SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
DATE OF REPORT (Date of earliest event reported): March 14, 1997
SUPERIOR ENERGY SERVICES, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 0-20310 75-2379388
(State or other jurisdiction of (Commission File Number) (IRS Employer
identification incorporation Identification)
or organization)
1503 ENGINEERS ROAD, BELLE CHASSE, LOUISIANA 70037
(Address of principal executive offices, Zip Code)
Registrant's telephone number, including area code: (504) 393-7774
The undersigned registrant hereby amends the following items,
financial statements, exhibits or other portions of its Current Report
on Form 8-K dated March 14, 1997, as set forth in the page(s) attached
hereto:
Item 7. Financial Statements and Exhibits
(a) Financial statements of business acquired. The financial statements
of the business acquired filed as part of this report are listed in the
Financial Information Table of Contents appearing on page 3 hereof.
(b) Pro forma financial information. The pro forma financial statements
of Superior filed as part of this report are listed in the Financial
Information Table of Contents appearing on page 12 hereof.
(c) Exhibits.
23.1 Consent of KPMG Peat Marwick LLP
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 13, 1997 By: /s/ Terence E. Hall
----------------------------
Terence E. Hall
Chairman of the Board,
Chief Executive Officer
and President
(Principal Executive Officer)
Date: May 13, 1997 By: /s/ Robert S. Taylor
----------------------------
Robert S. Taylor
Chief Financial Officer
(Principal Financial and
Accounting Officer)
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Page
NAUTILUS PIPE & TOOL RENTAL, INC.
Independent Auditors Report 3
Balance Sheet at December 31, 1996 4
Statement of Operations and Retained Earnings
for the year ended December 31, 1996 5
Statement of Cash Flows for the year ended
December 31, 1996 6
Notes to Financial Statements 7
Pro Forma Consolidated Financial Statements
Unaudited Pro Forma Condensed Balance Sheet as
of December 31, 1996 12
Unaudited Pro Forma Condensed Statement of Earnings
for the year ended December 31, 1996 13
Notes to unaudited Pro Forma Condensed Financial
Information 14
Independent Auditors' Report
The Board of Directors
Nautilus Pipe & Rental Tool, Inc.
We have audited the accompanying balance sheet of Nautilus Pipe & Rental Tool,
Inc. as of December 31, 1996, and the related statements of operations and
retained earnings and cash flows for the year then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Nautilus Pipe & Rental Tool,
Inc. as of December 31, 1996, and the results of its operations and its cash
flows for the year then ended, in conformity with generally accepted
accounting principles.
KPMG PEAT MARWICK LLP
New Orleans, Louisiana
April 17, 1997
NAUTILUS PIPE & RENTAL TOOL, INC.
BALANCE SHEET
DECEMBER 31, 1996
ASSETS
Current Assets:
Accounts receivable - net allowance
for doubtful accounts of $10,000 $1,189,739
Accounts receivable - affiliate 195,491
Other 1,560
----------
Total current assets 1,386,790
Property and equipment - net 2,446,669
----------
$3,833,459
==========
LIABILITIES AND SHAREHOLDER'S EQUITY
Current liabilities:
Notes payable - current $ 827,000
Accounts payable and accrued expenses 78,307
Income taxes payable 86,735
Deferred income taxes 336,043
---------
Total current liabilities 1,328,085
Notes payable 588,681
Due to shareholder 483,541
Deferred income taxes 154,805
Stockholder's equity:
Common stock no par value, authorized 1,000
shares; issued -100 shares 168,569
Treasury stock (40,000)
Retained earnings 1,149,778
---------
Total stockholder's equity 1,278,347
---------
$3,833,459
==========
NAUTILUS PIPE & RENTAL TOOL, INC.
STATEMENT OF OPERATIONS AND RETAINED EARNINGS
YEAR ENDED DECEMBER 31, 1996
Revenues $4,424,334
----------
Expenses:
Cost of services 1,401,313
General and administrative 1,559,924
Interest 125,094
Depreciation 556,150
----------
Income before income taxes 781,853
Provision for income taxes 300,923
----------
Net income 480,930
Retained earnings at beginning of year 668,848
----------
Retained earnings at end of year $1,149,778
==========
NAUTILUS PIPE & RENTAL TOOL, INC.
