0000008411-95-000020.txt : 19950817 0000008411-95-000020.hdr.sgml : 19950817 ACCESSION NUMBER: 0000008411-95-000020 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950630 FILED AS OF DATE: 19950816 SROS: NASD 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: 000-06352 FILM NUMBER: 95564461 BUSINESS ADDRESS: STREET 1: 15835 PARK TEN PL DR STREET 2: SUITE 200 CITY: HOUSTON STATE: TX ZIP: 77084 BUSINESS PHONE: 7134922929 10-Q 1 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, 1995 COMMISSION FILE NUMBER 0-6352 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: 713-492-2929 _______________ 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 June 30, 1995 6,588,113 shares of Common Stock $1 par value PAGE 2 PART I. FINANCIAL INFORMATION ATWOOD OCEANICS, INC. AND SUBSIDIARIES The condensed financial statements herein have been prepared by the Company without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted, although the Company believes that the disclosures are adequate to make the information not misleading. The financial statements reflect all adjustments which are, in the opinion of management, necessary to present fairly the financial position as of June 30, 1995 and September 30, 1994, and the results of operations for the three months and nine months ended June 30, 1995 and 1994, respectively, and the statements of cash flows for the nine months then ended. All adjustments were of a normal recurring nature. It is suggested these condensed financial statements be read in conjunction with the financial statements and the notes thereto included in the Company's September 30, 1994 Annual Report to Shareholders. PAGE 3 PART I. ITEM I - FINANCIAL STATEMENTS ATWOOD OCEANICS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
(Unaudited) June 30, September 30, 1995 1994 (In thousands) ASSETS CURRENT ASSETS: Cash and cash equivalents $ 14,060 $ 16,119 Accounts receivable 14,621 13,915 Current maturities of long-term notes receivable --- 400 Inventories of materials and supplies, at lower of 4,632 4,194 average cost or market 1,202 3,844 Prepaid expenses and other Total Current Assets 34,515 38,472 AVAILABLE FOR SALE SECURITIES 25,844 24,928 LONG-TERM NOTES RECEIVABLE, net of current maturities --- 5,985 PROPERTY AND EQUIPMENT: Drilling vessels, equipment and drill pipe 173,717 187,525 Other 9,230 4,479 182,947 192,004 Less-accumulated depreciation 93,853 109,159 Net Property and Equipment 89,094 82,845 DEFERRED COSTS AND OTHER ASSETS 1,021 1,230 $150,474 $153,460 See accompanying notes to financial statements.
PAGE 4 PART I. ITEM I - FINANCIAL STATEMENTS ATWOOD OCEANICS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
(Unaudited) June 30, September 30. 1995 1994 (In thousands) LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Current maturities of long-term notes payable $ 3,750 $ 3,000 Short-term notes payable 3,000 --- Accounts payable 4,367 3,728 Accrued liabilities 7,940 6,573 Total Current Liabilities 19,057 13,301 LONG-TERM NOTES PAYABLE, net of current maturities 36,319 50,294 DEFERRED CREDITS: Income taxes 1,050 1,650 Other 553 639 1,603 2,289 MINORITY INTEREST IN PARTNERSHIPS --- 1,617 SHAREHOLDERS' EQUITY: Preferred stock, no par value; 1,000,000 shares authorized, none outstanding --- --- Common stock, $1 par value; 10,000,000 share authorized with 6,588,000 and 6,582,000 6,588 6,582 shares issued and outstanding in 1995 and 54,321 54,273 1994, respectively 1,261 --- Paid-in capital 31,325 25,104 Net unrealized holding gains Retained earnings 93,495 85,959 Total Shareholders' Equity $ 150,474 $ 153,460 See accompanying notes to financial statements.
