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UNITED STATES
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 QUARTER ENDED MARCH 31, 2004 COMMISSION FILE NO. 2-71058
DAWSON GEOPHYSICAL COMPANY
INCORPORATED IN THE STATE OF TEXAS 75-0970548
(I.R.S. EMPLOYER
IDENTIFICATION NO.)
508 WEST WALL, SUITE 800, MIDLAND, TEXAS 79701
(PRINCIPAL EXECUTIVE OFFICE)
TELEPHONE NUMBER: 432-684-3000
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 12 preceding months, and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [_]
Indicate by check mark whether the Registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act). Yes [_] No [X]
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
CLASS Outstanding at March 31, 2004
----- -----------------------------
COMMON STOCK, $.33 1/3 PAR VALUE 5,570,294 SHARES
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DAWSON GEOPHYSICAL COMPANY
--------------------------
INDEX
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Page No.
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Part I. Financial Information:
Item 1. Financial Statements
Statements of Operations --
Three Months and Six Months
Ended March 31, 2004 and 2003 3
Balance Sheets --
March 31, 2004 and September 30,
2003 4
Statements of Cash Flows --
Six Months Ended March 31,
2004 and 2003 5
Notes to Financial Statements 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations 9
Item 3. Quantitative and Qualitative Disclosures 12
About Market Risk
Item 4. Controls and Procedures 12
Part II. Other Information 13
-2-
DAWSON GEOPHYSICAL COMPANY
STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended March 31, Six Months Ended March 31,
-------------------------------- ---------------------------------
2004 2003 2004 2003
------------ ------------ ------------ ------------
Operating revenues $ 15,203,000 $ 14,196,000 $ 30,678,000 $ 25,606,000
Operating costs:
Operating expenses 11,642,000 11,880,000 24,953,000 22,716,000
General and administrative 601,000 617,000 1,219,000 1,195,000
Depreciation 1,117,000 1,120,000 2,225,000 2,123,000
------------ ------------ ------------ ------------
13,360,000 13,617,000 28,397,000 26,034,000
Income (loss) from operations 1,843,000 579,000 2,281,000 (428,000)
Other income:
Interest income 48,000 84,000 117,000 183,000
Gain (loss) on disposal of assets -- 11,000 (3,000) 21,000
Gain on sale of short-term investments -- 52,000 -- 52,000
Other 108,000 118,000 110,000 123,000
------------ ------------ ------------ ------------
Income (loss) before income tax 1,999,000 844,000 2,505,000 (49,000)
Income tax (expense) benefit:
Current -- -- -- --
Deferred -- -- --
------------ ------------ ------------ ------------
Net income (loss) $ 1,999,000 $ 844,000 $ 2,505,000 $ (49,000)
============ ============ ============ ============
Net income (loss) per common share $ 0.36 $ 0.15 $ 0.45 $ (0.01)
============ ============ ============ ============
Net income ( loss) per common share-assuming dilution $ 0.36 $ 0.15 $ 0.45 $ (0.01)
============ ============ ============ ============
Weighted average equivalent common shares outstanding 5,535,514 5,487,794 5,511,524 5,481,374
============ ============ ============ ============
Weighted average equivalent common
shares outstanding-assuming dilution 5,596,164 5,488,818 5,552,206 5,481,374
============ ============ ============ ============
See accompanying notes to the financial statements.
