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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________
FORM 10-K
(Mark One)
x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
----- SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1999
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 1-11953
Willbros Group, Inc.
(Exact name of registrant as specified in its charter)
Republic of Panama 98-0160660
(Jurisdiction of incorporation) (I.R.S. Employer Identification Number)
Dresdner Bank Building
50th Street, 8th Floor
P. O. Box 850048
Panama 5, Republic of Panama
Telephone No.: (50-7) 263-9282
(Address, including zip code, and telephone number, including
area code, of principal executive offices of registrant)
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
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Common stock, $.05 Par Value New York Stock Exchange
Preferred Share Purchase Rights New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
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
----- -----
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein,
and will not be contained, to the best of the Registrant's
knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. X
-----
As of March 22, 2000, 13,993,187 shares of the Registrant's
Common Stock were outstanding, and the aggregate market value of
the Common Stock held by non-affiliates was approximately
$70,197,697.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's Annual Report to Stockholders
for the fiscal year ended December 31, 1999, are incorporated by
reference into Parts I and II of this Form 10-K.
Portions of the Registrant's Proxy Statement for the Annual
Meeting of Stockholders to be held May 4, 2000 are incorporated
by reference into Part III of this Form 10-K.
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WILLBROS GROUP, INC.
FORM 10-K
YEAR ENDED DECEMBER 31, 1999
TABLE OF CONTENTS
Page
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PART I
Items 1
and 2. Business and Properties 4
Item 3. Legal Proceedings 25
Item 4. Submission of Matters to a Vote of
Security Holders 25
Item 4A. Executive Officers of the Registrant 25
PART II
Item 5. Market for Registrant's Common Equity
and Related Stockholder Matters 28
Item 6. Selected Financial Data 28
Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations 28
Item 7A. Quantitative and Qualitative Disclosures
About Market Risk 28
Item 8. Financial Statements and Supplementary Data 28
Item 9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure 28
PART III
Item 10. Directors and Executive Officers of the
Registrant 28
Item 11. Executive Compensation 29
Item 12. Security Ownership of Certain Beneficial
Owners and Management 29
Item 13. Certain Relationships and Related
Transactions 29
PART IV
Item 14. Exhibits, Financial Statement Schedules,
and Reports on Form 8-K. 29
Signatures 32
2
Forward-Looking Statements
This Form 10-K includes "forward-looking statements" within the
meaning of Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Securities Exchange Act of 1934, as
amended. All statements, other than statements of historical
facts, included or incorporated by reference in this Form 10-K
which address activities, events or developments which the
Company expects or anticipates will or may occur in the future,
including such things as future capital expenditures (including
the amount and nature thereof), oil and gas prices and demand,
expansion and other development trends of the oil and gas
industry, business strategy, expansion and growth of the
Company's business and operations, movement of the Tulsa,
Oklahoma administrative offices to Houston, Texas, and other such
matters are forward-looking statements. These statements are
based on certain assumptions and analyses made by the Company in
light of its experience and its perception of historical trends,
current conditions and expected future developments as well as
other factors it believes are appropriate in the circumstances.
However, whether actual results and developments will conform
with the Company's expectations and predictions is subject to a
number of risks and uncertainties which could cause actual
results to differ materially from the Company's expectations
including the timely award of one or more projects; exceeding
project cost and schedule targets; failing to realize cost
recoveries from projects completed or in progress within a
reasonable period after completion of the relevant project;
identifying and acquiring suitable acquisition targets on
reasonable terms; the demand for energy diminishing; political
circumstances impeding the progress of work; general economic,
market or business conditions; changes in laws or regulations;
the risk factors listed from time to time in the Company's
filings with the Securities and Exchange Commission; and other
factors, most of which are beyond the control of the Company.
Consequently, all of the forward-looking statements made in this
Form 10-K are qualified by these cautionary statements and there
can be no assurance that the actual results or developments
anticipated by the Company will be realized or, even if
substantially realized, that they will have the expected
consequences to or effects on the Company or its business or
operations. The Company assumes no obligation to update publicly
any such forward-looking statements, whether as a result of new
information, future events or otherwise.
3
PART I
Items 1 and 2. Business and Properties
General
Willbros Group, Inc. ("the Company") is one of the leading
independent contractors serving the oil and gas industry,
providing construction, engineering and specialty services to
industry and government entities worldwide. The Company places
particular emphasis on projects in developing countries where the
Company believes its experience gives it a competitive advantage.
The Company's construction services include the building and
replacement of major pipelines and gathering systems, flow
stations, pump stations, gas compressor stations, gas processing
facilities, oil and gas production facilities, piers, dock
facilities and bridges. The Company's engineering services
include feasibility studies, conceptual and detailed design,
field services, material procurement and overall project
management. The Company's specialty services include dredging,
pipe coating, pipe double jointing, removal and installation of
flowlines, fabrication of piles and platforms, maintenance and
repair of pipelines, stations and other facilities, pipeline
rehabilitation, general oilfield services and transport of
oilfield equipment, rigs and vessels. The Company's backlog was
$253.1 million at December 31, 1999, compared to $286.5 million
at December 31, 1998.
The Company provides its services utilizing a large fleet of
Company-owned equipment comprised of, among other things, marine
vessels, barges, dredges, pipelaying equipment, heavy
construction equipment, transportation equipment and camp
equipment. At March 2, 2000, the Company had approximately 676
units of heavy construction equipment, 926 units of
transportation equipment and 5,278 units of support equipment.
The Company's equipment fleet is supported by warehouses of spare
parts and tools, which are located to maximize availability and
minimize cost.
The Company traces its roots to the construction business of
Williams Brothers Company, founded in 1908. Through successors
to that business, Willbros has completed many landmark projects
around the world, including the "Big Inch" and "Little Big Inch"
War Emergency Pipelines (1942-44), the Mid-America Pipeline
(1960), the TransNiger Pipeline (1962-64), the Trans-Ecuadorian
Pipeline (1970-72), the northernmost portion of the Trans-Alaskan
Pipeline System (1974-76), the All American Pipeline System (1984-
86), Colombia's Alto Magdalena Pipeline System (1989-90) and a
portion of the Pacific Gas Transmission System expansion (1992-
93).
Over the years, Willbros has been employed by more than 400
clients to carry out work in over 50 countries. Within the past
10 years, Willbros has worked in Africa, Asia, Australia, the
Middle East, North America and South America. Willbros'
relatively steady base of ongoing construction, engineering and
specialty services operations in Nigeria, Oman, the United States
and Venezuela has been enhanced by major construction and
engineering projects in Abu Dhabi, Australia, Cameroon, Colombia,
Egypt, Gabon, Indonesia, Ivory Coast, Kuwait, Morocco, Nigeria,
Oman, Pakistan, Russia, the United States and Venezuela.
Representative clients (or affiliates of clients) of the
Company include Royal Dutch Shell; Asamera (Overseas) Limited;
Apache Cote d'lvoire; Pecten Cameroon; Bilfinger + Berger;
Conoco; Chevron; Kuwait Oil Company; Abu Dhabi National Oil
Company; U.S. Army; U.S. Navy; Pacific Gas & Electric; Petroleum
Development Oman; Enron; El Paso Energy; Petroleos de Venezuela
S.A. ("PDVSA"); Transredes; Occidental Petroleum; Duke Energy;
Great Lakes Gas Transmission Company; E.N.I.; The Williams
Companies; Nigerian National Petroleum Corporation ("NNPC"); and
the Pak-Arab Refinery, Ltd. ("PARCO"). Private sector clients
such as Royal Dutch Shell have historically accounted for the
majority of the Company's revenues. Government entities and
agencies, such as Kuwait Oil Company, U.S. Army, U.S. Navy, NNPC
and PDVSA, have accounted for the remainder. Ten clients were
responsible for 67% of the Company's total revenues in 1999 (78%
in 1998 and 74% in 1997). Operating units of Royal Dutch
4
Shell and Duke Energy accounted for 36% and 11%, respectively, of
the Company's total revenues in 1999.
The Company is incorporated in the Republic of Panama and
maintains its headquarters at Dresdner Bank Building, 50th
Street, 8th Floor, Panama 5, Republic of Panama; its telephone
number is (50-7) 263-9282. Administrative services for the
Company are provided by Willbros USA, Inc., which is located at
600 Willbros Place, 2431 East 61st Street, Tulsa, Oklahoma 74136-
1267; its telephone number is (918) 748-7000.
Current Market Conditions
The world's economies have begun their recovery following the
downturn of 1997-98. That fact, along with the recent run-up in
oil prices, suggests that many significant development projects
and energy infrastructure projects will now likely proceed,
including a number of projects in emerging markets which were put
on hold over the past two to three years. These projects include
natural gas, crude oil and petroleum products, pipeline systems,
LNG projects and ancillary projects. Industry sources estimate
that worldwide pipeline construction expenditures will be
approximately $17.6 billion for projects completed in 2000 and
another $30.2 billion for projects planned to begin during 2000
and be completed in 2001 or later.
The Company believes that certain of these projects will meet
its bidding criteria, and that the Company's worldwide pipeline
construction, engineering and specialty services experience place
it in an advantageous position to compete for such projects. The
Company currently has a number of significant bids outstanding
with respect to potential contract awards in Algeria, Bolivia,
Cameroon, Chad, Egypt, Ghana, Indonesia, Ivory Coast, Nigeria,
Oman, the United States and Venezuela. The Company is currently
preparing bids with respect to potential contract awards in
Australia, Indonesia, Nigeria, Oman, the United States and
Venezuela. Finally, the Company expects to prepare and submit
bids with respect to certain other potential construction and
engineering projects in Africa, Asia, Australia, the Middle East,
North America and South America during 2000.
Over the long term, the Company believes several factors
influencing the global energy market have led to and will
continue to result in increased activity across its types of
service. The factors leading to higher levels of energy-related
capital expenditures include (a) rising global energy demand
resulting from economic growth in developing countries, (b) the
privatization of certain state-controlled oil and gas companies,
and (c) the need for larger oil and gas transportation
infrastructures in a number of developing countries.
Business Strategy
The Company seeks to maximize stockholder value through its
business strategy. The core elements of this strategy are to
concentrate on projects and prospects in areas where it can be
most competitive and obtain the highest profit margins, pursue
engineer-procure-construct contracts with a renewed vigor because
they can often yield higher profit margins than construction-only
contract, focus on performance and project execution in order to
maximize the profit potential on each contract awarded, maintain
its commitment to safety and quality, develop alliances with
companies who will enhance its capability and competitiveness in
markets throughout the world and pursue growth through expansion,
mergers, acquisitions and equity investments while maintaining a
strong balance sheet.
In pursuing this strategy, the Company relies on (a) the
competitive advantage gained from its experience in completing
logistically complex and technically difficult projects in remote
areas with difficult terrain and harsh climatic conditions, and
(b) its experienced multinational work force of approximately
2,030 employees, of whom more than 80 percent are citizens of the
respective countries in which they work.
5
The Company continues to invest in its employees to ensure that
they have the training and tools needed to be successful in
today's challenging environment. For example, during the recent
business cycle downturn, the Company converted all of its
worldwide information systems to a new, fully integrated
enterprise system that will increase efficiency, standardize the
way operations are managed throughout the world and make it
easier for company personnel to adapt quickly to a change of
locations.
The Company's short-term strategy during this cycle has been to
(a) reduce operating and overhead costs to a level that is
justified by expected revenues, (b) evaluate and consider closing
operations or offices in work countries where expected returns
have not materialized, and (c) identify and sell surplus
equipment. The Company's long-term strategies, summarized below,
remain unchanged.
Geographic Expansion. The Company's objective is to maintain
and enhance its presence in regions where it has developed a
strong base of operations, such as Africa, Asia, the Middle East,
North America and South America, by capitalizing on its local
experience, established contacts with local customers and
suppliers, and familiarity with local working conditions. In
addition, the Company seeks to establish a presence in other
strategically important areas, such as Algeria, Bolivia,
Cameroon, and Chad, as well as certain other selected areas in
South America and Asia. In pursuing this strategy, the Company
seeks to identify a limited number of long-term niche markets in
which the Company can outperform the competition and establish an
advantageous position.
Strategic Alliances. The Company seeks to establish strategic
alliances with companies whose resources, skills and strategies
are complementary to and are likely to enhance the Company's
business opportunities, including the formation of joint ventures
and consortia to achieve competitive advantage and share risks.
