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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, 2000
COMMISSION FILE NUMBER 1-13167
ATWOOD OCEANICS, INC.
(Exact name of registrant as specified in its charter)
TEXAS 74-1611874
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
15835 Park Ten Place Drive 77084
Houston, Texas (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code:
281-749-7800
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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, 2000 13,822,551 shares of Common Stock $1 par
value
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PART I. ITEM I - FINANCIAL STATEMENTS
ATWOOD OCEANICS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)
December 31, September 30,
2000 2000
------------ ------------
(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 24,959 $ 19,740
Accounts receivable,net 30,376 31,466
Inventories of materials and supplies,
at lower of average cost or market 8,869 9,544
Deferred tax assets 950 950
Prepaid expenses 2,216 3,217
--------- ---------
Total Current Assets 67,370 64,917
-------- --------
SECURITIES HELD FOR INVESTMENT:
Held-to-maturity, at amortized cost 12,597 22,594
Available-for-sale, at fair value 364 327
--------- ----------
12,961 22,921
-------- --------
PROPERTY AND EQUIPMENT, at cost:
Drilling vessels, equipment and drill pipe 405,098 391,879
Other 8,335 8,197
--------- ---------
413,433 400,076
Less-accumulated depreciation 182,420 175,969
------- -------
Net Property and Equipment 231,013 224,107
------- -------
DEFERRED COSTS AND OTHER ASSETS 1,398 1,306
--------- -----------
$312,742 $313,251
======== ========
The accompanying notes are an integral part of these consolidated financial
statements.
PART I. ITEM I - FINANCIAL STATEMENTS
ATWOOD OCEANICS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)
December 31, September 30,
2000 2000
------------ -----------
(Unaudited)
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 3,308 $ 5,886
Accrued liabilities 13,580 11,598
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Total Current Liabilities 16,888 17,484
---------- ---------
LONG-TERM DEBT, net of current maturities: 40,000 46,000
---------- ---------
DEFERRED CREDITS:
Income taxes 10,904 10,390
Other 18,652 21,172
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29,556 31,562
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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
13,824,000 and 13,823,000 shares
issued and outstanding at
December 31, 2000 and
September 30, 2000,
respectively 13,824 13,823
Paid-in capital 55,179 55,151
Accumulated other comprehensive
income (loss) (128) (152)
Retained earnings 157,423 149,383
-------- --------
226,298 218,205
-------- --------
$312,742 $313,251
======== ========
The accompanying notes are an integral part of these consolidated financial
statements.
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,
-------------------------------
2000 1999
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(Unaudited)
REVENUES:
Contract drilling $ 37,747 $ 30,661
Contract management 1,693 523
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39,440 31,184
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COSTS AND EXPENSES:
Contract drilling 15,938 13,966
Contract management 1,552 389
Depreciation 6,634 6,144
General and administrative 2,365 2,000
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26,489 22,499
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OPERATING INCOME 12,951 8,685
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OTHER INCOME (EXPENSE):
Interest expense (966) (954)
Interest income 570 537
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(396) (417)
------- - --------
INCOME BEFORE INCOME TAXES 12,555 8,268
PROVISION FOR INCOME TAXES 4,515 3,215
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NET INCOME $ 8,040 $ 5,053
======== ========
EARNINGS PER SHARE:
Basic $ .58 $ .37
Diluted $ .58 $ .36
AVERAGE COMMON SHARES OUTSTANDING:
Basic
Diluted 13,823 13,676
13,930 13,859
The accompanying notes are an integral part of these consolidated financial
statements.
