-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, IE3kIfyuJLnwp9+9DcOyjtpfBoeQOHi699abpbvFnSp02jDF7WKMYcffZtSewaaP BNREqo3fGacoLLgOk6MStw== 0000008411-02-000031.txt : 20020514 0000008411-02-000031.hdr.sgml : 20020514 ACCESSION NUMBER: 0000008411-02-000031 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20020331 FILED AS OF DATE: 20020514 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ATWOOD OCEANICS INC CENTRAL INDEX KEY: 0000008411 STANDARD INDUSTRIAL CLASSIFICATION: DRILLING OIL & GAS WELLS [1381] IRS NUMBER: 741611874 STATE OF INCORPORATION: TX FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-13167 FILM NUMBER: 02644466 BUSINESS ADDRESS: STREET 1: 15835 PARK TEN PL DR STREET 2: SUITE 200 CITY: HOUSTON STATE: TX ZIP: 77084 BUSINESS PHONE: 2817497845 MAIL ADDRESS: STREET 1: 15835 PARK TEN PL DR STREET 2: SUITE 200 CITY: HOUSTON STATE: TX ZIP: 77084 10-Q 1 f10q033102.txt - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 20549 ---------------- Form 10-Q QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR QUARTERLY PERIOD ENDED MARCH 31, 2002 COMMISSION FILE NUMBER 1-13167 ATWOOD OCEANICS, INC. (Exact name of registrant as specified in its charter) TEXAS 74-1611874 (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 15835 Park Ten Place Drive 77084 Houston, Texas (Zip Code) (Address of principal executive offices) Registrant's telephone number, including area code: 281-749-7800 --------------- Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 15 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months and (2) has been subject to such filings requirements for the past 90 days. Yes X No___ Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of April 30, 2002: 13,840,451 shares of Common Stock $1 par value - ------------------------------------------------------------------------------- PART I. FINANCIAL INFORMATION ATWOOD OCEANICS, INC. AND SUBSIDIARIES The unaudited interim consolidated financial statements as of March 31, 2002 and for each of the three and six month periods ended March 31, 2002 and 2001, included herein, have been prepared by the Company, pursuant to the rules and regulations of the Securities and Exchange Commission for interim financial reporting. Accordingly, these financial statements and related information have been prepared without audit, and certain information and note disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted, although management believes that the note disclosures are adequate to make the information not misleading. The interim financial results may not be indicative of results that could be expected for a full year. It is suggested these condensed consolidated financial statements be read in conjunction with the consolidated financial statements and the notes thereto included in the Company's September 30, 2001 Annual Report to Shareholders on Form 10-K. PART I. ITEM I - FINANCIAL STATEMENTS ATWOOD OCEANICS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In thousands) March 31, September 30, 2002 2001 -------- ------------ (Unaudited) ASSETS CURRENT ASSETS: Cash and cash equivalents $ 27,763 $12,621 Accounts receivable, net 38,373 19,815 Inventories of materials and supplies, at lower of average cost or market 9,197 9,111 Deferred tax assets 780 780 Prepaid expenses 2,370 3,394 -------- -------- Total Current Assets 78,483 45,721 -------- -------- PROPERTY AND EQUIPMENT, at cost: Drilling vessels, equipment and drill pipe 532,600 497,821 Other 9,076 8,768 -------- -------- 541,676 506,589 Less-accumulated depreciation 212,746 200,335 -------- -------- Net Property and Equipment 328,930 306,254 -------- -------- DEFERRED COSTS AND OTHER ASSETS 3,889 1,903 -------- -------- $411,302 $353,878 ======== ======== The accompanying notes are an integral part of these consolidated financial statements. PART I. ITEM I - FINANCIAL STATEMENTS ATWOOD OCEANICS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In thousands) March 31, September 30, 2002 2001 --------- ------------- (Unaudited) LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable $ 4,474 $ 8,055 Accrued liabilities 18,604 12,609 -------- -------- Total Current Liabilities 23,078 20,664 -------- -------- LONG-TERM DEBT, net of current maturities: 100,000 60,000 -------- -------- DEFERRED CREDITS: Income taxes 15,100 13,600 Other 10,443 11,978 -------- -------- 25,543 25,578 -------- -------- SHAREHOLDERS' EQUITY: Preferred stock, no par value; 1,000,000 shares authorized, none outstanding --- --- Common stock, $1 par value; 20,000,000 shares authorized with 13,836,000 and 13,832,000 issued and outstanding in 2002 and 2001, respectively 13,836 13,832 Paid-in capital 57,128 57,075 Retained earnings 191,717 176,729 -------- -------- 262,681 247,636 -------- -------- $411,302 $353,878 ======== ========
