Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2016 | May. 04, 2016 | |
Document and Entity Information | ||
Entity Registrant Name | DAWSON GEOPHYSICAL CO | |
Entity Central Index Key | 799,165 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2016 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 21,596,240 | |
Document Fiscal Year Focus | 2,016 | |
Document Fiscal Period Focus | Q1 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) | Mar. 31, 2016 | Dec. 31, 2015 |
Current assets: | ||
Cash and cash equivalents | $ 30,378,000 | $ 37,009,000 |
Short-term investments | 32,250,000 | 21,000,000 |
Accounts receivable, net | 26,720,000 | 35,700,000 |
Prepaid expenses and other assets | 5,605,000 | 6,150,000 |
Total current assets | 94,953,000 | 99,859,000 |
Property and equipment, net | 139,136,000 | 147,567,000 |
Intangibles | 361,000 | 361,000 |
Total assets | 234,450,000 | 247,787,000 |
Current liabilities: | ||
Accounts payable | 4,152,000 | 8,401,000 |
Accrued liabilities: | ||
Payroll costs and other taxes | 2,704,000 | 1,074,000 |
Other | 5,181,000 | 4,604,000 |
Deferred revenue | 5,615,000 | 6,146,000 |
Current maturities of notes payable and obligations under capital leases | 7,141,000 | 8,585,000 |
Total current liabilities | 24,793,000 | 28,810,000 |
Long-term liabilities: | ||
Notes payable and obligations under capital leases less current maturities | 1,295,000 | 2,106,000 |
Deferred tax liability, net | 4,429,000 | 5,319,000 |
Other accrued liabilities | 1,899,000 | 1,834,000 |
Total long-term liabilities | $ 7,623,000 | $ 9,259,000 |
Commitments and contingencies | ||
Stockholders' equity: | ||
Preferred stock-par value $1.00 per share; 4,000,000 shares authorized, none outstanding | ||
Common stock-par value $0.01 per share; 35,000,000 shares authorized, 21,644,685 and 21,629,310 issued, and 21,596,240 and 21,580,865 shares outstanding at March 31, 2016 and December 31, 2015, respectively | $ 216,000 | $ 216,000 |
Additional paid-in capital | 142,466,000 | 142,269,000 |
Retained earnings | $ 60,457,000 | $ 69,057,000 |
Treasury stock, at cost; 48,445 shares at March 31, 2016 and December 31, 2015 | ||
Accumulated other comprehensive loss, net of tax | $ (1,105,000) | $ (1,824,000) |
Total stockholders' equity | 202,034,000 | 209,718,000 |
Total liabilities and stockholders' equity | $ 234,450,000 | $ 247,787,000 |
CONDENSED CONSOLIDATED BALANCE3
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Mar. 31, 2016 | Dec. 31, 2015 |
CONDENSED CONSOLIDATED BALANCE SHEETS | ||
Preferred stock, par value (in dollars per share) | $ 1 | $ 1 |
Preferred stock, shares authorized | 4,000,000 | 4,000,000 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 35,000,000 | 35,000,000 |
Common stock, shares issued | 21,644,685 | 21,629,310 |
Common stock, shares outstanding | 21,596,240 | 21,580,865 |
Treasury stock, shares | 48,445 | 48,445 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS - USD ($) | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS | ||
Operating revenues | $ 47,055,000 | $ 73,722,000 |
Operating costs: | ||
Operating expenses | 40,081,000 | 64,791,000 |
General and administrative | 5,560,000 | 7,522,000 |
Depreciation and amortization | 12,045,000 | 11,223,000 |
Operating expenses, total | 57,686,000 | 83,536,000 |
Loss from operations | (10,631,000) | (9,814,000) |
Other income (expense): | ||
Interest income | 64,000 | 24,000 |
Interest expense | (96,000) | (147,000) |
Other income | 1,095,000 | 32,000 |
Loss before income tax | (9,568,000) | (9,905,000) |
Income tax benefit | ||
Income tax benefit | 968,000 | 3,313,000 |
Net loss | (8,600,000) | (6,592,000) |
Other comprehensive gain (loss): | ||
Net unrealized gain (loss) on foreign exchange rate translation, net of tax | 719,000 | (418,000) |
Comprehensive loss | $ (7,881,000) | $ (7,010,000) |
Basic loss per share attributable to common stock | $ (0.40) | $ (0.37) |
Diluted loss per share attributable to common stock | $ (0.40) | $ (0.37) |
Weighted average equivalent common shares outstanding | 21,629,817 | 18,021,366 |
Weighted average equivalent common shares outstanding-assuming dilution | 21,629,817 | 18,021,366 |
CONDENSED CONSOLIDATED STATEME5
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss | $ (8,600,000) | $ (6,592,000) |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||
Depreciation and amortization | 12,045,000 | 11,223,000 |
Noncash compensation | 197,000 | 531,000 |
Deferred income tax benefit | (1,033,000) | (3,418,000) |
Gain on insurance proceeds from insurance settlement | (909,000) | |
Other | 111,000 | (39,000) |
Change in current assets and liabilities: | ||
Decrease (increase) in accounts receivable | 8,980,000 | (6,211,000) |
Decrease (increase) in prepaid expenses and other assets | 545,000 | (819,000) |
(Decrease) increase in accounts payable | (4,249,000) | 2,259,000 |
Increase (decrease) in accrued liabilities | 2,207,000 | (192,000) |
Decrease in deferred revenue | (531,000) | (4,000) |
Net cash provided by (used in) operating activities | 8,763,000 | (3,262,000) |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Cash acquired from merger | 12,382,000 | |
Capital expenditures, net of noncash capital expenditures summarized below | (4,232,000) | (1,189,000) |
Proceeds from maturity of short-term investments | 20,000,000 | 6,750,000 |
Acquisition of short-term investments | (31,250,000) | (5,500,000) |
Proceeds from disposal of assets | 1,201,000 | 603,000 |
Proceeds on flood insurance claim | 909,000 | |
Net cash (used in) provided by investing activities | (13,372,000) | 13,046,000 |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Principal payments on notes payable | (2,063,000) | (2,847,000) |
Principal payments on capital lease obligations | (192,000) | (378,000) |
Excess tax benefit from share-based payment arrangement | (340,000) | |
Tax withholdings related to stock based compensation awards | (120,000) | |
Net cash used in financing activities | (2,255,000) | (3,685,000) |
Effect of exchange rate changes in cash and cash equivalents | 233,000 | (101,000) |
Net (decrease) increase in cash and cash equivalents | (6,631,000) | 5,998,000 |
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | 37,009,000 | 14,644,000 |
CASH AND CASH EQUIVALENTS AT END OF PERIOD | 30,378,000 | 20,642,000 |
SUPPLEMENTAL CASH FLOW INFORMATION: | ||
Cash paid for interest | 96,000 | 152,000 |
Cash paid for income taxes | 2,000 | 215,000 |
Cash received for income taxes | $ 156,000 | 520,000 |
NONCASH INVESTING AND FINANCING ACTIVITIES: | ||
Increase in accrued purchases of property and equipment | 19,000 | |
Capital lease obligations incurred | 126,000 | |
Stock consideration to consummate the merger | $ 42,902,000 |
ORGANIZATION AND NATURE OF OPER
ORGANIZATION AND NATURE OF OPERATIONS | 3 Months Ended |
Mar. 31, 2016 | |
ORGANIZATION AND NATURE OF OPERATIONS. | |
ORGANIZATION AND NATURE OF OPERATIONS | 1. ORGANIZATION AND NATURE OF OPERATIONS Founded in 1952, the Company acquires and processes 2-D, 3-D and multi-component seismic data for its clients, ranging from major oil and gas companies to independent oil and gas operators as well as providers of multi-client data libraries. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 3 Months Ended |
