EXHIBIT 13.1
2000 ANNUAL REPORT TO SHAREHOLDERS
THE COMPANY
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Atwood Oceanics, Inc. is engaged in the business of international offshore
drilling of exploratory and developmental oil and gas wells and related support,
management and consulting services. Presently, the Company owns and operates a
modern fleet of seven mobile offshore drilling units and one modular platform
drilling unit, as well as manages the operations of two operator-owned platform
drilling units in Northwest Australia. In December 2000, the Company purchased a
semisubmersible for future conversion to a tender assist vessel once an
acceptable contract opportunity is secured. The Company also owns a 50% interest
in a platform drilling unit located in Australia. Since 1996, the Company has
expended over $200 million in upgrading its mobile offshore drilling units. The
Company supports its operations from headquarters in Houston and affiliated
offices in Australia, Malaysia, Indonesia, Philippines, United Kingdom, Egypt,
India and Israel.
<PAGE>
TO OUR SHAREHOLDERS AND EMPLOYEES:
Fiscal 2000 marked the Company's seventh consecutive profitable year, with
a net income of $23.1 million compared to a net income of $27.7 million in
fiscal 1999. Even though revenues during fiscal 2000 declined 10% to $134.5
million, operating cash flow in both fiscal 2000 and 1999 were approximately $55
million. With anticipated continuing positive cash flows along with a $150
million credit facility executed in June 2000, the Company is well positioned to
continue with its planned fleet upgrades and to explore additional growth
opportunities.
The Company's seven mobile offshore drilling units returned to full
utilization in June 2000 when the ATWOOD SOUTHERN CROSS commenced work in the
eastern Mediterranean Sea. Recent bid opportunities have provided encouraging
signs of increasing spending by our clients, tightening rig utilization, and
higher dayrates. As we enter the year 2001, demand for our mobile offshore
drilling units is positive with approximately 70% of these units' days committed
for fiscal year 2001. The ATWOOD FALCON and SEAHAWK are currently committed
through fiscal year 2001. Commitments for the ATWOOD SOUTHERN CROSS and ATWOOD
EAGLE should keep those units working into the second half of fiscal 2001. The
ATWOOD HUNTER should remain committed into second quarter of fiscal 2001, after
which an upgrade is planned. The RICHMOND has a backlog extending into the
second quarter of fiscal 2001. The VICKSBURG, operating successfully in India
since upgrade in 1998, should be available for reemployment in the second or
third quarter of fiscal 2001 and has potential for dayrate upside.
Three fleet upgrades were successfully completed during fiscal 2000
bringing expenditures on upgrades of our seven mobile offshore units to over
$200 million since 1996. The ATWOOD EAGLE Phase-one upgrade to 3,300 feet water
depth was completed on-time and within budget in January 2000. A major $22
million upgrade of our semisubmersible, tender-assist unit, SEAHAWK, was also
completed on-time and within budget, with the unit commencing a four-year
contract extension in January 2000. The RICHMOND has also been upgraded with a
(patent pending) suction pile system further enhancing its unique
characteristics for shallow water operations in the Gulf of Mexico, with a long
record as an attractive, highly utilized unit. All three units have performed
well since upgrade.
The Company plans two additional major upgrades during fiscal 2001. A
Phase-two upgrade of the ATWOOD EAGLE, which will increase its water-depth
capability to 5,000 feet for international (non-North Sea) waters, and upgrade
of the ATWOOD HUNTER, which will increase its water-depth capability to 5,000
feet for international (mild environments) waters. Both upgrades include totally
new quarters with 120-bed capacity and additional offices, enhanced drilling
systems, and improved sub-sea completion and tree handling capabilities. Our
goal is to provide safe, cost-effective, and fit-for-purpose units with both
drilling efficiency and completion capability in mind.
In early December, the Company acquired the semisubmersible OCEAN SCOUT,
which was subsequently renamed the SEASCOUT, for $4.5 million. This unit has a
similar hull design to the SEAHAWK and is an ideal candidate for conversion to a
premium tender-assist unit for use with fixed platform and possibly with
floating structures in deeper water. Preliminary engineering has already been
undertaken to reduce conversion lead-time to twelve months or less. A full
tender upgrade and fabrication of a new derrick equipment set will only be
undertaken upon award of an acceptable term contract.
The Company has been built on providing safe, quality operations, and
efficient, value-adding performance for our clients. We are well positioned for
the future with a modern, well-equipped, upgraded fleet; leverage to
international and deeper water markets; and high caliber personnel. These
strengths should enable us to benefit from improving longer-term fundamentals
and increasing international exploration and development spending by our
clients, particularly in deeper waters.
Our focused niche strategy of building on our strengths and pursuing
selective, high-return opportunities has served us well, producing the Company's
three best years of financial performance in our 30-year history in fiscal years
1998, 1999, and 2000. The support of our shareholders and the contributions of
our employees are appreciated as we strive to further enhance shareholder value.
John R. Irwin
<PAGE>
FINANCIAL HIGHLIGHTS
--------------------------------------------- ---------------- --------------
(In thousands) 2000 1999
--------------------------------------------- ---------------- --------------
FOR THE YEAR ENDED SEPTEMBER 30,
CONTRACT REVENUES $ 134,514 $ 150,009
NET INCOME 23,148 27,720
CAPITAL EXPENDITURES 34,841 38,760
AT SEPTEMBER 30,
CASH AND SECURITIES HELD FOR INVESTMENT $ 42,661 $ 43,041
NET PROPERTY AND EQUIPMENT 224,107 218,914
TOTAL ASSETS 313,251 293,604
TOTAL SHAREHOLDERS' EQUITY 218,205 192,229
<PAGE>
Atwood Oceanics, Inc. and Subsidiaries
FIVE-YEAR FINANCIAL REVIEW
<TABLE>
At or For the Years Ended September 30,
<S> <C> <C> <C> <C> <C>
------------------------------------------------------ ------------ -------------- ------------- ------------- ------------
(In thousands, except per share amounts, fleet data 2000 1999 1998 1997 1996
and ratios)
------------------------------------------------------ ------------ -------------- ------------- ------------- ------------
STATEMENTS OF OPERATIONS DATA:
Contract revenues $134,514 $150,009 $151,809 $ 89,082 $ 79,455
Drilling costs and general
and administrative expenses (67,699) (77,874) (72,616) (54,890) (56,653)
--------- -------- ------- -------- -------
OPERATING MARGIN 66,815 72,135 79,193 34,192 22,802
Depreciation (29,624) (23,904) (17,596) (9,979) (9,742)
--------- -------- -------- -------- -------
OPERATING INCOME 37,191 48,231 61,597 24,213 13,060
Other income (expense) (1,293) (1,724) (1,278) 1,165 2,783
Tax provision (12,750) (18,787) (20,955) (9,759) (4,475)
--------- -------- -------- -------- -------
NET INCOME $ 23,148 $ 27,720 $ 39,364 $15,619 $11,368
========= ======== ========= ======== =======
PER SHARE DATA:
Earnings per common share: (1)
Basic $ 1.68 2.03 2.90 1.16 .85
Diluted 1.66 2.01 2.84 1.14 .84
Average common shares outstanding: (1)
Basic 13,763 13,649 13,592 13,474 13,328
Diluted 13,916 13,791 13,884 13,715 13,544
FLEET DATA:
Number of rigs owned or managed, at end
of period 11 11 11 11 11
Utilization rate for in-service rigs
(excludes contractual downtime for rig
upgrades in 2000, 1999, 1998 and 1997) 71% 77% 100% 100% 100%
BALANCE SHEETS DATA:
Cash and securities held for investment $ 42,661 $ 43,041 $34,529 $ 42,234 $ 40,492
Working capital 47,433 31,519 24,864 27,549 26,151
Net property and equipment 224,107 218,914 205,632 143,923 91,124
Total assets 313,251 293,604 281,737 215,330 159,309
Total long-term debt 46,000 54,000 72,000 59,500 34,473
Shareholders' equity 218,205 192,229 163,766 122,689 105,554
Ratio of current assets to current liabilities 3.71 2.66 1.93 2.41 2.45
</TABLE>
Note -
(1) Retroactively adjusted to reflect 100% stock dividend declared in
November 1997.
(The Company has never paid any cash dividends on its common stock.)
<PAGE>
<TABLE>
OFFSHORE DRILLING OPERATIONS
PERCENTAGE
MAXIMUM OF 2000
YEAR BUILT WATER CONTRACT CONTRACT STATUS AT
RIG NAME /UPGRADED DEPTH REVENUES LOCATION CUSTOMER DECEMBER 15, 2000
-------- --------- -------- -------- -------- ---------- ---------------------------------
<S> <C> <C> <C> <C> <C> <C>
SEMISUBMERSIBLES -
------------------
ATWOOD FALCON 1983/1998 3,500 Ft. 30% Malaysia Esso Production Rig is under long-term contract which
Malaysia Inc. terminates in November 2001. Upon
through completion of current well in Malaysia,
assignment from the rig will be relocated to the
Shell Philippines Philippines to recommence drilling
Exploration, B.V. program for Shell Philippines.
ATWOOD HUNTER 1981/1997 3,600 Ft. 25% United States British-Borneo Following completion of its contractual
Gulf of Mexico Petroleum Inc. commitments (estimated February 2001),
an additional upgrade is planned for
the rig costing between $40 and $45
million.
ATWOOD EAGLE 1982/2000 3,300 Ft. 12% Egypt Rashid Petroleum Rig is contractually committed into the
Company second half of 2001. An approximate $80
million upgrade of the rig is planned
immediately upon the rig completing
its current contractual commitments
(estimated June to August 2001).
