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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-Q
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(Mark One)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED NOVEMBER 30, 1993
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
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COMMISSION FILE NUMBER 1-7573
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PARKER DRILLING COMPANY
(Exact name of registrant as specified in its charter)
Delaware 73-0618660
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
Parker Building, Eight East Third Street, Tulsa, Oklahoma 74103
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(Address of principal executive offices) (zip code)
Registrant's telephone number, including area code (918) 585-8221
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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 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
As of December 31, 1993, 54,971,211 common shares were outstanding.
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PARKER DRILLING COMPANY
INDEX
Part I. Financial Information Page No.
Consolidated Condensed Balance Sheets (Unaudited) -
November 30, 1993 and August 31, 1993 2
Consolidated Condensed Statements of Operations (Unaudited) -
Three Months Ended November 30, 1993 and
November 30, 1992 3
Consolidated Condensed Statements of Cash Flows (Unaudited) -
Three Months Ended November 30, 1993
and November 30, 1992 4
Notes to Unaudited Consolidated Condensed
Financial Statements 5
Report of Review by Independent Accountants 6
Management's Discussion and Analysis of Financial
Condition and Results of Operations 7 - 8
Part II. Other Information
Item 6, Exhibits and Reports on Form 8-K 9
Signatures 10
Exhibit 15, Letter Re Unaudited Interim
Financial Information
PART 1. FINANCIAL INFORMATION
PARKER DRILLING COMPANY AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(Dollars in Thousands)
(Unaudited)
November 30, August 31,
1993 1993
ASSETS ---------- ----------
------
Current assets:
Cash and cash equivalents $ 14,015 $ 12,570
Other investments 20,616 31,419
Accounts and notes receivable 30,858 23,353
Rig materials and supplies 11,361 10,970
Other current assets 2,564 2,793
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Total current assets 79,414 81,105
Property, plant and equipment less accumulated
depreciation, depletion and amortization of
$476,968 at November 30, 1993, and $472,466
at August 31, 1993 145,037 139,326
Other noncurrent assets 15,196 15,911
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Total assets $239,647 $236,342
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-------- --------
LIABILITIES AND STOCKHOLDERS' EQUITY
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Current liabilities:
Accounts payable and accrued liabilities $ 17,119 $ 15,561
Accrued income taxes 5,545 5,291
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Total current liabilities 22,664 20,852
Deferred income tax 1,198 1,198
Other long-term liabilities 3,193 3,495
Minority interest 3,117 3,118
Common stock, $.16 2/3 par value 9,161 9,164
Capital in excess of par value 201,606 201,784
Retained earnings 2,107 499
Other (3,399) (3,768)
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Total liabilities and stockholders' equity $239,647 $236,342
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-------- --------
See accompanying notes to consolidated condensed financial statements.
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/TABLE
PARKER DRILLING COMPANY AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(Dollars in Thousands Except Per Share Amounts)
(Unaudited)
Three Months Ended
November 30,
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1993 1992
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Revenue:
Drilling contracts $39,396 $22,741
Other 647 1,186
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Gross operating revenue 40,043 23,927
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Operating expense:
Drilling 26,232 13,750
Other 757 981
Depreciation, depletion and
amortization 4,922 5,230
General and administrative 6,138 6,119
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38,049 26,080
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Operating income (loss) 1,994 (2,153)
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Other income and (expense):
Interest expense (3) (21)
Interest income 357 397
Other income (expense) - net 40 (150)
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394 226
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Income (loss) before income taxes 2,388 (1,927)
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Income tax expense 780 600
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Net income (loss) 1,608 (2,527)
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Dividends on preferred stock - 3
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Income (loss) applicable
to common stock $ 1,608 $(2,530)
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Earnings (loss) per share,
primary and fully diluted $ .03 $ (.05)
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Number of common shares used in ------- -------
computing earnings (loss) per share:
Primary 54,490,360 52,546,873
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Fully diluted 54,511,673 52,546,873
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See accompanying notes to consolidated condensed financial statements.
