-----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, NaLxM7KwSR+y5jOPpi1EYfo5NdiGXdx2FLBkOL6NjsKYQuj5ge41Pa7RMOX97FHF OWFzvhBlIpfx2+9y098f1g== 0000008411-02-000049.txt : 20020814 0000008411-02-000049.hdr.sgml : 20020814 20020814150458 ACCESSION NUMBER: 0000008411-02-000049 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20020630 FILED AS OF DATE: 20020814 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: 02735369 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 f10qjune302002.txt 10-Q JUNE 30, 2002 - ------------------------------------------------------------------------------- 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 JUNE 30, 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 July 31, 2002: 13,845,051 shares of Common Stock $1 par value - ------------------------------------------------------------------------------- PART I. FINANCIAL INFORMATION ATWOOD OCEANICS, INC. AND SUBSIDIARIES The unaudited interim consolidated financial statements as of June 30, 2002 and for each of the three and nine month periods ended June 30, 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 accounting principles generally accepted in the United States 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. This Form 10-Q for the quarterly period ended June 30, 2002 includes "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended. All statements other than statements of historical facts included in this Form 10-Q regarding the Company's financial position, business strategy, budgets and plans and objectives of management for future operations are forward-looking statements. These forward-looking statements involve risks and uncertainties that may cause the Company's actual future activities and results of operation to be materially different from those suggested or described in the Form 10-Q. PART I. ITEM I - FINANCIAL STATEMENTS ATWOOD OCEANICS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In thousands) June 30, September 30, 2002 2001 ---------- ------------ (Unaudited) ASSETS CURRENT ASSETS: Cash and cash equivalents $37,808 $12,621 Accounts receivable, net 25,821 19,815 Inventories of materials and supplies, at lower of average cost or market 9,369 9,111 Deferred tax assets 780 780 Prepaid expenses 2,744 3,394 -------- -------- Total Current Assets 76,522 45,721 -------- -------- PROPERTY AND EQUIPMENT, at cost: Drilling vessels, equipment and drill pipe 565,072 497,821 Other 9,129 8,768 -------- -------- 574,201 506,589 Less-accumulated depreciation 218,704 200,335 ------- ------- Net Property and Equipment 355,497 306,254 ------- ------- DEFERRED COSTS AND OTHER ASSETS 2,875 1,903 -------- -------- $434,894 $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) June 30, September 30, 2002 2001 ----------- ------------- (Unaudited) LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable $ 3,995 $ 8,055 Accrued liabilities 17,645 12,609 ---------- --------- Total Current Liabilities 21,640 20,664 ---------- --------- LONG-TERM DEBT 120,000 60,000 --------- --------- DEFERRED CREDITS: Income taxes 15,850 13,600 Other 8,467 11,978 ---------- -------- 24,317 25,578 --------- -------- COMMITMENTS AND CONTINGENCIES 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 13,845,000 and 13,832,000 issued and outstanding in 2002 and 2001, respectively 13,845 13,832 Paid-in capital 57,243 57,075 Retained earnings 197,849 176,729 -------- --------- 268,937 247,636 -------- --------- $434,894 $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 Nine Months Ended June 30, June 30, ------------------------ --------------------- 2002 2001 2002 2001 -------- ------- --------- ------- (Unaudited) (Unaudited) REVENUES: Contract drilling $ 37,402 $ 34,944 $118,376 $111,594 -------- -------- -------- -------- COSTS AND EXPENSES: Contract drilling 19,493 17,327 58,912 52,935 Depreciation 5,958 6,342 18,501 19,603 General and administrative 2,336 2,285 7,500 7,021 -------- -------- -------- -------- 27,787 25,954 84,913 79,559 -------- -------- --------- --------- OPERATING INCOME 9,615 8,990 33,463 32,035 -------- -------- -------- -------- OTHER INCOME (EXPENSE) Interest expense (501) (723) (1,387) (2,523) Interest income 60 273 200 1,360 Loss on sale on securities ---- (130) ---- (130) -------- -------- -------- -------- (441) (580) (1,187) (1,293) -------- -------- -------- -------- INCOME BEFORE INCOME TAXES 9,174 8,410 32,276 30,742 PROVISION FOR INCOME TAXES 3,042 2,925 11,156 11,187 -------- -------- ------- -------- NET INCOME $ 6,132 $ 