ATWOOD 1976/1997 2,000 Ft. 4% Israel Isramco Rig has contractual commitments in
SOUTHERN CROSS Israel, Egypt and Turkey, which should
keep the rig employed into the fourth
quarter of fiscal 2001.
SEAHAWK 1974/1992 600 Ft. 14% Malaysia Esso Production Rig is under long-term contract which
and Malaysia Inc. terminates in 2003, with
1999 a further option to extend.
SEASCOUT 1974 1,000 Ft. 0% United States The SEASCOUT (ex-OCEAN SCOUT) was
Gulf of Mexico purchased in December 2000 for future
conversion to a tender assist unit
similar to SEAHAWK once an acceptable
contract opportunity is secured.
CANTILEVER JACKUP -
-------------------
VICKSBURG 1976/1998 300 Ft. 9% India Enron Oil & Rig is under term contract which
Gas India Ltd. expires at the end of December 2000.
The rig is being marketed in India,
Southeast Asia and West Africa with
an anticipated increase in dayrate
revenues following completion of
its current contract.
SUBMERSIBLE -
-------------
RICHMOND 1982/2000 75 Ft. 3% United States Applied Drilling Rig is contractually committed in the
Gulf of Mexico Technology Inc. United States Gulf of Mexico into the
second quarter of fiscal 2001.
MODULAR PLATFORMS -
-------------------
RIG-19 1988 N/A 0% Australia Rig is available for contract since it
became idle in September 1999.
RIG-200 1995 N/A 0% Australia Rig is available for contract since it
became idle in June 1999.
MANAGEMENT CONTRACT
GOODWYN `A' and N/A N/A 3% Australia Woodside Energy Rigs are under term contract for
NORTH RANKIN `A' management of drilling operations
estimated to extend into 2003.
</TABLE>
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This Annual Report to Shareholders and the related Form 10-K for the fiscal
year ended September 30, 2000 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. Our Company and its
representatives may from time to time make written or verbal forward-looking
statements, including statements contained in this report and other Company
filings with the Securities and Exchange Commission and in our reports to
Shareholders. Generally, the words "believe", "expert", "intend", "estimate",
"anticipate", "plan", and similar expressions identify forward-looking
statements. All statements other than statements of historical facts included in
this report and the related Form 10-K regarding the Company's financial
position, business strategy, budgets and plans and objectives of management for
future operations are forward-looking statements. Although the Company believes
that the expectations reflected in such forward-looking statements are
reasonable, it can give no assurance that such expectations will prove to have
been correct. The forward-looking statements are and will be based on
management's then current views and assumptions regarding future events and
operating performances, and speak only as of their dates. The Company undertakes
no obligation to publicly update or revise any forward-looking statements,
whether as a result of new information, future events or otherwise. These
forward-looking statements involve risks and uncertainties that may cause the
Company's actual future activities and results of operations to be materially
different from those suggested or described in this Annual Report to
Shareholders and related Form 10-K. These risks include: the Company's
dependence on the oil and gas industry; the Company's ability to secure adequate
financing; the risks involved in the construction and upgrade to the Company's
rigs; competition; operations risks; risks involved in foreign operations; and
governmental regulation and environmental matters. These factors ("Cautionary
Statements") are disclosed in various places throughout this report and the
related Form 10-K. All subsequent written and oral forward-looking statements
attributable to the Company, or persons acting on its behalf, are expressly
qualified in their entirety by the Cautionary Statements.
OUTLOOK
During fiscal 2000, the Company accomplished some significant achievements:
the seventh consecutive profitable year and third best year in its history from
a financial performance perspective, the successful upgrades of the SEAHAWK,
RICHMOND and ATWOOD EAGLE, the execution of a new $150 million credit facility
and the return to work of the ATWOOD SOUTHERN CROSS after being idle for 18
months. Worldwide utilization of offshore drilling equipment is currently around
87% 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 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 the second
quarter of fiscal 2001 or beyond. The Company's two owned platform rigs, RIG-200
and RIG-19, have not worked since the second half of fiscal 1999 and have a very
uncertain future outlook. Both units are stacked on land in Australia at nominal
costs. Since 1996, the Company has expended over $200 million in upgrading its
seven offshore mobile drilling units. Of these units, the SEAHAWK and ATWOOD
FALCON have contract commitments beyond fiscal 2001. The ATWOOD EAGLE and ATWOOD
SOUTHERN CROSS have contract commitments in the Mediterranean Sea area which
should keep both units employed into the second half of fiscal 2001. The
RICHMOND completed its upgrade in early October 2000 and has returned to work in
the United States Gulf of Mexico. The VICKSBURG is committed in India through
December 31, 2000 with ongoing discussions for additional work. The ATWOOD
HUNTER has contractual commitments into January 2001.
The Company is currently planning additional upgrades for the ATWOOD HUNTER
and the ATWOOD EAGLE. Upon completing its current contract commitments, the
ATWOOD HUNTER will be moved to a shipyard in the United States to undergo
upgrades and enhancements estimated to cost between $40 and $45 million which is
anticipated to take four to five months to complete. When the ATWOOD EAGLE
completes its contractual commitments, it will be moved to a shipyard in the
Mediterranean Sea area to undergo an approximate $80 million upgrade which is
anticipated to take five to six months to complete.
The Company continues to maintain its focus on having safe, quality
operations. With anticipated increases in international oil and gas companies'
drilling budgets, the Company remains optimistic about the long-term drilling
market outlook and improving fundamentals.
<PAGE>
RESULTS OF OPERATIONS
Fiscal Year 2000 Versus Fiscal Year 1999
Contract revenues during fiscal 2000 decreased 10% from revenues in fiscal
1999 primarily due to reduced revenues from the ATWOOD EAGLE and the Company's
platform rigs. An analysis of contract revenues by rig for fiscal years 2000 and
1999 is as follows:
CONTRACT REVENUES
(In millions)
---------------------------------
Fiscal Fiscal
2000 1999 Variance
-------- ------- --------
SEAHAWK $ 19.5 $ 9.5 $ 10.0
ATWOOD FALCON 40.6 34.7 5.9
ATWOOD SOUTHERN CROSS 5.1 0.0 5.1
ATWOOD HUNTER 33.3 31.0 2.3
VICKSBURG 12.0 10.6 1.4
RICHMOND 4.2 4.1 0.1
GOODWYN `A'/NORTH RANKIN `A' 3.1 8.6 (5.5)
RIG-19/RIG-200 0.0 13.6 (13.6)
ATWOOD EAGLE 16.7 37.9 (21.2)
------- ------ -------
$ 134.5 $150.0 $(15.5)
======= ====== =======
In preparation for a four-year contract extension, the SEAHAWK was being
upgraded from April 1999 through December 1999, with a reduced dayrate received
during the upgrade period. The contract dayrate for the SEAHAWK varies from a
high of $50,000 to a low of $30,000 depending upon the price of oil. With a high
oil price, the SEAHAWK has received $50,000 per day since it returned to work in
February 2000 which accounts for its increase in revenues. The ATWOOD FALCON and
VICKSBURG have worked continuously since they completed their upgrades in
November 1998. The ATWOOD SOUTHERN CROSS returned to work in June 2000 after
being idle since September 1998. Higher revenues for the ATWOOD HUNTER are due
to an increase in dayrate during the last year of its three-year contract
commitment. 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. RIG -200 and RIG-19 have been idle in Australia
following completion of their contracts in June and September 1999,
respectively. The decrease in revenues for the ATWOOD EAGLE is due to a decline
in dayrate revenues from an average of over $100,000 per day in fiscal 1999 to
approximately $50,000 per day in fiscal 2000.
Contract drilling and management costs during fiscal 2000 decreased 16%
primarily due to reductions in operating costs of the Company's platform rigs
due to their decline in drilling operations. An analysis of contract drilling
and management costs by rig for fiscal years 2000 and 1999 is as follows:
CONTRACT DRILLING AND MANAGEMENT COSTS
(In millions)
--------------------------------------
Fiscal Fiscal
2000 1999 Variance
------- ------- ---------
ATWOOD HUNTER $11.4 $ 9.8 $ 1.6
ATWOOD FALCON 8.3 6.8 1.5
VICKSBURG 5.7 4.5 1.2
ATWOOD SOUTHERN CROSS 7.6 6.8 0.8
SEAHAWK 7.7 7.1 0.6
RICHMOND 5.0 4.8 0.2
GOODWYN `A'/NORTH RANKIN `A' 2.7 6.6 (3.9)
ATWOOD EAGLE 9.0 14.3 (5.3)
RIG-200/RIG-19 0.1 7.5 (7.4)
OTHER 1.8 2.2 (0.4)
----- ----- ------
$59.3 $70.4 $(11.1)
===== ===== ======
The increase in drilling costs for the ATWOOD HUNTER is due to higher
maintenance costs. The increases in the drilling costs for the ATWOOD FALCON and
VICKSBURG are due to the rigs working continuously since completing their
upgrades during the first quarter of fiscal 1999. The increase in drilling costs
for the ATWOOD SOUTHERN CROSS was due to its return to work. The increase in
drilling costs for the SEAHAWK was primarily due to additional costs incurred in
December 1999 and January 2000 to mobilize and prepare the rig for commencement
of drilling operations following its required upgrade. The reduction in drilling
costs for the ATWOOD EAGLE was due to no drilling 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 have been dismantled and are stacked on land in Australia with
nominal costs being incurred.
