-----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, IAmwMSvEC4fNzyadGNPhSfNCfqipsxkU7JXsJs5vGMeH24ChDFSgSzmcGRwAJdtk 7VEVEl1+VIPcBFJHKAYFmw== 0000008411-99-000015.txt : 19990813 0000008411-99-000015.hdr.sgml : 19990813 ACCESSION NUMBER: 0000008411-99-000015 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990630 FILED AS OF DATE: 19990812 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: 99686308 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, 1999 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___ The number of shares outstanding of the issuer's class of common stock, as of July 31, 1999; 13,671,526 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 June 30, 1999 and September 30, 1998, and the results of its operations and cash flows for the three months and nine months ended June 30, 1999 and 1998, 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 (Unaudited) June 30, September 30, ---------- --------------- 1999 1998 ---------- --------------- (In thousands) ASSETS CURRENT ASSETS: Cash and cash equivalents $ 32,216 $ 11,621 Accounts receivable 20,164 27,730 Inventories of materials and supplies, at lower of average cost or market 7,588 8,076 Deferred tax assets 880 880 Prepaid expenses 1,184 3,280 -------- -------- Total Current Assets 62,032 51,587 -------- -------- SECURITIES HELD FOR INVESTMENT: Held-to-maturity, at amortized cost 22,588 22,585 Available-for-sale, at fair value 317 323 -------- -------- 22,905 22,908 -------- -------- PROPERTY AND EQUIPMENT, at cost: Drilling vessels, equipment and drill pipe 352,445 327,520 Other 7,297 6,128 -------- -------- 359,742 333,648 Less-accumulated depreciation 141,309 128,016 -------- -------- Net Property and Equipment 218,433 205,632 -------- -------- DEFERRED COSTS AND OTHER ASSETS 1,321 1,610 -------- -------- $304,691 $281,737 ======== ======== PART I. ITEM I - FINANCIAL STATEMENTS ATWOOD OCEANICS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Unaudited) June 30, September 30, ------------- -------------- 1999 1998 ------------- -------------- (In thousands) LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Current maturities of long-term debt $ ---- $ 750 Accounts payable 5,601 14,250 Accrued liabilities 15,691 11,723 -------- -------- Total Current Liabilities 21,292 26,723 -------- -------- LONG-TERM DEBT, net of current liabilities 68,000 72,000 -------- -------- DEFERRED CREDITS: Income taxes 6,720 4,820 Other 21,538 14,428 -------- -------- 28,258 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 13,670,000 and 13,625,000 shares issued and outstanding in 1999 and 1998, respectively 13,670 13,625 Paid-in capital 52,222 51,781 Net unrealized holding loss on available-for-sale securities (160) (155) Retained earnings 121,409 98,515 -------- ------- 187,141 163,766 -------- ------- $304,691 $281,737 ======== ======== 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, June 30, June 30, 1999 1998 1999 1998 ------- -------- --------- -------- (In thousands except (In thousands except per share amounts) per share amounts) REVENUES: Contract drilling $ 38,503 $ 38,359 $113,632 $115,116 Contract management 224 935 1,397 1,830 -------- -------- -------- -------- 38,727 39,294 115,029 116,946 -------- -------- -------- -------- COSTS AND EXPENSES: Contract drilling 18,626 16,189 52,646 48,127 Contract management 141 899 1,256 1,638 Depreciation 6,008 4,572 17,792 13,454 General and administrative 1,710 1,826 5,816 5,657 -------- -------- ------- ------- 26,485 23,486 77,510 68,876 -------- -------- ------- ------- OPERATING INCOME 12,242 15,808 37,519 48,070 -------- -------- ------- ------- OTHER INCOME (EXPENSE) Interest expense (1,125) (931) (3,226) (3,072) Interest income 667 626 1,801 1,760 -------- -------- ------- -------- (458) (305) (1,425) (1,312) -------- -------- ------- ------- INCOME BEOFRE INCOME TAXES 11,784 15,503 36,094 46,758 PROVISION FOR INCOME TAXES 4,390 5,469 13,200 16,365 -------- -------- ------- ------- NET