-----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, WmbZHXoIwipQm2JhI0Ehef1hHJWwNXFMAphRHbTG4dOt8kMVz6R6sBrOeMqJRODz sSXZwytj5uihvxCcpGKgJw== 0000008411-99-000008.txt : 19990217 0000008411-99-000008.hdr.sgml : 19990217 ACCESSION NUMBER: 0000008411-99-000008 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19981231 FILED AS OF DATE: 19990216 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: 99541542 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 DECEMBER 31, 1998 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: 281-492-2929 --------------- 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 December 31, 1998 13,624,926 shares of Common Stock $1 par value - ------------------------------------------------------------------------------ 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 December 31, 1998 and September 30, 1998, and the results of its operations and cash flows for the three months ended December 31, 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, 1998 Annual Report to Shareholders. PART I. ITEM I - FINANCIAL STATEMENTS ATWOOD OCEANICS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS December 31, September 30, 1998 1998 ------------ ------------- (Unaudited) (In thousands) ASSETS CURRENT ASSETS: Cash and cash equivalents $ 12,152 $ 11,621 Accounts receivable 30,636 27,730 Inventories of materials and supplies, at lower of average cost or market 8,269 8,076 Deferred tax assets 880 880 Prepaid expenses 2,834 3,280 -------- -------- Total Current Assets 54,771 51,587 -------- -------- SECURITIES HELD FOR INVESTMENT: Held-to-maturity, at amortized cost 22,586 22,585 Available-for-sale, at fair value 186 323 -------- -------- 22,772 22,908 -------- -------- PROPERTY AND EQUIPMENT, at cost: Drilling vessels, equipment and drill pipe 343,413 327,520 Other 6,513 6,128 -------- -------- 349,926 333,648 Less-accumulated depreciation 129,388 128,016 -------- -------- Net Property and Equipment 220,538 205,632 -------- -------- DEFERRED COSTS AND OTHER ASSETS 1,702 1,610 -------- -------- $299,783 $281,737 ======== ======== PART I. ITEM I - FINANCIAL STATEMENTS ATWOOD OCEANICS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS December 31, September 30, 1998 1998 ----------- ------------- (Unaudited) (In thousands) LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Current maturities of long-term debt $ ---- $ 750 Accounts payable 6,511 14,250 Accrued liabilities 15,265 11,723 -------- -------- Total Current Liabilities 21,776 26,723 -------- -------- LONG-TERM DEBT, net of current liabilities 85,000 72,000 -------- -------- DEFERRED CREDITS: Income taxes 4,772 4,820 Other 17,782 14,428 -------- -------- 22,554 19,248 -------- -------- 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 13,625,000 shares issued and outstanding 13,625 13,625 Paid-in capital 51,781 51,781 Net unrealized holding loss on available-for-sale securities (244) (155) Retained earnings 105,291 98,515 -------- -------- 170,453 163,766 -------- -------- $299,783 $281,737 ======== ======== PART I. ITEM I - FINANCIAL STATEMENTS ATWOOD OCEANICS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) Three Months Ended December 31, 1998 1997 ---------- ---------- In thousands except per share amounts) REVENUES: Contract drilling $ 34,252 $ 35,768 Contract management 725 456 -------- -------- 34,977 36,224 -------- -------- COSTS AND EXPENSES: Contract drilling 15,911 16,069 Contract management 723 354 Depreciation 5,327 4,072 General and administrative 2,190 1,984 -------- -------- 24,151 22,479 -------- -------- OPERATING INCOME 10,826 13,745 -------- -------- OTHER INCOME (EXPENSE): Interest expense (824) (1,039) Interest income 586 583 -------- ------- (238) (456) -------- ------- INCOME BEFORE INCOME TAXES 10,588 13,289 PROVISION FOR INCOME TAXES 3,812 4,612 -------- ------- NET INCOME $ 6,776 $ 8,677 ======== ======= EARNINGS PER SHARE Basic $ .50 $ .64 Diluted $ .49 $ .63 AVERAGE COMMON SHARES OUTSTANDING Basic 13,625 13,550 Diluted 13,755 13,855 PART I. ITEM I - FINANCIAL STATEMENTS ATWOOD OCEANICS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Three Months Ended December 31, 1998 1997 (In thousands) CASH FLOW FROM OPERATING ACTIVITIES: Net Income $ 6,776 $ 8,677 -------- ------- Adjustments to reconcile net income to net cash provided (used) by operating activities: Depreciation 5,327 4,072 Amortization of deferred items 124 208 Changes in assets and liabilities: Increase in accounts receivable (2,906) (6,351) Increase (decrease) in accounts payable and accrued liabilities 3,776 (293) Net mobilization fees 3,357 1,200 