3
Dawson Geophysical Company
Balance Sheets
March 31, September 30,
2004 2003
------------ ------------
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 3,243,000 $ 3,389,000
Short-term investments 9,258,000 8,623,000
Accounts receivable, net of allowance
for doubtful accounts of $127,000 in
each period 10,915,000 9,713,000
Prepaid expenses 412,000 287,000
------------ ------------
Total current assets 23,828,000 22,012,000
Property, plant and equipment 84,360,000 81,585,000
Less accumulated depreciation (62,022,000) (60,805,000)
------------ ------------
Net property, plant and equipment 22,338,000 20,780,000
------------ ------------
$ 46,166,000 $ 42,792,000
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 1,407,000 $ 1,237,000
Accrued liabilities:
Payroll costs and other taxes 655,000 478,000
Other 416,000 415,000
------------ ------------
Total current liabilities 2,478,000 2,130,000
------------ ------------
Stockholders' equity:
Preferred stock-par value $1.00 per share;
5,000,000 shares authorized, none outstanding -- --
Common stock-par value $.33 1/3 per share;
10,000,000 shares authorized, 5,570,294
and 5,487,794 shares issued and outstanding
in each period 1,857,000 1,829,000
Additional paid-in capital 39,470,000 38,931,000
Other comprehensive income, net of tax (9,000) 37,000
Retained earnings (deficit) 2,370,000 (135,000)
------------ ------------
Total stockholders' equity 43,688,000 40,662,000
------------ ------------
$ 46,166,000 $ 42,792,000
============ ============
See accompanying notes to the financial statements.
4
DAWSON GEOPHYSICAL COMPANY
STATEMENTS OF CASH FLOWS
(UNAUDITED)
Six Months Ended March 31,
---------------------------------
2004 2003
------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 2,505,000 $ (49,000)
Adjustments to reconcile net income (loss) to
net cash provided (used) by operating activities:
Depreciation 2,225,000 2,123,000
Gain on disposal of assets (3,000) (21,000)
Gain on sale of short-term investments -- (52,000)
Non-cash compensation 92,000 75,000
Other 22,000 32,000
Change in current assets and liabilities:
Increase in accounts receivable (1,202,000) (3,960,000)
Decrease (increase) in prepaid expenses (125,000) (313,000)
Increase in accounts payable 170,000 897,000
Increase in accrued liabilities 178,000 168,000
------------ ------------
Net cash provided (used) by operating activities 3,862,000 (1,100,000)
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from disposal of assets -- 25,000
Capital expenditures (3,787,000) (5,418,000)
Proceeds from sale of short-term investments -- 5,964,000
Proceeds from maturity of short-term investments 5,550,000 4,000,000
Acquisition of short-term investments (6,245,000) (3,002,000)
------------ ------------
Net cash provided by (used in) investing activities (4,482,000) 1,569,000
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of stock options 474,000 --
Net increase (decrease) in cash and cash equivalents (146,000) 469,000
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 3,389,000 1,309,000
------------ ------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 3,243,000 $ 1,778,000
============ ============
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid during the period for income taxes $ 14,000 $ --
============ ============
NON CASH INVESTING ACTIVITIES:
Unrealized gain (loss) on investments $ (46,000) $ (79,000)
============ ============
See accompanying notes to the financial statements.
5
DAWSON GEOPHYSICAL COMPANY
--------------------------
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
1. BASIS OF PRESENTATION, OPINION OF MANAGEMENT
Although the information furnished is unaudited, in the opinion of
management of the Registrant, the accompanying financial statements reflect all
adjustments, consisting only of normal recurring accruals, necessary for a fair
presentation of the financial condition and results of operations necessary for
the periods presented. The results of operations for the three months and the
six months ended March 31, 2004, are not necessarily indicative of the results
to be expected for the fiscal year.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted in this Form 10-Q report pursuant to certain
rules and regulations of the Securities and Exchange Commission. These financial
statements should be read with the financial statements and notes included in
the Company's 2003 Form 10-K.
CRITICAL ACCOUNTING POLICIES
The following accounting policies require management assumptions and estimates
which could result in materially different amounts to be reported if conditions
or underlying circumstances were to change.
Revenue Recognition
- -------------------
The Company recognizes revenues when services are performed. The Company also
receives reimbursements for certain out-of-pocket expenses under the terms of
its master contracts. Amounts billed to clients are recorded in revenue at the
gross amount including out-of-pocket expenses which will be reimbursed by the
client.
Allowance for Doubtful Accounts
- -------------------------------
Management prepares its allowance for doubtful accounts receivable based on its
past experience of historical write-offs and review of past due accounts. The
inherent volatility of the energy industry's business cycle can cause swift and
unpredictable changes in the financial stability of the Company's customers.
