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U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
X QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1996
or
TRANSITION REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Transition Period From .........to........
Commission File No. 0-20310
SUPERIOR ENERGY SERVICES, INC.
(Exact Name of small business issuer
as specified in its charter)
Delaware 75-2379388
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1503 Engineers Road
P.O. Box 6220,
New Orleans, LA 70174
(Address of principal executive offices) (Zip Code)
Issuer's telephone number: (504) 393-7774
Check whether the issuer: (1) filed all reports
required to be filed by Section 13 or 15 (d) of the Exchange
Act during the past 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 __
The number of shares of the Registrants' common stock
outstanding on April 30, 1996 was 17,032,916
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PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements
Superior Energy Services, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
March 31, 1996 and December 31, 1995
(in thousands)
3/31/96 12/31/95
(Unaudited) (Audited)
____________ ____________
ASSETS
Current assets:
Cash and cash equivalents $ 2,452 $ 5,068
Accounts receivable - net 3,358 3,759
Inventories 1,046 968
Deferred income taxes 256 256
Other 187 227
____________ ____________
Total current assets 7,299 10,278
Property, plant and equipment-net 6,563 6,904
Goodwill - net 4,518 4,576
Patent - net 1,200 1,226
____________ ____________
Total assets $19,580 $22,984
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable - bank $ 234 $ 1,249
Accounts payable 1,572 2,345
Notes payable - other 1,407 3,422
Unearned income 911 1,085
Accrued expenses 347 456
Income taxes payable 652 545
Other 235 200
____________ ____________
Total current liabilities 5,358 9,302
____________ _____________
Deferred income taxes 408 408
Other - 180
Stockholders' equity:
Preferred stock of $.01 par value.
Authorized, 5,000,000 shares;
none issued - -
Common stock of $.001 par value.
Authorized,40,000,000 shares;
issued, 17,032,916 17 17
Additional paid-in capital 16,230 16,230
Accumulated deficit (2,433) (3,153)
____________ ______________
Total stockholders' equity 13,814 13,094
____________ ______________
Total liabilities and
stockholders' equity $ 19,580 $ 22,984
============ ==============
Superior Energy Services, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
Three Months Ended March 31, 1996 and 1995
(in thousands, except per share data)
(unaudited)
1996 1995
____________ _____________
REVENUES $ 4,640 $ 2,936
Costs and expenses:
Costs of services 2,271 1,779
Depreciation and amortization 293 41
General and administrative 1,182 716
____________ _____________
Total costs and expenses 3,746 2,536
____________ _____________
Income from operations 894 400
Other income (expense):
Interest expense (30) (19)
Other 165 59
____________ ____________
Income before income taxes 1,029 440
Provision for income taxes 309 -
____________ ____________
Net income $ 720 $ 440
============ ============
Income before income taxes Pro forma
____________
as per above $ 440
Pro forma income taxes 163
____________
Net income as adjusted for pro forma
income taxes $ 277
============
Net income per common
share and common share
equivalent $ 0.04 $ 0.03
============ ============
Weighted average shares
outstanding 17,072,916 8,400,000
============ ============
Net income as adjusted for pro forma income taxes
Superior Energy Services, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
Three Months Ended March 31, 1996 and 1995
(in thousands)
(unaudited)
1996 1995
___________ ___________
Cash flows from operating
activities:
Net income $ 720 $ 440
Adjustments to reconcile net
income to net cash provided by
operating activities:
Depreciation and amortization 293 35
Unearned income (174) -
Changes in operating assets
and liabilities:
Accounts receivable 401 (1,040)
Notes receivable - 110
Inventories (78) (48)
Other - net (104) 48
Accounts payable (773) 445
Due to shareholders (15) 49
Accrued expenses (109) -
Income taxes payable 107 -
___________ ___________
Net cash provided by operating
activities 268 39
___________ ____________
Cash flows from investing
activities:
Proceeds from sale of property and
equipment 351 -
Payments for purchases of property
and equipment (220) (214)
___________ ____________
Net cash provided by (used
in) investing activities 131 (214)
___________ ____________
Cash flows from financing
activities:
Notes payable - bank (1,015) 650
Deferred payment for acquisition
of Oil Stop, Inc. (2,000) -
Shareholder distributions - (412)
___________ _____________
Net cash provided by (used
in) financing activities (3,015) 238
___________ _____________
Net increase (decrease) in
cash (2,616) 63
Cash and cash equivalents at
beginning of period 5,068 207
____________ _____________
Cash and cash equivalents at
end of period $ 2,452 $ 270
============ =============
SUPERIOR ENERGY SERVICES, INC.
AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
Three Months Ended March 31, 1996 and 1995
(1) Reorganization
_______________
On December 13, 1995, the Company consummated a share
exchange (the "Reorganization") whereby it (i) acquired all
of the outstanding capital stock of Superior Well Service,
Inc., Connection Technology, Ltd. and Superior Tubular
Services, Inc. (collectively, "Superior") in exchange for
8,400,000 Common Shares and (ii) acquired all of the
outstanding capital stock of Oil Stop, Inc. ("Oil Stop") in
exchange for 1,800,000 Common Shares and $2.0 million cash.
As used in the consolidated financial statements, the term
"Small's" refers to the Company as of dates and periods
prior to the Reorganization and the term "Company" refers to
the combined operations of Small's, Oil Stop and Superior
after the consummation of the Reorganization.
As a result of the controlling interest the Superior
shareholders have in the Company following the
Reorganization, among other factors, the Reorganization has
been accounted for as a reverse acquisition (i.e., a
purchase of Small's by Superior) under the "purchase" method
of accounting. As such, the Company's consolidated
financial statements and other financial information reflect
the historical operations of Superior for periods and dates
prior to the Reorganization. The net assets of Small's and
Oil Stop, at the time of the Reorganization, were reflected
at their estimated fair value pursuant to purchase
accounting at the date of the Reorganization. The net
assets of Superior have been reflected at their historical
book values.
(2) Basis of Presentation
______________________
Certain information and footnote disclosures normally in
financial statements prepared in accordance with generally
accepted accounting principles have been condensed or
omitted pursuant to rules and regulations of the Securities
and Exchange Commission; however, management believes the
disclosures which are made are adequate to make the
information presented not misleading. These financial
statements and footnotes should be read in conjunction with
the financial statements and notes thereto included in the
Company's Annual Report on Form 10-KSB for the year ended
December 31, 1995 and the accompanying notes and
Management's Discussion and Analysis or Plan of Operation.
(Continued)
SUPERIOR ENERGY SERVICES, INC.
AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
The financial information for the three months ended March
31, 1996 and 1995, has not been audited. However, in the
opinion of management, all adjustments (which include only
normal recurring adjustments) necessary to present fairly
the results of operations for the periods presented have
been included therein. The results of operations for the
first three months of the year are not necessarily
indicative of the results of operations which might be
expected for the entire year.
(3) Pro Forma Income Taxes and Earnings per Share
______________________________________________
Prior to the Reorganization, the Superior Companies, with
the exception of Superior Tubular Services, Inc., which was
a sub-chapter C corporation, were sub-chapter S corporations
for income tax reporting purposes. Therefore, through March
31, 1995, no provision for federal and state income taxes
had been made. Pro forma income tax expense and net income
as adjusted for income taxes is presented for the three
months ended March 31, 1995 on the Statement of Operations
in order to reflect the impact on income taxes as if
Superior had been a taxable entity during that period. In
computing weighted average share outstanding, 8,400,000
shares issued in exchange for Superior's capital stock is
assumed to be outstanding as of January 1, 1995. All other
common shares issued or sold are included in the weighted
average shares outstanding calculation from the date of
issuance or sale.
(4) Joint Venture
______________
On January 15, 1996, the Company entered into a joint
venture with G&L Tool Company ("G&L"), an unrelated party,
which extends through January 31, 2001. The Company has
contributed assets of Superior Fishing with a book value of
approximately $4.5 million to the joint venture which is
engaged in the business of renting specialized oil well
equipment and fishing tools to the oil and gas industry in
connection with the drilling, development and production of
oil, gas and related hydrocarbons.
Superior Fishing receives as its share of distributions from
operations $110,000 a month commencing February 1996
through January 1998 and $80,000 a month for the period
February 1998 through January 2001. The Company's share of
distributions is personally guaranteed by a principal of
G&L. In connection with the joint venture, Superior Fishing
also sold G&L land for $300,000.
