EXHIBIT 13.1
2001 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 as well as manages the
operations of two operator-owned platform drilling units in Northwest Australia.
The Company also owns a fifty percent interest in a modular platform that is
idle. 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 is also constructing an ultra-premium jack-up unit for the
international non-North Sea drilling market. Since 1996, the Company has
expended over $250 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
and Israel.
FINANCIAL HIGHLIGHTS
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2001 2000
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(In Thousands)
FOR THE YEAR ENDED SEPTEMBER 30,
CONTRACT REVENUES $ 147,541 $ 135,973
NET INCOME 27,346 23,148
CAPITAL EXPENDITURES 107,778 34,841
AT SEPTEMBER 30,
NET PROPERTY AND EQUIPMENT $ 306,254 $ 224,107
TOTAL ASSETS 353,878 313,251
TOTAL SHAREHOLDERS' EQUITY 247,636 218,205
TO OUR SHAREHOLDERS AND EMPLOYEES:
The Company's net income of $27.3 million for fiscal 2001 marked our eighth
consecutive year of profitability. The last four years of financial performance
have been the best in Atwood Oceanics' thirty-three year history. This financial
performance record has been accomplished despite the Company having had drilling
units undergoing upgrades in various shipyards at times during this period.
Since 1996, the Company has expended over $250 million in upgrading all
seven of our current active drilling units, with the ATWOOD EAGLE to be further
upgraded in 2002. With our upgraded drilling fleet, the Company is well
positioned to take advantage of the upside from longer-term market improvement.
Even without any improvement in market conditions in 2002, based upon current
contract commitments, fiscal 2002 should be another profitable year.
Our financial results for fiscal 2001 once again reflected operating
margins that are high by industry standards. In recent years, this has been
achieved in large part, through maintaining high utilization of our seven active
drilling units. We again expect to maintain high utilization of our drilling
units in fiscal 2002.
Four of the Company's seven active drilling units - ATWOOD HUNTER, ATWOOD
FALCON, VICKSBURG and SEAHAWK - have contract commitments that should keep them
employed through fiscal 2002. Current commitments for a fifth unit, the ATWOOD
SOUTHERN CROSS, should keep it busy until fourth quarter fiscal 2002. The ATWOOD
EAGLE should be fully utilized until it enters a shipyard for upgrade in second
quarter of fiscal 2002. Our only unit in the U.S. Gulf of Mexico, the unique,
shallow-draft submersible, RICHMOND, is committed until second quarter fiscal
2002. The Company is leveraged to international markets and has low exposure to
the weaker market conditions currently prevailing in the U.S. Gulf of Mexico.
In December 2001, the ATWOOD HUNTER commenced an eleven-well contract
following a five-month upgrade in a United States shipyard to enable it to drill
in water depths up to 5,000 feet in international mild environments and a
one-month mobilization to the Mediterranean. The major $90 million upgrade of
the ATWOOD EAGLE will increase its water-depth capability to 5,000 feet for
international non-North Sea markets. Both upgrades of the ATWOOD HUNTER and
ATWOOD EAGLE include totally new 120-bed quarters with additional offices,
enhanced drilling systems, and sub-sea tree-handling systems to improve drilling
efficiency and sub-sea completion capability.
In late July 2001, the Company entered into a contract to construct a $125
million ultra-premium jack-up with scheduled delivery in June 2002. The new rig,
ATWOOD BEACON, is being built in Singapore by a strong, experienced shipyard. We
believe the Mod-V Enhanced B-Class unit will provide broad coverage for our
clients in international non-North Sea markets.
The SEASCOUT, a sister unit to the SEAHAWK, was purchased for $4.5 million
in December 2000 and is currently idle. The SEASCOUT is an ideal candidate for
upgrade to a premium tender-assist unit. While engineering is being undertaken
and cost estimates prepared for possible future opportunities, an upgrade will
not be undertaken without an acceptable contract.
The Company strives to achieve client satisfaction and growth through safe,
quality operations and value-adding service. We are leveraged to international
and premium higher return markets with a modern, well-equipped fleet. Our
successful fleet upgrade program has focused on both drilling and completion
capability.
While fiscal 2002 may not provide improvement in financial results through
significantly higher utilization levels and dayrates, we do remain optimistic
about the longer-term opportunities and fundamentals in our business. The
Company's financial performance over the past five years was recognized when
Forbes magazine named Atwood Oceanics one of America's Top 200 Smaller
Companies. This represents less than 1% of small cap companies. The continuing
support of our shareholders and the contributions of our employees are important
to us as we work to build the Company and enhance future shareholder value.
/s/John R. Irwin
Atwood Oceanics, Inc. and Subsidiaries
FIVE-YEAR FINANCIAL REVIEW
At or For the Years Ended September 30,
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(In thousands, except per share amounts, fleet data 2001 2000 1999 1998 1997
and ratios)
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STATEMENTS OF OPERATIONS DATA:
Contract revenues (1) $147,541 $135,973 $152,850 $153,388 $ 89,421
Contract drilling and management costs (1) (70,014) (60,709) (73,196) (66,864) (49,129)
General and administrative expenses (9,250) (8,449) (7,519) (7,331) (6,100)
-------- -------- -------- -------- --------
OPERATING MARGIN 68,277 66,815 72,135 79,193 34,192
Depreciation (25,579) (29,624) (23,904) (17,596) (9,979)
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OPERATING INCOME 42,698 37,191 48,231 61,597 24,213
Other income (expense) (1,577) (1,293) (1,724) (1,278) 1,165
Tax provision (13,775) (12,750) (18,787) (20,955) (9,759)
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NET INCOME $ 27,346 $ 23,148 $ 27,720 $ 39,364 $ 15,619
======== ======== ======== ======== ========
PER SHARE DATA:
Earnings per common share:
Basic $ 1.98 $ 1.68 $2.03 $2.90 $ 1.16
Diluted 1.96 1.66 2.01 2.84 1.14
Average common shares outstanding:
Basic 13,828 13,763 13,649 13,592 13,474
Diluted 13,978 13,916 13,791 13,884 13,715
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 2001, 2000, 1999, 1998 and 1997) 80% 71% 77% 100% 100%
BALANCE SHEETS DATA:
Cash and securities held for investment $ 12,621 $ 42,661 $ 43,041 $ 34,529 $ 42,234
Working capital 25,057 47,433 31,519 24,864 27,549
Net property and equipment 306,254 224,107 218,914 205,632 143,923
Total assets 353,878 313,251 293,604 281,737 215,330
Total long-term debt 60,000 46,000 54,000 72,000 59,500
Shareholders' equity (2) 247,636 218,205 192,229 163,766 122,689
Ratio of current assets to current liabilities 2.21 3.71 2.66 1.93 2.41
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Notes -
(1) In the fourth quarter of 2001, the Company adopted Staff Accounting
Bulletin No. 101 which requires that mobilization revenues and related
costs be shown gross on the consolidated income statement as opposed to
the Company's prior policy of netting such amounts. Accordingly, contract
revenues and drilling costs amounts for 2001 through 1997 reflect these
reclassifications.
