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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Transition Period From ______ to ______.
COMMISSION FILE NUMBER 1-10570
BJ SERVICES COMPANY
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 63-0084140
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
5500 NORTHWEST CENTRAL DRIVE, HOUSTON, TEXAS 77092
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (713) 462-4239
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
----- -----
There were 38,003,928 shares of the registrant's common stock, $.10 par value,
outstanding as of August 9, 1996.
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BJ SERVICES COMPANY
INDEX
PART I - FINANCIAL INFORMATION:
Item 1. Financial Statements
Consolidated Condensed Statement of Operations (Unaudited) - Three
and nine months ended June 30, 1996 and 1995 3
Consolidated Condensed Statement of Financial Position -
June 30, 1996 (Unaudited) and September 30, 1995 4
Consolidated Condensed Statement of Cash Flows (Unaudited) -
Nine months ended June 30, 1996 and 1995 5
Notes to Unaudited Consolidated Condensed Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 20
PART II - OTHER INFORMATION 26
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PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
BJ SERVICES COMPANY
CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS (UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
THREE MONTHS ENDED NINE MONTHS ENDED
JUNE 30, JUNE 30,
1996 1995 1996 1995
----------- ----------- ----------- ----------
Revenue $220,960 $199,542 $628,255 $425,625
Operating expenses:
Cost of sales and services 178,415 166,645 512,664 356,909
Research and engineering 3,992 4,115 11,594 8,393
Marketing 9,837 9,271 27,720 17,219
General and administrative 9,027 7,864 25,749 20,317
Goodwill amortization 1,354 1,236 4,025 1,814
Unusual charge 3,539 16,000 3,539 16,000
----------- ----------- ---------- ----------
Total operating expenses 206,164 205,131 585,291 420,652
----------- ----------- ----------- ----------
Operating income (loss) 14,796 (5,589) 42,964 4,973
Interest expense (5,654) (4,884) (16,749) (9,502)
Interest income 217 322 543 656
Other income - net 1,664 480 3,003 1,998
----------- ----------- ---------- ----------
Income (loss) before income taxes 11,023 (9,671) 29,761 (1,875)
Income taxes 1,951 (3,823) 7,121 (2,149)
----------- ----------- ---------- ----------
Net income (loss) $ 9,072 $ (5,848) $ 22,640 $ 274
=========== =========== ========== ==========
Net income (loss) per share
Primary $ .31 $ (.22) $ .79 $ .01
Fully diluted $ .31 $ (.22) $ .77 $ .01
Average shares outstanding
Primary 29,651 26,416 28,705 19,283
Fully diluted 29,663 26,416 29,573 19,408
SEE NOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
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BJ SERVICES COMPANY
CONSOLIDATED CONDENSED STATEMENT OF FINANCIAL POSITION
(IN THOUSANDS)
JUNE 30, SEPTEMBER 30,
1996 1995
----------------- -----------------
(UNAUDITED)
ASSETS
Current assets:
Cash and cash equivalents $ 2,012 $ 1,842
Receivables - net 249,858 168,771
Inventories:
Finished goods 68,663 50,665
Work in process 1,758 2,394
Raw materials 17,690 13,792
------------ ------------
Total inventories 88,111 66,851
Deferred income taxes 7,036 9,370
Other current assets 22,574 10,101
------------ ------------
Total current assets 369,591 256,935
Property - net 545,114 416,810
Deferred income taxes 125,328 107,889
Goodwill and other assets 635,118 208,049
------------ ------------
$ 1,675,151 $ 989,683
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 133,299 $ 85,675
Short-term borrowings and current
portion of long-term debt 329,708 37,600
Accrued employee compensation and benefits 22,781 24,885
Income and other taxes 14,751 11,375
Accrued insurance 8,644 12,867
Other accrued liabilities 52,979 31,869
------------ ------------
Total current liabilities 562,162 204,271
Long-term debt 563,864 259,566
Deferred income taxes 13,291 11,496
Accrued post retirement benefits and other 41,104 47,555
Stockholders' equity 494,730 466,795
------------ ------------
$ 1,675,151 $ 989,683
============ ============
SEE NOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
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BJ SERVICES COMPANY
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS (UNAUDITED)
(IN THOUSANDS)
NINE MONTHS ENDED
JUNE 30,
1996 1995
------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 22,640 $ 274
Adjustments to reconcile net income to cash
provided by operating activities:
Amortization of unearned compensation 819 660
Unusual charge (noncash) 3,539 3,646
Depreciation and amortization 44,288 25,178
Deferred income taxes (benefit) 697 (8,637)
Net gain on disposal of property (2,266) (740)
Changes in:
Receivables (9,448) 494
Inventories (2,246) (4,361)
Accounts payable (47) (1,280)
Other current assets and liabilities (23,187) 677
Other, net (14,407) 8,292
------------ ------------
Net cash provided by operating activities 20,382 24,203
CASH FLOWS FROM INVESTING ACTIVITIES:
Property additions (34,372) (24,346)
Proceeds from disposal of assets 4,458 5,121
Acquisition of business, net of cash acquired (586,535) (202,858)
------------ ------------
Net cash used for investing activities (616,449) (222,083)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings - net 591,701 193,293
Proceeds from issuance of stock 4,536 2,752
------------ ------------
Net cash provided by financing activities 596,237 196,045
Increase in cash and cash equivalents 170 (1,835)
Cash and cash equivalents at beginning of period 1,842 3,218
------------ ------------
Cash and cash equivalents at end of period $ 2,012 $ 1,383
============ ============
SEE NOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
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BJ SERVICES COMPANY
NOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
NOTE 1 GENERAL
In the opinion of management, the unaudited consolidated condensed financial
statements for BJ Services Company (the "Company") include all adjustments
(consisting solely of normal recurring adjustments) necessary for a fair
presentation of the financial position as of June 30, 1996, and the results of
operations and cash flows for each of the nine-month periods ended June 30,
1996 and 1995. The consolidated condensed statement of financial position at
September 30, 1995 is derived from the September 30, 1995 audited consolidated
financial statements. Although management believes the disclosures in these
financial statements are adequate to make the information presented not
misleading, certain information and footnote disclosures normally included in
annual financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to the rules and
regulations of the Securities and Exchange Commission. The results of
operations and the cash flows for the nine-month period ended June 30, 1996 are
not necessarily indicative of the results to be expected for the full year.