Such alliances have already been established in Argentina,
Australia, Bolivia, Cameroon, Chad, Indonesia, Malaysia,
Thailand, the United States and Venezuela. As a related
strategy, the Company may decide to make an equity investment in
a project in order to enhance its competitive position and/or
maximize project returns. In 1998, this strategy led to the
Company's Venezuelan subsidiary taking a 10 percent equity stake in a
16-year contract to operate, maintain and refurbish water injection
facilities in Lake Maracaibo, Venezuela.
Acquisitions. The Company seeks to identify, evaluate and
acquire companies that offer growth opportunities and the ability
to complement the Company's resources and capabilities.
Consistent with this strategy, in 1994 the Company acquired
Construcciones Acuaticas Mundiales, S.A. ("CAMSA"). CAMSA
operates in Venezuela and, in addition to performing onshore
construction and specialty services, possesses expertise in
marine construction and the fabrication and installation of
concrete piles and platforms for offshore projects. Further to
this strategy, in 1997 the Company entered into a new credit
agreement, a substantial portion of which can be used for
acquisitions. In January 2000, the Company acquired Rogers &
Phillips, Inc. (RPI), a closely held pipeline construction
company in Houston, Texas with an experienced management team and
a strong market position in the Gulf Coast area.
Quality Improvements. The Company's quality program enhances
the Company's ability to meet the specific requirements of its
customers through continuous improvement of all its business
processes, while at the same time improving competitiveness and
profitability. ISO 9000, an internationally recognized
verification system for quality management, has in recent years
been made a criterion for prequalification of contractors by
certain clients and potential clients, and this trend is expected
to continue. The certification process involves a rigorous
review and audit of the Company's management processes and
quality control procedures. Four of the Company's key operating
subsidiaries currently have ISO 9000 certification.
Conservative Financial Management. The Company emphasizes the
maintenance of a conservative balance sheet in order to finance
the development and growth of its business. The Company also
seeks to obtain contracts that are likely to result in recurring
revenues in order to partially mitigate the cyclical
nature of its construction and engineering businesses. For
example, the Company generally seeks to obtain specialty services
contracts of more than one year in duration. Additionally, the
Company acts to minimize its exposure to currency fluctuations
through the use of U.S. dollar-denominated contracts
6
whenever possible, by limiting payments in local currency to
approximately the amount of local currency expenses, and
otherwise by engaging in hedging activities such as purchasing
foreign currency forward contracts. The Company had no forward
contracts at December 31, 1999.
Willbros Background
The Company is the successor to the pipeline construction
business of Williams Brothers Company, which was started in 1908
by Miller and David Williams. In 1949, the business was
reconstituted and acquired by the next generation of the Williams
family. The resulting enterprise eventually became The Williams
Companies, Inc., a major U.S. energy, communications and
interstate natural gas and petroleum products transportation
company ("Williams").
In 1975, Williams elected to discontinue its pipeline
construction activities and, in December 1975, sold substantially
all of the non-U.S. assets and entities comprising its pipeline
construction division to a newly formed Panama corporation
(eventually renamed "Willbros Group, Inc.") owned by employees of
the division. In 1979, Willbros Group, Inc. retired its debt
incurred in the acquisition by selling a 60 percent equity stake to
Heerema Holding Construction, Inc. ("Heerema"). In 1986, Heerema
acquired the balance of Willbros Group, Inc., which then operated
as a wholly owned subsidiary of Heerema until April 1992.
In April 1992, Heerema sold Willbros Group, Inc. to a
corporation formed December 31, 1991, in the Republic of Panama
by members of the Company's management, certain other investors,
and Heerema. Subsequently, the original Willbros Group, Inc. was
dissolved into the acquiring corporation which was renamed
"Willbros Group, Inc." In August 1996, the Company completed an
initial public offering of Common Stock in which Heerema sold all
of its shares of Common Stock; and in October 1997, the Company
completed a secondary offering in which such other investors sold
substantially all of their shares of Common Stock.
The term "Willbros," as used in this Form 10-K, includes the
Company, the original Willbros Group, Inc. and their predecessors
in the pipeline construction business, as described above. All
references in this Form 10-K to the "Company" refer to Willbros
Group, Inc. ("WGI") and its consolidated subsidiaries.
Willbros Milestones
The following are selected milestones which Willbros has
achieved:
1915 Began pipeline work in the United States.
1939 Began international pipeline work in Venezuela.
1942-44 Served as principal contractor on the "Big Inch" and
"Little Big Inch" War Emergency Pipelines in the United
States which delivered Gulf Coast crude oil to the Eastern
Seaboard.
1947-48 Built the 370-mile (600-kilometer) Camiri to Sucre and
Cochabamba crude oil pipeline in Bolivia.
1951 Completed the 400-mile (645-kilometer) western segment of
the Trans-Arabian Pipeline System in Jordan, Syria and
Lebanon.
1954-55 Built Alaska's first major pipeline system, consisting
of 625 miles (1,000 kilometers) of petroleum products
pipeline, housing, communications, two tank farms, five
pump stations, and marine dock and loading facilities.
1956-57 Led a joint venture which constructed the 335-mile
(535-kilometer) southern section of the Trans-Iranian
Pipeline, a products pipeline system extending from Abadan
to Tehran.
7
1958 Constructed pipelines and related facilities for the
world's largest oil export terminal at Kharg Island, Iran.
1960 Built the first major liquefied petroleum gas pipeline
system, the 2,175-mile (3,480-kilometer) Mid-America
Pipeline in the United States, including six delivery
terminals, two operating terminals, 13 pump stations,
communications and cavern storage.
1962 Began operations in Nigeria with the commencement of
construction of the TransNiger Pipeline, a 170-mile (275-
kilometer) crude oil pipeline.
1964-65 Built the 390-mile (625-kilometer) Santa Cruz to Sica
Sica crude oil pipeline in Bolivia. The highest altitude
reached by this line is 14,760 feet (4,500 meters) above
sea level, which management believes is higher than the
altitude of any other pipeline in the world.
1965 Began operations in Oman with the commencement of
construction of the 175-mile (280-kilometer) Fahud to
Muscat crude oil pipeline system.
1967-68 Built the 190-mile (310-kilometer) Orito to Tumaco
crude oil pipeline in Colombia, one of five Willbros
crossings of the Andes Mountains, a project notable for the
use of helicopters in high-altitude construction.
1969 Completed a gas gathering system and 105 miles (170
kilometers) of 42-inch trunkline for the Iranian Gas
Trunkline Project (IGAT) in Iran to supply gas to the USSR.
1970-72 Built the Trans-Ecuadorian Pipeline, consisting of 315 miles
(505 kilometers) of 20- and 26-inch pipeline, seven
pump stations, four pressure-reducing stations and six
storage tanks.
1974-76 Led a joint venture which built the northernmost 225 miles
(365 kilometers) of the Trans-Alaskan Pipeline System.
1974-76 Led a joint venture which constructed 290 miles
(465 kilometers) of pipeline and two pump stations in the
inaccessible western Amazon basin of Peru.
1974-79 Designed and engineered the 500-mile (795-kilometer)
Sarakhs-Neka gas transmission line in northeastern Iran.
1976-79 Acted as technical leader of a consortium which
designed and supplied six modularized gas compressor
stations totaling 726,000 horsepower for the 56-inch
Urengoy to Chelyabinsk gas pipeline system in western
Siberia.
1982-83 Built the Cortez carbon dioxide pipeline system in the
southwestern United States, consisting of 505 miles
(815 kilometers) of 30-inch pipe.
1984-86 Constructed, through a joint venture, the All American
Pipeline System, a 1,240-mile (1,995-kilometer), 30-inch
heated pipeline, including 23 pump stations, in the
United States.
1984-95 Developed and furnished a rapid deployment fuel
pipeline distribution and storage system for the U.S. Army
which was used extensively and successfully in Saudi Arabia
during Operation Desert Shield/Desert Storm in 1990/1991
and in Somalia during 1993.
1985-86 Built a 185-mile (300-kilometer), 24-inch crude oil
pipeline from Ayacucho to Covenas in Colombia.
1987 Rebuilt 25 miles (40 kilometers) of the Trans-Ecuadorian
crude oil pipeline within six months after major portions
were destroyed by an earthquake.
8
1988-92 Performed the project management, engineering,
procurement and field support services to expand the Great
Lakes Gas Transmission System in the northern
United States. The expansion involved modifications to 13
compressor stations and the addition of 660 miles
(1,060 kilometers) of 36-inch pipeline in 50 separate
loops.
1989-90 Built the Alto Magdalena Pipeline System in Colombia,
consisting of 250 miles (400 kilometers) of 20-inch crude
oil pipeline, one pump station and a tank farm.
1989-92 Provided pipeline engineering and field support
services for the Kern River Gas Transmission System, a 36-
inch pipeline project extending over 685 miles
(1,100 kilometers) of desert and mountains from Wyoming to
California in the United States.
1992-93 Rebuilt oil field gathering systems in Kuwait as part
of the post-war reconstruction effort.
1992-93 Built 150 miles (240 kilometers) of 42-inch pipeline
in Oregon to expand the Pacific Gas Transmission System.
1992-94 Resumed activities in the C.I.S. Selected to develop
export pipeline system for Caspian Pipeline Consortium from
Tengiz field in Kazakstan to Black Sea oil terminal at
Novorossiysk, Russia, and established a representative
office and joint stock company in Russia.
1994 Re-entered Venezuela oil service market through the
acquisition of CAMSA.
1995 Entered into an agreement with a Japanese trading company
providing for the joint development of projects in selected
markets in Southeast Asia and established an office in
Jakarta, Indonesia, to pursue major projects in the region.
1995-97 Executed two contracts in Pakistan for construction,
material procurement and engineering of the MFM Pipeline
Extension Project, which consisted of 225 miles
(365 kilometers) of 18- and 16-inch multi-product pipeline and
related facilities.
1996 Listed shares in an initial public offering of Common Stock
on the NYSE under the symbol "WG."
1996-97 Achieved ISO Certification for seven operating
companies.
1996-98 Performed an EPC contract with Asamera (Overseas) Limited
to design and construct pipelines, flowlines and
related facilities for the Corridor Block Gas Project
located in southern Sumatra, Indonesia.
1997-98 Carried out a contract for the construction of 120 miles
(200 kilometers) each of 36- and 20-inch pipelines in
the Zuata Region of the Orinoco Belt in Venezuela.
1997-98 Executed a contract with an MW Kellogg joint venture
for the construction of a 35-mile (55-kilometer) gas
pipeline for a LNG plant in Kalimantan, Indonesia,
furthering the Company's efforts to establish Indonesia
as an ongoing work country.
1997-98 Completed an EPC contract for El Paso Natural Gas Company
and Gasoductos de Chihuahua, a joint venture
between El Paso and PEMEX, to construct a 45-mile
(75-kilometer) gas pipeline system in Texas and Mexico.
1998 Made a 10 percent equity investment in a consortium which was
awarded a 16-year contract to build, operate and transfer
water injection facilities on Lake Maracaibo in Venezuela.
1998 Acquired a multi-purpose marine construction barge to
pursue shallow water pipelay, utility and maintenance
opportunities in offshore West Africa.
9
1999 Entered Australia market through a joint venture to
construct a 492-mile (792-kilometer), 18-inch gas pipeline.
2000 Acquired Rogers & Phillips, Inc.
Services Provided
The Company operates in a single operating segment providing
contract construction, engineering and specialty services to the
oil and gas industry. The following table reflects the Company's
contract revenue by type of service for 1999, 1998 and 1997.
Year Ended December 31,
----------------------------------------------
1999 1998
---------------------- ----------------------
Amount Percent Amount Percent
---------- ---------- ---------- ----------
(Dollar amounts in thousands)
Construction services $ 67,690 38% $ 185,995 66%
Engineering services 70,500 40 63,258 22
Specialty services 38,374 22 32,365 12
---------- ---------- ---------- ----------
Total $ 176,564 100% $ 281,618 100%
========== ========== ========== ==========
- -CONTINUED-
Year Ended December 31,
-----------------------
1997
----------------------
Amount Percent
---------- ----------
(Dollar amounts in thousands)
Construction services $ 118,277 47%
Engineering services 75,674 30
Specialty services 57,926 23
---------- ----------
Total $ 251,877 100%
========== ==========
Construction Services
The Company is one of the most experienced contractors serving
the oil and gas industry. The Company's construction
capabilities include the expertise to construct and replace large-
diameter cross-country pipelines; to construct oil and gas
production facilities, pump stations, flow stations, gas
compressor stations, gas processing facilities and other related
facilities; and to construct piers, docks and bridges.