(2) The Company has never paid any cash dividends on its common stock.
OFFSHORE DRILLING OPERATIONS
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PERCENTAGE OF
MAXIMUM 2001
YEAR BUILT WATER CONTRACT CONTRACT STATUS AT
RIG NAME (UPGRADED) DEPTH REVENUES LOCATION CUSTOMER DECEMBER 15, 2001
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SEMISUBMERSIBLES -
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ATWOOD FALCON 1983(1998) 3,500 Ft. 27% Malaysia Shell Philippines The rig's current contract terminates
Exploration, B.V. upon completion of the current well.
Immediately upon completion of its
current contract, the rig will be
moved to Malaysia to commence a
drilling program for Sarawak Shell
Berhad and Sabah Shell Petroleum
Company Ltd., ("Shell").The drilling
contract includes five firm wells and
provides Shell with options to drill
five additional wells and could
extend approximately one year if all
ten wells are drilled.
ATWOOD HUNTER 1981(1997/ 5,000 Ft. 11% Egypt Burullus Gas Company The rig commenced its current
2001) contract in early December 2001 which
is expected to take between 280 and
340 days to complete.
ATWOOD EAGLE 1982(2000) 3,300 Ft. 13% Egypt Rashid Petroleum The rig is contractually committed
into Company early 2002. An
approximate $90 million upgrade of
the rig is planned immediately upon
the rig completing its current
contractual commitments, which will
take around six months shipyard time
to complete. Contract opportunities
to commence following the rig's
upgrade are being pursued
internationally.
ATWOOD 1976(1997) 2,000 Ft. 12% Israel Isramco The rig has contractual commitments
SOUTHERN CROSS in Israel and Egypt, which should
keep the rig employed into the third
or fourth quarters of fiscal 2002.
SEAHAWK 1974(1992/ 600 Ft. 16% Malaysia Esso Production The rig is under long-term contract
1999) which Malaysia Inc. terminates in
2003, with an option for the
Customer to extend.
SEASCOUT 1974 1,000 Ft. 0% United States The rig was purchased in December
Gulf of Mexico 2000 for future conversion to a
tender assist unit similar to the
SEAHAWK, once an acceptable contract
opportunity is secured.
CANTILEVER JACK-UPS -
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VICKSBURG 1976/1998 300 Ft. 9% Malaysia - Carigali - Triton The rig commenced a term contract in
Thailand Joint Operating Company November 2001 to drill 31 wells
Development Sdn. Bhd.("CTOC") estimated to take around 540 days to
complete. CTOC has the option of
cancelling the contract at any time
after giving a sixty-day written
notice of termination.
ATWOOD BEACON Under 350 Ft. 0% Singapore The Company expects the construction
Construction of this ultra-premium jack-up
drilling unit to be completed in
June 2003.
SUBMERSIBLE -
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RICHMOND 1982/2000 75 Ft. 8% United States Samedan Oil The rig has contract commitments to
Gulf of Mexico Corporation drill one well (estimated to take
("Samedan") around 60 days), with Samedan having
an option to drill one additional
well at a future date.
MODULAR PLATFORMS -
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RIG-200 1995 N/A 0% Australia The rig has been available for
contract since it became idle in
June 1999.
MANAGEMENT CONTRACT
GOODWYN 'A' and N/A N/A 4% Australia Woodside Energy There is currently an indefinite
NORTH RANKIN 'A' planned break in drilling activity for
the two client-owned rigs. The
Company is involved in maintenance of
the two rigs for future drilling
programs.
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, 2001 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; risks
associated with possible disruptions in operations due to terrorism 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
Fiscal 2001 marked the Company's eighth consecutive profitable year.
Despite worldwide utilization of offshore drilling equipment being currently
around 81% compared to around 87% at the beginning of fiscal year 2001, with the
utilization in the United States Gulf of Mexico currently around 60% compared to
88% at this time last year, the Company remains optimistic about the long-term
outlook and fundamentals of the offshore drilling market. Since 1996, the
Company has expended over $250 million in upgrading its seven active offshore
mobile drilling units. In December 2000, the Company purchased the
semisubmersible SEASCOUT for $4.5 million for a future conversion and upgrade to
a semisubmersible tender assist unit once an acceptable contract opportunity has
been secured. In July 2001, the Company entered into a contract to construct a
$125 million ultra-premium jack-up drilling vessel with a scheduled delivery in
June 2003. In early November 2001, the Company completed the approximately $58
million water-depth upgrade and refurbishment of the ATWOOD HUNTER, with the rig
transported to Egypt to commence a drilling program that should keep the rig
employed for most of fiscal 2002. The Company continues its planning for a $90
million water-depth upgrade and refurbishment of the ATWOOD EAGLE during the
second half of fiscal 2002.
Of the Company's current seven active drilling units, the ATWOOD HUNTER,
ATWOOD FALCON, ATWOOD SOUTHERN CROSS, VICKSBURG and SEAHAWK have contract
commitments which should keep these drilling units employed for most, if not
all, of fiscal 2002. Considering the ATWOOD EAGLE's planned upgrade during
fiscal 2002, the RICHMOND has the most uncertainty concerning utilization during
fiscal 2002. Based upon current contract commitments, the Company anticipates
that fiscal 2002 will be the Company's ninth consecutive profitable year;
however, over the short-term, improvement in offshore drilling market pricing is
not anticipated.
RESULTS OF OPERATIONS
Fiscal Year 2001 Versus Fiscal Year 2000
Contract revenues during fiscal 2001 were 9% higher than revenues in fiscal
2000 primarily due to increased revenues from the ATWOOD SOUTHERN CROSS,
RICHMOND and SEAHAWK which more than offset a decline in revenues from the
ATWOOD HUNTER. An analysis of contract revenues by rig for fiscal years 2001 and
2000 is as follows:
CONTRACT REVENUES
(In millions)
------------------------------------
Fiscal Fiscal
2001 2000 Variance
------ ----- --------
ATWOOD SOUTHERN CROSS $ 17.9 $ 5.1 $ 12.8
RICHMOND 11.3 4.2 7.1
SEAHAWK 23.4 19.5 3.9
ATWOOD EAGLE 19.9 16.7 3.2
GOODWYN `A'/NORTH RANKIN `A' 6.1 3.1 3.0
VICKSBURG 12.7 12.0 0.7
ATWOOD FALCON 40.4 40.9 (0.5)
ATWOOD HUNTER 15.8 34.5 (18.7)
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$ 147.5 $136.0 $ 11.5
======= ====== ======
The ATWOOD SOUTHERN CROSS has worked continuously since it was relocated to
the Mediterranean Sea in June 2000 from Australia where it had been idle since
September 1998. The increase in revenues for the RICHMOND is due to higher
dayrates in the Gulf of Mexico during 2001. Current dayrate levels in the Gulf
of Mexico have declined; whereby, the Company expects RICHMOND revenues in 2002
to be lower than revenues earned in 2001. After its upgrade, the SEAHAWK
commenced its four-year contract extension in February 2000, with its dayrate
ranging from a high of $50,000 to a low of $30,000 depending upon the price of
oil. The SEAHAWK's dayrate for fiscal 2001 averaged $50,000 compared to an
average dayrate of $43,000 in 2000, which accounts for its increase in revenues.