INCOME $ 7,394 $ 10,034 $22,894 $30,393 ======== ======== ======= ======= EARNINGS PER SHARE Basic $ .54 $ .74 $ 1.68 $ 2.24 Diluted .53 .72 1.66 2.20 WEIGHTED AVERAGE NUMBER OF COMMON SHARE OUTSTANDING Basic 13,669 13,623 13,641 13,581 Diluted 13,849 13,866 13,773 13,830 . PART I. ITEM I - FINANCIAL STATEMENTS ATWOOD OCEANICS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Nine Months Ended June 30, --------------- -------------- 1999 1998 --------- --------- (In thousands) CASH FLOW FROM OPERATING ACTIVITIES: Net Income $ 22,894 $ 30,393 ---------- --------- Adjustments to reconcile net income to net cash provided (used) by operating activities: Depreciation 17,792 13,454 Amortization of deferred items 349 399 Deferred tax provision 1,900 3,003 Changes in assets and liabilities: Decrease (Increase) in accounts receivable 5,426 (10,847) Increase (decrease) in accounts payable and accrued liabilities 5,432 (2,733) Net mobilization fees 8,391 4,121 Other 2,106 597 --------- --------- Total adjustments 41,396 7,994 --------- --------- Net cash provided by operating activities 64,290 38,387 --------- --------- CASH FLOW FROM INVESTING ACTIVITIES: Capital expenditures (39,431) (56,972) --------- --------- Net cash used by investing activities (39,431) (56,972) --------- --------- CASH FLOW FROM FINANCING ACTIVITIES: Proceeds from credit facilities 13,000 14,000 Principal payments on long-term debt (17,750) (750) Proceeds from exercises of stock options 486 659 ---------- --------- Net cash (used) provided by financing activities (4,264) 13,909 --------- --------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 20,595 (4,676) CASH AND CASH EQUIVALENTS, at beginning of period 11,621 19,264 --------- --------- CASH AND CASH EQUIVALENTS, at end of period $ 32,216 $ 14,588 ========= ========= Supplemental disclosure of cash flow information: Cash paid during the periiod for domestic and foreign income tax $ 8,913 $ 14,936 ========== ========= Cash paid during the period for interest, net of amount capitalized $ 4,138 $ 2,714 ========== ========= 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 fleet utilization for mobile offshore drilling units is currently below 75 percent. Despite recent improvements in oil prices, international petroleum exploration and development companies continue to limit their capital expenditures on drilling programs. The reduction in demand for offshore drilling units has likewise resulted in a decline in dayrates. Currently, the ATWOOD SOUTHERN CROSS, RICHMOND, RIG-19 and RIG-200 are without drilling contracts. The Company is actively marketing these rigs; however, current market conditions may result in these rigs incurring a significant amount of idle time during the remainder of 1999. The ATWOOD EAGLE continues to operate in the Mediterranean Sea with a commitment to the end of September 1999. The Company is currently in discussion for additional work for the ATWOOD EAGLE at a dayrate significantly below the $115,000 dayrate received when the rig initially moved to the Mediterranean Sea in 1998. Despite the anticipated lower rig utilization and some dayrate reductions, term contracts in place for the ATWOOD HUNTER, ATWOOD FALCON, VICKSBURG and SEAHAWK should provide the Company with a high level of revenues during the remainder of fiscal 1999 and into fiscal 2000. RESULTS OF OPERATIONS Contract revenues for the three months and nine months ended June 30, 1999 decreased 1.4% and 1.6%, respectively, compared to the same periods ended June 30, 1998. A comparative analysis of contract revenues by drilling unit is as follows: CONTRACT REVENUES ----------------------------------------------------------- THREE MONTHS ENDED NINE MONTHS ENDED ---------------------------- -------------------------- June 30, June 30, June 30, June 30, 1999 1998 Variance 1999 1998 Variance -------- -------- -------- -------- ------- -------- (In millions) ATWOOD FALCON 9.7 4.7 5.0 24.8 17.3 7.5 VICKSBURG 3.3 