STATEMENT OF CASH FLOWS
DECEMBER 31, 1996
Cash flows from operating activities
Net income $ 480,930
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation 556,150
Deferred income taxes 129,748
Allowance for doubtful accounts 10,000
Net change in operating assets and liabilities:
Accounts receivable (117,863)
Accounts receivable - affiliates 66,762
Other current assets 7,821
Accounts payable (106,182)
Income taxes payable 1,639
Other 18,521
-----------
Net cash provided by operating activities 1,047,526
Cash flows used in investing activities:
Purchases of property and equipment (1,312,124)
-----------
Net cash used in investing activities (1,312,124)
Cash flows from (used in) financing activities:
Notes payable 322,321
Due to shareholder (69,315)
-----------
Net cash provided by financing activities 253,006
Net decrease in cash (11,592)
Cash at beginning of year 11,592
-----------
Cash at end of year $ -
===========
NAUTILUS PIPE & RENTAL TOOL, INC.
Notes to Financial Statements
December 31, 1996
(1) Organization and Summary of Significant Accounting Policies
(a) Organization
Nautilus Pipe & Rental Tool, Inc., rents specialized equipment used
in oil and gas well drilling, work-over, completion and production
activities.
(b) Use of Estimates
The preparation of financial statements requires management to make
estimates and assumptions that effect the reported amounts in the
financial statements and related disclosures. Actual results could
differ from these estimates.
(c) Property and Equipment
Property and equipment is carried at cost. Depreciation is computed
using the straight-line method based on the following estimated
useful lives:
Estimated
Description useful lives
----------- ------------
Buildings and improvements 30 years
Machinery and equipment 5-15 years
Automobiles, trucks, trailers
and tractors 3-5 years
Furniture and equipment 5-7 years
(d) Income Taxes
The Company provides for income taxes in accordance with Statement
of Financial Accounting Standards (FAS) No. 109, Accounting for
Income Taxes. FAS No. 109 requires an asset and liability approach
for financial accounting and reporting for income taxes. Deferred
income taxes reflect the impact of temporary differences between
amounts of assets and liabilities for financial reporting purposes
and such amounts as measured by tax laws.
(e) Cash Flows
For purposes of the statement of cash flows, cash equivalents
include demand deposits with original maturities of less than three
months.
(f) Revenue Recognition
The Company recognizes revenues as services are provided.
(2) Concentration of Credit Risk
The Company's financial instruments that are exposed to concentrations
of credit risk consist primarily of cash and cash equivalents and trade
accounts receivable. The Company places cash and temporary cash investments
with high quality financial institutions.
A majority of the Company's business is conducted with major oil and gas
exploration companies with operations in the Gulf of Mexico. The Company
continually evaluates the financial strength of their customers but does not
require collateral to support the customer receivables.
Customers which accounted for 10 percent or more of operating revenue
were as follows for the year ended December 31, 1996:
Baker Hughes, Inc. 18.2%
Chevron USA 11.0%
Shell Offshore, Inc. 10.0%
(3) Property and Equipment
A summary of property and equipment at December 31, 1996 follows:
Buildings and improvements $ 262,479
Automobiles, trucks, trailers 211,174
Furniture and equipment 23,828
Machinery and equipment 3,840,725
------------
4,338,206
Less accumulated depreciation (1,891,537)
------------
Property and equipment - net $ 2,446,669
============
(4) Notes Payable
The Company's notes payable as of December 31, 1996 consists of the
following:
Revolving line of credit in the original
amount of $670,000 due May, 1997, annual
interest rate of 8.25% $ 570,000
Equipment loan due May, 1998, annual
interest of 8.35% 361,541
Equipment loan due April, 1998, annual
interest of 8.05% 236,442
Equipment loan due December, 1999, annual
interest of 9.75% 117,352
Other installment notes payable with interest
rates ranging from 7.75% to 10.5% due in
monthly installments through 1999 130,346
----------
1,415,681
Less current portion 827,000
----------
Long-term debt $ 588,681
==========
Maturities of long-term debt for the five years ended December 31,
2001 are as follows: $827,000, $544,000, $45,000, none and none,
respectively.
(5) Commitments and Contingencies
The Company leases facilities in Houma and Lafayette, Louisiana under
operating leases. Total rent expense in 1996 was $30,000. Future minimum
lease payments under these non-cancelable leases for the five year's ended
December 31, 2001 are as follows: $26,000, $14,000, $3,000, $3,000 and $3,000,
respectively.
From time to time the Company is involved in litigation arising out of
operations in the normal course of business. In management's opinion, the
Company is not involved in any litigation, the outcome of which would have a
material effect on its business operations.