The ATWOOD EAGLE was fully utilized in fiscal 2001 with an average per day
revenue of $54,000 compared to being off dayrate in January 2000 while
undergoing some shipyard work which reduced its average per day revenue for
fiscal 2000 to around $45,000. Revenues were higher on the GOODWYN `A' and NORTH
RANKIN `A' platform rigs due to increased drilling activities in 2001 compared
to 2000. At the end of 2001, an indefinite planned break in drilling activities
was instigated on the two client-owned platform rigs, which will result in
reduced revenues being received on these rigs in 2002. The increase in revenues
of the VICKSBURG was due to higher dayrates received in 2001 compared to 2000.
The ATWOOD FALCON has earned a consistent level of revenues since it commenced
its three-year contract in the Philippines following its upgrade in November
1998. This contract will terminate upon completion of the current well. The
significant decline in revenues for the ATWOOD HUNTER was due to a significant
reduction in dayrate revenues following the completion of its three-year
contract term in November 2000 and to the rig being off dayrate while in a
shipyard for an upgrade from early June 2001 to early November 2001.
Contract drilling and management costs during fiscal 2001 increased 15%
primarily due to higher operating costs associated with the GOODWYN 'A'/NORTH
RANKIN 'A' platform rigs, and the ATWOOD EAGLE, ATWOOD SOUTHERN CROSS, RICHMOND
and VICKSBURG. An analysis of contract drilling and management costs by rig for
fiscal years 2001 and 2000 is as follows:
CONTRACT DRILLING AND MANAGEMENT
COSTS
(In millions)
------------------------------------
Fiscal Fiscal
2001 2000 Variance
----- ----- --------
GOODWYN `A'/NORTH RANKIN `A' $ 5.7 $ 2.7 $ 3.0
ATWOOD EAGLE 11.9 9.0 2.9
ATWOOD SOUTHERN CROSS 10.3 7.6 2.7
RICHMOND 7.6 5.0 2.6
VICKSBURG 7.4 5.7 1.7
SEAHAWK 7.8 7.7 0.1
ATWOOD FALCON 8.6 8.6 0.0
ATWOOD HUNTER 8.1 12.5 (4.4)
OTHER 2.6 1.9 0.7
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$ 70.0 $60.7 $ 9.3
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Higher drilling costs for the GOODWYN `A'/NORTH RANKIN `A' platform rigs
were due to an increase in drilling activities during 2001 following
refurbishment by their Australian owner in 2000. Drilling costs for the ATWOOD
EAGLE increased due to the rig having no downtime in 2001, thus, operating at a
full cost level, compared to no drilling costs being incurred in January 2000
when the rig was in a shipyard for a brief period. The increase in drilling
costs for the ATWOOD SOUTHERN CROSS was due to the rig being fully utilized
since it returned to work in June 2000. Drilling costs for the RICHMOND and
VICKSBURG increased due to higher maintenance and some personnel related costs.
The reduction in drilling costs for the ATWOOD HUNTER was due to its upgrade,
whereby no drilling costs were incurred during the upgrade period.
An analysis of depreciation expense by rig is as follows:
DEPRECIATION EXPENSE
(In millions)
--------------------------------------
Fiscal Fiscal
2001 2000 Variance
------ ------ --------
SEAHAWK $ 6.9 $ 5.1 $ 1.8
RICHMOND 1.5 0.2 1.3
ATWOOD EAGLE 3.6 3.0 0.6
ATWOOD SOUTHERN CROSS 3.9 3.9 0.0
VICKSBURG 2.6 2.9 (0.3)
ATWOOD HUNTER 1.5 5.2 (3.7)
ATWOOD FALCON 2.7 6.5 (3.8)
OTHER 2.9 2.8 0.1
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$ 25.6 $ 29.6 $(4.0)
====== ====== =====
The Company does not recognize depreciation expense during a period a rig
is out of service for a significant upgrade. The SEAHAWK, RICHMOND and ATWOOD
EAGLE had some reduction in depreciation expense in early fiscal 2000 due to
upgrades which accounts for a portion of the increased deprecation expense in
2001. Higher depreciable basis for these rigs following their upgrades also
contributed to increased depreciation expense in 2001. The reduction in
depreciation expense for the ATWOOD HUNTER and ATWOOD FALCON was primarily due
to an increase in their depreciable lives from 12 to 22 years effective October
1, 2000.
The Company's general and administrative expenses increased 9% in fiscal
2001 compared to 2000; while its effective tax rate declined from 36% to 33%.
The increase in general and administrative expenses was due to higher personnel
related costs.
Fiscal Year 2000 Versus Fiscal Year 1999
Contract revenues during fiscal 2000 decreased 11% from revenues in fiscal
1999 primarily due to reduced revenues from the ATWOOD EAGLE and the Company's
two 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 40.9 35.1 5.8
ATWOOD SOUTHERN CROSS 5.1 0.0 5.1
ATWOOD HUNTER 34.5 32.2 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-200/RIG-19 0.0 14.9 (14.9)
ATWOOD EAGLE 16.7 37.9 (21.2)
------- ------ ------
$ 136.0 $152.9 $(16.9)
======= ====== ======
In preparation for a four-year contract extension, the SEAHAWK was upgraded
from April 1999 through December 1999, with a reduced dayrate received during
the upgrade period. The SEAHAWK received a dayrate of $50,000 from the time it
returned to work in February 2000 through the end of the year which accounted
for its increase in revenues. The ATWOOD FALCON and VICKSBURG 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
contractual dayrate during the last year of its three-year contract term which
expired in November 2000. As a result of a decline in drilling activities on the
GOODWYN `A' and NORTH RANKIN `A' platform rigs while undergoing refurbishment,
the Company's management activities related to these rigs declined, resulting in
less revenues being received and less costs being incurred in 2000. RIG-200 and
RIG-19 have been idle in Australia following completion of their contracts in
June and September 1999, respectively. At the end of fiscal 2001, the Company
retired RIG-19 with its equipment available for sale. The decrease in revenues
for the ATWOOD EAGLE was 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 17%
primarily due to reductions in operating costs of the Company's platform rigs
due to their idle status. 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 $12.5 $11.0 $ 1.5
ATWOOD FALCON 8.6 7.1 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 8.8 (8.7)
OTHER 1.8 2.2 (0.4)
------ ----- ------
$ 60.7 $ 73.2 $(12.5)
====== ====== ======
The increase in drilling costs for the ATWOOD HUNTER was due to higher
maintenance costs. The increases in the drilling costs for the ATWOOD FALCON and
VICKSBURG were 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. In 1999,
RIG-200 and RIG-19 were dismantled and stacked on land in Australia with nominal
costs 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 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 was
due to higher depreciable costs due to its water-depth upgrade in January 2000.
