-----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, KdZa//sETUl7IIIUOcY9RXoY3Nlp1dfkbT6eQt9o8CgQdctNFITrtYXKNrn4tQ7n KOpsD6VfMzKEydq41BG2Kw== 0000008411-98-000010.txt : 19980814 0000008411-98-000010.hdr.sgml : 19980814 ACCESSION NUMBER: 0000008411-98-000010 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19980630 FILED AS OF DATE: 19980813 SROS: NYSE 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: SEC FILE NUMBER: 001-13167 FILM NUMBER: 98685048 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, 1998 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: 281-492-2929 --------------- 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 preceding 12 months and (2) has been subject to such filings requirements for the past 90 days. Yes X No Number of outstanding shares of Common Stock, $1 par value, as of July 31, 1998: 13,624,576 shares. =========================================================================== PART I. FINANCIAL INFORMATION ATWOOD OCEANICS, INC. AND SUBSIDIARIES The condensed consolidated financial statements 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 disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted, although management believes that the disclosures are adequate to make the information not misleading. The condensed consolidated financial statements reflect all adjustments which are, in the opinion of management, necessary to present fairly the financial position of the Company as of June 30, 1998 and September 30, 1997, and the results of its operations and cash flows for the three months and nine months ended June 30, 1998 and 1997, respectively. All adjustments were of a normal recurring nature. 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, 1997 Annual Report to Shareholders. PART I. ITEM I - FINANCIAL STATEMENTS ATWOOD OCEANICS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Unaudited) June 30, September 30, 1998 1997 (In thousands) ASSETS CURRENT ASSETS: Cash and cash equivalents $ 14,588 $ 19,264 Accounts receivable 27,200 16,353 Inventories of materials and supplies, at lower of average cost or market 7,658 7,004 Deferred tax assets 1,820 1,820 Prepaid expenses 769 2,610 ------ ------ Total Current Assets 52,035 47,051 ------ ------ SECURITIES HELD FOR INVESTMENT: Held-to-maturity, at amortized cost 22,584 22,581 Available-for-sale, at fair value 405 389 ------ ------ 22,989 22,970 ------ ------ PROPERTY AND EQUIPMENT: Drilling vessels, equipment and drill pipe 304,420 249,496 Other 5,906 5,363 ------ ----- 310,326 254,859 Less-accumulated depreciation 124,000 110,936 ------- ------- Net Property and Equipment 186,326 143,923 ------- ------- DEFERRED COSTS AND OTHER ASSETS 1,903 1,386 ----- ----- $263,253 $215,330 ======== ======== PART I. ITEM I - FINANCIAL STATEMENTS ATWOOD OCEANICS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Unaudited) June 30, September 30, 1998 1997 (In thousands) LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Current maturities of long-term debt $ 750 $ 750 Accounts payable 4,343 5,323 Accrued liabilities 11,676 13,429 ------ ------ Total Current Liabilities 16,769 19,502 ------ ------ LONG-TERM DEBT, net of current maturities 72,000 58,750 ------ ------ DEFERRED CREDITS: Income taxes 4,819 1,810 Other 15,913 12,579 ------ ------ 20,732 14,389 ------ ------ SHAREHOLDERS' EQUITY: Preferred stock, no par value; 1,000,000 shares authorized, none outstanding --- --- Common stock, $1 par value; 20,000,000 share authorized with 13,625,000 and 13,546,000 shares issued and outstanding 13,625 13,546 Paid-in capital 50,684 50,104 Net unrealized holding loss on available-for-sale securities (101) (112) Retained earnings 89,544 59,151 ------ ------ Total Shareholders' Equity 153,752 122,689 ------- ------- $ 263,253 $ 215,330 ========= ========= PART I. ITEM I - FINANCIAL STATEMENTS ATWOOD OCEANICS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) Three Months Ended Nine