Other 223 1,360 -------- ------- 9,901 196 -------- ------- Net cash provided by operating activities 16,677 8,873 -------- ------- CASH FLOW FROM INVESTING ACTIVITIES: Capital expenditures (28,396) (25,501) -------- ------- Net cash used by investing activities (28,396) (25,501) -------- ------- CASH FLOW FROM FINANCING ACTIVITIES: Proceeds from revolving credit facility 13,000 7,000 Proceeds from exercises of stock options --- 33 Principal payments on long-term debt (750) (750) -------- ------- Net cash provided by financing activities 12,250 6,283 -------- ------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 531 (10,345) CASH AND CASH EQUIVALENTS, at beginning of period 11,621 19,264 -------- ------- CASH AND CASH EQUIVALENTS, at end of period $ 12,152 $ 8,919 ======== ======= - ------------- Supplemental disclosure of cash flow information: Cash paid during the quarter for domestic and foreign income tax $ 1,622 $ 1,022 ======== ========= Cash paid during the quarter for interest, net of amount capitalized $ 1,769 $ 1,034 ======== ========= 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 Low oil prices continue to curtail worldwide drilling activities, especially for jack-ups and shallow water drilling rigs. In response to low oil prices, international petroleum exploration and development companies are reducing their capital expenditures on drilling programs. It appears that 1999 will be a challenging year for the drilling industry, with current worldwide fleet utilization for mobile offshore rigs at 80 percent. Currently, the ATWOOD SOUTHERN CROSS is the Company's only rig without a drilling contract. The Company anticipates lower utilization during 1999; however, term contracts in place for the ATWOOD HUNTER, ATWOOD FALCON, ATWOOD EAGLE, VICKSBURG, and SEAHAWK should, despite near-term market softness, provide the Company with a high level of revenues during fiscal year 1999 and to some extent, into fiscal year 2000. Despite current market softness, the Company remains optimistic about the longer-term market outlook. RESULTS OF OPERATIONS Contract revenues for the three months ended December 31, 1998 decreased 3%, compared to the three months ended December 31, 1997 A comparative analysis of contract revenues is as follows: CONTRACT REVENUES -------------------------------------------------- First Quarter First Quarter Fiscal 1999 Fiscal 1998 Variance ----------------- -------------- ------------ ATWOOD EAGLE $ 9.1 $ 7.4 $ 1.7 ATWOOD FALCON 5.4 4.5 0.9 SEAHAWK 2.9 2.8 0.1 RIG-200 2.1 2.0 0.1 RIG-19 1.9 1.9 0.0 RICHMOND 2.4 2.7 (0.3) ATWOOD HUNTER 8.7 9.3 (0.6) ATWOOD SOUTHERN CROSS 0.0 1.4 (1.4) VICKSBURG 0.4 1.9 (1.5) GOODWYN `A'/NORTH RANKIN `A' 2.1 2.3 (0.2) $35.0 $36.2 $(1.2) The increase in revenue for the ATWOOD EAGLE is due to an increase in contract dayrates when the rig relocated from West Africa to the Mediterranean Sea in March/April 1998. During the first quarter of fiscal 1998, the ATWOOD HUNTER received some enhancement in revenues from performing some limited special drilling services. Such additional services were not performed during the first quarter of fiscal 1999 accounting for the decrease in revenues. Due to current curtailed worldwide drilling activities due to the low oil prices, the Company has been unable to obtain a contract for the ATWOOD SOUTHERN CROSS since it completed its last contract in September 1998. The decline in revenues for the RICHMOND is also due to lower dayrates dictated by the current market environment. The ATWOOD FALCON commenced drilling in November 1998 at an enhanced dayrate level following its upgrade; while the VICKSBURG did not complete its upgrade until the end of the first quarter of fiscal 1999 accounting for the decrease in revenue. Contract drilling and management costs increased only one percent in the first quarter of fiscal 1999 compared to the first quarter of fiscal 1998. An analysis of contract drilling and management costs by rig is as follows: CONTRACT DRILLING AND MANAGEMENT COSTS --------------------------------------------------- First Quarter First Quarter Fiscal 1999 Fiscal 1998 Variance ---------------- ------------------ ------------ ATWOOD EAGLE $ 3.5 $ 2.1 $ 1.4 ATWOOD HUNTER 2.6 2.2 0.4 ATWOOD SOUTHERN CROSS 1.5 1.1 0.4 RICHMOND 1.6 1.5 0.1 RIG-200 0.6 0.7 (0.1) RIG-19 1.4 1.5 (0.1) SEAHAWK 1.6 1.7 (0.1) ATWOOD FALCON 1.2 1.8 (0.6) VICKSBURG 0.3 1.4 (1.1) GOODWYN `A'/NORTH RANKIN `A' 1.7 1.7 0.0 OTHER 0.6 0.7 (0.1) $16.6 $16.4 $ 0.2 The increase in costs for the ATWOOD EAGLE is due to operating costs in the Mediterranean Sea being higher than its previous area