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, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13
OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from _____________ to ______________
Commission File Number: 1-4221
HELMERICH & PAYNE, INC.
(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)
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Registrant's telephone number, including area code: (918) 742-5531
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
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CLASS OUTSTANDING AT DECEMBER 31, 1995
- ---------------------------- --------------------------------
Common Stock, .10 par value 24,764,620
AUTHORIZED AT DECEMBER 31, 1995
--------------------------------
26,764,476
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HELMERICH & PAYNE, INC.
INDEX
PART I. FINANCIAL INFORMATION PAGE NO.
Consolidated Condensed Balance Sheets -
December 31, 1995 and September 30, 1995 . . . . . . . . . . 3
Consolidated Condensed Statements of Income -
Three Months Ended December 31, 1995 and 1994. . . . . . . . 4
Consolidated Condensed Statements of Cash Flows -
Three Months Ended December 31, 1995 and 1994. . . . . . . . 5
Consolidated Condensed Statement of Shareholders' Equity -
Three Months Ended December 31, 1995 . . . . . . . . . . . . 6
Notes to Consolidated Condensed Financial Statements . . . . 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
Signature Page . . . . . . . . . . . . . . . . . . . . . . . 11
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PART I FINANCIAL INFORMATION
HELMERICH & PAYNE, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(in thousands)
(Unaudited)
December 31 September 30
1995 1995
----------- ------------
ASSETS
- ------
Current Assets
Cash and cash equivalents $ 8,606 $ 19,661
Short-term investments 8,989 8,989
Accounts receivable, net 66,400 59,314
Inventories 21,787 21,313
Prepaid expenses and other 6,350 5,717
----------- ------------
Total Current Assets 112,132 114,994
----------- ------------
Investments 157,502 156,908
Property, Plant and Equipment, Net 448,801 423,762
Other Assets 14,433 14,501
----------- ------------
Total Assets $ 732,868 $ 710,165
=========== ============
LIABILITIES AND SHAREHOLDERS' EQUITY
- ------------------------------------
Current Liabilities
Accounts payable $ 24,983 $ 26,382
Accrued liabilities 24,663 21,529
Notes Payable 23,700 21,700
----------- ------------
Total Current Liabilities 73,346 69,611
----------- ------------
Noncurrent Liabilities
Deferred income taxes 69,598 66,047
Other 13,738 12,072
----------- ------------
Total Noncurrent Liabilities 83,336 78,119
----------- ------------
Shareholders' Equity
Common stock, par value $.10 per share 2,677 2,677
Preferred stock, no shares issued - -
Additional paid-in capital 48,436 48,436
Net unrealized holding gains 43,332 38,004
Retained earnings 504,115 495,692
----------- ------------
598,560 584,809
Less treasury stock, at cost 22,374 22,374
----------- ------------
Total Shareholders' Equity 576,186 562,435
----------- ------------
$ 732,868 $ 710,165
=========== ============
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See accompanying notes to financial statements.
HELMERICH & PAYNE, INC.
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(Unaudited)
(in thousands, except per share data)
Three Months Ended
December 31
1995 1994
-------------- --------------
REVENUES:
Sales and other operating revenues $ 93,418 $ 78,555
Income from investments 1,167 1,389
------------ ------------
94,585 79,944
------------ ------------
COST AND EXPENSES:
Operating costs 56,377 51,248
Depreciation, depletion and amortization 13,737 13,630
Dry holes and abandonments 928 2,179
Taxes, other than income taxes 3,833 3,978
General and administrative 2,348 2,094
Interest 79 99
------------ ------------
77,302 73,228
------------ ------------
INCOME BEFORE INCOME TAXES AND
EQUITY IN INCOME OF AFFILIATE 17,283 6,716
INCOME TAX EXPENSE 6,384 2,481
EQUITY IN INCOME OF AFFILIATE,
net of income taxes 194 181
------------ ------------
NET INCOME $ 11,093 $ 4,416
============ ============
NET INCOME PER AVERAGE COMMON SHARE $ .45 $ .18
============ ============
CASH DIVIDENDS (Note 2) $ .125 $ .125
AVERAGE COMMON SHARES OUTSTANDING 24,603 24,479
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See accompanying notes to financial statements.