Mar. 31, 2016 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The accompanying condensed consolidated financial statements include the accounts of the Company. Intercompany accounts and transactions have been eliminated. In the opinion of the Company’s management, the condensed consolidated financial statements reflect all adjustments, which are normal and recurring in nature, necessary for fair financial statement presentation. The preparation of these condensed consolidated financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the amounts reported in these condensed consolidated financial statements and accompanying notes. Actual results could differ materially from those estimates. Certain prior period amounts in the condensed consolidated financial statements have been reclassified to conform to the current period’s presentation. These condensed consolidated financial statements have been prepared using accounting principles generally accepted in the United States for interim financial information and the instructions to Form 10-Q and applicable rules of Regulation S-X of the Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures normally included in annual financial statements presented in accordance with accounting principles generally accepted in the United States have been omitted. These condensed consolidated financial statements and accompanying notes should be read in conjunction with the Company’s annual consolidated financial statements and the notes thereto included on the Company’s Annual Report on Form 10-K for the year ended December 31, 2015. As discussed more fully in Note 3, on February 11, 2015, Legacy Dawson completed the Merger with a wholly-owned subsidiary of Legacy TGC (“Merger Sub”), with Legacy Dawson continuing after the Merger as the surviving entity and a wholly-owned subsidiary of Legacy TGC. The Merger was accounted for as a purchase of Legacy TGC by Legacy Dawson in a “reverse acquisition” because the existing shareholders of Legacy TGC prior to the Merger did not have voting control of the combined entity after the Merger. In a reverse acquisition, the accounting treatment differs from the legal form of the transaction, as the continuing legal parent entity, Legacy TGC, is not assumed to be the acquirer and the financial statements of the combined entity are those of the accounting acquirer, Legacy Dawson, including any comparative prior year financial statements presented by the combined entity. Accordingly, the financial results of the Company for the three months ended March 31, 2016 presented in this Form 10-Q are compared to the results for Legacy Dawson for the period January 1 through February 11, 2015 and the operations of the merged entity for the period February 12 through March 31, 2015. Additionally, all historical equity accounts and awards of Legacy Dawson, including par value per share, share and per share numbers, have been adjusted to reflect the number of shares received in the Merger. Further, in connection with the Merger in 2015, Legacy Dawson changed its fiscal year end from September 30 to December 31. Significant Accounting Policies The preparation of the Company’s financial statements in conformity with generally accepted accounting principles requires that certain assumptions and estimates be made that affect the reported amounts of assets and liabilities at the dates of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Because of the use of assumptions and estimates inherent in the reporting process, actual results could differ from those estimates. Principles of Consolidation . The condensed consolidated financial statements for the three months ended March 31, 2016 and 2015 include the accounts of the Company and its wholly-owned subsidiaries, Dawson Operating LLC, Eagle Canada, Inc., Dawson Seismic Services Holdings, Inc., Eagle Canada Seismic Services ULC, Tidelands Geophysical Co., Inc. and Exploration Surveys, Inc. All significant intercompany balances and transactions have been eliminated in consolidation. Cash Equivalents . The Company considers demand deposits, certificates of deposit, overnight investments, money market funds and all highly liquid debt instruments purchased with an initial maturity of three months or less to be cash equivalents. Allowance for Doubtful Accounts . Management prepares its allowance for doubtful accounts receivable based on its review of past-due accounts, its past experience of historical write-offs and its current client base. While the collectability of outstanding client invoices is continually assessed, the inherent volatility of the energy industry’s business cycle can cause swift and unpredictable changes in the financial stability of the Company’s clients. The Company’s allowance for doubtful accounts was $250,000 at March 31, 2016 and December 31, 2015. Property and Equipment . As discussed more fully in Note 3, the Merger was accounted for as a reverse acquisition, and the Company accounted for the transaction by using Legacy Dawson’s historical information and accounting policies and adding the assets and liabilities of Legacy TGC as of the completion date of the Merger at their respective fair values. As a result, Legacy Dawson’s property and equipment is capitalized at historical cost and depreciated over the useful life of the assets and Legacy TGC’s property and equipment is capitalized at its estimated fair values as of the merger date and depreciated over the remaining useful life of the assets. Management’s estimation of the useful life of assets is based on circumstances that exist in the seismic industry and information available at the time of the purchase of the asset. As circumstances change and new information becomes available, these estimates could change. During the first quarter of 2016, the Company’s management evaluated the useful life of a limited line of certain seismic equipment assets and determined that an adjustment to their useful lives was necessary which resulted in an immaterial impact on depreciation expense on the Company’s financial statements. Depreciation is computed using the straight-line method. When assets are retired or otherwise disposed of, the cost and related accumulated depreciation are removed from the condensed consolidated balance sheet, and any resulting gain or loss is reflected in the results of operations for the period. For purposes of measuring the estimated fair value of the Legacy TGC assets acquired in the Merger, the Company used the guidance in Accounting Standards Codification (“ASC”) No. 820, “Fair Value Measurement and Disclosure.” ASC No. 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price). Market participants are assumed to be buyers and sellers in the principal (most advantageous) market for the asset or liability. Additionally, under ASC No. 820, fair value measurements for an asset assume the highest and best use of that asset by market participants. As a result, the Company may be required to value assets of Legacy TGC at fair value measures that do not reflect the Company’s intended use of those assets. Use of different estimates and judgments could yield different results. Impairment of Long-lived Assets . Long-lived assets are reviewed for impairment when triggering events occur suggesting deterioration in the assets’ recoverability or fair value. Recognition of an impairment charge is required if future expected undiscounted net cash flows are insufficient to recover the carrying value of the assets and the fair value of the assets is below the carrying value of the assets. Management’s forecast of future cash flows used to perform impairment analysis includes estimates of future revenues and expenses based on the Company’s anticipated future results while considering anticipated future oil and natural gas prices, which is fundamental in assessing demand for the Company’s services. If the carrying amounts of the assets exceed the estimated expected undiscounted future cash flows, the Company measures the amount of possible impairment by comparing the carrying amount of the assets to the fair value. Although the Company does not currently anticipate an impairment of its assets, if oil and natural gas prices remain at current levels for an extended period of time or decline further, the Company may be exposed to impairment charges in future periods, which could negatively affect the Company’s results of operations in a material manner in the period in which they are recorded. Leases . The Company leases certain equipment and vehicles under lease agreements. The Company evaluates each lease to determine its appropriate classification as an operating or capital lease for financial reporting purposes. Any lease that does not meet the criteria for a capital lease is accounted for as an operating lease. The assets and liabilities under capital leases are recorded at the lower of the present value of the minimum lease payments or the fair market value of the related assets. Assets under capital leases are amortized using the straight-line method over the initial lease term. Amortization of assets under capital leases is included in depreciation expense. Intangibles . Trademarks/tradenames resulting from a business combination are not subject to amortization. The Company tests for impairment on an annual basis and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of the reporting unit below its carrying amount. Revenue Recognition . Services are provided under cancelable service contracts. These contracts are