An analysis of depreciation expense by rig is as follows:
DEPRECIATION EXPENSE
(In millions)
--------------------------------------
Fiscal Fiscal
2000 1999 Variance
---------- ----------- -------------
SEAHAWK $ 5.1 $ 1.3 $ 3.8
VICKSBURG 2.9 2.0 0.9
ATWOOD FALCON 6.5 5.8 0.7
ATWOOD EAGLE 3.0 2.4 0.6
ATWOOD HUNTER 5.2 5.1 0.1
ATWOOD SOUTHERN CROSS 3.9 3.8 0.1
RIG-200/RIG-19 2.1 2.1 0.0
RICHMOND 0.2 0.8 (0.6)
OTHER 0.7 0.6 0.1
------ ------ ------
$ 29.6 $ 23.9 $ 5.7
====== ====== =======
The Company does not recognize depreciation expense during a period a rig
is out of service for a significant upgrade. The SEAHAWK, VICKSBURG and ATWOOD
FALCON had some reduction in depreciation expense in 1999 due to upgrades,
accounting for these increases in depreciation expense in 2000. The increase in
depreciation expense for the ATWOOD EAGLE is due to higher depreciable costs due
to its water-depth upgrades in January 2000.
Fiscal Year 1999 Versus Fiscal Year 1998
Despite the Company's active rig utilization decreasing from 100% in 1998
to 77% in 1999, contract revenues only declined approximately 1 percent. An
analysis of contract revenues by rig for fiscal year 1999 and 1998 is as
follows:
<PAGE>
CONTRACT REVENUES
(In millions)
--------------------------------
Fiscal Fiscal
1999 1998 Variance
------- ------ ---------
ATWOOD FALCON $ 34.7 $17.3 $ 17.4
VICKSBURG 10.6 1.9 8.7
ATWOOD EAGLE 37.9 32.2 5.7
GOODWYN `A'/NORTH RANKIN `A' 8.6 7.5 1.1
RIG-19 6.8 6.7 0.1
RIG-200 6.8 7.9 (1.1)
SEAHAWK 9.5 11.4 (1.9)
ATWOOD HUNTER 31.0 35.2 (4.2)
RICHMOND 4.1 11.3 (7.2)
ATWOOD SOUTHERN CROSS 0.0 20.4 (20.4)
------ ------ -----
$150.0 $151.8 $(1.8)
====== ====== =====
The ATWOOD FALCON was in a shipyard from May 1998 to November 1998
undergoing a water-depth upgrade. The VICKSBURG entered a shipyard in December
1997 for refurbishment and upgrade which was not completed until November 1998.
The ATWOOD FALCON and VICKSBURG have worked continuously since the completion of
their upgrades. The ATWOOD EAGLE was relocated from West Africa to the
Mediterranean Sea area in March 1998. The increase in revenues for the ATWOOD
EAGLE is due to enhanced dayrates for a portion of the year from term contract
commitments. The increase in revenues from the GOODWYN `A' and NORTH RANKIN `A'
rigs is due to the Company providing additional labor and assistance to the
rigs' Australian owner in upgrading the rigs during fiscal 1999. In preparation
for a four-year contract extension, the SEAHAWK entered a shipyard in April 1999
for upgrade, with a reduced dayrate paid during the upgrade period which
accounts for the decline in revenues. The decline in revenues for the ATWOOD
HUNTER is due to a temporary reduction in dayrate revenue during a period when
the rig could not drill due to extremely strong underwater currents. Market
conditions resulted in a reduced dayrate and some idle time for the RICHMOND;
with the ATWOOD SOUTHERN CROSS idle for the entire year.
Contract drilling and managements costs during fiscal 1999 increased 8%
from $65.3 million to $70.4 million. An analysis of contract drilling and
management costs by rig is as follows:
CONTRACT DRILLING AND MANAGEMENT COSTS
(In millions)
------------------------------------------
Fiscal Fiscal
1999 1998 Variance
------ ------- --------
VICKSBURG $ 4.5 $1.4 $ 3.1
ATWOOD EAGLE 14.3 11.5 2.8
ATWOOD FALCON 6.8 4.9 1.9
RIG-19 6.0 4.5 1.5
SEAHAWK 7.1 6.1 1.0
ATWOOD HUNTER 9.8 9.4 0.4
GOODWYN `A'/NORTH RANKIN `A' 6.6 6.3 0.3
RIG-200 1.5 2.6 (1.1)
RICHMOND 4.8 6.0 (1.2)
ATWOOD SOUTHERN CROSS 6.8 10.6 (3.8)
OTHER 2.2 2.0 0.2
----- ----- -----
$70.4 $65.4 $ 5.1
===== ===== =====
The increase in the drilling costs for the VICKSBURG and ATWOOD FALCON are
due to the rigs working continuously since completing their upgrades during the
first quarter of fiscal 1999. The increase in drilling costs for the ATWOOD
EAGLE was due primarily to an increase in maintenance costs and higher operating
costs associated with working the entire year in the Mediterranean Sea area. The
increase in drilling costs for RIG-19 was due to costs being lower in 1998 due
to the receipt of certain payroll related tax refunds. Reductions in drilling
costs for the RICHMOND, RIG-200 and ATWOOD SOUTHERN CROSS were due to cost
savings associated with idle rig time.
An analysis of depreciation expense by rig is as follows:
DEPRECIATION EXPENSE
(In millions)
-----------------------------------
Fiscal Fiscal
1999 1998 Variance
------- ------ --------
ATWOOD FALCON $ 5.8 $ 1.8 $4.0
VICKSBURG 2.0 0.0 2.0
ATWOOD SOUTHERN CROSS 3.8 3.0 0.8
RICHMOND 0.8 0.5 0.3
ATWOOD HUNTER 5.1 5.0 0.1
ATWOOD EAGLE 2.4 2.2 0.2
RIG-200 2.1 2.1 0.0
RIG-19 0.0 0.2 (0.2)
SEAHAWK 1.3 2.5 (1.2)
OTHER 0.6 0.3 0.3
----- ------ -----
$23.9 $ 17.6 $ 6.3
===== ====== =====
The increase in depreciation expense was primarily due to the commencing of
depreciation in fiscal 1999 of upgrade costs of the ATWOOD FALCON and VICKSBURG.
The Company does not recognize depreciation expense during the period a rig is
out of service for a significant upgrade. This accounts for the decline in
depreciation expense for the SEAHAWK in fiscal 1999.
LIQUIDITY AND CAPITAL RESOURCES
Even though, net income in fiscal 2000 declined 16% from fiscal 1999,
operating cash flows (before changes in working capital and other assets and
liabilities) for fiscal 2000 only declined one percent from $55.7 million to
$55.2 million. During fiscal 2000, the Company utilized available cash and
internally generated funds to invest approximately $10 million in completing the
upgrade of the SEAHAWK, to invest approximately $8 million in upgrading the
water-depth drilling capacity of the ATWOOD EAGLE from 2,500 feet to 3,300 feet,
to fund approximately $17 million in other capital expenditures and to reduce
outstanding debt by $8 million.
Since 1996, the Company has successfully upgraded all seven of its mobile
offshore drilling units and after completing the future upgrades planned for the
ATWOOD HUNTER and ATWOOD EAGLE, will have expended over $300 million in its
upgrade program. The upgrade of the ATWOOD HUNTER will include extending the
water-depth drilling capacity to 5,000 feet for certain environmental
conditions, a new high capacity crane, new 120-bed quarters in addition to other
improvements. The upgrade on the ATWOOD EAGLE will include modifications of the
rig's hull and mooring equipment to enable the rig to work in 5,000 feet of
water, new 120-bed quarters, new high-capacity crane, upgraded well control,
drilling and mud systems, in addition to other improvements. On December 5,
2000, the Company purchased the semisubmersible unit SEASCOUT (ex-OCEAN SCOUT)
for $4.5 million. This unit was purchased for conversion and upgrade to a
semisubmersible tender assist rig, which, depending upon water depth and other
operational requirements, could cost from $40 to $60 million. The conversion and
upgrades will not be undertaken until an acceptable contract opportunity has
been secured. Except for planned upgrades of the ATWOOD HUNTER and ATWOOD EAGLE
estimated to cost between $120 and $125 million, and the purchase of the
SEASCOUT for $4.5 million, the Company currently has no significant capital
commitments; however, the Company continues to pursue growth opportunities
which, if successful, could result in additional capital commitments.
To assist the Company in funding all capital commitments, in June 2000, the
Company executed a new $150 million revolving line of credit. This Credit
Facility requires no principal reductions prior to its maturity in June 2005.
Initially, $46 million was borrowed under the Facility to repay the balance
outstanding under an existing reducing credit facility. Subsequent to September
30, 2000, the Company prepaid $6 million for a currently outstanding balance of
$40 million. Assuming no additional capital investments other than the upgrades
to the ATWOOD HUNTER and ATWOOD EAGLE, the outstanding balance under the Credit
Facility at the end of fiscal year 2001 should be approximately $100 million.
Working capital increased from $31.5 million at the end of September 30,
1999 to $47.4 million at the end of September 30, 2000. The Company's portfolio
of accounts receivable is comprised of major international corporate entities
with stable payment experience. Historically, the Company has experienced no
significant difficulties in receivable collections; however, at September 30,
2000, the Company was continuing to pursue legal action in Australia to collect
approximately $2 million billed in 1998.
Impact of the Year 2000 Issue
The Company has not experienced any Year 2000 related computer failure or
problems. The total cost of the Company's Year 2000 compliance program was
approximately $1.5 million, which consisted primarily of the replacement of
accounting and related software. The Company does not expect to incur any
further Year 2000 costs.
DISCLOSURES ABOUT MARKET RISK
The Company is exposed to market risk, including adverse changes in
interest rates and foreign currency exchange rates as discussed below.