Impairment of Long-lived Assets
- -------------------------------
Long-lived assets are reviewed for impairment when triggering events occur
suggesting a deterioration in the asset's recoverability or fair value.
Recognition of an impairment is required if future expected net cash flows are
insufficient to recover the carrying value of the amounts. Management's forecast
of future cash flow used to perform impairment analysis includes estimates of
future revenues and future gross margins. If the Company is unable to achieve
these cash flows, management's estimates would be revised potentially resulting
in an impairment charge in the period of revision.
6
Depreciable Lives of Property, Plant and Equipment
- --------------------------------------------------
Property, Plant and Equipment is capitalized at historical cost and depreciated
over the useful life of the asset. Management's estimation of this useful life
is based on circumstances that exist in the seismic industry and information
available at the time of the purchase of the asset. As circumstances change and
new information becomes available these estimates could change.
Stock-Based Compensation
- ------------------------
In accordance with the Accounting Principles Board Opinion No. 25, "Accounting
for Stock Issued to Employees", no compensation is recorded for stock options or
other stock-based awards that are granted to employees or non-employee directors
with an exercise price equal to or above the common stock price on the grant
date. There were stock-based awards granted in the current quarter to the
outside directors and to certain employees.
The Company accounts for stock-based compensation utilizing the intrinsic value
method prescribed by Accounting Principles Board Opinion No. 25 "Accounting for
Stock Issued to Employees" ("APB 25") and related interpretations. The following
pro forma information, as required by Statement of Financial Accounting
Standards No. 123 "Accounting for Stock-Based Compensation" ("SFAS 123"), as
amended by Statement of Financial Accounting Standards No. 148 ("SFAS 148"),
presents net income and earnings per share information as if the stock options
issued since February 2, 1999 were accounted for using the fair value method.
The fair value of stock options issued for each year was estimated at the date
of grant using the Black-Scholes option pricing model.
The SFAS 123 pro forma information for the three months and the six months ended
March 31, 2004 and 2003 is as follows:
Three Months Ended Six Months Ended
March 31 March 31
-------------------------------- --------------------------------
2004 2003 2004 2003
------------ ------------ ------------ ------------
Net income (loss), as reported $ 1,999,000 $ 844,000 $ 2,505,000 $ (49,000)
Add: Stock-based employee compensation expense
included in net income (loss), net of tax 73,000 -- 73,000 75,000
Deduct: Stock-based employee compensation expense
determined under fair value based method (SFAS 123),
net of tax (152,000) (82,000) (230,000) (289,000)
------------ ------------ ------------ ------------
Net income (loss), pro forma $ 1,920,000 $ 762,000 $ 2,348,000 $ (263,000)
============ ============ ============ ============
Basic:
Net income (loss) per common share, as reported $ 0.36 $ 0.15 $ 0.45 $ (0.01)
============ ============ ============ ============
Net income (loss) per common share, pro forma $ 0.35 $ 0.14 $ 0.43 $ (0.05)
============ ============ ============ ============
Diluted:
Net income (loss) per common share, as reported $ 0.36 $ 0.15 $ 0.45 $ (0.01)
============ ============ ============ ============
Net income (loss) per common share, pro forma $ 0.34 $ 0.14 $ 0.42 $ (0.05)
============ ============ ============ ============
7
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
The Financial Accounting Standards Board (FASB) has announced it will
require all public companies to expense the fair value of employee stock awards.
The final requirements will be effective for fiscal years beginning after
December 31, 2004. The impact to the Company's financial statements will be in
the form of additional compensation expense upon the award of any stock options.
The amount of the compensation expense recognized by the Company is dependent on
the value of the Company's common stock and the number of options awarded.
2. NET INCOME PER COMMON SHARE
The Company accounts for earnings per share in accordance with Statement of
Financial Accounting Standards No. 128, "Earnings per Share" ("Statement 128").