LIQUIDITY AND CAPITAL RESOURCES
Operating cash flows (before changes in working capital and other assets
and liabilities) for fiscal 2001 increased 2% to $56.3 million from $55.2
million. During fiscal 2001, the Company utilized available cash and internally
generated funds plus $14 million in net proceeds from its Credit Facility to
invest approximately $45 million in the upgrade of the ATWOOD HUNTER, to invest
approximately $33 million in purchases of equipment for the upgrade of the
ATWOOD EAGLE, to invest approximately $16 million in initialization of the
construction of the ATWOOD BEACON and to fund approximately $14 million in other
capital expenditures.
Since 1996 and after completing the upgrades planned in 2002 for the ATWOOD
EAGLE, the Company will have expended over $300 million in upgrading all seven
of its current active mobile offshore drilling units. The upgrade of the ATWOOD
EAGLE (estimated to cost around $90 million of which $33 million has been
expended on equipment purchases at September 30, 2001) will include modification
of the rig's hull and mooring equipment to enable the rig to work in 5,000 feet
of water, new 120-bed quarters, a new high-capacity crane, and upgraded well
control, drilling and mud systems, in addition to other improvements. The
Company continues to perform some engineering work on the SEASCOUT in
preparation for its conversion and upgrade to a semisubmersible tender assist
vessel, which, depending upon water depth and other operational requirements,
could cost from $52 to $70 million. The conversion and upgrades will not be
undertaken until an acceptable contract opportunity has been secured. Currently,
the Company's primary capital commitments are the upgrade of the ATWOOD EAGLE
(with an estimated $57 million to be expended in 2002) and the construction of
the ATWOOD BEACON (with an estimated $64 million and $45 million to be expended
in 2002 and 2003, respectively).
To assist the Company in funding all of its capital commitments, in 2000,
the Company executed a $150 million revolving line of credit. This Credit
Facility requires no principal reduction prior to its maturity in June 2005.
Subsequent to September 30, 2001, the Company has borrowed an additional $20
million for a currently outstanding balance of $80 million. With the funding of
the upgrade of the ATWOOD EAGLE and the construction of the ATWOOD BEACON, the
Company anticipates utilizing virtually all of the borrowing capacity under the
Credit Facility prior to the end of September 2002. The Company continues to
pursue growth opportunities and would expect to finance additional capital
expenditures through additional debt financing; however, there are no assurances
that additional debt financing would be available on terms acceptable to the
Company. The Company continues to periodically review and adjust its planned
capital expenditures and financing of such expenditures in light of current
market conditions.
As a result of the commencement of the construction of the ATWOOD BEACON
and continuing upgrades of existing drilling units, working capital decreased
from $47.4 million at September 30, 2000 to $25.1 at September 30, 2001. 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, 2001, the Company was continuing to pursue legal action to
collect approximately $2 million billed in 1998 and approximately $1.5 million
billed in 2001.
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 $60 million of long-term debt outstanding at September 30, 2001,
was floating rate debt. As a result, the Company's annual interest costs in
fiscal 2002 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, 2001.
The impact on annual cash flow of a 10% change in the floating rate
(approximately 40 basis points) would be approximately $0.2 million. The Company
did not have any open derivative contracts relating to its floating rate debt at
September 30, 2001.
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, 2001 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, 2001.
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, 2001
and 2000, 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, 2001. 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, 2001 and 2000, and the results of their
operations and their cash flows for each of the three years in the period ended
September 30, 2001, in conformity with accounting principles generally accepted
in the United States.
/s/ARTHUR ANDERSEN LLP
Houston, Texas
November 19, 2001
Atwood Oceanics, Inc. and Subsidiaries
CONSOLIDATED BALANCE SHEETS
September 30,
- ------------------------------------------------------------------------------
(In thousands) 2001 2000
- ------------------------------------------------------------------------------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $12,621 $ 19,740
Accounts receivable, net 19,815 31,466
Inventories of materials and supplies,
at lower of average cost or market 9,111 9,544
Deferred tax assets 780 950
Prepaid expenses 3,394 3,217
------ ------
Total Current Assets 45,721 64,917
------ ------
SECURITIES HELD FOR INVESTMENT:
Held-to-maturity, at amortized cost --- 22,594
Available-for-sale, at fair value --- 327
------ ---
---- 22,921
------ ------
PROPERTY AND EQUIPMENT, at cost:
Drilling vessels, equipment and drill pipe 497,821 391,879
Other 8,768 8,197
------- -------
506,589 400,076
Less - accumulated depreciation 200,335 175,969
------- -------
Net Property and Equipment 306,254 224,107
------- -------
DEFERRED COSTS AND OTHER ASSETS 1,903 1,306
-------- --------
$353,878 $313,251
======== ========
The accompanying notes are an integral part of these consolidated financial
statements.
Atwood Oceanics, Inc. and Subsidiaries
CONSOLIDATED BALANCE SHEETS
September 30,
- --------------------------------------------------------------------------------------------------
(In thousands, except share data) 2001 2000
- --------------------------------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt $ --- $ ---
Accounts payable 8,055 5,886
Accrued liabilities 12,609 11,598
-------- --------
Total Current Liabilities 20,664 17,484
-------- --------
LONG-TERM DEBT, net of current maturities 60,000 46,000
-------- --------
DEFERRED CREDITS:
Income taxes 13,600 10,390
Mobilization fees and other 11,978 21,172
-------- --------
25,578 31,562
-------- --------
COMMITMENTS AND CONTINGENCIES (NOTE 11)
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 13,832,000 and
13,823,000 issued and outstanding in 2001 and 2000,
respectively 13,832 13,823
Paid-in capital 57,075 55,151
Accumulated other comprehensive income (loss) --- (152)
Retained earnings 176,729 149,383
-------- --------
Total Shareholders' Equity 247,636 218,205
-------- --------
$353,878 $313,251
======== ========
The accompanying notes are an integral part of these consolidated financial
statements.