Months Ended June 30, June 30, ------------------ ------------------- 1998 1997 1998 1997 (In thousands, (In thousands, except per except per share amounts) share amounts) REVENUES: Contract drilling and management $ 39,294 $ 22,069 $ 116,946 $ 64,967 -------- -------- --------- -------- COSTS AND EXPENSES: Contract drilling and management 17,088 12,894 49,765 37,532 Depreciation 4,572 2,493 13,454 7,205 General and administrative 1,826 1,432 5,657 4,636 ----- ----- ----- ----- 23,486 16,819 68,876 49,373 ------ ------ ------ ------ OPERATING INCOME 15,808 5,250 48,070 15,594 Other Income (expense) (305) 410 (1,312) 917 ----- --- ------- --- INCOME BEFORE INCOME TAXES 15,503 5,660 46,758 16,511 Provision for income taxes 5,469 1,998 16,365 5,816 ----- ----- ------ ----- NET INCOME $10,034 $3,662 $30,393 $10,695 ======= ====== ======= ======= EARNINGS PER SHARE Basic $ 0.74 $ 0.27 $2.24 $ 0.79 Diluted $ 0.72 $ 0.27 $2.20 $ 0.78 WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING Basic 13,623 13,492 13,581 13,456 Diluted 13,866 13,755 13,830 13,708 PART I. ITEM I - FINANCIAL STATEMENTS ATWOOD OCEANICS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Nine Months Ended June 30, ----------------------- 1998 1997 ----- ----- (In thousands) CASH FLOW FROM OPERATING ACTIVITIES: Net Income $30,393 $10,695 ------- ------- Adjustments to reconcile net income to net cash provided (used) by operating activities: Depreciation 13,454 7,205 Amortization of deferred items (1,780) 106 Deferred tax provision (benefit) 3,003 (550) Changes in assets and liabilities: Decrease (increase) in accounts receivable (10,847) 2,930 Increase (decrease) in accounts payable and accrued liabilities (2,733) 5,157 Deferred mobilization revenues 6,300 6,938 Other 597 (3,561) ----- ------ Total adjustments 7,994 18,225 ------ ------ Net cash provided by operating activities 38,387 28,920 ------ ------ CASH FLOW FROM INVESTING ACTIVITIES: Capital expenditures (56,972) (41,055) ------- ------ Net cash used by investing activities (56,972) (41,055) ------- ------ CASH FLOW FROM FINANCING ACTIVITIES: Proceeds from credit facilities 14,000 20,000 Proceeds from exercises of stock options 659 737 Principal payments on long-term debt (750) (16,452) ---- ------- Net cash provided by financing activities 13,909 4,285 ------ ------- NET DECREASE IN CASH AND CASH EQUIVALENTS (4,676) (7,850) CASH AND CASH EQUIVALENTS, at beginning of period 19,264 17,565 ------ ------ CASH AND CASH EQUIVALENTS, at end of period $14,588 $9,715 ======= ====== Supplemental disclosure of cash flow information: Cash paid during the period for domestic and foreign income tax $ 14,936 $ 3,799 ======== ======= Cash paid during the period for interest, net of amount capitalized $ 2,714 $ 1,242 ======== ======= PART I. ITEM 2 ATWOOD OCEANICS, INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS This Form 10-Q includes "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. 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. Important factors that could cause actual results to differ materially from the Company's expectations ("Cautionary Statements") are disclosed within this item and elsewhere in this Form 10-Q. RESULTS OF OPERATIONS Contract revenues and net income for the three months ended June 30, 1998 increased 78% and 174%, respectively, compared to the three months ended June 30, 1997. For the first nine months of fiscal 1998 compared to the first nine months of fiscal 1997, contract revenues and net income increased 80% and 184%, respectively. These improvements in operating results reflect the impact of the ATWOOD HUNTER and the ATWOOD SOUTHERN CROSS commencing drilling operations in late 1997 after upgrades and of increases in dayrate revenues for the ATWOOD EAGLE, ATWOOD FALCON, RIG 200 and RICHMOND. A comparative analysis of contract revenues is as follows: CONTRACT REVENUES ------------------------------------------------------------ THREE MONTHS ENDED NINE MONTHS ENDED -------------------------- ----------------------------- June 30, June 30, June 30, June 30, 1998 1997 Variance 1998 1997 Variance (In millions) ATWOOD HUNTER $8.7 $0.0 $8.7 $26.6 $3.5 $23.1 SOUTHERN CROSS 6.4 0.0 6.4 13.5 0.0 13.5 ATWOOD EAGLE 8.2 5.0 3.2 24.2 14.3 9.9 RICHMOND 3.1 2.3 0.8 8.2 6.5 1.7 ATWOOD FALCON 4.7 4.2 0.5 17.3 12.5 4.8 RIG-200 1.9 1.9 --- 5.9 3.9 2.0 SEAHAWK 2.8 2.8 --- 8.5 8.4 0.1 RIG-19 1.9 2.1 (0.2) 4.9 4.9 0.0 VICKSBURG 0.0 1.3 (1.3) 1.9 3.8 (1.9) NORTH RANKIN `A' 0.9 0.6 0.3 1.8 1.6 0.2 GOODWYN `A' 0.7 1.9 (1.2) 4.1 5.6 (1.5) ----- ----- ----- ------ ----- ----- $39.3 $22.1 $17.2 $116.9 $65.0 $51.9 ===== ===== ===== ====== ===== ===== In April 1998, the ATWOOD EAGLE was relocated from West Africa to Egypt. While drilling off the coast of Egypt, the rig incurred some damage which did not interfere with its ability to complete its drilling program in Egypt, but did require repairs at a shipyard in June prior to commencing its current drilling program offshore Italy. Except for a $250,000 insurance deductible, the cost of the repairs should be covered by insurance. The third quarter operating results for the ATWOOD EAGLE reflect 15 days with no revenue while the rig was undergoing repairs. The ATWOOD FALCON was transported to a Singapore shipyard in late May to commence its water-depth upgrade which should take five to six months to complete. The VICKSBURG is also in a Singapore shipyard undergoing upgrade and cantilever conversion. The decline in revenues from the GOODWYN `A' is due to the rig being upgraded by its Australian owner with the Company providing reduced services to the rig during the upgrade period. Contract drilling and management cost increased 33% for both the three months and nine months ended June 30, 1998 compared to the same periods in fiscal 1997. This increase was primarily due to commencement of drilling operations for the ATWOOD SOUTHERN CROSS and ATWOOD HUNTER following upgrades. A comparative analysis of contract drilling and management costs is as follows: CONTRACT DRILLING AND MANAGEMENT COSTS --------------------------------------------------------- THREE MONTHS ENDED NINE MONTHS ENDED -------------------------- ----------------------- June 30, June 30, June 30, June 30, 1998 1997 Variance 1998 1997 Variance -------- ------- -------- -------- (In millions) ATWOOD HUNTER $2.5 $0.0 $2.5 $6.8 $ 1.9 $4.9 SOUTHERN CROSS 3.2 0.0 3.2 7.7 0.0 7.7 ATWOOD EAGLE 3.1 2.6 0.5 8.0 7.5 0.5 RICHMOND 1.6 1.3 0.3 4.4 3.9 0.5 ATWOOD FALCON 1.2 1.8 (0.6) 4.9 5.2 (0.3) RIG-200 0.6 0.7 (0.1) 2.0 1.3 0.7 SEAHAWK 1.5 1.9 (0.4) 4.5 5.3 (0.8) RIG-19 1.4 1.6 (0.2) 3.6 3.9 (0.3) VICKSBURG 0.0 1.0 (1.0) 1.4 2.7 (1.3) NORTH RANKIN `A' 0.9 0.2 0.7 1.6 0.6 1.0 GOODWYN `A' 0.7 1.4 (0.7) 3.3 4.4 (1.1) OTHER 0.4 0.4 0.0 1.6 0.8 0.8 ---- ---- ---- ---- ---- ---- $17.1 $12.9 $4.2 $49.8 $37.5 $12.3 ===== ===== ===== ===== ===== ===== The increase in operating costs for the ATWOOD EAGLE was due to higher repair and maintenance costs for the quarter. Higher operating costs for the RICHMOND were due to increases in repair and maintenance costs and payroll related costs. During the ATWOOD FALCON and VICKSBURG upgrade periods, no operating costs are being incurred, resulting in lower operating costs in the current year than in comparable periods of fiscal 1997. The decrease in the SEAHAWK operating costs is primarily due to Malaysian currency exchange gains. The increase in NORTH RANKIN `A' costs and the decrease in GOODWYN `A' costs are due to an increase in personnel service provided to the NORTH RANKIN `A' with a decrease in service provided to GOODWYN `A' during its upgrade period. The 22% increase in general and administrative expenses for the nine months ended June 30, 1998 is primarily due to higher payroll related costs. The increase in depreciation expense is due to the commencing of upgrade costs depreciation of the