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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, 1998
COMMISSION FILE NUMBER 1-13167
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 13 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
Number of outstanding shares of Common Stock, $1 par value, as of July 31,
1998: 13,624,576 shares.
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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 June 30, 1998 and September 30, 1997, and the results of its
operations and cash flows for the three months and nine months ended June 30,
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)
June 30, September 30,
1998 1997
(In thousands)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 14,588 $ 19,264
Accounts receivable 27,200 16,353
Inventories of materials and supplies,
at lower of average cost or market 7,658 7,004
Deferred tax assets 1,820 1,820
Prepaid expenses 769 2,610
------ ------
Total Current Assets 52,035 47,051
------ ------
SECURITIES HELD FOR INVESTMENT:
Held-to-maturity, at amortized cost 22,584 22,581
Available-for-sale, at fair value 405 389
------ ------
22,989 22,970
------ ------
PROPERTY AND EQUIPMENT:
Drilling vessels, equipment
and drill pipe 304,420 249,496
Other 5,906 5,363
------ -----
310,326 254,859
Less-accumulated depreciation 124,000 110,936
------- -------
Net Property and Equipment 186,326 143,923
------- -------
DEFERRED COSTS AND OTHER ASSETS 1,903 1,386
----- -----
$263,253 $215,330
======== ========
<PAGE>
PART I. ITEM I - FINANCIAL STATEMENTS
ATWOOD OCEANICS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
June 30, September 30,
1998 1997
(In thousands)
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt $ 750 $ 750
Accounts payable 4,343 5,323
Accrued liabilities 11,676 13,429
------ ------
Total Current Liabilities 16,769 19,502
------ ------
LONG-TERM DEBT, net of current maturities 72,000 58,750
------ ------
DEFERRED CREDITS:
Income taxes 4,819 1,810
Other 15,913 12,579
------ ------
20,732 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 13,625,000 and 13,546,000
shares issued and outstanding 13,625 13,546
Paid-in capital 50,684 50,104
Net unrealized holding loss on
available-for-sale securities (101) (112)
Retained earnings 89,544 59,151
------ ------
Total Shareholders' Equity 153,752 122,689
------- -------
$ 263,253 $ 215,330
========= =========
<PAGE>
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,
------------------ -------------------
1998 1997 1998 1997
(In thousands, (In thousands,
except per except per
share amounts) share amounts)
REVENUES:
Contract drilling and management $ 39,294 $ 22,069 $ 116,946 $ 64,967
-------- -------- --------- --------
COSTS AND EXPENSES:
Contract drilling and management 17,088 12,894 49,765 37,532
Depreciation 4,572 2,493 13,454 7,205
General and administrative 1,826 1,432 5,657 4,636
----- ----- ----- -----
23,486 16,819 68,876 49,373
------ ------ ------ ------
OPERATING INCOME 15,808 5,250 48,070 15,594
Other Income (expense) (305) 410 (1,312) 917
----- --- ------- ---
INCOME BEFORE INCOME TAXES 15,503 5,660 46,758 16,511
Provision for income taxes 5,469 1,998 16,365 5,816
----- ----- ------ -----
NET INCOME $10,034 $3,662 $30,393 $10,695
======= ====== ======= =======
EARNINGS PER SHARE
Basic $ 0.74 $ 0.27 $2.24 $ 0.79
Diluted $ 0.72 $ 0.27 $2.20 $ 0.78
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING
Basic 13,623 13,492 13,581 13,456
Diluted 13,866 13,755 13,830 13,708
<PAGE>
PART I. ITEM I - FINANCIAL STATEMENTS
ATWOOD OCEANICS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended
June 30,
-----------------------
1998 1997
----- -----
(In thousands)
CASH FLOW FROM OPERATING ACTIVITIES:
Net Income $30,393 $10,695
------- -------
Adjustments to reconcile net income to net cash
provided (used) by operating activities:
Depreciation 13,454 7,205
Amortization of deferred items (1,780) 106
Deferred tax provision (benefit) 3,003 (550)
Changes in assets and liabilities:
Decrease (increase) in accounts receivable (10,847) 2,930
