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, 1999
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
(State or other jurisdiction of incorporation or organization)
73-0679879
(I.R.S. Employer I.D. Number)
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
Former name, former address and former fiscal year, if changed since last
report:
NONE
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, 1999
Common Stock, .10 par value 49,655,900
|
HELMERICH & PAYNE, INC.
INDEX
PART I. FINANCIAL INFORMATION
Consolidated Condensed Balance Sheets -
December 31, 1999 and September 30, 1999 . . . . . . . . . 3
Consolidated Condensed Statements of Income -
Three Months Ended December 31, 1999 and 1998. . . . . . . 4
Consolidated Condensed Statements of Cash Flows -
Three Months Ended December 31, 1999 and 1998. . . . . . . 5
Consolidated Condensed Statement of Shareholders' Equity
Three Months Ended December 31, 1999 . . . . . . . . . . . 6
Notes to Consolidated Condensed Financial Statements . . . 7 - 10
Revenues and Income by Business Segments . . . . . . . . . 11
Management's Discussion and Analysis of Results of
Operations and Financial Condition . . . . . . . . . . . . 12 - 15
PART II. OTHER INFORMATION . . . . . . . . . . . . . . . . . . 15
Signature Page . . . . . . . . . . . . . . . . . . . . . . 15
|
PART I. FINANCIAL INFORMATION
HELMERICH & PAYNE, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(in thousands)
(Unaudited)
December 31 September 30
1999 1999
--------------- ---------------
ASSETS
Current Assets
Cash and cash equivalents $ 38,544 $ 21,758
Accounts receivable, net 96,719 99,598
Inventories 24,421 25,187
Prepaid expenses and other 18,983 14,081
--------------- ---------------
Total Current Assets 178,667 160,624
--------------- ---------------
Investments 255,558 238,475
Property, Plant and Equipment, net 684,832 691,215
Other Assets 19,051 19,385
--------------- ---------------
Total Assets $ 1,138,108 $ 1,109,699
=============== ===============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable $ 25,778 $ 25,704
Accrued liabilities 43,986 41,200
Notes payable -- 5,000
--------------- ---------------
Total Current Liabilities 69,764 71,904
--------------- ---------------
Noncurrent Liabilities
Long-term notes payable 50,000 50,000
Deferred income taxes 125,272 116,588
Other 23,448 23,098
--------------- ---------------
Total Noncurrent Liabilities 198,720 189,686
--------------- ---------------
SHAREHOLDERS' EQUITY
Common stock, par value $.10 per
share 5,353 5,353
Preferred stock, no shares issued -- --
Additional paid-in capital 61,724 61,411
Retained earnings 756,618 745,956
Unearned compensation (4,376) (4,487)
Accumulated other comprehensive income 85,337 75,182
--------------- ---------------
904,656 883,415
Less treasury stock, at cost 35,032 35,306
--------------- ---------------
Total Shareholders' Equity 869,624 848,109
--------------- ---------------
Total Liabilities and Shareholders' Equity $ 1,138,108 $ 1,109,699
=============== ===============
|
The accompanying notes are an integral part of these statements.
PART I. FINANCIAL INFORMATION
HELMERICH & PAYNE, INC.
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(Unaudited)
(in thousands except per share data)
Three Months Ended
12/31/99 12/31/98
-------- --------
REVENUES:
Sales and other operating revenues $135,194 $142,518
Income from investments 4,159 1,346
-------- --------
139,353 143,864
-------- --------
COST AND EXPENSES:
Operating costs 76,697 86,614
Depreciation, depletion and
amortization 26,138 23,999
Dry holes and abandonments 2,382 1,759
Taxes, other than income taxes 6,512 6,421
General and administrative 2,821 3,590
Interest 821 1,602
-------- --------
115,371 123,985
-------- --------
INCOME BEFORE INCOME TAXES AND
EQUITY IN INCOME OF AFFILIATE 23,982 19,879
INCOME TAX EXPENSE 10,372 7,862
EQUITY IN INCOME OF AFFILIATE,
net of income taxes 510 794
-------- --------
NET INCOME $ 14,120 $ 12,811
======== ========
EARNINGS PER COMMON SHARE:
Basic $ 0.29 $ 0.26
Diluted $ 0.28 $ 0.26
CASH DIVIDENDS (Note 2) $ 0.07 $ 0.07
AVERAGE COMMON SHARES OUTSTANDING:
Basic 49,427 49,182
Diluted 49,764 49,664
|
The accompanying notes are an integral part of these statements.
