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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, 2000
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: 281-749-7800
---------------
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
July 31, 2000; 13,822,051 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 June 30,
2000 and September 30, 1999, and the results of its operations and cash flows
for the three months and nine months ended June 30, 2000 and 1999, 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, 1999 Annual Report to Shareholders.
<PAGE>
PART I. ITEM I - FINANCIAL STATEMENTS
ATWOOD OCEANICS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)
June 30, September 30,
2000 1999
---------- ------------
(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 21,618 $ 20,105
Accounts receivable 24,980 18,289
Inventories of materials and supplies,
at lower of average cost or market 8,668 8,010
Deferred tax assets 720 720
Prepaid expenses 1,863 3,408
-------- --------
Total Current Assets 57,849 50,532
-------- --------
SECURITIES HELD FOR INVESTMENT:
Held-to-maturity, at amortized cost 22,592 22,589
Available-for-sale, at fair value 316 347
-------- --------
22,908 22,936
-------- --------
PROPERTY AND EQUIPMENT, at cost:
Drilling vessels, equipment and drill pipe 382,185 358,372
Other 7,885 7,317
-------- --------
390,070 365,689
Less-accumulated depreciation 167,937 146,775
------- --------
Net Property and Equipment 222,133 218,914
------- --------
DEFERRED COSTS AND OTHER ASSETS 1,341 1,222
-------- --------
$304,231 $293,604
======== ========
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
PART I. ITEM I - FINANCIAL STATEMENTS
ATWOOD OCEANICS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)
June 30, September 30,
2000 1999
---------- -------------
(Unaudited)
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 4,786 $ 7,640
Accrued liabilities 10,125 11,373
---------- ---------
Total Current Liabilities 14,911 19,013
---------- ---------
LONG-TERM DEBT, net of current maturities: 46,000 54,000
---------- ---------
DEFERRED CREDITS:
Income taxes 9,007 8,168
Other 23,717 20,194
--------- --------
32,724 28,362
--------- --------
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 13,822,000 and 13,675,000 shares
issued and outstanding at June 30, 2000
and September 30, 1999, respectively 13,822 13,675
Paid-in capital 54,412 52,458
Accumulated other comprehensive
income (loss) (159) (139)
Retained earnings 142,521 126,235
-------- ---------
210,596 192,229
-------- ---------
$304,231 $293,604
======== ========
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
PART I. ITEM I - FINANCIAL STATEMENTS
ATWOOD OCEANICS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
<TABLE>
<S> <C> <C> <C> <C>
Three Months Ended Nine Months Ended
June 30, June 30,
2000 1999 2000 1999
--------------- ---------- --------- ----------
(Unaudited) (Unaudited)
REVENUES:
Contract drilling $ 32,934 $ 38,503 $ 95,473 $113,632
Contract management 477 224 1,483 1,397
-------- -------- -------- --------
33,411 38,727 96,956 115,029
-------- -------- -------- ---------
COSTS AND EXPENSES:
Contract drilling 14,457 18,626 40,815 52,646
Contract management 370 141 1,113 1,256
Depreciation 7,883 6,008 21,591 17,792
General and administrative 2,050 1,710 6,187 5,816
-------- -------- -------- ---------
24,760 26,485 69,706 77,510
-------- -------- -------- ---------
OPERATING INCOME 8,651 12,242 27,250 37,519
-------- -------- -------- ---------
OTHER INCOME (EXPENSE)
Interest expense (901) (1,125) (2,829) (3,226)
Interest income 662 667 1,780 1,801
------- -------- -------- ---------
(239) (458) (1,049) (1,425)
------- -------- -------- ---------
INCOME BEFORE INCOME TAXES 8,412 11,784 26,201 36,094
PROVISION FOR INCOME TAXES 3,160 4,390 9,915 13,200
------ -------- -------- ---------
NET INCOME 5,252 $ 7,394 $ 16,286 $ 22,894
====== ======== ======== =========
EARNINGS PER SHARE
Basic $ .38 $ .54 $1.18 $1.68
Diluted $ .37 $ .53 $1.17 $1.66
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING
Basic 13,822 13,669 13,744 13,641
Diluted 14,026 13,849 13,902 13,773
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
.