5,485 $ 21,120 $ 19,555 ======== ======== ======== ======== EARNINGS PER COMMON SHARE Basic $.44 $ .40 $1.53 $1.41 Diluted $.44 $ .39 $1.51 $1.40 WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING Basic 13,843 13,831 13,839 13,827 Diluted 14,048 13,981 13,984 13,971 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) Nine Months Ended June 30, -------------------------- 2002 2001 ------- ------- (Unaudited) CASH FLOW FROM OPERATING ACTIVITIES: Net Income $ 21,120 $ 19,555 -------- -------- Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 18,501 19,603 Amortization 318 42 Changes in assets and liabilities: Decrease (increase) in accounts receivable (6,006) 536 Increase in accounts payable and accrued liabilities 976 3,904 Net mobilization fees (2,903) (6,191) Federal income tax provision 2,250 2,250 Other (1,452) (288) -------- ------- 11,684 19,856 -------- ------- Net cash provided by operating activities 32,804 39,411 -------- ------- CASH FLOW FROM INVESTING ACTIVITIES: Capital expenditures (67,798) (50,583) Treasury notes maturity --- 22,600 Proceeds from sale of securities --- 429 -------- ------- Net cash used by investing activities (67,798) (27,554) -------- ------- CASH FLOW FROM FINANCING ACTIVITIES: Proceeds from revolving credit facility 60,000 --- Principal payments on long-term debt --- (6,000) Proceeds from exercises of stock options 181 154 -------- -------- Net cash provided (used) by financing activities 60,181 (5,846) -------- --------- NET INCREASE IN CASH AND CASH EQUIVALENTS 25,187 6,011 CASH AND CASH EQUIVALENTS, at beginning of period 12,621 19,740 -------- -------- CASH AND CASH EQUIVALENTS, at end of period $37,808 $ 25,751 ======== ======== Supplemental disclosure of cash flow information: Cash paid during the period for domestic and foreign income taxes $ 9,605 $ 5,590 ======== ======== Cash paid during the period for interest, net of amounts capitalized $ 1,415 $ 2,700 ======== ========
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. Contract drilling revenues and contract drilling costs for 2001 in the accompanying "Consolidated Statement of Operations", 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. 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 Nine Months Ended -------------------------------- ------------------------------------- Net Per Share Net Per Share Income Shares Amount Income Shares Amount ------- ------ ------- ------- ------ --------- June 30, 2002: Basic earnings per share $ 6,132 13,843 $ .44 $21,120 13,839 $ 1.53 Effect of dilutive securities - Stock Options --- 205 --- --- 145 (.02) ------- ------- ------- ------- ------ ------- Diluted earnings per share $ 6,132 14,048 $ . 44 $21,120 13,984 $ 1.51 ======= ======= ======= ======= ====== ======= June 30, 2001: Basic earnings per share $ 5,485 13,831 $ .40 $19,555 13,827 $ 1.41 Effect of dilutive securities- Stock Options --- 150 (.01) --- 144 (.01) ------- ------- ------- ------- ------ ------- Diluted earnings per share $ 5,485 13,981 $ .39 $19,555 13,971 $1.40 ======= ======= ======= ======= ====== ======
3. COMPREHENSIVE INCOME Comprehensive income includes the following (in thousands): THREE MONTHS ENDED JUNE 30, 2002 2001 ------- ------- Net Income $ 6,132 $ 5,485 Other comprehensive income: Unrealized holding gain on available-for-sale securities, net of tax expense of $21 in 2001 --- 37 Reclassification adjustment for losses realized in net income, net of tax expense of $46 in 2001 --- 86 ------- ------- Comprehensive income $ 6,132 $ 5,608 ======= ======= NINE MONTHS ENDED JUNE 30, 2002 2001 ------- ------- Net Income $21,120 $19,555 Other comprehensive income: Unrealized holding gain on available-for-sale securities, net of tax expense of $36 in 2001 --- 66 Reclassification adjustment for losses realized in net income, net of tax expense of $46 in 2001 --- 86 ------- ------- Comprehensive income $21,120 $19,707 ======= =======