Certain amounts for fiscal 1995 have been reclassified in the accompanying
consolidated condensed financial statements to conform to the current year
presentation.
NOTE 2 EARNINGS PER SHARE
Primary earnings per share are based on the weighted average number of shares
outstanding during each period and the assumed exercise of dilutive stock
options and warrants less the number of treasury shares assumed to be purchased
from the proceeds using the average market price of the Company's common stock
for each of the periods presented.
Fully diluted earnings per share are based on the weighted average number of
shares outstanding during each period and the assumed exercise of dilutive
stock options and warrants less the number of treasury shares assumed to be
purchased from the proceeds using the closing market price of the Company's
common stock for each of the periods presented.
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The following table presents information necessary to calculate earnings per
share for the periods presented (in thousands):
THREE MONTHS ENDED NINE MONTHS ENDED
JUNE 30, JUNE 30,
1996 1995 1996 1995
----------- ----------- ----------- ----------
Net income $ 9,072 $ (5,848) $ 22,640 $ 274
=========== =========== ========== ==========
Average primary common and common
equivalent shares outstanding:
Common stock 28,190 26,115 28,100 19,170
Common stock equivalents from
assumed exercise of stock options 771 605 113
Common stock equivalents from
assumed exercise of warrants 690
----------- ----------- ----------- ----------
29,651 26,115 28,705 19,283
=========== =========== ========== ==========
Primary earnings per share $ .31 $ (.22) $ .79 $ .01
=========== =========== ========== ==========
Average fully diluted common and common
equivalent shares outstanding:
Common stock 28,190 26,115 28,100 19,170
Common stock equivalents from
assumed exercise of stock options 774 774 238
Common stock equivalents from
assumed exercise of warrants 699 699
----------- ----------- ---------- ----------
29,663 26,115 29,573 19,408
=========== =========== ========== ==========
Fully diluted earnings per share $ .31 $ (.22) $ .77 $ .01
=========== =========== ========== ==========
NOTE 3 ACQUISITIONS OF BUSINESSES
Effective December 1, 1995, the Company acquired the remaining 60% ownership of
its previously unconsolidated joint venture in Brazil, for total consideration
of $5.4 million consisting of $3.7 million in cash and $1.7 million in debt
assumed by the Company. This acquisition was accounted for as a purchase and,
accordingly, the acquired assets and liabilities have been recorded at their
estimated fair values at the date of acquisition. The consolidated statement
of operations includes operating results of the subsidiary acquired since the
date of acquisition. This acquisition is not material to the Company's
financial statements and therefore pro forma information is not presented.
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On June 28, 1996, the Company completed the acquisition of Nowsco Well Service
Ltd. ("Nowsco" and the "Nowsco Acquisition") for a total purchase price of
$583.4 million (including transaction costs of $7.0 million) in cash. The
transaction may be summarized as follows (in thousands):
Cash $ 576,361
Transaction costs 7,000
------------
Total consideration 583,361
Net assets acquired 176,515
------------
Goodwill $ 406,846
============
This acquisition was accounted for using the purchase method of accounting.
Accordingly, the results of Nowsco's operations will be included in the
statement of operations beginning July 1, 1996. The assets and liabilities of
Nowsco have been recorded in the Company's statement of financial position at
estimated fair market value on June 30, 1996 with the remaining purchase price
reflected as goodwill, which will be amortized on a straight line basis over 40
years. The allocation of the purchase price is preliminary, as valuation and
other studies have not been finalized. The specific nature and timing of other
costs related to the Nowsco Acquisition are being reviewed and have not been
finalized. The following unaudited pro forma summary presents the consolidated
results of operations of the Company as if the April 1995 acquisition of The
Western Company of North America, the Nowsco Acquisition and the related
issuance of common stock discussed in Note 7 had occurred at the beginning of
fiscal year 1995:
Nine Months Ended
June 30,
1996 1995
----------- -----------
(In thousands, except
per share amounts)
Revenue $ 891,026 $ 851,132
Net income (loss) 13,612 (6,119)
Net income (loss) per share - primary and fully diluted .35 (.16)
NOTE 4 UNUSUAL CHARGE
During the third quarter of 1996, the Company recorded an unusual charge of
$3.5 million ($.08 per share after-tax) in connection with the Nowsco
Acquisition. The unusual charge consisted of $1.9 million in interest relating
to borrowings incurred to finance the Nowsco Acquisition (prior to the issuance
of common stock discussed in Note 7) and a $1.6 million write-off of bank fees
in connection with the Company's previous bank facility.
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NOTE 5 LONG-TERM DEBT
In June 1996, in connection with the Nowsco Acquisition, the Company, BJ
Services Company, U.S.A., BJ Services Company Middle East, BJ Service
International, Inc. and Nowsco Well Service, Ltd. entered into a new bank
credit facility ("Bank Credit Facility") with a major commercial bank. The
Bank Credit Facility provided for up to $850.0 million in unsecured borrowings,
including a one-year bridge loan facility of $285.0 million, a six-year term
loan facility of $315.0 million and a five-year revolving credit facility of
$250.0 million. On July 7, 1996 the bridge loan was repaid in full and the
term loan was partially repaid from the proceeds of the Company's stock
offering (see Note 7). On August 7, 1996, the Bank Credit Facility was
amended and restated. The Bank Credit Facility now consists of a six-year
term facility with an initial 364-day loan of Cdn $320 million repayable in 22
quarterly installments beginning in March 1997 (convertible to approximately
U.S. $234 million at the option of the banks) and a five-year revolving credit
facility of $325.0 million (including letters of credit). The Bank Credit
Facility includes various customary covenants, including the maintenance of
certain financial ratios and net worth and restrictions on dividend payments.
Pursuant to such dividend restrictions, based on its debt to capitalization
ratio at June 30, 1996, the Company is currently unable to pay dividends on its
common stock. At June 30, 1996, after giving effect to the August amendment,
principal reductions of the term loan are due in aggregate installments of
$25,765,000, $34,353,000, $43,923,000, $47,113,000, $47,113,000 and $35,334,000
in the years ended September 30, 1997, 1998, 1999, 2000, 2001 and 2002,
respectively.