HELMERICH & PAYNE, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
Three Months Ended
December 31
1995 1994
----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
- -------------------------------------
Net Income $ 11,093 $ 4,416
Adjustments to reconcile net income to net
cash provided by operating activities-
Depreciation, depletion and amortization 13,737 13,630
Dry holes and abandonments 928 2,179
Equity in income of affiliate before
income taxes ( 313) ( 291)
Amortization of deferred compensation 425 458
Other, net 448 ( 332)
Change in assets and liabilities-
Increase in accounts receivable ( 7,086) ( 26)
Increase in inventories ( 474) ( 295)
Increase in prepaid exps. & other ( 565) ( 2,087)
Increase(decrease) in accounts payable ( 336) 3,601
Increase(decrease) in accrued liabilities 6,088 ( 2,127)
Increase in deferred income taxes 286 393
Increase in other noncurrent liabilities 1,666 1,115
------------ ------------
Total Adjustments 14,804 16,218
------------ ------------
Net cash provided by operating activities 25,897 20,634
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
- -------------------------------------
Capital expenditures, including dry hole costs ( 35,929) ( 27,404)
Proceeds from sales of property, plant
and equipment 72 644
Purchase of investments - ( 4,978)
------------ ------------
Net cash used in investing activities ( 35,857) ( 31,738)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
- -------------------------------------
Proceeds from notes payable 22,000 -
Payments made on notes payable ( 20,000) -
Dividends paid ( 3,095) ( 3,084)
Proceeds from exercise of stock options - 175
------------ ------------
Net cash used in financing activities ( 1,095) ( 2,909)
------------ ------------
NET DECREASE IN CASH AND CASH EQUIVALENTS ( 11,055) ( 14,013)
CASH AND CASH EQUIVALENTS, beginning of period 19,661 29,447
------------ ------------
CASH AND CASH EQUIVALENTS, end of period $ 8,606 $ 15,434
============ ============
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See accompanying notes to financial statements.
HELMERICH & PAYNE, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENT OF
SHAREHOLDERS' EQUITY
(in thousands)
Net
Common Stock Unrlzed Treasury Stock
---------------- Paid-In Holding Retained --------------
Shares Amount Capital Gains Earnings Shares Amount
------ ------ ------- ------- -------- ------ ------
Balance, September 30, 1995 26,764 $2,677 $48,436 $38,004 $495,692 2,000 $(22,374)
Change in net unrealized holding
gains, net of income taxes of
$3,265 - - - 5,328 - - -
Cash dividends ($0.125 per share) - - - - (3,095) - -
Amortization of deferred
compensation - - - - 425 - -
Net income - - - - 11,093 - -
-------------------------------------------------------------------------
Balance, December 31, 1995 26,764 $2,677 $48,436 $43,332 $504,115 2,000 $(22,374)
=========================================================================
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See accompanying notes to financial statements.
HELMERICH & PAYNE, INC.
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 results of the periods presented. The results of operations for the three months ended December 31, 1995, and December 31, 1994, are not necessarily indicative of the results to be expected for the full year.
2. The $.125 cash dividend declared in September, 1995 was paid December 1, 1995. On December 6, 1995, a cash dividend of $.125 per share was declared for shareholders of record on February 15, 1996, payable March 1, 1996.
3. Inventories consisted of the following (in thousands of dollars):
12-31-95 09-30-95
-------- --------
Raw Materials $ 209 $ 100
Works in Progress 304 315
Finished Goods 1,703 1,435
Materials & Supplies 19,571 19,463
-------- --------
$ 21,787 $ 21,313
======== ========
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4. Income from investments does not include any gains or losses on sales of available-for-sale securities during the first quarter of 1996 or 1995.
5. In May, 1993 the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 115, "Accounting for Certain Investments in Debt and Equity Securities." The Company adopted the provisions of the new standard for investments held as of or acquired after October 1, 1994.
Gross Gross Est.
