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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 MARCH 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 April 30, 1998: 13,619,576 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 March 31, 1998 and September 30, 1997, and the results of its
operations and cash flows for the three months and six months ended March 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, 1997 Annual Report to
Shareholders.
<PAGE>
PART I. ITEM I - FINANCIAL STATEMENTS
ATWOOD OCEANICS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
March 31, September 30,
1998 1997
(In thousands)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 13,146 $ 19,264
Accounts receivable 28,941 16,353
Inventories of materials and supplies,
at lower of average cost or market 7,351 7,004
Deferred tax assets 1,820 1,820
Prepaid expenses 2,078 2,610
----- -----
Total Current Assets 53,336 47,051
------ ------
SECURITIES HELD FOR INVESTMENT:
Held-to-maturity, at amortized cost 22,583 22,581
Available-for-sale, at fair value 438 389
--- ---
23,021 22,970
------ ------
PROPERTY AND EQUIPMENT:
Drilling vessels, equipment
and drill pipe 282,986 249,496
Other 5,748 5,363
---- -----
288,734 254,859
Less-accumulated depreciation 119,477 110,936
------- -------
Net Property and Equipment 169,257 143,923
------- -------
DEFERRED COSTS AND OTHER ASSETS 1,652 1,386
----- -----
$247,266 $215,330
======== ========
<PAGE>
PART I. ITEM I - FINANCIAL STATEMENTS
ATWOOD OCEANICS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
March 31, September 30,
1998 1997
(In thousands)
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt $ 750 $ 750
Accounts payable 3,104 5,323
Accrued liabilities 11,472 13,429
------ ------
Total Current Liabilities 15,326 19,502
------ ------
LONG-TERM DEBT, net of current maturities 72,000 58,750
------ ------
DEFERRED CREDITS:
Income taxes 4,427 1,810
Other 11,952 12,579
------ ------
16,379 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 13,607,000 and 13,546,000
shares issued and outstanding 13,607 13,546
Paid-in capital 50,524 50,104
Net unrealized holding loss on
available-for-sale securities (80) (112)
Retained earnings 79,510 59,151
--- ---
Total Shareholders' Equity 143,561 122,689
------- -------
$ 247,266 $ 215,330
========= =========
<PAGE>
PART I. ITEM I - FINANCIAL STATEMENTS
ATWOOD OCEANICS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended Six Months Ended
March 31, March 31,
--------- ---------
1998 1997 1998 1997
------ ------ ---- ----
(In thousands except per (In thousands except
share amounts) per share amounts)
REVENUES:
Contract drilling $ 40,989 $ 20,247 $ 76,757 $ 41,914
Contract management 439 558 895 984
----- ----- ----- -----
41,428 20,805 77,652 42,898
------ ------ ------ ------
COSTS AND EXPENSES:
Contract drilling 15,869 11,767 31,938 24,173
Contract management 385 211 739 465
Depreciation 4,810 2,410 8,882 4,712
General and administrative 1,847 1,693 3,831 3,204
----- ----- ----- -----
22,911 16,081 45,390 32,554
----- ------ ------ ------
OPERATING INCOME 18,517 4,724 32,262 10,344
------ ----- ------ ------
OTHER INCOME (EXPENSE)
Interest expense (1,102) (199) (2,141) (731)
Interest income 551 592 1,134 1,238
--- --- ------- -----
(551) 393 (1,007) 507
---- --- ------ ---
INCOME BEFORE INCOME TAXES 17,966 5,117 31,255 10,851
PROVISION FOR INCOME TAXES 6,284 2,003 10,896 3,818
----- ----- ------ -----
NET INCOME $11,682 $3,114 $20,359 $7,033
======= ====== ======= ======
EARNINGS PER SHARE
Basic $ .86 $ .23 $1.50 $ .52