On February 20, 1996, BJ Services Company ("Parent") issued $125.0 million of
7% notes due 2006 ("7 % Notes") as to which its direct wholly owned
subsidiaries BJ Services Company, U.S.A., BJ Service International, Inc., and
BJ Services Company Middle East (collectively "Guarantor Subsidiaries" and
individually "Guarantor") have fully and unconditionally guaranteed, on a joint
and several basis, its obligation to pay principal and interest with respect to
the 7% Notes. In August 1996, the 7% Notes were exchanged for 7% Series B
Notes due 2006 which were issued in a transaction registered under the
Securities Act. The form and terms of the 7% Series B Notes are identical in
all material respects to the form and terms of the 7% Notes. Each of the
guarantees is an unsecured obligation of the Guarantor providing such guarantee
and ranks pari passu with the guarantees provided by and the obligations of
such Guarantor under the Bank Credit Facility and the obligations of such
Guarantor Subsidiaries under the Company's 9.2% Notes due August 1, 1998 (the
"9.2% Notes") and with all existing and future unsecured funded indebtedness of
such Guarantor for borrowed money that is not, by its terms, expressly
subordinated in right of payment to such guarantee.
The 9.2% Notes were amended on August 7, 1996 to include financial covenants
comparable to those in the Bank Credit Facility.
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NOTE 6 SUPPLEMENTAL GUARANTOR INFORMATION
As discussed in Note 5, each of the Guarantors has fully and unconditionally
guaranteed, on a joint and several basis, the obligation to pay principal and
interest with respect to the Notes.
Substantially all of the Company's operating income and cash flow is generated
by its subsidiaries. As a result, funds necessary to meet the Company's debt
service obligations are provided in part by distributions or advances from its
subsidiaries. Under certain circumstances, contractual and legal restrictions,
as well as the financial condition and operating requirements of the Company's
subsidiaries, could limit the Company's ability to obtain cash from its
subsidiaries for the purpose of meeting its debt service obligations, including
the payment of principal and interest on the Notes. Although holders of the 7%
Notes will be direct creditors of the Company's principal direct subsidiaries
by virtue of the guarantees, the Company has subsidiaries ("Non-Guarantor
Subsidiaries") that are not included among the Guarantor Subsidiaries, and such
subsidiaries will not be obligated with respect to the 7% Notes. As a result,
the claims of creditors of the Non-Guarantor Subsidiaries will effectively have
priority with respect to the assets and earnings of such companies over the
claims of creditors of the Company, including the holders of the Notes.
The following supplemental consolidating condensed financial statements
present:
1. Consolidating condensed statements of financial position as of
June 30, 1996 and September 30, 1995, consolidating condensed statements of
operations for each of the three and nine month periods ended June 30, 1996 and
1995 and consolidating condensed statements of cash flows for each of the nine
month periods ended June 30, 1996 and 1995.
2. The Parent and combined Guarantor Subsidiaries and combined
Non-Guarantor Subsidiaries with their investments in subsidiaries accounted for
using the equity method.
3. Elimination entries necessary to consolidate the Parent and all of
its subsidiaries.
Management does not believe that separate financial statements of the
Guarantors of the Notes are material to investors in the Notes.
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SUPPLEMENTAL CONSOLIDATING CONDENSED STATEMENT
OF OPERATIONS
(IN THOUSANDS)
THREE MONTHS ENDED JUNE 30, 1996
COMBINED COMBINED
GUARANTOR NONGUARANTOR
PARENT SUBSIDIARIES SUBSIDIARIES ELIMINATIONS CONSOLIDATED
------------ ------------- ------------- ------------- ------------
Revenue $ $ 144,063 $ 83,991 $ (7,094) $ 220,960
Operating expenses:
Cost of sales and services 121,775 63,734 (7,094) 178,415
Research and engineering 3,789 203 3,992
Marketing 7,567 2,270 9,837
General and administrative 5,731 3,296 9,027
Goodwill amortization 1,179 175 1,354
Unusual charge 3,539 3,539
------------ ------------- ------------- ------------- -------------
Total operating expenses 143,580 69,678 (7,094) 206,164
------------ ------------- ------------- ------------- -------------
Operating income 483 14,313 14,796
Interest income 348 217 (348) 217
Interest expense (6,392) 390 348 (5,654)
Income from equity investees 9,072 13,203 (22,275)
Other income-net 329 1,335 1,664
------------ ------------- ------------- ------------- -------------
Income before income taxes 9,072 7,971 16,255 (22,275) 11,023
Income tax expense (benefit) (1,101) 3,052 1,951
------------ ------------- ------------- ------------- -------------
Net income $ 9,072 $ 9,072 $ 13,203 $ (22,275) $ 9,072
============ ============= ============= ============= =============
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SUPPLEMENTAL CONSOLIDATING CONDENSED STATEMENT
OF OPERATIONS
(IN THOUSANDS)
THREE MONTHS ENDED JUNE 30, 1995
COMBINED COMBINED
GUARANTOR NONGUARANTOR
PARENT SUBSIDIARIES SUBSIDIARIES ELIMINATIONS CONSOLIDATED
------------ ------------- ------------- ------------- ------------
Revenue $ $ 134,237 $ 73,583 $ (8,278) $ 199,542
Operating expenses:
Cost of sales and services 118,860 56,063 (8,278) 166,645
Research and engineering 3,898 217 4,115
Marketing 7,234 2,037 9,271
General and administrative 4,639 3,225 7,864
Goodwill amortization 1,068 168 1,236
Unusual charge 16,000 16,000
------------ ------------- ------------- ------------- -------------
Total operating expenses 151,699 61,710 (8,278) 205,131
------------ ------------- ------------- ------------- -------------
Operating income (loss) (17,462) 11,873 (5,589)
Interest income 51 322 (51) 322
Interest expense (3,939) (996) 51 (4,884)
Income (loss) from
equity investees (5,848) 8,289 (2,441)
Other income-net 782 (302) 480
------------ ------------- -------------- ------------- -------------
