FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 30549
{x} QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For quarterly period ended: DECEMBER 31, 1993
OR
{ } TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number: 1-4221
HELMERICH & PAYNE
(Exact name of registrant as specified in its charter)
DELAWARE 73-0679879
(State or other jurisdiction of incorporation (I.R.S. Employer I.D. Number)
or organization)
UTICA AT TWENTY-FIRST STREET, TULSA, OKLAHOMA 74114
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code: (918) 742-5531
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NONE
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes x No
CLASS OUTSTANDING AT DECEMBER 31, 1993
Common Stock, .10 par value 24,667,482
AUTHORIZED AT DECEMBER 31, 1993
26,764,476
Total Number of Pages 10
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HELMERICH & PAYNE, INC. AND SUBSIDIARIES
INDEX
PART I. FINANCIAL INFORMATION PAGE NO.
Consolidated Condensed Balance Sheets -
December 31, 1993 and September 30, 1993. . . . . . . . . . . . 3
Consolidated Condensed Statements of Income -
Three Months Ended December 31, 1993 and 1992 . . . . . . . . . 4
Consolidated Condensed Statement of Cash Flows -
Three Months Ended December 31, 1993 and 1992 . . . . . . . . . 5
Notes to Consolidated Condensed Financial Statements. . . . . . 6-7
Revenues and Income by Business Segments. . . . . . . . . . . . 8
Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . . . . . . . . 9
PART II. OTHER INFORMATION . . . . . . . . . . . . . . . . . . . . . . 10
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PART I FINANCIAL INFORMATION
HELMERICH & PAYNE, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
Unaudited
(Thousands of Dollars)
December 31 September 30
1993 1993
----------- ------------
ASSETS
- ------
Current Assets
Cash and cash equivalents $ 54,109 $ 61,656
Short-term investments 9,009 9,109
Accounts receivable, net 61,283 56,305
Inventories 18,843 17,646
Other current assets 11,792 5,783
---------- ----------
Total Current Assets $ 155,036 $ 150,499
Investments 85,188 84,945
Property, Plant and Equipment, Net 358,238 358,798
Other Assets 17,528 16,693
---------- ----------
Total Assets $ 615,990 $ 610,935
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
- ------------------------------------
Current Liabilities
Current maturities of long-term debt $ 1,714 $ 5,679
Accounts payable 22,184 23,836
Accrued liabilities 20,480 16,899
---------- ----------
Total Current Liabilities $ 44,378 $ 46,414
---------- ----------
Non-Current Liabilities
Long-term debt, less current maturities $ 6,000 $ 3,600
Deferred Federal income taxes 40,903 44,723
Other 7,049 7,271
---------- ----------
Total Non-Current Liabilities $ 53,952 $ 55,594
---------- ----------
Shareholders' Equity
Common stock, par value $.10 per share $ 2,677 $ 2,677
Preferred stock, no par value, 1,000,000
shares authorized, no shares issued - -
Additional paid-in capital 47,893 47,412
Retained earnings 490,324 482,405
---------- ----------
$ 540,894 $ 532,494
Less-Treasury stock, at cost 23,234 23,567
---------- ----------
Total Shareholders' Equity $ 517,660 $ 508,927
---------- ----------
$ 615,990 $ 610,935
========== ==========
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See accompanying notes to financial statements.
HELMERICH & PAYNE, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(Unaudited)
(Thousands of Dollars Except per Share Data)
Three Months Ended
December 31
1993 1992
---- ----
REVENUES:
Sales and other operating revenues $ 80,644 $ 80,002
Income from investments 1,542 2,996
---------- ----------
82,186 82,998
---------- ----------
COST AND EXPENSES:
Operating costs $ 50,511 $ 48,652
General and administrative 2,682 1,767
Interest 182 322
Depreciation, depletion and amortization 11,818 12,853
Dry holes and abandonments 1,310 3,240
Taxes, other than Federal income taxes 4,398 3,660
---------- ----------
70,901 70,494
---------- ----------
INCOME BEFORE FEDERAL INCOME TAXES, EQUITY
IN INCOME (LOSS) OF AFFILIATE AND
CHANGE IN ACCOUNTING PRINCIPLE $ 11,285 $ 12,504
FEDERAL INCOME TAX EXPENSE 4,183 5,100
EQUITY IN INCOME (LOSS) OF AFFILIATE,
net of income taxes 151 ( 185)
---------- ----------
INCOME BEFORE CHANGE IN ACCOUNTING
PRINCIPLE $ 7,253 $ 7,219
CUMULATIVE EFFECT OF A CHANGE IN ACCOUNTING
PRINCIPLE 4,000 -
---------- ----------
NET INCOME 11,253 $ 7,219
========== ==========
INCOME PER COMMON SHARE BEFORE CHANGE
IN ACCOUNTING PRINCIPLE $ .30 $ .30
CUMULATIVE EFFECT OF A CHANGE IN ACCOUNTING
PRINCIPLE $ .16 $ .00
INCOME PER COMMON SHARE $ .46 $ .30
AVERAGE COMMON SHARES OUTSTANDING 24,368,482 24,247,394
CASH DIVIDENDS PER COMMON SHARE (NOTE 3) $ .12 $ .12
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See accompanying notes to financial statements.
