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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, 2001
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, 2001: 13,831,951 shares of Common Stock $1
par value
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PART I. FINANCIAL INFORMATION
ATWOOD OCEANICS, INC. AND SUBSIDIARIES
The unaudited interim financial statements as of December 31, 2001 and for
each of the three month periods ended December 31, 2001 and 2000, 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. 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, 2001
Annual Report to Shareholders.
PART I. ITEM I - FINANCIAL STATEMENTS
ATWOOD OCEANICS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)
December 31, September 30,
2001 2001
-------------- -------------
(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 15,786 $12,621
Accounts receivable, net 23,254 19,815
Inventories of materials and supplies,
at lower of average cost or market 9,119 9,111
Deferred tax assets 780 780
Prepaid expenses 2,539 3,394
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Total Current Assets 51,478 45,721
-------- --------
PROPERTY AND EQUIPMENT, at cost:
Drilling vessels, equipment and drill pipe 522,176 497,821
Other 8,977 8,768
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531,153 506,589
Less-accumulated depreciation 206,087 200,335
-------- -------
Net Property and Equipment 325,066 306,254
-------- -------
DEFERRED COSTS AND OTHER ASSETS 3,913 1,903
-------- -----------
$380,457 $353,878
======== ========
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,
2001 2001
(Unaudited)
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 4,633 $ 8,055
Accrued liabilities 13,622 12,609
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Total Current Liabilities 18,255 20,664
---------- ---------
LONG-TERM DEBT, net of current maturities: 80,000 60,000
---------- ---------
DEFERRED CREDITS:
Income taxes 14,350 13,600
Other 12,058 11,978
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26,408 25,578
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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 13,832,000
shares issued and outstanding 13,832 13,832
Paid-in capital 57,075 57,075
Retained earnings 184,887 176,729
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255,794 247,636
-------- ---------
$380,457 $353,878
======== ========
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,
----------------------------
2001 2000
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(Unaudited)
REVENUES:
Contract drilling $37,234 $39,524
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COSTS AND EXPENSES:
Contract dril1ing 16,214 17,574
Depreciation 5,823 6,634
General and administrative 2,670 2,365
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24,707 26,573
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OPERATING INCOME 12,527 12,951
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OTHER INCOME (EXPENSE)
Interest expense (203) (966)
Interest income 63 570
------ -------
(140) (396)
------ -------
INCOME BEFORE INCOME TAXES
12,387 12,555
PROVISION FOR INCOME TAXES 4,229 4,515
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NET INCOME $ 8,158 $8,040
======= ======
EARNINGS PER COMMON SHARE:
Basic $ .59 $ .58
Diluted .59 .58
AVERAGE COMMON SHARES OUTSTANDING:
Basic 13,832 13,823
Diluted 13,912 13,930
(Contract drilling revenues and contract drilling costs for 2000 reflect
the gross-up of mobilization revenues and costs, which were reported on a net
basis prior to the adoption of Staff Accounting Bulletin 101 in the fourth
quarter of 2001.)
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,
-------------------------------
2001 2000
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(Unaudited)
CASH FLOW FROM OPERATING ACTIVITIES:
Net Income $ 8,158 $ 8,040
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Adjustments to reconcile net income to net cash
provided (used) by operating activities:
Depreciation 5,823 6,634
Amortization 450 13
Deferred federal income tax provision 750 500
Changes in assets and liabilities:
Decrease (increase) in accounts receivable (3,439) 1,090
Increase (decrease) in accounts payable and
accrued liabilities (2,409) 1,625
Net mobilization fees (1,917) (2,130)
Other 351 1,179
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(391) 8,911
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Net cash provided by operating activities 7,767 16,951
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CASH FLOW FROM INVESTING ACTIVITIES:
Capital expenditures (24,602) (15,761)
Treasury note maturity --- 10,000
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Net cash used by investing activities (24,602) (5,761)
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CASH FLOW FROM FINANCING ACITIVITES:
Proceeds from revolving credit facility 20,000 ---
Principal payments on long-term debt --- (6,000)
Proceeds from exercises of stock options --- 29
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Net cash provided by (used in)
financing activities 20,000 (5,971)
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NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 3,165 5,219
CASH AND CASH EQUIVALENTS, at beginning of period 12,621 19,740
-------- --------
CASH AND CASH EQUIVALENTS, at end of period $ 15,786 $ 24,959
======== ========
Supplemental disclosure of cash flow information:
Cash paid during the quarter for domestic
and foreign income taxes $ 1,164 $ 1,521
======= ========
Cash paid during the quarter for interest,
net of amounts capitalized $ 86 $ 1,134
======= ========
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
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.