either “turnkey” or “term” agreements. Under both types of agreements, the Company recognizes revenues when revenue is realizable and services have been performed. Services are defined as the commencement of data acquisition or processing operations. Revenues are considered realizable when earned according to the terms of the service contracts. Under turnkey agreements, revenue is recognized on a per unit of data acquired rate as services are performed. Under term agreements, revenue is recognized on a per unit of time worked rate as services are performed. In the case of a cancelled service contract, revenue is recognized and the customer is billed for services performed up to the date of cancellation. The Company receives reimbursements for certain out-of-pocket expenses under the terms of the service contracts. Amounts billed to clients are recorded in revenue at the gross amount, including out-of-pocket expenses that are reimbursed by the client. In some instances, customers are billed in advance of services performed. In those cases, the Company recognizes the liability as deferred revenue. As services are performed, those deferred revenue amounts are recognized as revenue. In some instances, the contract contains certain permitting, surveying and drilling costs that are incorporated into the per unit of data acquired rate. In these circumstances, these set up costs are capitalized and amortized as services are provided. Stock-Based Compensation . The Company measures all employee stock-based compensation awards, which include stock options, restricted stock, restricted stock units and common stock awards, using the fair value method and recognizes compensation cost, net of estimated forfeitures, in its financial statements. The Company records compensation expense as operating or general and administrative expense, as appropriate, in the condensed consolidated statements of operations on a straight-line basis over the vesting period of the related stock options, restricted stock awards or restricted stock units. Foreign Currency Translation . The U.S. Dollar is the reporting currency for all periods presented. The functional currency of the Company’s foreign subsidiaries is generally the local currency. All assets and liabilities denominated in a foreign currency are translated into U.S. Dollars at the exchange rate on the balance sheet date. Income and expenses are translated at the average exchange rate during the period. Equity transactions are translated using historical exchange rates. Adjustments resulting from translation are recorded as a separate component of accumulated other comprehensive (loss) income in the condensed consolidated balance sheets. Foreign currency transaction gains (losses) are included in the condensed consolidated statements of operations as other income (expense). Income Taxes . The Company accounts for income taxes by recognizing amounts of taxes payable or refundable for the current year, and by using an asset and liability approach in recognizing the amount of deferred tax assets and liabilities for the future tax consequences of events that have been recognized in the Company’s financial statements or tax returns. Management determines deferred taxes by identifying the types and amounts of existing temporary differences and by measuring the total deferred tax asset or liability using the applicable tax rate in effect for the year in which those temporary differences are expected to be recovered or settled. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the year of an enacted rate change. The deferred tax asset is reduced by a valuation allowance if, based on available evidence, it is more likely than not that some portion or all of the deferred tax asset will not be realized. Management’s methodology for recording income taxes requires judgment regarding assumptions and the use of estimates, including determining the annual effective tax rate and the valuation of deferred tax assets, which can create variances between actual results and estimates and could have a material impact on the Company’s provision or benefit for income taxes. The Company’s effective tax rates differ from the statutory federal rate of 35% for certain items such as valuation allowances, state and local taxes, non-deductible expenses, discrete items and expenses related to share-based compensation that are not expected to result in a tax deduction. Recently Issued Accounting Pronouncements In March 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-09, Compensation — Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting, which is intended to simplify accounting for share-based payments awarded to employees, including income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. This ASU is effective for the annual period ending after December 15, 2016, and for annual and interim periods thereafter. Early adoption is permitted. The Company is currently evaluating the new guidance to determine the impact it will have on its condensed consolidated financial statements. In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers, that introduces a new five-step revenue recognition model in which an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This ASU also requires disclosures sufficient to enable users to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers, including qualitative and quantitative disclosures about contracts with customers, significant judgments and changes in judgments, and assets recognized from the costs to obtain or fulfill a contract. Entities have the option of using either a full retrospective or modified approach to adopt ASU No. 2014-09. In March 2016, ASU No. 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Gross versus Net), was issued and in April 2016, ASU No. 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing, w as issued. These updates do not change the core principle of the guidance under ASU No. 2014-09, but rather provide implementation guidance. In August 2015, ASU No. 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date, was issued and it amended the effective date of ASU No. 2014-09 for public companies to annual reporting periods beginning after December 15, 2017. Early adoption is permitted, but only beginning after December 15, 2016. The Company is currently evaluating the new guidance in these updates to determine the impact they will have on its condensed consolidated financial statements and the method of adoption. |
MERGER
MERGER | 3 Months Ended |
Mar. 31, 2016 | |
MERGER | |
MERGER | 3. MERGER On February 11, 2015, the Company completed the Merger. Immediately prior to the effective time of the Merger, Legacy TGC effected a reverse stock split with respect to its common stock, par value $0.01 per share (the “Legacy TGC Common Stock”), on a one-for-three ratio (the “Reverse Stock Split”) to reduce the total number of shares of Legacy TGC Common Stock outstanding. After giving effect to the Reverse Stock Split, at the effective time of the Merger, without any action on the part of any shareholder, each issued and outstanding share of Legacy Dawson’s common stock, par value $0.33-1/3 per share (the “Legacy Dawson Common Stock”), including shares underlying Legacy Dawson’s outstanding equity awards (but excluding any shares of Legacy Dawson Common Stock owned by Legacy TGC, Merger Sub or Legacy Dawson or any wholly-owned subsidiary of Legacy Dawson), were converted into the right to receive 1.760 shares of Legacy TGC Common Stock (the “Exchange Ratio”). The Merger was accounted for as a reverse acquisition under the acquisition method of accounting in accordance with ASC No. 805, “Business Combinations.” The Company accounted for the transaction by using Legacy Dawson’s historical information and accounting policies and adding the assets and liabilities of Legacy TGC at their respective fair values. Consequently, Legacy Dawson’s assets and liabilities retained their carrying values, and Legacy TGC’s assets acquired and liabilities assumed by Legacy Dawson as the accounting acquirer in the Merger were recorded at their fair values measured as of February 11, 2015, the effective date of the Merger. In the fourth quarter of 2015, management finalized its valuation of assets acquired and liabilities assumed in connection with the Merger. As a result, the fair value of the assets acquired and the liabilities