===============================================================
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 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
October 31, 1996 was 18,597,045.
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PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements
Superior Energy Services, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
September 30, 1996 and December 31, 1995
(in thousands)
9/30/96 12/31/95
(Unaudited) (Audited)
___________ ____________
ASSETS
Current assets:
Cash and cash equivalents $ 1,574 $ 5,068
Accounts receivable - net 6,519 3,759
Inventories 955 968
Deferred income taxes 256 256
Other 356 227
___________ ___________
Total current assets
9,660 10,278
Property, plant and equipment - net
9,347 6,904
Goodwill - net
8,283 4,576
Patent - net
1,151 1,226
___________ ____________
Total assets $ 28,441 $ 22,984
=========== ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable - bank $ 1,421 1,249
Accounts payable 2,008 2,345
Notes payable - other 1,446 3,422
Unearned income 565 1,085
Accrued expenses 747 456
Income taxes payable 1,656 545
Other 200 380
____________ ___________
Total current liabilities
8,043 9,482
___________ ____________
Notes payable - other
250 -
Deferred income taxes
1,114 408
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, 18,597,045 18 17
Additional paid-in capital 19,551 16,230
Accumulated deficit (535) (3,153)
_____________ ____________
Total stockholders' equity $19,034 $13,094
_____________ ___________
Total liabilities and
stockholders' equity 28,441 22,984
============= ===========
Superior Energy Services, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
Three and Nine Months Ended September 30, 1996 and 1995
(in thousands, except per share data)
(unaudited)
Three Months Nine Months _
_______________________ ______________________
1996 1995 1996 1995
___________ __________ __________ __________
REVENUES $ 5,910 $ 2,593 $ 15,240 $ 8,740
____________ ___________ ___________ __________
Costs and expenses:
Costs of services
2,716 1,622 7,129 5,335
Depreciation and amortization 346 56 936 144
General and administrative 1,359 627 3,548 2,076
____________ ____________ ____________ __________
Total costs and expenses 4,421 2,305 11,613 7,555
____________ ____________ ____________ __________
Income from operations 1,489 288 3,627 1,185
Other income (expense):
Interest expense (11) (17) (59) (65)
Other (7) 11 173 67
____________ ____________ ____________ __________
Income before income taxes 1,471 282 3,741 1,187
Provision for income taxes 441 - 1,122 -
____________ ____________ ____________ __________
Net income $ 1,030 $ 282 $ 2,619 $ 1,187
============ ============ ============ ==========
Pro forma(1) Pro forma(1)
Income before income taxes ____________ ____________
as per above $ 282 $ 1,187
Pro forma income taxes 104 439
____________ ____________
Net income as adjusted for pro forma
income taxes $ 178 $ 748
=========== ============
Net income per common
share and common share
equivalent $ 0.06 $ 0.02 $ 0.15 $ 0.09
============ ============ ============ ============
Weighted average shares outstanding 17,613,766 8,400,000 17,259,064 8,400,000
============ ============ ============ ============
(1) Net income as adjusted for pro forma income taxes
Superior Energy Services, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
Nine Months Ended September 30, 1996 and 1995
(in thousands)
(unaudited)
1996 1995
________ _________
Cash flows from operating activities:
Net income $ 2,619 $ 1,187
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 936 144
Unearned income (519) -
Changes in operating assets and
liabilities:
Accounts receivable (1,044) (94)
Notes receivable - 229
Inventories 14 (55)
Other - net (70) (25)
Accounts payable (1,186) (50)
Due to shareholders (26) 87
Accrued expenses 135 -
Income taxes payable 1,111 -
____________ ______________
Net cash provided by operating activities 1,970 1,423
Cash flows from investing activities:
Proceeds from sale of property and
equipment 357 -
Payments for purchases of property and
equipment (1,164) (509)
____________ ______________
Acquisition of businesses, net of cash
acquired (2,349) -
____________ _____________
Net cash used in investing
activities (3,156) (509)
____________ ______________
Cash flows from financing activities:
Notes payable - bank (308) 190
Deferred payment for acquisition of Oil
Stop, Inc. (2,000) -
Shareholder distributions - (965)
____________ ____________
Net cash provided by (used in)
financing activities (2,308) (775)
____________ _____________
Net increase (decrease) in cash (3,494) 139
Cash and cash equivalents at beginning of
period 5,068 207
_____________ _____________
Cash and cash equivalents at end of
period $ 1,574 $ 346
SUPERIOR ENERGY SERVICES, INC.
AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
Nine Months Ended September 30, 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 that
this information is fairly presented. 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
(2) Basis of Presentation (continued)
The financial information for the nine months ended
September 30, 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 nine 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
September 30, 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 and nine months ended September 30, 1995 on the
Statement of Operations in order to reflect the impact on
income taxes as if Superior had been a taxable entity during
those periods. In computing weighted average share
outstanding, 8,400,000 shares issued in the Reorganization
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 distributions are
in revenues on the Condensed Consolidated Statements of
Operations. 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.
SUPERIOR ENERGY SERVICES, INC.
AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(4) Joint Venture (continued)
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) Stockholder's 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.
(6) Business Combinations
On July 30, 1996, the Company effected a merger in which it
acquired all of the capital stock of Baytron, Inc. for
$1,100,000 cash and 550,000 Common Shares. Baytron, Inc.
designs, manufactures, sells and rents oil and gas drilling
instrumentation and computerized rig data acquisition
systems used to monitor, display and record drill site
functions.
On September 15, 1996, the Company effected a merger in
which it acquired all of the capital stock of Dimensional
Oil Field Services, Inc. ("Dimensional") for $1,500,000
cash, promissory notes in the aggregate amount of $1,000,000
and 1,000,000 Common Shares. Promissory notes having an
aggregate principal amount of $750,000 are subject to a
custodial agreement under which the notes will be released
to the former Dimensional shareholders upon Dimensional's
meeting specified earnings levels through December 31, 1998.
Dimensional provides offshore well plug and abandonment
services primarily in the Gulf of Mexico.
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 Quarters
Ended September 30, 1996
and 1995
Revenues increased 128% in the third quarter ended September
30, 1996 compared to the quarter ended September 30, 1995.
Of this increase, 49% is the result of increased levels of
activity and favorable weather conditions. The remaining
increase is a result of the acquisitions the Company has
made over the last year.
Cost of services for the quarter ended September 30, 1996
increased 67% from the quarter ended September 30, 1995. Of
the increase, 30% is the result of the increased levels of
activity while the remainder is the effect of the Company's
acquisitions. Depreciation increased by $296,000 in the
quarter ended September 30, 1996 as compared to the quarter
ended September 30, 1995 primarily as a result of the
Company's acquisitions. General and administrative expenses
increased 117% in the third quarter of 1996 as compared to
the third quarter of 1995. Of this increase, 29% is the
result of supporting the increased levels of revenue, while
71% of the increase is the result of the Company's
acquisitions.
Comparison of the Results of Operations for the Nine Months
ended September 30, 1996 and 1995.
Revenues increased 74% for the nine months ended September
30, 1996 as compared to the nine months ended September 30,
1995. Of this increase, 40% is the result of increased
levels of activity as well as favorable weather conditions
in the Gulf of Mexico. The remaining increase is a result
of the acquisitions the Company has made over the last year.
Cost of services for the nine months ended September 30,
1996 increased 34% over the nine months ended September 30,
1995. Of this income, 45% is the result of increased levels
of activity and 55% is the result of the Company's
acquisitions. Depreciation increased $792,000 in the nine
months ended September 30, 1996 primarily as a result of the
acquisitions. General and administrative expenses increased
71% for the nine months ended September 30, 1995. Of this
increase, 22% is the result of the increased levels of
activity and the remainder is the result of the Company's
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 is $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 was $1,970,000 for
the nine months ended September 30, 1996. This is an
increase of $547,000 as compared to the nine months ended
September 30, 1995. The Company's accounts payable has been
reduced by $1,186,000 since December 31, 1995, primarily as
a result of a permanent reduction of Small's remaining
obligations.