Statement 128 replaced the calculation of primary and fully diluted earnings per
share with basic and diluted earnings per share. Unlike primary earnings per
share, basic earnings per share excludes any dilutive effects of options,
warrants and convertible securities. Diluted earnings per share is very similar
to the previously reported fully diluted earnings per share. All earnings per
share amounts for all periods have been presented to conform to the Statement
128 requirements.
The following table sets forth the computation of basic and diluted net
income (loss) per common share:
Three Months Ended Six Months Ended
March 31 March 31
-------------------------------- --------------------------------
2004 2003 2004 2003
------------ ------------ ------------ ------------
NUMERATOR:
Net income and numerator for basic
and diluted net income per
common share-income available
to common stockholders $ 1,999,000 $ 844,000 $ 2,505,000 $ (49,000)
------------ ------------ ------------ ------------
DENOMINATOR:
Denominator for basic net loss
per common share-weighted
average common shares 5,535,514 5,487,794 5,511,524 5,481,374
Effect of dilutive securities-
employee stock options 60,650 1,024 40,682 --
------------ ------------ ------------ ------------
Denominator for diluted net
income per common share-
adjusted weighted average
common shares and assumed
conversions 5,596,164 5,488,818 5,552,206 5,481,374
------------ ------------ ------------ ------------
Net income (loss) per common share $ .36 $ .15 $ .45 $ (.01)
============ ============ ============ ============
Net income (loss) per common share-
assuming dilution $ .36 $ .15 $ .45 $ (.01)
============ ============ ============ ============
Employee stock options to purchase shares of common stock were outstanding
during fiscal year 2004 and 2003 but were not included in the computation of
diluted net income (loss) per share because either (i) the employee stock
options' exercise price was greater than the average market price of the common
stock of the Company, or (ii) the Company had a net loss from continuing
operations and, therefore, the effect would be antidilutive.
8
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the Company's
financial statements. In addition, in reviewing the Company's financial
statements it should be noted that the Company's revenues fluctuate in response
to activity levels in the oil and gas exploration and production sector and
additionally fluctuations in the Company's results of operations may occur due
to commodity prices, weather, land use permitting and other factors.
FORWARD LOOKING STATEMENTS
All statements other than statements of historical fact included in this report,
including without limitation, statements under "Management's Discussion and
Analysis of Financial Condition and Results of Operations" regarding the
Company's financial position, business strategy and plans and objectives of
management of the Company for future operations, are forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933 and Section 21E
of the Securities Exchange Act of 1934. When used in this report, words such as
"anticipate", "believe", "estimate", "expect", "intend", and similar
expressions, as they relate to the Company or its management, identify
forward-looking statements. Such forward-looking statements are based on the
beliefs of the Company's management as well as assumptions made by and
information currently available to the Company's management. Actual results
could differ materially from those contemplated by the forward-looking
statements as a result of certain factors, including but not limited to
dependence upon energy industry spending, weather problems, inability to obtain
land use permits, the volatility of oil and gas prices, and the availability of
capital resources. Such statements reflect the current views of the Company with
respect to future events and are subject to these and other risks, uncertainties
and assumptions relating to the operations, results of operations, growth
strategy and liquidity of the Company. All subsequent written and oral
forward-looking statements attributable to the Company or persons acting on its
behalf are expressly qualified in their entirety by this paragraph. The Company
assumes no obligation to update any such forward-looking statements.
OVERVIEW
The Company's continued improved performance was due to increased petroleum
industry demand for the Company's high resolution 3-D seismic surveys,
exploration for reserves of crude oil and natural gas, more favorable weather
conditions than in most recent quarters along with modest price increases. The
Company has been and is currently involved in the application of high resolution
techniques over previously surveyed areas.