Income (loss) before income taxes (5,848) (12,279) 10,897 (2,441) (9,671)
Income tax expense (benefit) (6,431) 2,608 (3,823)
------------ ------------- ------------- ------------- -------------
Net income (loss) $ (5,848) $ (5,848) $ 8,289 $ (2,441) $ (5,848)
============ ============= ============= ============= =============
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SUPPLEMENTAL CONSOLIDATING CONDENSED STATEMENT
OF OPERATIONS
(IN THOUSANDS)
NINE MONTHS ENDED JUNE 30, 1996
COMBINED COMBINED
GUARANTOR NONGUARANTOR
PARENT SUBSIDIARIES SUBSIDIARIES ELIMINATIONS CONSOLIDATED
------------ ------------- ------------- ------------- ------------
Revenue $ $ 417,185 $ 236,038 $ (24,968) $ 628,255
Operating expenses:
Cost of sales and services 358,415 179,217 (24,968) 512,664
Research and engineering 10,985 609 11,594
Marketing 21,214 6,506 27,720
General and administrative 15,829 9,920 25,749
Goodwill amortization 3,501 524 4,025
Unusual charge 3,539 3,539
------------ ------------- ------------- ------------- -------------
Total operating expenses 413,483 196,776 (24,968) 585,291
------------ ------------- ------------- ------------- -------------
Operating income 3,702 39,262 42,964
Interest income 1,077 537 (1,071) 543
Interest expense (16,001) (1,819) 1,071 (16,749)
Income from equity investees 22,640 29,776 (52,416)
Other income-net 1,949 1,054 3,003
------------ ------------- ------------- ------------- -------------
Income before income taxes 22,640 20,503 39,034 (52,416) 29,761
Income tax expense (benefit) (2,137) 9,258 7,121
------------ ------------- ------------- ------------- -------------
Net income $ 22,640 $ 22,640 $ 29,776 $ (52,416) $ 22,640
============ ============= ============= ============= =============
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SUPPLEMENTAL CONSOLIDATING CONDENSED STATEMENT
OF OPERATIONS
(IN THOUSANDS)
NINE MONTHS ENDED JUNE 30, 1995
COMBINED COMBINED
GUARANTOR NONGUARANTOR
PARENT SUBSIDIARIES SUBSIDIARIES ELIMINATIONS CONSOLIDATED
------------ ------------- ------------- ------------- ------------
Revenue $ $ 260,627 $ 185,315 $ (20,317) $ 425,625
Operating expenses:
Cost of sales and services 233,632 143,594 (20,317) 356,909
Research and engineering 7,652 741 8,393
Marketing 11,937 5,282 17,219
General and administrative 11,430 8,887 20,317
Goodwill amortization 1,304 510 1,814
Unusual charge 16,000 16,000
------------ ------------- ------------- ------------- -------------
Total operating expenses 281,955 159,014 (20,317) 420,652
------------ ------------- ------------- ------------- -------------
Operating income (loss) (21,328) 26,301 4,973
Interest income 811 640 (795) 656
Interest expense (7,064) (3,233) 795 (9,502)
Income from equity investees 274 16,849 (17,123)
Other income-net 2,179 (181) 1,998
------------ ------------- ------------- ------------- -------------
Income (loss) before income taxes 274 (8,553) 23,527 (17,123) (1,875)
Income tax expense (benefit) (8,827) 6,678 (2,149)
------------ ------------- ------------- ------------- -------------
Net income $ 274 $ 274 $ 16,849 $ (17,123) $ 274
============ ============= ============= ============= =============
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SUPPLEMENTAL CONSOLIDATING CONDENSED STATEMENT
OF FINANCIAL POSITION
(IN THOUSANDS)
JUNE 30, 1996
COMBINED COMBINED
GUARANTOR NONGUARANTOR
PARENT SUBSIDIARIES SUBSIDIARIES ELIMINATIONS CONSOLIDATED
------------ ------------- ------------- ------------- ------------
ASSETS
Current assets:
Cash and cash equivalents $ $ 2,012 $ $ $ 2,012
Receivables - net 90,007 159,851 249,858
Inventories - net 37,912 50,199 88,111
Deferred income taxes 7,036 7,036
Other current assets 7,152 15,422 22,574
------------ ------------- ------------- ------------- -------------
Total current assets 144,119 225,472 369,591
Investment in subsidiaries 195,072 137,369 (332,441)
Intercompany advances - net 300,409 162,011 (462,420)
Property - net 249,014 296,093 7 545,114
Deferred income taxes 98,139 27,189 125,328
Goodwill and other assets 223,692 411,426 635,118
------------ ------------- ------------- ------------- -------------
Total assets $ 495,481 $ 1,014,344 $ 960,180 $ (794,854) $ 1,675,151
============ ============= ============= ============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ $ 60,360 $ 72,939 $ $ 133,299
Short-term borrowings and
current portion of long-term debt 326,100 3,608 329,708
Accrued employee
compensation and benefits 13,155 9,626 22,781
Income and other taxes 7 (873) 15,617 14,751
Other accrued liabilities 744 14,489 46,390 61,623
------------ ------------- ------------- ------------- -------------
Total current liabilities 751 413,231 148,180 562,162
Long-term debt 365,240 198,624 563,864
Deferred income taxes 13,291 13,291
Accrued post retirement
benefits and other 40,801 303 41,104
Intercompany advances - net 462,413 (462,413)
Stockholders' equity 494,730 195,072 137,369 (332,441) 494,730
------------ ------------- ------------- ------------- -------------
Total liabilities and
stockholders' equity $ 495,481 $ 1,014,344 $ 960,180 $ (794,854) $ 1,675,151
============ ============= ============= ============= =============
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SUPPLEMENTAL CONSOLIDATING CONDENSED STATEMENT
OF FINANCIAL POSITION
(IN THOUSANDS)
SEPTEMBER 30, 1995
COMBINED COMBINED
GUARANTOR NONGUARANTOR
PARENT SUBSIDIARIES SUBSIDIARIES ELIMINATIONS CONSOLIDATED
------------ ------------- ------------- ------------- ------------
ASSETS
Current assets:
Cash and cash equivalents $ 1,842 $ 1,842
Receivables - net 87,118 81,653 168,771
Inventories - net 38,463 28,388 66,851
Deferred income taxes 9,370 9,370
Other current assets 3,163 6,938 10,101
------------ ------------- ------------- ------------- -------------
Total current assets 139,956 116,979 256,935
Investment in subsidiaries 171,612 107,653 (279,265)
Intercompany advances 296,156 (296,156)
Property - net 261,713 155,097 416,810
Deferred income taxes 92,447 15,442 107,889
Goodwill and other assets 205,403 2,646 208,049