The accompanying notes are an integral part of these consolidated financial statements. PART I. ITEM I - FINANCIAL STATEMENTS ATWOOD OCEANICS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share amounts) Three Months Ended Six Months Ended March 31, March 31, ----------------------------- ------------------------------ 2002 2001 2002 2001 -------- ---------- --------- ---------- - - (Unaudited) (Unaudited) REVENUES: Contract drilling $ 43,740 $ 37,294 $ 80,974 $ 76,818 -------- -------- -------- -------- COSTS AND EXPENSES: Contract drilling 23,205 18,202 39,419 35,776 Depreciation 6,720 6,627 12,543 13,261 General and administrative 2,494 2,371 5,164 4,736 -------- -------- --------- -------- 32,419 27,116 57,126 53,605 -------- -------- --------- -------- OPERATING INCOME 11,321 10,094 23,848 23,045 -------- -------- --------- -------- OTHER INCOME (EXPENSE) Interest expense (683) (834) (886) (1,800) Interest income 77 517 140 1,087 -------- -------- -------- ------- (606) (317) (746) (713) -------- -------- -------- -------- INCOME BEFORE INCOME TAXES 10,715 9,777 23,102 22,332 PROVISION FOR INCOME TAXES 3,885 3,747 8,114 8,262 -------- -------- -------- -------- NET INCOME $ 6,830 $ 6,030 $ 14,988 $ 14,070 ======== ======== ======== ======== EARNINGS PER SHARE Basic $.49 $ .44 $1.08 $1.02 Diluted $.49 $ .43 $1.07 $1.00 WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING Basic 13,834 13,826 13,835 13,824 Diluted 13,978 14,069 13,948 14,048
(Contract drilling revenues and contract drilling cost for 2001 reflect the gross-up of mobilization revenues and costs, which were reported on a net basis prior to the adoption of Staff Accounting Bulletin 101 in the fourth quarter of 2001.) The accompanying notes are an integral part of these consolidated financial statements. PART I. ITEM I - FINANCIAL STATEMENTS ATWOOD OCEANICS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) Six Months Ended March 31, --------------------------------- 2002 2001 (Unaudited) CASH FLOW FROM OPERATING ACTIVITIES: Net Income $ 14,988 $ 14,070 -------- -------- Adjustments to reconcile net income to net cash provided (used) by operating activities: Depreciation 12,543 13,261 Amortization 224 26 Deferred federal income tax provision 1,500 1,000 Changes in assets and liabilities: Decrease (increase) in accounts receivable (18,558) 3,985 Increase in accounts payable and accrued liabilities 2,414 3,515 Net mobilization fees (2,410) (4,261) Other (365) 585 -------- -------- (4,652) 18,111 -------- -------- Net cash provided by operating activities 10,336 32,181 -------- -------- CASH FLOW FROM INVESTING ACTIVITIES: Capital expenditures (35,251) (33,780) Treasury notes maturity --- 22,600 --------- -------- Net cash used by investing activities (35,251) (11,180) -------- -------- CASH FLOW FROM FINANCING ACTIVITIES: Proceeds from revolving credit facility 40,000 --- Principal payments on long-term debt --- (6,000) Proceeds from exercises of stock options 57 91 -------- ------- Net cash used by financing activities 40,057 (5,909) -------- ------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 15,142 15,092 CASH AND CASH EQUIVALENTS, at beginning of period 12,621 19,740 -------- -------- CASH AND CASH EQUIVALENTS, at end of period $27,763 $ 34,832 ======== ======== - --------------------------- Supplemental disclosure of cash flow information: Cash paid during the period for domestic and foreign income taxes $ 4,912 $ 4,465 ========= ======== Cash paid during the period for interest, net of amounts capitalized $ 1,005 $ 1,950 ======== ========
