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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
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Form 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR QUARTERLY PERIOD ENDED DECEMBER 31, 1999
COMMISSION FILE NUMBER 1-13167
ATWOOD OCEANICS, INC.
(Exact name of registrant as specified in its charter)
TEXAS 74-1611874
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
15835 Park Ten Place Drive 77084
Houston, Texas (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code:
281-492-2929
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Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 15 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months and (2) has been subject to such filings
requirements for the past 90 days. Yes X No___
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of December 31, 1999 13,677,701 shares of Common Stock $1 par
value
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<PAGE>
PART I. FINANCIAL INFORMATION
ATWOOD OCEANICS, INC. AND SUBSIDIARIES
The condensed consolidated financial statements herein have been prepared by the
Company pursuant to the rules and regulations of the Securities and Exchange
Commission for interim financial reporting. Accordingly, these financial
statements and related information have been prepared without audit and certain
information and disclosures normally included in financial statements prepared
in accordance with generally accepted accounting principles have been condensed
or omitted, although management believes that the disclosures are adequate to
make the information not misleading. The condensed consolidated financial
statements reflect all adjustments which are, in the opinion of management,
necessary to present fairly the financial position of the Company as of December
31, 1999 and September 30, 1999, and the results of its operations and cash
flows for the three months ended December 31, 1999 and 1998, respectively. All
adjustments were of a normal recurring nature. The interim financial results may
not be indicative of results that could be expected for a full year. It is
suggested these condensed consolidated financial statements be read in
conjunction with the consolidated financial statements and the notes thereto
included in the Company's September 30, 1999 Annual Report to Shareholders.
<PAGE>
PART I. ITEM I - FINANCIAL STATEMENTS
ATWOOD OCEANICS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In Thousands)
December 31, September 30,
1999 1999
------------ -------------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 16,948 $ 20,105
Accounts receivable 31,486 18,289
Inventories of materials and supplies,
at lower of average cost or market 7,892 8,010
Deferred tax assets 720 720
Prepaid expenses 2,099 3,408
-------- --------
Total Current Assets 59,145 50,532
-------- --------
SECURITIES HELD FOR INVESTMENT:
Held-to-maturity, at amortized cost 22,590 22,589
Available-for-sale, at fair value 325 347
-------- --------
22,915 22,936
-------- --------
PROPERTY AND EQUIPMENT, at cost:
Drilling vessels, equipment and drill pipe 369,706 358,372
Other 7,622 7,317
-------- --------
377,328 365,689
Less-accumulated depreciation 152,879 146,775
-------- --------
Net Property and Equipment 224,449 218,914
-------- --------
DEFERRED COSTS AND OTHER ASSETS 1,187 1,222
-------- --------
$307,696 $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)
December 31, September 30,
1999 1999
------------ -------------
(Unaudited)
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 4,561 $ 7,640
Accrued liabilities 11,118 11,373
-------- --------
Total Current Liabilities 15,679 19,013
-------- --------
LONG-TERM DEBT, net of current maturities: 57,000 54,000
-------- --------
DEFERRED CREDITS:
Income taxes 8,660 8,168
Other 29,053 20,194
-------- --------
37,713 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, 678,000 and 13,675,000 shares
issued and outstanding at
December 31, 1999 and
September 30, 1999,
respectively 13,678 13,675
Paid-in capital 52,492 52,458
Accumulated other comprehensive
income (loss) (154) (139)
Retained earnings 131,288 126,235
-------- --------
197,304 192,229
-------- --------
$307,696 $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)
Three Months Ended December 31,
1999 1998
----------- ----------
(Unaudited)
REVENUES:
Contract drilling $ 30,661 $ 34,252
Contract management 523 725
-------- --------
31,184 34,977
-------- --------
COSTS AND EXPENSES:
Contract drilling 13,966 15,911
Contract management 389 723
Depreciation 6,144 5,327
General and administrative 2,000 2,190
-------- --------
22,499 24,151
-------- --------
OPERATING INCOME 8,685 10,826
-------- --------
OTHER INCOME (EXPENSE):
Interest expense (954) (824)
Interest income 537 586
-------- --------
(417) (238)
-------- --------
INCOME BEFORE INCOME TAXES 8,268 10,588
PROVISION FOR INCOME TAXES 3,215 3,812
-------- --------
NET INCOME $ 5,053 $ 6,776
======== ========
EARNINGS PER SHARE:
Basic $ .37 $ .50
Diluted $ .36 $ .49
AVERAGE COMMON SHARES OUTSTANDING:
Basic 13,676 13,625
Diluted 13,859 13,755
The accompanying notes are an integral part of these consolidated financial
statements.