Increase (decrease) in accounts payable
and accrued liabilities (2,733) 5,157
Deferred mobilization revenues 6,300 6,938
Other 597 (3,561)
----- ------
Total adjustments 7,994 18,225
------ ------
Net cash provided by operating activities 38,387 28,920
------ ------
CASH FLOW FROM INVESTING ACTIVITIES:
Capital expenditures (56,972) (41,055)
------- ------
Net cash used by investing activities (56,972) (41,055)
------- ------
CASH FLOW FROM FINANCING ACTIVITIES:
Proceeds from credit facilities 14,000 20,000
Proceeds from exercises of stock options 659 737
Principal payments on long-term debt (750) (16,452)
---- -------
Net cash provided by financing activities 13,909 4,285
------ -------
NET DECREASE IN CASH AND CASH EQUIVALENTS (4,676) (7,850)
CASH AND CASH EQUIVALENTS, at beginning of period 19,264 17,565
------ ------
CASH AND CASH EQUIVALENTS, at end of period $14,588 $9,715
======= ======
Supplemental disclosure of cash flow information:
Cash paid during the period for domestic
and foreign income tax $ 14,936 $ 3,799
======== =======
Cash paid during the period for interest,
net of amount capitalized $ 2,714 $ 1,242
======== =======
<PAGE>
PART I. ITEM 2
ATWOOD OCEANICS, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS
This Form 10-Q includes "forward-looking statements" within the meaning
of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. 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. Important factors that could
cause actual results to differ materially from the Company's expectations
("Cautionary Statements") are disclosed within this item and elsewhere in this
Form 10-Q.
RESULTS OF OPERATIONS
Contract revenues and net income for the three months ended June 30,
1998 increased 78% and 174%, respectively, compared to the three months ended
June 30, 1997. For the first nine months of fiscal 1998 compared to the first
nine months of fiscal 1997, contract revenues and net income increased 80% and
184%, respectively. These improvements in operating results reflect the impact
of the ATWOOD HUNTER and the ATWOOD SOUTHERN CROSS commencing drilling
operations in late 1997 after upgrades and of increases in dayrate revenues for
the ATWOOD EAGLE, ATWOOD FALCON, RIG 200 and RICHMOND. A comparative analysis of
contract revenues is as follows:
CONTRACT REVENUES
------------------------------------------------------------
THREE MONTHS ENDED NINE MONTHS ENDED
-------------------------- -----------------------------
June 30, June 30, June 30, June 30,
1998 1997 Variance 1998 1997 Variance
(In millions)
ATWOOD HUNTER $8.7 $0.0 $8.7 $26.6 $3.5 $23.1
SOUTHERN CROSS 6.4 0.0 6.4 13.5 0.0 13.5
ATWOOD EAGLE 8.2 5.0 3.2 24.2 14.3 9.9
RICHMOND 3.1 2.3 0.8 8.2 6.5 1.7
ATWOOD FALCON 4.7 4.2 0.5 17.3 12.5 4.8
RIG-200 1.9 1.9 --- 5.9 3.9 2.0
SEAHAWK 2.8 2.8 --- 8.5 8.4 0.1
RIG-19 1.9 2.1 (0.2) 4.9 4.9 0.0
VICKSBURG 0.0 1.3 (1.3) 1.9 3.8 (1.9)
NORTH RANKIN `A' 0.9 0.6 0.3 1.8 1.6 0.2
GOODWYN `A' 0.7 1.9 (1.2) 4.1 5.6 (1.5)
----- ----- ----- ------ ----- -----
$39.3 $22.1 $17.2 $116.9 $65.0 $51.9
===== ===== ===== ====== ===== =====
In April 1998, the ATWOOD EAGLE was relocated from West Africa to
Egypt. While drilling off the coast of Egypt, the rig incurred some damage which
did not interfere with its ability to complete its drilling program in Egypt,
but did require repairs at a shipyard in June prior to commencing its current
drilling program offshore Italy. Except for a $250,000 insurance deductible, the
cost of the repairs should be covered by insurance. The third quarter operating
results for the ATWOOD EAGLE reflect 15 days with no revenue while the rig was
undergoing repairs. The ATWOOD FALCON was transported to a Singapore shipyard in
late May to commence its water-depth upgrade which should take five to six
months to complete. The VICKSBURG is also in a Singapore shipyard undergoing
upgrade and cantilever conversion. The decline in revenues from the GOODWYN `A'
is due to the rig being upgraded by its Australian owner with the Company
providing reduced services to the rig during the upgrade period.