assumed have changed since the comparative period ending March 31, 2015 since that period reflected preliminary fair value estimates. The fair value of acquired property and equipment was ultimately concluded to be $5,055,000 higher than preliminarily estimated, the fair value of current liabilities assumed was higher by $943,000, the fair value of current assets was lower by $625,000, the fair value of intangible assets was lower by $2,953,000, and the net deferred tax asset as a result of these adjustments was $534,000 lower. As such, for the fourth quarter of 2015, we recorded a $628,000 increase to depreciation expense and a $697,000 reduction to amortization expense as compared to what we would have recorded had the final valuations of assets acquired and liabilities assumed been recorded as of the acquisition date in February 2015. The following table summarizes the final fair values of the assets acquired and liabilities assumed at the Merger date: Fair Value (in 000’s) Stock consideration $ Interest bearing debt assumed Debt-free current liabilities Total purchase price consideration including liabilities assumed $ Value of current assets Current assets excluding cash and cash equivalents $ Cash and cash equivalents Total current assets $ Identified tangible assets Fair value of property and equipment $ Identified intangible assets Trademarks/tradenames $ Net deferred tax asset $ Total indicated value of assets $ The value of the stock consideration was determined based on the closing price of Legacy TGC on the February 11, 2015 closing date and the 7,381,476 shares outstanding. As a result of the consideration transferred being less than the book value of net assets acquired, the Company was required to analyze the purchase price allocation and the potential reasonableness of reflecting a bargain purchase. Upon completing this analysis, the Company determined that the Merger was not an acquisition of a distressed business or a bargain purchase and accordingly reflected a substantial reduction in the property and equipment to its fair value which was reflected by the value of the consideration transferred. Furthermore, in allocating the remainder of the purchase price to the indicated fair value of the property and equipment, there was not any excess purchase price to be allocated to goodwill. Measurements used to determine fair value were deemed to be level 3 fair value measurements. Trade receivables and payables, as well as other current and non-current assets and liabilities, were recorded at their expected settlement amounts as they approximate the fair value of those items at the time of the Merger, based on management’s judgments and estimates. Property and equipment were valued using a combination of the income approach, the market approach and the cost approach which was based on current replacement and/or reproduction cost of the asset as new, less depreciation attributable to physical, functional, and economic factors. Useful lives of the property and equipment were estimated to be between eighteen months and twelve years. Trademarks were valued using the relief from royalty method. Relief from royalty method under the income approach estimates the cost savings that accrue to the Company which would otherwise have to pay royalties or license fees on revenues earned through the use of the asset. Trademarks are considered to have an indefinite life and as a result are not amortizable. Existing long-term debt assumed in the Merger was recorded at fair valued based on a current market rate. Deferred income tax assets and liabilities as of the acquisition date represent the expected future tax consequences of temporary differences between the fair values of the assets acquired and liabilities assumed and their tax basis. At the acquisition date, the Company accrued approximately $865,000 for unrecognized tax benefits and contingencies related to certain tax matters. The Company incurred approximately $2,600,000 in Merger related costs on a pretax basis during the three months ended March 31, 2015. During the three months ended March 31, 2015, the Company’s income statement includes $8,592,000 of revenues and $2,837,000 of net loss from Legacy TGC. |
SHORT-TERM INVESTMENTS
SHORT-TERM INVESTMENTS | 3 Months Ended |
Mar. 31, 2016 | |
SHORT-TERM INVESTMENTS | |
SHORT-TERM INVESTMENTS | 4. SHORT-TERM INVESTMENTS The Company had short-term investments at March 31, 2016 and December 31, 2015 consisting of certificates of deposit with original maturities greater than three months, but less than a year. Certificates of deposit are limited to one per banking institution and no single investment exceeded the FDIC insurance limit at March 31, 2016 or December 31, 2015. |
FAIR VALUE OF FINANCIAL INSTRUM
FAIR VALUE OF FINANCIAL INSTRUMENTS | 3 Months Ended |
Mar. 31, 2016 | |
FAIR VALUE OF FINANCIAL INSTRUMENTS | |
FAIR VALUE OF FINANCIAL INSTRUMENTS | 5. FAIR VALUE OF FINANCIAL INSTRUMENTS At March 31, 2016 and December 31, 2015, the Company’s financial instruments included cash and cash equivalents, short-term investments in certificates of deposit, trade and other receivables, other current assets, accounts payable, other current liabilities and term notes (defined below). Due to the short-term maturities of cash and cash equivalents, trade and other receivables, other current assets, accounts payable and other current liabilities, the carrying amounts approximate fair value at the respective balance sheet dates. The carrying value of the term notes approximate their fair value based on a comparison with the prevailing market interest rate. Due to the short-term maturities of the Company’s investments in certificates of deposit, the carrying amounts approximate fair value at the respective balance sheet dates. The fair values of the Company’s term notes and investments in certificates of deposit are level 2 measurements in the fair value hierarchy. |
DEBT
DEBT | 3 Months Ended |
Mar. 31, 2016 | |
DEBT | |
DEBT | 6. DEBT Credit Agreement The Company’s existing Credit Agreement with Sovereign Bank (the “Credit Agreement”) includes a term loan feature and a revolving loan feature, and also allows for the issuance of letters of credit and other promissory notes. The Company can borrow up to a maximum of $20.0 million pursuant to the Credit Agreement, subject to the terms and limitations discussed below. The Company has one outstanding note payable at March 31, 2016 under the term loan feature of the Credit Agreement with a principal amount of $2,572,000 (the “Term Loan”). In addition, the Company has two outstanding notes payable under the Credit Agreement that are not under the term loan feature (and therefore, do not count towards the maximum amounts that we may borrow) which were incurred to purchase (and are secured by) equipment, representing a remaining aggregate principal amount of $4,332,000 as of March 31, 2016. In addition, the Credit Agreement permits the Company to borrow, repay and re-borrow, from time to time until June 30, 2017, up to the lesser of $20.0 million or 80% of the Company’s eligible accounts receivable less the then-outstanding principal balance of the Term Loan (the “Line of Credit”). The Company has not utilized the Line of Credit during the current year and has the full Line of Credit available for borrowing. Because the Company’s ability to borrow funds under the revolving line of credit is tied to the amount of the Company’s eligible accounts receivable, if the Company’s accounts receivable decrease materially for any reason, including delays, reductions or cancellations by clients or decreased demand for our services, our ability to borrow to fund operations or other obligations may be limited. Sovereign Bank has also issued a letter of credit under the Credit Agreement in the principal amount of $1,767,000 in favor of AIG Assurance Company in order to support payment of certain insurance premiums of the Company. The principal amount of this letter of credit counts as funds borrowed under our Line of Credit. The Company’s obligations under the Line of Credit are secured by a security interest in the Company’s accounts receivable, and the term notes are secured by certain of the Company’s core equipment. Interest on amounts outstanding under the Credit Agreement accrues at the lesser of 4.5% or the prime rate (as quoted in the Wall Street Journal ), subject to