(6) Income Taxes
The components of income tax expense for the year ended December 31,
1996 are as follows:
Current - Federal $ 171,175
Deferred - Federal 129,748
----------
$ 300,923
==========
The significant components of deferred tax assets and liabilities at
December 31, 1996 are as follows:
Deferred tax assets:
Alternative Minimum Tax Carry Forward $ 46,709
Other 25,159
---------
71,868
---------
Deferred tax liabilities:
Accounts receivable (407,911)
Property and equipment (154,805)
---------
(562,716)
---------
$(490,848)
=========
The deferred tax assets reflect management's estimate of the amount
which will be realized from future profitability which can be predicted
with reasonable certainty.
A reconciliation between the statutory federal income tax rate and the
Company's effective tax rate on pre-tax income for the year ended
December 31, 1996 is as follows:
Federal income tax rate 34.0%
Entertainment expense 3.3
Officers life insurance 1.3
Other (.1)
-----------
Effective income tax rate 38.5%
===========
(7) Subsequent Event
On February 28, 1997, the Company was merged with Superior Energy
Services, Inc. and the former shareholder's of the Company received cash of
$4,000,000, a promissory note of $2,150,000 and 420,000 shares of Superior
Energy Services, Inc.'s common stock. The Company's obligation to pay under
the promissory note having an aggregate value of $2,150,000 is subject to the
Company meeting specified earnings levels through December 31, 1999.
b) Pro Forma Financial Information:
The following unaudited pro forma condensed financial information is derived
from the historical financial statements of Superior Energy Services, Inc.,
Baytron, Inc., Dimensional Oilfield Services, Inc. and Nautilus Pipe and
Rental Tool, Inc. Adjustments have been made to reflect the financial impact
of purchase accounting for the Baytron, Dimensional and Nautilus acquisitions
which would have been effected had the acquisitions taken place on January 1,
1996 with respect to operating data and December 31, 1996 with respect to
balance sheet data. The acquisitions of Baytron, Inc. and Dimensional Oil
Field Services, Inc. have been previsously report. The pro forma adjustments
are described in the accompanying notes and are based upon preliminary
estimates and certain assumptions that management of the companies believe
reasonable in the circumstances. This pro forma information is not
necessarily indicative of the results of the operations had the acquisitions
been effected on the assumed date. As part of the acquisition of Nautilus,
the Company also acquired Superior Bearing & Machine Works, Inc. The
financial information for Superior Bearing & Machine Works, Inc. is considered
immaterial and is not reflected in the pro forma information.
SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES
Unaudited Pro Forma Condensed Balance Sheet
December 31, 1996
(in thousands)
Historical Historical Pro Forma
Superior Nautilus Adjustments Pro Forma
Assets
Cash $ 433 $ - $ - $ 433
Accounts Receivable
Trade 6,966 1,191 - 8,157
Other - 195 - 195
Deferred Tax Asset 137 - - 137
Inventories 1,197 2 - 1,199
Other 345 - - 345
-------- -------- --------- ---------
Total Current 9,078 1,388 - 10,466
Assets
Property, Plant & Equipment - Net 9,894 2,447 (A)2,007 14,348
Goodwill 8,239 - (A)2,770 11,009
Other Assets 1,126 - - 1,126
-------- -------- --------- ---------
Total Assets $ 28,337 $ 3,835 $ 4,777 $ 36,949
======== ======== ========= ========
SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES
Unaudited Pro Forma Condensed Balance Sheet
December 31, 1996
(in thousands)
Historical Historical Pro Forma
Superior Nautilus Adjustments Pro Forma
--------- -------- ----------- ---------
Liabilities & Stockholders' Equity
Current liabilities:
Notes Payable $ 351 $ 827 $ - $ 1,178
Trade Accounts Payable 1,801 78 - 1,879
Due to Shareholder 1,171 484 (A) 484 1,171
Unearned Income 392 - - 392
Accrued Expenses 1,362 - - 1,362
Income Taxes Payable 1,208 87 - 1,295
Deferred Income Taxes - 336 - 336
Other 200 - - 200
--------- -------- ---------- ---------
Total Current Liabilities 6,485 1,812 484 7,813
Notes Payable 250 589 (A)(4,000) 4,839
Deferred Taxes 1,254 155 (A)(703) 2,112
--------- -------- ---------- ---------
Total Long-Term Liabilities 1,504 744 (4,703) 6,951
--------- -------- ---------- ---------
Total Liabilities 7,989 2,556 (4,219) 14,764
Stockholders' Equity:
Common Stock 19 129 (A) 129 19
Additional Paid in Capital 19,551 (A)(1,837) 21,388
Retained Earnings 778 1,150 (A) 1,150 778
--------- -------- ---------- ---------
Total Stockholders' Equity 20,348 1,279 (558) 22,185