Contract drilling and management cost increased 33% for both the three
months and nine months ended June 30, 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 is as follows:
<PAGE>
CONTRACT DRILLING AND MANAGEMENT COSTS
---------------------------------------------------------
THREE MONTHS ENDED NINE MONTHS ENDED
-------------------------- -----------------------
June 30, June 30, June 30, June 30,
1998 1997 Variance 1998 1997 Variance
-------- ------- -------- --------
(In millions)
ATWOOD HUNTER $2.5 $0.0 $2.5 $6.8 $ 1.9 $4.9
SOUTHERN CROSS 3.2 0.0 3.2 7.7 0.0 7.7
ATWOOD EAGLE 3.1 2.6 0.5 8.0 7.5 0.5
RICHMOND 1.6 1.3 0.3 4.4 3.9 0.5
ATWOOD FALCON 1.2 1.8 (0.6) 4.9 5.2 (0.3)
RIG-200 0.6 0.7 (0.1) 2.0 1.3 0.7
SEAHAWK 1.5 1.9 (0.4) 4.5 5.3 (0.8)
RIG-19 1.4 1.6 (0.2) 3.6 3.9 (0.3)
VICKSBURG 0.0 1.0 (1.0) 1.4 2.7 (1.3)
NORTH RANKIN `A' 0.9 0.2 0.7 1.6 0.6 1.0
GOODWYN `A' 0.7 1.4 (0.7) 3.3 4.4 (1.1)
OTHER 0.4 0.4 0.0 1.6 0.8 0.8
---- ---- ---- ---- ---- ----
$17.1 $12.9 $4.2 $49.8 $37.5 $12.3
===== ===== ===== ===== ===== =====
The increase in operating costs for the ATWOOD EAGLE was due to higher
repair and maintenance costs for the quarter. Higher operating costs for the
RICHMOND were due to increases in repair and maintenance costs and payroll
related costs. During the ATWOOD FALCON and VICKSBURG upgrade periods, no
operating costs are being incurred, resulting in lower operating costs in the
current year than in comparable periods of fiscal 1997. The decrease in the
SEAHAWK operating costs is primarily due to Malaysian currency exchange gains.
The increase in NORTH RANKIN `A' costs and the decrease in GOODWYN `A' costs are
due to an increase in personnel service provided to the NORTH RANKIN `A' with a
decrease in service provided to GOODWYN `A' during its upgrade period.
The 22% increase in general and administrative expenses for the nine
months ended June 30, 1998 is primarily due to higher payroll related costs. The
increase in depreciation expense is due to the commencing of upgrade costs
depreciation of the ATWOOD HUNTER and ATWOOD SOUTHERN CROSS. A comparative
analysis of depreciation expense is as follows:
DEPRECIATION EXPENSE
---------------------------------------------------------------
THREE MONTHS ENDED NINE MONTHS ENDED
------------------------------- -----------------------------
June 30, June 30, June 30, June 30,
1998 1997 Variance 1998 1997 Variance
------ ------ -------- ------ --------- --------
(In millions)
ATWOOD HUNTER $1.2 $0.0 $1.2 $3.7 $0.3 $3.4
SOUTHERN CROSS 0.9 0.0 0.9 2.1 0.0 2.1
ATWOOD EAGLE 0.5 0.5 0.0 1.6 1.6 0.0
ATWOOD FALCON 0.4 0.7 (0.3) 1.8 2.0 (0.2)
SEAHAWK 0.6 0.6 0.0 1.8 1.7 0.1
RIG-200N 0.5 0.5 0.0 1.6 1.0 0.6
RICHMOND 0.2 0.1 0.1 0.4 0.3 0.1
OTHER 0.3 0.1 0.2 0.5 0.3 0.2
--- --- --- --- --- ---
$4.6 $2.5 $2.1 $13.5 $7.2 $6.3
==== ==== ==== ==== ==== ====
<PAGE>
A summary of the contract status of each of the Company's wholly or
partially owned drilling rigs as of August 5, 1998 is as follows:
NAME OF RIG LOCATION CONTRACT STATUS
ATWOOD HUNTER United States Term contract (estimated completion
Gulf of Mexico September 2000).
ATWOOD
SOUTHERN CROSS Australia Estimated completion September 1998.