Atwood Oceanics, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF OPERATIONS
Years Ended September 30,
- -------------------------------------------------------------------------------
(In thousands, except per share amounts) 2001 2000 1999
- -------------------------------------------------------------------------------
REVENUES:
Contract drilling $ 141,473 $ 132,846 $ 150,892
Contract management 6,068 3,127 1,958
--------- --------- ---------
147,541 135,973 152,850
--------- --------- ---------
COSTS AND EXPENSES:
Contract drilling 64,343 58,057 71,709
Contract management 5,671 2,652 1,487
Depreciation 25,579 29,624 23,904
General and administrative 9,250 8,449 7,519
--------- --------- ---------
104,843 98,782 104,619
--------- --------- ---------
OPERATING INCOME 42,698 37,191 48,231
--------- --------- ---------
OTHER INCOME (EXPENSE):
Interest expense (2,939) (3,907) (4,172)
Investment income 1,362 2,614 2,448
--------- --------- ---------
(1,577) (1,293) (1,724)
--------- --------- ---------
INCOME BEFORE INCOME TAXES 41,121 35,898 46,507
PROVISION FOR INCOME TAXES 13,775 12,750 18,787
--------- --------- ---------
NET INCOME $ 27,346 $ 23,148 $ 27,720
========= ========= =========
EARNINGS PER COMMON SHARE:
Basic $ 1.98 $ 1.68 $ 2.03
Diluted 1.96 1.66 2.01
AVERAGE COMMON SHARES OUTSTANDING:
Basic 13,828 13,763 13,649
Diluted 13,978 13,916 13,791
The accompanying notes are an integral part of these consolidated financial
statements.
Atwood Oceanics, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
For Years Ended September 30,
- -----------------------------------------------------------------------------------------------------------------
(In thousands) 2001 2000 1999
- -----------------------------------------------------------------------------------------------------------------
CASH FLOW FROM OPERATING ACTIVITIES:
Net income $ 27,346 $ 23,148 $ 27,720
-------- --------- --------
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation 25,579 29,624 23,904
Amortization of deferred items 107 403 566
Deferred federal income tax provision 3,298 2,000 3,500
Changes in assets and liabilities:
Decrease (increase) in accounts receivable 11,651 (13,177) 9,441
Increase (decrease) in accounts payable 1,090 (3,014) 402
Increase (decrease) in accrued liabilities 1,011 225 (350)
Net mobilization fees (8,806) 981 7,074
Other 1,071 (1,103) (1,364)
------- ------- -------
35,001 15,939 43,173
------- ------- -------
Net Cash Provided by Operating Activities 62,347 39,087 70,893
------- ------- -------
CASH FLOW FROM INVESTING ACTIVITIES:
Capital expenditures (107,778) (34,841) (38,760)
Non-cash portion of capital expenditures 1,079 1,260 (7,012)
Maturities of Treasury notes 22,600 --- ---
Proceeds from sale of securities 429 --- ---
Other 51 24 1,574
-------- ------- ------
Net Cash Used by Investing Activities (83,619) (33,557) (44,198)
-------- ------- -------
CASH FLOW FROM FINANCING ACTIVITIES:
Proceeds from exercises of stock options 153 2,105 539
Proceeds from revolving credit facility 20,000 6,000 13,000
Principal payments on debt (6,000) (14,000) (31,750)
------- ------- -------
Net Cash Provided (Used) by Financing Activities 14,153 (5,895) (18,211)
-------- ------- -------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (7,119) (365) 8,484
CASH AND CASH EQUIVALENTS, at beginning of period 19,740 20,105 11,621
-------- ------- -------
CASH AND CASH EQUIVALENTS, at end of period $ 12,621 $19,740 $20,105
======== ======= ========
- --------------------------
Supplemental disclosure of cash flow information:
Cash paid during the year for domestic and foreign income taxes $ 9,054 $10,713 $13,383
======== ======= =======
Cash paid during the year for interest, net of amounts capitalized $ 3,299 $ 3,914 $ 4,614
======== ======= =======
The accompanying notes are an integral part of these consolidated financial
statements.
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 Amount Capital Income (Loss) Earnings
- ---------------------------------------------------------------------------------------------------------------------------
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) ---
---------
$23,135
=========
Comprehensive income 148 148 1,957 --- ---
Exercises of employee stock options
Tax benefit from exercises
employee stock options --- --- 736 ---
------- ------ ------ ------
September 30, 2000 13,823 13,823 55,151 (152) 149,383
Net income $27,346 --- --- --- 27,346
Unrealized holding gain on
available-for-sale securities, net
of tax of $36 66 --- --- --- 66 ---
Reclassification adjustment for losses
realized in net income, net of tax 86 --- --- --- 86 ---
of $46 -------
$27,498
=======
Comprehensive income 9 9 144 --- ---
Exercises of employee stock options
Tax benefit from exercises --- 1,780 --- ---
of employee stock options ------- ------- ------- ------- --------
September 30, 2001 13,832 $13,832 $57,075 $ $176,729
======= ======= ======= ======== ========
NOTE -
(1) 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.
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 is involved in maintenance of two operator-owned platform drilling units in
Northwest Australia for future drilling programs. The Company also owns a 50%
interest in a platform drilling unit currently idle in Australia. 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 4). The Company is also constructing an ultra-premium jack-up drilling unit
in Singapore which is scheduled to be completed in June 2003. Currently, the
Company is involved in active operations in the territorial waters of Australia,
Malaysia, Egypt, Philippines, Israel, United States and Thailand.
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. Since most of the Company's operations are foreign, such operations
are subject to higher risks associated with possible disruptions due to
terrorism. 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. 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
million in both fiscal 2001 and 2000, respectively, with a foreign exchange gain
of $.4 million in fiscal 1999.
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. Interest capitalized during fiscal 2001 and 1999 totaled $.5 million for
each year. There were no interest costs capitalized during fiscal 2000.
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 5-22
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 recently upgraded 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 2002. 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. As a result of these changes
in depreciable lives, depreciation expense for fiscal 2001 was reduced by
approximately $5.8 million, resulting in enhancement to net income for the year
of $.27 per diluted share.
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 mobilization revenues and costs -
In the fourth quarter of fiscal 2001, the Company adopted the Securities
and Exchange Commission's ("SEC") Staff Accounting Bulletin No. 101 ("SAB 101")
"Revenue Recognition in Financial Statements". The Company defers the net
mobilization revenues or costs relating to moving a drilling rig to a new area
and amortizes such revenues or costs on a straight-line basis over the life of
the applicable drilling contract. One requirement of SAB 101 is that
mobilization revenues and costs be reported on a gross not a net basis; thus, as
required by SAB 101, contract revenues and drilling costs in the Statements of
Operations for prior years have been reclassified to reflect the gross amounts.