Pipeline Construction. World demand for pipelines results
from the need to move millions of barrels of crude oil and
petroleum products and billions of cubic feet of natural gas to
refiners, processors and consumers each day. Pipeline
construction is capital-intensive, and the Company owns, operates
and maintains a fleet of specialized equipment necessary for it
to engage in the pipeline construction business. The Company
focuses on pipeline construction activity in remote areas and
harsh climates where it believes its experience gives it a
competitive advantage. Willbros believes that it has constructed
more miles of pipeline than any other private sector company.
The construction of a cross-country pipeline involves a number
of sequential operations along the designated pipeline right-of-
way. These operations are virtually the same for all overland
pipelines, but personnel and equipment may vary widely depending
upon such factors as the time required for completion, general
climatic conditions, seasonal weather patterns, the number of
road crossings, the number and size of river crossings, terrain
considerations, extent of rock formations, density of heavy
timber and amount of swamp. Construction often involves separate
crews to perform the following different functions: clear the
right-of-way; grade the right-of-way; excavate a trench in which
to bury the pipe; haul pipe to intermediate stockpiles from which
stringing trucks carry pipe and place individual lengths (joints)
of pipe alongside the ditch; bend pipe joints to conform to
changes of direction and elevation; clean pipe ends and line up
the succeeding joint; perform various welding operations; non-
destructively inspect welds; clean pipe and apply anti-corrosion
coatings; lower pipe into the ditch; backfill the ditch; bore and
install highway and railroad crossings; drill, excavate or dredge
and install pipeline river crossings; tie in all crossings to the
pipeline; install mainline valve stations; conduct pressure
testing; install cathodic protection system; and perform final
clean up.
10
Special equipment and techniques are required to construct
pipelines across wetlands. From a launching station on dry land,
a section of several joints of pipe, which have been welded
together, may be pushed into a flooded ditch. By securing
floaters to the pipe, it is possible to float the pipe. The next
section is then welded to the end of the previous section, after
which it is pushed into the flooded ditch. The same method can
be used from a properly secured and anchored barge. Another
specialized swamp pipelaying technique is to lay the pipe from a
lay barge which moves along the right-of-way, laying one joint at
a time; each joint is aligned and welded, and the weld non-
destructively inspected and coated before being lowered in. The
Company uses swamp pipelaying methods extensively in Nigeria,
where most of its construction operations are carried out in the
Niger River delta. In addition to primary equipment such as
laybarges, dredges and swamp backhoes, the Company has a
substantial investment in support vessels, including tugboats,
barges, supply boats and houseboats, which are required in order
to maintain a capability in swamp pipeline construction.
Station Construction. Oil and gas companies require various
facilities in the course of producing, processing, storing and
moving oil and gas. The Company is experienced in and capable of
constructing facilities such as pump stations, flow stations, gas
processing facilities, gas compressor stations and metering
stations. The Company is capable of building such facilities
onshore, offshore or in swamp locations. The construction of
station facilities, while not nearly as capital-intensive as
pipeline construction, is generally characterized by complex
logistics and scheduling, particularly on projects in locations
where seasonal weather patterns limit construction options, and
in countries where the importation process is difficult.
Willbros' capabilities have been enhanced by its experience in
dealing with such challenges in numerous countries around the
world.
Marine Construction. The Company constructs and installs
fixed drilling and production platforms in Venezuela, primarily
in Lake Maracaibo. Because of the extremely corrosive
conditions, concrete, rather than steel, piling is driven deep
into the lakebed to support such platforms. The Company is also
capable of building bridges, docks, jetties and mooring or
breasting dolphins. The Company's marine fleet includes pile
driving barges, derrick barges and other vessels, which support
marine construction operations. During 1998, the Company
purchased a multi-purpose marine construction barge to pursue
shallow water pipelay and maintenance opportunities in offshore
West Africa.
Engineering Services
The Company provides engineering, project management and
material procurement services to the oil and gas industry and
government agencies. The Company specializes in providing
engineering services to assist clients in constructing or
expanding pipeline systems, compressor stations, pump stations,
fuel storage facilities, and field gathering and production
facilities. Through experience, the Company has developed
expertise in addressing the unique engineering issues involved
with pipeline systems and associated facilities to be installed
where climatic conditions are extreme, where areas of
environmental sensitivity must be crossed, where fluids which
present extreme health hazards must be transported, and where
fluids which present technical challenges regarding material
selection are to be transported.
To complement its engineering services, the Company also
provides a full range of field services, including surveying,
right-of-way acquisition, material receiving and control,
construction inspection and facilities startup assistance. Such
services are furnished to a number of oil and gas industry and
government clients on a stand-alone basis; and, in addition, are
provided as part of engineering, procurement and construction
contracts undertaken by the Company.
Climatic Constraints. In the design of pipelines and
associated facilities to be installed in harsh environments,
special provisions for metallurgy of materials and foundation
design must be addressed. The Company is experienced in designing
pipelines for arctic conditions, where permafrost and extremely
low temperatures are prevalent, and for desert conditions,
mountainous terrain and swamps.
11
Environmental Impact of River Crossings. The Company has
considerable capability in designing pipeline crossings of rivers
and streams in such a way as to minimize environmental impact.
The Company possesses expertise to determine the optimal crossing
techniques (e.g., open cut, directionally-drilled or overhead)
and to develop site-specific construction methods to minimize
bank erosion, sedimentation and other environmental impacts.
Seismic Design and Stress Analysis. Company engineers are
experienced in seismic design of pipeline crossings of active
faults and areas where liquefaction or slope instability may
occur due to seismic events. Company engineers also carry out
specialized stress analyses of piping systems that are subjected
to expansion and contraction due to temperature changes, as well
as loads from equipment and other sources.
Hazardous Materials. Special care must be taken in the design
of pipeline systems transporting sour gas. Sour gas not only
presents challenges regarding personnel safety (hydrogen sulfide
leaks can be extremely hazardous), but also requires that
material be specified to withstand highly corrosive conditions.
Hydraulics Analysis for Fluid Flow in Piping Systems. The
Company employs engineers with the specialized knowledge
necessary to address properly the effects of both steady state
and transient flow conditions for a wide variety of fluids
transported by pipelines (natural gas, crude oil, refined
petroleum products, natural gas liquids, carbon dioxide and
water). This expertise is important in optimizing the capital
costs of pipeline projects where pipe material costs typically
represent a significant portion of total project capital costs.
Natural Gas Transmission Systems. The expansion of the
natural gas transportation network in the United States in recent
years has been a major contributor to the engineering business of
the Company. The Company believes it has established a strong
position as a leading supplier of engineering services to natural
gas pipeline transmission companies in the United States. Since
1988, Willbros has provided, or is providing, engineering
services for seven major natural gas pipeline projects in the
United States, totaling more than 3,300 miles (5,400 kilometers)
of large diameter pipe for new systems and expansions of existing
systems. During this same period, Willbros was also the
engineering contractor for 15 compressor stations (or additions
to existing stations) for six clients.
Liquids Pipelines and Storage Facility Design. Willbros has
engineered a number of crude oil and refined petroleum products
systems throughout the world, and has become recognized for its
expertise in the engineering of systems for the storage and
transportation of petroleum products and crude oil. In recent
years, the Company has been responsible for the engineering of a
major expansion of a products pipeline system in the United
States, involving 395 miles (640 kilometers) of pipeline in New
Mexico and Texas. Currently, the Company is providing
engineering and field services for a major expansion of a crude
oil system in Wisconsin and Illinois, involving over 450 miles
(725 kilometers) of large diameter pipeline to serve the upper
Midwest refineries with Canadian crude oil.
U.S. Government Services. Since 1981, Willbros has
established its position with U.S. government agencies as a
leading engineering contractor for jet fuel storage and aircraft
fueling facilities, having performed the engineering for major
projects at seven U.S. military bases including three air bases
outside the U.S. The award of these projects was based largely
on contractor experience and personnel qualifications.
Design of Peripheral Systems. The Company's expertise extends
to the engineering of a wide range of project peripherals,
including various types of support buildings and utility systems,
power generation and electrical transmission, communications
systems, fire protection, water and sewage treatment, water
transmission, roads and railroad sidings.
Material Procurement. Because material procurement plays such
a critical part in the success of any project, the Company
maintains an experienced staff to carry out material procurement
activities. Material procurement services are provided to
clients as a complement to the engineering services performed for
a
12
project. On engineering, procurement and construction contracts
undertaken by the Company, material procurement is especially
critical to the timely completion of construction. The Company
maintains a computer-based material procurement, tracking and
control system, which utilizes software enhanced to meet the
Company's specific requirements.
Specialty Services
The Company provides a wide range of support and ancillary
services related to the construction, operation, repair and
rehabilitation of pipelines. Frequently, such services require
the utilization of specialized equipment, which is costly and
requires operating expertise. Due to the initial equipment cost
and operating expertise required, many companies contract for the
use of such specialized equipment and experienced personnel. The
Company owns and operates a variety of specialized equipment that
is used to support construction projects and to provide a wide
range of oilfield services. The following is a description of
the primary types of specialty services.
Dredging. The Company conducts dredging operations on its own
projects and as a subcontractor to other companies. Dredging
equipment is required to pump sand to establish a land location
in a swamp and to excavate trenches for pipelines in swamps or
offshore locations and for river crossings. Dredging equipment
is also used to maintain required depth of navigation channels
for barges and other watercraft. This maintenance dredging is
often performed on annual or multi-year contracts. The Company
owns a fleet of dredges, including cutter suction dredges and
grab dredges, which are routinely used in Nigeria and can be
readily deployed to other projects in the region.
Pipe Coating. The Company owns and operates coating
equipment, which applies a variety of protective anti-corrosion
coatings to the external surface of line pipe. The external
coating is required to protect buried pipe in order to mitigate
external corrosion.
Concrete Weight Coating. Pipelines installed in wetlands or
marine environments must be heavy enough to offset the buoyancy
forces on the buried pipeline to keep the pipeline from floating
out of the ditch. The most effective method of achieving the
required negative buoyancy is concrete coating applied over the
anti-corrosion coating to a calculated thickness. The Company
owns and operates a facility in Nigeria to apply concrete weight
coating to line pipe.
Pipe Double-Jointing. Large diameter pipe for onshore
pipeline projects is normally manufactured in 40-foot (12-meter)
nominal lengths (joints) to facilitate ocean transportation. On
long distance, large diameter pipeline projects, it is usually
economical to weld two joints into an 80-foot (24-meter) double
joint at a location or locations along the pipeline route. This
technique reduces the amount of field welding by 50 percent, and,
because welding is often the critical operation, it may
accelerate construction of the pipeline. The double-joint welds
are made with a semi-automatic submerged arc welding process,
which produces high quality, consistent welds at lower costs than
field welding. The Company owns two transportable, self-contained
double-joint plants, which can handle 24- to 48-inch diameter
pipe and are used on both domestic and international projects.
Piling. The Company's subsidiary in Venezuela specializes in
the fabrication and installation of 36-inch concrete piles up to
220 feet (67 meters) in length. These piles are used to
construct marine facilities such as drilling platforms,
production platforms, bridges, docks, jetties and mooring or
breasting dolphins. The Company also owns barges and pile
driving equipment to install piles in Venezuela and Nigeria.
Marine Heavy Lift Services. The primary equipment used for
offshore oil and gas production facilities is usually
manufactured on skids at the vendor's shop and transported to the
production site by ocean-going water craft. The Company owns a
variety of heavy lift barges and tugs to transport such equipment
from the receiving country port to the production location and to
install the equipment on the platforms. Other services include
marine salvage and dry-dock facilities for inland water barges.
13
Transport of Dry and Liquid Cargo. Exploration and production
operations in marine environments require logistical support
services to transport a variety of liquid and dry cargo to the
work sites. The Company owns and operates a diversified fleet of
marine equipment to provide transportation services to support
these operations in Nigeria and Venezuela.
Rig Moves. Derricks used for drilling oil and gas wells and
for well work-overs require heavy transportation equipment to
move such equipment and tanks and storage vessels between well
locations. The Company owns a fleet of heavy trucks and trailers,
and provides transportation services to move rigs for clients in
Oman and Venezuela.