------------ ------------- ------------- ------------- -------------
Total assets $ 467,768 $ 807,172 $ 290,164 $ (575,421) $ 989,683
============ ============= ============= ============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 60,677 $ 24,998 $ 85,675
Short-term borrowings and
current portion of long-term debt 37,600 37,600
Accrued employee
compensation and benefits 16,277 8,608 24,885
Income and other taxes 7 4,097 7,271 11,375
Other accrued liabilities 966 29,959 16,648 (2,837) 44,736
------------ ------------- ------------- ------------- -------------
Total current liabilities 973 148,610 57,525 (2,837) 204,271
Long-term debt 222,566 37,000 259,566
Deferred income taxes 2,248 9,248 11,496
Accrued post retirement
benefits and other 46,902 653 47,555
Intercompany advances-net 215,234 78,085 (293,319)
Stockholders' equity 466,795 171,612 107,653 (279,265) 466,795
------------ ------------- ------------- ------------- -------------
Total liabilities and
stockholders' equity $ 467,768 $ 807,172 $ 290,164 $ (575,421) $ 989,683
============ ============= ============= ============= =============
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SUPPLEMENTAL CONSOLIDATING CONDENSED STATEMENT
OF CASH FLOWS
(IN THOUSANDS)
NINE MONTHS ENDED JUNE 30, 1996
COMBINED COMBINED
GUARANTOR NONGUARANTOR
PARENT SUBSIDIARIES SUBSIDIARIES ELIMINATIONS CONSOLIDATED
------------ ------------- ------------- ------------- ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 22,640 $ 22,640 $ 29,776 $ (52,416) $ 22,640
Adjustments to reconcile net income
to cash provided by operating activities:
Depreciation and amortization 27,153 17,135 44,288
Net gain on disposal of assets (10) (2,256) (2,266)
Recognition of unearned compensation 819 819
Deferred income taxes (benefit) 697 697
Unusual charge (noncash) 3,539 3,539
Income of equity investees (22,640) (29,776) 52,416
Changes in:
Receivables (2,889) (6,559) (9,448)
Accounts payable (317) 270 (47)
Inventories 551 (2,797) (2,246)
Other current assets and liabilities (222) (25,217) (788) 3,040 (23,187)
Intercompany advance and other, net (4,314) (416,538) 409,485 (3,040) (14,407)
------------ ------------- ------------- ------------- -------------
Net cash provided by (used for)
operating activities (4,536) (420,045) 444,963 20,382
CASH FLOWS FROM INVESTING ACTIVITIES:
Property additions (12,591) (21,781) (34,372)
Proceeds from disposal of assets 1,632 2,826 4,458
Acquisition of business,
net of cash acquired (586,535) (586,535)
------------ ------------- ------------- ------------- -------------
Net cash used for
investing activities (10,959) (605,490) (616,449)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of stock 4,536 4,536
Proceeds from (reduction of)
borrowings-net 431,174 160,527 591,701
------------ ------------- ------------- ------------- -------------
Net cash provided by
financing activities 4,536 431,174 160,527 596,237
Increase in cash and cash equivalents 170 170
Cash and cash equivalents
at beginning of period 1,842 1,842
------------ ------------- ------------- ------------- -------------
Cash and cash equivalents
at end of period $ $ 2,012 $ $ $ 2,012
============ ============= ============= ============= =============
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18
SUPPLEMENTAL CONSOLIDATING CONDENSED STATEMENT
OF CASH FLOWS
(IN THOUSANDS)
NINE MONTHS ENDED JUNE 30, 1995
COMBINED COMBINED
GUARANTOR NONGUARANTOR
PARENT SUBSIDIARIES SUBSIDIARIES ELIMINATIONS CONSOLIDATED
------------ ------------- ------------- ------------- ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 274 $ 274 $ 16,849 $ (17,123) $ 274
Adjustments to reconcile net income
to cash provided by operating activities:
Depreciation and amortization 11,333 13,845 25,178
Net gain on disposal of assets (45) (695) (740)
Recognition of unearned compensation 660 660
Deferred income taxes (benefit) (8,637) (8,637)
Unusual charge 3,646 3,646
Income of equity investees (274) (16,849) 17,123
Changes in:
Receivables 18,353 (17,859) 494
Accounts payable (10,809) 9,529 (1,280)
Inventories (18,800) 14,439 (4,361)
Other current assets and liabilities 34,479 (34,432) 630 677
Intercompany advance and other, net (2,752) (3,287) 14,961 (630) 8,292
------------ ------------- ------------- ------------- -------------
Net cash provided by (used for)
operating activities (2,752) 10,318 16,637 24,203
CASH FLOWS FROM INVESTING ACTIVITIES:
Property additions (7,587) (16,759) (24,346)
Proceeds from disposal of assets 2,689 2,432 5,121
Acquisition of business,
net of cash acquired (202,858) (202,858)
------------ ------------- ------------- ------------- -------------
Net cash used for
investing activities (2,752) (207,756) (14,327) (222,083)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of stock 2,752 2,752
Proceeds from (reduction of)
borrowings-net 195,603 (2,310) 193,293
------------ ------------- ------------- ------------- -------------
Net cash provided by (used for)
financing activities 2,752 195,603 (2,310) 196,045
Increase in cash and cash equivalents (1,835) (1,835)
Cash and cash equivalents
at beginning of period 3,218 3,218
------------ ------------- ------------- ------------- -------------
Cash and cash equivalents
at end of period $ $ 1,383 $ $ $ 1,383
============ ============= ============= ============= =============
18
19
NOTE 6 SUBSEQUENT EVENT
In July 1996, the Company issued 9,775,000 shares of common stock in a public
offering generating net proceeds of $323.1 million. The net proceeds were used
to repay the one-year bridge loan portion and other borrowings under the Bank
Credit Facility.
19
20
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
GENERAL
The Company's operations are primarily driven by the number of oil and gas
wells being drilled, the depth and drilling conditions of such wells, the
number of well completions and the level of workover activity worldwide.
Drilling activity, in turn, is largely dependent on the price of oil and
natural gas. This is especially true in the United States, where the Company
is expected to generate approximately one-half of its revenues during the next
twelve months.