HELMERICH & PAYNE, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
(Unaudited)
(Thousands of Dollars)
Three Months Ended
December 31
1993 1992
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
- -------------------------------------
Net Income $ 11,253 $ 7,219
Adjustments to reconcile net income to net
cash provided by operating activities-
Depreciation, depletion and amortization 11,818 12,853
Abandonments and surrendered leases 1,236 1,220
Cumulative effect of a change in accounting
principle ( 4,000) -
Equity in (income) loss of affiliate
before income taxes ( 243) 200
Amortization of deferred compensation 439 429
Gain on sale of securities - ( 1,570)
Other, net ( 11) ( 263)
Change in assets and liabilities-
Increase in accounts receivable ( 5,702) (12,332)
(Increase)Decrease in inventories ( 1,197) 67
Increase in prepaid exps/other ( 6,844) ( 2,805)
Increase(Decrease) in accounts payable ( 1,652) 6,736
Increase in accrued liabilities 4,305 4,676
Increase(Decrease) in deferred Federal
Income Taxes 180 ( 520)
Decrease in other non-current liabilities ( 222) ( 573)
---------- ----------
Total Adjustments $ ( 1,893) $ 8,118
---------- ----------
Net cash provided by operating activities $ 9,360 $ 15,337
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
- -------------------------------------
Capital expenditures $ (13,435) $ (10,929)
Proceeds from sales of property, plant
and equipment 949 400
Purchase of investments - ( 400)
Proceeds from sale of investments - 3,449
Purchase of short-term investments ( 12) ( 10)
Proceeds from sale of short-term investments 112 2,012
---------- ----------
Net cash used in investing activities $ (12,386) $ ( 5,478)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
- -------------------------------------
Proceeds from issuance of long-term debt $ 2,750 $ 2,070
Payments made on long-term debt ( 4,315) ( 385)
Dividends paid ( 2,956) ( 2,949)
Proceeds from exercise of stock options - 25
---------- ----------
Net cash used in financing activities $ ( 4,521) $ ( 1,239)
---------- ----------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS $ ( 7,547) $ 8,620
---------- ----------
CASH AND CASH EQUIVALENTS, beginning of period $ 61,656 $ 37,586
---------- ----------
CASH AND CASH EQUIVALENTS, end of period $ 54,109 $ 46,206
========== ==========
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HELMERICH & PAYNE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
1. In the opinion of the Company, the accompanying unaudited consolidated financial statements contain all adjustments (consisting of only normal recurring accruals) necessary to present fairly the financial position as of December 31, 1993, and September 30, 1993, and the results of operations for the three months ended December 31, 1993, and 1992, and changes in financial position for the three months then ended.
2. The results of operations for the three months ended December 31, 1993, and December 31, 1992, are not necessarily indicative of the results to be expected for the full year.
3. The $.12 cash dividend declared in September was paid December 1, 1993. On December 1, 1993, a cash dividend of $.12 per share was declared for shareholders of record on February 15, 1994, payable March 1, 1994. The dividend was included in accounts payable on the consolidated balance sheet at December 31, 1993.
4. Inventories consisted of the following (in thousands of dollars):
12-31-93 09-30-93
-------- --------
Raw Materials $ 167 $ 163
Works in Progress 197 210
Finished Goods 980 1,041
Materials & Supplies 17,499 16,232
$ 18,843 $ 17,646
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5. Income from investments include no gains on sales of securities during the first quarter of 1994, and $1,570,000 during the first quarter of 1993.
