- --------------------------------------------------------------------------------
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 MARCH 31, 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
April 30, 1999; 13,640,976 shares of Common Stock, $1 par value.
- ------------------------------------------------------------------------------
<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, 1999 and September 30, 1998, and the results of its operations and cash
flows for the three months and six months ended March 31, 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.
<PAGE>
PART I. ITEM I - FINANCIAL STATEMENTS
ATWOOD OCEANICS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
March 31, September 30,
1999 1998
------------------ ------------------
(In thousands)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 15,540 $ 11,621
Accounts receivable 38,750 27,730
Inventories of materials
and supplies, at lower
of average cost or market 8,700 8,076
Deferred tax assets 880 880
Prepaid expenses 2,420 3,280
---------- ----------
Total Current Assets 66,290 51,587
---------- ----------
SECURITIES HELD FOR INVESTMENT:
Held-to-maturity, at amortized cost 22,587 22,585
Available-for-sale, at fair value 270 323
---------- ----------
22,857 22,908
---------- ----------
PROPERTY AND EQUIPMENT, at cost:
Drilling vessels, equipment
and drill pipe 348,672 327,520
Other 6,800 6,128
---------- ----------
355,472 333,648
Less-accumulated depreciation 135,718 128,016
---------- ----------
Net Property and Equipment 219,754 205,632
---------- ----------
DEFERRED COSTS AND OTHER ASSETS 1,401 1,610
---------- ----------
$310,302 $281,737
========== ==========
<PAGE>
PART I. ITEM I - FINANCIAL STATEMENTS
ATWOOD OCEANICS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
March 31, September 30,
1999 1998
---------- --------------------
(In thousands)
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of
long-term debt $ ---- $ 750
Accounts payable 8,834 14,250
Accrued liabilities 13,610 11,723
------------ ----------
Total Current Liabilities 22,444 26,723
------------ ----------
LONG-TERM DEBT, net of current
liabilities 78,000 72,000
------------ ----------
DEFERRED CREDITS:
Income taxes 5,901 4,820
Other 24,675 14,428
------------ ----------
30,576 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 13,631,000
and 13,625,000
shares issued and
outstanding in
1999 and 1998,
respectively 13,631 13,625
Paid-in capital 51,825 51,781
Net unrealized holding
loss on available-for
-sale securities (189) (155)
Retained earnings 114,015 98,515
----------- ----------
179,282 163,766
----------- ----------
$ 310,302 $ 281,737
=========== =========
<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,
-------------------- -----------------------
1999 1998 1999 1998
---- ---- ---- ----
(In thousands except (In thousands except
per per
share amounts) share amounts)
REVENUES:
Contract drilling $ 40,877 $ 40,989 $ 75,129 $ 76,757
Contract management 488 439 1,173 895
--------- -------- -------- --------
41,325 41,428 76,302 77,652
--------- -------- -------- --------
COSTS AND EXPENSES:
Contract drilling 18,109 15,869 34,020 31,938
Contract management 392 385 1,115 739
Depreciation 6,457 4,810 11,784 8,882
administrative 1,916 1,847 4,106 3,831
--------- -------- --------- --------
26,874 22,911 51,025 45,390
--------- -------- --------- --------
OPERATING INCOME 14,451 18,517 25,277 32,262
--------- -------- --------- --------
OTHER INCOME (EXPENSE)
Interest expense (1,277) (1,102) (2,101) (2,141)
Interest income 548 551 1,134 1,134
--------- -------- -------- --------
(729) (551) (967) (1,007)
--------- -------- -------- --------
INCOME BEFORE INCOME TAXES 13,722 17,966 24,310 31,255
PROVISION FOR INCOME TAXES 4,998 6,284 8,810 10,896
--------- -------- -------- -------
NET INCOME $ 8,724 $11,682 $15,500 $20,359
========= ======== ======== =======
EARNINGS PER SHARE
Basic $ .63 $ .84 $1.13 $1.47
Diluted $ .64 $ .86 $1.14 $1.50
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING
Basic 13,627 13,571 13,626 13,560
Diluted 13,740 13,838 13,739 13,824
.