Due to "aging" oilfields and lower-cost sources of oil internationally,
drilling activity in the United States has declined more than 75% from its peak
in 1981. Record low drilling activity levels were experienced in 1986 and
1992. As a result, pumping service companies have been unable to recapitalize
their aging U.S. fleets due to the inability, under current market conditions,
to generate adequate returns on new capital investments. The Company believes
it is important to operate with a greater "critical mass" in the key U.S.
markets to improve returns in this environment. This conclusion led to the
decision to withdraw from certain low activity areas in the past several years
and to consolidate its remaining operations with those acquired in April 1995
from The Western Company of North America ("Western"), which had a larger
presence in the United States. The Company's U.S. critical mass was further
increased through the acquisition of Nowsco Well Service Ltd. ("Nowsco") in
June 1996 which added operations in the mid-continental and northeastern U.S.,
the latter being an area in which the Company did not have an existing
presence.
The rig count in the United States averaged 760 and 744 active drilling rigs
during the respective three and nine-month periods ended June 30, 1996.
Compared with the same periods of the prior fiscal year, active U.S. drilling
rigs increased by 12% and 1%, respectively, due to increased natural gas
related drilling. Drilling for natural gas increased by 35% and 11% during the
respective three and nine-month periods. Due to relatively stronger oil and
natural gas prices currently being realized, management expects U.S. drilling
activity levels for the last quarter of the fiscal year to be above prior year
levels.
International drilling activity (excluding Canada) has historically been less
volatile than domestic drilling activity. Active international drilling rigs
increased by 4% in each of the most recent three and nine-month periods,
respectively, compared with the same prior year periods on the strength of
development work in Latin America, especially Venezuela, and renewed
exploration programs in the United Kingdom North Sea.
In both the United States and internationally, there has been a continuing
trend by oil and gas companies toward "alliances" with the service companies.
These alliances take various forms including packaged or integrated services,
single source suppliers and turnkey agreements. Approximately 20% of the
Company's revenues were generated under such alliances during the first nine
months of fiscal 1996.
20
21
EXPANSIONS AND ACQUISITIONS
Management believes the primary opportunities for geographic and service line
expansion remain in international markets. As a result, other than the
acquisition of Western (the "Western Acquisition"), the Company's capital
spending and expansion efforts have been primarily focused outside the United
States. The Company's expansion efforts during the past year have included the
expansion of pumping services into several key international markets, including
Saudi Arabia and Vietnam; expanding tubular services and commissioning and leak
detection services into geographic regions outside the North Sea; adding
additional pumping service capacity in key Latin American markets and the
acquisition of the remaining 60% of the Company's Brazilian joint venture in
December 1995.
On April 13, 1995, the Company completed the Western Acquisition for a total
purchase price of $511.4 million (including transaction costs of $7.2 million),
consisting of 12.0 million shares of common stock, cash of $247.9 million from
borrowings under the Company's then-existing bank credit facility and warrants
to purchase 4.8 million shares of common stock at an exercise price of $30.00
per share, exercisable until the close of business on April 13, 2000. The
Western Acquisition provides the Company with a greater critical mass with
which to compete in domestic and international markets and the opportunity to
realize significant consolidation benefits. The Western Acquisition increased
the Company's existing total revenue base by approximately 75% and more than
doubled the Company's domestic revenue base beginning in the June 1995 quarter.
In addition, in excess of $40 million of overhead and redundant operating costs
have been eliminated annually by combining the two companies.
On June 28, 1996, the Company completed the acquisition of Nowsco Well Service
Ltd. ("Nowsco" and the "Nowsco Acquisition") for a total purchase price of
$583.4 million (including transaction costs of $7.0 million) in cash. The
Nowsco Acquisition accomplishes three primary objectives: (i) it gives the
Company the number one pumping services market position in Canada, where the
Company has not operated since 1992, and adds to the Company's existing market
positions in several key U.S. and international markets; (ii) provides a
technological leadership position in the high-growth coiled tubing service
line; and (iii) provides the opportunity for further cost savings through
consolidation of redundant overhead and operating bases. The consolidation of
Nowsco is expected to add approximately 40% to the Company's existing revenue
base beginning in the quarter ending September 30, 1996.
RESULTS OF OPERATIONS
Revenue: Revenue for the quarter ended June 30, 1996 was $221.0 million, an 11%
increase from the prior year's third quarter. For the nine months ended June
30, 1996, revenue was $628.3 million, a 48% increase over the same period of
the previous year. For the quarter, the increase was due primarily to activity
increases in both U.S. and international operations. For the nine-month
period, such increase was primarily driven by increased international activity
and expansions, and the acquisition of Western.
21
22
For the quarter, U.S. and international operations showed revenue increases of
10% and 12%, respectively over the same period of the prior year. U.S.
activity was strong in the natural gas drilling regions, most significantly
South Texas and the Gulf of Mexico, as indicated by a 35% increase in active
gas-targeted drilling rigs. U.S. oil-related drilling activity, however,
declined by 11% resulting in the overall active rig count increase of 12%. The
Company's international operations continued their recent trend having their
fourteenth consecutive quarter of year over year revenue increases. Each of
the Company's international regions, most significantly the Far East and Middle
East regions, and service lines showed revenue increases. While overall growth
in the Company's Latin America operations continued, activity in Argentina
decreased, partially offsetting increases being realized in other Latin
American countries. A decrease in equipment sales also impacted revenue
comparisons as some expected deliveries have been postponed into future
quarters.
Operating Income: The Company's operating income increased substantially during
both the three and nine month periods as a result of the previously mentioned
revenue increases. Both years' results were impacted by an unusual charge for
acquisition-related expenditures, $3.5 million in the third quarter of 1996
related to the Nowsco Acquisition and $16.0 million in the prior year's third
quarter related to the Western Acquisition. A further charge of approximately
$5 to $10 million is expected in the fourth quarter of 1996 as the
consolidation of the overlapping operating locations resulting from the Nowsco
Acquisition is completed.