The Company's order book continues on a trend of approximately six months of
operations. The stability in the order book is the result of improving market
conditions, the Company's reputation throughout the industry as a quality
provider of leading edge technology, technical expertise and experience in the
field of geophysics, and an industry model Health, Safety and Environmental
program. Six data acquisition crews have operated continuously throughout the
fiscal year with a seventh crew placed into operations late in the second
quarter. The Company's data channels and supporting equipment are fully
deployed. In addition the Company is responding to opportunities to increase its
data channel count through the open market at favorable prices.
By responding to these opportunities, the Company's capital expenditures
increased in fiscal 2003 and the fiscal 2004 number reflects the same strategy
to satisfy client demand for increased channel count. The Company has increased
its data channel capacity more than 50 percent in the last five years. Even
though demand for the Company's services is related to crude oil and natural gas
prices, production results are enhanced by favorable weather and timely permits
for rights-of-way.
9
RESULTS OF OPERATIONS
The Company's operating revenues for the first six months of fiscal 2004
increased 19.8% from $25,606,000 to $30,678,000. For the three months ended
March 31, 2004, operating revenues totaled $15,203,000 versus $14,196,000 for
the same period of fiscal 2003, a 7.1% increase. Revenues have been positively
impacted in the first six months of fiscal 2004 by stable pricing with modest
improvement and the continuous operations of six crews.
Operating expenses for the six months ended March 31, 2004 totaled $24,953,000
versus $22,716,000 for the same period of fiscal 2003. For the quarter ended
March 31, 2004, operating expenses totaled $11,642,000 versus $11,880,000. In
fiscal 2003 the Company began with five crews in operation and expanded to six
in November 2002. In fiscal 2004 the Company began with six crews and expanded
to seven in March 2004. The increase in operating expenses consists primarily of
costs associated with the increase in personnel necessary to operate six crews.
General and administrative expenses for the six months ended March 31, 2004
totaled $1,219,000, an increase of $24,000 from the same period of fiscal 2003.
For the quarter ended March 31, 2004 general and administrative expenses totaled
$601,000, a slight decrease compared to the same quarter of fiscal 2003. General
and administrative expenses represent approximately 4% of revenues; however, the
Company anticipates a slight increase due to Sarbanes Oxley compliance and to
increased personnel to service seven crews.
Depreciation for the six months ended March 31, 2004 totaled $2,225,000 as
compared to $2,123,000 for the six months ended March 31, 2003. There was
virtually no change in depreciation for the quarter ended March 31, 2004 as
compared to the same period of the prior year. Assets purchased during the years
with relatively large capital expenditures before the restricted budgets
beginning in fiscal 1999 are becoming fully depreciated. Conversely, capital
expenditures purchased in fiscal 2003 and in fiscal 2004 reflect the strategy to
satisfy client demand for increased channel count by responding to opportunities
in the open market at favorable prices.
Total operating costs for the first six months of fiscal 2004 were $28,397,000,
an increase of 9.1%, from the same period of fiscal 2003 due to the factors
described above. For the quarter ended March 31, 2004, total operating costs of
$13,360,000 represent a 1.9% decrease, resulting from savings in a change of
insurance carriers effective January 1, 2004, as compared to the same period of
the prior fiscal year. There is a high proportion of relatively fixed total
operating costs (including personnel costs of active crews and depreciation
costs) inherent in the Company's business. Margins are improved in fiscal 2004
due to the demand for the Company's services resulting in improved pricing and
improved productivity in fiscal 2004 due to fewer days lost to inclement weather
as compared to fiscal 2003.
For the first six months of 2004, no income tax expense was recorded due to the
anticipated utilization of net operating loss carryforward and the uncertainty
of future profitability due to the cyclical nature of the business.
LIQUIDITY AND CAPITAL RESOURCES
CASH FLOWS
Net cash provided by operating activities of $3,862,000 for the six months ended
March 31, 2004 primarily reflects net income and changes in accounts receivable.
The increase in accounts receivable of $1,202,000 for the first six months of
fiscal 2004 is a direct result of the increase in revenues. The Company
considers its accounts receivable, net of the allowance for doubtful accounts,
collectible.