ATWOOD HUNTER and ATWOOD SOUTHERN CROSS. A comparative analysis of depreciation expense is as follows: DEPRECIATION EXPENSE --------------------------------------------------------------- THREE MONTHS ENDED NINE MONTHS ENDED ------------------------------- ----------------------------- June 30, June 30, June 30, June 30, 1998 1997 Variance 1998 1997 Variance ------ ------ -------- ------ --------- -------- (In millions) ATWOOD HUNTER $1.2 $0.0 $1.2 $3.7 $0.3 $3.4 SOUTHERN CROSS 0.9 0.0 0.9 2.1 0.0 2.1 ATWOOD EAGLE 0.5 0.5 0.0 1.6 1.6 0.0 ATWOOD FALCON 0.4 0.7 (0.3) 1.8 2.0 (0.2) SEAHAWK 0.6 0.6 0.0 1.8 1.7 0.1 RIG-200N 0.5 0.5 0.0 1.6 1.0 0.6 RICHMOND 0.2 0.1 0.1 0.4 0.3 0.1 OTHER 0.3 0.1 0.2 0.5 0.3 0.2 --- --- --- --- --- --- $4.6 $2.5 $2.1 $13.5 $7.2 $6.3 ==== ==== ==== ==== ==== ==== A summary of the contract status of each of the Company's wholly or partially owned drilling rigs as of August 5, 1998 is as follows: NAME OF RIG LOCATION CONTRACT STATUS ATWOOD HUNTER United States Term contract (estimated completion Gulf of Mexico September 2000). ATWOOD SOUTHERN CROSS Australia Estimated completion September 1998. ATWOOD FALCON Singapore Currently undergoing a major upgrade, which when completed (estimated the first quarter of fiscal 1999), the rig will commence a three-year drilling program. ATWOOD EAGLE Mediterranean Sea Term contract (estimated completion March 1999).Current contract discussions which, if executed, should have rig under contract for all of fiscal 1999. RIG-200 Australia Term contract (minimum duration of two-years from January 1997). SEAHAWK Malaysia Term contract (estimated completion December 1998). Currently discussing contract extension. VICKSBURG Singapore Undergoing upgrade and refurbishment which could extend into the first quarter of fiscal 1999. RIG-19 Australia Term contract (estimated completion March 1999). RICHMOND United States Gulf of Mexico Term contract(estimated completion March 1999). LIQUIDITY AND CAPITAL RESOURCES For the nine months ended June 30, 1998 compared to the same period in fiscal 1997, operating cash flows (before changes in working capital and other assets and liabilities) increased 158%. During the first nine-months of fiscal 1998, the Company utilized its internally generated funds plus an additional $14 million borrowed under the $125 million revolving credit facility to invest $12.7 million in completing the upgrade and refurbishment of the ATWOOD SOUTHERN CROSS, to invest $20.9 million in the upgrade and refurbishment of the VICKSBURG, to invest $18.8 million in the upgrade of the ATWOOD FALCON, and to invest $4.6 million in other capital expenditures. The Company anticipates spending between $35 and $40 million on the upgrade and refurbishment of the VICKSBURG and $50 million on the upgrade of the ATWOOD FALCON. The VICKSBURG is currently being marketed in its upgraded mode, and despite near-term market softness, the Company expects this enchanced, quality rig to be a significant contributor to its success over the long-term. Lower crude oil prices are causing reduction in exploration and production budgets with corresponding downward pressure on dayrates for certain drilling units. Despite this present softness in the market, the Company's contract commitments on its third-generation semisubmersibles should provide for a high level of revenues during fiscal 1999. Higher dayrate revenues have resulted in accounts receivable increasing from $16.4 million at September 30, 1997 to $27.2 million at June 30, 1998. The Company continues to experience no difficulties in collecting its accounts receivable, with no requirement for an allowance for doubtful accounts. Anticipated operating cash flows plus proceeds available under the revolving credit facility should provide sufficient cash resources to fund all currently planned rig upgrades. Depending upon additional capital investments, anticipated future operating cash flows are