Maintenance and Repair Services. The Company provides a wide
range of other services including mechanical, electrical,
instrumentation, civil works, road maintenance and provision of
camp services for operating personnel associated with operation
and maintenance of oil and gas gathering systems and production
equipment.
Geographic Regions
The Company currently operates in the following geographic
regions: Africa, Asia and Australia, the Middle East, North
America and South America. The following table reflects the
Company's contract revenue by geographic region for 1999, 1998
and 1997.
Year Ended December 31,
----------------------------------------------
1999 1998
---------------------- ----------------------
Amount Percent Amount Percent
---------- ---------- ---------- ----------
(Dollar amounts in thousands)
Africa $ 79,777 45% $ 64,180 23%
Asia and Australia 21,979 12 32,481 12
Middle East 8,026 5 17,806 6
North America 42,981 24 91,801 33
South America 23,801 14 75,350 26
---------- ---------- ---------- ----------
Total $ 176,564 100% $ 281,618 100%
========== ========== ========== ==========
- -CONTINUED-
Year Ended December 31,
-----------------------
1997
----------------------
Amount Percent
---------- ----------
(Dollar amounts in thousands)
Africa $ 75,982 30%
Asia and Australia 42,098 17
Middle East 22,846 9
North America 79,121 31
South America 31,830 13
---------- ----------
Total $ 251,877 100%
========== ==========
See Note 15 to the Consolidated Financial Statements on page 44
of the Company's 1999 Annual Report to Stockholders (which is
incorporated by reference herein) for additional information
about the Company's operations in its work countries.
Africa
Africa has been and will continue to be an important strategic
market for the Company. The Company believes that there will be
opportunities to expand its business in Africa, particularly
through the development of natural gas projects. There are
large, potentially exploitable reserves of natural gas in West
Africa, extending from the Ivory Coast to Angola. Depending upon
the world market for natural gas and the availability of
financing, the amount of potential new work could be substantial.
The Company intends to maintain its presence in Africa and seeks
to increase its share of available work. Willbros is currently
monitoring or bidding major work prospects in Cameroon, Chad,
Egypt, Gabon, Ghana, Ivory Coast, Nigeria and Tanzania.
Over the past 50 years, Willbros has completed major projects
in a number of African countries including Algeria, Cameroon,
Egypt, Gabon, Ivory Coast, Libya, Morocco and Nigeria. The
Company has management staff resident in Africa, assisted by
engineers, managers and craftsmen with extensive African
experience, capable of providing construction expertise, repair
and maintenance services, dredging operations, pipe coating and
engineering support. Strong local relationships have enabled
Willbros to satisfy the varied needs of its clientele in the
region.
14
Willbros has had a continuous presence in Nigeria since 1962.
The Company's activities in Nigeria are directed from a fully
staffed operational base near Port Harcourt. This 60-acre
compound includes office and living facilities, equipment and
vehicle repair shops, a marine jetty and warehouses for both
Company and client materials and spare parts. The Company has
diversified its range of services by adding dredging and pipe
coating expertise. Having diverse yet complementary capabilities
has often given the Company a competitive advantage on projects
that contain several distinct work elements within the project's
scope of work. For example, the Company believes that it is
currently the only contractor operating in the Nigerian oil and
gas sector capable, on its own, of executing a pipeline
construction project which requires yard coating of line pipe,
installation of major water crossings, and both swamp and cross-
country segments of pipeline. During 1998, the Company purchased
a multi-purpose marine construction barge to further diversify
its range of services by pursuing shallow water pipelay, utility
and maintenance opportunities in offshore West Africa. In late
1998, the Company successfully completed an offshore project in
Cameroon for the installation of decks and other production
facilities on two offshore platforms and the construction of
approximately five miles (7.5 kilometers) of 8-inch and 10-inch
pipelines. During 1999, the vessel was deployed part of the year
in offshore Nigeria, performing various services for Texaco.
The Company's current activities in Nigeria include two major
contracts for Shell: (a) to engineer, procure and construct the
Nembe Creek gas gathering pipeline system, and (b) to construct
four concrete barge-mounted gas compressor facilities for Shell's
Nembe Creek Associated Gas project. Other ongoing activities in
Nigeria are multi-year contracts with Shell to provide dredging
services and swamp flowline maintenance services. In February
2000, the Company was awarded a contract valued at $13.0 million
to provide engineering, procurement and construction services to
install a single-point mooring and a 2-mile, 20-inch offshore
pipeline.
Elsewhere, in West Africa, the Company completed a $15 million
gas pipeline construction contract in Ivory Coast in January 1999
for Apache Cote d'lvoire.
The Company's backlog in Africa was $150.2 million at December 31,
1999, compared to $220.7 million at December 31, 1998.
Asia and Australia
Despite the recent economic difficulties in certain countries
in the region, it appears that recovery may be underway and that
Asia will eventually develop and distribute more energy resources
to implement ongoing modernization programs. The relative
abundance of undeveloped natural gas resources, along with
environmental concerns, favor the use of natural gas for power
generation and industrial and residential usage in the region
assuming a stable political and economic environment that will
allow projects to be financed and go forward.
In March 1995, the Company established an office in Jakarta,
Indonesia, to pursue potential major projects in Asia and
Australia. In October 1995, the Company entered into a
cooperation agreement with a major Japanese trading company
providing for the joint development of projects in Indonesia,
Malaysia and Thailand. In November 1996, the Company was awarded
a $33 million contract by Asamera (Overseas) Limited to construct
pipelines, flowlines and related facilities for the Corridor
Block Gas Project in southern Sumatra, Indonesia. In June 1997,
the Company was awarded a $22 million contract by a MW Kellogg
joint venture for the construction of a gas pipeline for a LNG
plant in Kalimantan, Indonesia. Despite these successes, the
Company continues to evaluate maintaining a presence in the
region due to the delay of new projects.
In June 1999, Duke Energy International awarded a $100 million
gas pipeline construction contract in Australia to a consortium
in which a Willbros operating subsidiary has a 35 percent
interest. The 18-inch pipeline will transport natural gas from
Longford, Victoria to Sydney. This project marks the Company's
first construction activity in Australia, a country known for
being highly competitive and for having difficult labor practices
which make it difficult to maintain a high level of productivity
and stay on schedule and
15
budget. The Company reported a loss of $0.6 million in 1999 on
this project, and the project continues to be behind schedule and
over budget.
The Company recently completed contracts for Pak-Arab Refinery,
Ltd. relating to the MFM Pipeline Extension Project in Pakistan.
The contracts included the supply of project materials, the
engineering and construction of 225 miles (365 kilometers) of 18-
and 16-inch petroleum products pipeline, the expansion of an existing
terminal (including 267,000 barrels of storage capacity), the
addition of a new terminal and pump station (including 270,000
barrels of storage), the addition of a storage terminal
(including 443,000 barrels of storage) and the design of a future
pump station.
Willbros' activities in the Commonwealth of Independent States
("C.I.S.") date back to 1976. The C.I.S. continues to be an area
of interest to the Company because it contains vast reserves of
oil and gas and many of the Company's clients are major oil and
gas companies who are candidates to participate in the
development of energy resources in the C.I.S.
The Company is currently monitoring or bidding work prospects
in Australia, Bangladesh, India, Indonesia, Malaysia, Pakistan
and Papua New Guinea. The Company's backlog in Asia and Australia
was $19.9 million at December 31, 1999, compared to $3.2 million
at December 31, 1998.
Middle East
The Company believes that increased exploration and production
activity in the Middle East will continue to be the primary
factor influencing the construction of new energy transportation
systems. The majority of future transportation projects in the
region are expected to be centered around natural gas due to
increased regional demand, governments' realization of gas as an
important asset and an underdeveloped gas transportation
infrastructure throughout the region. The Company is
aggressively pursuing business opportunities throughout the
Middle East and is currently bidding work or monitoring prospects
in Abu Dhabi, Jordan, Kuwait, Oman, Qatar, Saudi Arabia and
Yemen.
Willbros operations in the Middle East date back to 1948. It
has worked in most of the countries in the region, with
particularly heavy involvement in Iran, Kuwait, Oman and Saudi
Arabia. In Iran, Willbros designed or constructed a substantial
portion of the pipelines and related facilities that exist today.
During 1992 and 1993, following the Gulf War, the Company carried
out a significant program of gathering line replacement in Kuwait
to help Kuwait Oil Company restore its production capacity.
Currently, the Company has ongoing operations in Oman, where
Willbros has been active for more than 30 years. The Company
maintains a fully staffed facility in Oman with equipment repair
facilities and spare parts on site and offers construction
expertise, repair and maintenance services, engineering support,
oil field transport services, materials procurement and a variety
of related services to its clients. In November 1999, the
Company was awarded a five-year contract by Oman LNG for general
maintenance services. Minimum contract revenue is expected to be
$10 million over the contract term, with a potential of $25
million based on the capacity of the project organization and
resources which have been put in place. Other current operations
in Oman include a general oilfield services contract for
Occidental of Oman and an ad hoc services contract for Petroleum
Development Oman ("PDO"). Work carried out in Oman during 1999
includes pipeline construction, pipeline maintenance, mechanical
services and flowline work for Occidental of Oman and PDO.
The Company's backlog in the Middle East was $11.1 million at
December 31, 1999, compared to no reportable backlog at December 31,
1998. The Company has active call out service contracts in
place in Oman under which it performs work for such clients as
Occidental and PDO; such contracts are not reflected in backlog.
16
North America
Willbros has provided services to the U.S. oil and gas industry
for more than 80 years. The Company believes that the United
States will continue to be an important market for its services.
Recent deregulation of the electric power and natural gas
pipeline industries in the United States has led to the
consolidation and reconfiguration of existing pipeline
infrastructure and the establishment of new energy transport
systems, which the Company expects will result in continued
demand for its services. The demand for natural gas for
industrial and power usage in the Upper Midwest and the
Southeastern and Northeastern United States will also fuel the
requirement to build new natural gas transportation
infrastructure in the region. Supply to satisfy such market
demand for natural gas will come from existing and new production
in Western Canada, the Gulf of Mexico and the Canadian Atlantic
offshore region. Environmental concerns will likely continue to
require careful, thorough and specialized professional
engineering and planning for all new facilities within the oil
and gas sector. Furthermore, the demand for replacement and
rehabilitation of pipelines is expected to increase as pipeline
systems in the United States approach the end of their design
lives and population trends influence overall energy needs.
Willbros is recognized as an industry leader in the United
States for providing state-of-the-art engineering and
construction services. The Company maintains a staff of
experienced management, construction, engineering and support
personnel in the United States. Among Willbros' significant
achievements in the United States are (a) the construction of the
two northernmost segments of the Trans-Alaskan Pipeline System
(1974-76), which consisted of a 225-mile (365-kilometer) crude
oil pipeline and a 140-mile (225-kilometer) fuel gas pipeline and
(b) a joint venture to build the All American Pipeline System
(1984-86), a 1,240-mile (1,995-kilometer) heated crude oil
pipeline with 23 pumping and heating stations. The Company was a
construction contractor on the Pacific Gas & Electric-PGT
pipeline expansion project in Oregon and the Tuscarora Gas
Transmission project in Nevada and California. Since 1988,
Willbros has provided engineering services for the Great Lakes
Gas Transmission Company's system expansion, the Kern River Gas
Transmission System, the Northwest Pipeline System expansion, the
NorAm Line AC pipeline project and the Northern Border Pipeline
Company's expansion project in Iowa and Illinois. During the
same period, Willbros was the engineering contractor for
15 compressor stations or station expansions on behalf of six
different clients in the United States. Currently, the Company
is providing project management and engineering services for the
following projects: ANR Pipeline Company's Gulfstream Project to
transport natural gas from southern Alabama and Mississippi to
markets throughout central and south Florida; CMS Gas
Transmission's Guardian Project to transport natural gas from the
Chicago area into Wisconsin; Southern Natural Gas Company's
Southern Company Expansion Project to increase the capacity to
transport natural gas in their existing system in Mississippi,
Alabama and Georgia; Trans-Union Interstate Pipeline's Project to
transport natural gas from Louisiana to a planned power plant in
Arkansas; and El Paso Natural Gas Company's Caballero Pipeline
Project to transport natural gas from producing areas in
northeastern New Mexico to a connecting pipeline in the Texas
panhandle.