ATWOOD FALCON Singapore Currently undergoing a major upgrade,
which when completed (estimated the
first quarter of fiscal 1999), the rig
will commence a three-year drilling
program.
ATWOOD EAGLE Mediterranean Sea Term contract (estimated completion
March 1999).Current contract discussions
which, if executed, should have rig
under contract for all of fiscal 1999.
RIG-200 Australia Term contract (minimum duration of
two-years from January 1997).
SEAHAWK Malaysia Term contract (estimated completion
December 1998). Currently discussing
contract extension.
VICKSBURG Singapore Undergoing upgrade and refurbishment
which could extend into the first
quarter of fiscal 1999.
RIG-19 Australia Term contract (estimated completion
March 1999).
RICHMOND United States
Gulf of Mexico Term contract(estimated completion March
1999).
LIQUIDITY AND CAPITAL RESOURCES
For the nine months ended June 30, 1998 compared to the same period in
fiscal 1997, operating cash flows (before changes in working capital and other
assets and liabilities) increased 158%. During the first nine-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
$12.7 million in completing the upgrade and refurbishment of the ATWOOD SOUTHERN
CROSS, to invest $20.9 million in the upgrade and refurbishment of the
VICKSBURG, to invest $18.8 million in the upgrade of the ATWOOD FALCON, and to
invest $4.6 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 despite near-term market
softness, the Company expects this enchanced, quality rig to be a significant
contributor to its success over the long-term.
Lower crude oil prices are causing reduction in exploration and
production budgets with corresponding downward pressure on dayrates for certain
drilling units. Despite this present softness in the market, the Company's
contract commitments on its third-generation semisubmersibles should provide for
a high level of revenues during fiscal 1999. Higher dayrate revenues have
resulted in accounts receivable increasing from $16.4 million at September 30,
1997 to $27.2 million at June 30, 1998. The Company continues to experience no
difficulties in collecting its accounts receivable, 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>
YEAR 2000
The Company is in the process of completing a Year 2000 assessment of
its worldwide operations. Certain software operating systems are in the process
of being modified so that they function properly with respect to dates in the
Year 2000 and thereafter. The Company does not expect that such costs to modify
existing software and conversions to new software will be material to its
financial condition or results of operations. The Company believes that with
modifications to existing software and conversion to new software, the Year 2000
issue will not pose significant operational problems and will not materially
affect its financial condition or results of operations. The Company does not
currently have information concerning the Year 2000 compliance of its suppliers
and customers. 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.
NEW ACCOUNTING PRONOUNCEMENT
In June 1998, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 133, Accounting for Derivative Instruments
and Hedging Activities. The Statement establishes accounting and reporting
standard requiring that every derivative instrument (including certain
derivative instruments embedded in other contracts) be recorded in the balance
sheet as either an asset or liability measured at its fair value. Statement 133
is effective for fiscal year beginning after June 14, 1999. In the opinion of
management, the adoption of Statement 133 will not have a material impact on the
Company's financial statements.
<PAGE>
ATWOOD OCEANICS, INC. AND SUBSIDIARIES
PART II - OTHER INFORMATION
ITEM 5. OTHER INFORMATION
RECENT DEVELOPMENTS
Well control measures are currently being undertaken on a well being
drilled by the semisubmersible, ATWOOD EAGLE, offshore Italy, after encountering
high pressure during drilling operations on August 10, 1998. The rig has not
been damaged.
TO OUR SHAREHOLDERS AND EMPLOYEES
Contract revenues of $116.9 million and net income of $30.4 million for the
nine months ended June 30, 1998 were not only a record performance for a
nine-month period, but exceeded any historical results for a twelve-month
period. Net income of $10.0 million, on contract revenue of $39.3 million, for
the three months ended June 30, 1998, was the Company's second best quarterly
performance, exceeded only by the results for the quarter ended March 31, 1998.