expected to provide the Company with the option of repaying funds borrowed under the revolving credit facility prior to the required maturity. The Company will continue to review and adjust its planned capital expenditures and financing of such expenditures in light of current market conditions. YEAR 2000 The Company is in the process of completing a Year 2000 assessment of its worldwide operations. Certain software operating systems are in the process of being modified so that they function properly with respect to dates in the Year 2000 and thereafter. The Company does not expect that such costs to modify existing software and conversions to new software will be material to its financial condition or results of operations. The Company believes that with modifications to existing software and conversion to new software, the Year 2000 issue will not pose significant operational problems and will not materially affect its financial condition or results of operations. The Company does not currently have information concerning the Year 2000 compliance of its suppliers and customers. In the event the Company's major suppliers or customers do not successfully and timely achieve Year 2000 compliance, the Company's operations could be adversely affected. NEW ACCOUNTING PRONOUNCEMENT In June 1998, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 133, Accounting for Derivative Instruments and Hedging Activities. The Statement establishes accounting and reporting standard requiring that every derivative instrument (including certain derivative instruments embedded in other contracts) be recorded in the balance sheet as either an asset or liability measured at its fair value. Statement 133 is effective for fiscal year beginning after June 14, 1999. In the opinion of management, the adoption of Statement 133 will not have a material impact on the Company's financial statements. ATWOOD OCEANICS, INC. AND SUBSIDIARIES PART II - OTHER INFORMATION ITEM 5. OTHER INFORMATION RECENT DEVELOPMENTS Well control measures are currently being undertaken on a well being drilled by the semisubmersible, ATWOOD EAGLE, offshore Italy, after encountering high pressure during drilling operations on August 10, 1998. The rig has not been damaged. TO OUR SHAREHOLDERS AND EMPLOYEES Contract revenues of $116.9 million and net income of $30.4 million for the nine months ended June 30, 1998 were not only a record performance for a nine-month period, but exceeded any historical results for a twelve-month period. Net income of $10.0 million, on contract revenue of $39.3 million, for the three months ended June 30, 1998, was the Company's second best quarterly performance, exceeded only by the results for the quarter ended March 31, 1998. The record earnings and cash flow currently being experienced by the Company are due to the renewal in late 1997 and early 1998 of several of the Company's contracts at higher dayrates and the commencement of term contracts in late 1997 for the ATWOOD HUNTER and ATWOOD SOUTHERN CROSS, following the major enhancement and water-depth upgrade of both units. The Company's three third-generation semisubmersibles, ATWOOD HUNTER, ATWOOD FALCON and ATWOOD EAGLE should account for approximately 70 percent of fiscal year 1998 gross margin from drilling operations. With long-term contracts for the ATWOOD HUNTER and ATWOOD FALCON into year 2000 and 2001, respectively, and with the ATWOOD EAGLE contracted for a significant portion of 1999, over 80 percent of potential revenue days for these high-margin rigs are already committed for the next twelve months. In the near term, lower crude oil prices are causing reductions in exploration and production budgets with corresponding downward pressure on dayrates for certain drilling units with contracts expiring during 1998. Despite this present softness in the market, the Company's contract commitments should provide for a high level of revenues during