Net cash used in investing activities in the first six months of fiscal 2004
represents management of short-term investments and use of proceeds for capital
expenditures and working capital.
10
The exercise of stock options which occurred in the second quarter of fiscal
2004 were made by officers of the Company and other employees granted options in
1999 and 2001 from an incentive stock option plan.
CAPITAL EXPENDITURES
The Company continually strives to supply market demand with technologically
advanced 3-D data acquisition recording systems and leading edge data processing
capabilities. The Company maintains equipment in and out of service in
anticipation of increased future demand of the Company's services. In addition,
the Company continues to monitor the development of the three-component seismic
approach. The Company believes that it is in position to respond to demand for
this technological advancement of the seismic industry.
CAPITAL RESOURCES
The Company believes that its capital resources, including its short-term
investments and cash flow from operations are adequate to meet its current
operational needs and finance capital needs as determined by market demand and
technological developments. The Company is currently not subject to any
financing arrangements; however, it believes that financing through traditional
sources is available, if necessary.
CRITICAL ACCOUNTING POLICIES
The following accounting policies require management assumptions and estimates
which could result in materially different amounts to be reported if conditions
or underlying circumstances were to change.
Revenue Recognition
- -------------------
The Company recognizes revenues when services are performed. The Company also
receives reimbursements for certain out-of-pocket expenses under the terms of
its master contracts. Amounts billed to clients are recorded in revenue at the
gross amount including out-of-pocket expenses which will be reimbursed by the
client.
Allowance for Doubtful Accounts
- -------------------------------
Management prepares its allowance for doubtful accounts receivable based on its
past experience of historical write-offs and review of past due accounts. The
inherent volatility of the energy industry's business cycle can cause swift and
unpredictable changes in the financial stability of the Company's customers.
Impairment of Long-lived Assets
- -------------------------------
Long-lived assets are reviewed for impairment when triggering events occur
suggesting a deterioration in the asset's recoverability or fair value.
Recognition of an impairment is required if future expected net cash flows are
insufficient to recover the carrying value of the amounts. Management's forecast
of future cash flow used to perform impairment analysis includes estimates of
future revenues and future gross margins. If the Company is unable to achieve
these cash flows, management's estimates would be revised potentially resulting
in an impairment charge in the period of revision.
Depreciable Lives of Property, Plant and Equipment
- --------------------------------------------------
Property, Plant and Equipment is capitalized at historical cost and depreciated
over the useful life of the asset. Management's estimation of this useful life
is based on circumstances that exist in the seismic industry and information
available at the time of the purchase of the asset. As circumstances change and
new information becomes available these estimates could change.
11
Stock-Based Compensation
- ------------------------
In accordance with the Accounting Principles Board Opinion No. 25, Accounting
for Stock Issued to Employees, no compensation is recorded for stock options or
other stock-based awards that are granted to employees or non-employee directors
with an exercise price equal to or above the common stock price on the grant
date.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
The Financial Accounting Standards Board (FASB) has announced it will
require all public companies to expense the fair value of employee stock awards.
The final requirements will be effective for fiscal years beginning after
December 31, 2004. The impact to the Company's financial statements will be in
the form of additional compensation expense upon the award of any stock options.
The amount of the compensation expense recognized by the Company is dependent on
the value of the Company's common stock and the number of options awarded.
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
The primary sources of market risk include fluctuations in commodity prices
which effect demand for and pricing of the Company's services and interest rate
fluctuations. At March 31, 2004 the Company had no indebtedness. The Company's
short-term investments were fixed-rate and the Company does not necessarily
intend to hold them to maturity, and therefore, the short-term investments
expose the Company to the risk of earnings or cash flow loss due to changes in
market interest rates. As of March 31, 2003, the carrying value of the
investments approximate fair value. The Company has not entered into any hedge
arrangements, commodity swap agreements, commodity futures, options or other
derivative financial instruments. The Company does not currently conduct
business internationally so it is generally not subject to foreign currency
exchange rate risk.