4. LONG-TERM DEBT In February 2002, the Company increased its borrowing capacity under its current credit facility from $150 million to $175 million. Outstanding borrowings at June 30, 2002 under this facility were $120 million. 5. NEW ACCOUNTING STANDARDS In July 2001, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards ("SFAS") No. 143, "Accounting for Asset Retirement Obligations." SFAS No. 143 requires entities to record the fair value of a liability for legal obligations associated with the retirement obligations of tangible long-lived assets in the period in which it is incurred and the corresponding cost capitalized by increasing the carrying amount of the related asset . The liability is accreted to the fair value at the time of settlement over the useful life of the asset, and the capitalized cost is depreciated over the useful life of the related asset. If the liability is settled for an amount other than the recorded amount a gain or loss is recognized. The standard is effective for fiscal years beginning after June 15, 2002, with earlier application encourage. In the opinion of management, the adoption of SFAS No. 143 will not have a material impact on the Company's financial statements In May 2002, the FASB issued SFAS No. 145, "Rescission of FASB Statements No. 4,44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections". SFAS 145 rescinds the automatic treatment of gains or losses from extinguishment of debt as extraordinary unless they meet the criteria for extraordinary items as outlined in APB Opinion No. 30, "Reporting the Results of Operations, Reporting the Effect of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions. The provisions of this Statement shall be applied in fiscal years beginning after May 15, 2002. In the opinion of management, the adoption of SFAS 145 will not have a material impact on the Company's financial statements. In July, the FASB issued SFAS No. 146, "Accounting for Costs Associated with Exit or Disposal Activities". The standard requires companies to recognize costs associated with exit or disposal activities when they are incurred rather than at the date of commitment to an exit or disposal plan. Examples of costs covered by the standard include lease termination costs and certain employee severance costs that are associated with a restructuring, discontinued operation, or other exit or disposal activity. SFAS 146 replaces Emerging Issues Task Force ("EITF") Issue No. 94-3, "Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring)". The provisions of this Statement are effective for exit and disposal activities that are initiated after December 31, 2002. The Company will account for exit or disposal activities initiated after December 31, 2002 in accordance with the provision of SFAS 146. 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 as of August 2002 is around 80%, with a utilization of 68% in the United States Gulf of Mexico. The Company expects market conditions for the remainder of 2002 to stay flat. The Company remains optimistic about the longer-term opportunities and fundamentals in the offshore drilling business; however, short-term market fundamentals for mid-water and deepwater semisubmersibles are weak and could remain so over the next six to twelve months. The Company, currently, does not have contracts for the ATWOOD EAGLE, following completion of its upgrade (October/November 2002) and for the ATWOOD HUNTER, following completion of its current contract (October 2002). The Company is pursuing contract opportunities for both rigs; however, there is no guarantee that the Company will not incur some idle time on one or both units or other units during fiscal 2003. The $90 million upgrade of the ATWOOD EAGLE continues to progress well. The completion of this upgrade will conclude the Company's $340 million upgrade program that began in 1996. The new, ultra-premium jack-up (ATWOOD BEACON) is due for completion in June 2003. For the last quarter of fiscal 2002, the SEAHAWK, ATWOOD HUNTER, ATWOOD EAGLE, VICKSBURG and RICHMOND should be utilized during the quarter, with the ATWOOD SOUTHERN CROSS being off dayrate for approximately four to five weeks during the quarter and the ATWOOD EAGLE being in the shipyard the entire quarter undergoing its upgrade. With the ATWOOD SOUTHERN CROSS downtime and the ATWOOD EAGLE ongoing upgrade, the Company expects operating results for the fourth quarter of fiscal 2002 to be below results for the previous quarters of fiscal 2002, with revenues, results of operations, and cash flows from the fiscal year being comparable to fiscal 2001. RESULTS OF OPERATIONS Contract revenues for the three months and nine months ended June 30, 2002 increased 7% and 6%, respectively, compared to the same periods in 2001. A comparative analysis of contract revenues is as follows: CONTRACT REVENUES (In Millions) ----------------------------------------------------------------------- THREE MONTHS ENDED NINE MONTHS ENDED JUNE 30, JUNE 30, ------------------------------- -------------------------------- 2002 2001 VARIANCE 2002 2001 VARIANCE ATWOOD HUNTER $ 8.0 $ 3.1 $ 4.9 $ 19.0 $ 15.8 $ 3.2 VICKSBURG 5.9 1.9 4.0 17.0 8.0 9.0 ATWOOD SOUTHERN CROSS 6.0 4.9 1.1 17.2 12.9 4.3 SEAHAWK 5.9 5.9 0.0 16.6 17.5 (0.9) ATWOOD FALCON 8.3 10.0 (1.7) 26.6 30.1 (3.5) RICHMOND 1.0 2.9 (1.9) 5.3 7.7 (2.4) ATWOOD EAGLE 1.9 4.6 (2.7) 15.2 14.9 0.3 OTHER 0.4 1.6 (1.2) 1.5 4.7 (3.2) ------- ------- ------ ------- ------- ------- $ 37.4 $ 34.9 $ 2.5 $ 118.4 $ 111.6 $ 6.8 ======= ======= ====== ======= ======= =======