an interest rate floor of 2.5%. The Credit Agreement contains customary covenants for credit facilities of this type, including limitations on disposition of assets, mergers and other fundamental changes. The Company is also obligated to meet certain financial covenants, including (i) a ratio of (x) total liabilities minus subordinated debt to (y) tangible net worth plus subordinated debt not to exceed 1.00:1.00, (ii) a ratio of current assets to current liabilities of at least 1.50:1.00 and (iii) required tangible net worth of not less than $150,000,000. The Company was in compliance with all covenants under the Credit Agreement, including specified ratios, as of March 31, 2016. Other Indebtedness The Company has one outstanding note, in the remaining principal amount of $526,000 at March 31, 2016 payable to a finance company for insurance. In addition, the Company leases vehicles and certain specialized seismic equipment under leases classified as capital leases. The Company’s condensed consolidated balance sheet as of March 31, 2016 includes capital lease obligations of $1,006,000. The following tables set forth the aggregate principal amount under the Company’s outstanding notes payable and the interest rates as of March 31, 2016 and December 31, 2015: March 31, 2016 December 31, 2015 Notes payable to commercial banks Aggregate principal amount outstanding $ $ Interest rates 3.50%-4.50% 3.50%-4.50% March 31, 2016 December 31, 2015 Notes payable to finance company for insurance Aggregate principal amount outstanding $ $ Interest rates The aggregate maturities of the notes payable at March 31, 2016 are as follows: April 2016 – March 2017 $ April 2017 – March 2018 $ The following is a schedule showing future minimum lease payments under capital leases by years and the present value of the minimum lease payments as of March 31, 2016: April 2016 – March 2017 $ April 2017 – March 2018 $ Interest rates on these leases ranged from 3.16% to 6.88%. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 3 Months Ended |
Mar. 31, 2016 | |
COMMITMENTS AND CONTINGENCIES. | |
COMMITMENTS AND CONTINGENCIES | 7. COMMITMENTS AND CONTINGENCIES From time to time, the Company is a party to various legal proceedings arising in the ordinary course of business. Although the Company cannot predict the outcomes of any such legal proceedings, management believes that the resolution of pending legal actions will not have a material adverse effect on the Company’s financial condition, results of operations or liquidity as the Company believes it is adequately indemnified and insured. The Company experiences contractual disputes with its clients from time to time regarding the payment of invoices or other matters. While the Company seeks to minimize these disputes and maintain good relations with its clients, the Company has in the past experienced, and may in the future experience, disputes that could affect its revenues and results of operations in any period. The Company has non-cancelable operating leases for office space in Midland, Plano, Denison, Houston, Denver, Oklahoma City and Calgary, Alberta. |
NET LOSS PER SHARE ATTRIBUTABLE
NET LOSS PER SHARE ATTRIBUTABLE TO COMMON STOCK | 3 Months Ended |
Mar. 31, 2016 | |
NET LOSS PER SHARE ATTRIBUTABLE TO COMMON STOCK | |
NET LOSS PER SHARE ATTRIBUTABLE TO COMMON STOCK | 8. NET LOSS PER SHARE ATTRIBUTABLE TO COMMON STOCK Net loss per share attributable to common stock is calculated using the two-class method. The two-class method is an allocation method of calculating loss per share when a company’s capital structure includes participating securities that have rights to undistributed earnings. Historically, the Company’s employees and officers that held unvested restricted stock were entitled to dividends when the Company paid dividends (“participating”). The Company’s employees and officers that hold unvested restricted stock awarded during 2016 are not entitled to dividends when the Company pays dividends (“non-participating”). The Company’s basic net loss per share attributable to common stock is computed by reducing the Company’s net loss by the net income allocable to unvested restricted stockholders that have a right to participate in earnings. The Company’s employees and officers that hold unvested restricted stock do not participate in losses because they are not contractually obligated to do so. The undistributed earnings are allocated based on the relative percentage of the weighted average unvested participating restricted stock awards. The basic net loss per share attributable to common stock is computed by dividing the net loss attributable to common stock by the weighted average shares outstanding. The weighted average shares outstanding for the three months ended March 31, 2015 was calculated by totaling (i) the product of (x) the weighted shares of Legacy Dawson Common Stock outstanding at the beginning of the year multiplied by (y) the Exchange Ratio, plus (ii) the number of shares associated with awards of Legacy Dawson restricted stock and restricted stock units that vested in conjunction with the Merger, weighted as of February 11, 2015, plus (iii) the number of shares of Legacy TGC Common Stock outstanding immediately prior to the Merger, weighted to reflect that such shares were outstanding from February 11, 2015 until the end of the period. The Company’s dilutive net loss per share attributable to common stock is computed by adjusting basic net loss per share attributable to common stock by diluted income allocable to unvested restricted stock, if any, divided by weighted average diluted shares outstanding. A reconciliation of the net loss per share attributable to common stock is as follows: Net Loss per Share Attributable to Common Stock Three Months Ended March 31, 2016 2015 (in 000’s) Net loss $ ) $ ) Income allocable to participating restricted stock — — Basic loss attributable to common stock $ ) $ ) Reallocation of participating earnings — — Diluted loss attributable to common stock $ ) $ ) Weighted average common shares outstanding: Basic Dilutive common stock options, restricted stock units, and non-participating restricted stock awards — — Diluted Basic loss attributable to a share of common stock $ ) $ ) Diluted loss attributable to a share of common stock $ ) $ ) The Company had a net loss in each of the three months ended March 31, 2016 and 2015. As a result, all stock options, restricted stock units, and non-participating restricted stock awards were anti-dilutive and excluded from weighted average shares used in determining the diluted loss attributable to a share of common stock for the respective periods. The following weighted average numbers of stock options, restricted stock units, and non-participating restricted stock awards have been excluded from the calculation of diluted loss per share attributable to common stock, as their effect would be anti-dilutive for each of the three months ended March 31, 2016 and 2015: Three Months Ended March 31, 2016 2015 Stock options Restricted stock units Non-participating restricted stock awards — Total There were no shares of participating restricted stock at March 31, 2016. There were 81,840 shares of participating restricted stock at March 31, 2015 included in common stock outstanding as such shares had a non-forfeitable right to participate in any dividends that might be declared and have the right to vote. |
INCOME TAXES
INCOME TAXES | 3 Months Ended |
Mar. 31, 2016 | |
INCOME TAXES | |