Unrealized Unrealized Fair
Cost Gains Losses Value
(in thousands)
---------------------------------------
Equity Securities 12/31/95 $64,804 $70,184 $294 $134,694
Equity Securities 09/30/95 $64,804 $61,455 $158 $126,101
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During the quarter ended December 31, 1995 the net unrealized holding gains of the Company's securities classified as available-for-sale increased $5,328,000 (net of $3,265,000 in deferred income taxes).
6. The Company maintains a line of credit agreement with certain banks which provides for maximum borrowing of $75,000,000 at adjustable interest rates. Under the agreement, $75,000,000 may be borrowed through May 1996, and $45,000,000 may be borrowed through May 1998. As of December 31, 1995, the Company had borrowed $23,700,000 at a weighted average interest rate of 6.14% leaving an unused portion of $51,300,000. Under the line of credit agreement, the Company must meet certain requirements regarding levels of debt, net worth and earnings.
HELMERICH & PAYNE, INC.
REVENUES AND INCOME BY BUSINESS SEGMENTS
(in thousands)
FY 1996 FY 1995
1st Qtr 1st Qtr
------- -------
SALES AND OTHER REVENUES:
Contract Drilling-Domestic $23,020 $25,488
Contract Drilling-Internat. 33,935 22,150
------- -------
Total Contract Drilling
Division 56,955 47,638
------- -------
Exploration and Production 15,460 13,471
Natural Gas Marketing 12,786 9,479
------- -------
Total Oil & Gas Division 28,246 22,950
------- -------
Chemical Division 6,158 5,951
Real Estate Division 2,008 1,846
Investment and Other 1,218 1,559
------- -------
Total Revenues $94,585 $79,944
======= =======
OPERATING PROFIT(LOSS):
Contract Drilling-Domestic $ 1,915 $ 1,125
Contract Drilling-Internat. 8,309 3,355
------- -------
Total Contract Drilling
Division 10,224 4,480
------- -------
Exploration and Production 4,075 ( 538)
Natural Gas Marketing 757 287
------- -------
Total Oil & Gas Division 4,832 ( 251)
------- -------
Chemical Division 2,739 2,636
Real Estate Division 1,221 1,121
------- -------
Total Operating Profit 19,016 7,986
------- -------
OTHER (1,733) (1,270)
------- -------
INCOME BEFORE INCOME TAXES AND
EQUITY IN INCOME OF AFFILIATE $17,283 $ 6,716
======= =======
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See accompanying notes to financial statements.
HELMERICH & PAYNE, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
DECEMBER 31, 1995
Results of Operations
The Company reported net income of $11,093,000 ($0.45 per share) on revenues of $94,585,000 for the first quarter of fiscal year 1996, compared with net income of $4,416,000 ($0.18 per share) on revenues of $79,944,000 during the first quarter of fiscal 1995.
The Contract Drilling Division reported an operating profit of $10,224,000 for the first quarter of 1996, compared with $4,480,000 for the same period in fiscal 1995. Operating profit from international drilling operations increased 148% to $8,309,000 for the first quarter of fiscal 1996, compared with $3,355,000 for the first quarter of 1995. Additional rigs sent to Colombia (3) and Venezuela (4) during 1995 was the primary reason for the significant increase. Utilization for all international rigs was 90% during the first quarter, compared with 84% during the first quarter of fiscal 1995. Utilization is expected to remain strong for the remainder of the year in Venezuela and Colombia, but softer in other South American countries.
Exploration and Production reported an operating profit of $4,075,000 for the first quarter of fiscal 1996, compared with an operating loss of $538,000 in the first quarter of fiscal 1995. The improvement in operating profit from the prior year was primarily the result of higher natural gas prices, increased production volumes and lower operating expenses. The average natural gas price increased from $1.37 per mcf in the first quarter of fiscal 1995 to $1.49 per mcf in the first quarter of fiscal 1996. Production volumes increased from 78.2 Mmcf/day during the first quarter of 1995 to 89.3 Mmcf/day in the same period of 1996. Reductions in depreciation and depletion, dry hole costs, and geophysical expense totaled $2,756,000. A significant increase in the Company's exploration activity is expected to occur in the second and third quarters, providing increased exposure to dry hole costs.