Willbros has also provided significant engineering services to
the U.S. Government during the past 15 years, particularly in
fuel storage and distribution systems and aircraft fueling
facilities. Willbros performed the engineering for major
projects on seven U.S. military bases, four of which were located
within the United States. In 1984, Willbros was selected by the
U.S. Army to act as the systems integration contractor for the
Southwest Asia Petroleum Distribution Operational Project.
Willbros was responsible for developing and procuring a tactical
fuel distribution and storage system to support military
operations worldwide. The system was successfully deployed in
Saudi Arabia during Operation Desert Storm. Willbros acted as
the systems integrator for this project until 1996. Currently,
the Company owns and operates two fueling facilities at Ft.
Bragg, North Carolina, which were constructed in 1998 by the
Company. The Company will be completing a similar facility in
2000 at Twenty-nine Palms Marine Corps Base in California. The
Company recently completed the engineering and construction of an
airfield lighting project for the U.S. Army Corps of Engineers at
an air base in Ismailia, Egypt.
17
On January 24, 2000, the Company acquired Rogers & Phillips,
Inc. ("RPI"), a closely held pipeline construction company in
Houston, Texas, with an experienced management team and a strong
market position in the Gulf Coast area.
The Company's backlog in North America was $30.8 million at
December 31, 1999, compared to $14.8 million at December 31,
1998. An additional $13.7 million was added to backlog in
January 2000 as a result of the acquisition of RPI.
South America
Willbros' first entry into South America was in Venezuela in
1939. Recent developments involving political changes and
privatization efforts in many of the South American countries
make this region especially attractive to the Company. In
particular, privatization and deregulation in this region are
allowing more foreign and domestic private investment in the
energy sector which, until recently, had traditionally been
controlled by state-owned energy companies. In Argentina,
Bolivia, Brazil, Chile and Peru, gas transportation projects will
continue to evolve to meet increasing demand for gas for
industrial and power usage in the rapidly growing urban areas.
In Venezuela, Colombia and Ecuador, crude oil transportation
systems will need to be built and upgraded so that the vast crude
reserves in these countries can be efficiently exported to the
world market. The Company is aggressively pursuing business
opportunities throughout South America and currently bidding work
or monitoring prospects in Argentina, Bolivia, Brazil, Colombia,
Ecuador, Peru and Venezuela.
Willbros has performed numerous major projects in South
America, where its accomplishments include the construction of
five major pipeline crossings of the Andes Mountains and setting
a world altitude record for constructing a pipeline. Willbros'
largest project in South America was a $134.0 million turnkey
project for the procurement and construction of the Alto
Magdalena Crude Oil Pipeline System in Colombia, awarded to
Willbros in 1989 and completed in 1990.
Venezuela, the largest oil producer in South America, is a
particularly important market for the Company. With conservative
estimates of proven reserves of more than 72 billion barrels of
oil, PDVSA's plans for the future include an increase in oil
production from its current level of approximately 3.0 million
barrels per day to approximately 6.0 million barrels per day by
2006. In addition, the opening of Venezuela's previously
nationalized oil and gas industry to foreign energy company
participation has attracted the interest of most of the world's
major oil and gas companies.
In May 1994, in anticipation of significant opportunities in
Venezuela, the Company acquired CAMSA, a Venezuelan company
located in the city of Maracaibo. When acquired, CAMSA's primary
expertise was marine construction and the fabrication and
installation of cylindrical concrete piles and platforms for
offshore projects. Since the acquisition, the Company has added
onshore construction equipment to complement the marine fleet,
enabling CAMSA to compete for both onshore and offshore
construction projects, as well as specialty services contracts.
The Company maintains a fully staffed facility including
offices, equipment yard and dock facilities on a 15-acre
waterfront site on Lake Maracaibo, with resident management
personnel assigned who are responsible for estimating and
tendering bids, providing construction expertise, repair and
maintenance services, marine related services, engineering
support and other needed services. Major clients include
international oil companies such as Shell, Occidental Petroleum,
Chevron and operating subsidiaries of PDVSA, including Maraven,
Corpoven and Lagoven. In 1998, the Company successfully
completed a contract to construct 120 miles (200 kilometers) each
of 36- and 20-inch pipelines originating from the Zuata Region of
the Orinoco Belt for Petrozuata, a joint venture between Conoco
and Maraven. Also during 1998, a consortium in which CAMSA holds
a 10 percent equity interest was awarded a 16-year contract valued
at $785.0 million to operate, maintain and refurbish the Lake
Maracaibo water injection program for PDVSA Gas. Current
activities include fabrication and installation of concrete piles
and platform fabrication and installation for the abovementioned
consortium and recurring service and maintenance work for various
clients.
18
The Company's backlog in South America was $40.1 million at
December 31, 1999, compared to $47.8 million at December 31,
1998.
Backlog
The Company's backlog (anticipated revenue from the uncompleted
portions of existing contracts and contracts whose award is
reasonably assured) was $253.1 million at December 31, 1999,
compared to $286.5 million at December 31, 1998. The Company
believes the backlog figures are firm, subject only to the
cancellation and modification provisions contained in various
contracts. It is expected that approximately $186.3 million
(74%) of the backlog existing at December 31, 1999, will be
recognized in revenue during 2000. Historically, a substantial
amount of the Company's revenue in a given year has not been
reflected in its backlog at the beginning of that year; such
revenue may result from contracts of long or short duration
entered into during a year as well as from various contractual
processes, including change orders, extra work, variations in the
scope of work and the effect of escalation or currency
fluctuation formulas. These revenue sources are not added to
backlog until realization is assured.
The following is a breakdown of the Company's backlog by
geographic region as of December 31, 1999 and 1998:
1999 1998
---------------------- ----------------------
Amount Percent Amount Percent
---------- ---------- ---------- ----------
(Dollar amounts in thousands)
Africa $ 150,262 59% $ 220,688 77%
Asia and Australia 19,880 8 3,223 1
Middle East 11,032 5 - -
North America 30,768 12 14,763 5
South America 41,138 16 47,799 17
---------- ---------- ---------- ----------
Total $ 253,080 100% $ 286,473 100%
========== ========== ========== ==========
The $33.4 million (12%) decrease in backlog is due mainly to
work performed on the engineering, procurement and construction
of the Nembe Creek AG Gathering Pipelines Project in Nigeria
consisting of pipelines varying from 12 to 28 inches in diameter
and 2 to 13 miles (3 to 21 kilometers) in length and five
concrete barge-mounted compressor stations, on a three-year
dredging contract in Nigeria, and on the construction and
installation of five concrete water injection platforms in
Venezuela, offset by additions for a mechanical service contract
in Oman, a contract awarded to a consortium in which the Company
has a 35 percent interest to construct a 492-mile (792-kilometer),
18-inch gas pipeline in Australia, and engineering service
contracts in the United States.
A substantial percentage of the Company's revenue in past years
resulted from contracts entered into during that year or the
immediately preceding year. The following table sets forth revenue
for each of the last five years as a percentage of backlog at the
beginning of each such year:
Revenue for
Backlog at Year Ended
January 1 December 31 Percent
---------- ----------- ----------
(Dollar amounts in thousands)
1995 $ 97,493 $ 220,506 226%
1996 139,359 197,688 142
1997 108,751 251,877 231
1998 135,797 281,618 207
1999 286,473 176,564 61
No assurance can be given that future experience will be similar
to historical results in this respect.
19
Competition
The Company operates in a highly competitive environment. The
Company competes against government-owned or supported companies
and other companies that have financial and other resources
substantially in excess of those available to the Company. In
certain markets, there is competition from national and regional
firms against which the Company may not be price competitive.
The Company's primary competitors on construction projects in
developing countries include Entrepose (France), Mannesmann
(Germany), CCC (Lebanon), Nippon Kokan (Japan), Saipem (Italy),
Spie-Capag (France), Techint (Argentina) and Bechtel (U.S.). The
Company believes that it is one of the few companies among its
competitors possessing the ability to carry out large projects in
developing countries on a turnkey basis (engineering, procurement
and construction), without subcontracting major elements of the
work. As a result, the Company may be more cost effective than
its competitors in certain instances.
The Company has different competitors in different markets. In
Nigeria, the Company competes for pipe coating work with Bredero
Price (Netherlands), while its dredging competitors include Bos
Kalis Westminster (Netherlands), Dredging International
(Belgium), Bilfinger + Berger (Germany), Nigerian Dredging &
Marine (Netherlands) and Ham Dredging (Netherlands). In Oman,
competitors in oil field transport services include Desert Line,
Al Ahram, Hamdam and TruckOman, all Omani companies; and in
construction and the installation of flowlines and mechanical
services, the Company competes with Taylor Woodrow Towell
(Britain), CCC (Lebanon), Dodsal (India), Saipem (Italy), Desert
Line (Oman) and Galfar (Oman). In Venezuela, competitors in
marine support services include Raymond de Venezuela, Petrolago,
Flag Instalaciones and Siemogas, all Venezuelan companies. In
Indonesia, major competitors include Saipem (Italy), Spie-Capag
(France), McConnell Dowell (Australia) and Mannesmann (Germany).
In the United States, the Company's primary construction
competitors on a national basis include Associated, Gregory &
Cook, Henkels & McCoy, Murphy Brothers, H. C. Price, Sheehan and
Welded. In addition, there are a number of regional competitors.
Primary competitors for engineering services include Bechtel,
Brown and Root, Gulf Interstate, Marmac, Fluor Daniel Williams
Brothers, Mustang Engineering, Stone & Webster, Paragon
Engineering, Trigon Engineering and Universal Ensco.
Contract Provisions and Subcontracting
Most of the Company's revenues are derived from construction,
engineering and specialty services contracts. The Company enters
into four basic types of construction contracts: (a) firm fixed-
price or lump sum fixed-price contracts providing for a single
price for the total amount of work or for a number of fixed lump
sums for the various work elements comprising the total price;
(b) unit-price contracts which specify a price for each unit of
work performed; (c) time and materials contracts under which
personnel and equipment are provided under an agreed schedule of
daily rates with other direct costs being reimbursable; and (d) a
combination of the above (for example, lump sums for certain
items and unit rates for others).
The Company enters into three types of engineering contracts:
firm fixed-price or lump sum fixed-price contracts; time and
materials contracts pursuant to which engineering services are
provided under an agreed schedule of hourly rates for different
categories of personnel, and materials and other direct costs are
reimbursable; and cost-plus-fee contracts, common with U.S.
government clients under which income is earned solely from the
fee received. Cost-plus-fee contracts are often used for
material procurement services.
Specialty services contracts generally are unit-price
contracts, which specify a price payable per unit of work
performed (e.g., per cubic meter, per lineal meter, etc.). Such
contracts usually include hourly rates for various categories of
personnel and equipment to be applied in cases where no unit
price exists for a particular work element. Under a services
contract, the client is typically responsible for supplying all
20
materials; a cost-plus-percentage-fee provision is generally
included in the contract to enable the client to direct the
contractor to furnish certain materials.
The Company usually obtains contracts through competitive
bidding or through negotiations with long-standing clients. The
Company is typically invited to bid on projects undertaken by its
clients who maintain approved bidder lists. Bidders are pre-
qualified by virtue of their prior performance for such clients,
as well as their experience, reputation for quality, safety
record, financial strength and bonding capacity.
In evaluating bid opportunities, the Company considers such
factors as the client, the geographic location and the difficulty
of the work, the Company's current and projected workload, the
likelihood of additional work, the project's cost and
profitability estimates, and the Company's competitive advantage
relative to other likely bidders. The Company uses a computer-
based estimating system. The bid estimate forms the basis of a
project budget against which performance is tracked through a
project control system, enabling management to monitor projects
effectively. Project costs are accumulated weekly and monitored
against billings and payments to facilitate cash flow management
on the project.
All U.S. government contracts and many of the Company's other
contracts provide for termination of the contract for the
convenience of the client. In addition, many contracts are
subject to certain completion schedule requirements with
liquidated damages in the event schedules are not met as the
result of circumstances within the control of Willbros. As an
example, the Australian project, which is currently behind
schedule and over budget, is subject to liquidated damages if the
project is not complete by July 1, 2000. The Company has not
been materially adversely affected by these provisions in the
past.