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, 2001:
Basic earnings per share $ 8,158 13,832 $ .59
Effect of dilutive securities -
Stock options --- 80 ---
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Diluted earnings per share $ 8,158 13,912 $ .59
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December 31, 2000:
Basic earnings per share $ 8,040 13,823 $ .58
Effect of dilutive securities -
Stock options --- 107 ---
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Diluted earnings per share $ 8,040 13,930 $ .58
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3. COMPREHENSIVE INCOME
Comprehensive income includes the following (in thousands):
First Quarter
----------------------------
Fiscal 2002 Fiscal 2001
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Net Income --- $ 8,040
Other comprehensive income:
Unrealized holding gain (loss) on available-
for-sale securities, net of tax provision
$13 in 2001
Comprehensive income --- 24
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$ --- $ 8,064
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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
around 75%, with an utilization of 60% in the United States Gulf of Mexico.
Despite the current soft market conditions, the Company remains optimistic about
the long-term offshore drilling and completions markets. The ATWOOD HUNTER,
VICKSBURG and SEAHAWK have current contract commitments which should keep these
units employed into fiscal 2003, while the ATWOOD SOUTHERN CROSS and ATWOOD
FALCON have current contract commitments which should keep these units employed
for most, if not all, of fiscal 2002. The ATWOOD EAGLE should enter the shipyard
at the end of February or early March, 2002 to commence its $90 million
water-depth upgrade and refurbishment, which should take approximately six
months to complete. Contract opportunities to commence following the rig's
upgrade are being pursued internationally. In recent years, the RICHMOND has
been a high utilized unit in the United States Gulf of Mexico; however, with its
current contract expected to be completed by the end of February 2002, the
Company could incur some idle time with the unit under the current soft market
conditions. Even with the upgrade of the ATWOOD EAGLE and exposure to some idle
time on the RICHMOND, the Company's contract backlog on its other drilling units
should provide revenues and cash flows comparable to results for fiscal 2001.
RESULTS OF OPERATIONS
Contract revenues for the three months ended December 31, 2001 decreased 6%
compared to the three months ended December 31, 2000. A comparative analysis of
contract revenues is as follows:
CONTRACT REVENUES
(In millions)
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First Quarter First Quarter
Fiscal 2002 Fiscal 2001 Variance
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VICKSBURG $ 5.2 $ 2.8 $ 2.4
ATWOOD SOUTHERN CROSS 5.8 4.1 1.7
RICHMOND 3.3 2.1 1.2
ATWOOD EAGLE 5.3 5.0 0.3
SEAHAWK 5.6 5.9 (0.3)
ATWOOD FALCON 9.4 10.3 (0.9)
ATWOOD HUNTER 2.0 7.6 (5.6)
OTHER 0.6 1.7 (1.1)
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$37.2 $39.5 $(2.3)
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The increase in revenue for the VICKSBURG, ATWOOD SOUTHERN CROSS and
RICHMOND was due to higher dayrates received during the first quarter of fiscal
2002 than the first quarter of fiscal 2001. The ATWOOD SOUTHERN CROSS received
an average dayrate of approximately $63,000 during the first quarter of fiscal
2002 compared to approximately $45,000 for the same period in fiscal 2001, while
the VICKSBURG averaged $57,000 in per day revenues for the quarter ended
December 31, 2001 compared to $30,000 for the quarter ended December 31, 2000.
The United States Gulf of Mexico market is very cyclical with the RICHMOND
averaging $36,000 per day revenues for the first quarter of fiscal 2002 compared
to $23,000 for the first quarter of fiscal 2001, with a current dayrate of
$18,500. The ATWOOD EAGLE has worked consistently in the Mediterranean for
almost four years. The SEAHAWK continues to have a consistent level of
operations under its long-term contract in Malaysia. The ATWOOD FALCON is
expected to complete its current contractual commitments in the Philippines
between April and June 2002 and then be relocated to Malaysia to commence a
five-well plus options contract. The decrease in revenues for the ATWOOD HUNTER
was due to the unit's upgrade (commenced in June 2001) and relocation to the
Mediterranean. The ATWOOD HUNTER returned to work in mid-December 2001 and is
currently working off the coast of Egypt under a contract which should keep it
employed into the first quarter of fiscal 2003.