PAGE 5 PART I. ITEM I - FINANCIAL STATEMENTS ATWOOD OCEANICS, INC. AND SUBSIDIARIES Consolidated Statement of Operations (Unaudited)
Three Months Ended Nine Months Ended June 30, June 30, 1995 1994 1995 1994 (In thousands, except per share amounts) REVENUES: Drilling revenues $ 18,499 $ 16,219 $ 54,433 $ 47,577 Management fee income 49 542 735 1,561 Dividends and interest 738 680 2,180 1,893 Gain on sale of investments 2,370 --- 2,370 --- Gain on sale of joint venture --- --- --- 201 21,656 17,441 59,718 51,232 COSTS AND EXPENSES: Drilling 13,282 11,129 38,435 33,102 Depreciation 2,523 3,421 8,561 10,163 General and 1,199 1,157 3,446 3,236 administrative 740 708 2,207 2,063 Interest 17,744 16,415 52,649 48,564 INCOME BEFORE MINORITY INTEREST AND INCOME TAXES 3,912 1,026 7,069 2,668 MINORITY INTEREST IN NET LOSS OF PARTNERSHIPS --- 635 908 2,429 INCOME BEFORE INCOME TAXES 3,912 1,661 7,977 5,097 PROVISION FOR INCOME TAXES 721 35 1,756 566 NET INCOME $ 3,191 $ 1,626 $ 6,221 $ 4,531 INCOME PER COMMON SHARE $ .48 $ .25 $ .95 $ .69 AVERAGE COMMON SHARES OUTSTANDING 6,585 6,582 6,583 6,582
See accompanying notes to financial statements PAGE 6 PART I. ITEM I - FINANCIAL STATEMENTS ATWOOD OCEANICS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)
Nine Months Ended June 30, 1995 1994 (In thousands) CASH FLOW FROM OPERATING ACTIVITIES: Net Income $ 6,221 $ 4,531 Adjustments to reconcile net income to net cash provided (used) by operating activities: Depreciation 8,561 10,163 Amortization of deferred costs 316 440 Deferred federal income tax provision (benefit) 200 (200) Minority interest in net loss of partnerships (908) (2,429) Gain on sale of investments (2,370) --- Changes in assets and liabilities: Increase in accounts receivable (706) (1,497) Increase in accounts payable and accrued liabilities 2,006 426 Other 1,195 32 Total adjustments 8,294 6,935 Net cash provided by operating activities 14,515 11,466 CASH FLOW FROM INVESTING ACTIVITIES: Proceeds from sale of investments 3,343 --- Proceeds from sale of Indian joint venture --- 1,300 Payment received on notes receivable 202 303 Acquisitions of interest in partnerships (13,275) --- Investment in Australian joint venture (4,400) --- Capital expenditures (3,018) (3,869) Net cash used by investing activities (17,148) (2,266) CASH FLOW FROM FINANCING ACTIVITIES: Proceeds from exercises of stock options 54 --- Short-term bank loan 3,000 --- Principal payment on long-term notes payable (2,380) (2,250) Net payment to limited partner (100) --- Net cash provided (used) by financing activities 574 (2,250) NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (2,059) 6,950 CASH AND CASH EQUIVALENTS, at beginning of period 16,119 10,087 CASH AND CASH EQUIVALENTS, at end of period $14,060 $17,037 See accompanying notes to financial statements
PAGE 7 PART I. ITEM I - FINANCIAL STATEMENTS ATWOOD OCEANICS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. Effective as of December 31, 1994, the Company acquired the 50 percent limited partner's interest in the three semisubmersible drilling rigs, the HUNTER, EAGLE and FALCON. Pursuant to the acquisition, the Company has become the sole owner of the three semisubmersible rigs for an aggregate purchase price consisting of $13.3 million in cash plus the issuance of a $3 million note payable in annual installments of $750,000. 2. In conjunction with the acquisition of the limited partner's interest, the Company contributed to equity in Atwood Deep Seas, Ltd ("Deep Seas") $7.9 million principal amount of Deep Seas' long-term debt with a discounted basis of $6.3 million. Currently, Deep Seas' long-term debt consist of $37.1 million in non-recourse loans from the bank group and will continue to require quarterly principal payments of $750,000, with a balloon payment of $29.7 million payable in March 1998. 3. When the Company acquired its initial interest in the HUNTER, EAGLE and FALCON in 1990, estimated useful lives for these rigs of ten years were adopted for depreciation purposes. However, since these facilities remain "state-of-the-art" drilling rigs and since the Company acquired the 50 percent limited partner's interest on the basis that these rigs will remain long-term productive assets, effective January 1, 1995, management has increased its estimated lives on these rigs by an additional five years. The effect of the change in depreciable lives was an approximate $1 million reduction in depreciation in each quarter ended March 31, and June 30, 1995, respectively. 