The Company acts as prime contractor on a majority of the
construction projects it undertakes. In its capacity as prime
contractor and when acting as a subcontractor, the Company
performs most of the work on its projects with its own resources
and typically subcontracts only such specialized activities as
hazardous waste removal, non-destructive inspection, tank
erection, catering and security. In the construction industry,
the prime contractor is normally responsible for the performance
of the entire contract, including subcontract work. Thus, when
acting as a prime contractor, the Company is subject to the risk
associated with the failure of one or more subcontractors to
perform as anticipated. The Company has not incurred any
significant loss or liability on work performed by subcontractors
to date.
Employees
The Company believes its employees are its most valuable asset
and that their loyalty, productivity, pioneering spirit, work
ethic and strong commitment in providing quality services have
been crucial elements in the successes Willbros has achieved on
numerous projects in remote, logistically challenging locations
around the world.
At December 31, 1999, the Company employed a multi-national
work force of approximately 2,030 persons, over 80 percent of whom
are citizens of the respective countries in which they work.
Although the level of activity varies from year to year, Willbros
has maintained an average work force of approximately 3,290 over
the past five years. The minimum employment during that period
has been 2,010 and the maximum 4,750. At December 31, 1999,
approximately 1,210 of the Company's employees were covered by
collective bargaining agreements. The Company believes its
relations with its employees are good.
21
The following table sets forth an approximate breakdown of the
Company's employees as of December 31, 1999:
Number of
Employees Percent
---------- ----------
Nigeria 1,010 50%
Oman 300 15
Venezuela 330 16
Indonesia 20 1
Australia 20 1
U.S. Engineering 220 10
U.S. Administration 110 5
U.S. Construction 10 1
Other Countries 10 1
---------- ----------
2,030 100%
========== ==========
Equipment
The Company owns and maintains a fleet of generally
standardized construction, transportation and support equipment
and spare parts. In 1999 and 1998, expenditures for capital
equipment and spare parts were $12.2 million and $36.1 million,
respectively. At December 31, 1999, the Company's net book value
of property, plant, equipment and spare parts was $71.4 million.
An estimated breakdown of the Company's major capital equipment
at March 2, 2000, is as follows: heavy construction equipment,
676 units; transportation equipment, 926 units; and support
equipment, 5,278 units. During 1999, surplus equipment with a net
book value of $14.2 million was sold for approximately $20.0
million, resulting in a gain of $2.9 million after selling
expenses.
Historically, the Company has preferred to own rather than
lease equipment to ensure that standardized equipment is
available as needed. The Company believes that ownership of
standardized equipment has resulted in lower equipment costs.
However, depending on market conditions, the availability of
equipment and other considerations, the Company may from time to
time pursue the leasing of equipment to support projects and may
dispose of surplus equipment. The Company attempts to obtain
projects that will keep its equipment fully utilized in order to
increase profitability. All equipment is subject to scheduled
maintenance to maximize fleet readiness. The Company has
maintenance facilities at Port Harcourt, Nigeria; Azaiba, Oman;
Maracaibo, Venezuela; and Broken Arrow, Oklahoma; as well as
temporary site facilities on major jobs to minimize downtime.
Facilities
The Company owns a 14-acre equipment yard/maintenance facility
and an adjoining 29-acre undeveloped industrial site at Broken
Arrow, Oklahoma, a short distance from Tulsa, Oklahoma. In
Venezuela, the Company's offices and construction facilities are
located on 15 acres of land, which it owns, on the shores of Lake
Maracaibo. The Company leases all other facilities used in its
operations, including corporate offices in Panama; administrative
and engineering offices in Tulsa, Oklahoma, and Houston, Texas;
and various office facilities, equipment sites and expatriate
housing units in Abu Dhabi, England, Nigeria, Oman, Egypt, Kuwait
and Indonesia. The aggregate lease payments made by the Company
for its facilities were $2.3 million in 1999 and $3.3 million in
1998.
Insurance and Bonding
The Company maintains workers' compensation, employers'
liability, general liability, directors' and officers' liability,
automobile liability, aircraft liability, marine liability and
excess liability insurance to
22
provide benefits to employees and to protect the Company against
claims by third parties. Such insurance is underwritten by A+ or
better rated insurance companies (AM Best rating as to claims
paying ability) and, when possible, in loss-sensitive plans with
return premiums for favorable loss experience. The Company also
maintains physical damage insurance covering loss of or damage to
Company property on a worldwide basis, with special insurance
covering loss or damage caused by political or terrorist risks in
locations where such coverage is deemed prudent. Formal risk
management and safety programs are maintained, which have
resulted in favorable loss ratios and cost savings. The Company
believes its risk management, safety and insurance programs are
adequate to meet its needs.
The Company is often required to provide surety bonds
guaranteeing its performance and/or financial obligations. The
amounts of bonding available depend upon experience and
reputation in the industry, financial condition, backlog and
management expertise, among other factors. The Company maintains
relationships with two top-rated surety companies to provide
surety bonds.
Political and Economic Risks; Operational Risks
The Company has substantial operations and assets in developing
countries in Africa, Asia, the Middle East and South America.
Accordingly, the Company is subject to risks which ordinarily
would not be expected to exist in the United States, Canada,
Japan or western Europe. Some of these risks include foreign
currency restrictions (such as those which existed in Venezuela
until 1996), extreme exchange rate fluctuations (for example, in
Venezuela and Nigeria), expropriation of assets, civil uprisings
and riots, availability of suitable personnel and equipment,
government instability and legal systems of decrees, laws,
regulations, interpretations and court decisions which are not
always fully developed and which may be retroactively applied.
The Company's operations in developing countries may be adversely
affected in the event any governmental agencies in these
countries interpret laws, regulations or court decisions in a
manner which might be considered inconsistent or inequitable in
the United States, Canada, Japan or western Europe. The Company
may be subject to unanticipated taxes including income taxes,
excise duties, import taxes, export taxes, sales taxes, or other
governmental assessments, which could have a material adverse
effect on the Company's results of operations for any quarter or
year.
Given the unpredictable nature of the risks described in the
preceding paragraph, there can be no assurance that such risks
will not result in a loss of business which could have a material
adverse effect on the Company's results of operations. The
Company has attempted to mitigate the risks of doing business in
developing countries by separately incorporating its operations
in many such countries; working with local partners in certain
countries; contracting whenever possible with major international
oil and gas companies; obtaining sizeable down payments or
securing payment guarantees; entering into contracts providing
for payment in U.S. dollars instead of the local currency
whenever possible; maintaining reserves for credit losses;
maintaining insurance on equipment against certain political
risks and terrorism; and limiting its capital investment in each
country. The Company retains local advisors to assist it in
interpreting the laws, practices and customs of the countries in
which the Company operates.
From time to time, international oil companies operating in
Nigeria, including Royal Dutch Shell, have expressed concern over
the Nigerian government's tardiness in meeting its payment
obligations and have threatened to reduce their planned
investments, and/or cut production, in Nigeria. In addition,
indecision by the Nigerian government over agreeing to budget
expenditure plans for oil companies involved in joint ventures
with the Nigerian National Petroleum Corporation may also lead
these companies to curtail their planned investments in Nigeria.
Any such reduction in the level of investment or production could
reduce the amount of contract work awarded in Nigeria, which
could have a material adverse effect on the Company and its
results of operations. The Company cannot predict whether any
such actions will be taken in the future and, if taken, the
extent to which such actions would impact current or future
prospects of the Company in Nigeria.
During 1999, local protestors looted and vandalized a Company
facility near Port Harcourt, Nigeria. Reports of similar
disturbances were frequent within the country during 1999, with
many of the oil
23
production and oilfield services companies sustaining similar
problems. While the disturbance interfered with the Company's
operations, progress on some ongoing projects was not halted.
The Nigerian government intervened and restored order in the
area. The Company has successfully operated in Nigeria for the
past 37 years with very favorable relationships with the local
communities, and believes that order can be maintained and that
it can continue to operate in the area.
Due to the limited number of major projects worldwide, the
Company may, at any one time, have a substantial portion of its
resources dedicated to one country. The Company's results of
operations are, therefore, susceptible to adverse events beyond
its control, which may occur in a particular country in which the
Company's business may be concentrated.
The Company's operations include pipeline construction,
dredging, pipeline rehabilitation services, marine support
services and the operation of vessels and heavy equipment. These
operations involve a high degree of operational risk. Natural
disasters, adverse weather conditions, collisions, and operator
or navigational error could cause personal injury or loss of
life, severe damage to and destruction of property, equipment and
the environment and suspension of operations. In locations where
we perform work with equipment that is owned by others, our
continued use of equipment can be subject to unexpected or
arbitrary interruption or termination. The occurrence of any of
these events could result in work stoppage, loss of revenue,
casualty loss, increased costs and significant liability to third
parties. Litigation arising from the occurrence of any of these
events could result in the Company being named as a defendant in
lawsuits asserting substantial claims.
The Company maintains risk management and safety programs to
mitigate the effects of loss or damage. While the Company
maintains such insurance protection as it deems prudent, there
can be no assurance that any such insurance will be sufficient or
effective under all circumstances or against all hazards to which
the Company may be subject. An enforceable claim for which the
Company is not fully insured could have a material adverse effect
on the Company. Moreover, no assurance can be given that the
Company will be able to maintain adequate insurance in the future
at rates that it considers reasonable.
Government Regulations
General
Many aspects of the Company's operations are subject to
government regulations in the countries in which the Company
operates, including those relating to currency conversion and
repatriation, taxation of its earnings and earnings of its
personnel, and its use of local employees and suppliers. In
addition, the Company depends on the demand for its services from
the oil and gas industry and, therefore, is affected by changing
taxes, price controls and laws and regulations relating to the
oil and gas industry generally. The ability of the Organization
of Petroleum Exporting Countries to meet and maintain production
targets also influences the demand for the Company's services.
The adoption of laws and regulations by countries in which the
Company operates, curtailing exploration and development drilling
for oil and gas for economic and other policy reasons, could
adversely affect the Company's operations by limiting demand for
its services. The Company's operations are also subject to the
risk of changes in foreign and domestic laws and policies which
may impose restrictions on the Company, including trade
restrictions, which could have a material adverse effect on the
Company's operations. Other types of government regulation which
could, if enacted or implemented, adversely affect the Company's
operations include expropriation or nationalization decrees,
confiscatory tax systems, primary or secondary boycotts directed
at specific countries or companies, embargoes, extensive import
restrictions or other trade barriers, mandatory sourcing rules
and unrealistically high labor rate and fuel price regulation.
The Company cannot determine to what extent future operations and
earnings of the Company may be affected by new legislation, new
regulations or changes in, or new interpretations of, existing
regulations.
24
Environmental
The Company's operations are subject to numerous environmental
protection laws and regulations, which are complex and stringent.
The Company regularly works in and around sensitive environmental
areas such as rivers, lakes and wetlands. Significant fines and
penalties may be imposed for non-compliance with environmental
laws and regulations, and certain environmental laws provide for
joint and several strict liability for remediation of releases of
hazardous substances, rendering a person liable for environmental
damage without regard to negligence or fault on the part of such
person. In addition to potential liabilities that may be
incurred in satisfying these requirements, the Company may be
subject to claims alleging personal injury or property damage as
a result of alleged exposure to hazardous substances. Such laws
and regulations may expose the Company to liability arising out
of the conduct of operations or conditions caused by others, or
for the acts of the Company which were in compliance with all
applicable laws at the time such acts were performed. The
Company is not aware of any non-compliance with or liability
under any environmental law that could have a material adverse
effect on the Company's business or operations.
Item 3. Legal Proceedings
The Company is a party to a number of legal proceedings. The
Company believes that the nature and number of these proceedings
are typical for a firm of its size engaged in the Company's type
of business and that none of these proceedings is material to the
Company's financial position.
Item 4. Submission of Matters to a Vote of Security Holders
No matter was submitted to a vote of security holders during
the fourth quarter of 1999 through the solicitation of proxies or
otherwise.
Item 4A. Executive Officers of the Registrant
The following table sets forth certain information regarding
the executive officers and key personnel of the Company.
Officers are elected annually by, and serve at the discretion of,
the Board of Directors.
Name Age Position
- ---- --- ------------------------------------------------
Larry J. Bump 60 Director, Chairman of the Board of Directors
and Chief Executive Officer
Michael F. Curran 59 Director, Vice Chairman of the Board of
Directors, President and Chief Operating Officer
Melvin F. Spreitzer 61 Director, Executive Vice President, Chief
Financial Officer and Treasurer
James R. Beasley 57 President of Willbros Engineers, Inc.