Both the Chemical Division and the Real Estate Division had slightly higher operating profits than a year ago on increased revenues.
In August 1994, the Company entered into a joint venture with its equity affiliate, Atwood Oceanics, Inc. to construct a new generation offshore platform rig for work offshore Australia. The rig has been completed and is ready for shipment to Australia. The rig was originally scheduled to commence operating offshore Australia in early 1996, however, due to project delays in Australia unrelated to the rig construction activities, the shipment of the rig to Australia has been delayed until early 1997. Under terms of the contract, revenues from a holding rate will commence on January 1, 1996, and will be reflected in the international contract drilling segment.
Liquidity and Capital Resources
Net cash provided by operating activities was $25,897,000 for the first three months of fiscal 1996, compared with $20,634,000 for the same period in 1995. Capital expenditures for the first quarter of fiscal 1996 were $35,929,000, compared with $27,404,000 for the first quarter of fiscal 1995.
It is anticipated for fiscal 1996 that capital expenditures will exceed internally generated cash flows and that the Company will have to borrow under its line of credit agreement or sell a portion of its investment portfolio. In the current quarter the Company increased the amount borrowed under its line of credit agreement by $2,000,000.
There were no other significant changes in the Company's financial position since September 30, 1995.
PART II. OTHER INFORMATION
HELMERICH & PAYNE, INC.
Item 1. Legal Proceedings
On November 15, 1995, a lawsuit captioned William G. Caldwell, et al. vs. Helmerich & Payne, Inc. was filed in the District Court of Washita County, Oklahoma, in which five (5) named plaintiffs, on behalf of themselves and other unnamed plaintiffs, are demanding their royalty share of a gas contract settlement. The plaintiffs are attempting to certify a class which would contain certain of the Company's lessors and certain other mineral owners who own an interest in wells covered by such gas contract settlement.
Item 6(b) Reports on Form 8-K
There were no reports on Form 8-K filed for the three months ended December 31, 1995.
HELMERICH & PAYNE, INC.
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.
Date: FEBRUARY 13, 1996 /S/ DOUGLAS E. FEARS
-----------------------------------------
Douglas E. Fears, Chief Financial Officer
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Date: FEBRUARY 13, 1996 /S/ HANS C. HELMERICH
-----------------------------------------
Hans C. Helmerich, President
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EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
27 Financial Data Schedule
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| ARTICLE 5 |
| MULTIPLIER: 1,000 |
| PERIOD TYPE | 3 MOS |
| FISCAL YEAR END | SEP 30 1996 |
| PERIOD START | OCT 01 1995 |
| PERIOD END | DEC 31 1995 |
| CASH | 8,606 |
| SECURITIES | 157,502 |
| RECEIVABLES | 66,862 |
| ALLOWANCES | 462 |
| INVENTORY | 21,787 |
| CURRENT ASSETS | 112,132 |
| PP&E | 1,045,919 |
| DEPRECIATION | 597,118 |
| TOTAL ASSETS | 732,868 |
| CURRENT LIABILITIES | 73,346 |
| BONDS | 0 |
| COMMON | 2,677 |
| PREFERRED MANDATORY | 0 |
| PREFERRED | 0 |
| OTHER SE | 573,509 |
| TOTAL LIABILITY AND EQUITY | 732,868 |
| SALES | 93,418 |
| TOTAL REVENUES | 94,585 |
| CGS | 74,875 |
| TOTAL COSTS | 74,875 |
| OTHER EXPENSES | 2,348 |
| LOSS PROVISION | 0 |
| INTEREST EXPENSE | 79 |
| INCOME PRETAX | 17,283 |
| INCOME TAX | 6,384 |
| INCOME CONTINUING | 11,093 |
| DISCONTINUED | 0 |
| EXTRAORDINARY | 0 |
| CHANGES | 0 |
| NET INCOME | 11,093 |
| EPS PRIMARY | .45 |
| EPS DILUTED | .45 |