INCOME TAXES | 9. INCOME TAXES The Company recorded an income tax benefit of $968,000 on a pretax loss of $9,568,000 during the three months ended March 31, 2016 which represents an effective tax rate of 10.1%. The Company recorded an income tax benefit of $3,313,000 on a pretax loss of $9,905,000 during the three months ended March 31, 2015 which represents an effective tax rate of 33.4%. The Company assesses the available positive and negative evidence to estimate whether sufficient future taxable income will be generated to permit the use of the existing deferred tax assets. A significant piece of objective negative evidence evaluated was the cumulative loss incurred over the three year period ended December 31, 2015. Such objective evidence limits the ability to consider other subjective evidence, such as projections for taxable earnings. The income tax benefit for the three months ended March 31, 2016 does not include income tax benefits for all of the losses incurred because the Company recorded a valuation allowance against part of its federal net operating loss deferred tax assets. In addition, the Company increased its valuation allowance for part of its state net operating loss deferred tax assets. The Company has recorded a valuation allowance against the associated deferred tax assets for the amounts it deems are not more likely than not realizable. Based on Management’s belief that not all the net operating losses are realizable, a federal valuation allowance of $2,360,000 and an additional state valuation allowance of $61,000 was recorded during the three months ended March 31, 2016. In addition, due to our recent operating losses and valuation allowance, the Company may recognize reduced or no tax benefits on future losses on the Condensed Consolidated Statements of Operations and Comprehensive Loss. The amount of the valuation allowance considered realizable, however, could be adjusted if estimates of future taxable income during the carryforward period are reduced or increased, or if objective negative evidence in the form of cumulative losses is no longer present and additional weight is given to subjective evidence such as projections for future growth. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 3 Months Ended |
Mar. 31, 2016 | |
SUBSEQUENT EVENTS | |
SUBSEQUENT EVENTS | 10. SUBSEQUENT EVENTS None. |
SUMMARY OF SIGNIFICANT ACCOUN16
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 3 Months Ended |
Mar. 31, 2016 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Principles of Consolidation | Principles of Consolidation . The condensed consolidated financial statements for the three months ended March 31, 2016 and 2015 include the accounts of the Company and its wholly-owned subsidiaries, Dawson Operating LLC, Eagle Canada, Inc., Dawson Seismic Services Holdings, Inc., Eagle Canada Seismic Services ULC, Tidelands Geophysical Co., Inc. and Exploration Surveys, Inc. All significant intercompany balances and transactions have been eliminated in consolidation. |
Cash Equivalents | Cash Equivalents . The Company considers demand deposits, certificates of deposit, overnight investments, money market funds and all highly liquid debt instruments purchased with an initial maturity of three months or less to be cash equivalents. |
Allowance for Doubtful Accounts | Allowance for Doubtful Accounts . Management prepares its allowance for doubtful accounts receivable based on its review of past-due accounts, its past experience of historical write-offs and its current client base. While the collectability of outstanding client invoices is continually assessed, the inherent volatility of the energy industry’s business cycle can cause swift and unpredictable changes in the financial stability of the Company’s clients. The Company’s allowance for doubtful accounts was $250,000 at March 31, 2016 and December 31, 2015. |
Property and Equipment | Property and Equipment . As discussed more fully in Note 3, the Merger was accounted for as a reverse acquisition, and the Company accounted for the transaction by using Legacy Dawson’s historical information and accounting policies and adding the assets and liabilities of Legacy TGC as of the completion date of the Merger at their respective fair values. As a result, Legacy Dawson’s property and equipment is capitalized at historical cost and depreciated over the useful life of the assets and Legacy TGC’s property and equipment is capitalized at its estimated fair values as of the merger date and depreciated over the remaining useful life of the assets. Management’s estimation of the useful life of assets is based on circumstances that exist in the seismic industry and information available at the time of the purchase of the asset. As circumstances change and new information becomes available, these estimates could change. During the first quarter of 2016, the Company’s management evaluated the useful life of a limited line of certain seismic equipment assets and determined that an adjustment to their useful lives was necessary which resulted in an immaterial impact on depreciation expense on the Company’s financial statements. Depreciation is computed using the straight-line method. When assets are retired or otherwise disposed of, the cost and related accumulated depreciation are removed from the condensed consolidated balance sheet, and any resulting gain or loss is reflected in the results of operations for the period. For purposes of measuring the estimated fair value of the Legacy TGC assets acquired in the Merger, the Company used the guidance in Accounting Standards Codification (“ASC”) No. 820, “Fair Value Measurement and Disclosure.” ASC No. 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price). Market participants are assumed to be buyers and sellers in the principal (most advantageous) market for the asset or liability. Additionally, under ASC No. 820, fair value measurements for an asset assume the highest and best use of that asset by market participants. As a result, the Company may be required to value assets of Legacy TGC at fair value measures that do not reflect the Company’s intended use of those assets. Use of different estimates and judgments could yield different results. |
Impairment of Long-Lived Assets | Impairment of Long-lived Assets . Long-lived assets are reviewed for impairment when triggering events occur suggesting deterioration in the assets’ recoverability or fair value. Recognition of an impairment charge is required if future expected undiscounted net cash flows are insufficient to recover the carrying value of the assets and the fair value of the assets is below the carrying value of the assets. Management’s forecast of future cash flows used to perform impairment analysis includes estimates of future revenues and expenses based on the Company’s anticipated future results while considering anticipated future oil and natural gas prices, which is fundamental in assessing demand for the Company’s services. If the carrying amounts of the assets exceed the estimated expected undiscounted future cash flows, the Company measures the amount of possible impairment by comparing the carrying amount of the assets to the fair value. Although the Company does not currently anticipate an impairment of its assets, if oil and natural gas prices remain at current levels for an extended period of time or decline further, the Company may be exposed to impairment charges in future periods, which could negatively affect the Company’s results of operations in a material manner in the period in which they are recorded. |
Leases | Leases . The Company leases certain equipment and vehicles under lease agreements. The Company evaluates each lease to determine its appropriate classification as an operating or capital lease for financial reporting purposes. Any lease that does not meet the criteria for a capital lease is accounted for as an operating lease. The assets and liabilities under capital leases are recorded at the lower of the present value of the minimum lease payments or the fair market value of the related assets. Assets under capital leases are amortized using the straight-line method over the initial lease term. Amortization of assets under capital leases is included in depreciation expense. |
Intangibles | Intangibles . Trademarks/tradenames resulting from a business combination are not subject to amortization. The Company tests for impairment on an annual basis and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of the reporting unit below its carrying amount. |