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/TABLE
PARKER DRILLING COMPANY AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
Increase (Decrease) in Cash and Cash Equivalents
(Dollars in Thousands)
(Unaudited)
Three Months Ended
November 30,
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1993 1992
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Cash flows from operating activities:
Net income (loss) $ 1,608 $(2,527)
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Depreciation, depletion and amortization 4,922 5,230
Expenses not requiring cash 910 1,160
Change in operating assets and liabilities (6,607) 6,689
Other-net (83) (852)
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Net cash provided by operating activities 750 9,700
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Cash flows from investing activities:
Capital expenditures (9,967) (1,231)
Proceeds from the sale of equipment 171 3,641
Decrease (increase) in short-term and
long-term investments 10,803 (254)
Other-net - (107)
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Net cash provided by investing
activities 1,007 2,049
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Cash flows from financing activities:
Principal payments under debt obligations - (10)
Other-net (312) (112)
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Net cash provided (used) by financing
activities (312) (122)
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Net increase in cash and cash equivalents 1,445 11,627
Cash and cash equivalents at
beginning of period 12,570 13,288
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Cash and cash equivalents at
end of period $14,015 $24,915
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Supplemental disclosure:
Interest paid $ 3 $ 13
Taxes paid $ 526 $ 1,042
See accompanying notes to consolidated condensed financial statements.
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/TABLE
PARKER DRILLING COMPANY AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
1. In the opinion of the Company, the accompanying unaudited consolidated
condensed financial statements reflect all adjustments (of a normally
recurring nature) which are necessary for a fair presentation of (1) the
financial position as of November 30, 1993 and August 31, 1993, (2) the
results of operations for the three months ended November 30, 1993 and
November 30, 1992, and (3) cash flows for the three months ended November
30, 1993 and November 30, 1992. Results for the three months ended
November 30, 1993, are not necessarily indicative of the results which
will be realized for the year ending August 31, 1994. The year-end
consolidated condensed balance sheet data was derived from audited
financial statements, but does not include all disclosures required by
generally accepted accounting principles. The financial statements
should be read in conjunction with the Company's Form 10-K for the year
ended August 31, 1993.
2. Earnings per common share is based on the weighted average number of
common shares and common share equivalents outstanding during the period.
Common shares granted under the 1969 Key Employee Stock Grant Plan, 1980
Incentive Career Stock Plan and the 1991 Stock Grant Plan are issued and
outstanding but are not considered in the computation of weighted average
shares outstanding until the restrictions lapse. However, they are
considered common stock equivalents.
Independent Accountants' Report
To the Board of Directors and Shareholders
Parker Drilling Company
We have reviewed the consolidated condensed balance sheet of Parker
Drilling Company and subsidiaries as of November 30, 1993, and the related
consolidated condensed statements of operations for the three month periods
ended November 30, 1993 and 1992 and consolidated condensed statements of cash
flows for the three month periods ended November 30, 1993 and 1992. These
financial statements are the responsibility of the Company's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures
to financial data and making inquiries of persons responsible for financial
and accounting matters. It is substantially less in scope than an audit
conducted in accordance with generally accepted auditing standards, the
objective of which is the expression of an opinion regarding the financial
statements taken as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that
should be made to the condensed consolidated financial statements referred to
above for them to be in conformity with generally accepted accounting
principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet as of August 31, 1993, and the
related consolidated statements of operations, redeemable preferred stock and
stockholders' equity and cash flows for the year then ended (not presented
herein); and in our report, dated October 14, 1993, we expressed an
unqualified opinion on those consolidated financial statements. In our
opinion, the information set forth in the accompanying condensed consolidated
balance sheet as of August 31, 1993, is fairly stated in all material respects
in relation to the consolidated balance sheet from which it has been derived.
COOPERS & LYBRAND
Tulsa, Oklahoma
January 11, 1994
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
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The Company's net income of $1.6 million for the first quarter of fiscal
1994 represented an increase of $4.1 million from fiscal 1993's first quarter
loss of $2.5 million. The increase was primarily attributable to increased
drilling revenue and drilling margin in the first quarter of fiscal 1994.
Drilling revenue in the first quarter of fiscal 1994 was $39.4 million, an
increase of $16.7 million over the first quarter of fiscal 1993.
International utilization in the first quarter of fiscal 1994 was 61% compared
to 36% in the first quarter fiscal 1993 and overall utilization increased to
38% from 23%.
Drilling revenue from operations in Africa, the Middle East and
Commonwealth of Independent States ("CIS") increased a combined $7.1 million
in the first quarter of fiscal 1994 when compared to the first quarter of
fiscal 1993. The increase was caused by the Company once again being active
in three countries that had no operations in the first quarter of fiscal 1993:
The Russian Republic, Congo and Chad. In addition, the Company entered a new
market in the fourth quarter of fiscal 1993 when it obtained a labor contract
with a major customer in the country of Kazakhstan.