4. Effective on January 1, 1995, all notes payable to the limited partner by Deep Seas (approximately $14 million) were cancelled with approximately $6 million (net of $8 million previously reclassified as "minority interest in partnerships") reclassified as equity in Deep Seas. 5. In June 1995, the Company sold 33,000 of its 65,000 shares of Mobil common stock for $3.3 million with a realized gain reflected in the Statement of Operations, of $2.4 million ($.36 per share). In accordance with Financial Accounting Standards Board Statement No. 115 "Accounting for Certain Investments in Debt and Equity Securities", shareholders' equity was increased by $1,261,000 (net of $650,000 in deferred income taxes) to reflect the net unrealized holding gains on remaining securities owned by the Company which are classified as available-for-sale previously carried at lower of cost or market. In accordance with the Statement, prior period financial statements have not been restated to reflect the change in accounting principle. The change had no effect on net income. PAGE 8 PART I. ITEM 2 ATWOOD OCEANICS, INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS Excluding the SOUTHERN CROSS, which has not been placed in service, for the nine months ended June 30, 1995, the Company maintained 100 percent utilization of its equipment. Since October 1993 through June 30, 1995, the Company has incurred only eleven idle equipment days, a 99.8 percent equipment utilization rate. The key to the Company's return to profitability in 1994 and its level of profitability thus far in fiscal 1995 has been high equipment utilization. However, due to certain planned maintenance and surveys on the RICHMOND and the EAGLE, the Company will incur some idle days on these rigs during the fourth quarter of fiscal 1995. Total revenues increased $4.2 million (24 percent) in the third quarter of fiscal year 1995 compared to the third quarter of fiscal year 1994. This revenue increase in the third quarter of fiscal 1995 is primarily due to a $2.3 million (14 percent) increase in drilling revenues plus a $2.4 million gain on sale of investments partially offset by a $400,000 reduction in management fees. A comparative analysis of drilling revenues is as follows:
QUARTERS ENDED June 30, March 31, June 30, 1995 1995 1994 (In thousands) SEAHAWK $2,689 $ 2,632 $2,716 HUNTER 2,534 2,542 2,618 EAGLE 4,036 3,878 3,214 FALCON 2,804 2,787 2,680 VICKSBURG 1,224 1,198 1,136 RIG-19 1,905 1,908 1,814 RICHMOND 1,063 1,430 1,241 GOODWYN 'A' 2,068 1,586 --- OTHER 176 117 800 $18,499 $18,078 $16,219
Since its commencement of operation in February 1993, the SEAHAWK has been a significant contributor to the Company's return to profitability. The HUNTER has experienced 100 percent utilization since April 1993. The increase in revenues for the EAGLE for the quarter ended June 30, 1995 compared to the quarter ended June 30, 1994 is due to equipment repair downtime incurred by the rig in 1994. Due to equipment problems, the EAGLE incurred several hours at zero rate during the June 30, 1994 quarter. These equipment problems were corrected and thus far, during 1995 the EAGLE has encountered limited equipment downtime. During the last year, the FALCON has experienced 100 percent utilization while working in Korea, China and the "Joint Development Area" between Thailand and Malaysia. In September 1994, RIG-19 was relocated to a new platform and received an increase in dayrate revenue which accounts for its increase in drilling revenues. The RICHMOND has worked continuously since March 1993; however, a decline in dayrate levels in the Gulf of Mexico accounts for the reduction in revenues for the RICHMOND during the quarter PAGE 9 ended June 30, 1995. In October 1994, the Australian operator-owned GOODWYN 'A' platform rig commenced drilling operations. Since July 1989, the Company, on a management fee basis, directed the design, construction and offshore commissioning of the GOODWYN 'A' drilling facilities. The Company now has responsibility for the operations and maintenance of these facilities and is compensated on a dayrate basis. The reduction in "other" relates primarily to less labor service being provided to the Australian operator-owned NORTH RANKIN 'A' platform rig. The Company's current contract status for its drilling operations is as follows:
NAME OF RIG LOCATION CONTRACT STATUS SEAHAWK Malaysia Term contract (estimated completion 1997). HUNTER Malaysia Rig has four remaining wells to drill on its current contract (with current discussion for ongoing work). EAGLE Australia/Indonesia Will complete current contract in September "Zone of 1995; then be moved to sheltered water for Cooperation" performance of certain surveys and maintenance work. Upon completion of this shipyard work, the rig will commence a two firm plus one option well contract in Australia. FALCON Thailand/Malaysia Drilling the second of four firm wells (with "Joint Development three option wells). Area" VICKSBURG Australia Under contract until February 1996 (with two one year options). RIG-19 Australia Term contract (estimated completion 1996). RICHMOND United States Drilling first of three firm wells in Gulf of Mexico. GOODWYN 'A' Australia Term contract (estimated completion December 1996).