(Continued)
SUPERIOR ENERGY SERVICES, INC.
AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
The responsibility and authority for establishing policies
relating to the strategic direction of the joint venture
operations and ensuring that such policies are implemented
have been vested in a policy committee consisting of three
members, one of which is a Company employee. G&L will be
responsible for the maintenance and repair, insurance and
licenses and permits for all joint venture assets.
At the end of the joint venture term, G&L will have at its
election, the option to purchase all of the Superior Fishing
assets contributed to the joint venture for $2 million.
(5) Stockholders Equity
____________________
At a special meeting of stockholders on February 23, 1996,
the shareholders approved increasing the authorized number
of shares of common stock to 40,000,000.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
_________________________________________________
Reorganization
For purposes of this presentation, the term "Small's" refers
to the Company as of dates and periods prior to the
Reorganization and the term "Company" refers to the combined
operations of Small's, Oil Stop and Superior after the
consummation of the Reorganization.
On December 13, 1995, the Company consummated a share
exchange (the "Reorganization") whereby it (i) acquired all
of the outstanding capital stock of Superior Well Service,
Inc., Connection Technology, Ltd. and Superior Tubular
Services, Inc. (collectively "Superior") in exchange for
8,400,000 Common Shares and (ii) acquired all of the
outstanding capital stock of Oil Stop, Inc. ("Oil Stop") in
exchange for 1,800,000 Common Shares and $2.0 million cash.
Due to the controlling interest the Superior shareholders
have in the Company as a result of the Reorganization, the
Reorganization has been accounted for as a reverse
acquisition (i.e., a purchase of Small's by Superior) under
the "purchase" method of accounting. As such, the Company's
financial statements and other financial information now
reflect the historical operations of Superior for periods
and dates prior to the Reorganization. The net assets of
Small's and Oil Stop have been reflected at their estimated
fair value pursuant to purchase accounting at the date of
the Reorganization. The net assets of Superior have been
reflected at the historical book values.
Comparison of the Results of Operations for the Quarter
Ended March 31, 1996 and 1995
Revenues increased 58% in the first quarter ended March 31,
1996 as compared to the quarter ended March 31, 1995. Of
this increase, 29% is a result of increased levels of
activity and 71% is the result of acquisitions.
Cost of services for the quarter ended March 31, 1996
increased 28% over the quarter ended March 31, 1995. Of
this increase, 46% is as a result of increased levels of
activity and 54% is the result of acquisitions.
Depreciation increased $252,000 in the quarter ended March
31, 1996 as compared to the quarter ended March 31, 1995.
Of this amount, $20,000 is the result of additional
equipment placed into service and $232,000 is the result of
acquisitions. General and administrative expenses increased
59% in the first quarter of 1996 as compared to the first
quarter of 1995. Of this increase, 11% is the result of
additional activity and 89% is the result of acquisitions.
For the year ended August 31, 1995, Small's incurred a loss
of $1,586,000 followed by a loss of $378,000 for the quarter
ended November 30, 1995. The Company, in an effort to
eliminate these continued losses, entered into a joint
venture for its West Texas rental tool and fishing
operations on January 15, 1996. As a result of the joint
venture, the Company will have no liability for any
operating losses that may be incurred in the joint venture.
The Company's share of distributions will be $110,000 a
month for the first 24 months and $80,000 a month for the
remaining 36 months of the term of the joint venture.
Capital Resources and Liquidity
Net cash provided by operating activities increased to
$268,000 for the quarter ended March 31, 1996 from $39,000
for the quarter ended March 31, 1995. The Company's cash
decreased to $2,452,000 at March 31, 1996 from $5,068,000 at
December 31, 1995. This was primarily the result of a $2
million final payment made in connection with the
acquisition of all the capital stock of Oil Stop as well as
a reduction of debt of approximately $1.0 million.
The Company's working capital improved to $1,941,000 at
March 31, 1996 as compared to $976,000 at December 31, 1995.
The Company's current ratio also improved from 1.08 at March
31, 1995 to 1.36 at March 31, 1996.