PART I. ITEM I - FINANCIAL STATEMENTS
ATWOOD OCEANICS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Three Months Ended December 31,
2000 1999
--------- ----------
(Unaudited)
CASH FLOW FROM OPERATING ACTIVITIES:
Net Income $ 8,040 $ 5,053
-------- -------
Adjustments to reconcile net income to net cash
provided (used) by operating activities:
Depreciation 6,634 6,144
Amortization 13 214
Deferred federal income tax provision 500 499
Changes in assets and liabilities:
Decrease (increase) in accounts receivable 1,090 (13,197)
Increase (decrease) in accounts payable and
accrued liabilities 1,625 (2,794)
Net mobilization fees (2,130) 8,862
Other 1,179 1,244
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8,911 972
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Net cash provided by operating activities 16,951 6,025
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CASH FLOW FROM INVESTING ACTIVITIES:
Capital expenditures (15,761) (12,219)
Treasury note maturity 10,000 ---
-------- --------
Net cash used by investing activities (5,761) (12,219)
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CASH FLOW FROM FINANCING ACITIVITES:
Proceeds from revolving credit facility
Principal payments on long-term debt --- 6,000
Proceeds from exercises of stock options (6,000) (3,000)
Net cash provided by (used in) financing activities 29 37
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(5,971) 3,037
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NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 5,219 (3,157)
CASH AND CASH EQUIVALENTS, at beginning of period
19,740 20,105
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CASH AND CASH EQUIVALENTS, at end of period $ 24,959 $ 16,948
======== ========
Supplemental disclosure of cash flow information:
Cash paid during the quarter for domestic
and foreign income taxes $ 1,521 $ 2,373
======== =========
Cash paid during the quarter for interest,
net of amounts capitalized $ 1,134 $ 1,390
======== =========
The accompanying notes are an integral part of these consolidated financial
statements.
PART I. ITEM 1 - FINANCIAL STATEMENTS
ATWOOD OCEANICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. UNAUDITED INTERIM INFORMATION
The unaudited interim financial statements as of December 31, 2000 and
for each of the three month periods ended December 31, 2000 and 1999, included
herein, have been prepared by the Company, pursuant to the rules and regulations
of the Securities and Exchange Commission for interim financial reporting.
Accordingly, these financial statements and related information have been
prepared without audit, and certain information and note disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted, although management
believes that the note disclosures are adequate to make the information not
misleading. For interim periods, the Company records income taxes using the
expected effective tax rate for the fiscal year. In the opinion of the Company's
management, the unaudited interim financial statements reflect all adjustments
(consisting of normal recurring adjustments) considered necessary for a fair
presentation of the financial position and results of operations of the Company
for the periods presented. The interim financial results may not be indicative
of results that could be expected for a full year. 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, 2000 Annual Report to Shareholders.
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, 2000:
Basic earnings per share $ 8,040 13,823 $ .58
Effect of dilutive securities -
Stock options --- 107 ---
------- ------- -----
Diluted earnings per share $ 8,040 13,930 $ .58
======= ======= =====
December 31, 1999:
Basic earnings per share $ 5,053 13,676 $ .37
Effect of dilutive securities -
Stock options --- 183 (.01)
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Diluted earnings per share $ 5,053 13,859 $ .36
======= ======= =====
3. COMPREHENSIVE INCOME
Comprehensive income includes the following (in thousands):
First Quarter
-----------------------
Fiscal Fiscal
2001 2000
Net Income $ 8,040 $ 5,053
Other comprehensive income:
Unrealized holding gain (loss)
on available- for-sale securities,
net of tax (provision) benefit of
$(13) and $8 in 2001 and 2000,
respectively 24 (15)
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Comprehensive income $ 8,064 $ 5,038
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4. CHANGE IN DEPRECIATION POLICY
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. This change in the Company's
depreciation policy lowered depreciation expense by $1.7 million for the three
months ended December 31, 2000 and increased net income by $1.1 million ($0.08
per diluted share).
5. NEW ACCOUNTING PRONOUNCEMENTS
Statement of Financial Accounting Standard ("SFAS") No. 133 establishes
accounting and reporting standards requiring that any derivative instrument
(including certain derivative instruments embedded in other contracts) be
recorded in the balance sheet as either an asset or liability measured at fair
value. In the first quarter of fiscal 2001, the Company adopted SFAS No. 133,
which had no 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 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.