The increase in revenue for the ATWOOD HUNTER for the third quarter of fiscal 2002 was due to an escalation of its dayrate to $90,000 as compared to $55,000 during the same quarter of the prior fiscal year and to the rig realizing only two months of revenue in the third quarter of fiscal 2001 as it commenced its upgrade in June 2001. The VICKSBURG was fully utilized during the third quarter of fiscal 2002 at an average dayrate of around $64,000 as compared to the third quarter of fiscal 2001 where the rig was off rate for most of the quarter during its relocation from India to Vietnam. The average dayrate for the ATWOOD SOUTHERN CROSS for the third quarter of fiscal 2002 was $68,000 compared to $55,000 in the third quarter of fiscal 2001. The SEAHAWK has continued to experience a consistent level of operation under its long-term contract in Malaysia. During the third quarter of fiscal 2002, the ATWOOD FALCON completed its three plus years work in the Philippines at dayrates of approximately $100,000, and was relocated to Malaysia where it commenced a five-well plus options contract at a dayrate of $73,000. The RICHMOND was idle 35 days during the third quarter of fiscal 2002 while completing some repairs, inspections and painting at a dockside location, which accounts for the decline in its revenue, while the ATWOOD EAGLE commenced its upgrade at the end of April 2002, which accounts for its decrease in revenue. Contract drilling and management costs for the three months and nine months ended June 30, 2002 increased 13% and 11%, 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 NINE MONTHS ENDED JUNE 30, JUNE 30, ------------------------------------- ----------------------------------- 2002 2001 VARIANCE 2002 2001 VARIANCE ------- ------- -------- ------- ----- -------- ATWOOD HUNTER $ 4.0 $ 2.0 $ 2.0 $ 9.0 $ 8.1 $ 0.9 VICKSBURG 2.4 1.2 1.2 6.9 4.5 2.4 ATWOOD FALCON 3.0 2.1 0.9 7.9 6.5 1.4 ATWOOD SOUTHERN CROSS 2.8 2.4 0.4 7.8 7.4 0.4 SEAHAWK 2.1 2.0 0.1 6.2 5.7 0.5 RICHMOND 2.2 2.8 (0.6) 7.5 5.8 1.7 ATWOOD EAGLE 1.2 2.7 (1.5) 9.0 8.6 0.4 OTHER 1.8 2.1 (0.3) 4.6 6.3 (1.7) ------- ------- ------- ------ ------ ------- $ 19.5 $ 17.3 $ 2.2 $ 58.9 $ 52.9 $ 6.0 ======= ======= ======= ====== ====== =======
The increase in operating costs on the ATWOOD HUNTER during the third quarter of fiscal 2002 as compared to the same quarter in the prior fiscal year was due to the rig commencing its upgrade in June 2001 whereby no operating costs were incurred during the upgrade period and to the rig incurring a higher level of operating costs following its upgrade and relocation to Egypt than it incurred when working in the United States Gulf of Mexico. The increase in drilling costs for the VICKSBURG was due to the rig being relocated from India to Vietnam during the third quarter of fiscal 2001 at a reduced level of operating costs as compared to a normal level of operating costs being incurred during for the third quarter of fiscal 2002. The increase in operating costs for the ATWOOD FALCON was due to expenses incurred while relocating from the Philippines to Malaysia. The ATWOOD SOUTHERN CROSS incurred higher operating costs while working in Israel, which accounts for its increase in drilling costs. During the third quarter of fiscal 2001, the RICHMOND incurred some extraordinary costs associated with certain repairs and operational issues as compared to a normal level of operating expenses in the third quarter of fiscal 2002, which accounts for its decline in operating costs. The ATWOOD EAGLE commenced its upgrade at the end of April 2002 with no operating costs being realized during the upgrade period. An analysis of depreciation expense by rig is as follows: DEPRECIATION EXPENSE (In Millions) ---------------------------------------------------------------------------- THREE MONTHS ENDED NINE MONTHS ENDED JUNE 30, JUNE 30, --------------------------------- --------------------------------- 2002 2001 VARIANCE 2002 2001 VARIANCE ------ ----- -------- ----- ------ -------- ATWOOD HUNTER $ 1.3 $ 0.4 $ 0.9 $ 2.9 $ 1.5 $ 1.4 VICKSBURG 0.6 0.6 0.0 1.8 2.0 (0.2) ATWOOD FALCON 0.7 0.7 0.0 2.0 2.1 (0.1) ATWOOD SOUTHERN CROSS 1.0 0.9 0.1 2.9 2.9 0.0 RICHMOND 0.4 0.4 0.0 1.2 1.1 0.1 SEAHAWK 1.2 1.7 (0.5) 3.6 5.1 (1.5) ATWOOD EAGLE 0.3 0.9 (0.6) 2.2 2.7 (0.5) OTHER 0.5 0.7 (0.2) 1.9 2.2 (0.3) ------- ------ ------ ------- ------- ------- $ 6.0 $ 6.3 $ (0.3) $ 18.5 $ 19.6 $ (1.1) ======= ====== ====== ======= ======= =======