In June 1995, the Company sold 33,000 shares of the 65,000 shares of Mobil Corporation common stock it has owned since 1986. The Company realized a gain of $2.4 million on the sale of these securities and through utilization of certain tax carryforward attributes will incur no significant tax obligations related to the gain. The $400,000 reduction in management fee income is due to the commencement of drilling operations of the GOODWYN 'A' platform rig whereby the Company is compensated through dayrate revenues instead of a fixed management fee as was the case prior to commencement of drilling operations. For the three months ended June 30, 1995 compared to the three months ended June 30, 1994, drilling costs increased $2.2 million or 19 percent. An analysis of drilling costs by rig is as follows: PAGE 10
QUARTERS ENDED June 30, March 31, June 30, 1995 1995 1994 (In thousands) SEAHAWK $ 1,597 $ 1,377 $ 1,504 HUNTER 1,773 1,769 1,697 EAGLE 3,362 3,138 2,525 FALCON 1,597 1,543 1,494 VICKSBURG 736 770 735 RIG-19 1,469 1,552 1,428 RICHMOND 971 1,008 852 GOODWYN "A" 1,396 1,219 --- OTHER 381 247 894 $13,282 $12,623 $11,129
The increase in drilling cost for the EAGLE during the third quarter of fiscal year 1995 compared to the third quarter of fiscal 1994 is due to increases in certain personnel costs and equipment maintenance costs. As previously stated, drilling operations commenced on the GOODWYN 'A' platform rig in October 1994 whereby the Company has labor responsibility and is being compensated on a dayrate revenue basis. The reduction in "other" relates primarily to reduction in personnel costs assigned to the NORTH RANKIN "A" platform rig due to a decline in drilling activities of this customer-owned facility For the quarter ended June 30, 1995 compared to the same quarter of fiscal year 1994, depreciation decreased $898,000. This decrease is attributable to an increase in the depreciable lives of the HUNTER, EAGLE and FALCON of five additional years. The Company acquired the 50 percent limited partner's interest in these rigs on the basis that these rigs remain "state- of-the art" with at least ten years of estimated useful lives. An analysis of depreciation expense by rig is as follows:
QUARTERS ENDED June 30, March 31, June 30, 1995 1995 1994 (In thousands) HUNTER, EAGLE and $1,578 $1,557 $ 2,557 FALCON 582 576 558 SEAHAWK 285 287 306 RIG-19 78 76 --- OTHER $2,523 $2,496 $3,421
As a result of the Company's buyout of its limited partner's interest effective as of December 31, 1994, the limited partner had no interest in the operating results of the HUNTER, EAGLE and FALCON for the three months ended June 30, 1995; therefore, no minority interest is reflected in the June 1995 quarter. The increase in provision for income taxes for the three months and nine months ended June 30, 1995 is due primarily to increases in foreign taxes in Malaysia and Australia. As a result of profitable operations in recent times in both of these countries, most tax carryforward attributes have been utilized, thereby, increasing exposure to foreign taxes. PAGE 11 LIQUIDITY AND CAPITAL RESOURCES Effective as of December 31, 1994, the Company has become the sole owner of the HUNTER, EAGLE and FALCON for an aggregate purchase price consisting of $13.3 million in cash plus the issuance of a $3 million note payable. The note is payable in four annual $750,000 installments and bears interest at six percent. In conjunction with this acquisition, the Company contributed to equity in Deep Seas $7.9 million principal amount of Deep Seas' long-term debt acquired by the Company in 1990 with a current discounted basis of $6.3 million. Effective on January 1, 1995, all notes payable to limited partner by Deep Seas (approximately $14 million) were cancelled with approximately $6 million (net of $8 million previously