<PAGE>
PART I. ITEM I - FINANCIAL STATEMENTS
ATWOOD OCEANICS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
<TABLE>
<S> <C> <C>
Nine Months Ended June 30,
2000 1999
--------- -----------
(Unaudited)
CASH FLOW FROM OPERATING ACTIVITIES:
Net Income $ 16,286 $22,894
-------- -------
Adjustments to reconcile net income to net cash
provided (used) by operating activities:
Depreciation 21,591 17,792
Amortization 391 349
Deferred federal income tax provision 850 1,900
Changes in assets and liabilities:
(Increase) decrease in accounts receivable (6,691) 5,426
Increase (decrease) in accounts payable and
accrued liabilities (3,141) 5,432
Net mobilization fees 3,528 8,391
Other 495 2,106
-------- -------
17,023 41,396
-------- -------
Net cash provided by operating activities 33,309 64,290
-------- -------
CASH FLOW FROM INVESTING ACTIVITIES:
Capital expenditures (25,897) (39,431)
-------- -------
Net cash used by investing activities (25,897) (39,431)
-------- -------
CASH FLOW FROM FINANCING ACITIVITES:
Proceeds from revolving credit facility 52,000 13,000
Principal payments on long-term debt (60,000) (17,750)
Proceeds from exercises of stock options 2,101 486
-------- -------
Net cash provided by financing activities (5,899) (4,264)
-------- -------
NET INCREASE IN CASH AND
CASH EQUIVALENTS 1,513 20,595
CASH AND CASH EQUIVALENTS, at beginning of period 20,105 11,621
------- -------
CASH AND CASH EQUIVALENTS, at end of period $21,618 $32,216
======= =======
Supplemental disclosure of cash flow information:
Cash paid during the period for domestic
and foreign income taxes $ 7,658 $ 8,913
======= =======
Cash paid during the period for interest,
net of amounts capitalized $ 3,914 $ 4,138
======= =======
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
PART I. ITEM 1 - FIANCIAL STATEMENTS
ATWOOD OCEANICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. UNAUDITED INTERIM INFORMATION
The unaudited interim financial statements as of June 30, 2000 and for
each of the nine month periods ended June 30, 2000 and 1999, included 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 note disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted, although management believes that the
note disclosures are adequate to make the information not misleading. For
interim periods, the Company records income taxes using the expected effective
tax rate for the fiscal year. In the opinion of the Company's management, the
unaudited interim financial statements reflect all adjustments (consisting of
normal recurring adjustments) considered necessary for a fair presentation of
the financial position and results of operations of the Company for the periods
presented. The interim financial results may not be indicative of results that
could be expected for a full year.
2. EARNINGS PER COMMON SHARE
The computation of basic and diluted earnings per share is as follows
(in thousands, except per share amounts):
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Three Months Ended Nine Months Ended
------------------------------------- -------------------------------
Net Per Share Net Per Share
Income Shares Amount Income Shares Amount
June 30, 2000:
Basic earnings per share $ 5,252 13,822 $ .38 $16,286 13,744 $ 1.18
Effect of dilutive securities-
Stock Options --- 204 (.01) -- 158 (.01)
------- ------- ----- ------- ------ ------
Diluted earnings per share $ 5,252 14,026 $ .37 $16,286 13,902 $ 1.17
======= ======= ===== ======= ====== ======
June 30, 1999:
Basic earnings per share $ 7,394 13,669 .54 $22,894 13,641 $ 1.68
Effect of dilutive securities-
Stock Options --- 180 (.01) --- 132 (.02)
------- ------- ----- -------- ------ ------
Diluted earnings per share $ 7,394 13,849 $ .53 $22,894 13,773 $ 1.66
======= ======= ===== ======== ====== ======
</TABLE>
3. COMPREHENSIVE INCOME
Comprehensive income includes the following (in thousands):
THREE MONTHS ENDED JUNE 30, 2000 1999
------- -------
Net Income $ 5,252 $ 7,394
Other comprehensive income:
Unrealized holding gain on available-for-sale
Securities, net of tax expense of $ 1 in 2000 and
$17 in 1999, respectively 3 29
------- -------
Comprehensive income $ 5,255 $ 7,423
======= =======
NINE MONTHS ENDED JUNE 30, 2000 1999
------- -------
Net Income $16,286 $22,894
Other comprehensive income:
Unrealized holding loss on available-for-sale
Securities, net of tax benefit of $ 11 and $ 2
in 2000 and 1999, respectively (20) (5)
------- -------
Comprehensive income $16,266 $22,889
======= =======
<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
Worldwide utilization of offshore drilling equipment is currently
around 84% compared to around 70% at the beginning of fiscal year 2000. There
are encouraging indications that the offshore drilling market environment could
continue to improve toward the end of 2000 and into 2001. Except for RIG-200 and
RIG-19, the Company's drilling units have current contract commitments that
should keep the various rigs employed into fiscal 2001. The ATWOOD SOUTHERN
CROSS (idle since September 1998) commenced working in June 2000 off the coast
of Israel. Even though the operating results for fiscal 2000 will not be as good
as fiscal 1998 and 1999, it will be the Company's seventh consecutive profitable
year.