PART I. ITEM 2
ATWOOD OCEANICS, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS
All non-historical information set forth herein is based upon expectations
and assumptions deemed reasonable by the Company. The Company can give no
assurance that such expectations and assumptions will prove to have been
correct, and actual results could differ materially from the information
presented herein. The Company's periodic reports filed with the Securities and
Exchange Commission should be consulted for a description of risk factors
associated with an investment in the Company.
MARKET OUTLOOK
The worldwide mobile offshore drilling fleet utilization is currently
in the 86% to 87% range. With anticipated increases in international exploration
and production budgets starting in 2001, the Company remains optimistic about
improving fundamentals and the long-term offshore drilling and completions
markets. The Company anticipates that the ATWOOD HUNTER will enter a shipyard in
early March 2001 to commence its $40 to 45 million upgrade and enhancement
project. With the ATWOOD HUNTER anticipated being off dayrate for five to six
months for its upgrade, the Company's quarterly operating results for the
remainder of fiscal 2001 are expected to be lower than the results realized for
the first quarter of fiscal 2001. However, even with the upgrade of the ATWOOD
HUNTER, the Company's contract backlog on its other drilling units should
continue to provide a high level of revenues and cash flows in fiscal 2001.
RESULTS OF OPERATIONS
Contract revenues for the three months ended December 31, 2000 increased
26% compared to the three months ended December 31, 1999. A comparative analysis
of contract revenues is as follows:
CONTRACT REVENUES
(In millions)
-----------------------------------------------
First Quarter First Quarter
Fiscal 2001 Fiscal 2000 Variance
ATWOOD SOUTHERN CROSS $ 4.1 $ 0.0 $ 4.1
SEAHAWK 5.9 2.2 3.7
ATWOOD EAGLE 5.0 4.3 0.7
RICHMOND 2.1 1.5 0.6
ATWOOD FALCON 10.2 10.5 (0.3)
VICKSBURG 2.8 3.4 (0.6)
ATWOOD HUNTER 7.6 8.8 (1.2)
RIG-200/RIG-19 0.0 0.0 0.0
NORTH RANKIN 'A'/GOODWYN 'A' 1.7 0.5 1.2
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$ 39.4 $ 31.2 $ 8.2
====== ====== ======
The increase in revenues for the ATWOOD SOUTHERN CROSS was due to the
drilling unit being under contract during the first quarter of fiscal 2001
compared to being idle during the quarter ended December 31, 1999. Revenue
increase for the SEAHAWK was due to it returning to work in January 2000
following the completion of its upgrade, whereby reduced revenues were received
during the upgrade period. The increase in revenues for the ATWOOD EAGLE and
RICHMOND was due to higher dayrates; while the decrease in revenues for the
VICKSBURG and the ATWOOD HUNTER was due to reduction in dayrates. As a result of
drilling operations recommencing on the NORTH RANKIN 'A' platform following
completion of its upgrade, revenues and costs increased on this operation.
Contract drilling and management costs increased 22% in the first
quarter of fiscal 2001 compared to the first quarter of fiscal 2000. 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 2001 Fiscal 2000 Variance
------------ ------------- --------
ATWOOD SOUTHERN CROSS $ 2.4 $ 1.0 $ 1.4
ATWOOD HUNTER 3.4 2.8 0.6
VICKSBURG 1.7 1.5 0.2
ATWOOD FALCON 2.1 2.0 0.1
ATWOOD EAGLE 2.6 2.7 (0.1)
RICHMOND 1.2 1.3 (0.1)
SEAHAWK 1.9 2.2 (0.3)
GOODWYN 'A'/NORTH RANKIN 'A' 1.6 0.4 1.2
OTHER 0.6 0.5 0.1
----- ----- -----
$17.5 $14.4 $ 3.1
===== ===== =====
The increase in drilling costs for the ATWOOD SOUTHERN CROSS was due to
the drilling unit being idle (at a reduced level of costs) during the first
quarter of fiscal 2000. The increase in the drilling costs for the ATWOOD HUNTER
was due to higher maintenance costs being incurred. In December 1999, the
SEAHAWK incurred additional costs related to mobilization and preparing the rig
for commencement of drilling operations following its upgrade; thereby,
accounting for its decline in operating costs for the quarter ended December 31,
2000.