0.0 3.3 7.1 1.9 5.2 ATWOOD EAGLE 8.5 8.2 0.3 28.2 24.2 4.0 RIG-200 2.4 1.9 0.5 6.5 5.9 0.6 RIG-19 2.0 1.9 0.1 5.9 4.9 1.0 SEAHAWK 2.0 2.8 (0.8) 7.8 8.5 (0.7) ATWOOD HUNTER 8.7 8.7 0.0 24.8 26.6 (1.8) RICHMOND 0.0 3.1 (3.1) 3.7 8.2 (4.5) SOUTHERN CROSS 0.0 6.4 (6.4) 0.0 13.5 (13.5) GOODWYN 'A' 1.9 0.7 1.2 4.8 4.1 0.7 NORTH RANKIN 'A' 0.2 0.9 (0.7) 1.4 1.8 (0.4) ------ ----- ----- ------ ------ ----- $ 38.7 $39.3 $(0.6) $115.0 $116.9 $(1.9) ====== ===== ===== ====== ====== ===== The increase in revenues for the ATWOOD FALCON resulted from higher contract dayrates following completion of its water-depth upgrade in November 1998. During the third quarter of fiscal 1998, the VICKSBURG was in a shipyard undergoing upgrade and refurbishment, with no revenues being earned compared to working in India since December 1998. The ATWOOD EAGLE was relocated from West Africa to the Mediterranean Sea at the end of March 1998 and commenced working under a term rig sharing agreement which provided for enhancement in operating dayrates. The drilling contract for RIG-200 terminated in early April 1999, with $1.9 million of unamortized deferred net mobilization fees recognized into income, accounting for the increase in revenues. RIG-19 revenues increased in 1999 due to the rig having reduced revenues in 1998 from its move to a new offshore installation with no revenues being recognized during the relocation period. The Company is currently moving RIG-19 to a stacking location in Australia following completion of its drilling contract in July 1999. The SEAHAWK is currently being upgraded for a four year contract extension, with a reduced dayrate being received during the upgrade period. Due to market conditions, the RICHMOND and ATWOOD SOUTHERN CROSS have been idle since March 1999 and September 1998, respectively. Contract drilling and management costs for the three months and nine months ended June 30, 1999 increased 10% and 8%, respectively, compared to the same periods ended June 30, 1998. A comparative analysis of contract drilling and management costs by drilling unit is as follows: CONTRACT DRILLING AND MANAGEMENT COSTS --------------------------------------------------------------- THREE MONTHS ENDED NINE MONTHS ENDED ---------------------------- ------------------------------ June 30, June 30, June 30, June 30, 1999 1998 Variance 1999 1998 Variance -------- -------- -------- -------- -------- -------- (In millions) VICKSBURG $ 1.8 $ 0.0 1.8 $ 3.3 $1.4 1.9 RIG-19 2.3 1.4 0.9 5.1 3.6 1.5 ATWOOD EAGLE 4.0 3.1 0.9 11.5 8.0 3.5 ATWOOD FALCON 2.0 1.2 0.8 5.1 4.9 0.2 SEAHAWK 1.9 1.5 0.4 5.3 4.5 0.8 ATWOOD HUNTER 2.1 2.5 (0.4) 7.4 6.8 0.6 RIG-200 0.2 0.6 (0.4) 1.5 2.0 (0.5) RICHMOND 1.0 1.6 (0.6) 3.9 4.4 (0.5) SOUTHERN CROSS 1.0 3.2 (2.2) 3.6 7.7 (4.1) NORTH RANKIN 'A' 0.1 0.9 (0.8) 1.2 1.6 (0.4) GOODWYN 'A' 1.4 0.7 0.7 3.7 3.3 0.4 OTHER 1.0 0.4 0.6 2.3 1.6 0.7 ----- ----- ----- ----- ----- ----- $18.8 $17.1 $ 1.7 $53.9 $49.8 $4.1 ===== ===== ===== ===== ===== ===== The increase in costs for the VICKSBURG was due to the rig being in a shipyard undergoing upgrade during most of fiscal 1998 with no operating costs being incurred. The RIG-19 costs increase was due to the rig being relocated to a new platform in 1998 with no operating costs being incurred during the relocation period and due to certain costs being incurred in 1999 associated with the termination of its drilling operations. Operating costs for the ATWOOD EAGLE in the Mediterranean Sea are higher than its previous area of operation in West Africa. Thus, higher area costs plus an increase in repair and maintenance costs account for its overall increase in operating costs. The ATWOOD FALCON was moved to a shipyard in May 1998 to commence its upgrade compared to working the entire third quarter of fiscal 1999, accounting for its increase in operating costs. The increase in operating costs for the year for the SEAHAWK and ATWOOD HUNTER were primarily due to higher repair and maintenance costs. The decrease in costs for RIG-200, RICHMOND and ATWOOD SOUTHERN CROSS were due to the rigs incurring idle time following termination of contracts, with certain operating cost savings being realized during idle periods. The increase in depreciation expense is primarily due to increase in depreciation on the ATWOOD FALCON and VICKSBURG following completion of their upgrades. 