fully diluted Income from continuing operations . . . . . $ .40 $ .31 Loss from discontinued operations . . . . . -- (.01) Net income. . . . . . . . . . . . . . . . . $ .40 $ .30 Weighted average shares outstanding . . . . . 10,258 10,168 Dividends per share . . . . . . . . . . . . . $ .07 $ .06 Average shares outstanding upon which dividends were accrued . . . . . . . . . . . 10,147 10,078
5 PRODUCTION OPERATORS CORP AND SUBSIDIARY CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED DECEMBER 31, 1995 AND 1994 (UNAUDITED-000'S OMITTED)
Quarter Ended December 31, 1995 1994 Cash flows from operating activities: Cash received from customers. . . . . . . . . . $ 19,650 $ 17,062 Cash paid to suppliers and employees. . . . . . (14,235) (8,625) Interest paid . . . . . . . . . . . . . . . . . (468) (133) Income tax paid . . . . . . . . . . . . . . . . (15) (319) Interest and dividends received . . . . . . . . 133 203 Other income. . . . . . . . . . . . . . . . . . 210 141 5,275 8,329 Cash flows from investing activities: Net additions to property and equipment . . . . (6,905) (12,913) Proceeds from sale of property and equipment. . 1,830 502 Other . . . . . . . . . . . . . . . . . . . . . (332) (436) (5,407) (12,847) Cash flows from financing activities: Additions to net borrowings on long-term senior notes . . . . . . . . . . . . . . . . . 1,229 4,689 Dividends paid. . . . . . . . . . . . . . . . . (710) (605) (Increase) decrease in deferred compensation under Company's ESOP Plan . . . . 311 (290) Cash received upon exercise of stock options. . 216 10 Cash bonus paid upon exercise of stock options. (49) (2) Repurchases of stock awards . . . . . . . . . . (32) (6) 965 3,796 Net increase (decrease) in cash and cash equivalents. . . . . . . . . . . . . . . . . . . 833 (722) Cash and cash equivalents at beginning of year. . 985 1,037 Cash and cash equivalents at end of quarter . . . $ 1,818 $ 315
6 PRODUCTION OPERATORS CORP AND SUBSIDIARY RECONCILIATION OF NET INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES FOR THE THREE MONTHS ENDED DECEMBER 31, 1995 AND 1994 (UNAUDITED-000'S OMITTED)
Quarter Ended December 31, 1995 1994 Net income. . . . . . . . . . . . . . . . . . . . . $ 4,057 $ 3,078 Adjustments: Depreciation and amortization . . . . . . . . . . 3,727 3,453 Provision for deferred income tax . . . . . . . . 1,529 228 Provision for tax benefits on stock option exercises and ESOP dividends . . . . . . . . . . 78 11 Issuance of stock awards. . . . . . . . . . . . . 206 74 Provision for bad debts . . . . . . . . . . . . . 6 6 Gain on sale of property and equipment. . . . . . (972) (172) Increase in receivables . . . . . . . . . . . . . (1,551) (2,352) Decrease in inventories . . . . . . . . . . . . . 1,759 2,846 Increase in prepaid expenses and other. . . . . . (346) (547) Decrease in long-term receivable and other assets . . . . . . . . . . . . . . . . . . 732 428 Increase in valuation reserve for unrealized losses on marketable securities . . . -- 120 Increase (decrease) in accounts payable . . . . . (4,199) 3,022 Decrease in accrued liabilities . . . . . . . . . (306) (3,013) Decrease in current tax benefit . . . . . . . . . 555 -- Increase in income taxes payable. . . . . . . . . -- 1,147 1,218 5,251 Net cash provided by operating activities . . . . . $ 5,275 $ 8,329
7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Results of Operations - The Company reported net revenues from sales and services and other income of $22,124,000 during its fiscal 1996 first quarter ended December 31, 1995 as compared to $16,810,000 for the first quarter of fiscal 1995. Current year first quarter revenues from contract gas handling services were $21,736,000, an improvement of $5,149,000 (31%) over the prior year first quarter level of $16,587,000. These results include enhanced oil recovery revenues which were reported separately prior to fiscal 1995. The Company's fleet of revenue producing compression equipment, including operations of customer owned units, averaged 381,000 horsepower for the three months ended December 31, 1995, a 28% increase over the previous year's same quarter average of 297,000 horsepower. At its December 31, 1995 quarter end, the Company had operating horsepower of 388,000 with a backlog of 44,000 horsepower, including client owned units. Average realized prices per horsepower increased 9% for the current fiscal quarter as compared to the prior year first quarter primarily due to an increase in international operations where the revenue per horsepower is higher. As disclosed in the Company's annual report for its most recent fiscal year ended September 30, 1995, oil and gas producing activities have been classified as discontinued operations. In connection with this discontinuance, the Company adopted a plan for exiting the oil and gas production