Contract drilling and management costs decreased 7% in the first quarter of
fiscal 2002 compared to the first quarter of fiscal 2001. 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 2002 Fiscal 2001 Variance
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ATWOOD EAGLE $ 3.3 $ 2.6 $ 0.7
RICHMOND 1.9 1.2 0.7
VICKSBURG 2.2 1.7 0.5
SEAHAWK 2.1 1.9 0.2
ATWOOD SOUTHERN CROSS 2.5 2.4 0.1
ATWOOD FALCON 2.2 2.2 0.0
ATWOOD HUNTER 0.7 3.4 (2.7)
OTHER 1.3 2.2 (0.9)
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$16.2 $17.6 $(1.4)
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The increase in operating costs for the ATWOOD EAGLE, RICHMOND, VICKSBURG
and SEAHAWK is primarily due to higher maintenance and insurance costs. The
decrease in operating costs for the ATWOOD HUNTER was due to its upgrade,
whereby no operating costs were recognized during the upgrade period.
An analysis of depreciation expense by rig for the first quarter of fiscal
2002 compared to the first quarter of fiscal 2001 is as follows:
DEPRECIATION EXPENSE
(In millions)
----------------------------------------------------
First Quarter First Quarter
Fiscal 2002 Fiscal 2001 Variance
----------- ----------- --------
RICHMOND $0.4 $0.3 $0.1
ATWOOD EAGLE 0.9 0.9 0.0
ATWOOD SOUTHERN CROSS 1.0 1.0 0.0
ATWOOD FALCON 0.7 0.7 0.0
VICKSBURG 0.6 0.7 (0.1)
ATWOOD HUNTER 0.2 0.6 (0.4)
SEAHAWK 1.3 1.7 (0.4)
OTHER 0.7 0.7 0.0
---- ---- -----
$5.8 $6.6 $(0.8)
==== ==== =====
The Company does not recognize depreciation expense during the period a rig
is out of service for a significant upgrade, which accounts for the decrease in
depreciation expense for the ATWOOD HUNTER for the first quarter of fiscal 2002.
The decrease in depreciation expense for the SEAHAWK was due to the rigs 1992
upgrade costs becoming fully depreciated: thereby, leaving only its 2000 upgrade
cost of approximately $22 million to be depreciated over a remaining period of
approximately three years.
LIQUIDITY AND CAPITAL RESOURCES
During the first quarter of fiscal 2002, operating cash flow (before
charges in working capital and other assets and liabilities) was approximately
$15 million, which was the same as the first quarter of fiscal 2001. During the
first quarter of fiscal 2002, the Company primarily utilized $20 million
borrowed under the credit facility to invest $12.8 million in completing the
upgrade of the ATWOOD HUNTER, to invest $9.3 million in the construction of the
ATWOOD BEACON and to fund approximately $2.5 million of other capital
expenditures. Despite an increase in long-term debt, interest expense for the
first quarter of fiscal 2002 decreased compared to the first quarter of fiscal
2001 because of approximately $600,000 of interest capitalized during the
quarter as a component of construction costs. The Company is finalizing plans
for the $90 million upgrade of the ATWOOD EAGLE, which is expected to commence
in March 2002. The construction of the $125 million ultra-premium jack-up ATWOOD
BEACON continues to be on schedule, with an expected completion date of June
2003. The Company continues to market the SEASCOUT which could cost $50 to $70
million to refurbish and upgrade if an acceptable contract is identified.
The Company anticipates using the full funding capacity under the $150
million credit facility (with a current outstanding balance of $100 million) by
the end of fiscal 2002. The Company anticipates securing an additional $25
million in borrowing capacity under its credit facility before the end of
February 2002. The Company will continue to adjust planned capital expenditures
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) Earnings for the fiscal year ended September 30, 2001
along with supporting information (Filed November 19, 2001)
2) Award of contract for the ATWOOD FALCON (Filed December 11, 2001)
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, 2002 s/JAMES M. HOLLAND
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James M. Holland
Senior Vice President
and Chief Accounting Officer