Operating expenses for the quarter were higher when compared to the prior year
periods primarily as a result of the revenue growth and, for the nine-month
period, the Western acquisition; however, the cost of sales and services as a
percentage of revenue declined by 2.8% and 2.3% for the three and nine-month
periods, respectively, primarily as a result of cost reduction efforts
implemented after the acquisition of Western and the economies of scale in
having a larger U.S. operation. Marketing expenses in the three months ended
June 30, 1996 also increased due to commissions on international business. For
the nine-month period, marketing expenses represent a higher percentage of
revenue than the prior year due to the higher concentration of the additional
revenues from the Western Acquisition being in the U.S., which requires a
relatively greater marketing effort. General and administrative expenses
increased during the three-month period primarily due to higher incentive
accruals, legal and information systems costs and, for the nine-month period,
also from the Western Acquisition. The increase in goodwill amortization for
the nine-month period also resulted from the Western Acquisition, which was
accounted for under the purchase method with the resulting goodwill being
amortized over a 40-year period. All of the operating expenses are expected to
increase beginning in the fourth quarter as a result of the Nowsco Acquisition.
Other: Interest expense increased by $.8 million and $7.2 million,
respectively, over the same three and nine-month periods of the previous year
as a result of increased borrowings to fund the Western Acquisition. See
"Financial Condition -Capital Resources and Liquidity." Other income was a
net gain in both the three and nine-month periods primarily as a result of
royalty income from one of the Company's proprietary products, a $.5 million
realized gain from an interest rate futures contract in the second quarter and,
in the most recent quarter, a $1.2 million net gain from asset sales.
22
23
The year-to-date effective tax rate decreased to 24% from the second quarter's
year-to-date rate of 28% as a result of a favorable tax settlement in Norway
during the quarter.
FINANCIAL CONDITION
Capital Resources and Liquidity: Net cash provided from operating activities
for the nine months ended June 30, 1996 decreased by $3.8 million from the
prior year's figure. Higher profitability and depreciation was offset by the
payment of merger-related and various other expenses previously accrued for.
Management strives to maintain low cash balances while utilizing available
credit facilities to meet the Company's capital needs. Excess cash generated is
used to pay down outstanding borrowings. In June 1996, in connection with the
Nowsco Acquisition, the Company, BJ Services Company, U.S.A., BJ Services
Company Middle East, BJ Service International, Inc. and Nowsco Well Service,
Ltd. entered into a new bank credit facility ("Bank Credit Facility") with a
major commercial bank. The Bank Credit Facility provided for up to $850.0
million in unsecured borrowings, including a one-year bridge loan facility of
$285.0 million, a six-year term loan facility of $315.0 million and a five-year
revolving credit facility of $250.0 million. At June 30, 1996, borrowings
outstanding under the Bank Credit Facility amounted to $733.0 million consisting
of $285.0 million under the one-year bridge loan, $315.0 million under the term
loan and $133.0 million borrowed under the revolver. Interest under the Bank
Credit Facility is determined, at the Company's option as follows A) with
respect to borrowings outstanding under the revolving credit facility by
reference to (i) the higher of the reference rate announced from time to time by
the lender or the federal funds rate plus .5% per annum or (ii) the London
interbank offered rate (LIBOR) plus a spread depending on the Company's debt to
capitalization ratio or (iii) U.S. prime, and B) with respect to borrowings
outstanding in Canadian dollars under the term loan facility by reference to (i)
the Bankers Acceptance rate or (ii) Canadian prime. On July 7, 1996, the bridge
loan was repaid in full and the term loan was partially repaid from the proceeds
of the Company's stock offering (see Note 7 of Notes to Unaudited Consolidated
Condensed Financial Statements). On August 7, 1996 the Bank Credit Facility was
amended and restated. The Bank Credit Facility now consists of a six-year term
facility with an initial 364-day loan of Cdn $320 million repayable in 22
quarterly installments beginning in March 1997 (convertible into approximately
U.S. $234 million at the option of the banks) and a five-year revolving credit
facility of $325.0 million (including letters of credit). At June 30, 1996
after giving effect to the August amendment, principal reductions of the term
loan are due in aggregate installments of $25,765,000, $34,353,000, $43,923,000,
$47,113,000, $47,113,000 and $35,334,000 in the years ended September 30, 1997,
1998, 1999, 2000, 2001 and 2002, respectively.
On February 20, 1996, the Company issued $125.0 million of 7% Notes in a
transaction exempt from the registration requirements of the Securities Act of
1933 (the "Securities Act"). Three of the Company's subsidiaries that are
obligors with respect to the Bank Credit Facility and the Company's 9.2% Notes
due August 1, 1998 (the "9.2% Notes"), BJ Services Company, U.S.A., BJ Service
International, Inc. and BJ Services Company Middle East, were full and
unconditional guarantors
23
24
on a joint and several basis of the 7% Notes. In August 1996, the 7% Notes
were exchanged for 7% Series B Notes due 2006 which were issued in a
transaction registered under the Securities Act. The form and terms of the 7%
Series B Notes are identical in all material respects to the form and terms of
the 7% Notes. The net proceeds from the issuance of the 7% Notes ($123.3
million) were used by the Company to repay indebtedness outstanding under the
term loan portion of the then-existing bank credit facility.
The outstanding balance of the 9.2% Notes, issued in 1991, was $18.0 million at
June 30, 1996. Principal reductions of $6.0 million are required annually each
August until maturity on August 1, 1998.
As a result of borrowings to fund the Nowsco Acquisition, the Company's
interest-bearing debt represented 64.4% of its total capitalization at June 30,
1996, compared to 38.9% at September 30, 1995. The interest-bearing debt was
subsequently reduced to approximately 41% of total capitalization in July when
the Company used the net proceeds from its common stock offering ($323.1
million) to repay the bridge loan and other borrowings under the Bank Credit
Facility. The Bank Credit Facility and 9.2% Notes include various customary
covenants and other provisions that are substantially similar to those under
the previous bank credit facility, including the maintenance of certain
financial ratios and net worth and restrictions on dividend payments.
Pursuant to such dividend restrictions, based on its debt to capitalization
ratio at June 30, 1996, the Company is currently unable to pay dividends on its
common stock. The 9.2% Notes were amended on August 7, 1996, to include
financial covenants comparable to those in the Bank Credit Facility.
Management believes that the Bank Credit Facility, combined with other
discretionary credit facilities and cash flow from operations, provides the
Company with sufficient capital resources and liquidity to manage its routine
operations and fund projected capital expenditures.
At September 30, 1995, the Company had approximately $512 million of United
States tax net operating loss carryforwards expiring between 2000 and 2011.