6. In February 1992, the Financial Accounting Standards Board issued Statement No. 109, Accounting for Income Taxes (Statement 109). Statement 109 represents a new method of accounting for income taxes. It generally requires that deferred taxes be provided using a liability approach at currently enacted income tax rates, rather than the deferred approach at historical rates which has been required.
Effective October 1, 1993, the Company adopted the provisions of SFAS
109. The cumulative effect on prior years of adopting the change was
recorded in the quarter ended December 31, 1993, as provided by SFAS
109, and increased net income for the quarter by $4.0 million.
The components of the Company's net deferred tax liability are as follows:
December 31, October 1,
1993 1993
------------ ------------
(in thousands)
Deferred Tax Liability:
Differences between book and tax
basis of property, plant and
equipment $ 40,915 $ 46,508
Pension provision 4,551 4,548
Other 3,910 1,842
--------- ---------
Deferred tax liability 49,376 52,898
--------- ---------
Deferred Tax Asset:
Alternative minimum tax credit
carryforward 1,652 1,652
Foreign tax credit carryforward 935 1,325
Deferred compensation 1,561 1,312
Insurance provisions 1,390 1,391
Deferred expenses - internat'l 2,563 2,013
Other 1,307 1,807
--------- ---------
Subtotal 9,408 9,500
--------- ---------
Valuation allowance ( 935) ( 1,325)
--------- ---------
Deferred tax asset 8,473 8,175
--------- ---------
Net Deferred Tax Liability $ 40,903 $ 44,723
========= =========
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7. On December 31, 1993, the Company owned 1,600,000 shares of Atwood Oceanics, Inc. The Company's total carrying value of the investment ($19,528,000) exceeded the market value ($18,400,000) by $1,128,000 at January 28, 1994. Management has reviewed Atwood's financial strength and cash flow trends and believes that the market value of the affiliate will improve to levels equaling or exceeding the carrying value within the foreseeable future. The Company currently has no plans to liquidate any of its holdings in Atwood. At December 31, 1993, the total carrying value of all the Company's equity securities totaled $85,188,000. Total market value of those investments were approximately $144,628,000 as of January 28, 1994.
HELMERICH & PAYNE, INC. AND SUBSIDIARIES
REVENUES AND INCOME BY BUSINESS SEGMENTS
(Thousands of Dollars)
FY 1994 Fiscal 1993
1st Qtr 4th Qtr 3rd Qtr 2nd Qtr 1st Qtr
------- ------- ------- ------- -------
SALES AND OTHER REVENUES:
Contract Drilling-Domestic $19,817 $16,165 $14,781 $14,750 $14,632
Contract Drilling-Internatl 22,319 23,379 22,252 23,745 20,242
------- ------- ------- ------- -------
Total Contract Drilling
Division 42,136 39,544 37,033 38,495 34,874
------- ------- ------- ------- -------
Oil and Gas Division 16,626 15,090 16,357 17,881 20,467
Energy Services Division 14,820 12,354 14,089 19,072 18,343
Real Estate Division 1,836 1,901 1,918 1,903 1,908
Chemical Division 5,046 3,754 2,550 3,772 4,298
Investments and Other
Income 1,722 2,498 1,660 2,228 3,108
------- ------- ------- ------- -------
Total Revenues $82,186 $75,141 $73,607 $83,351 $82,998
======= ======= ======= ======= =======
INCOME (LOSS) BEFORE FEDERAL INCOME
TAX, EQUITY IN INCOME (LOSS) OF
AFFILIATE AND A CHANGE IN ACCOUNTING
PRINCIPLE:
Contract Drilling-Domestic $ 1,252 $( 742) $ 612 $ 177 $ 115
Contract Drilling-Internatl 3,590 2,464 3,343 6,068 3,406
------- ------- ------- ------- -------
Total Contract Drilling
Division 4,842 1,722 3,955 6,245 3,521
------- ------- ------- ------- -------
Oil and Gas Division 4,997 4,570 4,154 4,246 6,184
Energy Services Division 287 ( 26) 48 455 25
Real Estate Division 987 989 989 965 1,013
Chemical Division 1,791 1,150 37 1,044 1,353
Other (Note 1) (1,619) 609 ( 981) ( 355) 408
-------- ------- ------- ------- -------
INCOME BEFORE FEDERAL INCOME
TAX, EQUITY IN INCOME (LOSS)
OF AFFILIATE AND A CHANGE IN
ACCOUNTING PRINCIPLE $11,285 $ 9,014 $ 8,202 $12,600 $12,504
======= ======= ======= ======= =======
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
DECEMBER 31, 1993
The Company reported net income of $11,253,000 ($0.46 per share) on revenues of $82,186,000 for the first quarter of fiscal year 1994, compared with net income of $7,219,000 ($0.30 per share) on revenues of $82,998,000 during the first quarter of fiscal 1993. This year's first quarter net income includes the cumulative effect on prior years' income ($.16 per share) caused by the change in accounting method for deferred taxes as required by FASB Statement 109.