The Company, in connection with the joint venture for its
West Texas fishing and rental tool operation, sold land for
$300,000. During the first quarter of 1996 it also sold
various equipment for approximately $51,000. Both these
sales resulted in no gain or loss. In the first quarter of
1996, the Company purchased approximately $220,000 of
machinery and equipment. These purchases were funded
primarily from cash generated from operations.
The Company had a $1,000,000 revolving line of credit which
expired March 31, 1996. There was approximately $87,000
outstanding at March 31, 1996. The line was extended to May
31,1996 at which time it is expected to be paid in full.
Additionally, the Company maintains a master note loan
agreement with a $1.4 million revolving line of credit. The
Company believes that its available funds, together with
cash generated from operations and funds available under
this line of credit will be sufficient to meet the Company's
working capital requirements. However, significant capital
expenditures or other acquisitions may require additional
equity or debt financing.
Inflation has not had a significant effect on the Company's
financial condition or operations in recent years.
PART II. OTHER INFORMATION
_________________
Item 4. Submission of Matters to a Vote of Security Holders
_____________________________________________________________
The Company held a special meeting of stockholders of the
Company on February 23, 1996 to consider an amendment of the
Company's certificate of incorporation to increase the
number of authorized shares of Company common stock by
15,000,000 shares to bring the total number of authorized
shares of Company common stock to 40,000,000. Of the
17,032,916 shares outstanding and entitled to vote,
16,085,535 were voted for the proposal, 311,250 were voted
against and there were 636,131 abstentions.
Item 6. Exhibits and Reports on Form 8-K
__________________________________________
a) The following exhibits are filed with this Form-10QSB
3.1 Composite of the Company's Certificate of Incorporation
including amendment filed on March 27, 1996.
b) The Company did not file any reports on Form 8-K during
the quarter ended March 31, 1996.
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.
Superior Energy Services, Inc.
Date: May 14, 1996 By: /s/ Terence E. Hall
_______________________
Terence E. Hall
Chairman of the Board,
Chief Executive Officer
and President
(Principal Executive Officer)
Date: May 14, 1996 By: /s/ Robert S. Taylor
________________________
Robert S. Taylor
Chief Financial Officer
(Principal Financial and
Accounting Officer)
COMPOSITE
CERTIFICATE OF INCORPORATION
OF
SUPERIOR ENERGY SERVICES, INC.
The undersigned, a natural person, for the purpose of
organizing a corporation for conducting the business and
promoting the purposes hereinafter stated, under the provisions
and subject to the requirements of the laws of the General
Corporation Law of the State of Delaware, hereby certifies that:
FIRST: The name of the corporation (hereinafter called the
"corporation" is Superior Energy Services, Inc.
SECOND: The address of the registered office of the
corporation in the Sate of Delaware is c/o United Corporate
Services, Inc. 15 East North Street, City of Dover, County of
Kent; and the name of the registered agent of the corporation in
the State of Delaware at such address is United Corporate
Services, Inc.
THIRD: The purpose of the corporation is to engage in any
lawful act or activity for which corporations may be organized
under the General Corporation Law of the State of Delaware, and
by such statement all lawful acts and activities shall be within
the purposes of the corporation, except for express limitations,
if any.
FOURTH: The aggregate number of shares which the
corporation shall have authority to issue is Forty-Five Million
(45,000,000) shares, of which Forty Million (40,000,000) shares
shall be designated Common Stock, par value $.001 per share, and
Five Million (5,000,000) shares shall be designated Preferred
Stock, par value $.01 per share. The Board of Directors may
authorize the issuance from time to time of the Preferred Stock
in one or more series with such designations, preferences,
qualifications, limitations, restrictions and optional or other
special rights (which may differ with respect to each series) as
the Board may fix by resolution. Without limiting the foregoing,
the Board of Directors is authorized to fix with respect to each
series:
(1) the number of shares which shall constitute
the series and the name of the series;
(2) the rate and times at which, and the
preferences and conditions under which, dividends shall
be payable on shares of the series, and the status of
such dividends as cumulative or non-cumulative and as
participating or non-participating;
(3) the prices, times and terms, if any, at or
upon which shares of the series shall be subject to
redemption;
(4) the rights, if any, of holders of shares of
the series to convert such shares into, or to exchange
such shares for, shares of any other class of stock of
the corporation;
(5) the terms of the sinking fund or redemption
or purchase account, if any, to be provided for shares
of the series;
(6) the rights and preferences, if any, of the
holders of shares of the series upon any liquidation,
dissolution or winding up of the affairs of, or upon
any distribution of the assets of, the corporation;
(7) the limitations, if any, applicable which
such series is outstanding, on the payment of dividends
or making of distributions on, or the acquisition of,
the Common Stock or any other class of stock which does
not rank senior to the shares of the series; and
(8) the voting rights, if any, to be provided for
shares of the series.
