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>
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>
PAGE 3
PART I. ITEM I - FINANCIAL STATEMENTS
ATWOOD OCEANICS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
<S> <C> <C>
(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.
</TABLE>
<PAGE>
PAGE 4
PART I. ITEM I - FINANCIAL STATEMENTS
ATWOOD OCEANICS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
(Unaudited)
June 30, September 30.
1995 1994
(In thousands)
<S> <C> <C>
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.
</TABLE>
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PAGE 5
PART I. ITEM I - FINANCIAL STATEMENTS
ATWOOD OCEANICS, INC. AND SUBSIDIARIES
Consolidated Statement of Operations
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
June 30, June 30,
<S> <C> <C> <C> <C>
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
</TABLE>
See accompanying notes to financial statements
<PAGE>
PAGE 6
PART I. ITEM I - FINANCIAL STATEMENTS
ATWOOD OCEANICS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended June 30,
1995 1994
<S> <C> <C>
(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
</TABLE>
<PAGE>
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>
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:
<TABLE>
<CAPTION>
QUARTERS ENDED
June 30, March 31, June 30,
1995 1995 1994
(In thousands)
<S> <C> <C> <C>
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
</TABLE>
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>
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:
<TABLE>
<CAPTION>
<S> <C> <C>
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).
</TABLE>
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>
PAGE 10
<TABLE>
<CAPTION>
QUARTERS ENDED
<S> <C> <C> <C>
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
</TABLE>
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:
<TABLE>
<CAPTION>
QUARTERS ENDED
June 30, March 31, June 30,
1995 1995 1994
(In thousands)
<S> <C> <C> <C>
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
</TABLE>
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>
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>
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
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000008411
<NAME> ATWOOD OCEANICS, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-START> OCT-01-1994
<PERIOD-END> JUN-30-1995
<CASH> 14,060
<SECURITIES> 25,844
<RECEIVABLES> 14,621
<ALLOWANCES> 0
<INVENTORY> 4,632
<CURRENT-ASSETS> 34,515
<PP&E> 182,947
<DEPRECIATION> 93,853
<TOTAL-ASSETS> 150,474
<CURRENT-LIABILITIES> 19,057
<BONDS> 36,319
<COMMON> 6,588
0
0
<OTHER-SE> 86,907
<TOTAL-LIABILITY-AND-EQUITY> 150,474
<SALES> 55,168
<TOTAL-REVENUES> 59,718
<CGS> 41,881
<TOTAL-COSTS> 41,881
<OTHER-EXPENSES> 8,561
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,207
<INCOME-PRETAX> 7,977
<INCOME-TAX> 1,756
<INCOME-CONTINUING> 6,221
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</TABLE>