This year's investment and other income declined because last year's pre-tax income included $1,570,000 ($.04 per share net income) from the sale of equity securities, while no security sales were made during the first quarter of this year.
The Contract Drilling Division reported a pre-tax income of $4,842,000 for the first quarter, compared with $3,521,000 for the same period in fiscal 1993. The 37% increase in pre-tax income was the result of increased activity of the Company's offshore rigs. This was also the first full quarter of revenue from two labor contracts with Exxon Offshore California. Revenues from domestic drilling operations were $19,817,000 in the first quarter of 1994, compared with $14,632,000 in the first quarter of 1993. Pre-tax income from international operations was $3,590,000 in the first quarter of 1994, compared with $3,406,000 in the first quarter of 1993. International operations should remain consistent through the remainder of fiscal 1994.
Oil and Gas pre-tax earnings decreased to $4,997,000 for the quarter from $6,184,000 during the same period last year. Average gas prices for the quarter were $1.82 (per MCF), compared with $1.97 (per MCF) last year. Volumes also declined to 82,214 (MCF/day), from 89,703 (MCF/day) last year. Oil prices dropped significantly compared with first quarter of fiscal 1993. The average oil price per barrel was $14.23 in the first quarter of 1994, compared with $18.69 in 1993. As a result of price and volume declines, revenues decreased 19% to $16,626,000, compared with $20,467,000 in the first quarter of 1993.
General and Administrative costs were $2,682,000 for the first quarter of 1994, compared with $1,767,000 for the first quarter of 1993. Approximately $600,000 of the increase was for additional hospitalization expenses during the quarter. The Company expects General and Administrative expense for the remainder of fiscal 1994 to be moderately higher than fiscal 1993 levels for the same time period.
During the current quarter the Company paid the remaining debt associated with its real estate notes in the amount of $3,139,000. The Company's remaining current and long-term debt of $7,714,000 at December 31, 1993, is associated with guarantees on workmen's compensation and general liability insurance payments.
Deferred Federal income taxes were reduced $4,000,000 during the quarter as required by adoption of Financial Accounting Standards Board Statement No. 109.
There were no other significant changes to the balance sheet or the Company's financial position since September 30, 1993.
PART II. OTHER INFORMATION
HELMERICH & PAYNE, INC. AND SUBSIDIARIES
Item 1. Legal Proceedings
On or about November 11, 1993, approximately 1,000 plaintiffs filed a lawsuit (styled Theresa Arceneaux, et al. v. Natural Gas Odorizing, Inc., Case Number 93-568602, District Court Harris County, Texas, 165th Judicial District) against the Registrant's wholly owned subsidiary Natural Gas Odorizing, Inc. ("NGO") alleging personal injury, wrongful death and property damage arising out of the operation of NGO's plant facility. Among other things, plaintiffs prayed for $500 million dollars in actual damages and $500 billion dollars in punitive damages. On January 18, 1994, the Harris County District Court dismissed this lawsuit without prejudice.
The Registrant is not currently involved in any legal proceedings which, in the judgement of the registrant, subjects it to liability that would be material and is not adequately covered by insurance.
Item 6(a) Exhibits
None
Item 6(b) Reports on Form 8-K
There were no reports on Form 8-K filed for the three months ended December 31, 1993.
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.
HELMERICH & PAYNE, INC.
Date: 1994 DOUGLAS E. FEARS
----------------------- Douglas E. Fears, Chief Financial Officer
Date: 1994 HANS C. HELMERICH
----------------------- Hans C. Helmerich, President
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