Revenue Recognition | Revenue Recognition . Services are provided under cancelable service contracts. These contracts are either “turnkey” or “term” agreements. Under both types of agreements, the Company recognizes revenues when revenue is realizable and services have been performed. Services are defined as the commencement of data acquisition or processing operations. Revenues are considered realizable when earned according to the terms of the service contracts. Under turnkey agreements, revenue is recognized on a per unit of data acquired rate as services are performed. Under term agreements, revenue is recognized on a per unit of time worked rate as services are performed. In the case of a cancelled service contract, revenue is recognized and the customer is billed for services performed up to the date of cancellation. The Company receives reimbursements for certain out-of-pocket expenses under the terms of the service contracts. Amounts billed to clients are recorded in revenue at the gross amount, including out-of-pocket expenses that are reimbursed by the client. In some instances, customers are billed in advance of services performed. In those cases, the Company recognizes the liability as deferred revenue. As services are performed, those deferred revenue amounts are recognized as revenue. In some instances, the contract contains certain permitting, surveying and drilling costs that are incorporated into the per unit of data acquired rate. In these circumstances, these set up costs are capitalized and amortized as services are provided. |
Stock-Based Compensation | Stock-Based Compensation . The Company measures all employee stock-based compensation awards, which include stock options, restricted stock, restricted stock units and common stock awards, using the fair value method and recognizes compensation cost, net of estimated forfeitures, in its financial statements. The Company records compensation expense as operating or general and administrative expense, as appropriate, in the condensed consolidated statements of operations on a straight-line basis over the vesting period of the related stock options, restricted stock awards or restricted stock units. |
Foreign Currency Translation | Foreign Currency Translation . The U.S. Dollar is the reporting currency for all periods presented. The functional currency of the Company’s foreign subsidiaries is generally the local currency. All assets and liabilities denominated in a foreign currency are translated into U.S. Dollars at the exchange rate on the balance sheet date. Income and expenses are translated at the average exchange rate during the period. Equity transactions are translated using historical exchange rates. Adjustments resulting from translation are recorded as a separate component of accumulated other comprehensive (loss) income in the condensed consolidated balance sheets. Foreign currency transaction gains (losses) are included in the condensed consolidated statements of operations as other income (expense). |
Income Taxes | Income Taxes . The Company accounts for income taxes by recognizing amounts of taxes payable or refundable for the current year, and by using an asset and liability approach in recognizing the amount of deferred tax assets and liabilities for the future tax consequences of events that have been recognized in the Company’s financial statements or tax returns. Management determines deferred taxes by identifying the types and amounts of existing temporary differences and by measuring the total deferred tax asset or liability using the applicable tax rate in effect for the year in which those temporary differences are expected to be recovered or settled. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the year of an enacted rate change. The deferred tax asset is reduced by a valuation allowance if, based on available evidence, it is more likely than not that some portion or all of the deferred tax asset will not be realized. Management’s methodology for recording income taxes requires judgment regarding assumptions and the use of estimates, including determining the annual effective tax rate and the valuation of deferred tax assets, which can create variances between actual results and estimates and could have a material impact on the Company’s provision or benefit for income taxes. The Company’s effective tax rates differ from the statutory federal rate of 35% for certain items such as valuation allowances, state and local taxes, non-deductible expenses, discrete items and expenses related to share-based compensation that are not expected to result in a tax deduction. |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements In March 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-09, Compensation — Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting, which is intended to simplify accounting for share-based payments awarded to employees, including income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. This ASU is effective for the annual period ending after December 15, 2016, and for annual and interim periods thereafter. Early adoption is permitted. The Company is currently evaluating the new guidance to determine the impact it will have on its condensed consolidated financial statements. In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers, that introduces a new five-step revenue recognition model in which an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This ASU also requires disclosures sufficient to enable users to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers, including qualitative and quantitative disclosures about contracts with customers, significant judgments and changes in judgments, and assets recognized from the costs to obtain or fulfill a contract. Entities have the option of using either a full retrospective or modified approach to adopt ASU No. 2014-09. In March 2016, ASU No. 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Gross versus Net), was issued and in April 2016, ASU No. 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing, was issued. These updates do not change the core principle of the guidance under ASU No. 2014-09, but rather provide implementation guidance. In August 2015, ASU No. 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date, was issued and it amended the effective date of ASU No. 2014-09 for public companies to annual reporting periods beginning after December 15, 2017. Early adoption is permitted, but only beginning after December 15, 2016. The Company is currently evaluating the new guidance in these updates to determine the impact they will have on its condensed consolidated financial statements and the method of adoption. |
MERGER (Tables)
MERGER (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Legacy TGC | |
Summary of assets acquired and liabilities assumed at the Merger date | Fair Value (in 000’s) Stock consideration $ Interest bearing debt assumed Debt-free current liabilities Total purchase price consideration including liabilities assumed $ Value of current assets Current assets excluding cash and cash equivalents $ Cash and cash equivalents Total current assets $ Identified tangible assets Fair value of property and equipment $ Identified intangible assets Trademarks/tradenames $ Net deferred tax asset $ Total indicated value of assets $ |
DEBT (Tables)
DEBT (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
DEBT | |
Schedule of aggregate principal amount outstanding, interest rates under outstanding notes payable | March 31, 2016 December 31, 2015 Notes payable to commercial banks Aggregate principal amount outstanding $ $ Interest rates 3.50%-4.50% 3.50%-4.50% March 31, 2016 December 31, 2015 Notes payable to finance company for insurance Aggregate principal amount outstanding $ $ Interest rates |
Schedule of aggregate maturities of notes payable | The aggregate maturities of the notes payable at March 31, 2016 are as follows: April 2016 – March 2017 $ April 2017 – March 2018 $ |
Schedule of future minimum lease payments | The following is a schedule showing future minimum lease payments under capital leases by years and the present value of the minimum lease payments as of March 31, 2016: April 2016 – March 2017 $ April 2017 – March 2018 $ |
NET LOSS PER SHARE ATTRIBUTAB19
NET LOSS PER SHARE ATTRIBUTABLE TO COMMON STOCK (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
NET LOSS PER SHARE ATTRIBUTABLE TO COMMON STOCK | |
Schedule of the reconciliation of basic and diluted (loss) income per share attributable to common stock | Three Months Ended March 31, 2016 2015 (in 000’s) Net loss $ ) $ ) Income allocable to participating restricted stock — — Basic loss attributable to common stock $ ) $ ) Reallocation of participating earnings — — Diluted loss attributable to common stock $ ) $ ) Weighted average common shares outstanding: Basic Dilutive common stock options, restricted stock units, and non-participating restricted stock awards — — Diluted Basic loss attributable to a share of common stock $ ) $ ) Diluted loss attributable to a share of common stock $ ) $ ) |