Diluted $ .84 $ .23 $1.47 $ .51
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING
Basic 13,571 13,466 13,560 13,440
Diluted 13,838 13,732 13,824 13,697
<PAGE>
PART I. ITEM I - FINANCIAL STATEMENTS
ATWOOD OCEANICS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended
March 31,
1998 1997
(In thousands)
CASH FLOW FROM OPERATING ACTIVITIES:
Net Income $20,359 $7,033
------- ------
Adjustments to reconcile net income to net cash
provided (used) by operating activities:
Depreciation 8,882 4,712
Amortization of deferred items (1,197) 231
Deferred tax provision 2,600 ---
Changes in assets and liabilities:
Decrease (increase) in accounts receivable (12,588) 1,283
Increase (decrease) in accounts payable
and accrued liabilities (4,176) 2,089
Deferred mobilization revenues 1,200 6,938
Other 371 (1,566)
----- -------
Total adjustments (4,908) 13,687
-------- ------
Net cash provided by operating activities 15,451 20,720
-------- ------
CASH FLOW FROM INVESTING ACTIVITIES:
Capital expenditures (35,300) (14,597)
Investment in RIG-200 --- (526)
------ -----
Net cash used by investing activities (35,300) (15,123)
-------- --------
CASH FLOW FROM FINANCING ACTIVITIES:
Proceeds from credit facilities 14,000 5,000
Proceeds from exercises of stock options 481 615
Principal payments on long-term debt (750) (15,702)
---- -------
Net cash provided (used) by
financing activities 13,731 (10,087)
------ --------
NET DECREASE IN CASH AND CASH EQUIVALENTS (6,118) (4,490)
CASH AND CASH EQUIVALENTS, at beginning of period 19,264 17,565
-------- ------
CASH AND CASH EQUIVALENTS, at end of period $13,146 $13,075
========= =======
Supplemental disclosure of cash
flow information:
Cash paid during the period for
domestic and foreign income tax $ 9,495 $ 2,369
======== =========
Cash paid during the period for
interest, net of amount capitalized $ 1,084 $ 852
======== =========
<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 March 31,
1998 increased 99% and 275%, respectively, compared to the three months ended
March 31, 1997. For the first half of fiscal 1998 compared to the first half of
fiscal 1997, contract revenues and net income increased 81% and 189%,
respectively. These improvements 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, ATWOOD
FALCON, RIG 200 and RICHMOND coupled with RIG-19 having reduced revenues in the
first quarter of fiscal 1998 due to a move to a new offshore installation. A
comparative analysis of contract revenues for the second quarter is as follows:
CONTRACT REVENUES
- ------------------------- ---- ----------------------------
Second Quarter Second Quarter
Fiscal 1998 Fiscal 1997 Variance
---------------------- ------------------ -----------
(In millions)
ATWOOD HUNTER $ 8.6 $ 0.0 $ 8.6
SOUTHERN CROSS 5.7 0.0 5.7
ATWOOD EAGLE 8.6 4.6 4.0
ATWOOD FALCON 8.1 4.1 4.0
RIG-200 2.0 1.6 0.4
RICHMOND 2.4 2.2 0.2
SEAHAWK 2.8 2.8 0.0
VICKSBURG 0.0 1.2 (1.2)
RIG-19 1.2 1.9 (0.7)
GOODWYN `A' 1.6 1.8 (0.2)
NORTH RANKIN `A' 0.4 0.6 (0.2)
$41.4 $20.8 $20.6
==== ===== =====
In April 1998, the ATWOOD EAGLE was relocated from West Africa to the
Mediterranean Sea and has commenced a minimum 200-day drilling program at higher
dayrates. The ATWOOD FALCON is drilling the last well of its phase-one program
in the Philippines. Upon completion of this well, the rig will be mobilized to a
shipyard in Singapore to undergo a water-depth upgrade which will take five to
six months to complete. The VICKSBURG is currently in a Singapore shipyard
undergoing upgrade and cantilever conversion.