John N. Hove 52 General Counsel and Secretary
William R. Phillips 49 President and Chief Executive
Officer of Rogers & Phillips, Inc.
David L. Kavanaugh 52 Senior Vice President of Willbros
International, Inc.
25
Name Age Position
- ---- --- -----------------------------------------------
Joel M. Gall 51 Vice President of Willbros International, Inc.
Arthur J. West 56 Vice President of Willbros International, Inc.
Adrian P. Wright 53 Vice President of Willbros International, Inc.
Lance H. Foster 41 President of Willbros Energy Services Company
Carlos A. Atik 36 General Manager of Willbros Construction &
Engineering-Egypt, LLC
Monica M. Bagguley 59 Director of Willbros (Overseas) Limited
Latif A. Razek 59 General Manager of The Oman Construction
Company, LLC
G. Patrick Riga 44 General Manager of Constructora CAMSA, C.A.
J. K. Tillery 41 Managing Director of Willbros (Nigeria)
Limited
Larry J. Bump joined Willbros in 1977 as President and Chief
Operating Officer and was elected to the Board of Directors. He
was named Chief Executive Officer in 1980 and elected Chairman of
the Board of Directors in 1981. His forty-year career includes
significant U.S. and international management experience. Prior
to joining Willbros, he managed major international projects in
North Africa and the Middle East, and was Chief Executive Officer
of a major international pipeline construction company. From
1985 until mid-1988, he also served as Chief Executive Officer of
a major international marine engineering and construction
company, which at that time was the controlling shareholder of
Willbros.
Michael F. Curran joined Willbros in 2000 as a Director, Vice
Chairman of the Board of Directors, President and Chief Operating
Officer. Mr. Curran has over 35 years of diversified experience
of pipeline construction around the world, including 30 years as
President and Chief Executive Officer of various pipeline
construction firms.
Melvin F. Spreitzer joined Willbros in 1974 as Controller and
was elected Vice President of Finance in 1978. He was elected
Executive Vice President, Chief Financial Officer and Treasurer
in 1987, and a Director in 1992. He has over 43 years of
experience in corporate finance and public accounting.
James R. Beasley joined Willbros in 1981 when Willbros
Engineers, Inc. ("WEI") was acquired. He was elected Vice
President of WEI in 1981, Senior Vice President and General
Manager of WEI in 1982 and President of WEI in 1986. Mr. Beasley
has more than 29 years of experience in pipeline engineering and
operations.
John N. Hove became General Counsel of Willbros in 1991. He
was elected Secretary of Willbros in 1996. He has more than 28
years of experience as a lawyer and has provided legal assistance
to Willbros since 1973. Prior to 1991, he was a shareholder in a
law firm in Tulsa, Oklahoma, where he concentrated his practice
on international business transactions.
William R. Phillips joined Willbros in 2000 when Rogers &
Phillips, Inc. ("RPI") was acquired. He was elected Vice
President of RPI in 1992, and President and Chief Executive
Officer of RPI in 1997. Mr. Phillips has more than 26 years of
experience in pipeline construction.
David L. Kavanaugh joined Willbros in 1977 as an engineer
assigned to Saudi Arabia. From 1979 until 1988, he served as
Project Engineer and Project Manager in Nigeria. From 1988 to
1991, he managed construction projects in Gabon and Colombia. In
1991, he was elected Vice President of
26
Willbros International, Inc. ("WII"), and in 1995 he was promoted
to Senior Vice President of operations and business development
for WII. Mr. Kavanaugh has over 29 years of pipeline
construction experience.
Joel M. Gall joined Willbros in 1978 as an Office Manager in
the Middle East. He was transferred to Nigeria in 1979 where he
served as Administrative Manager, General Manager and Managing
Director until 1991 when he was elected Vice President of WII.
Since 1994, he has been responsible for business development
activities in Southeast Asia and Australia. Mr. Gall has over 28
years of experience in the international pipeline construction
industry.
Arthur J. West joined Willbros in 1962 in North Africa. In
1988, he became Vice President of Willbros Middle East, Inc.
("WMEI") and, in 1992, he was elected Vice President of WII and
became responsible for business development and operations for
WMEI in the Middle East. Mr. West has over 34 years of
experience in pipeline construction in the areas of
administrative and project management.
Adrian P. Wright joined Willbros in 1973 as an engineer
assigned to Algeria. From 1974 until 1982, he served as Project
Engineer and Project Manager in Nigeria. From 1982 to 1992, he
served as Project Manager in Oman, Colombia and the United
States. In 1992, Mr. Wright was elected Vice President of WII,
and he is currently responsible for WII's estimating and
technical services. Mr. Wright has over 33 years of experience
in the construction industry.
Lance H. Foster was employed by WEI from 1990 to 1992 as a
Design Engineer and Project Engineer. He was Manager of
Engineering for EVI Cherrington Environmental from 1992 to 1993,
Project Manager for WEI from 1993 to 1994 and Manager of Pipeline
Construction for ARB, Incorporated from 1994 to 1996. He
subsequently joined Willbros USA, Inc. as an estimator/project
manager in 1996, was promoted to Vice President of Willbros
Energy Services Company in January 1998, and promoted to
President of WESCO in 2000. Mr. Foster has over 22 years of
experience in pipeline construction in the areas of estimating,
planning, administration, and management.
Carlos A. Atik joined Willbros in 1991 as an assistant Project
Manager in Egypt. He assumed the duties of Project Manager in
1992 and continued in that role until 1995 when he was named
General Manager of Willbros Construction & Engineering-Egypt, LLC.
Mr. Atik has over 15 years of engineering and construction
experience in Africa and the Middle East.
Monica M. Bagguley joined Willbros (Overseas) Limited ("WOL")
in 1974. Since 1985, she has served as Director of Personnel and
Purchasing for WOL. Ms. Bagguley has over 24 years of experience
in international personnel management and project procurement.
Latif A. Razek joined Willbros in 1973 and was promoted to
General Manager of The Oman Construction Company, L.L.C. in 1999.
He has over 27 years of experience in the pipeline construction
industry.
G. Patrick Riga joined Willbros in 1981 in Oman as a
warehouseman. From 1985 to 1988, he served in administrative
capacities in Colombia and Ecuador. From 1989 until 1994, he was
employed by HDI, a horizontal drilling company. He rejoined the
Company in 1994 as Assistant General Manager in Venezuela and, in
1995, was promoted to General Manager of Constructora CAMSA, C.A.
Mr. Riga has over 21 years of experience in the pipeline
industry, including operations, quality control and
administrative management.
J. K. Tillery joined Willbros in 1983 as a field engineer. He
has over 19 years of experience as an Engineer and Project
Manager working in both U.S. and international pipeline
construction. In 1995, he was named Managing Director of
Willbros (Nigeria) Limited.
27
PART II
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters
The information required by this Item is incorporated by
reference from (a) the section on page 48 of the Company's 1999
Annual Report to Stockholders entitled "Common Stock Information
and Dividend Policy" and (b) the section on pages 27 and 28 of
the Company's 1999 Annual Report to Stockholders entitled
"Management's Discussion and Analysis of Financial Condition and
Results of Operations - Capital Structure, Liquidity and Capital
Resources."
Item 6. Selected Financial Data
The information required by this Item is incorporated by
reference from page 21 of the Company's 1999 Annual Report to
Stockholders.
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations
The information required by this Item is incorporated by
reference from pages 22 through 28 of the Company's 1999 Annual
Report to Stockholders.
Item 7A. Quantitative and Qualitative Disclosures About Market
Risk
The information required by this Item is incorporated by
reference from page 28 of the Company's 1999 Annual Report to
Stockholders entitled "Management's Discussion and Analysis of
Financial Condition and Results of Operations - Financial Risk
Management."
Item 8. Financial Statements and Supplementary Data
The information required by this Item is incorporated by
reference from pages 29 through 47 of the Company's 1999 Annual
Report to Stockholders.
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure
None.
PART III
Item 10. Directors and Executive Officers of the Registrant
The information required by this Item with respect to the
Company's directors is incorporated by reference from the
sections of the Company's definitive Proxy Statement for its 2000
Annual Meeting of Stockholders (the "Proxy Statement") entitled
"Election of Directors" and "Section 16(a) Beneficial Ownership
Reporting Compliance." The information required by this Item
with respect to the Company's executive officers appears in Item
4A of Part I of this Form 10-K.
28
Item 11. Executive Compensation
The information required by this Item is incorporated by
reference from the section of the Proxy Statement entitled
"Executive Compensation."
Item 12. Security Ownership of Certain Beneficial Owners and
Management
The information required by this Item is incorporated by
reference from the section of the Proxy Statement entitled
"Principal Stockholders and Security Ownership of Management."
Item 13. Certain Relationships and Related Transactions
The information required by this Item is incorporated by
reference from the section of the Proxy Statement entitled
"Certain Transactions."
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports
on Form 8-K
(a) (1) Financial Statements:
The financial statements of the Company and its subsidiaries
and report of independent auditors listed below are incorporated
by reference from the following pages of the Company's 1999
Annual Report to Stockholders:
1999
Annual Report
Page(s)
---------------
Report of Independent Auditors 29
Consolidated Balance Sheets as of
December 31, 1999 and 1998 30
Consolidated Statements of Operations for the
years ended December 31, 1999, 1998 and 1997 31
Consolidated Statements of Stockholders' Equity for
the years ended December 31, 1999, 1998 and 1997 32
Consolidated Statements of Cash Flows for the
years ended December 31, 1999, 1998 and 1997 33
Notes to Consolidated Financial Statements 34-47
1999
Form 10-K
Page(s)
---------------
(2) Financial Statement Schedule:
Independent Auditors' Report 33
Schedule II - Consolidated Valuation and
Qualifying Accounts 34
All other schedules are omitted as inapplicable or because the
required information is contained in the financial statements or
included in the footnotes thereto.
29
(3) Exhibits:
The following documents are included as exhibits to this Form 10-K.
Those exhibits below incorporated by reference herein are
indicated as such by the information supplied in the
parenthetical thereafter. If no parenthetical appears after an
exhibit, such exhibit is filed herewith.
3.1 Amended and Restated Articles of Incorporation of the
Company (Filed as Exhibit 3.2 to the Company's report on
Form 10-Q for the quarter ended September 30, 1998, filed
November 16, 1998).
3.2 Restated By-laws of the Company (Filed as Exhibit 3.2 to the
Company's Registration Statement on Form S-1, Registration
No. 333-5413 (the "S-1 Registration Statement")).
4.1 Form of stock certificate for the Company's Common Stock,
par value $.05 per share (Filed as Exhibit 4 to the
S-1 Registration Statement).
4.2 Rights Agreement, dated April 1, 1999, between the Company
and ChaseMellon Shareholder Services, L.L.C., as Rights
Agent (Filed as an Exhibit to the Company's Registration
Statement on Form 8-A, dated April 9, 1999).
4.3 Certificate of Designation of Series A Junior Participating
Preferred Stock of the Company (Filed as Exhibit 3 to the
Company's report on Form 10-Q for the quarter ended
March 31, 1999, filed May 17, 1999).
10.1 Credit Agreement dated February 20, 1997, by and among the
Company, certain designated subsidiaries, Credit Lyonnais
New York Branch, as co-agent, certain financial
institutions, and ABN AMRO Bank N.V., as agent (Filed as
Exhibit 10.1 to the Company's report on Form 10-K for the
year ended December 31, 1996, filed March 31, 1997 (the
"1996 Form 10-K")).
10.2 Parent Pledge Agreement dated February 20, 1997, by the
Company, in favor of ABN AMRO Bank N.V., as agent (Filed as
Exhibit 10.2 to the 1996 Form 10-K).
10.3 Pledge Agreement dated February 20, 1997, by Musketeer Oil
B.V., in favor of ABN AMRO Bank N.V., as agent (Filed as
Exhibit 10.3 to the 1996 Form 10-K).
10.4 Pledge Agreement dated February 20, 1997, by Willbros USA,
Inc., in favor of ABN AMRO Bank N.V., as agent (Filed as
Exhibit 10.4 to the 1996 Form 10-K).
10.5* Form of Indemnification Agreement between the Company
and its officers (Filed as Exhibit 10.7 to the
S-1 Registration Statement).