The adoption of SAB 101 had no impact on net income or cash flow.
At September 30, 2001 and 2000, deferred mobilization revenues totaling
$12.1 million and $20.8 million, respectively, and deferred mobilization costs
totaling $0.5 million and $0.4 million, respectively, were included in Deferred
Credits on the accompanying consolidated balance sheets.
Deferred drydocking costs -
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.
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 -
All investments in held-to-maturity securities which were stated at the
amortized cost at September 30, 2000 matured during fiscal 2001. All investments
in available-for-sale securities which were carried at fair value with the
unrealized holding loss, net of deferred tax, included in accumulated other
comprehensive income at September 30, 2000 were sold during fiscal 2001 at a
realized loss of $132,000.
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 2001:
Basic earnings per share $ 27,346 13,828 $1.98
Effect of dilutive securities -
Stock options --- 150 (0.02)
-------- ------ -----
Diluted earnings per share $ 27,346 13,978 $1.96
-------- ------ -----
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
======== ====== =====
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 chose to disclose comprehensive income, which
was 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.
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
In November 2000 and February 2001, United States Treasury Bonds totaling
approximately $22.6 million matured. Prior to their maturing, these securities
were classified as "held-to-maturity" and reflected in the September 30, 2000
Consolidated Balance Sheet at amortized cost. During fiscal 2001, the Company
sold all of its equity securities for $429,000 with a realized loss of $132,000.
Prior to their sale, these securities were classified as "available-for-sale"
and reflected in the September 30, 2000 Consolidated Balance Sheet at fair
value, with the aggregate unrealized gain or loss, net of related deferred tax
liability or asset, included in shareholders' equity. There were no sale of
securities during fiscal 2000 or 1999.
An analysis of the Company's investment in marketable securities at
September 30, 2000 is as follows (in thousands):
Amortized Unrealized Fair
Cost Gain (Loss) Value
------------ ----------- ---------
Equity Securities $ 561 $ (234) $ 327
United States Treasury Bonds 22,594 84 22,678
------- ------ -------
$23,155 $ (150) $23,005
======= ====== =======
NOTE 4 - PROPERTY AND EQUIPMENT
ATWOOD HUNTER -
In 1997, the ATWOOD HUNTER was initially upgraded to extend its water-depth
drilling capabilities to 3,600 feet at an aggregate cost of approximately $40
million. From early June 2001 to early November 2001, the ATWOOD HUNTER was in a
shipyard in the United States undergoing another upgrade which included among
other improvements, the extension of its water-depth drilling capacity to 5,000
feet for certain environmental conditions, new 120 bed living quarters; a new
high capacity crane and the enhancement of its completion and sub-sea tree
handling capabilities. The aggregate cost of this upgrade and improvements was
approximately $58 million. Following completion of its upgrade, the drilling
unit was transported to the Mediterranean Sea to commence contract work off the
coast of Egypt.
ATWOOD 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 in
Greece 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 $90 million. Contract
opportunities to commence following the rig's upgrade are being pursued
internationally.
RICHMOND -
During August and September 2000, the RICHMOND was upgraded and refurbished
at an aggregate cost of approximately $7 million. The upgrade included, among
other improvements, the installation of suction piles and the refurbishment of
its living quarters. In recent years, the RICHMOND has been a highly utilized
unit in the United States Gulf of Mexico, with its current contract expected to
be completed by the end of December 2001.
ATWOOD FALCON -
The ATWOOD FALCON was upgraded in 1998, at a cost of $45 million. The
long-term contract the rig entered into in November 1998 will terminate upon
completion of its present work in progress, estimated to be late 2001 or early
2002. The rig's current contract provided for the payment of $11.2 million in
mobilization fees compared to $800,000 in mobilization costs incurred, with
these amounts recorded to Deferred Credits and amortized into revenues and costs
over a three-year period ended in November 2001.
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, are being
amortized into revenue over the four-year contract extension period, with an
unamortized balance of $11.2 million at September 30, 2001.
VICKSBURG -
In 1998 the VICKSBURG was refurbished and upgraded at a cost of
approximately $35 million. From December 1998, until April 2001, the rig worked
in India. In April/May 2001 the rig was relocated from India to Vietnam for a
short drilling program and then in November 2001 relocated to its current
location in the Malaysia-Thailand Joint Development Area where it is working
under a drilling program for Carigali-Triton Operating Company Sdn. Bhd.
("CTOC") which is estimated to extend for 540 days. The costs to move the
VICKSBURG from India to Vietnam and then to the Malaysia-Thailand Joint
Development Area were approximately $1.5 million. The drilling contracts
provided for the payment of mobilization fees of $700,000 and for a special
payment of $1.5 million, which gives CTOC the option to cancel the rig's current
contract after giving a sixty-day written notice of termination. All of these
amounts will be recorded to Deferred Credits and amortized into revenues and
costs over the anticipated term of the VICKSBURG'S current contract.
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. Since its relocation to the
Mediterranean Sea the rig has worked continuously for several companies. Its
current contract commitments should keep the rig employed for most, if not all,
of fiscal 2002.
ATWOOD BEACON -
In July 2001, the Company entered into a vessel construction agreement to
construct an ultra-premium jack-up drilling unit in Singapore. Presently, the
Company expects the construction of the drilling unit to be completed in June
2003, with a total estimated cost, including owner furnished equipment and
capitalized interest, of approximately $125 million.
SEASCOUT -
On December 5, 2000, the Company purchased the semisubmersible unit
SEASCOUT for $4.5 million. The Company purchased this unit for conversion and
upgrade to a semisubmersible tender assist vessel. Depending upon water depth
and other operational requirements, the cost of the conversion and upgrade could
range from $52 to $70 million and take up to twelve months to complete. The
conversion and upgrade will not be undertaken until an acceptable contract
opportunity has been secured.
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 2001, 2000, and 1999 reflected
in the Company's Consolidated Statements of Operations. RIG-200 completed its
initial contract in June 1999 and remains idle in Australia, at a very low
stacking cost, while waiting for a new contract opportunity.
RIG-19 -
RIG-19, a platform rig located in Australia that has been idle since
January 1999, has been retired. Since this rig was fully depreciated, its
retirement had no impact on the Company's financial statements. The rig's
equipment is available for sale. Estimated disposal costs for the rig is
minimal.
NOTE 5 - DEBT
LONG-TERM DEBT -
A summary of long-term debt is as follows (in thousands):
September 30,
---------------------
2001 2000
---- ----
Non-reducing revolving credit agreement, bearing interest
(market adjustable) at approximately 4% per annum at
September 30, 2001 $ 60,000 $ 46,000
Less - current maturities --- ---
-------- --------
$ 60,000 $ 46,000
======== ========
On June 30, 2000, the Company entered into a $150 million five-year
non-reducing Revolving Credit Facility with a bank group. The Revolving Credit
Facility permits the Company to prepay principal at anytime without incurring
penalty. Subsequent to September 30, 2001, the Company borrowed an additional
$20 million for a current outstanding balance of $80 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, 2001 totaling approximately $175
million). 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, 2001. The Revolving Credit
Facility also supports issuance, when required, of standby letters of guarantee.