RESULTS OF OPERATIONS
Contract revenues for the three months and nine months ended June 30,
2000 decreased 14% and 16%, respectively, compared to the same periods ended
June 30, 1999. A comparative analysis of contract revenues is as follows:
<TABLE>
CONTRACT REVENUES
(In Millions)
--------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Three Months Ended Nine Months Ended
June 30, June 30,
--------------------------------- -----------------------------
2000 1999 Variance 2000 1999 Variance
----- ----- -------- ----- ----- --------
SEAHAWK $ 5.7 $ 2.0 $ 3.7 $13.6 $ 7.8 $ 5.8
RICHMOND 1.8 0.0 1.8 4.8 3.7 1.1
ATWOOD SOUTHERN CROSS 0.8 0.0 0.8 0.8 0.0 0.8
ATWOOD FALCON 10.0 9.7 0.3 30.4 24.8 5.6
VICKSBURG 2.9 3.3 (0.4) 9.1 7.1 2.0
ATWOOD HUNTER 7.2 8.7 (1.5) 25.0 24.8 0.2
ATWOOD EAGLE 4.5 8.5 (4.0) 11.8 28.2 (16.4)
RIG 200/RIG-19 0.0 4.4 (4.4) 0.0 12.4 (12.4)
GOODWYN 'A'/NORTH RANKIN 'A' 0.5 2.1 (1.6) 1.4 6.2 (4.8)
----- ------- ----- ----- ------ -----
$33.4 $38.7 $(5.3) $96.9 $115.0 $(18.1)
===== ==== ===== ===== ====== ======
</TABLE>
The SEAHAWK commenced drilling operations, following its upgrade, in
January 2000 at a significant enhancement in dayrate over the reduced dayrate it
received during its upgrade period, accounting for its increase in revenues in
2000. The RICHMOND was idle in the third quarter of fiscal 1999 due to depressed
market conditions and did not return to work until September 1999. For the first
nine months of fiscal 2000, the RICHMOND was fully employed, which accounts for
its increase in revenues. In June 2000, the ATWOOD SOUTHERN CROSS returned to
work (after being idle since September 1998) off the coast of Israel. The
increase in revenues for the ATWOOD FALCON during the nine months ended June 30,
2000 compared to the same period in fiscal 1999 was due to the rig's upgrade not
being completed until November 1998. Thus far, the VICKSBURG has worked the
entire fiscal year 2000 compared to having some idle days at the beginning of
fiscal 1999 while completing its upgrade, accounting for its increase in
revenues for the nine months ended June 30, 2000. During the third quarter of
fiscal 2000, the ATWOOD HUNTER incurred some unanticipated downtime due to
equipment problems, which accounts for its decline in revenues. When the ATWOOD
EAGLE commenced working in the Mediterranean Sea in 1998, its dayrate was
$115,000, compared to a dayrate during 2000 of approximately $50,000. Besides a
dayrate reduction, the decline in revenues is also attributable to the rig being
idle in January 2000 while undergoing a water depth upgrade. RIG-200 and RIG-19
are available for contract since becoming idle in June and September 1999,
respectively. As a result of a decline in drilling activities on the GOODWYN "A"
and NORTH RANKIN "A" platforms, the Company's management activities related to
these platforms have also declined resulting in less revenues being received and
less costs being incurred.
Contract drilling and management costs for the three months
and nine months ended June 30, 2000 decreased 21% and 22%, respectively,
compared to the same periods in 1999. An analysis of contract drilling and
management costs by rig is as follows.
<TABLE>
CONTRACT DRILLING AND
MANAGEMENT COSTS
(In Millions)
-------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Three Months Ended Nine Months Ended
June 30, June 30,
---------------------------------- --------------------------------
2000 1999 Variance 2000 1999 Variance
------ ------ --------- ------ ------ --------
ATWOOD HUNTER $ 2.7 $ 2.1 $ 0.6 $ 7.9 $ 7.4 $ 0.5
RICHMOND 1.5 1.0 0.5 4.3 3.9 0.4
ATWOOD SOUTHERN CROSS 2.0 1.0 1.0 4.1 3.6 0.5
ATWOOD FALCON 2.1 2.0 0.1 6.2 5.1 1.1
SEAHAWK 1.9 1.9 0.0 6.0 5.3 0.7
VICKSBURG 1.4 1.8 (0.4) 4.2 3.3 0.9
ATWOOD EAGLE 2.5 4.0 (1.5) 6.7 11.5 (4.8)
RIG-200/RIG-19 0.0 2.5 (2.5) 0.1 6.6 (6.5)
GOODWYN 'A'/NORTH RANKIN 'A' 0.4 1.5 (1.1) 1.2 4.9 (3.7)
OTHER 0.3 1.0 (0.7) 1.2 2.3 (1.1)
----- ----- ------ ------ ----- ------
$14.8 $18.8 $(4.0) $41.9 $53.9 $(12.0)
===== ===== ===== ===== ===== ======
</TABLE>
The increase in operating costs for the ATWOOD HUNTER was related to
the equipment downtime problems incurred by the rig during the third quarter of
fiscal 2000. The rig will be down for an estimated seven days during the fourth
quarter of fiscal 2000 for some additional repairs to be completed. The RICHMOND
being idle during the third quarter of fiscal 1999 compared to working in fiscal
2000 accounts for its increase in operating costs. The increase in operating
costs for the ATWOOD SOUTHERN CROSS was due to its return to work. The increase
in drilling costs for the ATWOOD FALCON and VICKSBURG for the nine months ended
June 30, 2000 was due to both rigs, thus far, working the entire fiscal 2000
while working only a portion of the first quarter of fiscal 1999 due to
completing their upgrades during which no operating costs were incurred. The
increase in drilling costs for the SEAHAWK for the nine months ended June 30,
2000 was primarily due to additional costs incurred in December 1999 to mobilize
and prepare the rig for commencement of drilling operations following its
required upgrade for its four-year contract extension. The reduction in
operating costs for the ATWOOD EAGLE was due to no operating costs being
incurred in January 2000 when the rig was in a shipyard for its water depth
upgrade and due to a generally overall decline in maintenance and some personnel
costs. RIG-200 and RIG-19 are currently stacked on land in Australia with very
little costs being incurred.