PART I. FINANCIAL INFORMATION
HELMERICH & PAYNE, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
Three Months Ended
12/31/99 12/31/98
-------- --------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 14,120 $ 12,811
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation, depletion and amortization 26,138 23,999
Dry holes and abandonments 2,382 1,759
Equity in income of affiliate before income taxes (823) (1,281)
Amortization of deferred compensation 377 386
Gain on sale of securities (2,861) (116)
Gain on sale of property, plant & equipment (24) (4,957)
Other, net 300 287
Change in assets and liabilities-
Accounts receivable 2,879 2,502
Inventories 766 (1,581)
Prepaid expenses and other (4,564) (10,852)
Accounts payable 74 (8,749)
Accrued liabilities 2,786 1,770
Deferred income taxes 2,460 675
Other noncurrent liabilities 350 (539)
-------- --------
Total adjustments 30,240 3,303
-------- --------
NET CASH PROVIDED BY OPERATING ACTIVITIES 44,360 16,114
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures, including dry hole costs (22,377) (44,418)
Proceeds from sales of property, plant and equipment 304 6,248
Purchase of investments -- 15
Proceeds from sale of investments 2,833 53
-------- --------
NET CASH USED IN INVESTING ACTIVITIES (19,240) (38,102)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from notes payable -- 58,000
Payments made on notes payable (5,000) (29,300)
Dividends paid (3,476) (3,458)
Proceeds from exercise of stock options 142 160
-------- --------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES (8,334) 25,402
-------- --------
NET INCREASE IN CASH AND CASH EQUIVALENTS 16,786 3,414
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 21,758 24,476
-------- --------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 38,544 $ 27,890
======== ========
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PART I. FINANCIAL INFORMATION
HELMERICH & PAYNE, INC.
CONSOLIDATED CONDENSED STATEMENT OF SHAREHOLDERS' EQUITY
(in thousands - except per share data)
Accumulated
Common Stock Additional Treasury Stock Other
-------------- Paid-In Unearned Retained -------------- Comprehensive
Shares Amount Capital Compensation Earnings Shares Amount Income Total
-----------------------------------------------------------------------------------------------------------------------------------
Balance, September 30, 1999 53,529 $5,353 $61,411 $(4,487) $745,956 3,903 $(35,306) $ 75,182 $848,109
Comprehensive Income:
Net Income 14,120 14,120
Other comprehensive income,
net of tax - Unrealized gains
on available-for-sale
securities 10,155 10,155
--------
Comprehensive income 24,275
--------
Cash dividends ($0.07 per share) (3,476) (3,476)
Exercise of Stock Options 156 (20) 183 339
Stock issued under Restricted Stock
Award Plan 157 (248) (10) 91
Amortization of deferred
compensation 359 18 377
-----------------------------------------------------------------------------------------------
Balance, December 31, 1999 53,529 $5,353 $61,724 $(4,376) $756,618 3,873 $(35,032) $ 85,337 $869,624
===============================================================================================
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PART I. FINANCIAL INFORMATION
HELMERICH & PAYNE, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
1. In the opinion of the Company, the accompanying unaudited condensed 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, 1999, and December 31, 1998, are not necessarily indicative of the results to be expected for the full year. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto in the Company's 1999 Annual Report on Form 10K.
2. The $.07 cash dividend declared in September, 1999, was paid December 1, 1999. On December 1, 1999, a cash dividend of $.07 per share was declared for shareholders of record on February 15, 2000, payable March 1, 2000.
3. Inventories consist of materials and supplies.
4. Income from investments includes $2,861,000 and $116,000 from gains on sales of available-for-sale securities during the first quarter of fiscal years 2000 and 1999, respectively.