<PAGE>
PART I. ITEM I - FINANCIAL STATEMENTS
ATWOOD OCEANICS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended
March 31,
-----------------------
1999 1998
-------- ---------
(In thousands)
CASH FLOW FROM OPERATING ACTIVITIES:
Net Income $15,500 $20,359
------- -------
Adjustments to reconcile net income to net cash
provided (used) by operating activities:
Depreciation 11,784 8,882
Amortization of deferred items 275 (1,197)
Deferred tax provision 1,000 2,600
Changes in assets and liabilities:
Increase in accounts receivable (11,020) (12,588)
Increase (decrease) in accounts
payable and accrued liabilities 4,444 (4,176)
Net mobilization fees 11,648 1,200
Other (765) 371
------- -------
Total adjustments 17,366 (4,908)
------- -------
Net cash provided by
operating activities 32,866 15,451
------- -------
CASH FLOW FROM INVESTING ACTIVITIES:
Capital expenditures (34,247) (35,300)
------- -------
Net cash used by investing activities (34,247) (35,300)
------- -------
CASH FLOW FROM FINANCING ACTIVITIES:
Proceeds from credit facilities 13,000 14,000
Proceeds from exercises of stock options 50 481
Principal payments on long-term debt (7,750) (750)
------- -------
Net cash provided by financing activities 5,300 13,731
------- -------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 3,919 (6,118)
CASH AND CASH EQUIVALENTS, at beginning of period 11,621 19,264
------- -------
CASH AND CASH EQUIVALENTS, at end of period $15,540 $13,146
======= =======
Supplemental disclosure of cash flow information:
Cash paid during the period for
domestic and foreign income tax $ 7,427 $9,495
======= ======
Cash paid during the period for interest,
net of amount capitalized $ 2,216 $1,084
======= ======
<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.
MARKET OUTLOOK
- --------------
The worldwide fleet utilization for mobile offshore drilling units is
currently at 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 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 June 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 second half of fiscal 1999 and into fiscal
2000.
RESULTS OF OPERATIONS
- ---------------------
Contract revenues for the three months and six months ended March 31,
1999 decreased .3% and 1.7%, respectively, compared to the same periods ended
March 31, 1998. A comparative analysis of contract revenues is as follows:
<PAGE>
CONTRACT REVENUES
------------------------------------------------------
Second Quarter Second Quarter
Fiscal 1999 Fiscal 1998 Variance
--------------- ---------------- -----------------
(In millions)
VICKSBURG $ 3.4 $ 0.0 $3.4
ATWOOD EAGLE 10.7 8.6 2.1
ATWOOD FALCON 9.8 8.1 1.7
RIG-19 1.9 1.2 0.7
RIG-200 2.0 2.0 0.0
SEAHAWK 2.8 2.8 0.0
RICHMOND 1.3 2.4 (1.1)
ATWOOD HUNTER 7.4 8.6 (1.2)
ATWOOD SOUTHERN CROSS 0.0 5.7 (5.7)
GOODWYN `A' 1.6 1.6 0.0
NORTH RANKIN `A' 0.4 0.4 0.0
----- ----- -----
$41.3 $41.4 $(0.1)
===== ===== ======
During the second quarter of fiscal 1998, the VICKSBURG was in a
shipyard undergoing upgrade and refurbishment; therefore, earning no revenues
compared to working in India for all of the second quarter of fiscal 1999. 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 enhancements in operating dayrates. The increase in revenues for
the ATWOOD FALCON resulted from higher contract dayrates following completion of
its upgrade in November 1998. RIG-19 revenues increased due to the rig having
reduced revenues in the second quarter of fiscal 1998 from its move to a new
offshore installation with no revenues being recognized during the relocation
period. The decline in revenues for the RICHMOND was due to lower dayrates
dictated by the market environment. ATWOOD HUNTER revenues declined as a result
of incurring a few days of downtime during the quarter due to repairs required
to correct certain equipment defects. Due to current curtailed worldwide
drilling activities, the Company has been unable to obtain a contract for the
ATWOOD SOUTHERN CROSS since it completed its last contract in September 1998.
Contract drilling and management costs for the three months and six
months ended March 31, 1999 increased 14% and 8%, respectively, compared to the
same periods ended March 31, 1998. A comparative analysis of contract drilling
and management costs by rig is as follows:
<PAGE>
CONTRACT DRILLING AND MANAGEMENT COSTS
-------------------------------------------------------------------------
Second Quarter Second Quarter
Fiscal 1999 Fiscal 1998 Variance
-------------- -------------- -------------
(In millions)
VICKSBURG $ 1.4 $ 0.0 $ 1.4
ATWOOD EAGLE 4.0 2.7 1.3
RIG-19 1.5 0.8 0.7
ATWOOD HUNTER 2.4 2.1 0.3
SEAHAWK 1.7 1.4 0.3
ATWOOD FALCON 2.0 1.8 0.2
RICHMOND 1.4 1.3 0.1
RIG-200 0.7 0.6 0.1
ATWOOD SOUTHERN CROSS 1.2 3.4 (2.2)
GOODWYN `A'/NORTH RANKIN `A' 1.7 1.7 0.0
OTHER 0.5 0.5 0.0
----- ----- -----
$18.5 $16.3 $ 2.2
===== ===== ======
The increase in costs for the VICKSBURG was due to the rig being
upgraded in 1998 with no operating costs being recognized. Operating costs for
the ATWOOD EAGLE in the Mediterranean Sea are higher than its previous areas of
operation in West Africa, accounting for its increase in costs. RIG-19 costs
increase was due to the rig being relocated to a new platform in 1998 with no
operating costs being recognized during the relocation period. The increase in
operating costs for the ATWOOD HUNTER, SEAHAWK and ATWOOD FALCON were primarily
due to higher repair and maintenance costs incurred in the quarter. The decrease
in costs for the ATWOOD SOUTHERN CROSS is due to it being idle with reduced
personnel and other operating costs.