The Company does not recognize depreciation expense during a period a
rig is out of service for a significant upgrade. The ATWOOD FALCON, VICKSBURG
and SEAHAWK had some reduction in depreciation expense in 1999 due to upgrades,
accounting for the increase in depreciation in 2000.
A summary of the contract status of the Company's wholly or partially
owned drilling units as of August 9, 2000 is as follows:
<TABLE>
NAME OF RIG LOCATION CONTRACT STATUS
<S> <C> <C>
-------------------- ------------------ ------------------------------------------------
ATWOOD FALCON Philippines Rig is under long-term contract,
which terminates in November 2001.
ATWOOD HUNTER United States Current three-year contract executed in
Gulf of Mexico 1997 terminates in November/December 2000.
ATWOOD EAGLE Mediterranean Sea Rig is currently working in Egypt under
drilling programs, which should keep the
rig employed into the second half of fiscal 2001.
VICKSBURG India Rig is under term contract, which terminates
in December 2000.
SEAHAWK Malaysia Rig is currently drilling under a four-year
contract extension period, with a further option.
ATWOOD SOUTHERN CROSS Mediterranean Sea Currently working off the coast of Israel
under contracts, which should keep the rig
employed into 2001.
RICHMOND United States Currently in a shipyard undergoing a minor
Gulf of Mexico upgrade which should be completed in
September 2000. Following its upgrade,
the rig has contracts, which should keep
it employed into 2001.
RIG-19 Australia Rig is available for contract since it became
idle in September 1999.
RIG-200 Australia Rig is available for contract since it became
idle in June 1999.
</TABLE>
LIQUIDITY AND CAPITAL RESOURCES
For the first nine months of fiscal 2000, operating cash flow (before
changes in working capital and other assets and liabilities) was $39.1 million
compared to $42.9 million for the first nine months of fiscal 1999. During the
first nine months of fiscal 2000, the Company utilized internally generated
funds to invest approximately $10.1 million in completing the upgrade of the
SEAHAWK, to invest approximately $10.6 million in the upgrade of the ATWOOD
EAGLE, to fund approximately $5.2 million of other capital expenditures, in
addition to reducing long-term debt by $8 million. In August 2000, a minor $5 to
$6 million enhancement and refurbishment of the RICHMOND will be performed. The
Company is also planning an additional $70 million future water depth upgrade to
the ATWOOD EAGLE to enable the rig to work in water depths of up to 5,000 feet
from its current water depth capacity of 3,600 feet. The Company is also
evaluating the feasibility of making million in certain upgrades and
refurbishment to the ATWOOD HUNTER following the completion of its current
drilling program (estimated November/December 2000), which could involve
expenditures in excess of $30 million. In June 2000, the Company entered into a
$150 million revolving (non-reducing) Credit Facility with a bank group, which
matures in June 2005. Proceeds from this facility were used to refinance $46
million of existing debt and will be used to fund future capital expenditures to
upgrade existing offshore drilling units.
The Company continues to explore the market for possible growth
opportunities. Further reduction or increase in long-term debt will depend on
identifying investment opportunities. The Company will adjust planned capital
expenditures, debt repayment and financing requirements in light of current
market conditions.
<PAGE>
PART II. OTHER INFORMATION
ATWOOD OCEANICS, INC. AND SUBSIDIARIES
ITEM 6. Reports on Form 8-K
(a) Exhibits
None
(b) Report on Form 8-K
Execution of $150 million Revolving Credit Facility on
June 30, 2000 (Filed July 5, 2000)
<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: August 11, 2000 s/JAMES M. HOLLAND
------------------
James M. Holland
Senior Vice President
and Chief Accounting Officer