fiscal 1999. We believe that the longer-term outlook remains positive. The ATWOOD FALCON is in a Singapore shipyard undergoing major upgrade to 3,500 ft. water-depth for a three-year contract in the Philippines expected to commence during the first quarter of fiscal year 1999. The jack-up, VICKSBURG, is also undergoing a significant cantilever upgrade in Singapore. The Company is currently exploring contract opportunities for the VICKSBURG and despite near-term market softness, expects this enhanced, quality rig to be a significant contributor to the Company's success over the longer-term. The ATWOOD EAGLE is in Italy drilling its second well in the Mediterranean Sea. Repairs to the ATWOOD EAGLE from damage it incurred while operating off the coast of Egypt were completed ahead of schedule. A contract has been executed for the ATWOOD EAGLE to drill an estimated 100 days in Egypt at an increase in dayrate following completion of its initial 200-day contract commitments in Italy and Egypt. The ATWOOD HUNTER is on its fourth well of a three-year contract in the Gulf of Mexico following major upgrade last year to 3,500 ft. water-depth. The ATWOOD SOUTHERN CROSS is drilling its fifth well in Australia following major upgrade in late 1997. While present market conditions could impact the financial performance of the SOUTHERN CROSS following its current contract commitment, we believe that the rig will be a significant contributor to financial results on a longer-term basis. The contract for the RICHMOND, continuously employed in the U.S. Gulf of Mexico since early 1993, has been extended for another 6 months to March 31, 1999. While the extension will be at lower rates due to current market conditions, the rig's unique operating characteristics and performance are contributing to its full employment. On a longer-term basis, we believe the RICHMOND will continue to be an attractive unit with good upside potential. The SEAHAWK is a candidate for upgrade and enhancement as a semisubmersible tender-assist unit following the completion of its current drilling program in fiscal year 1999. The Company is committed to maintaining its reputation for international operations and premium equipment. The pursuit of safe operations remains foremost on our agenda. Highly skilled personnel, quality and diverse equipment, financial strength, and a contract backlog and mix provide the Company a strong foundation for protecting and enhancing shareholders' value. We appreciate the support of employees, shareholders, and clients, all of whom play important roles in the Company's success. John Irwin President and Chief Executive Officer Atwood Oceanics, Inc. August 5, 1998 NOTICE OF SHAREHOLDER PROPOSALS The Securities and Exchange Commission recently adopted amendments to the discretionary voting provisions of Rule 14a-4 of the proxy rules. The changes became effective June 29, 1998. The amendments were intended to clarify when management may use the discretionary authority customarily contained in a proxy to vote against shareholder proposals made outside the mechanism of Rule 14a-8, such as proposals made by a shareholder from the floor of the meeting or through an independent proxy solicitation. Rule 14a-4(c) has always clearly authorized management to use discretionary authority granted in a proxy to vote against any shareholder proposal validly omitted from the Company's proxy materials pursuant to Rule 14a-8. With respect to proposals made entirely outside the mechanism of Rule 14a-8, such as a proposal that the proponent makes only from the floor of the meeting or a proposal that is the subject of an independent proxy solicitation by the proponent, Rule 14a-4(c) was somewhat ambiguous. Under revised Rule 14a-4(c), management may exercise discretionary authority to vote against any shareholder proposal of which they did not have notice at least 45 days before the date on which the Company first mailed its