Operating expenses represented 81.1% of the revenues in 1993 versus
78.4% in 1992. This increase was the result of lower insurance costs in 1992 and
additional costs incurred in connection with the expansion of the Mid Continent
and Eastern operations during 1993.
General and Administrative Expenses
General and administrative expenses decreased by $2.2 million or 19% in
1993 versus 1992. This decrease was due to the contribution of the Gulf Coast
operation into Dawson in late 1992 and extensive cost cutting efforts at the
corporate level. This was offset by a slight increase due to the expansion of
the Mid Continent operations during 1993.
The 13 % decrease in depreciation expense from 1992 to 1993 of $477,000
related to the contribution of the Gulf Coast operation into Dawson in November
Investment Valuation Provision
In 1992, WellTech reassessed the carrying value of certain of its
non-well servicing investments and recorded a provision of $2.4 million to write
these investments down to their estimated net realizable value. In 1993, a
similar assessment was made and a provision of $582,000 was recorded.
Net cash provided by operating activities increased $1.8 million from
($824,000) in 1992 to $933,000 in 1993. Of this increase, $2.0 million was the
result of changes in working capital components offset by $300,000 lower cash
flows from operations in 1993. Net cashflows required for investing activities
decreased in 1993 by $3.3 million primarily due to a decrease in the
contributions to unconsolidated operations ($2.1 million) and an increase in
distributions from Dawson ($775,000). Net cash from financing activities
decreased by $2.7 million from 1992 to 1993 due to a decrease in proceeds from
the issuance of debt ($2.3 million) and an increase in payments on debt
Liquidity And Capital Resources
During 1993, capital expenditures were generally limited to
refurbishments and improvements to existing machinery and equipment and were
funded with the proceeds from the sale of obsolete or unused property and
equipment. The cash provided by operating activities along with the
distributions from Dawson funded the contributions to unconsolidated operations
and the debt service requirements.