The Company's working capital position improved to
$1,618,000 at September 30, 1996 as compared to $976,000 at
December 31, 1995. This is primarily as a result of the
increase in accounts receivable caused by the increase in
revenue. The Company's current ratio also improved from
1.10 at December 31, 1995 to 1.20 at September 30, 1996.
The Company, in connection with the joint venture for its
West Texas fishing and rental tool operation, sold land for
$300,000 in January 1996. During the first nine months of
1996 it also sold various equipment for approximately
$57,000. Both these sales resulted in no gain or loss. In
the first nine months of 1996, the Company purchased
approximately $1,164,000 of machinery and equipment. These
purchases were funded primarily from cash generated from
operations.
On July 30, 1996, the Company, pursuant to a merger acquired
all the capital stock of Baytron, Inc. for $1,100,000 in
cash and 550,000 Common Shares. The cash portion of the
purchase was made with available funds.
On September 15, 1996, the Company, pursuant to a merger,
acquired all the capital stock of Dimensional Oil Field
Services, Inc. for $1,500,000 cash, $1,000,000 in notes
payable and 1,000,000 Common Shares. The Company borrowed
$900,000 of the cash used to fund this transaction.
Promissory notes having an aggregate principal amount of
$750,000 are subject to a custodial agreement under which
the common stock and the notes will be released to the
former Dimensional shareholders upon Dimensional's meeting
specified earnings levels through December 31, 1998.
The Company maintains a revolving credit facility which was
increased in June 1996 from $1.4 million to $4.0 million. As
of September 30, 1996, there was approximately $900,000
outstanding under this facility. During the third quarter,
the Board of Directors authorized the repurchase of
Company's common stock. No common stock has been
repurchased and this program has been discontinued. The
Company believes that its available funds, together with
cash generated from operations and available borrowing
capacity should be sufficient to support the Company's
strategic and capital spending initiatives.
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 its Annual Meeting of stockholders on
September 25, 1996, at which meeting the stockholders
considered and approved the re-election of the Board of
Directors consisting of Terence E. Hall, Ernest J. Yancey,
Jr., James E. Ravannack, Richard Lazes, Justin L. Sullivan,
Kenneth C. Boothe and Bradford Small. Out of the 16,838,296
shares present at the meeting, 16,771,246 were voted for and
67,050 against each of the nominees.
Item 6. Exhibits and Reports on Form 8-K
a) Exhibits
10.1 Agreement and Plan of Merger dated July 30, 1996 by
and among the Company, Baytron Acquisition, Inc., Baytron,
Inc., James Edwards and Judy Edwards, incorporated by
reference to the Company's Registration on Form SB-2 filed
on November 12, 1996 (Registration Statement No. 333-15987).
10.2 Agreement and Plan of Merger dated September 15, 1996
by and among the Company, Dimensional Oil Field Services, Inc.
and Emmett E. Crockett, Evelyn Crockett, Geroge K. Crockett
and Robert L. Crockett, incorporated by reference to the
Company's Form 8-K dated September 16, 1996.
27. Financial Data Schedule
b) Reports on Form 8-K. The Company filed a Current Report
on Form 8-K under items 2 and 7 dated September 30, 1996
reporting the acquisition, pursuant to a merger, of
Dimensional Oil Field Services, Inc.
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: November 13, 1996 By: /s/ Terence E. Hall
_________________________
Terence E. Hall
Chairman of the Board,
Chief Executive Officer
and President
(Principal Executive Officer)
Date: November 13, 1996 By: /s/ Robert S. Taylor
________________________
Robert S. Taylor
Chief Financial Officer
(Principal Financial and
Accounting Officer)
5
1,000
9-MOS
DEC-31-1996
SEP-30-1996
1,574
0
6,761
242
955
9,660
11,450
2,103
28,441
8,043
0
0
0
18
19,016
28,441
0
15,240
0
7,129
4,484
0
59
3,741
1,122
2,619
0
0
0
2,619
.15
0