FIFTH: The name and the mailing address of the incorporator
are as follows:
Name Mailing Address
Mark Gasarch 599 Lexington Avenue - 28th Floor
New York, NY 10022
SIXTH: The corporation is to have perpetual existence.
SEVENTH: Whenever a compromise or arrangement is proposed
between this corporation and its creditors or any class of them
and/or between this corporation and its stockholders or any class
of them, any court of equitable jurisdiction within the State of
Delaware may, on the application in a summary way of this
corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for this
corporation under Section 291 of Title 8 of the Delaware Code or
on the application of trustees in dissolution or of any receiver
or receivers appointed for this corporation under Section 279 of
Title 8 of the Delaware Code order a meeting of the creditors or
class of creditors, and/or of the stockholders or class of
stockholders of this corporation, as the case may be, to be
summoned in such manner as the said court directs. If a majority
in number representing three-fourths in value of the creditors or
class of creditors, and/or of the stockholders or class of
stockholders of this corporation, as the case may be, agree to
any compromise or arrangement and to any reorganization of this
corporation as a consequence of such compromise or arrangement,
the said compromise or arrangement and the said reorganization
shall, if sanctioned by the court to which the said application
has been made, be binding on all the creditors or class of
creditors, and/or on all the stockholders or class of
stockholders, of this corporation, as the case may be, and also
on this corporation.
EIGHTH: For the management of the business and for the
conduct of the affairs of the corporation, and in further
definition, limitation, and regulation of the powers of the
corporation and of its directors and of its stockholders or any
class thereof, as the case may be, it is further provided:
1. The management of the business and the
conduct of the affairs of the corporation shall be
vested in its Board of Directors. The number of
directors which shall constitute the whole Board
of Directors shall be fixed by, or in the manner
provided in, the Bylaws.
2. After the original or other Bylaws of
the corporation have been adopted, amended, or
repealed, as the case may be, in accordance with
the provisions of Section 109 of the General
Corporation law of the State of Delaware, and,
after the corporation has received any payment for
any of its stock,the power to adopt, amend, or
repeal the Bylaws of the corporation may be
exercised by the Board of Directors of the
corporation.
3. Whenever the corporation shall be
authorized to issue only one class of stock, each
outstanding share shall entitle the holder thereof
to notice of, and the right to vote at, any
meeting of the stockholders.
NINTH: The personal liability of the directors of the
corporation is hereby eliminated to the fullest extend permitted
by paragraph (7) of subsection (b) of Section 102 of the General
Corporation Law of the State of Delaware, as the same may be
amended and supplemented.
TENTH: The corporation shall, to the fullest extent
permitted by Section 145 of the General Corporation Law of the
State of Delaware, as the same may be amended and supplemented,
indemnify any and all persons whom it shall have power to
indemnify under said section from and against any and all of the
expenses, liabilities, or other matters referred to or covered by
said section, and the indemnification provided for which those
indemnified may be entitled under any Bylaw, 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 such office, and shall continue as to a
person who has ceased to be a director, officer, employee, or
agent and shall inure to the benefit of the heirs, executors, and
administrators of such a person.
ELEVENTH: From time to time any of the provisions of this
certificate of incorporation may be amended, altered, or
repealed, and other provisions authorized by the laws of the
State of Delaware at the time in force may be added or inserted
in the manner and at the time prescribed by said laws, and all
rights at any time conferred upon the stockholders of the
corporation by this certificate of incorporation are granted
subject to the provisions of this Article ELEVENTH.
5
1,000
3-MOS
DEC-31-1996
MAR-31-1996
2,452
0
3,358
204
1,046
7,299
6,563
989
19,580
5,358
234
17
0
0
13,797
19,580
4,640
4,640
2,271
3,746
(165)
0
30
1,029
309
720
0
0
0
720
.04
.04