The increase in depreciation expense is primarily due to increase is
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 May 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 Rig is under long-term contract
Gulf of Mexico which terminates in September 2000.
ATWOOD EAGLE Mediterranean Rig is contracted into June 1999, with
Sea current discussions 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 expected to complete its current
contract in June 1999.
RIG-200 Australia Rig is being moved to a stacking
location following the completion of its
contract in April 1999.
RICHMOND United States Rig is available for contract since it
Gulf of Mexico became idle in March 1999.
ATWOOD
SOUTHERN CROSS Australia Rig is available contract since it
became idle at the end of September
1998.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
During the first half of fiscal 1999, operating cash flow (before
changes in working capital and other assets and liabilities) was $28.6 million
compared to $30.6 million for the first half of fiscal 1998. During the first
half of fiscal 1999, the Company utilized internally generated funds plus an
additional net $6 million borrowed during the first half of fiscal 1999 under
its revolving credit facility to invest approximately $28.1 million in
completing the upgrades of the ATWOOD FALCON and the VICKSBURG, and to fund
approximately $6.1 in other capital expenditures. Currently, the only
significant capital commitment for the remainder of fiscal 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 accounts receivable and other deferred credits at March 31,
1999) was paid by the operator in April 1999, with the balance due at the end of
the upgrade process.
At March 31, 1999, the Company had $78 million outstanding under the
revolving credit facility compared to $85 million and $72 million outstanding at
December 31, 1998 and September 30, 1998, respectively. Depending upon
additional capital investments, anticipated future cash flows are expected to
provide the Company with the option of continuing to repay 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>
PART II. OTHER INFORMATION
ATWOOD OCEANICS, INC. AND SUBSIDIARIES
ITEM 4. Submission of Matters to a Vote of Security Holders
The Company's Annual Meeting of Shareholders was held on February 11,
1999, at which the shareholders voted on the election of six directors. Of the
11,938,595 shares of Common Stock present in person or by proxy, the number of
shares voted for or withheld in connection with the election of each director is
as follows:
NAME CAST FOR VOTES WITHHELD
Robert W. Burgess 11,754,688 183,907
George S. Dotson 11,749,688 188,907
Walter H. Helmerich III 11,752,020 186,575
Hans Helmerich 11,750,320 188,275
John R. Irwin 11,758,920 179,675
William J. Morrissey 11,752,820 185,775
ITEM 6. Reports on Form 8-K
On January 8, 1999, the Company filed a Form 8-K related to the January
4, 1999 announcement that it executed a four-year contract extension, with a
further option to extend, for the use of the SEAHAWK (a semisubmersible
tender-assist rig).
<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 12, 1999 s/JAMES M. HOLLAND
-----------------------
James M. Holland
Senior Vice President
and Chief Accounting Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
(Replace this text with the legend)
</LEGEND>
<CIK> 0000008411
<NAME> Atwood Oceanics, Inc.
<MULTIPLIER> 1,000
<CURRENCY> USD
<S> <C>
<PERIOD-TYPE> Year
<FISCAL-YEAR-END> Sep-30-1999
<PERIOD-START> Oct-01-1998
<PERIOD-END> Mar-31-1999
<EXCHANGE-RATE> 1
<CASH> 15,540
<SECURITIES> 22,857
<RECEIVABLES> 38,750
<ALLOWANCES> 0
<INVENTORY> 8,700
<CURRENT-ASSETS> 66,290
<PP&E> 355,472
<DEPRECIATION> 135,718
<TOTAL-ASSETS> 310,302
<CURRENT-LIABILITIES> 22,444
<BONDS> 78,000
0
0
<COMMON> 13,631
<OTHER-SE> 51,636
<TOTAL-LIABILITY-AND-EQUITY> 179,282
<SALES> 76,302
<TOTAL-REVENUES> 76,302
<CGS> 39,241
<TOTAL-COSTS> 51,025
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,101
<INCOME-PRETAX> 24,310
<INCOME-TAX> 8,810
<INCOME-CONTINUING> 15,500
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 15,500
<EPS-PRIMARY> 1.14
<EPS-DILUTED> 1.13
</TABLE>