The increase in depreciation for the ATWOOD HUNTER was due to an increase in its depreciable basis following its upgrade. The decrease in deprecation 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. The Company does not recognize depreciation expense during the period a rig is out of service for a significant upgrade, which accounts for the ATWOOD EAGLE having reduced depreciation for the third quarter of fiscal 2002. LIQUIDITY AND CAPITAL RESOURCES During the first nine months of fiscal 2002, operating cash flow, before changes in working capital and other assets and liabilities, was approximately $42 million, compared to approximately $41 million for the first nine months of fiscal 2001. During the first nine months of fiscal 2002, the Company utilized $60 million of borrowings under its credit facility and internally generated cash to invest $13.7 million in completing the upgrade of the ATWOOD HUNTER, to invest $33.9 million in the construction of the ATWOOD BEACON, to invest $16.8 million in the upgrade of the ATWOOD EAGLE and to fund approximately $5.7 million of other capital expenditures. Despite an increase in long-term debt, interest expense for the first nine months of fiscal 2002 decreased compared to the first nine months of fiscal 2001 because of approximately $1 million of interest expense being 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 seek contract opportunities for the SEASCOUT which could cost $50 to $70 million to refurbish and upgrade if an acceptable contract is identified. In February 2002, the Company increased its borrowing capacity under its credit facility from $150 million to $175 million. The Company anticipates having, at least, $130 million borrowed under this facility by the end of September 2002, with a current outstanding balance of $120 million at June 30, 2002. The Company will continue to adjust planned capital expenditures and financing requirements in light of current market conditions. In July 2002, the Company filed a $250 million shelf registration statement with the Securities and Exchange Commission covering up to $250 million of various debt and equity securities. The Company has no immediate plans to offer any of the securities for sale, but believes it is prudent to have registered securities available to fund future opportunities. PART II. OTHER INFORMATION ATWOOD OCEANICS, INC. AND SUBSIDIARIES ITEM 6. Reports on Form 8-K (a) Exhibits 99.1 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (b) Report on Form 8-K 1) Current and planned activities relating to the RICHMOND, ATWOOD EAGLE, ATWOOD FALCON and ATWOOD SOUTHERN CROSS (Filed April 9, 2002) 2) Earnings for the second quarter of Fiscal Year 2002 along with supportive information (Filed April 30, 2002) 3) Change in certifying accountants from Arthur Andersen LLP to PricewaterhouseCoopers LLP (Filed May 21, 2002) 4) Current and planned activities relating to the ATWOOD FALCON (Filed May 24, 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: August 14, 2002 s/JAMES M. HOLLAND ----------------------- James M. Holland Senior Vice President and Chief Accounting Officer EXHIBIT 99.1 Informational Addendum to Report on Form 10-Q Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 The undersigned Chief Executive Officer and Chief Financial Officer of Atwood Oceanics, Inc. (the "Company") do hereby certify as follows: Solely for the purpose of meeting the apparent requirements of Section 906 of the Sarbanes-Oxley Act of 2002, and solely to the extent this certification may be applicable to this Quarterly Report on Form 10-Q, the undersigned hereby certify that this Quarterly Report on Form 10-Q fully complies with the requirements of section 13(a) or 15 (d) of the Securities Exchange Act of 1934 and the information contained in this Report on Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company. Dated: August 14, 2002 By: /s/ John R. Irwin ----------------- John R. Irwin President and Chief Executive Officer Dated: August 14, 2002 By: /s/ James M. Holland -------------------- James M. Holland Senior Vice President and Chief Financial Officer -----END PRIVACY-ENHANCED MESSAGE-----