At September 30, 2001, standby letters of guarantee in the aggregate amount of
approximately $1.0 million were outstanding.
The maturities of long-term debt are as follows (in thousands):
FISCAL YEAR AMOUNT
2002 $ ---
2003 ---
2004 ---
2005 60,000
2006 ---
-------
$60,000
=======
NOTE 6 - INCOME TAXES
Domestic and foreign income before income taxes for the three years in the
period ended September 30, 2001 are as follows (in thousands):
Fiscal Fiscal Fiscal
2001 2000 1999
------- ------- -------
Domestic income $20,414 $30,490 $29,648
Foreign income 20,707 5,408 16,859
------- ------- -------
$41,121 $35,898 $46,507
======= ======= =======
The provision for domestic and foreign taxes on income consists of the
following (in thousands):
Fiscal Fiscal Fiscal
2001 2000 1999
------ ------ ------
Current domestic provision $ 2,502 $ 4,720 $ 8,000
Deferred domestic provision 3,298 2,000 3,500
Current foreign provision 7,975 6,030 7,287
------- ------- -------
$13,775 $12,750 $18,787
======= ======= =======
The components of the deferred income tax assets (liabilities) as of
September 30, 2001 and 2000 are summarized as follows (in thousands):
September 30,
2001 2000
---- ----
Deferred tax assets -
Net operating loss carryforwards $ 926 $2,650
Book reserves 422 850
------- --------
1,348 3,500
------- -------
Deferred tax liabilities -
Difference in book and tax basis of equipment 13,473 10,652
Unrealized holding loss on
available-for-sale securities --- (82)
------- -------
13,473 10,570
------- -------
Net deferred tax assets (liabilities) before
valuation allowance (12,125) (7,070)
Valuation allowance (695) (2,370)
-------- -------
$(12,820) $(9,440)
======== =======
Net current deferred tax assets $ 780 $950
Net noncurrent deferred tax liabilities (13,600) (10,390)
-------- -------
$(12,820) $(9,440)
======== =======
The Company does not provide federal income taxes on the undistributed
earnings of its foreign subsidiaries that the Company considers to be
permanently reinvested in foreign operations. The cumulative amount of such
undistributed earnings was approximately $37 million at September 30, 2001. If
these earnings were to be remitted to the Company, any U.S. income taxes payable
would be substantially reduced by foreign tax credits generated by the
repatriation of the earnings. Such foreign tax credits totaled approximately $18
million at September 30, 2001.
The differences between the statutory and the effective income tax rate are
as follows:
Fiscal Fiscal Fiscal
2001 2000 1999
------ ------ ------
Statutory income tax rate 35% 35% 35%
Increase (decrease) in tax rate resulting from -
Foreign tax rate differentials, net of
foreign tax credit utilization (2) 1 5
----- ----- -----
Effective income tax rate 33% 36% 40%
===== ===== =====
The Company has United States net operating loss carryforwards totaling
$2.6 million which expire in fiscal years 2002 and 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 $0.7 million valuation allowance is recorded as of September 30,
2001.
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 the Indian High
Court. During fiscal year 1999, all but approximately $400,000 (still unresolved
at September 30, 2001) of the amounts received were favorably resolved and
accordingly recognized (net of expenses) in income.
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, board members and key
employees through February 12, 2007. At September 30, 2001, options to purchase
601,775 shares were outstanding under this Plan. The Company also has options
outstanding to purchase 70,900 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, 2001,
2000 and 1999, and changes during the years ended on those dates is presented
below:
Fiscal Fiscal Fiscal
2001 2000 1999
----------------------------- --------------------------- ---------------------------
Weighted- Weighted- Weighted-
Number of Average Number of Average Number of Average
Options Exercise Price Options Exercise Price Options Exercise Price
--------- -------------- --------- -------------- --------- --------------
Outstanding at beginning of
Year 423,700 $29.82 504,900 $23.88 566,200 $22.76
Granted 274,500 32.26 97,000 37.75 --- ---
Exercised (9,400) 16.36 (147,700) 14.26 (49,925) 10.75
Forfeited (16,125) 32.83 (30,500) 31.95 (11,375) 26.00
Expired --- --- --- --- ---
-------- ------- --------
Outstanding at end of year 672,675 $30.93 423,700 $29.82 504,900 $23.88
======== ======= ========
Exercisable at end of year 189,450 $25.85 109,450 $23.58 137,150 $13.14
Available for grant at end of
Year 41,125 299,500 374,375
Weighted-average fair value of
options granted during the
year $22.14 $ 26.61 ---
The following table summarizes information about stock options outstanding
at September 30, 2001:
Options Outstanding Options Exercisable
-------------------------------------------- -----------------------
Weighted-
Average Weighted- Weighted-
Range of Remaining Average Average
Exercise Prices Shares Contractual Life Exercise Price Shares Exercise Price
--------------- ------- ---------------- -------------- ------ --------------
$ 4.87 to 5.38 5,500 1.2 years $5.24 5,500 $5.24
6.55 to 6.69 9,750 3.1 years 6.60 9,750 6.60
16.63 to 18.97 142,650 6.0 years 17.57 87,650 17.45
28.00 to 32.16 331,500 8.8 years 30.87 46,000 28.00
37.75 90,000 8.2 years 37.75 --- ---
48.75 to 52.06 93,275 6.5 years 49.09 40,550 49.00
------- ------ ------- ------
4.87 to 52.06 672,675 7.7 years $30.93 189,450 $25.85
======= ====== ======= ======
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
2001 2000 1999
------ ------ -------
Net Income
As reported $27,346 $23,148 $27,720
Pro forma 26,081 22,335 27,186
Earnings per share
As reported -
Basic 1.98 1.68 2.03
Diluted 1.96 1.66 2.01
Pro forma
Basic 1.89 1.62 1.99
Diluted 1.87 1.61 1.97
The fair value of grants made in fiscal 2001 and 2000 was estimated on the
date of grant using the Black-Scholes option pricing model with the following
weighted-average assumptions used: fiscal 2001 - risk-free interest rate of
5.10%, expected volatility of 51.61%, expected lives of 5 years and no dividend
yield; fiscal 2000 - risk-free interest rate of 6.72%, expected volatility of
50%, expected lives of 5 years and no dividend yield. There were no options
granted during 1999.