reclassified as "minority interest in partnership") reclassified as equity in Deep Seas. Fabrication work continues on RIG-200 (the state-of-the-art modular platform rig jointly owned by the Company and Helmerich & Payne, Inc.). At June 30, 1995, the Company had invested approximately $4.7 million in the RIG- 200 project, with total investment by the Company to be approximately $13 million. The construction of this rig is scheduled to be completed toward the end of calendar 1995; however, the Australian company that has contracted for the use of the rig has indicated that actual drilling operations may not commence until 1997. Upon completion and delivery of RIG-200 in Australia, the Company should commence receiving financial enhancement from this investment; however, the maximum enhancement may not occur until sometime in fiscal year 1997. The SOUTHERN CROSS remains idle in Australia as the Company pursues future contract opportunities. Before this unit can be placed into service, additional capital estimated to range from $6 million to $30 million, depending upon rig configuration, will have to be invested into the rig. In addition to pursuing a contract opportunity for the SOUTHERN CROSS, the Company is also pursuing other expansion opportunities. In order to complete the funding of the acquisition of the 50 percent limited partner's interest and continue funding RIG-200 without having to sell any of its available for sale securities, the Company borrowed $3 million in April 1995 under a short- term loan facility. The Company currently plans to fund the RIG-200 investment from internally generated funds; however, should the Company receive a contract for the SOUTHERN CROSS or receive a commitment on another expansion opportunity, funding of additional investment opportunities could require some additional borrowings under the short-term $10 million facility. PAGE 12 The Company continues to experience no difficulties in collecting its accounts receivable , with no requirement for an allowance for doubtful accounts. After selling in June 1995 33,000 shares of its Mobil Corporation common stock at a gain of $2.4 million, the Company still owns 32,000 shares of Mobil common stock. Thus, in accordance with Financial Accounting Standard Board Statements No. 115, available for sale securities and shareholders' equity have been increased by $1.5 million to reflect the net unrealized gains on this stock holding. This change in accounting principals has no effect on net income. Including the planned idle periods for surveys and maintenance on the RICHMOND and EAGLE during the fourth quarter, the Company should conclude fiscal year 1995 with an equipment utilization rate of 99 percent. However, due to the planned short-term idle periods for the RICHMOND and EAGLE and increased foreign tax expenses, management anticipates some reduction in the level of profitability in the second half of fiscal year 1995 compared to the first half of fiscal 1995. The Company will continue its emphasis on maintaining a high level of equipment utilization. ATWOOD OCEANICS, INC. AND SUBSIDIARIES PART II. OTHER INFORMATION Item 6. Reports on Form 8-K On April 5, 1995, the Company filed a Form 8-K related to the March 27, 1995 announcement that it executed agreements to acquire the 50 percent limited partner's interest in the HUNTER, EAGLE and FALCON. 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: 8/15/95 s/JAMES M. HOLLAND James M. Holland Senior Vice President and Chief Accounting Officer EX-27 2 ART. 5 FOR FORM 10-Q DATED JUNE 30, 1995
5 0000008411 ATWOOD OCEANICS, INC. 1,000 9-MOS SEP-30-1995 OCT-01-1994 JUN-30-1995 14,060 25,844 14,621 0 4,632 34,515 182,947 93,853 150,474 19,057 36,319 6,588 0 0 86,907 150,474 55,168 59,718 41,881 41,881 8,561 0 2,207 7,977 1,756 6,221 0 0 0 6,221 .95 .95