Interest Rate Risk
All of the $46 million of long-term debt outstanding at September 30, 2000,
was floating rate debt. As a result, the Company's annual interest costs in
fiscal 2001 will fluctuate based on interest rate changes. Because the interest
rate on the Company's long-term debt is a floating rate, the fair value of the
Company's long-term debt approximates carrying value as of September 30, 2000.
The impact on annual cash flow of a 10% change in the floating rate
(approximately 70 basis points) would be approximately $0.3 million. The Company
did not have any open derivative contracts relating to its floating rate debt at
September 30, 2000.
Foreign Currency Risk
Certain of the Company's subsidiaries have monetary assets and liabilities
that are denominated in a currency other than their functional currencies. Based
on September 30, 2000 amounts, a decrease in the value of 10% in the foreign
currencies relative to the U.S. dollar from the year-end exchange rates would
not result in any material foreign currency transaction loss. Thus, the Company
considers its current risk exposure to foreign currency exchange rate movements,
based on net cash flows, to be immaterial. The Company did not have any open
derivative contracts relating to foreign currencies at September 30, 2000.
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors of Atwood Oceanics, Inc.:
We have audited the accompanying consolidated balance sheets of Atwood
Oceanics, Inc. (a Texas corporation) and subsidiaries as of September 30, 2000
and 1999, and the related consolidated statements of operations, cash flows and
changes in shareholders' equity for each of the three years in the period ended
September 30, 2000. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Atwood Oceanics, Inc. and
subsidiaries as of September 30, 2000 and 1999, and the results of their
operations and their cash flows for each of the three years in the period ended
September 30, 2000, in conformity with accounting principles generally accepted
in the United States.
/s/ARTHUR ANDERSEN LLP
Houston, Texas
November 21, 2000
<PAGE>
Atwood Oceanics, Inc. and Subsidiaries
CONSOLIDATED BALANCE SHEETS
September 30,
-------------------------------------------------- -----------------------------
(In thousands) 2000 1999
-------------------------------------------------- -------------- --------------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 19,740 $20,105
Accounts receivable, net 31,466 18,289
Inventories of materials and supplies,
at lower of average cost or market 9,544 8,010
Deferred tax assets 950 720
Prepaid expenses 3,217 3,408
------- -------
Total Current Assets 64,917 50,532
------- -------
SECURITIES HELD FOR INVESTMENT:
Held-to-maturity, at amortized cost 22,594 22,589
Available-for-sale, at fair value 327 347
------- --------
22,921 22,936
------- --------
PROPERTY AND EQUIPMENT, at cost:
Drilling vessels, equipment and drill pipe 391,879 358,372
Other 8,197 7,317
------- --------
400,076 365,689
Less - accumulated depreciation 175,969 146,775
------- --------
Net Property and Equipment 224,107 218,914
------- --------
DEFERRED COSTS AND OTHER ASSETS 1,306 1,222
-------- --------
$313,251 $293,604
======== ========
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
Atwood Oceanics, Inc. and Subsidiaries
CONSOLIDATED BALANCE SHEETS
September 30,
-----------------------------------------------------------------------------
(In thousands, except share data) 2000 1999
----------------------------------------------------------------- -----------
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt $ --- $ ---
Accounts payable 5,886 7,640
Accrued liabilities 11,598 11,373
------- -------
Total Current Liabilities 17,484 19,013
------- -------
LONG-TERM DEBT, net of current maturities 46,000 54,000
------- -------
DEFERRED CREDITS:
Income taxes 10,390 8,168
Mobilization fees and other 21,172 20,194
------- -------
31,562 28,362
======= =======
COMMITMENTS AND CONTINGENCIES (NOTE 12)
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 13,823,000
and 13,675,000 issued and
outstanding in 2000 and 1999, respectively 13,823 13,675
Paid-in capital 55,151 52,458
Accumulated other comprehensive income (loss) (152) (139)
Retained earnings 149,383 126,235
-------- --------
Total Shareholders' Equity 218,205 192,229
-------- --------
$313,251 $293,604
======== ========
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
Atwood Oceanics, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF OPERATIONS
Years Ended September 30,
------------------------------------------ ------------------------------------
(In thousands, except per share amounts) 2000 1999 1998
------------------------------------------ --------- ---------- ---------
REVENUES:
Contract drilling $ 131,387 $ 148,051 $ 148,570
Contract management 3,127 1,958 3,239
--------- -------- --------
134,514 150,009 151,809
--------- -------- --------
COSTS AND EXPENSES:
Contract drilling 56,598 68,868 62,364
Contract management 2,652 1,487 2,921
Depreciation 29,624 23,904 17,596
General and administrative 8,449 7,519 7,331
-------- -------- -------
97,323 101,778 90,212
-------- -------- -------
OPERATING INCOME 37,191 48,231 61,597
-------- -------- -------
OTHER INCOME (EXPENSE):
Interest expense (3,907) (4,172) (3,599)
Investment income 2,614 2,448 2,321
-------- -------- -------
(1,293) (1,724) (1,278)
-------- -------- -------
INCOME BEFORE INCOME TAXES 35,898 46,507 60,319
PROVISION FOR INCOME TAXES 12,750 18,787 20,955
-------- -------- --------
NET INCOME $ 23,148 $ 27,720 $ 39,364
======== ======== ========
EARNINGS PER COMMON SHARE:
Basic $ 1.68 $ 2.03 $ 2.90
Diluted 1.66 2.01 2.84
AVERAGE COMMON SHARES OUTSTANDING:
Basic 13,763 13,649 13,592
Diluted 13,916 13,791 13,884
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
<TABLE>
Atwood Oceanics, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
For Years Ended September 30,
----------------------------------------------------------------------------- ------------- ------------- -------------
(In thousands) 2000 1999 1998
----------------------------------------------------------------------------- ------------- ------------- -------------
<S> <C> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES:
Net income $ 23,148 $ 27,720 $ 39,364
-------- -------- --------
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation 29,624 23,904 17,596
Amortization of deferred items 403 566 427
Deferred federal income tax provision 2,000 3,500 3,970
Changes in assets and liabilities:
Decrease (increase) in accounts receivable (13,177) 9,441 (11,377)
Increase (decrease) in accounts payable (3,014) 402 954
Increase (decrease) in accrued liabilities 225 (350) (1,706)
Net mobilization fees 981 7,074 2,779
Other (1,103) (1,364) (1,924)
-------- -------- --------
15,939 43,173 10,719
--------- -------- --------
Net Cash Provided by Operating Activities 39,087 70,893 50,083
--------- -------- --------
CASH FLOW FROM INVESTING ACTIVITIES:
Capital expenditures (34,841) (38,760) (79,607)
Non cash portion of capital expenditures 1,260 (7,012) 7,973
Other 24 1,574 ---
---------- -------- --------
Net Cash Used by Investing Activities (33,557) (44,198) (71,634)
----------- -------- --------
CASH FLOW FROM FINANCING ACTIVITIES:
Proceeds from exercises of stock options 2,105 539 658
Proceeds from revolving credit facility 6,000 13,000 14,000
Principal payments on debt (14,000) (31,750) (750)
-------- -------- --------
Net Cash Provided (Used) by Financing Activities (5,895) (18,211) 13,908
-------- -------- --------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (365) 8,484 (7,643)
CASH AND CASH EQUIVALENTS, at beginning of period 20,105 11,621 19,264
-------- -------- --------
CASH AND CASH EQUIVALENTS, at end of period $ 19,740 $ 20,105 $ 11,621
======== ======== ========
--------------------------
Supplemental disclosure of cash flow information:
Cash paid during the year for domestic and foreign income taxes $ 10,713 $ 13,383 $ 18,549
======== ======== ========
Cash paid during the year for interest, net of amounts capitalized $ 3,914 $ 4,614 $ 2,349
======== ======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
<TABLE>
Atwood Oceanics, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF CHANGES IN
SHAREHOLDERS' EQUITY
--------------------------------------------- ------------------ ------------------------ ------------ ------------------ ----------
Accumulated
Other
(In thousands) Comprehensive Common Stock Paid-in Comprehensive Retained
Income Shares(1) Amount(1) Capital(1) Income (Loss) Earnings
-------------------------------------------- ------------- ------------------- ----------- --------------- ------------
<S> <C> <C> <C> <C> <C> <C>
September 30, 1997 13,546 $13,546 $50,104 $ (112) $ 59,151
Net income $39,364 --- --- --- --- 39,364
Unrealized holding loss on
available-for-sale securities, net
of tax of $23 (43) --- --- --- (43) ---
-------
Comprehensive income $39,321
=======
Exercises of employee stock options 79 79 579 --- ---
Tax benefit from exercises
of employee stock options --- --- 1,098 --- ---
------ ------ ------ ------- -------
September 30, 1998 13,625 13,625 51,781 (155) 98,515
Net income $27,720 --- --- --- 27,720
Unrealized holding gain on
available-for-sale securities, net
of tax of $8 16 --- --- --- 16 ---
-------
Comprehensive income $27,736
=======
Exercises of employee stock options 50 50 489 --- ---
Tax benefit from exercises
of employee stock options --- --- 188 --- ---
------ ----- ------ ------ -------
September 30, 1999 13,675 $13,675 52,458 (139) $126,235
Net income $23,148 --- --- --- --- 23,148
Unrealized holding loss on
available-for-sale securities, net
of tax of $7 (13) --- --- --- (13) ---
-------
Comprehensive income $23,135
=======
Exercises of employee stock options 148 148 1,957 ---
Tax benefit from exercises
of employee stock options --- --- 736 --- ---
------ ------- ------- ------- --------
September 30, 2000 13,823 $13,823 $55,151 $(152) $149,383
====== ======= ======= ======= ========
</TABLE>
---------------------
NOTES -
(1) Adjusted for 100% stock dividend declared in November 1997.