.
<PAGE>
<TABLE>
PART I. ITEM I - FINANCIAL STATEMENTS
ATWOOD OCEANICS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
<CAPTION>
Three Months Ended December 31,
-------------------------------
1999 1998
------- -------
(Unaudited)
<S> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES:
Net Income $ 5,053 $ 6,776
------- -------
Adjustments to reconcile net income to net cash
provided (used) by operating activities:
Depreciation 6,144 5,327
Amortization 214 124
Deferred federal income tax provision 499 ---
Changes in assets and liabilities:
Increase in accounts receivable (13,197) (2,906)
Increase (decrease) in accounts payable and
accrued liabilities (2,794) 3,776
Net mobilization fees 8,862 3,357
Other 1,244 223
------- -------
972 9,901
------- -------
Net cash provided by operating activities 6,025 16,677
------- -------
CASH FLOW FROM INVESTING ACTIVITIES:
Capital expenditures (12,219) (28,396)
------- -------
Net cash used by investing activities (12,219) (28,396)
------- -------
CASH FLOW FROM FINANCING ACITIVITES:
Proceeds from revolving credit facility 6,000 13,000
Principal payments on long-term debt (3,000) (750)
Proceeds from exercises of stock options 37 ---
------- -------
Net cash provided by financing activities 3,037 12,250
------- -------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS (3,157) 531
CASH AND CASH EQUIVALENTS, at beginning of period
20,105 11,621
------- -------
CASH AND CASH EQUIVALENTS, at end of period $16,948 $12,152
======= =======
Supplemental disclosure of cash flow information:
Cash paid during the quarter for domestic
and foreign income taxes $ 2,373 $ 1,622
======= =======
Cash paid during the quarter for interest,
net of amounts capitalized $ 1,390 $ 1,769
======= =======
<FN>
The accompanying notes are an integral part of these consolidated financial
statements.
</FN>
</TABLE>
<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 December 31, 1999 and
for each of the three month periods ended December 31, 1999 and 1998, 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):
Per Share
Net Income Shares Amount
Three Months Ended -
December 31, 1999:
Basic earnings per share $ 5,053 13,676 $ .37
Effect of dilutive securities -
Stock Options --- 183 (.01)
Diluted earnings per share $ 5,053 13,859 $ .36
December 31, 1998:
Basic earnings per share $ 6,776 13,625 $ .50
Effect of dilutive securities -
Stock Options --- 130 (.01)
Diluted earnings per share $ 6,776 13,755 $ .49
3. COMPREHENSIVE INCOME
Comprehensive income includes the following (in thousands):
First Quarter
----------------------
1999 1998
------- -------
Net Income $ 5,053 $ 6,776
Other comprehensive income:
Unrealized holding loss on available-for-sale
Securities, net of tax benefit of $8 and $48
in 1999 and 1998, respectively (15) (89)
------- -------
Comprehensive income $ 5,038 $ 6,687
======= =======
<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
Even though, the price of oil is currently over $25 per barrel,
worldwide fleet utilization for mobile offshore drilling units still remains
below seventy-five percent. However, there are some encouraging indications that
the offshore drilling market environment could improve in the second half of
2000. The Company has 65 percent of its total potential revenue days for 2000
currently committed, with the ATWOOD SOUTHERN CROSS, RIG-200 and RIG-19 being
the Company's only drilling units without current contract commitments. Thus,
even without market improvements, the Company's contract backlog should provide
a high level of revenues and cash flows in fiscal 2000.
