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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
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Form 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR QUARTERLY PERIOD ENDED DECEMBER 31, 1997
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
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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, 1997 13,551,626 shares of Common Stock $1 par
value
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<PAGE>
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, 1997 and September 30, 1997, and the results of its
operations and cash flows for the three months ended December 31, 1997 and 1996,
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.
<PAGE>
PART I. ITEM I - FINANCIAL STATEMENTS
ATWOOD OCEANICS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
December 31, September 30,
1997 1997
(In thousands)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 8,919 $ 19,264
Accounts receivable 22,704 16,353
Inventories of materials and supplies,
at lower of average cost or market 6,750 7,004
Deferred tax assets 1,820 1,820
Prepaid expenses 2,136 2,610
----- -----
Total Current Assets 42,329 47,051
------ ------
SECURITIES HELD FOR INVESTMENT:
Held-to-maturity, at amortized cost 22,582 22,581
Available-for-sale, at fair value 440 389
--- ---
23,022 22,970
------ ------
PROPERTY AND EQUIPMENT:
Drilling vessels, equipment and drill pipe 273,697 249,496
Other 5,616 5,363
----- -----
279,313 254,859
Less-accumulated depreciation 114,800 110,936
------- -------
Net Property and Equipment 164,513 143,923
------- -------
DEFERRED COSTS AND OTHER ASSETS 1,252 1,386
----- -----
$231,116 $215,330
======== ========
<PAGE>
PART I. ITEM I - FINANCIAL STATEMENTS
ATWOOD OCEANICS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
December 31, September 30,
1997 1997
(In thousands)
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt $ 750 $ 750
Accounts payable 3,856 5,323
Accrued liabilities 14,603 13,429
------ ------
Total Current Liabilities 19,209 19,502
------ ------
LONG-TERM DEBT, net of current maturities 65,000 58,750
------ ------
DEFERRED CREDITS:
Income taxes 2,628 1,810
Other 12,847 12,579
------ ------
15,475 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 13,552,000 and 13,546,000
shares issued and outstanding 13,552 13,546
Paid-in capital 50,131 50,104
Net unrealized holding loss on
available-for-sale securities (79) (112)
Retained earnings 67,828 59,151
------ ------
Total Shareholders' Equity 131,432 122,689
------- -------
$ 231,116 $ 215,330
========= =========
<PAGE>
PART I. ITEM I - FINANCIAL STATEMENTS
ATWOOD OCEANICS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended
December 31,
1997 1996
(In thousands except per
share amounts)
REVENUES:
Contract drilling $ 35,768 $ 21,667
Contract management 456 426
--- ---
36,224 22,093
------ ------
COSTS AND EXPENSES:
Contract drilling 16,069 12,406
Contract management 354 254
Depreciation 4,072 2,302
General and administrative 1,984 1,511
----- -----
22,479 16,473
------ ------
OPERATING INCOME 13,745 5,620
------ -----
OTHER INCOME (EXPENSE)
Interest expense (1,039) (532)
Interest income 583 646
--- ---
(456) 114
---- ---
INCOME BEFORE INCOME TAXES 13,289 5,734
PROVISION FOR INCOME TAXES 4,612 1,815
----- -----
NET INCOME $8,677 $3,919
====== ======
EARNINGS PER SHARE
Basic $ .64 $ .29
Fully Dilutive $ .63 $ .29
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING
Basic 13,550 13,414
Fully Dilutive 13,855 13,711
See accompanying notes to financial statements.