International drilling revenue from operations in Asia and the Pacific
increased $4.9 million due primarily to the start-up of operations in the
first quarter of fiscal 1994 in the Philippines, another new market for the
Company. Also contributing to the increase in revenue was the resumption of
operations in Pakistan during the first quarter of fiscal 1994.
Western Hemisphere international drilling revenue increased $3.3 million
from the first quarter of fiscal 1993 as a result of the Company reentering
the Argentine drilling market in the fourth quarter of fiscal 1993. Domestic
drilling revenue increased $1.4 million due to increased utilization in the
Rocky Mountains.
Drilling margins did not increase in proportion to the increase in
drilling revenue due to start-up costs associated with entering new markets in
the countries of Argentina and the Philippines. Depreciation expense declined
$.3 million in the first quarter of fiscal 1994. However, this trend is not
expected to continue as management anticipates fiscal 1994 depreciation
expense to exceed fiscal 1993 due to a significant increase in capital
spending forecast for fiscal 1994.
General and administrative expense and other income and (expense) remained
consistent with the first quarter of fiscal 1993. Income tax expense consists
primarily of foreign taxes and increased $.2 million reflecting the increase
in international drilling activity.
LIQUIDITY AND CAPITAL RESOURCES
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During the first three months of fiscal 1994, cash and other short-term
investments declined $9.4 million. The decline was caused by the Company
financing capital expenditures of $10.0 million primarily with existing cash
and short-term investments.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
LIQUIDITY AND CAPITAL RESOURCES (continued)
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Capital expenditures in the first quarter of fiscal 1994 included the
addition of six rigs to the Company's rig fleet. Five rigs were purchased for
the purpose of performing a contract in Argentina for YPF, the Argentina state
owned oil company. These rigs are currently being refurbished and are
scheduled to begin operations in the second quarter of fiscal 1994. The sixth
rig is currently under contract in Colombia and is scheduled to begin
operations in the second quarter of fiscal 1994. Management currently
forecasts capital expenditures for fiscal 1994 to be approximately $46.0 to
$52.0 million. The increase in forecast capital expenditures over the $33.0
million as reported in the Company's Form 10-K for fiscal year 1993, reflects
additional opportunities anticipated in international markets. In the event
the Company obtains contracts, in addition to those currently anticipated,
that require the construction or purchase of new or specialized rigs or
significant modifications to existing rigs, capital expenditures could
increase further. Any significant increase in capital expenditures would be
subject to restrictions imposed on the Company as specified below.
The Company has a credit agreement with two banks which provides for a
$15.0 million revolving credit facility, all of which was available for
drawdown as of November 30, 1993. The credit agreement, which expires in
September 1994, contains restrictions on annual capital expenditures and
certain senior and subordinated indebtedness which can be incurred by Parker
Drilling Company and certain subsidiaries designated in the credit agreement.
These designated subsidiaries comprise the operating subsidiaries through
which the Company performs the majority of its drilling operations. The
credit facility also limits payment of dividends on the Company's common stock
to the lesser of 40% of consolidated net income for the preceding fiscal year,
or $2.6 million. The remaining subsidiaries of the Company are not a party to
the credit facility and are able to make capital expenditures and obtain
independent financing from lenders that have no recourse to Parker Drilling
Company and the designated subsidiaries, subject only to an overall limitation
of indebtedness.
The restrictions in the credit agreement are not anticipated to restrict
growth or investment opportunities in the foreseeable future.
Management believes that the current level of cash and short-term
investments, together with cash generated from operations, should be
sufficient to meet the Company's anticipated capital needs for the foreseeable
future. However, in the event the Company obtains additional contracts
requiring further significant capital expenditures, management believes the
Company could meet both short-term and long-term capital needs through a
combination of existing cash, cash generated from operations, borrowings under
the bank credit agreement and equity and long-term debt financing.
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PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a)Exhibits:
Exhibit 15 Letter re Unaudited Interim Financial Information
(b)Reports on Form 8-K - There were no reports on Form 8-K filed
during the three months ended November 30, 1993.
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.
Parker Drilling Company
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Registrant
Date: January 11, 1994
By: /s/James J. Davis
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James J. Davis
Vice President and
Chief Financial Officer
By: /s/Randy Ellis
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Randy Ellis
Controller and
Chief Accounting Officer
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