The accompanying notes are an integral part of these consolidated financial statements. PART I. ITEM 1 - FINANCIAL STATEMENTS ATWOOD OCEANICS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. UNAUDITED INTERIM INFORMATION For interim periods, the Company records income taxes using the expected effective tax rate for the fiscal year. In the opinion of the Company's management, the unaudited interim financial statements reflect all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation of the financial position and results of operations of the Company for the periods presented. 2. EARNINGS PER COMMON SHARE The computation of basic and diluted earnings per share is as follows (in thousands, except per share amounts): Three Months Ended Six Months Ended -------------------------------- ------------------------------- Net Per Share Net Per Share Income Shares Amount Income Shares Amount ------ ------ --------- ------ ------- --------- - -March 31, 2002: Basic earnings per share $ 6,830 13,834 $ .49 $14,988 13,835 $ 1.08 Effect of dilutive securities - Stock Options --- 144 --- --- 113 (.01) ------- ------ ------- ------- ------ ------ Diluted earnings per share $ 6,830 13,978 $ . 49 $14,988 13,948 $ 1.07 ======= ====== ======= ======= ====== ====== March 31, 2001: Basic earnings per share $ 6,030 13,826 $ .44 $14,070 13,824 $ 1.02 Effect of dilutive securities- Stock Options --- 243 (.01) --- 224 (.02) ------- ------ ------- ------- ------ ------ Diluted earnings per share $ 6,030 14,069 $ .43 $14,070 14,048 $1.00 ======= ====== ======= ======= ====== =====
3. COMPREHENSIVE INCOME Comprehensive income includes the following (in thousands): THREE MONTHS ENDED MARCH 31, 2002 2001 ------- ------- Net Income $ 6,830 $ 6,030 Other comprehensive income: Unrealized holding gain (loss) on available-for-sale securities, net of tax expense of $3 in 2001 --- 5 ------- ------- Comprehensive income $ 6,830 $ 6,035 ======= ======= SIX MONTHS ENDED MARCH 31, 2002 2001 ------- ------- Net Income $14,988 $14,070 Other comprehensive income: Unrealized holding gain (loss) on available-for-sale securities, net of tax expense of $15 in 2001 --- 29 ------- ------- Comprehensive income $14,988 $14,099 ======= ======= PART I. ITEM 2 ATWOOD OCEANICS, INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS All non-historical information set forth herein is based upon expectations and assumptions deemed reasonable by the Company. The Company can give no assurance that such expectations and assumptions will prove to have been correct, and actual results could differ materially from the information presented herein. The Company's periodic reports filed with the Securities and Exchange Commission should be consulted for a description of risk factors associated with an investment in the Company. MARKET OUTLOOK The worldwide mobile offshore drilling fleet utilization is currently around 80%, with an utilization of 61% in the United States Gulf of Mexico. The Company expects market conditions for the remainder of fiscal 2002 to stay relatively flat. Despite the current soft market conditions, the Company remains optimistic about the long-term offshore drilling and completions markets. The ATWOOD HUNTER, VICKSBURG, SEAHAWK and ATWOOD FALCON have current contract commitments which should keep these units employed into fiscal 2003, while the ATWOOD SOUTHERN CROSS and RICHMOND have current contract commitments which should keep these units employeed for most, if not all, of fiscal 2002. At the end of April 2002, the ATWOOD EAGLE entered a shipyard in Greece to commence its $90 million water-depth upgrade and refurbishment, which should take approximately six months to complete. Contract opportunities to commence following the rig's upgrade are being pursued internationally. The construction of the Compan s ultra-premium jack-up (the ATWOOD BEACON) continues on schedule for a June 2003 completion date. Even with the upgrade of the ATWOOD EAGLE, the Company expects that revenues and cash flows for fiscal 2002 will be comparable to results for fiscal 2001. RESULTS OF OPERATIONS Contract revenues for the three months and six months ended March 31, 2002 increased 17% and 5%, respectively, compared to the same periods in 2001. A comparative analysis of contract revenues is as follows: CONTRACT REVENUES (In Millions) ----------------------------------------------------------------- Three Months Ended Six Months Ended March 31, March 31, -------------------------- ------------------------------ 2002 2001 Variance 2002 2001 Variance ---- ----- -------- ------ ----- -------- ATWOOD HUNTER $ 9.0 $ 5.1 $ 3.9 $ 11.0 $12.7 $ (1.7) ATWOOD EAGLE 8.0 5.3 2.7 13.3 10.3 3.0 VICKSBURG 5.8 3.2 2.6 11.0 6.0 5.0 ATWOOD SOUTHERN CROSS 5.3 3.9 1.4 11.2 8.0 3.2 SEAHAWK 5.2 5.8 (0.6) 10.8 11.7 (0.9) ATWOOD FALCON 8.9 9.9 (1.0) 18.3 20.2 (1.9) RICHMOND 1.0 2.7 (1.7) 4.3 4.8 (0.5) OTHER 0.5 1.4 (0.9) 1.1 3.1 (2.0) ----- ----- ----- ----- ----- ----- $43.7 $37.3 $ 6.4 $81.0 $76.8 $ 4.2 ===== ===== ===== ===== ===== ======