of operation in West Africa. The ATWOOD HUNTER encountered higher maintenance expenses during the first quarter of fiscal 1999 accounting for its increase in costs. Even though the ATWOOD SOUTHERN CROSS earned no revenues during the first quarter of fiscal 1999, the Company maintained its full operating crew while pursuing a new contract opportunity. Since the ATWOOD SOUTHERN CROSS was completing its upgrade during the first part of the first quarter of fiscal 1998, it did not have a complete quarter of personnel costs compared to the first quarter of fiscal 1999 which accounts for its increase in operating costs. The increase in operating costs for the ATWOOD EAGLE, ATWOOD HUNTER and ATWOOD SOUTHERN CROSS were virtually offset by declines in operating costs for the ATWOOD FALCON and VICKSBURG due to these rigs being in the shipyard completing their upgrades for a portion of the first quarter of fiscal 1999. The increase in depreciation expense is primarily due to a complete quarter of depreciation of the ATWOOD SOUTHERN CROSS in fiscal 1999 compared to a partial quarter of depreciation in fiscal 1998 and the recommencement of depreciation on the ATWOOD FALCON following completion of its upgrade. The Company does not recognize depreciation expense during the period a rig is out of service for a significant upgrade. A summary of the contract status of each of the Company's wholly or partially owned drilling rigs as of February 12, 1999 is as follows: NAME OF RIG LOCATION CONTRACT STATUS - ------------------ -------------------- ------------------------------------ ATWOOD FALCON Philippines Rig is under long-term contract which terminates in November 2001. ATWOOD HUNTER United States Gulf Rig is under long-term contract of Mexico which terminates in September 2000. ATWOOD EAGLE Mediterranean Sea Rig is contracted to several operators under a "rig sharing agreement". These contracts should provide the rig with a backlog of work for the remainder of fiscal 1999, with options for further work. VICKSBURG India Rig is under term contract which terminates in December 1999, with options for further work. SEAHAWK Malaysia The rig is expected to complete its current drilling program in March/April 1999 and then undergo upgrades during the remainder of calendar 1999. Following the upgrades, the rig will commence drilling under a four-year contract extension period, with a further option to extend. RICHMOND United States Gulf Rig is under contract which expires of Mexico in March 1999, with options for further work. RIG-19 and RIG-200 Australia Rigs are under term contracts with estimated completions between March and May 1999. ATWOOD SOUTHERN CROSS Australia Rig is available for contract since it became idle at the end of September 1998. LIQUIDITY AND CAPITAL RESOURCES During the first quarter of fiscal 1999, operating cash flow (before changes in working capital and other assets and liabilities) was $12.2 million compared to $13.0 million for the first quarter of fiscal 1998. During the first quarter of fiscal 1999, the Company utilized the internally generated funds plus an additional $13 million borrowed under the $125 million revolving credit facility to invest approximately $26.6 million in completing the upgrades of the ATWOOD FALCON and the VICKSBURG, and to fund approximately $1.8 in other capital expenditures. Currently, the only significant capital commitment for the remainder of fiscal 1999 is an approximate $19 million upgrade of the SEAHAWK. The SEAHAWK contract extension provides that the upgrade costs will be reimbursed by the operator and that the Company will be paid a reduced dayrate during the upgrade period. Subsequent to December 31, 1998, the Company repaid $1 million under the revolving credit facility resulting in a current outstanding debt of $84 million. Depending upon additional capital investments, anticipated future 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. ATWOOD OCEANICS, INC. AND SUBSIDIARIES PART II. OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits None (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. (Registrant) Date: February 15, 1999 s/JAMES M. HOLLAND ------------------ James M. Holland Senior Vice President and Chief Accounting Officer EX-27 2 FDS --
5 (Replace this text with the legend) 0000008411 Atwood Oceanics, Inc. 1,000 USD Year Sep-30-1999 Oct-01-1998 Dec-3-1998 1 12,152 22,772 30,636 0 8,269 54,771 349,926 129,388 299,783 21,776 85,000 0 0 13,625 51,537 299,783 34,977 34,977 18,824 24,151 0 0 824 10,588 3,812 6,776 0 0 0 6,776 .50 .49
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