--------- -------- ---------- ---------
Total Liabilities and
Stockholders' Equity $ 28,337 $ 3,835 $ (4,777) $ 36,949
========= ======= ========== =========
SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES
Unaudited Pro Forma Condensed Statement of Earnings
For the year ended December 31, 1996
(in thousands, except per share data)
Historical Historical Historical Superior Historical
Superior Baytron Dimensional Adjustments Pre Acquisition Nautilus
---------- ---------- ----------- ----------- --------------- ----------
Revenues $ 23,638 $ 1,277 $ 4,053 $ - $ 28,968 $ 4,424
---------- ---------- ---------- --------- ---------- ----------
Costs and expenses:
Cost of Services 11,040 367 2,982 - 14,389 1,401
Depreciation and amortization 1,323 40 26 (E)18 1,577 556
(F)39
(G)37
(H)94
General and administrative 5,737 773 584 - 7,094 1,560
---------- ---------- ---------- --------- ---------- ----------
Total costs and expenses 18,100 1,180 3,592 188 23,060 3,517
---------- ---------- ---------- --------- ---------- ----------
Income from operations 5,538 97 461 (188) 5,908 907
Other income (expense):
Interest expense (127) (8) (45) - (180) (125)
Other 206 (16) - - 190 -
---------- ---------- ---------- --------- ---------- ----------
Income before income taxes 5,617 73 416 (188) 5,918 782
Provision for income taxes 1,685 - - (I)(20) 1,665 301
---------- ---------- ---------- --------- ---------- ----------
Net income $ 3,932 $ 73 $ 416 $ (168) $ 4,253 $ 481
========== ========== ========== ========= ========== ==========
Net income per common share
and common share equivalent $ 0.22 $ 0.23
========== ==========
Weighted average shares outstanding 17,616,468 18,644,362
========== ==========
SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES
Unaudited Pro Forma Condensed Statement of Earnings
For the year ended December 31, 1996
(in thousands, except per share data)
(Table continued)
Adjustments Pro Forma
----------- ---------
Revenues $ - $ 33,392
---------- ----------
Costs and expenses:
Cost of Services $ - $ 15,790
Depreciation and amortization (C)131 2,154
(B)(110)
General and administrative - 8,654
---------- ----------
Total costs and expenses 21 26,598
---------- ----------
Income from operations (21) 6,794
Other income (expense):
Interest expense - (305)
Other - 190
---------- ----------
Income before income taxes (21) 6,679
Provision for income taxes (D)(39) 1,927
---------- ----------
Net income $ 18 $ 4,752
========== ==========
Net income per common share
and common share equivalent $ 0.25
==========
Weighted average shares outstanding 19,064,362
==========
NOTES TO UNAUDITED PRO FORMA CONDENSED FINANCIAL INFORMATION
A. To reflect the purchase price adjustments related to the
acquisition of Nautilus Pipe & Tool Rental, Inc. The purchase price is
the sum of $4,000,000 cash, a promissory note of $2,150,000 and 420,000
shares of common stock at the current approximate $4 3/8 market price at
the date of purchase. Amounts to be paid under the promissory note is
subject to certain minimum earnings requirements and is not reflected in
the purchase price which approximates $5,838,000. The property and
equipment were valued at their approximate fair value of approximately
$4,454,000. Deferred taxes have been provided for the difference
between the book and tax basis of the property, plant and equipment
acquired. The excess purchase price over the fair value of net assets
of Nautilus at February 28, 1997 of approximately $2,770,000 was
allocated to goodwill amortized over 20 years.
B. To reflect the adjustment to depreciation associated with the
application of purchase accounting to Nautilus.
C. To reflect the amortization of goodwill associated with Nautilus.
D. To adjust the provision for income tax for Nautilus.
E. To reflect the additional depreciation associated with the application
of purchase accounting to Baytron fixed assets.
F. To reflect the additional depreciation associated with the application
of purchase accounting to Dimensional's fixed assets.
G. To reflect the amortization of goodwill associated with Baytron.
H. To reflect the amortization of goodwill associated with Dimensional.
I. To adjust the provision for income tax associated with Baytron and
Dimensional.
EXHIBIT 23.1
The Board of Directors and Shareholders
Nautilus Pipe & Rental Tool, Inc.:
We consent to the use of our report included herein dated April 17, 1997,
with respect to the balance sheet of Nautilus Pipe & Rental Tool, Inc. as
of December 31, 1996, and the related statments of operations and related
earnings and cash flows for the year then ended.
KPMG PEAT MARWICK LLP
New Orleans, Louisiana
May 12, 1997