The record earnings and cash flow currently being experienced by the
Company are due to the renewal in late 1997 and early 1998 of several of the
Company's contracts at higher dayrates and the commencement of term contracts in
late 1997 for the ATWOOD HUNTER and ATWOOD SOUTHERN CROSS, following the major
enhancement and water-depth upgrade of both units. The Company's three
third-generation semisubmersibles, ATWOOD HUNTER, ATWOOD FALCON and ATWOOD EAGLE
should account for approximately 70 percent of fiscal year 1998 gross margin
from drilling operations. With long-term contracts for the ATWOOD HUNTER and
ATWOOD FALCON into year 2000 and 2001, respectively, and with the ATWOOD EAGLE
contracted for a significant portion of 1999, over 80 percent of potential
revenue days for these high-margin rigs are already committed for the next
twelve months. In the near term, lower crude oil prices are causing reductions
in exploration and production budgets with corresponding downward pressure on
dayrates for certain drilling units with contracts expiring during 1998. Despite
this present softness in the market, the Company's contract commitments should
provide for a high level of revenues during fiscal 1999. We believe that the
longer-term outlook remains positive.
The ATWOOD FALCON is in a Singapore shipyard undergoing major upgrade to
3,500 ft. water-depth for a three-year contract in the Philippines expected to
commence during the first quarter of fiscal year 1999. The jack-up, VICKSBURG,
is also undergoing a significant cantilever upgrade in Singapore. The Company is
currently exploring contract opportunities for the VICKSBURG and despite
near-term market softness, expects this enhanced, quality rig to be a
significant contributor to the Company's success over the longer-term.
The ATWOOD EAGLE is in Italy drilling its second well in the Mediterranean
Sea. Repairs to the ATWOOD EAGLE from damage it incurred while operating off the
coast of Egypt were completed ahead of schedule. A contract has been executed
for the ATWOOD EAGLE to drill an estimated 100 days in Egypt at an increase in
dayrate following completion of its initial 200-day contract commitments in
Italy and Egypt.
The ATWOOD HUNTER is on its fourth well of a three-year contract in the
Gulf of Mexico following major upgrade last year to 3,500 ft. water-depth. The
ATWOOD SOUTHERN CROSS is drilling its fifth well in Australia following major
upgrade in late 1997. While present market conditions could impact the financial
performance of the SOUTHERN CROSS following its current contract commitment, we
believe that the rig will be a significant contributor to financial results on a
longer-term basis.
The contract for the RICHMOND, continuously employed in the U.S. Gulf of
Mexico since early 1993, has been extended for another 6 months to March 31,
1999. While the extension will be at lower rates due to current market
conditions, the rig's unique operating characteristics and performance are
contributing to its full employment. On a longer-term basis, we believe the
RICHMOND will continue to be an attractive unit with good upside potential. The
SEAHAWK is a candidate for upgrade and enhancement as a semisubmersible
tender-assist unit following the completion of its current drilling program in
fiscal year 1999.
<PAGE>
The Company is committed to maintaining its reputation for international
operations and premium equipment. The pursuit of safe operations remains
foremost on our agenda. Highly skilled personnel, quality and diverse equipment,
financial strength, and a contract backlog and mix provide the Company a strong
foundation for protecting and enhancing shareholders' value. We appreciate the
support of employees, shareholders, and clients, all of whom play important
roles in the Company's success.
John Irwin
President and Chief Executive Officer
Atwood Oceanics, Inc.
August 5, 1998
NOTICE OF SHAREHOLDER PROPOSALS
The Securities and Exchange Commission recently adopted amendments to
the discretionary voting provisions of Rule 14a-4 of the proxy rules. The
changes became effective June 29, 1998. The amendments were intended to clarify
when management may use the discretionary authority customarily contained in a
proxy to vote against shareholder proposals made outside the mechanism of Rule
14a-8, such as proposals made by a shareholder from the floor of the meeting or
through an independent proxy solicitation.
Rule 14a-4(c) has always clearly authorized management to use
discretionary authority granted in a proxy to vote against any shareholder
proposal validly omitted from the Company's proxy materials pursuant to Rule
14a-8. With respect to proposals made entirely outside the mechanism of Rule
14a-8, such as a proposal that the proponent makes only from the floor of the
meeting or a proposal that is the subject of an independent proxy solicitation
by the proponent, Rule 14a-4(c) was somewhat ambiguous.
Under revised Rule 14a-4(c), management may exercise discretionary
authority to vote against any shareholder proposal of which they did not have
notice at least 45 days before the date on which the Company first mailed its
proxy materials for the prior year's annual meeting. The Company's proxy
statement or proxy card must simply state that management intends to use its
discretionary authority in this way as a general matter.