business and recorded a fiscal 1995 fourth quarter charge that included a writedown of oil and gas properties to their estimated net realizable value along with a provision for disposing of these operations, less applicable tax benefits. No further activity was recorded in the fiscal 1996 first quarter. Other revenues, consisting principally of rents, interest and dividends were $388,000 for the fiscal 1996 first quarter as compared to $223,000 in the fiscal 1995 first quarter. Operating income from contract gas handling services (revenues less cost of services and depreciation) was $8,240,000 in the most recent quarter, an improvement of $2,055,000 (33%) over the prior year quarter of $6,185,000. During the fiscal 1996 first quarter, depreciation expense increased $1,185,000 to $3,727,000 as compared to the previous year's same quarter due primarily to the increase in horsepower previously noted and a waterflood project in Venezuela that is being depreciated substantially more rapidly than typical compression equipment due to contract terms that include a purchase option. General and administrative expenses increased $262,000 (17%) as compared to the prior year quarter due to changes in the Company's infrastructure to support the rapid business growth, principally in engineering and technical support. Interest expense, net of amounts allocated to discontinued operations, was $588,000 in the fiscal 1996 first quarter compared to $(56,000) in the comparative prior year period. Income tax expense for the fiscal 1996 first quarter was $2,177,000 at an average effective tax rate of 35% as compared to $1,753,000 at an average effective tax rate of 36% in the prior year's first quarter. Liquidity and Capital Resources - As of December 31, 1995, the Company's cash position was $1,818,000 versus $985,000 at the close of the prior fiscal year ended September 30, 1995. The principal sources of cash during the fiscal 1996 first quarter were internally generated funds from operating activities of $5,275,000, proceeds from the sale of property and equipment of $1,830,000 and additional bank borrowings totaling $1,229,000. The primary uses of cash were capital expenditures of $6,905,000 and payment of dividends amounting to $710,000. Cash and cash equivalents increased $833,000 to $1,818,000 at December 31, 1995 due to cash collections on the last day of the quarter. Accounts receivable for sales and services increased $6,540,000 to $23,032,000 at December 31, 1995 principally due to a slowdown in the collection of receivables from Venezuelan operations, increased revenue from our international operations, and equipment sales. The slowdown in collection of receivables in Venezuela was in large part due to the recent monetary problems that country has experienced and subsequent to the end of the fiscal 1996 first quarter, payments resumed on a normal basis. Accounts receivable from construction work in progress decreased $4,995,000 to $1,840,000 due to completion of a large project in Argentina. Inventories of compressor parts and supplies decreased $997,000 to $3,855,000 resulting from the timing of purchases as well as an effort to minimize inventories. Construction work in progress decreased $762,000 to $1,690,000 due to the previously mentioned project completion. Current tax benefits totalled $2,230,000, the majority of which are related to the discontinuance of the Company's oil and gas operations and the related asset writedowns. Net assets of discontinued operations at December 31, 1995 were $8,891,000, unchanged from the balance as of September 30, 1995 as no sales of producing properties were closed during the first 1996 fiscal quarter. Accounts payable decreased $4,199,000 to $5,768,000 due to the completion of the project in Argentina previously noted and the reductions in inventory and the level of capital spending that occurred during the quarter. Management expects cash requirements for the remainder of fiscal 1996 to be satisfied from cash on hand, cash flow from operations and additional bank borrowings as required. PART II. OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K The Registrant made no filing on Form 8-K during the period October 1, 1995 and December 31, 1995. All other items are inapplicable or have negative answers and are therefore omitted from this report. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. PRODUCTION OPERATORS CORP (Registrant) By: D. John Ogren D. John Ogren President By: John B. Simmons John B. Simmons Principal Financial and Accounting Officer Date: February 8, 1996 EX-27 2
5 1,000 3-MOS SEP-30-1996 DEC-31-1995 1,818 202 25,037 165 5,545 48,950 260,239 94,938 222,562 13,291 47,234 0 0 10,259 132,468 222,562 21,736 22,124 9,769 9,769 5,533 0 588 6,234 2,177 4,057 0 0 0 4,057 .40 .40
-----END PRIVACY-ENHANCED MESSAGE-----