With the Western Acquisition, the company acquired approximately $375 million
of tax net operating loss carryforwards, subject to certain limitations,
expiring between 2000 and 2008. Under Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes" ("SFAS 109"), the Company is
required to record a deferred tax asset for the future tax benefit of these tax
net operating loss carryforwards, as well as other items, if realization is
"more likely than not." As previously discussed, the Western Acquisition gives
the Company a greater critical mass with which to compete in the United States
as it has more than doubled the Company's United States revenue base. In
addition, with the combination of the Company and Western, the Company has
realized significant consolidation benefits. Management estimates that in
excess of $40 million of overhead and redundant operating costs have been
eliminated annually as a result of the combination of the two companies.
Management has concluded that the Company's future U.S. taxable income will be
sufficient over the remaining carryforward periods to realize the tax benefits
represented by approximately $332 million of tax net operating loss
carryforwards acquired with Western and generated by the Company's operations
prior to the Western Acquisition. The tax benefits resulting from the Western
Acquisition have been included in the approximately $84 million net deferred
tax asset recognized
24
25
in the purchase price allocation at the acquisition date. Valuation allowances
have been established for the benefits of the tax net operating loss
carryforwards that are estimated to expire prior to their utilization.
Requirements for Capital. Excluding acquisitions, capital expenditures during
the nine months ended June 30, 1996 were $34.4 million, or $10.0 million
higher than the spending in the comparable period of the prior year. The
current year's spending related primarily to international expansion
opportunities (primarily in Latin America) and offshore cementing skids. Other
investing activities included the acquisition of the remaining 60% interest in
the Company's joint venture in Brazil for total consideration of $5.4 million
consisting of $3.7 million of cash and $1.7 million of debt assumed by the
Company and the acquisition of Nowsco for $583.4 million in cash.
Capital expenditures for fiscal 1997 are projected to be approximately $60 to
70 million, excluding acquisitions, and are expected to include spending for
continued geographic expansions of all service lines, construction of an
additional coiled tubing vessel, additional capacity in certain high-margin
locations and normal levels of replacement capital. The actual amount of
fiscal 1997 capital expenditures will be primarily dependent upon the
availability of expansion opportunities and will be funded by cash flows from
operating activities and available credit facilities. Management believes cash
flow from operating activities and available lines of credit, if necessary,
will be sufficient to fund projected capital expenditures.
When used in this document, the words "expect," "estimate," "project" and
similar expressions are intended to identify forward-looking statements. Such
statements are subject to certain risks, uncertainties and assumptions. Should
one or more of these risks or uncertainties materialize, or should underlying
assumptions prove incorrect, actual results may vary materially from those
expected, estimated or projected.
25
26
PART II
OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 2. Changes in Securities
None.
Item 3. Defaults upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
10.1 Credit Agreement dated as of August 7, 1996, among the Company, BJ Services Company, U.S.A., BJ
Service International, Inc., BJ Services Company Middle East, Nowsco Well Service Ltd., and Bank
of America National Trust and Savings Association and Bank of America Canada, as agents.
10.2 Indenture dated as of February 1, 1996, among the Company, BJ Services Company, U.S.A., BJ
Service International, Inc. and BJ Services Company Middle East, as guarantors, and Bank of
Montreal Trust Company, as trustee, with respect to $125,000,000 aggregate principal Amount of 7%
Notes due 2006.
10.3 Fourth Amendment dated as of August 7, 1996, by and among the Company, BJ Services Company,
U.S.A., BJ Service International, Inc. and BJ Services Company Middle East with respect to the
9.2% Notes due August 1, 1998.
12.1 Statement re computation of ratio of earnings to fixed charges.
27.1 Financial Data Schedule
26
27
(b) Reports on Form 8-K.
A Current Report on Form 8-K was filed by the Company on
April 16, 1996, with respect to the Company's tender offer
for the outstanding common shares of Nowsco Well Service
Ltd.
A Current Report on Form 8-K/A was filed by the Company on
May 23, 1996, to include conforming changes to the pro forma
financial statements of the Company reflecting the
acquisition of The Western Company of North America.
A Current Report on Form 8-K/A was filed by the Company on
May 30, 1996, to provide updated quarterly financial
information regarding The Western Company of North America.
A Current Report on Form 8-K was filed by the Company on
June 28, 1996, to report the acquisition of all of the
outstanding common shares of Nowsco Well Service Ltd.
("Nowsco") by the Company; the entering into a new bank
credit facility by the Company and certain of its
subsidiaries; the filing of a registration statement with
the Securities and Exchange Commission to report the
proposed offering of 8,500,000 shares of the Company's
common stock and an over-allotment option of up to 1,275,000
additional shares; the effectiveness of a registration
statement with respect to the proposed exchange of $125
million of 7% Notes which were not registered under the
Securities Act of 1933 (the "Securities Act") with up to
$125 million of 7% Series B Notes which are registered under
the Securities Act; and the consolidated financial
statements and unaudited consolidated condensed financial
statements of the Company were set forth for the purposes of
providing supplemental information regarding the guarantors
of the 7% Notes and the 7% Series B Notes.
27
28
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BJ Services Company
(Registrant)
Date: August 14, 1996 BY: \s\ Michael McShane
----------------------------------
Michael McShane
Vice President - Finance and Chief
Financial Officer
Date: August 14, 1996 BY: \s\ Matthew D. Fitzgerald
----------------------------------
Matthew D. Fitzgerald
Controller and Chief
Accounting Officer
28
29
INDEX TO EXHIBITS
Exhibit
No. Description
-- -----------
10.1 Credit Agreement dated as of August 7, 1996, among the Company, BJ Services Company, U.S.A., BJ
Service International, Inc., BJ Services Company Middle East, Nowsco Well Service Ltd., and Bank
of America National Trust and Savings Association and Bank of America Canada, as agents.
10.2 Indenture dated as of February 1, 1996, among the Company, BJ Services Company, U.S.A., BJ
Service International, Inc. and BJ Services Company Middle East, as guarantors, and Bank of
Montreal Trust Company, as trustee, with respect to $125,000,000 aggregate principal Amount of 7%
Notes due 2006.
10.3 Fourth Amendment dated as of August 7, 1996, by and among the Company, BJ Services Company,
U.S.A., BJ Service International, Inc. and BJ Services Company Middle East with respect to the
9.2% Notes due August 1, 1998.
12.1 Statement re computation of ratio of earnings to fixed charges.
27.1 Financial Data Schedule
29