If management receives notice of a non-14a-8 proposal on or before the
required date, revised Rule 14a-4(c) still permits management to use
discretionary voting authority to vote against the proposal. To do so, however,
the Company's proxy materials must also include advice on the nature of the
particular matter and how the Company intends to exercise its discretion on it.
Management may not use discretionary authority under revised Rule
14a-4(c) to vote against a proposal with respect to which timely notice has been
given, if, in addition, the proponent (1) provides the Company by the notice
date with a written statement that it intends to solicit proxies from the
holders of at least the percentage of the Company's voting shares required to
carry the proposal, (2) includes a statement to that effect in the proponent's
proxy statement, and (3) thereafter provides the registrant with a verification
that such a solicitation has occurred. In such a case, management would have to
solicit specific proxy authority in its own proxy materials in order to vote
against the proposal rather than rely on discretion.
Revised Rule 14a-4(c) further provides that in the event of any advance
notice bylaw requiring that notice of a shareholder proposal be given by a
certain date, then the date designated in the advance notice bylaw will apply in
lieu of the 45 days designated in revised Rule 14a-4(c). The Company's Bylaws do
not currently include an advance notice requirement for shareholder proposals.
Therefore, the 45-day period described above will apply for purposes of
determining the ability of management to exercise discretionary authority with
respect to shareholder proposals pursuant to revised Rule 14a-4(c).
At the next annual meeting of shareholders, management may exercise
discretionary authority under its proxies, pursuant to revised Rule 14a-4(c), to
vote against any shareholder proposal of which the Company does not have notice
on or before November 28, 1998, which is 45 days before the date on which the
Company first mailed its proxy materials for the prior year's annual meeting.
<PAGE>
ATWOOD OCEANICS, INC. AND SUBSIDIARIES
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
27. Financial Data Schedule
99.1 Press Release on Atwood Eagle dated August 11, 1998
(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.
Date: August 13, 1998 s/JAMES M. HOLLAND
-------------------------
James M. Holland
Senior Vice President
and Chief Accounting Officer
<PAGE>
EXHIBIT INDEX
27. FINANCIAL DATA SCHEDULE
99.1 PRESS RELEASE ON ATWOOD EAGLE DATED AUGUST 11, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
condensed consolidated financial statements of Atwood Oceanics, Inc. and is
qualified in its entirety by references to such financial statements.
</LEGEND>
<CIK> 0000008411
<NAME> ATWOOD OCEANICS, INC.
<MULTIPLIER> 1,000
<CURRENCY> USD
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-START> OCT-01-1997
<PERIOD-END> JUN-30-1998
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<RECEIVABLES> 27,200
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<CURRENT-LIABILITIES> 16,769
<BONDS> 72,000
0
0
<COMMON> 13,625
<OTHER-SE> 140,127
<TOTAL-LIABILITY-AND-EQUITY> 263,253
<SALES> 116,946
<TOTAL-REVENUES> 116,946
<CGS> 55,422
<TOTAL-COSTS> 68,876
<OTHER-EXPENSES> 0
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<INTEREST-EXPENSE> 3,072
<INCOME-PRETAX> 46,758
<INCOME-TAX> 16,365
<INCOME-CONTINUING> 30,393
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<EPS-PRIMARY> 2.24
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</TABLE>
EXHIBIT 99.1
HOUSTON, TEXAS
11 AUGUST 1998
FOR IMMEDIATE RELEASE:
ATWOOD OCEANICS, INC. (A HOUSTON BASED INTERNATIONAL OFFSHORE DRILLING
CONTRACTOR - NYSE: ATW) ANNOUNCED TODAY THAT IT WAS UNDERTAKING WELL CONTROL
MEASURES ON A WELL BEING DRILLING BY ITS SEMISUBMERSIBLE ATWOOD EAGLE, OFFSHORE
ITALY, AFTER ENCOUNTERING HIGH PRESSURE DURING DRILLING OPERATIONS. THE RIG HAS
NOT BEEN DAMAGED. AS A PRECAUTIONARY MEASURE, NON-ESSENTIAL PERSONNEL HAVE BEEN
REMOVED FROM THE RIG AND 33 PERSONNEL REMAIN ON BOARD DURING THESE OPERATIONS.
CONTACT: JIM HOLLAND
(281) 492-2929