<PAGE>
PART I. ITEM I - FINANCIAL STATEMENTS
ATWOOD OCEANICS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended
December 31,
1997 1996
(In thousands)
CASH FLOW FROM OPERATING ACTIVITIES:
Net Income $8,677 $3,919
------ ------
Adjustments to reconcile net income to net cash
provided (used) by operating activities:
Depreciation 4,072 2,302
Amortization of deferred items 208 287
Changes in assets and liabilities:
Increase in accounts receivable (6,351) (1,860)
Increase (decrease) in accounts
payable and accrued liabilities (293) 2,036
Deferred mobilization revenues 1,200 4,500
Other 1,360 (1,523)
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Total adjustments 196 5,742
----- -----
Net cash provided by operating activities 8,873 9,661
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CASH FLOW FROM INVESTING ACTIVITIES:
Capital expenditures (25,501) (6,000)
Investment in RIG-200 --- (378)
--- -----
Net cash used by investing activities (25,501) (6,378)
-------- -------
CASH FLOW FROM FINANCING ACTIVITIES:
Proceeds from revolving credit facility 7,000 ---
Proceeds from exercises of stock options 33 247
Principal payments on long-term debt (750) (3,683)
---- ------
Net cash used by financing activities (6,283) (3,436)
------- -------
NET DECREASE IN CASH AND CASH EQUIVALENTS (10,345) (153)
CASH AND CASH EQUIVALENTS, at beginning of period 19,264 17,565
------- -------
CASH AND CASH EQUIVALENTS, at end of period $8,919 $17,412
======== =======
Supplemental disclosure of cash flow information:
Cash paid during the quarter for
domestic and foreign income tax $ 1,022 $ ---
========= ========
Cash paid during the quarter for interest $ 1,034 $ 659
========= ========
<PAGE>
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.
RESULTS OF OPERATIONS
Contract revenues and net income for the three months ended December
31, 1997 increased 64% and 121%, respectively, compared to the three months
ended December 31, 1996. This improvement in operating results reflect the
impact of the ATWOOD HUNTER and the ATWOOD SOUTHERN CROSS commencing drilling
operation after upgrades and of increases in dayrate revenues for the ATWOOD
EAGLE, RICHMOND and ATWOOD FALCON coupled with RIG-200 and RIG-19 having reduced
revenues in the first quarter of fiscal 1997 due to offshore platform
installations. A comparative analysis of contract revenues is as follows:
CONTRACT REVENUES
---------------- ----------------- -------------
First Quarter First Quarter
Fiscal 1998 Fiscal 1997 Variance
---------------- ----------------- -------------
(In millions)
ATWOOD HUNTER $ 9.3 $ 3.5 $ 5.8
ATWOOD EAGLE 7.4 4.7 2.7
RIG-200 2.0 0.4 1.6
SOUTHERN CROSS 1.4 0.0 1.4
RIG-19 1.9 0.9 1.0
RICHMOND 2.7 2.0 0.7
VICKSBURG 1.9 1.3 0.6
ATWOOD FALCON 4.5 4.2 0.3
SEAHAWK 2.8 2.8 0.0
NORTH RANKIN 'A' 0.5 0.4 0.1
GOODWYN 'A' 1.8 1.9 (0.1)
---------------- ----------------- -------------
$36.2 $22.1 $14.1
================ ================= =============
The VICKSBURG is currently in a Singapore shipyard undergoing upgrade and
cantilever conversion. The ATWOOD EAGLE should finish its present contract
around the end of February 1998, at which time it will be mobilized to the
Mediterranean Sea to commence a minimum 200-day program at higher dayrates. The
ATWOOD FALCON is currently drilling phase-one of its long-term contract in the
Philippines, and the rig should enter a Southeast Asia shipyard to undergo its
required water-depth upgrade around May/June, 1998. Preparations are being made
to move RIG-19 to another platform.
Contract drilling and management costs increased 29% during the first
quarter of fiscal 1998 compared to the first quarter of fiscal 1997. This
increase was primarily due to commencement of drilling operations for the ATWOOD
HUNTER and the ATWOOD SOUTHERN CROSS following upgrades, RIG-200 having no
active drilling costs in the first quarter of fiscal 1997, RIG-19 being
relocated to a new platform during the first quarter of fiscal 1997 with no
revenues or costs being recognized during the relocation period and the
VICKSBURG incurring increased costs in preparation for its mobilization to a
shipyard for upgrade. A comparative analysis of contract drilling and management
costs is as follows:
CONTRACT DRILLING AND MANAGEMENT COSTS
-------------------------------------------------
First Quarter First Quarter
Fiscal 1997 Fiscal 1996 Variance
-------------------------------------------------
(In millions)
SOUTHERN CROSS $ 1.1 $ 0.0 $ 1.1
RIG-200 0.7 0.0 0.7
RIG-19 1.5 0.8 0.7
VICKSBURG 1.4 0.8 0.6
ATWOOD HUNTER 2.2 1.9 0.3
RICHMOND 1.5 1.3 0.2
ATWOOD FALCON 1.8 1.7 0.1
SEAHAWK 1.7 1.7 0.0
GOODWYN `A'/NORTH RANKIN`A' 1.7 1.7 0.0
ATWOOD EAGLE 2.1 2.5 (0.4)
OTHER 0.7 0.3 0.4
-------------------------------------------------
$16.4 $12.7 $3.7
=================================================
The reduction in operation cost for the ATWOOD EAGLE was due to a decline in
repair and maintenance costs for the quarter. The increase in other costs was
primarily due to currency exchange losses in Southeast Asia. Since most of the
Company's drilling contracts provide for payments in US dollars, the Company's
exposure to currency exchange losses is limited.