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 the Company's wholly or partially owned drilling units as of August 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 of Mexico contract which terminates in September 2000. ATWOOD EAGLE Mediterranean Sea Rig is contracted into September 1999, with options for additional work. VICKSBURG India Rig is under term contract which terminates in December 1999, with options for further work. SEAHAWK Malaysia The rig is undergoing upgrades which may not be completed until the end of calendar 1999. Following the upgrades, the rig will commence drilling under a four- year contract extension period, with a further option to extend. RIG-19 Australia Rig is being moved to a stacking location following the completion of its contract in July 1999. RIG-200 Australia Rig is available for contract since it became idle in March 1999. RICHMOND United States Gulf Rig is available for of Mexico contract since it became idle in March 1999. ATWOOD SOUTHERN CROSS Australia Rig is available for contract since it became idle in September 1998. LIQUIDITY AND CAPITAL RESOURCES During the nine months ended June 30, 1999, operating cash flow (before changes in working capital and other assets and liabilities) was $42.9 million compared to $47.2 million for the same period in fiscal 1998. During the first nine months of fiscal 1999, the Company utilized internally generated funds to invest approximately $28.1 million in completing the upgrades of the ATWOOD FALCON and the VICKSBURG, to invest $5.8 million in commencing the upgrade of the SEAHAWK and to invest approximately $5.5 in other capital expenditures, in addition to reducing long-term debt by $4.8 million. Currently, the only significant capital commitment for the remainder of 1999 is an approximate $23 million upgrade of the SEAHAWK. The SEAHAWK contract extension provides for approximately $20 million of the upgrade costs to be reimbursed by the operator and for the Company to be paid a reduced dayrate during the upgrade period. Fifty percent of the upgrade costs reimbursement (approximately $10 million reflected in other deferred credits at June 30, 1999) was paid by the operator in April 1999, with the balance due at the end of the upgrade process. At June 30, 1999, the Company had $68 million outstanding under the revolving credit facility. Until an investment opportunity is identified, the Company will continue to utilize its excess cash flow to reduce its long-term debt, with a further reduction of $6 million made subsequent to June 30, 1999. 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 continues to place priority on Year 2000 Compliance ("Y2K") and is committed to being Y2K compliant without significant disruptions in safety systems, operations or its ability to perform quality service. In 1998, the Company engaged a Y2K consulting company to visit the Company's various drilling units to inventory all equipment systems and assess Y2K compliance. The Company believes that the Year 2000 issue will not pose significant operational problems to the Company's equipment; however, no assurance can be given that the Company will not encounter some Y2K issues. 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. 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 12, 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 Jun-30-1999 1 32,216 22,905 20,164 0 7,588 62,082 359,742 141,309 304,691 21,292 68,000 0 0 13,670 52,062 304,691 115,029 115,020 58,462 77,510 0 0 3,226 36,094 13,200 22,894 0 0 0 22,894 1.68 1.66
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