RESULTS OF OPERATIONS
Contract revenues for the three months ended December 31, 1999 decreased
11%, compared to the three months ended December 31, 1998. A comparative
analysis of contract revenues is as follows:
CONTRACT REVENUES
(In millions)
------------------------------------------------
First Quarter First Quarter
Fiscal 2000 Fiscal 1999 Variance
------------- -------------- ---------
- -
ATWOOD FALCON $10.5 $5.4 $5.1
VICKSBURG 3.4 0.4 3.0
ATWOOD HUNTER 8.8 8.7 0.1
ATWOOD SOUTHERN CROSS 0.0 0.0 0.0
SEAHAWK 2.2 2.9 (0.7)
RICHMOND 1.5 2.4 (0.9)
RIG-19 0.0 1.9 (1.9)
RIG-200 0.0 2.1 (2.1)
ATWOOD EAGLE 4.3 9.1 (4.8)
GOODWYN 'A'/NORTH RANKIN 'A' 0.5 2.1 (1.6)
----- ----- -----
$31.2 $35.0 $(3.8)
===== ===== =====
The increase in revenues for the ATWOOD FALCON and VICKSBURG is due to
both rigs working the entire first quarter of fiscal 2000 compared to working a
limited number of days during the first quarter of fiscal 1999 due to completing
their upgrades. The ATWOOD HUNTER continues to operate under its long-term
contract commitment in the United States Gulf of Mexico. The ATWOOD SOUTHERN
CROSS has not worked since it completed its last contract in September 1998. The
decrease in the SEAHAWK'S revenues is due to the rig receiving a reduced dayrate
during its upgrade period. The rig commenced drilling operations following its
upgrade in January 2000. The decrease in revenues for the RICHMOND and ATWOOD
EAGLE was due to reduced dayrates. When the ATWOOD EAGLE commenced working in
the Mediterranean Sea in 1998, its dayrate was $115,000; currently its dayrate
is $50,000. RIG-200 and RIG-19 are available for contracts since becoming idle
in June and September 1999, respectively.
Contract drilling and management costs decreased 13% in the first
quarter of fiscal 2000 compared to the first quarter of fiscal 1999. An analysis
of contract drilling and management costs by rig is as follows:
CONTRACT DRILLING AND MANAGEMENT COSTS
(In millions)
---------------------------------------------
First Quarter First Quarter
Fiscal 2000 Fiscal 1999 Variance
------------- ------------- ----------
VICKSBURG $1.5 $0.3 $1.2
ATWOOD FALCON 2.0 1.2 0.8
SEAHAWK 2.2 1.6 0.6
ATWOOD HUNTER 2.8 2.6 0.2
RICHMOND 1.3 1.6 (0.3)
ATWOOD SOUTHERN CROSS 1.0 1.5 (0.5)
RIG-200 0.0 0.6 (0.6)
ATWOOD EAGLE 2.7 3.5 (0.8)
RIG-19 0.1 1.4 (1.3)
GOODWYN 'A'/NORTH RANKIN 'A' 0.4 1.7 (1.3)
OTHER 0.4 0.6 (0.2)
----- ----- -----
$14.4 $16.6 $(2.2)
===== ===== =====
The increase in drilling costs for the VICKSBURG and ATWOOD FALCON is
due to both rigs working the entire first quarter of 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
operating costs for the SEAHAWK is due to additional costs incurred in December
1999 to mobilize and prepare the rig for commencement of drilling operation
following its required upgrade for its four-year contract extension. The decline
in costs for the ATWOOD SOUTHERN CROSS is due to a reduction in personnel costs
due to its idle status. Following completion of contracts in fiscal 1999,
RIG-200 and RIG-19 have been stacked on land in Australia with very little costs
being incurred. Due to a reduction in maintenance and some personnel costs,
operating costs for the ATWOOD EAGLE declined 23% during the first quarter of
fiscal 2000 compared to the first quarter of fiscal 1999. As a result of reduced
drilling operations for the GOODWYN 'A' and NORTH RANKIN 'A' platforms, revenues
and costs have declined on these operations.
The increase in depreciation expense is primarily due to a complete
quarter of depreciation of the ATWOOD FALCON and VICKSBURG in fiscal 2000
compared to a partial quarter of depreciation in fiscal 1999. The Company does
not recognize depreciation expense during the period a rig is out of service for
a significant upgrade.
