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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, 1997
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
Belle Chasse, New Orleans, LA 70037
(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, 1997 was 19,027,867
PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements
SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
March 31, 1997 and December 31, 1996
(in thousands)
3/31/97 12/31/96
(Unaudited) (Audited)
ASSETS
Current assets:
Cash and cash equivalents $ 726 $ 433
Accounts receivable - net 9,120 6,966
Inventories 1,223 1,197
Deferred income taxes 137 137
Other 436 345
-------- --------
Total current assets 11,642 9,078
Property, plant and equipment - net 15,391 9,894
Goodwill - net 10,738 8,239
Patent - net 1,101 1,126
-------- --------
Total assets $ 38,872 $ 28,337
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable - bank $ 1,425 $ 351
Accounts payable 2,342 1,800
Notes payable - other 903 1,171
Unearned income 519 392
Accrued expenses 1,159 1,362
Income taxes payable 1,243 1,208
Other 200 200
-------- --------
Total current liabilities 7,791 6,484
-------- --------
Deferred income taxes 2,349 1,254
Long-term debt 4,975 250
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, 19,027,867 19 19
Additional paid-in capital 21,437 19,551
Retained earnings 2,301 779
-------- --------
Total stockholders' equity 23,757 20,349
-------- --------
Total liabilities and
stockholders' equity $ 38,872 $ 28,337
SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
Three Months Ended March 31, 1997 and 1996
(in thousands, except per share data)
(unaudited)
1997 1996
---- ----
Revenues $ 9,180 $ 4,640
---------- ----------
Costs and expenses:
Costs of services 4,298 2,271
Depreciation and amortization 491 293
General and administrative 2,034 1,182
---------- ----------
Total costs and expenses 6,823 3,746
---------- ----------
Income from operations 2,357 894
Other income(expense):
Interest expense (85) (30)
Other - 165
Income before income taxes 2,272 1,029
Provision for income taxes 750 309
---------- ----------
Net income $ 1,522 $ 720
========== ==========
Net income per common
share and common share
equivalent $ 0.08 $ 0.04
========== ==========
Weighted average shares outstanding 20,322,300 17,072,916
========== ==========
SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
Three Months Ended March 31, 1997 and 1996
(in thousands)
(unaudited)
1997 1996
Cash flows from operating activities:
Net income $ 1,522 $ 720
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 491 293
Unearned income 126 (174)
Changes in operating assets and liabilities,
net of acquisition:
Accounts receivable (1,364) 401
Notes receivable - -
Inventories (18) (78)
Other - net 205 (103)
Accounts payable 388 (773)
Due to shareholders (268) (15)
Accrued expenses (338) (109)
Income taxes payable (21) 107
-------- --------
Net cash provided by operating activities 723 269
-------- --------
Cash flows from investing activities:
Acquisition of business, net of cash acquired (3,917) -
Payments for purchases of property and equipment (1,258) (221)
Proceeds from sale of property and equipment - 351
Deferred payment for acquisition of Oil Stop, Inc. - (2,000)
-------- --------
Net cash used in investing activities (5,175) (1,870)
-------- --------
Cash flows from financing activities:
Notes payable - bank 4,745 (1,015)
-------- --------
Net cash provided by (used in) financing
activities 4,745 (1,015)
-------- --------
Net increase (decrease) in cash 293 (2,616)
Cash and cash equivalents at beginning of period 433 5,068
-------- --------
Cash and cash equivalents at end of period $ 726 $ 2,452
======== ========
SUPERIOR ENERGY SERVICES, INC.
AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
Three Months Ended March 31, 1997 and 1996
(1) 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, 1996
and the accompanying notes and Management's Discussion and Analysis or Plan
of Operation.
The financial information for the three months ended March 31, 1997 and
1996, 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. Certain previously reported amounts
have been reclassified to conform to the 1997 presentation.
(2) Business Combinations
The Company, pursuant to a stock purchase agreement dated February 28, 1997,
acquired all of the outstanding common stock of Nautilus Pipe & Tool Rental,
Inc. and Superior Bearing & Machine Works, Inc. (collectively doing business
as "Concentric Pipe & Tool Rentals") for $4,000,000 cash, 420,000 restricted
shares of the Company's common stock and a promissory note in the principal
amount of $2,150,000. The amount payable under the promissory note is
subject to certain contingencies and is not reflected in the purchase price
which approximated $5,838,000. Concentric Pipe & Rental Tools is engaged in
the business of renting specialized equipment used in the exploration,
development and production of oil and gas and has operating facilities in
Houma and Lafayette, Louisiana.
Subsequent to March 31, 1997, the Company acquired all of the outstanding
common stock of F & F Wireline Service, Inc. for $900,000 cash and a
promissory note of $600,000. The amount payable under the promissory note
is subject to certain minimum earnings requirements through December 31,
1999.
Item 2. Management's Discussion and Analysis or Plan of Operation
Comparison of the Results of Operations for the Quarter Ended March 31, 1997
and 1996
Net income for the quarter ended March 31, 1997 increased 111% to $1,522,000
from $720,000 for the quarter ended March 31, 1996. Earnings per share
increased to $.08 per share from $.04 per share in the prior period.