(2) Preferred stock, no par value, of 1,000,000 shares was authorized in 1975
and no shares have been issued.
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
Atwood Oceanics, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - NATURE OF OPERATIONS
Atwood Oceanics, Inc. together with its wholly owned subsidiaries
(collectively referred to herein as the "Company"), is engaged in the business
of international offshore drilling of exploratory and developmental oil and gas
wells and related support, management and consulting services. Presently, the
Company owns and operates a modern fleet of seven mobile offshore drilling units
and one modular platform drilling unit, as well as manages the operations of two
operator-owned platform drilling units in Northwest Australia. The Company also
owns a 50% interest in another platform drilling unit. In December 2000, the
Company purchased a semisubmersible unit for a future conversion to a tender
assist vessel once an acceptable contract opportunity is secured (see Note 15).
Currently, the Company is involved in active operations in the territorial
waters of Australia, Malaysia, Egypt, Philippines, Israel, United States and
India.
Demand for drilling equipment is dependent on the exploration and
development programs of oil and gas companies, which is in turn influenced by
the financial conditions of such companies, by general economic conditions, by
prices of oil and gas, and from time to time, by political considerations and
policies. The Company's business operations are subject to the risks associated
with a business having a limited number of customers for which it can operate at
any given time. A decrease in the drilling programs of customers in the areas
where the Company is employed may adversely affect the Company's revenues. The
contracts under which the Company operates its drilling rigs are obtained either
through individual negotiations with the customer or by submitting proposals in
competition with the other drilling contractors and vary in their terms and
conditions. The Company competes with several other drilling contractors, most
of which are substantially larger than the Company and possess appreciably
greater financial and other resources. Price competition is generally the most
important factor in the drilling industry, but the technical capability of
specialized drilling equipment and personnel at the time and place required by
customers are also important. Other competitive factors include work force
experience, rig suitability, efficiency, condition of equipment, reputation and
customer relations. The Company believes that it competes favorably with respect
to these factors.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Consolidation -
The consolidated financial statements include the accounts of Atwood
Oceanics, Inc. ("AOI") and all of its wholly owned domestic and foreign
subsidiaries. The Company's undivided 50% interest in RIG-200 is accounted for
using the proportionate consolidation method (See Note 4). All significant
intercompany accounts and transactions have been eliminated in consolidation.
Foreign exchange -
The U.S. dollar is the functional currency for all areas of operations of
the Company. Accordingly, monetary assets and liabilities denominated in foreign
currency are remeasured to U.S. dollars at the rate of exchange in effect at the
end of the year, items of income and expense are remeasured at average monthly
rates, and property and equipment and other nonmonetary amounts are remeasured
at historical rates. Gains and losses on foreign currency transactions and
remeasurements are included in contract drilling costs in the consolidated
statements of operations. The Company recorded foreign exchange losses of $.4
and $1 million in fiscal 2000 and 1998, respectively, with a foreign exchange
gain of $.4 million in fiscal 1999.
<PAGE>
Property and equipment -
Property and equipment are recorded at cost. Interest costs related to
property under construction are capitalized as a component of construction
costs. There were no interest costs capitalized during fiscal 2000. Interest
capitalized during fiscal 1999 and 1998 totaled $.5 million and $1.4 million,
respectively.
Depreciation is provided on the straight-line method over the following
estimated useful lives of the various classifications of assets:
Years
---------
Drilling vessels and related equipment 5-15
Drill pipe 3
Furniture and other 3-10
In November 2000, the Company engaged an independent appraiser to evaluate
the expected useful lives of the ATWOOD HUNTER, ATWOOD FALCON and ATWOOD EAGLE.
Based, in part, upon such appraisal, the Company, effective October 1, 2000,
extended the depreciable lives of ATWOOD HUNTER and ATWOOD FALCON from 12 to 22
years and will extend the depreciable life of the ATWOOD EAGLE from 12 to 22
years following the completion of its water-depth upgrade planned at the end of
fiscal 2001. The Company believes that these changes in depreciable lives
provide a better matching of the revenues and expenses of these assets over
their anticipated useful lives. Maintenance, repairs and minor replacements are
charged against income as incurred; major replacements and upgrades are
capitalized and depreciated over the remaining useful life of the asset as
determined upon completion of the work. The cost and related accumulated
depreciation of assets sold, retired or otherwise disposed are removed from the
accounts at the time of disposition, and any resulting gain or loss is reflected
in the consolidated statements of operations for the applicable period.
Deferred costs -
The Company defers the net costs of moving a drilling rig to a new area and
amortizes such costs on a straight-line basis over the life of the applicable
drilling contract. The ATWOOD SOUTHERN CROSS was the only rig moved to a new
area during fiscal 2000 when it was relocated from Australia to the
Mediterranean Sea. The Company incurred net costs of approximately $1.2 million
in moving the rig, which was expensed during fiscal 2000 due to the rig's
initial short-term contract commitments. During fiscal years 1999 and 1998, the
Company received sufficient mobilization revenues on all rig moves to more than
cover all mobilization costs. There were no unamortized mobilization costs at
September 30, 2000 or 1999.
The Company defers the costs of scheduled drydocking and charges such costs
to expense over the period to the next scheduled drydocking (normally 30
months).
Federal income taxes -
The Company accounts for income taxes in accordance with Statement of
Financial Accounting Standards ("SFAS") No. 109 "Accounting for Income Taxes".
Under SFAS No. 109, deferred income taxes are recorded to reflect the tax
consequences on future years of differences between the tax basis of assets and
liabilities and their financial reporting amounts at each year-end given the
provisions of enacted tax laws. Deferred tax assets are reduced by a valuation
allowance when, based upon management's estimates, it is more likely than not
that a portion of the deferred tax assets will not be realized in a future
period.
Revenue recognition -
The Company accounts for drilling and management contract revenues using
the percentage of completion method of accounting, under which revenues are
recognized on a daily basis as earned. Mobilization revenues are first used to
cover the costs of mobilization with the excess revenues deferred and amortized
on a straight-line basis over the life of the applicable drilling contract. At
September 30, 2000 and 1999, deferred revenues totaling $20.4 million and $19.4
million, respectively, were included in Deferred Credits on the accompanying
consolidated balance sheets.
<PAGE>
Cash and cash equivalents -
Cash and cash equivalents consist of cash in banks and highly liquid debt
instruments which mature within three months of the date of purchase.
Investments -
Investments in held-to-maturity securities are stated at the amortized cost
at the balance sheet date. The Company has the ability and intent to hold such
securities to maturity. At September 30, 2000 and 1999, investments in
available-for-sale securities are carried at fair value with the unrealized
holding loss or gain, net of deferred tax, included in comprehensive income.
Earnings per common share -
Basic and diluted earnings per share have been computed in accordance with
SFAS No. 128, "Earnings per Share"(EPS). "Basic" EPS, excludes dilution and is
computed by dividing income available to common shareholders by the
weighted-average number of common shares outstanding for the period. "Diluted"
EPS reflects the issuance of additional shares in connection with the assumed
conversion of stock options.
The computation of basic and diluted earnings per share under SFAS No. 128
for each of the past three years is as follows (in thousands, except per share
amounts):
Per Share
Net Income Shares Amount
---------- ------- --------
Fiscal 2000:
Basic earnings per share $ 23,148 13,763 $1.68
Effect of dilutive securities -
Stock options --- 153 (0.02)
-------- ------- ------
Diluted earnings per share $ 23,148 13,916 $ 1.66
======== ======= ======
Fiscal 1999:
Basic earnings per share $ 27,720 13,649 $ 2.03
Effect of dilutive securities -
Stock options --- 142 (0.02)
--------- -------- ------
Diluted earnings per share $ 27,720 13,791 $ 2.01
========= ======== ======
Fiscal 1998:
Basic earnings per share $ 39,364 13,592 $ 2.90
Effect of dilutive securities -
Stock options --- 292 (.06)
-------- -------- ------
Diluted earnings per share $ 39,364 13,884 $ 2.84
======== ======== ======
Stock-Based compensation -
The Company accounts for employee stock-based compensation using the
intrinsic value method prescribed by Accounting Principles Board (APB) Opinion
No. 25, "Accounting for Stock Issued to Employees".
Comprehensive income -
In the first quarter of 1999, the Company adopted SFAS No. 130, "Reporting
Comprehensive Income," which requires companies to report the components of
comprehensive income in a financial statement with the same prominence as other
financial statements. The Company has chosen to disclose comprehensive income,
which is comprised of net income and unrealized holding gains (losses) on
available-for-sale equity securities, in the accompanying Consolidated
Statements of Changes in Shareholders' Equity. This information is shown for all
periods presented.
<PAGE>
Use of estimates -
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
NOTE 3 - SECURITIES HELD FOR INVESTMENT
All of the Company's investments in equity securities are classified as
"available-for-sale" and accordingly, are reflected in the September 30, 2000
and 1999 Consolidated Balance Sheets at fair value, with the aggregate
unrealized gain or loss, net of related deferred tax liability or asset,
included in shareholders' equity. All of the Company's investments in United
States Treasury Bonds (which mature in November 2000 and February 2001) are
classified as "held-to-maturity" and accordingly, are reflected in the September
30, 2000 and 1999 Consolidated Balance Sheets at amortized cost.