proxy materials for the prior year's annual meeting. The Company's proxy statement or proxy card must simply state that management intends to use its discretionary authority in this way as a general matter. If management receives notice of a non-14a-8 proposal on or before the required date, revised Rule 14a-4(c) still permits management to use discretionary voting authority to vote against the proposal. To do so, however, the Company's proxy materials must also include advice on the nature of the particular matter and how the Company intends to exercise its discretion on it. Management may not use discretionary authority under revised Rule 14a-4(c) to vote against a proposal with respect to which timely notice has been given, if, in addition, the proponent (1) provides the Company by the notice date with a written statement that it intends to solicit proxies from the holders of at least the percentage of the Company's voting shares required to carry the proposal, (2) includes a statement to that effect in the proponent's proxy statement, and (3) thereafter provides the registrant with a verification that such a solicitation has occurred. In such a case, management would have to solicit specific proxy authority in its own proxy materials in order to vote against the proposal rather than rely on discretion. Revised Rule 14a-4(c) further provides that in the event of any advance notice bylaw requiring that notice of a shareholder proposal be given by a certain date, then the date designated in the advance notice bylaw will apply in lieu of the 45 days designated in revised Rule 14a-4(c). The Company's Bylaws do not currently include an advance notice requirement for shareholder proposals. Therefore, the 45-day period described above will apply for purposes of determining the ability of management to exercise discretionary authority with respect to shareholder proposals pursuant to revised Rule 14a-4(c). At the next annual meeting of shareholders, management may exercise discretionary authority under its proxies, pursuant to revised Rule 14a-4(c), to vote against any shareholder proposal of which the Company does not have notice on or before November 28, 1998, which is 45 days before the date on which the Company first mailed its proxy materials for the prior year's annual meeting. ATWOOD OCEANICS, INC. AND SUBSIDIARIES PART II. OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits 27. Financial Data Schedule 99.1 Press Release on Atwood Eagle dated August 11, 1998 (b) Reports on Form 8-K None 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. Date: August 13, 1998 s/JAMES M. HOLLAND ------------------------- James M. Holland Senior Vice President and Chief Accounting Officer EXHIBIT INDEX 27. FINANCIAL DATA SCHEDULE 99.1 PRESS RELEASE ON ATWOOD EAGLE DATED AUGUST 11, 1998 EX-27 2 FDS --
5 This schedule contains summary financial information extracted from the condensed consolidated financial statements of Atwood Oceanics, Inc. and is qualified in its entirety by references to such financial statements. 0000008411 ATWOOD OCEANICS, INC. 1,000 USD 9-MOS SEP-30-1998 OCT-01-1997 JUN-30-1998 1 14,588 22,989 27,200 0 7,658 52,035 310,326 124,000 263,253 16,769 72,000 0 0 13,625 140,127 263,253 116,946 116,946 55,422 68,876 0 0 3,072 46,758 16,365 30,393 0 0 0 30,393 2.24 2.20
EX-99.1 3 EXHIBIT 99.1 HOUSTON, TEXAS 11 AUGUST 1998 FOR IMMEDIATE RELEASE: ATWOOD OCEANICS, INC. (A HOUSTON BASED INTERNATIONAL OFFSHORE DRILLING CONTRACTOR - NYSE: ATW) ANNOUNCED TODAY THAT IT WAS UNDERTAKING WELL CONTROL MEASURES ON A WELL BEING DRILLING BY ITS SEMISUBMERSIBLE ATWOOD EAGLE, OFFSHORE ITALY, AFTER ENCOUNTERING HIGH PRESSURE DURING DRILLING OPERATIONS. THE RIG HAS NOT BEEN DAMAGED. AS A PRECAUTIONARY MEASURE, NON-ESSENTIAL PERSONNEL HAVE BEEN REMOVED FROM THE RIG AND 33 PERSONNEL REMAIN ON BOARD DURING THESE OPERATIONS. CONTACT: JIM HOLLAND (281) 492-2929 -----END PRIVACY-ENHANCED MESSAGE-----