The Company's revenues increased 98% to $9,180,000 for the quarter ended
March 31, 1997 as compared to $4,640,000 for the quarter ended March 31,
1996. Approximately 60% of the increase in revenues is the effect of
acquisitions made in the last year, including the acquisition of Concentric
Pipe & Tool Rentals which was consummated on February 28, 1997. The remaining
increase is a result of increased levels of activity in plug and abandonment
and the continuing expansion of the Company's oilfield rental tool business.
Gross margins increased to 53.2% for the quarter ended March 31, 1997 from
51.1% for the quarter ended March 31, 1996. The increase is primarily the
result of decreased usage of rented marine equipment, greater service
efficiencies and an increase in the gross margin attributable to the rental
tool and data acquisition businesses which tend to have higher margins than
the plug and abandonment business.
Depreciation and amortization increased nearly 68% in the quarter ended
March 31, 1997 over the quarter ended March 31, 1996. Most of this increase
is associated with the acquisitions made in the past year. General and
administrative expenses were 22.2% of revenue for the quarter ended March
31, 1997 as compared to 25.5% of revenues for the quarter ended March 31,
1996.
Capital Resources and Liquidity
Net cash generated from operations was $723,000 for the first quarter ended
March 31, 1997. This is an increase of $454,000 as compared to the first
quarter ended March 31, 1996. The Company's working capital position
improved to $3,851,000 at March 31, 1997 as compared to $2,594,000 at
December 31, 1996. The company's current ratio also improved from 1.4 at
December 31, 1996 to nearly 1.5 at March 31, 1997.
The Company's earnings before interest, taxes, depreciation and amortization
(EBITDA) increased to $2,848,000 for the quarter ended March 31, 1997 as
compared to $1,187,000 for the quarter ended March 31, 1996. The increase
in EBITDA is a result of the Company's increased activity levels and the
impact of the Company's acquisitions in the last year.
In February 1997, the Company acquired all of the outstanding common stock
of Nautilus Pipe & Tool Rental, Inc. and Superior Bearing & Machine Works,
Inc. (collectively doing business as "Concentric Pipe & Tool Rentals") for
$4,000,000 cash, a promissory note in the principal amount of $2,150,000 and
420,000 shares of the Company's restricted common stock. The amount payable
under the promissory note is subject to certain minimum earnings
requirements through December 31, 1999.
On April 30, 1997, the Company acquired all of the outstanding common stock
of F & F Wireline Service, Inc. for $900,000 and a promissory note in the
amount of $600,000. The amount payable under the promissory note is subject
to certain minimum earnings requirements through December 31, 1999.
In February 1997, in connection with the Company's acquisition of Concentric
Pipe & Tool Rentals, the Company borrowed $4,000,000, which bears interest
at the lender's prime rate and requires no principal payments through
December 31, 1997 at which time it will convert to a five or seven year term
loan (at the Company's option) with principal and interest payable monthly
at an interest rate of 8.25%.
The Company also maintains a revolving credit facility of $4.0 million. At
March 31, 1997 there was approximately $1,185,000 outstanding under this
facility. Management believes the combination of working capital, the
revolving credit facility and cash flow from operations provide the company
with sufficient resources and liquidity to mange its routine operations.
Any strategic acquisitions will be funded with borrowed cash, newly issued
common stock or a combination of cash and common stock.
Inflation has not had a significant effect on the Company's financial
condition or operations in recent years.
PART II. OTHER INFORMATION
Item 2. Changes in Securities
On February 28, 1997, the Company acquired all of the outstanding common
stock of Nautilus Pipe & Tool Rental, Inc. and Superior Bearing & Machine
Works, Inc. for, among other things, 420,000 shares of the Company's Common
Stock. These shares were issued in a transaction that did not involve a
public offering within the meaning of Section 4(2) of the Securities Act of
1933 and were also issued solely to an accredited investor pursuant to
Section 4(6) thereunder.
The Company also issued 10,822 shares of common stock to an employee in
connection with his severance. These shares were issued in a transaction
that did not involve a public offering within the meaning of Section 4(2) of
the Securities Act of 1933.
Item 6. Exhibits and Reports on Form 8-K
a) The following exhibits are filed with this Form 10-QSB
2.1 Stock Purchase Agreement between Superior Energy Services, Inc.
and John C. Gordon dated as of February 28, 1997. Incorporated
by reference from Exhibit 2.1 to the Registrant's Current Report
on Form 8-K dated March 14, 1997.
27.1 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 March 14, 1997 reporting the acquisition, pursuant
to a merger of Nautilus Pipe & Tool Rental, Inc. and Superior Bearing &
Machine Works, 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: May 14, 1997 By: /s/ Terence E. Hall
-------------------------------
Terence E. Hall
Chairman of the Board,
Chief Executive Officer and President
(Principal Executive Officer)
Date: May 14, 1997 By: /s/ Robert S. Taylor
-------------------------------
Robert S. Taylor
Chief Financial Officer
(Principal Financial and
Accounting Officer)
5
3-MOS
DEC-31-1997
MAR-31-1997
726,000
0
9,279,000
(159,000)
1,223,000
11,642,000
17,444,000
(2,052,000)
38,872,000
7,791,000
0
0
0
19,000
23,738,000
38,872,000
9,180,000
9,180,000
4,298,000
6,823,000
0
0
85,000
2,272,000
750,000
1,522,000
0
0
0
1,522,000
0.08
0.08