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 2001 and 1999, the Company used forfeitures
of $ 115,000 and $190,000, respectively, to reduce its cash requirements, which
resulted in actual contributions of approximately $2.0 and $1.3 million,
respectively. In fiscal 2000, the Company made actual contributions of
approximately $1.7 million with no forfeitures used during the year to reduce
its cash requirements. As of September 30, 2001, there are approximately
$118,000 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 2001 and 2000.
With the sale of all of its marketable securities during 2001, the Company had
no financial instruments at September 30, 2001 with a fair value different from
carrying value. See 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, related primarily to contract disputes, at
September 30, 2001 and 2000 was $3.6 and $2.1 million, respectively.
Drilling revenues for fiscal 2001 include $38.0 million, $25.9 million and
$15.7 million in revenues received from Shell Philippines Exploration B.V., ESSO
Production Malaysia, Inc. and Rashid Petroleum Company, respectively. 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.
NOTE 11 - 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,
2002......................................... 580
2003......................................... 580
2004......................................... 580
2005......................................... 242
Total rent expense under operating leases was approximately $474,000,
$362,000 and $285,000 for fiscal years ended September 30, 2001, 2000 and 1999,
respectively.
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 purported 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.
The plaintiff alleged 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 contended
that this alleged conduct violated federal and state antitrust laws. The Company
vigorously denied these allegations and in 2001 reached a settlement in
principle with the plaintiff, pending final approval by the members of the class
action suit. Management does not believe that the outcome of this matter will
have a material effect on its business, financial position, or results of
operations.
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 position or results of operations.
CAPITAL EXPENDITURES
Currently, the Company has capital expenditure commitments estimated to
total $166 million relating to the ATWOOD EAGLE and ATWOOD BEACON. The Company
continues with its plans to upgrade the ATWOOD EAGLE, with an estimated $57
million to be expended in 2002. The Company estimates that $64 million and $45
million will be expended on the construction of the ATWOOD BEACON in 2002 and
2003, respectively. No significant commitments exist currently relating to the
SEASCOUT.
NOTE 12 - 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 in 2000 and 1999
were principally investments in marketable securities which were liquidated
during 2001. Contract revenues for 2001, 2000 and 1999 reflect the gross-up of
mobilization revenues which were reported on a net basis prior to the adoption
of SAB 101 in the fourth quarter of 2001.
A summary of revenues, operating margin and identifiable assets by geographic
areas is as follows (in thousands):
Fiscal Fiscal Fiscal
2001 2000 1999
---- ---- ----
CONTRACT REVENUES:
United States $ 27,128 $ 38,646 $ 36,311
Southeast Asia 70,472 60,357 44,551
Mediterranean Sea 37,815 21,831 37,063
Australia 6,068 3,127 23,553
India 6,058 12,012 11,372
-------- -------- --------
$147,541 $135,973 $152,850
======== ======== ========
OPERATING INCOME(LOSS):
United States $ 3,223 $ 11,464 $ 13,005
Southeast Asia 29,134 22,835 14,378
Mediterranean Sea 17,574 11,392 26,164
Australia 57 (5,985) (6,475)
India 1,960 5,934 8,678
General and administrative expenses (9,250) (8,449) (7,519)
-------- -------- --------
$ 42,698 37,191 $ 48,231
======== ======== ========
TOTAL ASSETS:
United States $122,894 $ 83,355 $ 76,227
Southeast Asia 133,369 90,889 85,650
Mediterranean Sea 90,849 71,798 21,921
Australia 5,264 4,476 46,688
India 123 37,303 40,180
General corporate and other 1,379 25,430 22,938
-------- -------- --------
$353,878 $313,251 $ 293,604
======== ======== ========
NOTE 13 - QUARTERLY FINANCIAL DATA (UNAUDITED)
Summarized quarterly results for fiscal years 2001 and 2000 are as follows
(in thousands, except per share amounts):
QUARTERS ENDED
-----------------------------------------------
DECEMBER 31, MARCH 31, JUNE 30, SEPTEMBER 30,
----------- --------- -------- -----------
2001
Revenues (1) $ 39,524 $ 37,294 $ 35,029 $35,694
Income before income taxes 12,555 9,777 8,410 10,379
Net income 8,040 6,030 5,485 7,791
Earnings per common share (2) -
Basic .58 .44 .40 .56
Diluted .58 .43 .39 .56
2000
Revenues (1) $ 31,549 $ 32,726 $ 33,776 $37,922
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 (2) -
Basic .37 .44 .38 .50
Diluted .36 .43 .37 .49
- ------------
(1) Contract revenues for 2001 and 2000 reflect the gross-up of mobilization
revenues which were reported on a net basis prior to the adoption of SAB 101 in
the fourth quarter of 2001.
(2) 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.
.
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
ANNUAL MEETING
The annual meeting of stockholders will be held on February 14, 2002 at the
Company's principal office: 15835 Park Ten Place Drive, Houston, Texas, 77084. 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, 2002.
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 2000 or 2001, and none are anticipated in the foreseeable
future. As of November 30, 2001, there were over 750 beneficial owners of the
common stock of Atwood Oceanics, Inc. As of November 30, 2001, the closing sale
price of the common stock of Atwood Oceanics, Inc., as reported by NYSE, was
$32.10 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
2000 2001
---------------------- -----------------------
QUARTERS ENDED LOW HIGH LOW HIGH
- -------------- --- ---- --- ----
December 31 $ 27.94 $38.81 $30.20 $45.00
March 31 36.13 66.69 39.50 49.90
June 30 41.56 69.88 33.60 46.86
September 30 35.50 50.94 23.76 35.95
APPENDIX
The following graphic and image information in the form of "Bar Charts" are
located in the Annual Report immediately following "Highlights".
BAR CHART - CONTRACT REVENUES ($ MILLIONS)
1997 1998 1999 2000 2001
- ---- ---- ---- ---- ----
$89.4 $151.4 $152.9 $136.0 $147.5
BAR CHART - EARNINGS, BEFORE DEPRECIATION, INTEREST, TAXES AND INVESTMENT INCOME
($ MILLIONS)
1997 1998 1999 2000 2001
- ---- ---- ---- ---- ----
$34.2 $79.2 $72.1 $ 66.8 $68.3
BAR CHART - OPERATING CASH FLOW ($ MILLIONS)
1997 1998 1999 2000 2001
- ---- ---- ---- ---- ----
$25.8 $61.4 $55.7 $55.2 $56.3
BAR CHART - NET INCOME ($ MILLIONS)
1997 1998 1999 2000 2001
- ---- ---- ---- ---- ----
$15.6 $39.4 $27.7 $23.1 $27.3
BAR CHART - CAPITAL EXPENDITURES ($ MILLIONS)
1997 1998 1999 2000 2001
- ---- ---- ---- ---- ----
$62.8 $79.6 $38.8 $34.8 $104.5