Schedule of weighted average numbers of stock options, restricted stock units and non-participating restricted stock awards that have been excluded from the calculation of diluted loss per share attributable to common stock | Three Months Ended March 31, 2016 2015 Stock options Restricted stock units Non-participating restricted stock awards — Total |
SUMMARY OF SIGNIFICANT ACCOUN20
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2016 | Dec. 31, 2015 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||
Allowance for doubtful accounts | $ 250,000 | $ 250,000 |
Federal statutory effective income tax rate | 35.00% |
MERGER (Details)
MERGER (Details) | Feb. 11, 2015USD ($)$ / sharesshares | Feb. 10, 2015$ / shares | Mar. 31, 2016USD ($)$ / sharesshares | Dec. 31, 2015USD ($)$ / sharesshares | Mar. 31, 2015USD ($) |
Common stock, par value (in dollars per share) | $ / shares | $ 0.01 | $ 0.01 | |||
Fair value of assets acquired and liabilities assumed | |||||
Common stock, shares outstanding | shares | 21,596,240 | 21,580,865 | |||
Net loss | $ (8,600,000) | $ (6,592,000) | |||
Legacy TGC | |||||
Common stock, par value (in dollars per share) | $ / shares | $ 0.01 | ||||
Reverse stock split ratio | 0.33 | ||||
Split-effected Common Stock | shares | 1.760 | ||||
Increase in preliminary estimated amount of property and equipment | $ 5,055,000 | ||||
Increase in preliminary estimated amount of current liability | 943,000 | ||||
Decrease in preliminary estimated amount of current assets | 625,000 | ||||
Decrease in preliminary estimated amount of intangible assets | 2,953,000 | ||||
Decrease in deferred tax assets related to adjustments to preliminary estimates | 534,000 | ||||
Increase in depreciation | 628,000 | ||||
Decrease in amortization expense | $ 697,000 | ||||
Fair value of assets acquired and liabilities assumed | |||||
Stock consideration | $ 42,902,000 | ||||
Interest bearing debt assumed | 12,048,000 | ||||
Debt-free current liabilities | 13,590,000 | ||||
Total purchase price consideration including liabilities assumed | 68,540,000 | ||||
Current assets excluding cash and cash equivalents | 15,531,000 | ||||
Cash and cash equivalents | 12,382,000 | ||||
Total current assets | 27,913,000 | ||||
Fair value of property and equipment | 33,867,000 | ||||
Net deferred tax asset | 6,360,000 | ||||
Total indicated value of assets | $ 68,540,000 | ||||
Common stock, shares outstanding | shares | 7,381,476 | ||||
Accrued taxes | $ 865,000 | ||||
Pre-tax merger-related costs | 2,600,000 | ||||
Revenues | 8,592,000 | ||||
Net loss | $ (2,837,000) | ||||
Legacy TGC | Minimum | |||||
Fair value of assets acquired and liabilities assumed | |||||
Estimated useful lives of property and equipment | 18 months | ||||
Legacy TGC | Maximum | |||||
Fair value of assets acquired and liabilities assumed | |||||
Estimated useful lives of property and equipment | 12 years | ||||
Legacy TGC | Trademarks/tradenames | |||||
Fair value of assets acquired and liabilities assumed | |||||
Identified intangible assets | $ 400,000 | ||||
Legacy Dawson | |||||
Common stock, par value (in dollars per share) | $ / shares | $ 0.33 |
SHORT-TERM INVESTMENTS (Details
SHORT-TERM INVESTMENTS (Details) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2016USD ($)item | Dec. 31, 2015USD ($)item | |
SHORT-TERM INVESTMENTS | ||
Maturity Period of certificates of deposit, minimum | 3 months | 3 months |
Maturity Period of certificates of deposit, maximum | 1 year | 1 year |
Limit of certificates of deposit per banking institution | item | 1 | 1 |
Number of investments exceeding FDIC limit | $ | $ 0 | $ 0 |
DEBT (Details)
DEBT (Details) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2016USD ($)item | Dec. 31, 2015USD ($) | |
Debt Instruments | ||
Aggregate principal amount | $ 7,430,000 | |
Capital lease obligations | 1,006,000 | |
Notes payable | ||
Aggregate principal amount outstanding | 7,430,000 | |
Aggregate maturities of notes payable | ||
April 2016 - March 2017 | 6,414,000 | |
April 2017 - March 2018 | 1,016,000 | |
Total | 7,430,000 | |
Future minimum lease payments | ||
April 2016 - March 2017 | 727,000 | |
April 2017 - March 2018 | 279,000 | |
Total minimum lease payments required | $ 1,006,000 | |
Minimum | ||
Future minimum lease payments | ||
Interest rate (as a percent) | 3.16% | |
Maximum | ||
Future minimum lease payments | ||
Interest rate (as a percent) | 6.88% | |
Credit Agreement | ||
Debt Instruments | ||
Borrowing, repaying and re-borrowing capacity | $ 20,000,000 | |
Number of notes payable | item | 1 | |
Aggregate principal amount | $ 2,572,000 | |
Number of notes payable not covered under term loan feature | item | 2 | |
Aggregate principal amount not covered under term loan feature outstanding | $ 4,332,000 | |
Percentage of maximum borrowing capacity on eligible accounts receivable | 80.00% | |
Minimum tangible net worth | $ 150,000,000 | |
Notes payable | ||
Aggregate principal amount outstanding | 2,572,000 | |
Aggregate maturities of notes payable | ||
Total | 2,572,000 | |
Credit Agreement | Letter Of Credit | ||
Debt Instruments | ||
Aggregate principal amount | $ 1,767,000 | |
Credit Agreement | Minimum | ||
Debt Instruments | ||
Ratio of current assets to current liabilities | 1.50 | |
Credit Agreement | Maximum | ||
Debt Instruments | ||
Interest rate | 4.50% | |
Debt to tangible net worth ratio | 1 | |
Credit Agreement | Maximum | Prime rate | ||
Debt Instruments | ||
Interest rate floor | 2.50% | |
Notes payable to commercial banks | ||
Debt Instruments | ||
Aggregate principal amount | $ 6,904,000 | $ 8,654,000 |
Notes payable | ||
Aggregate principal amount outstanding | $ 6,904,000 | $ 8,654,000 |
Minimum interest rate (as a percent) | 3.50% | 3.50% |
Maximum interest rate (as a percent) | 4.50% | 4.50% |
Aggregate maturities of notes payable | ||
Total | $ 6,904,000 | $ 8,654,000 |
Notes payable to finance companies for insurance | ||
Debt Instruments | ||
Number of notes payable | item | 1 | |
Aggregate principal amount | $ 526,000 | 838,000 |
Notes payable | ||
Aggregate principal amount outstanding | $ 526,000 | $ 838,000 |
Interest rate (as a percent) | 2.35% | 2.35% |
Aggregate maturities of notes payable | ||
Total | $ 526,000 | $ 838,000 |
NET LOSS PER SHARE ATTRIBUTAB24
NET LOSS PER SHARE ATTRIBUTABLE TO COMMON STOCK (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
NET LOSS PER SHARE ATTRIBUTABLE TO COMMON STOCK | ||
Net loss | $ (8,600,000) | $ (6,592,000) |
Basic loss attributable to common stock | (8,600,000) | (6,592,000) |
Diluted loss attributable to common stock | $ (8,600,000) | $ (6,592,000) |
Weighted average common shares outstanding: | ||
Basic | 21,629,817 | 18,021,366 |
Diluted | 21,629,817 | 18,021,366 |
Basic loss per share attributable to common stock | $ (0.40) | $ (0.37) |
Diluted loss attributable to a share of common stock | $ (0.40) | $ (0.37) |
NET LOSS PER SHARE ATTRIBUTAB25
NET LOSS PER SHARE ATTRIBUTABLE TO COMMON STOCK - Stock Options and Restricted Stock (Details) - shares | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Weighted Average | ||
Anti-dilutive Securities Excluded from Calculation of Earnings Per Share | ||
Weighted average number of securities excluded from calculation | 694,418 | 555,463 |
Participating restricted stock | ||
Anti-dilutive Securities Excluded from Calculation of Earnings Per Share | ||
Weighted average participating restricted stock included in common stock outstanding | 0 | 81,840 |
Stock options | Weighted Average | ||
Anti-dilutive Securities Excluded from Calculation of Earnings Per Share | ||
Weighted average number of securities excluded from calculation | 423,627 | 429,746 |
Restricted stock units | Weighted Average | ||
Anti-dilutive Securities Excluded from Calculation of Earnings Per Share | ||
Weighted average number of securities excluded from calculation | 226,813 | 125,717 |
Non-participating restricted stock awards | Weighted Average | ||
Anti-dilutive Securities Excluded from Calculation of Earnings Per Share | ||
Weighted average number of securities excluded from calculation | 43,978 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Income tax benefit | $ 968,000 | $ 3,313,000 |
Pretax loss | $ 9,568,000 | $ 9,905,000 |
Effective tax rate (as percent) | 10.10% | 33.40% |
Income tax benefits recognized from future losses | $ 0 | |
Federal | ||
Valuation allowance | 2,360,000 | |
State | ||
Valuation allowance | $ 61,000 |