A summary of the contract status of each of the Company's owned
drilling units as of February 10, 2000 is as follows:
<TABLE>
<CAPTION>
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 Rig is under long-term contract
Gulf of Mexico which terminates in November 2000.
ATWOOD EAGLE Mediterranean Sea Rig is currently being transported
to Israel to commence short-term
drilling program following a
one-month water-depth upgrade to
enable the rig to drill in up to
3,300 feet of water. Following
completion of its drilling program
in Israel, the rig will be moved
to Egypt for a drilling program
which should keep the rig employed
for the remainder of fiscal 2000.
VICKSBURG India Rig is under term contract which
terminates in December 2000.
SEAHAWK Malaysia The rig has commenced drilling in
January 2000 under a four-year
contract extension following its
required upgrade.
RICHMOND United States Rig is under contract until March 2000,
Gulf of Mexico with ongoing discussions for additional work.
ATWOOD SOUTHERN CROSS Australia Rig is available for contract since
it became idle at the end of
September 1998.
RIG-19 and RIG-200 Australia Rigs are available for contract
since they became idle at the end
of June and September 1999,
respectively.
</TABLE>
LIQUIDITY AND CAPITAL RESOURCES
During the first quarter of fiscal 2000, operating cash flow (before
changes in working capital and other assets and liabilities) was $11.9 million
compared to $12.2 million for the first quarter of fiscal 1999. During the first
quarter of fiscal 2000, the Company utilized internally generated funds plus an
additional net $3 million borrowed under its revolving credit facility to invest
approximately $10.1 million in the upgrades of the SEAHAWK and ATWOOD EAGLE, and
to fund approximately $2.1 million in other capital expenditures. In early
February 2000, the Company completed an approximate $7 million water-depth
upgrade of the ATWOOD EAGLE to enable the rig to drill in up to 3,300 feet of
water. The Company is planning to perform in April/May 2000 a minor $3 million
enhancement to the RICHMOND and is planning an additional $50 to $55 million
future upgrade to the ATWOOD EAGLE to enable the rig to work in water depths of
4,500 to 5,000 feet.
Subsequent to December 31, 1999, the Company reduced its outstanding
debt to $55 million. The Company is currently ahead of its required debt
repayment schedule. Depending upon additional capital investment opportunities,
the Company will adjust planned capital expenditures, debt repayments and
financing requirements in light of current market conditions.
<PAGE>
ATWOOD OCEANICS, INC. AND SUBSIDIARIES
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
None
(b) Reports on Form 8-K
None
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ATWOOD OCEANICS, INC.
(Registrant)
Date: February 10, 2000 s/JAMES M. HOLLAND______
James M. Holland
Senior Vice President
and Chief Accounting Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
(Replace this text with the legend)
</LEGEND>
<CIK> 0000008411
<NAME> Atwood Oceanics, Inc.
<MULTIPLIER> 1,000
<CURRENCY> USD
<S> <C>
<PERIOD-TYPE> Year
<FISCAL-YEAR-END> Sep-30-2000
<PERIOD-START> Oct-01-1999
<PERIOD-END> Dec-31-1999
<EXCHANGE-RATE> 1
<CASH> 16,948
<SECURITIES> 22,915
<RECEIVABLES> 31,486
<ALLOWANCES> 0
<INVENTORY> 7,892
<CURRENT-ASSETS> 59,145
<PP&E> 377,328
<DEPRECIATION> 152,879
<TOTAL-ASSETS> 307,696
<CURRENT-LIABILITIES> 15,679
<BONDS> 57,000
0
0
<COMMON> 13,678
<OTHER-SE> 52,338
<TOTAL-LIABILITY-AND-EQUITY> 307,696
<SALES> 31,184
<TOTAL-REVENUES> 31,184
<CGS> 16,355
<TOTAL-COSTS> 22,499
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 954
<INCOME-PRETAX> 8,268
<INCOME-TAX> 3,215
<INCOME-CONTINUING> 5,053
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,053
<EPS-BASIC> .37
<EPS-DILUTED> .36
</TABLE>