There were no sales of securities during fiscal 2000, 1999 or 1998. An
analysis of the Company's investment in marketable securities is as follows (in
thousands):
Amortized Unrealized
Cost Gain (Loss) Fair Value
----------- ------------- ------------
September 30, 2000 -
Equity Securities $ 561 $(234) $ 327
United States
Treasury Bonds 22,594 84 22,678
-------- ------ -------
$ 23,155 $(150) $ 23,005
======== ===== ========
September 30, 1999 -
Equity Securities $ 561 $ (214) $ 347
United States
Treasury Bonds 22,589 687 23,276
------- ------ --------
$ 23,150 $ 473 $ 23,623
======== ====== ========
NOTE 4 - PROPERTY AND EQUIPMENT
SEAHAWK -
In January 2000, the SEAHAWK commenced drilling under its four-year
contract extension with Esso Production Malaysia, Inc. following completion of
its approximately $22 million upgrade. Pursuant to the contract, the Company
received approximately $20 million in upgrade reimbursement payments which were
recorded to Deferred Credits. These upgrade reimbursement payments, net after
certain costs, are being amortized into revenue over the four-year contract
extension period, with an unamortized balance of $16.8 million at September 30,
2000.
<PAGE>
AWOOD EAGLE -
In January 2000, the Company increased the water depth drilling capability
of the ATWOOD EAGLE from 2,500 feet to 3,300 feet at a cost of approximately $8
million. When the ATWOOD EAGLE completes its current drilling program in the
Mediterranean Sea, the Company is planning to move the rig to a shipyard to
undergo an upgrade to increase its drilling capacity to 5,000 feet and to
enhance its living quarters, crane and sub-sea handling capabilities, in
addition to other improvements. This upgrade and refurbishment is anticipated to
take five to six months to complete and cost approximately $80 million.
RICHMOND -
During August and September 2000, the RICHMOND was in a shipyard undergoing
an upgrade and refurbishment at an aggregate cost of approximately $7 million.
The upgrade included, among other improvements, the installation of suction
piles and the refurbishment of living quarters.
ATWOOD FALCON -
In November 1998, the ATWOOD FALCON commenced drilling under its three-year
contract with Shell Philippines Exploration B.V. following completion of its
approximately $45 million water-depth upgrade. The contract provided for the
payment of $11.2 million in mobilization fees of which $10.4 million (net after
mobilization costs) was recorded to Deferred Credits and is being amortized into
revenue over the three-year contract period, with an unamortized balance of $3.6
million at September 30, 2000.
VICKSBURG -
In December 1998, the VICKSBURG commenced drilling in India under a
contract with Enron Oil & Gas India Ltd., following completion of its
approximately $35 million refurbishment and upgrade. The VICKSBURG's current
contract is scheduled to expire in December 2000, with discussions currently
underway for additional work.
ATWOOD HUNTER -
In September 1997, the ATWOOD HUNTER commenced drilling under its long-term
contract for British-Borneo Petroleum Inc., ("British-Borneo") following
completion of its approximately $40 million water depth upgrade. Following
completion of its current contractual commitments (estimated February 2001), the
Company is planning to perform an additional upgrade of the rig to include,
among other improvements, the extension of its water-depth drilling capacity to
5,000 feet for certain environmental conditions, new 120 bed quarters, a new
high capacity crane and the enhancement of its completion and sub-sea tree
handling capabilities. The costs of these improvements is estimated to be
between $40 and $45 million and anticipated to take four to five months to
complete.
ATWOOD SOUTHERN CROSS -
In 1997, the ATWOOD SOUTHERN CROSS was refurbished and upgraded to achieve
2,000 feet water-depth drilling capabilities at an aggregate cost of
approximately $35 million. Following its upgrade, the rig was employed in
Australia through September 1998 and then remained idle until it was moved to
the Mediterranean Sea in April/May 2000 to commence contract work off the coast
of Israel.
RIG 200-
RIG-200 (a modular platform rig built in 1995) is owned 50% by the Company
and 50% by Helmerich & Payne (current owner of 22% of the Company's outstanding
common stock). Since the Company has a 50% undivided ownership interest in
RIG-200 and is actively involved in its operations, the Company accounts for its
investment in the rig on a proportionate consolidation method. Accordingly, the
Company's $12 million gross investment in RIG-200 is reflected in "Drilling
Vessels, Equipment and Drill Pipe" in the Consolidated Balance Sheets, with 50%
of the rig's operating results for fiscal years 2000, 1999 and 1998 reflected in
the Company's Consolidated Statements of Operations. RIG-200 completed its
initial contract in June 1999 and remains idle in Australia while waiting for a
new contract opportunity.
NOTE 5 - DEBT
LONG-TERM DEBT -
A summary of long-term debt is as follows (in thousands):
September 30,
---------------------------
2000 1999
---- ----
Non-reducing revolving credit agreement,
bearing interest (market adjustable) at
approximately 8% per annum at
September 30, 2000 $ 46,000 $ ----
Reducing revolving credit agreement,
bearing interest (market adjustable) at
approximately 7% per annum at
September 30, 1999 --- 54,000
-------- --------
46,000 54,000
Less-current maturities --- ---
-------- --------
$ 46,000 $ 54,000
======== ========
On June 30, 2000, the Company entered into a $150 million five-year
non-reducing Revolving Credit Facility with a bank group. The Company initially
borrowed $46 million under this agreement to repay the balance outstanding under
the Reducing Credit Facility. The Revolving Credit Facility permits the Company
to prepay principal at anytime without incurring penalty. Subsequent to
September 30, 2000, the Company prepaid $6 million for a current outstanding
balance of $40 million. The bank group's collateral for this Revolving Credit
Facility consists principally of preferred mortgages on the ATWOOD HUNTER,
ATWOOD EAGLE and the ATWOOD FALCON (with an aggregate net book value at
September 30, 2000 totaling approximately $126 million) plus the assignment of
approximately $20 million in market value of United States Treasury Bonds. The
Company is not required to maintain compensating balances; however, it is
required to pay a fee of 1/4% to 1/2% per annum on the unused portion of the
total facility and certain other administrative costs. The Revolving Credit
Facility contains financial covenants, including but not limited to,
requirements for maintaining certain net worth and other financial ratios, and
restrictions on disposing of any material assets, paying dividends or
repurchasing any of the Company's outstanding common stock and incurring any
additional indebtness in excess of $10 million. The Company was in compliance
with all financial covenants at September 30, 2000.
The maturities of long-term debt are as follows (in thousands):
FISCAL YEAR AMOUNT
2001 $ ---
2002 ---
2003 ---
2004 ---
2005 46,000
-------
$46,000
=======
LINE OF CREDIT -
The Company has a $5 million unsecured line of credit with a bank to support
issuance, when required, of standby letters of guarantee and the Indian tax
guarantee (see Note 6). At September 30, 2000, standby letters of guarantee in
the aggregate amount of approximately $2 million were outstanding under this
facility.
<PAGE>
NOTE 6 - INCOME TAXES
Domestic and foreign income before income taxes for the three years in the
period ended September 30, 2000 are as follows (in thousands):
Fiscal Fiscal Fiscal
2000 1999 1998
----- ------- ------
Domestic income $30,490 $29,648 $39,553
Foreign income 5,408 16,859 20,766
------- ------- -------
$35,898 $46,507 $60,319
======= ======= =======
The provision (benefit) for domestic and foreign taxes on income consists of
the following (in thousands):
Fiscal Fiscal Fiscal
2000 1999 1998
------ ------ ------
Current domestic provision $4,720 $8,000 $11,487
Deferred domestic provision 2,000 3,500 3,970
Current foreign provision 6,030 7,287 5,498
------- ------- -------
$12,750 $18,787 $20,955
======= ======= =======
The components of the deferred income tax assets (liabilities) as of
September 30, 2000 and 1999 are summarized as follows (in thousands):
September 30,
------------------
2000 1999
------- -------
Deferred tax assets -
Net operating loss carryforwards $2,650 $2,760
Book reserves 850 700
Deferred mobilization revenues --- 700
------ ------
3,500 4,160
------ ------
Deferred tax liabilities -
Difference in book and tax basis of equipment 10,652 9,190
Deferred charges --- 123
Unrealized holding loss on
available-for-sale securities (82) (75)
------ -----
10,570 9,238
------ -----
Net deferred tax assets (liabilities) before
valuation allowance (7,070) (5,078)
Valuation allowance (2,370) (2,370)
-------- -------
$(9,440) $(7,448)
======== =======
Net current deferred tax assets $ 950 $ 720
Net noncurrent deferred tax liabilities (10,390) (8,168)
-------- -------
$(9,440) $(7,448)
======== =======
<PAGE>
U.S. deferred taxes have not been provided on foreign earnings totaling
approximately $21 million which are permanently invested abroad. Foreign tax
credits totaling approximately $14 million are available to reduce the U.S.
taxes on such amounts.
The differences between the statutory and the effective income tax rate are
as follows:
Fiscal Fiscal Fiscal
2000 1999 1998
---- ---- ----
Statutory income tax rate 35% 35% 35%
Increase (decrease) in tax rate resulting from -
Foreign tax rate differentials,
net of foreign tax credit utilization 1 5 (1)
Other, net --- --- 1
----- ----- -----
Effective income tax rate 36% 40% 35%
===== ===== =====
The Company has United States net operating loss carryforwards totaling $7.6
million which expire in fiscal years 2001 through 2003. Due to various
utilization limitations, management estimates that a significant portion of this
tax attribute will not be available to reduce future tax obligations;
accordingly, a $2.4 million valuation allowance is recorded as of September 30,
2000.