Contract drilling and management cost increased 36% and 33%, respectively, for
the three months and six months periods ended March 31, 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 for
the second quarter is as follows:
<PAGE>
CONTRACT DRILLING AND MANAGEMENT COSTS
---------------------------------------------------
Second Second
Quarter Quarter Variance
Fiscal 1998 Fiscal 1997
-------------- --------------- -------------
(In millions)
SOUTHERN CROSS $ 3.4 $ 0.0 $ 3.4
ATWOOD HUNTER 2.1 0.0 2.1
ATWOOD EAGLE 2.7 2.4 0.3
ATWOOD FALCON 1.8 1.7 0.1
RICHMOND 1.3 1.3 0.0
RIG-200 0.6 0.6 0.0
SEAHAWK 1.4 1.7 (0.3)
RIG-19 0.8 1.5 (0.7)
VICKSBURG 0.0 0.9 (0.9)
GOODWYN `A'/NORTH RANKIN `A' 1.7 1.5 0.2
OTHER 0.5 0.4 0.1
--- --- ---
$16.3 $12.0 $4.3
===== ===== ====
The increase in operating costs for the ATWOOD EAGLE was due to higher repair
and maintenance costs for the quarter. The reduction in operating costs for
RIG-19 was due to the rig being relocated to a new platform during the quarter
with no revenues or costs being recognized during the relocation period. During
the VICKSBURG upgrade period, no operating costs are being incurred.
The increase in depreciation expense was due to the commencement of upgrade cost
depreciation of the ATWOOD HUNTER and ATWOOD SOUTHERN CROSS. General and
administrative expenses increased 9% primarily due to higher payroll related
costs.
A summary of the contract status of each of the Company's wholly or partially
owned drilling rigs as of April 30, 1998 is as follows:
NAME OF RIG LOCATION CONTRACT STATUS
ATWOOD FALCON Philippines Currently drilling the last well under the
phase-one portion of a two-phase drilling
program. 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 Term contract (estimated completion
Gulf of Mexico September 2000).
ATWOOD EAGLE Mediterranean Sea At the end of April 1998, the rig
commenced 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 November 1998).
ATWOOD
SOUTHERN CROSS Australia In November 1997, the rig commenced
drilling under a 300-day plus option
contract.
LIQUIDITY AND CAPITAL RESOURCES
For the six months ended March 31, 1998 compared to the same period in
fiscal 1997, operating cash flows (before changes in working capital and other
assets and liabilities) increased 156%. During the first six-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
$12.4 million in completing the upgrade and refurbishment of the ATWOOD SOUTHERN
CROSS, to invest $13.2 million in commencing the upgrade and refurbishment of
the VICKSBURG, to invest $6.6 million in equipment to be used for the upgrade of
the ATWOOD FALCON, and to invest $3.1 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
management remains confident that a profitable contract will be obtained for the
rig after its upgrade.
Higher dayrate revenues have resulted in accounts receivable increasing
from $16.4 million at September 30, 1997 to $28.9 million at March 31, 1998. The
Company continues to experience no difficulties in collecting its account
receivables, 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.
<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: May 13, 1998 s/JAMES M. HOLLAND
-------------------------
James M. Holland
Senior Vice President
and Chief Accounting Officer
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(Replace this text with the legend)
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<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-START> OCT-01-1997
<PERIOD-END> MAR-31-1998
<EXCHANGE-RATE> 1
<CASH> 13,146
<SECURITIES> 23,021
<RECEIVABLES> 28,941
<ALLOWANCES> 0
<INVENTORY> 7,351
<CURRENT-ASSETS> 53,336
<PP&E> 288,734
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<TOTAL-ASSETS> 247,266
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<CGS> 36,508
<TOTAL-COSTS> 45,390
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,141
<INCOME-PRETAX> 31,255
<INCOME-TAX> 10,896
<INCOME-CONTINUING> 20,359
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