Item 4. CONTROLS AND PROCEDURES
Within the 90 day period prior to the filing date of this Quarterly Report on
Form 10-Q, the Company, under the supervision, and with the participation, of
its management, including its principal executive officer and principal
financial officer, performed an evaluation of the design and operation of the
Company's disclosure controls and procedures (as defined in Securities and
Exchange Act Rule 13a-14(c)). Based on that evaluation, the Company's principal
executive officer and principal financial officer concluded that such disclosure
controls and procedures are effective to ensure that material information
relating to the Company is accumulated and communicated to the Company's
management and made known to the principal executive officer and principal
financial officer, particularly during the period for which this periodic report
was being prepared.
No significant changes were made in the Company's internal controls or in other
factors that could significantly affect these controls subsequent to the date
the controls were evaluated as discussed above.
12
Part II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
No reports on Form 8-K were filed by the Company during
the quarter ended March 31, 2004.
13
SIGNATURE
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.
DAWSON GEOPHYSICAL COMPANY
--------------------------
(REGISTRANT)
By: /s/ L. Decker Dawson
----------------------------------
L. Decker Dawson
Chairman of the Board of Directors and
Chief Executive Officer
/s/ Christina W. Hagan
---------------------------------------
Christina W. Hagan
Executive Vice President, Treasurer,
Secretary and Chief Financial Officer
DATE: April 23, 2004
14
EXHIBIT 31.1
------------
CERTIFICATION
I, L. Decker Dawson, certify that:
1. I have reviewed this periodic report on Form 10-Q of Dawson Geophysical
Company;
2. Based on my knowledge, this periodic report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this periodic report;
3. Based on my knowledge, the financial statements, and other financial
information included in this periodic report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
periodic report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this periodic report
is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this periodic report (the "Evaluation Date"); and
c) presented in this periodic report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation date;
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent functions):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officers and I have indicated in this
periodic report whether there were significant changes in internal controls
or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any
corrective actions with regard to significant deficiencies and material
weaknesses.
Dated: April 23, 2004 Signature: /s/ L. Decker Dawson
-----------------------------
L. Decker Dawson
Chairman of the Board
Chief Executive Officer
EXHIBIT 31.2
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CERTIFICATION
I, Christina W. Hagan, certify that:
1. I have reviewed this periodic report on Form 10-Q of Dawson Geophysical
Company;
2. Based on my knowledge, this periodic report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this periodic report;
3. Based on my knowledge, the financial statements, and other financial
information included in this periodic report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
periodic report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this periodic report
is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this periodic report (the "Evaluation Date"); and
c) presented in this periodic report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation date;
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent functions):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officers and I have indicated in this
periodic report whether there were significant changes in internal controls
or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any
corrective actions with regard to significant deficiencies and material
weaknesses.
Dated: April 23, 2004 Signature: /s/Christina W. Hagan
-----------------------------
Christina W. Hagan
Executive Vice President,
Treasurer, Secretary and
Chief Financial Officer
EXHIBIT 32.1
------------
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the periodic report of Dawson Geophysical Company (the
"Company") Form 10-Q for the period ending March 31, 2004 as filed with the
Securities and Exchange Commission on the date hereof (the "Report"), I, L.
Decker Dawson, Chairman and Chief Executive Officer of the Company, certify,
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of Section 13 (a) or
15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d);
and
(2) The information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations
of the Company.
Dated: April 23, 2004 /s/ L. Decker Dawson
----------------------------------------
Chairman and Chief Executive Officer
EXHIBIT 32.2
------------
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the periodic report of Dawson Geophysical Company (the
"Company") Form 10-Q for the period ending March 31, 2004 as filed with the
Securities and Exchange Commission on the date hereof (the "Report"), I,
Christina W. Hagan, Executive Vice President, Secretary and Chief Financial
Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of Section 13 (a) or
15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d);
and
(2) The information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations
of the Company.
Dated: April 23, 2004 /s/ Christina W. Hagan
----------------------------------------
Executive Vice President, Treasurer,
Secretary and Chief Financial Officer