For several years, the Company has pursued legal action to collect certain
tax refund claims in India. As a result of favorable court decisions in India,
and upon the Company providing letters of guarantee, the Company received tax
refunds in 1997 and 1994 of $1.1 million and $.6 million, respectively, (net of
taxes on interest and other related expenses), which were recorded to other
Deferred Credits, pending ultimate resolution of the issue by Indian High Court.
During fiscal year 1999, all but approximately $400,000 (still unresolved at
September 30, 2000) of the amounts received were favorably resolved and
accordingly recognized (net of expenses) in income.
<PAGE>
NOTE 7 - CAPITAL STOCK
STOCK OPTION PLANS -
The Company has an incentive equity plan ("1996 Plan") whereby 670,000
shares of common stock may be granted to officers and key employees through
February 12, 2007. At September 30, 2000, options to purchase 345,650 shares
were outstanding under this Plan. The Company also has options outstanding to
purchase 78,050 shares under a stock option plan ("1990 Plan"). Under both
plans, the exercise price of each option equals the market price of the
Company's common stock on the date of grant, all outstanding options have a
maximum term of 10 years, and options vest over a period from the second to the
fifth year from the date of grant.
A summary of the status of the Company's Plans as of September 30, 2000,
1999 and 1998, and changes during the years ended on those dates is presented
below:
<TABLE>
Fiscal Fiscal Fiscal
2000 1999 1998
---------------------------- ----------------------- -----------------------
0
Weighted- Weighted- Weighted-
Number of Average Number of Average Number of Average
Options Exercise Price Options Exercise Price Options Exercise Price
----------- -------------- --------- -------------- -- -------- --------------
<S> <C> <C> <C> <C> <C> <C>
Outstanding at beginning of
Year 504,900 $23.88 566,200 $22.76 444,700 $15.42
Granted 97,000 37.75 --- --- 208,000 33.07
Exercised (147,700) 14.26 (49,925) 10.75 (78,500) 8.39
Forfeited (30,500) 31.95 (11,375) 26.00 (8,000) 23.73
Expired --- --- --- ---
------------- -------- ---------
Outstanding at end of year 423,700 $29.82 504,900 $23.88 566,200 $22.76
======= ======== =========
Exercisable at end of year 109,450 $23.58 137,150 $13.14 88,950 $ 8.49
Available for grant at end of
Year 299,500 374,375 366,000
Weighted-average fair value of
options granted during the
year $ 26.61 --- $ 14.21
</TABLE>
The following table summarizes information about stock options outstanding
at September 30, 2000:
<TABLE>
Options Outstanding Options Exercisable
----------------------------------------------------- ------------------------------------
Weighted-
Average Weighted- Weighted-
Range of Remaining Average Average
Exercise Prices Shares Contractual Life Exercise Price Shares Exercise Price
--------------- --- ------- ---------------- -------------- ------ --------------
<S> <C> <C> <C> <C> <C>
$ 4.87 to 5.38 5,500 2.2 years $5.24 5,500 $5.24
6.55 to 6.69 11,250 4.1 years 6.61 11,250 6.61
16.63 to 18.97 155,300 7.0 years 17.53 48,300 17.74
28.00 68,000 6.5 years 28.00 26,500 28.00
37.75 97,000 9.2 years 37.75 --- ---
48.75 to 52.06 86,650 7.2 years 48.98 17,900 49.03
------ ------ ------- ------
4.87 to 52.06 423,700 7.9 years $29.82 109,450 $23.58
======= ====== ======= ======
</TABLE>
<PAGE>
As permitted by SFAS No. 123 "Accounting for Stock-Based Compensation", the
Company applies APB Opinion No. 25 and related Interpretations in accounting for
its stock option plans. Accordingly, no compensation cost has been recognized
from the granting of options pursuant to its stock option plans. Had
compensation costs been determined based on the fair value at the grant dates
for awards made since fiscal 1996 consistent with the method of SFAS No. 123,
the Company's net income and earnings per share would have been reduced to the
pro forma amounts indicated below (in thousands, except for per share amounts):
Fiscal Fiscal Fiscal
2000 1999 1998
------- ------- -------
Net Income
As reported $23,148 $27,720 $39,364
Pro forma 22,335 27,186 38,830
Earnings per share
As reported -
Basic 1.68 2.03 2.90
Diluted 1.66 2.01 2.84
Pro forma
Basic 1.62 1.99 2.86
Diluted 1.61 1.97 2.80
The fair value of grants made in fiscal 2000 and 1998 was estimated on the date
of grant using the Black-Scholes option pricing model with the following
weighted-average assumptions used: fiscal 2000 - risk free interest rate of
6.72%, expected volatility of 50%, expected lives of 5 years and no dividend
yield; fiscal 1998 - risk-free interest rate of 5.4%, expected volatility of
42%, expected lives of 5 years and no dividend yield.
COMMON STOCK DIVIDEND -
On November 19, 1997, the Company effected a 100% common stock dividend
resulting in the issuance of approximately 6,775,000 shares of common stock and
the transfer of approximately $ 6,775,000 from paid-in capital to common stock
which represented the par value of additional shares issued. All share and per
share information has been retroactively restated in the Consolidated Financial
Statements to reflect the stock dividend.
NOTE 8 - RETIREMENT PLAN
The Company has a contributory retirement plan (the "Plan") under which
qualified participants may make contributions of up to 5% of their compensation,
as defined (the basic contribution). The Company makes contributions to the Plan
equal to twice the basic contributions. Company contributions vest 100% to each
participant beginning with the fourth year of participation. If a participant
terminates employment before becoming fully vested, the unvested portion is
credited to the Company's account and can be used only to offset Company
contribution requirements. In fiscal 2000 and 1998 the Company made actual
contributions of approximately $1.7 million and $1.3 million, respectively, with
no forfeitures used during these years to reduce its cash requirements. In
fiscal 1999 the Company used forfeitures of $190,000 to reduce its cash
requirements, which resulted in actual contributions of approximately $1.3
million. As of September 30, 2000, there are approximately $103,000 of
contribution forfeitures which can be utilized to reduce future Company cash
contribution requirements.
NOTE 9 - FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying values of cash and cash equivalents, accounts receivable,
accounts payable and accrued liabilities included in the accompanying
Consolidated Balance Sheets approximated fair value due to the short maturity of
these instruments. Since the bank debt has a market adjustable interest rate,
the carrying value approximated fair value as of fiscal year end 2000 and 1999.
The Company's only financial instruments at September 30, 2000 and 1999 with a
fair value different from carrying value are marketable securities; the
difference of which is shown in Note 3.
NOTE 10 - CONCENTRATION OF MARKET AND CREDIT RISK
All of the Company's customers are in the oil and gas offshore exploration
and production industry. This industry concentration has the potential to impact
the Company's overall exposure to market and credit risks, either positively or
negatively, in that the Company's customers could be affected by similar changes
in economic, industry or other conditions. However, the Company believes that
the credit risk posed by this industry concentration is offset by the
creditworthiness of the Company's customer base. The Company's portfolio of
accounts receivable is comprised of major international corporate entities and
government organizations with stable payment experience. Historically, the
Company's uncollectible accounts receivable have been immaterial, and typically,
the Company does not require collateral for its receivables. The Company's
allowance for doubtful accounts at September 30, 2000 and 1999 was $2.1 million.
Drilling revenues for fiscal 2000 include $ 40.5 million, $ 33.3 million
and $19.5 million in revenues received from Shell Philippines Exploration B.V.,
British-Borneo Petroleum Inc. and ESSO Production Malaysia, Inc. respectively.
Drilling revenues for fiscal 1999 include $34.7 million, $31.0 million and $23.1
million in revenues received from Shell Philippines Exploration B.V./Sabah Shell
Petroleum Company Limited, British-Borneo Petroleum Inc. and ESSO Australia
Limited/ESSO Production Malaysia, Inc., respectively. Drilling revenues for
fiscal 1998 include $35.2 million, $25.9 million and $20.4 million in revenues
received from British-Borneo Petroleum Inc., ESSO Australian Limited/ESSO
Production Malaysia, Inc. and Santos Ltd., respectively.
NOTE 11 - NEW ACCOUNTING PRONOUNCEMENTS
SFAS No. 133 has been amended to become effective for all fiscal quarters
of all fiscal years beginning after June 15, 2000. It establishes accounting and
reporting standards 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. In the
opinion of management, the adoption of SFAS No. 133 will not have a material
impact on the Company's financial statements.
In December 1999, the SEC staff issued Staff Accounting Bulletin No. 101
"Revenue Recognition in Financial Statements" which summarized the staff's view
on applying generally accepted accounting principles to revenue recognition in
financial statements. This bulletin has been amended to become effective no
later than in the fourth quarter of fiscal years beginning after December 15,
1999, which is the fourth quarter of fiscal 2001 for the Company. In the opinion
of management, the Company's current accounting policies are in compliance with
the staff's views, and the adoption of SAB 101 will not have a material impact
on the Company's financial statements.
NOTE 12 - COMMITMENTS AND CONTINGENCIES
OPERATING LEASES
The Company leases its office space under an operating lease agreement
which will expire in fiscal 2005.
Future minimum lease payments for operating leases are as follows (in
thousands):
Fiscal year ending September 30,
2001...................................................... $408
2002...................................................... 408
2003...................................................... 408
2004...................................................... 408
2005...................................................... 170
Total rent expense under operating leases was approximately $362,000,
$285,000 and $268,000 for fiscal years ended September 30, 2000, 1999 and 1998,
respectively.