An analysis of depreciation expense by rig for the first quarter of
fiscal 2001 compared to the first quarter of fiscal 2000 is as follows:
DEPRECIATION EXPENSE
(In millions)
--------------------------------------------
First Quarter First Quarter
Fiscal 2001 Fiscal 2000 Variance
----------- ----------- ----------
SEAHAWK $1.7 $0.0 $1.7
ATWOOD EAGLE 0.9 0.7 0.2
RICHMOND 0.3 0.1 0.2
ATWOOD SOUTHERN CROSS 1.0 1.0 0.0
VICKSBURG 0.7 0.7 0.0
ATWOOD HUNTER 0.6 1.3 (0.7)
ATWOOD FALCON 0.7 1.6 (0.9)
OTHER 0.7 0.7 0.0
---- ---- ----
$6.6 $6.1 $0.5
==== ==== ====
The Company does not recognize depreciation expense during the period a
rig is out of service for a significant upgrade, which accounts for the SEAHAWK
not having any depreciation for the first quarter of fiscal 2000. The decrease
in depreciation expense for the ATWOOD HUNTER and ATWOOD FALCON was due to
extending the depreciable lives of these rigs (effective October 1, 2000) from
12 to 22 years.
LIQUIDITY AND CAPITAL RESOURCES
During the first quarter of fiscal 2001, operating cash flow (before
changes in working capital and other assets and liabilities) was $15.0 million
compared to $11.9 million for the first quarter of fiscal 2000. During the first
quarter of fiscal 2001, the Company utilized internally generated funds, along
with proceeds of $10 million from the treasury note maturity, to invest $4.5
million to purchase the SEASCOUT for future conversion and upgrade to a
semisubmersible tender assist unit when an acceptable contract opportunity has
been secured; to invest approximately $4.1 million in early order items relating
to the upgrade of the ATWOOD HUNTER; to invest approximately $2.6 million in
completing the upgrade of the RICHMOND; and to fund approximately $4.6 million
of other capital expenditures; in addition to reducing long-term debt by $6
million. The Company is finalizing plans on the $40 to $45 million upgrade of
the ATWOOD HUNTER, which is expected to commence in March 2001. Immediately upon
the ATWOOD EAGLE completing its current contractual commitments (estimated late
fourth quarter fiscal 2001, or early first quarter fiscal 2002) it is
anticipated that the rig will enter a shipyard for an approximate $80 million
upgrade.
The Company continues to explore the market for possible growth
opportunities. Further reduction or increase in long-term debt will depend on
identifying investment opportunities and timing of planned upgrade costs. The
Company's current $150 million credit facility (with a current outstanding
balance of $40 million) should be more than adequate to provide funding for
currently planned capital expenditures. The Company will adjust planned capital
expenditures, debt repayment and financing requirements in light of current
market conditions.
PART II. OTHER INFORMATION
ATWOOD OCEANICS, INC. AND SUBSIDIARIES
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
None
(b) Reports on Form 8-K
1) Current and planned activities relating to the ATWOOD HUNTER and ATWOOD
EAGLE (Filed November 17, 2000)
2) Earnings for the fiscal year ended September 30, 2000 along with
supporting information (Filed November 21, 2000)
3) Purchase of the SEASCOUT for $4.5 million (Filed December 6, 2000)
4) Changes in the Company's depreciation policy relating to certain
drilling units (Filed December 11, 2000)
5) Current and planned activities relating to the ATWOOD SOUTHERN CROSS
(Filed December 20, 2000)
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 14, 2000 s/JAMES M. HOLLAND
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James M. Holland
Senior Vice President
and Chief Accounting Officer