The increase in depreciation expense was due to the commencement of
upgrade cost depreciation of the ATWOOD HUNTER and ATWOOD SOUTHERN CROSS coupled
with RIG-200 having no depreciation expense during the quarter ended December
31, 1996 since it did not start active drilling operation until January 1997.
General and administrative expenses increased 31% primarily due to higher
payroll related costs.
<PAGE>
A summary of the contract status of each of the Company's wholly or
partially owned drilling rigs as of February 10, 1998 is as follows:
NAME OF RIG LOCATION CONTRACT STATUS
ATWOOD FALCON Philippines Currently drilling under
a two phase program. Phase one
estimated to extend to June 1998.
Upon completion of the Phase one
program, the rig will be
transported to Singapore to
undergo an upgrade to enable the
rig to operate in up to
3,500 feet of water. When the
upgrade is completed
(estimated the first quarter of
fiscal 1999), the rig will
be transported back to the
Philippines to commence the
three-year phase two drilling
program.
ATWOOD HUNTER United States
Gulf of Mexico Term contract (estimated completion
September 2000).
ATWOOD EAGLE Equatorial Guinea Estimated completion of contract is
February/March, 1998.
Upon completion of the current
drilling contract, the rig will be
mobilized to the Mediterranean Sea
for a minimum 200-day drilling
program.
RIG-200 Australia Term contract (minimum duration of
two-years from January 1997).
SEAHAWK Malaysia Term contract (estimated completion
March 1999).
VICKSBURG Singapore Undergoing upgrade and
refurbishment which is estimated
to extend into the fourth quarter
of fiscal 1998.
RIG-19 Australia Term contract (estimated drilling
work of between 9 and 12
months from February 1998).
RICHMOND United States Term contract (estimated completion
Gulf of Mexico May 1998).
ATWOOD SOUTHERN
CROSS Australia In November 1997, the rig commenced
drilling under a 300-day plus
option contract.
LIQUIDITY AND CAPITAL RESOURCES
During the first quarter of fiscal 1998, operating cash flows (before
changes in working capital and other assets and liabilities) increased 88% from
$6.5 million in fiscal 1997 to $12.2 million. During the first quarter of fiscal
1998, the Company utilized its internally generated funds plus an additional $7
million borrowed under the $125 million revolving credit facility to invest
approximate $10.8 million in completing the upgrade and refurbishment of the
ATWOOD SOUTHERN CROSS, to invest approximately $7.4 million in commencing the
upgrade and refurbishment of the VICKSBURG, to invest approximately $5.6 million
in equipment to be used for the upgrade of the ATWOOD FALCON, and to fund
approximately $1.7 million in other capital expenditure. 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 upgrade mode, and management is confident that a
profitable contract will be obtained for the rig after its upgrade.
Subsequent to December 31, 1997, the Company borrowed another $7 million
under the revolving credit facility for a current outstanding debt of $72
million. The ATWOOD HUNTER, ATWOOD EAGLE and the RICHMOND plus $20 million of
the United States treasury bonds are pledged as collateral under the revolving
credit agreement. The 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.
<PAGE>
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
<PAGE>
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 11, 1998 s/JAMES M. HOLLAND
-------------------------
James M. Holland
Senior Vice President
and Chief Accounting Officer
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