The increase in revenue for the ATWOOD HUNTER for the second quarter of fiscal 2002 was due to its dayrate being in excess of $100,000 since it returned to work in mid-December 2001 following its upgrade compared to working at an average dayrate of approximately $55,000 during the second quarter of fiscal 2001. Revenue increases from the ATWOOD EAGLE was also due to higher dayrate with an average of $89,000 received during the second quarter of fiscal 2002 compared to $59,000 for the same period in fiscal 2001. The VICKSBURG received an average dayrate of approximately $64,000 during the second quarter of fiscal 2002 compared to approximately $36,000 for the same period in fiscal 2001, while the ATWOOD SOUTHERN CROSS averaged approximately $59,000 in per day revenue for the quarter ended March 31, 2002 compared to $43,000 for the quarter ended March 31, 2001. The SEAHAWK continues to have a consistent level of operation under its long-term contract in Malaysia, with a variation in revenues based upon the price of oil. At the end of April 2002, the ATWOOD FALCON completed its three plus years of work in the Philippines and has been relocated to Malaysia to commence a five-well plus options contract. The RICHMOND was idle approximately 40 days during the second quarter of fiscal 2002 undergoing some repairs, inspections and painting at a dockside location which accounts for its decline in revenue. In early May 2002, the RICHMOND returned to work in the United States Gulf of Mexico. Contract drilling and management costs for the three months and six months ended March 31, 2002 increased 27% and 10%, respectively, compared to the same periods in 2001. An analysis of contract drilling and management costs by rig is as follows. CONTRACT DRILLING COSTS (In Millions) --------------------------------------------------------------------------- Three Months Ended Six Months Ended March 31, March 31, -------------------------------- --------------------------------- 2002 2001 Variance 2002 2001 Variance ----- ----- -------- ----- ----- -------- RICHMOND $ 3.4 $ 1.8 $ 1.6 $ 5.3 $ 3.1 $ 2.2 ATWOOD HUNTER 4.3 2.7 1.6 5.0 6.1 (1.1) ATWOOD EAGLE 4.5 3.3 1.2 7.8 5.9 1.9 VICKSBURG 2.3 1.6 0.7 4.5 3.3 1.2 ATWOOD FALCON 2.7 2.3 0.4 4.9 4.5 0.4 SEAHAWK 2.0 1.9 0.1 4.1 3.8 0.3 ATWOOD SOUTHERN CROSS 2.5 2.6 (0.1) 5.0 5.0 0.0 OTHER 1.5 2.0 (0.5) 2.8 4.1 (1.3) ---- ----- ----- ----- ----- ----- $23.2 $18.2 $ 5.0 $39.4 $35.8 $ 3.6 ===== ===== ===== ===== ===== =====
During the second quarter of fiscal 2002, the Company committed to approximately $1.4 million in costs for repairs, painting and inspection on the RICHMOND, which accounts for its increase in drilling costs. The ATWOOD HUNTER has incurred a higher level of operating costs following its upgrade and relocating to Egypt than it incurred when working in the United States Gulf of Mexico prior to commencing its upgrade in June 2001. During the quarter ended March 31, 2002, the Company incurred some additional maintenance costs on the ATWOOD EAGLE in preparation for its upgrade. The increase in operating costs for the VICKSBURG and ATWOOD FALCON is primarily due to higher maintenance and insurance costs. An analysis of depreciation expense by rig is as follows: DEPRECIATION EXPENSE (In Millions) ---------------------------------------------------------------------------- Three Months Ended Six Months Ended March 31, March 31, ------------------------------------ --------------------------------- 2002 2001 Variance 2002 2001 Variance ------ ----- -------- ----- ----- -------- ATWOOD HUNTER $ 1.3 $ 0.5 $ 0.8 $ 1.5 $ 1.1 $ 0.4 ATWOOD EAGLE 1.0 0.9 0.1 1.9 1.8 0.1 ATWOOD SOUTHERN CROSS 1.0 0.9 0.1 2.0 2.0 0.0 RICHMOND 0.4 0.4 0.0 0.8 0.7 0.1 VICKSBURG 0.6 0.7 (0.1) 1.2 1.4 (0.2) ATWOOD FALCON 0.7 0.8 (0.1) 1.4 1.4 0.0 SEAHAWK 1.2 1.7 (0.5) 2.5 3.4 (0.9) OTHER 0.5 0.7 (0.2) 1.2 1.5 (0.3) ----- ----- ----- ----- ----- ----- $ 6.7 $6.6 $ 0.1 $12.5 $13.3 $(0.8) ===== ===== ===== ===== ===== =====