<PAGE>
LITIGATION
On August 31, 2000, the Company became a defendant in Bryant v. R&B
Falcon Drilling USA, Inc. et al., Civil Action No. G-00-488, in the United
States District Court for the Southern District of Texas-Galveston Division. In
this suit the plaintiff, Thomas Bryant, who is a former employee of the Company
and purports to represent a class of persons who are members of the crew aboard
water-based drilling apparatuses and who accepted employment with defendants
while in the United States for domestic or international employ, alleges the
Company and a number of other offshore drilling contractors or their affiliates,
all defendants in the suit, acted in concert to depress wages and benefits paid
to their offshore employees. Plaintiff contends that this alleged conduct
violates federal and state antitrust laws. The Plaintiff seeks an unspecified
amount of treble damages, attorney's fees and costs on behalf of himself and the
alleged class of offshore workers similarly situated. The Company has filed an
Answer to this suit. The suit is in the early stages of discovery and
preliminary proceedings. The Company vigorously denies these allegations and,
based on information presently available, does not expect that the outcome of
this matter will have a material adverse effect on its business or financial
position.
The Company is party to a number of other lawsuits which are ordinary,
routine litigation incidental to the Company's business, the outcome of which,
individually, or in the aggregate, is not expected to have a material adverse
effect on the Company's financial condition or results of operations.
NOTE 13 - OPERATIONS BY GEOGRAPHIC AREAS
The Company is engaged in offshore contract drilling. The contract drilling
operations consist of contracting Company owned or managed offshore drilling
equipment primarily to major oil and gas exploration companies. Operating income
is contract revenues less operating costs, general and administrative expenses
and depreciation. In computing operating margin for each geographic area, none
of the following items were considered: other income (expense) and domestic and
foreign income taxes. Total assets are those assets that are used by the Company
in operations in each geographic area. General corporate assets are principally
investments in marketable securities.
A summary of revenues, operating margin and identifiable assets by
geographic areas is as follows (in thousands):
Fiscal Fiscal Fiscal
2000 1999 1998
---- ---- ----
CONTRACT REVENUES:
United States $ 37,524 $ 35,122 $46,454
Australia 3,127 22,237 44,445
Southeast Asia 60,020 44,215 28,661
Mediterranean Sea 21,831 37,063 18,699
India 12,012 11,372 ---
Africa --- --- 13,550
-------- -------- --------
$134,514 $150,009 $151,809
======== ======== ========
OPERATING INCOME(LOSS):
United States $ 11,464 $ 13,003 $ 24,102
Australia (5,985) (6,475) 13,822
Southeast Asia 22,835 14,378 9,911
Mediterranean Sea 11,392 26,164 12,274
India 5,934 8,678 ---
Africa --- --- 8,819
General and administrative expenses (8,449) (7,519) (7,331)
-------- -------- --------
$ 37,191 $ 48,231 $ 61,597
======== ======== ========
<PAGE>
TOTAL ASSETS:
United States $ 83,355 $ 76,227 $ 76,557
Australia 4,476 46,688 59,388
Southeast Asia 90,889 85,650 97,736
Mediterranean Sea 71,798 21,921 24,908
India 37,303 40,180 238
General corporate and other 25,430 22,938 22,910
-------- -------- --------
$313,251 $293,604 $281,737
======== ======== ========
NOTE 14 - QUARTERLY FINANCIAL DATA (UNAUDITED)
Summarized quarterly results for fiscal years 2000 and 1999 are as follows
(in thousands, except per share amounts):
QUARTERS ENDED
-------------------------------------------------
DECEMBER 31, MARCH 31, JUNE 30, SEPTEMBER 30,
------------ --------- -------- -------------
2000
----
Revenues $ 31,184 $ 32,361 $ 33,411 $37,558
Income before income taxes 8,268 9,521 8,412 9,697
Net income 5,053 5,981 5,252 6,862
Earnings per common share (1) -
Basic .37 .44 .38 .50
Diluted .36 .43 .37 .49
1999
----
Revenues $ 34,977 $ 41,325 $ 38,727 $ 34,980
Income before income taxes 10,588 13,722 11,784 10,413
Net income 6,776 8,724 7,394 4,826
Earnings per common share (1)-
Basic .50 .64 .54 .35
Diluted .49 .63 .53 .35
------------
(1) The sum of the individual quarterly net income per common share amounts may
not agree with year-to-date net income per common share as each quarterly
computation is based on the weighted average number of common shares outstanding
during that period.
NOTE 15 - EVENT (UNAUDITED) SUBSEQUENT TO DATE OF AUDITORS' REPORT
On December 5, 2000, the Company purchased the semisubmersible unit SEASCOUT
(ex. OCEAN SCOUT) for $4.5 million. The Company purchased this unit for
conversion and upgrade to a semisubmersible tender assist unit. Depending upon
water depth and other operational requirements, the cost of the conversion and
upgrade could range from $40 to $60 million and take eleven to twelve months to
complete. The conversion and upgrade will not be undertaken until an acceptable
contract opportunity has been secured.
<PAGE>
DIRECTORS OFFICERS
ROBERT W. BURGESS (2,3) JOHN R. IRWIN
Financial Executive, Retired President, Chief Executive Officer
Orleans, Massachusetts
JAMES M. HOLLAND
GEORGE S. DOTSON (1,2,3) Senior Vice President and Secretary
Vice President
Helmerich & Payne, Inc. GLEN P. KELLEY
President Vice President - Contracts and
Helmerich & Payne International Administration
Drilling Co.
Tulsa, Oklahoma
W. H. HELMERICH, III
Chairman
Helmerich & Payne, Inc.
Tulsa, Oklahoma
HANS HELMERICH (1, 3)
President, Chief Executive Officer
Helmerich & Payne, Inc.
Tulsa, Oklahoma
JOHN R. IRWIN (1)
President, Chief Executive Officer
Atwood Oceanics, Inc.
Houston, Texas
WILLIAM J. MORRISSEY (2)
Bank Executive, Retired
Elkhorn, Wisconsin
(1) Executive Committee
(2) Audit Committee
(3) Compensation Committee
<PAGE>
ANNUAL MEETING
The annual meeting of stockholders will be held on February 8, 2001 at the
Company's principal office: 15835 Park Ten Place Drive, Houston, Texas. A formal
notice of the meeting together with a proxy statement and form of proxy will be
mailed to stockholders on or about January 15, 2001.
TRANSFER AGENT AND REGISTRAR
Continental Stock Transfer & Trust Company
2 Broadway
New York, New York 10004
FORM 10-K
A copy of the Company's Form 10-K as filed with the Securities and Exchange
Commission is available free on request by writing to:
Secretary, Atwood Oceanics, Inc.
P. O. Box 218350
Houston, Texas 77218
A copy may also be read and copied at the Securities and Exchange
Commission's Public Reference Room at 450 Fifth Street, N.W., Washington, D.C.
20549. Information on the operations of the Public Reference Room may be
obtained by calling the Securities and Exchange Commission at 1-800-SEC-0330.
The Securities and Exchange Commission maintains an Internet site that contains
reports, proxy and information statements, and other information regarding
issuers that file electronically at http://www.sec.gov.
STOCK PRICE INFORMATION -
The common stock of Atwood Oceanics, Inc. is traded on the New York Stock
Exchange ("NYSE") under the symbol "ATW". No cash dividends on common stock were
paid in fiscal year 1999 or 2000, and none are anticipated in the foreseeable
future. As of September 30, 2000, there were over 750 beneficial owners of the
common stock of Atwood Oceanics, Inc. As of November 30, 2000, the closing sale
price of the common stock of Atwood Oceanics, Inc., as reported by NYSE, was $41
11/16 per share. The following table sets forth the range of high and low sales
prices per share of common stock as reported by the NYSE for the periods
indicated.
Fiscal Fiscal
1999 2000
-------------------------- --------------------------
------------- ------------ ------------- ------------
QUARTERS ENDED LOW HIGH LOW HIGH
-------------- ---- ---- --- ----
December 31 $15 7/8 $32 1/2 $27 15/16 $38 13/16
March 31 16 1/8 31 3/4 36 1/8 66 11/16
June 30 25 7/8 37 3/4 41 9/16 69 7/8
September 30 28 1/2 35 9/16 35 1/2 50 15/16
<PAGE>
APPENDIX
The following graphic and image information in the form of "Bar Charts" are
located in the Annual Report immediately following "Highlights".
BAR CHART - CONTRACT REVENUES ($ MILLIONS)
1996 1997 1998 1999 2000
---- ---- ---- ---- ----
$79.5 $89.1 $151.8 $150.0 $134.5
BAR CHART - EARNINGS, BEFORE DEPRECIATION, INTEREST, TAXES AND INVESTMENT
INCOME ($ MILLIONS)
1996 1997 1998 1999 2000
---- ---- ---- ---- ----
$22.8 $34.2 $79.2 $72.1 $66.8
BAR CHART - OPERATING CASH FLOW ($ MILLIONS)
1996 1997 1998 1999 2000
---- ---- ---- ---- ----
$20.3 $25.8 $61.4 $55.7 $55.2
BAR CHART - NET INCOME ($ MILLIONS)
1996 1997 1998 1999 2000
---- ---- ---- ---- ----
$11.4 $15.6 $39.4 $27.7 $23.1
BAR CHART - CAPITAL EXPENDITURES ($ MILLIONS)
1996 1997 1998 1999 2000
---- ---- ---- ---- ----
$9.5 $62.8 $79.6 $38.8 $34.8
BAR CHART - CASH AND SECURITIES HELD FOR INVESTMENT ($ MILLIONS)
1996 1997 1998 1999 2000
---- ---- ---- ---- ----
$40.5 $42.2 $34.5 $43.0 $42.7