10.6* Form of Indemnification Agreement between the Company
and its directors (Filed as Exhibit 10.16 to the
S-1 Registration Statement).
10.7* Willbros Group, Inc. 1996 Stock Plan (Filed as
Exhibit 10.8 to the S-1 Registration Statement).
10.8* Amendment Number 1 to Willbros Group, Inc. 1996 Stock
Plan dated February 24, 1999 (Filed as Exhibit A to the
Company's Proxy Statement for Annual Meeting of Stockholders
dated March 31, 1999).
10.9* Form of Incentive Stock Option Agreement under the
Willbros Group, Inc. 1996 Stock Plan (Filed as Exhibit 10.13
to the 1996 Form 10-K).
10.10* Form of Non-Qualified Stock Option Agreement under the
Willbros Group, Inc. 1996 Stock Plan (Filed as Exhibit 10.14
to the 1996 Form 10-K).
30
10.11* Willbros Group, Inc. Director Stock Plan (Filed as
Exhibit 10.9 to the S-1 Registration Statement).
10.12* Willbros USA, Inc. Executive Benefit Restoration Plan
(Filed as Exhibit 10.10 to the S-1 Registration Statement).
10.13* Form of Secured Promissory Note under the Willbros
International, Inc. and Willbros USA, Inc. 1995 Management
Personnel Non-Qualified Stock Ownership Plans (Filed as
Exhibit 10.11 to the S-1 Registration Statement).
10.14* Form of Secured Promissory Note under the Willbros
International, Inc. and Willbros USA, Inc. 1992 Employee Non-
Qualified Stock Ownership Plans (Filed as Exhibit 10.12 to
the S-1 Registration Statement).
10.15 Registration Rights Agreement dated April 9, 1992,
between the Company and Heerema Holding Construction, Inc.,
Yorktown Energy Partners, L.P., Concord Partners II, L.P.,
Concord Partners Japan Limited and certain other
stockholders of the Company (Filed as Exhibit 10.13 to the
S-1 Registration Statement).
10.16* Willbros Group, Inc. Severance Plan dated January 1, 1999
(Filed as Exhibit 10.22 to the Company's report on Form 10-K
for the year ended December 31, 1998, filed March 31,
1999 (the "1998 Form 10-K")).
10.17* Separation Agreement and Release dated March 31, 1999,
by and between Willbros USA, Inc. and M. Kieth Phillips
(Filed as Exhibit 10.23 to the 1998 Form 10-K).
10.18* Consulting Services Agreement dated April 1, 1999, by and
between Willbros International, Inc. and M. Kieth Phillips
(Filed as Exhibit 10.24 to the 1998 Form 10-K).
10.19 First Amendment to Credit Agreement dated April 2,
1998, by and among the Company, certain designated
subsidiaries, Credit Lyonnais New York Branch, as co-agent,
certain financial institutions, and ABN AMRO Bank N.V., as
agent (Filed as Exhibit 10.25 to the 1998 Form 10-K).
10.20 Second Amendment to Credit Agreement dated October 1,
1998, by and among the Company, certain designated
subsidiaries, Credit Lyonnais New York Branch, as co-agent,
certain financial institutions, and ABN AMRO Bank N.V., as
agent (Filed as Exhibit 10.26 to the 1998 Form 10-K).
13. Portions of the Company's 1999 Annual Report to
Stockholders.
21. Subsidiaries of the Company.
23. Consent of KPMG Peat Marwick.
27. Financial Data Schedule.
- ------------------
* Management contract or compensatory plan or arrangement.
(b) Reports on Form 8-K.
No reports on Form 8-K were filed during the fourth quarter of
1999.
31
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
WILLBROS GROUP, INC.
Date: March 30, 2000 By: /s/ Larry J. Bump
----------------------------------
Larry J. Bump
Chairman of the Board and
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons
on behalf of the Registrant and in the capacities and on the
dates indicated:
Signature Title Date
- ---------- ----- ----
/s/ Larry J. Bump Director, Chairman March 30, 2000
- -------------------------- of the Board and Chief
Larry J. Bump Executive Officer (Principal
Executive Officer)
/s/ Michael F. Curran Director, Vice Chairman of March 30, 2000
- -------------------------- the Board, President and
Michael F. Curran Chief Operating Officer
/s/ Melvin F. Spreitzer Director, Executive March 30, 2000
- -------------------------- Vice President,
Melvin F. Spreitzer Chief Financial Officer
and Treasurer
(Principal Financial
Officer and Principal
Accounting Officer)
/s/ Guy E. Waldvogel Director March 30, 2000
- --------------------------
Guy E. Waldvogel
/s/ Peter A. Leidel Director March 30, 2000
- --------------------------
Peter A. Leidel
/s/ John H. Williams Director March 30, 2000
- --------------------------
John H. Williams
/s/ Michael J. Pink Director March 30, 2000
- --------------------------
Michael J. Pink
/s/ James B. Taylor, Jr. Director March 30, 2000
- --------------------------
James B. Taylor, Jr.
32
INDEPENDENT AUDITORS' REPORT ON
CONSOLIDATED FINANCIAL STATEMENT SCHEDULE
The Stockholders and Board of Directors
Willbros Group, Inc.:
The audits referred to in our report dated February 11, 2000
included the related consolidated financial statement schedule
for each of the years in the three-year period ended December 31,
1999. This consolidated financial statement schedule is the
responsibility of the Company's management. Our responsibility
is to express an opinion on the consolidated financial statement
schedule based on our audits. In our opinion, such consolidated
financial statement schedule, when considered in relation to the
basic consolidated financial statements taken as a whole,
presents fairly in all material respects the information set
forth therein.
KPMG
Panama City, Panama
February 11, 2000
33
WILLBROS GROUP, INC.
SCHEDULE II - CONSOLIDATED VALUATION AND QUALIFYING ACCOUNTS
(In thousands)
Charged
(Credited)
Balance at to Costs
Beginning and
Year Ended Description of Year Expenses
---------- ----------------------- ---------- -----------
December 31, 1997 Allowance for bad debts $ 1,119 $ (8)
December 31, 1998 Allowance for bad debts $ 1,001 $ 72
December 31, 1999 Allowance for bad debts $ 988 $ 573
- -CONTINUED-
Charge Balance
Offs and at End
Year Ended Description Other of Year
---------- ----------------------- ---------- -----------
December 31, 1997 Allowance for bad debts $ (110) $ 1,001
December 31, 1998 Allowance for bad debts $ (85) $ 988
December 31, 1999 Allowance for bad debts $ (294) $ 1,267
34
INDEX TO EXHIBITS
The following documents are included as exhibits to this Form 10-K.
Those exhibits below incorporated by reference herein are
indicated as such by the information supplied in the
parenthetical thereafter. If no parenthetical appears after an
exhibit, such exhibit is filed herewith.
Exhibit
Number Description
- ------ -----------
3.1 Amended and Restated Articles of Incorporation of the
Company (Filed as Exhibit 3.2 to the Company's report on
Form 10-Q for the quarter ended September 30, 1998, filed
November 16, 1998).
3.2 Restated By-laws of the Company (Filed as Exhibit 3.2 to the
Company's Registration Statement on Form S-1, Registration
No. 333-5413 (the "S-1 Registration Statement")).
4.1 Form of stock certificate for the Company's Common Stock,
par value $.05 per share (Filed as Exhibit 4 to the
S-1 Registration Statement).
4.2 Rights Agreement, dated April 1, 1999, between the Company
and ChaseMellon Shareholder Services, L.L.C., as Rights
Agent (Filed as an Exhibit to the Company's Registration
Statement on Form 8-A, dated April 9, 1999).
4.3 Certificate of Designation of Series A Junior Participating
Preferred Stock of the Company (Filed as Exhibit 3 to the
Company's report on Form 10-Q for the quarter ended
March 31, 1999, filed May 17, 1999).
10.1 Credit Agreement dated February 20, 1997, by and among the
Company, certain designated subsidiaries, Credit Lyonnais
New York Branch, as co-agent, certain financial
institutions, and ABN AMRO Bank N.V., as agent (Filed as
Exhibit 10.1 to the Company's report on Form 10-K for the
year ended December 31, 1996, filed March 31, 1997 (the
"1996 Form 10-K")).
10.2 Parent Pledge Agreement dated February 20, 1997, by the
Company, in favor of ABN AMRO Bank N.V., as agent (Filed as
Exhibit 10.2 to the 1996 Form 10-K).
10.3 Pledge Agreement dated February 20, 1997, by Musketeer Oil
B.V., in favor of ABN AMRO Bank N.V., as agent (Filed as
Exhibit 10.3 to the 1996 Form 10-K).
10.4 Pledge Agreement dated February 20, 1997, by Willbros USA,
Inc., in favor of ABN AMRO Bank N.V., as agent (Filed as
Exhibit 10.4 to the 1996 Form 10-K).
10.5* Form of Indemnification Agreement between the Company
and its officers (Filed as Exhibit 10.7 to the
S-1 Registration Statement).
10.6* Form of Indemnification Agreement between the Company
and its directors (Filed as Exhibit 10.16 to the
S-1 Registration Statement).
10.7* Willbros Group, Inc. 1996 Stock Plan (Filed as Exhibit 10.8
to the S-1 Registration Statement).
10.8* Amendment Number 1 to Willbros Group, Inc. 1996 Stock
Plan dated February 24, 1999 (Filed as Exhibit A to the
Company's Proxy Statement for Annual Meeting of Stockholders
dated March 31, 1999).
10.9* Form of Incentive Stock Option Agreement under the
Willbros Group, Inc. 1996 Stock Plan (Filed as Exhibit 10.13
to the 1996 Form 10-K).
10.10* Form of Non-Qualified Stock Option Agreement under the
Willbros Group, Inc. 1996 Stock Plan (Filed as Exhibit 10.14
to the 1996 Form 10-K).
10.11* Willbros Group, Inc. Director Stock Plan (Filed as
Exhibit 10.9 to the S-1 Registration Statement).
10.12* Willbros USA, Inc. Executive Benefit Restoration Plan
(Filed as Exhibit 10.10 to the S-1 Registration Statement).
10.13* Form of Secured Promissory Note under the Willbros
International, Inc. and Willbros USA, Inc. 1995 Management
Personnel Non-Qualified Stock Ownership Plans (Filed as
Exhibit 10.11 to the S-1 Registration Statement).
10.14* Form of Secured Promissory Note under the Willbros
International, Inc. and Willbros USA, Inc. 1992 Employee Non-
Qualified Stock Ownership Plans (Filed as Exhibit 10.12 to
the S-1 Registration Statement).
10.15 Registration Rights Agreement dated April 9, 1992,
between the Company and Heerema Holding Construction, Inc.,
Yorktown Energy Partners, L.P., Concord Partners II, L.P.,
Concord Partners Japan Limited and certain other
stockholders of the Company (Filed as Exhibit 10.13 to the
S-1 Registration Statement).
10.16* Willbros Group, Inc. Severance Plan dated January 1,
1999 (Filed as Exhibit 10.22 to the Company's report on Form 10-K
for the year ended December 31, 1998, filed March 31,
1999 (the "1998 Form 10-K")).
10.17* Separation Agreement and Release dated March 31, 1999,
by and between Willbros USA, Inc. and M. Kieth Phillips
(Filed as Exhibit 10.23 to the 1998 Form 10-K).
10.18* Consulting Services Agreement dated April 1, 1999, by
and between Willbros International, Inc. and M. Kieth
Phillips (Filed as Exhibit 10.24 to the 1998 Form 10-K).
10.19 First Amendment to Credit Agreement dated April 2,
1998, by and among the Company, certain designated
subsidiaries, Credit Lyonnais New York Branch, as co-agent,
certain financial institutions, and ABN AMRO Bank N.V., as
agent (Filed as Exhibit 10.25 to the 1998 Form 10-K).
10.20 Second Amendment to Credit Agreement dated October 1,
1998, by and among the Company, certain designated
subsidiaries, Credit Lyonnais New York Branch, as co-agent,
certain financial institutions, and ABN AMRO Bank N.V., as
agent (Filed as Exhibit 10.26 to the 1998 Form 10-K).
13. Portions of the Company's 1999 Annual Report to
Stockholders.
21. Subsidiaries of the Company.
23. Consent of KPMG Peat Marwick.
27. Financial Data Schedule.