The increase in depreciation expense for the ATWOOD HUNTER is due to its higher depreciable basis following its upgrade. The decrease in depreciation expense for the SEAHAWK was due to the rig's 1992 upgrade costs becoming fully depreciated; thereby, leaving only its 2000 upgrade costs of approximately $22 million to be depreciated over a remaining period of approximately three years. LIQUIDITY AND CAPITAL RESOURCES During the first half of fiscal 2002, operating cash flow (before changes in working capital and other assets and liabilities) was approximately $29 million, compared to approximately $28 million for the first half of fiscal 2001. During the first half of fiscal 2002, the Company primarily utilized $40 million borrowed under the credit facility to invest $13.7 million in completing the upgrade of the ATWOOD HUNTER, to invest $12.7 million in the construction of the ATWOOD BEACON, to invest $8.6 million in early order items for the upgrade of the ATWOOD EAGLE and to fund approximately $0.3 million of other capital expenditures. Despite an increase in long-term debt, interest expense for the first half of fiscal 2002 decreased compared to the first half of fiscal 2001 because of approximately $800,000 of interest capitalized during fiscal 2002 as a component of construction costs. At the end of April 2002, the ATWOOD EAGLE entered a shipyard in Greece to commence its $90 million upgrade. The construction of the $125 million ultra-premium jack-up ATWOOD BEACON continues to be on schedule, with an expected completion date of June 2003. The Company continues to market the SEASCOUT which could cost $50 to $70 million to refurbish and upgrade if an acceptable contract is identified. With the ATWOOD HUNTER returning to work in December 2002 following its upgrade and higher dayrates earned on certain rigs, accounts receivable at March 31, 2002 compared to September 30, 2001 increased approximately $18 million. With the Company's portfolio of accounts receivable comprised of major international corporate entities with stable payment experience, management does not anticipate any significant difficulties in receivable collections. In February 2002, the Company increased its borrowing capacity under its credit facility from $150 million to $175 million. The Company anticipates having between $140 and $150 million borrowed under this facility by the end of September 2002, with a current outstanding balance of $100 million. The Company will continue to adjust planned capital expenditures and financing requirements in light of current market conditions. PART II. OTHER INFORMATION ATWOOD OCEANICS, INC. AND SUBSIDIARIES ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS The Company's Annual Meeting of Shareholders was held on February 14, 2002, at which the shareholders voted on the election of six directors and on the adoption of the Company's 2001 Stock Incentive Plan. Of the 12,545,386 shares of Common Stock present in person or by proxy, the number of shares voted for or against in connection with the election of each director and adoption of the Company's 2001 Stock Incentive Plan are as follows: ELECTION OF DIRECTORS NAME CAST FOR VOTES WITHHELD - ----------------------- ---------- -------------- Robert W. Burgess 12,145,409 399,975 George S. Dotson 12,058,009 487,375 Walter H. Helmerich III 12,057,259 488,125 Hans Helmerich 12,057,659 487,725 John R. Irwin 11,082,434 1,462,950 William J. Morrissey 12,145,009 400,375 ADOPTION OF 2001 STOCK INCENTIVE PLAN Number of Shares Voted For 10,873,753 Number of Shares Voted Against 942,181 Number of Shares Abstained from Voting 7,896 ITEM 6. Reports on Form 8-K (a) Exhibits None (b) Report on Form 8-K 1) Current and planned activities relating to the ATWOOD EAGLE (Filed January 7, 2002) 2) Earnings for the first quarter of Fiscal Year 2002 along with supportive information (Filed January 30, 2002) 3) Amendment to increase the Company's borrowing capacity under its Credit Facility from $150 million to $175 million (Filed February 26, 2002) 4) Current and planned activities relating to the RICHMOND, ATWOOD EAGLE, ATWOOD FALCON and ATWOOD SOUTHERN CROSS (Filed March 14, 2002) 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. ATWOOD OCEANICS, INC. (Registrant) Date: May 14, 2002 s/JAMES M. HOLLAND ----------------------- James M. Holland Senior Vice President and Chief Accounting Officer -----END PRIVACY-ENHANCED MESSAGE-----