5. The following is a summary of available-for-sale securities, which excludes those accounted for under the equity method of accounting. The recorded investment in securities accounted for under the equity method is $41,980,010.
Gross Gross Est.
Unrealized Unrealized Fair
Cost Gains Losses Value
-----------------------------------------
(in thousands)
Equity Securities 12/31/99 $ 75,938 $140,221 $ 2,581 213,578
Equity Securities 09/30/99 $ 76,057 $122,369 $ 1,108 197,318
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6. Comprehensive Income - The components of comprehensive income, net of related tax, for the three month periods ended December 31, 1999, and 1998, are as follows (in thousands):
Fiscal Fiscal
2000 1999
-------- --------
Net Income $ 14,120 $ 12,811
Unrealized gain (loss) on securities 10,155 (1,511)
-------- --------
Comprehensive income $ 24,275 $ 11,300
======== ========
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The only component of accumulated other comprehensive income is unrealized gains on available-for-sale securities.
PART I. FINANCIAL INFORMATION
HELMERICH & PAYNE, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Continued)
7. At December 31, 1999, the Company had committed bank lines of credit totaling $120 million; $70 million expires in May 2000 and $50 million expires in October 2003. Additionally, the Company had uncommitted credit facilities totaling $35 million. The Company had $50 million in outstanding borrowings under its committed bank line of credit that expires in October 2003. The Company also has outstanding letters of credit totaling $8.5 million against these lines at December 31, 1999. The average rate on the borrowings at December 31, 1999, was 7.0 percent. However, concurrent with a $50 million borrowing under one of its committed facilities, the Company entered into a 5-year, $50 million interest rate swap, which closely correlates with the terms and maturity of the facility. The swap effectively fixes the interest rate on this facility at 5.38% for the entire 5 year term of the note.
8. Earnings per Share - Basic earnings per share is based on the weighted-average number of common shares outstanding during the period. Diluted earnings per share include the dilutive effect of stock options and restricted stock.
A reconciliation of the weighted-average common shares outstanding on a basic and diluted basis is as follows:
Three Months Ended
(in thousands) 12-31-99 12-31-98
----------------------------------------------------------------------
Basic weighted-average shares 49,427 49,182
Effect of dilutive shares:
Stock options 335 472
Restricted stock 2 10
--------------------
337 482
--------------------
Diluted weighted-average shares 49,764 49,664
====================
|
Restricted stock of 190,000 shares at a weighted-average price of $37.02 and options to purchase 1,686,000 shares of common stock at a weighted-average price of $28.92 were outstanding at December 31, 1999, but were not included in the computation of diluted earnings per common share. Inclusion of these shares would be antidilutive, as the exercise prices of the options exceed the average market price of the common shares.
9. New Accounting Pronouncements - The Financial Accounting Standards Board has issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities", (SFAS 133). SFAS 133 is effective for fiscal years beginning after June 15, 2000. This standard requires that all derivatives be recognized as assets or liabilities in the balance sheet and that those instruments be measured at fair value. The Company has not yet determined what the effect of SFAS 133 will be on the earnings and the financial position of the Company.
PART I. FINANCIAL INFORMATION
HELMERICH & PAYNE, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Continued)
10. Restricted Stock Awards - In the first quarter of fiscal year 2000, the Company issued to certain employees 10,000 shares of treasury stock as restricted stock awards under the 1996 Stock Incentive Plan. The Company recognized unearned compensation of $248,000, which was the fair market value of the stock at the time of issuance. Treasury stock was reduced by the book value of the shares issued ($90,451) with the difference recognized as an increase in paid-in-capital. The unearned compensation is being amortized over a five-year period as compensation expense.
11. Segment Information - The Company evaluates performance of its segments based upon operating profit or loss from operations before income taxes, which includes revenues from external and internal customers; operating costs; depreciation, depletion and amortization; dry holes and abandonments and taxes other than income taxes. Intersegment sales are accounted for in the same manner as sales to unaffiliated customers. Other includes investments in available-for-sale securities, equity owned investments, as well as corporate operations.
Summarized financial information of the Company's reportable segments for the quarters ended December 31, 1999 and 1998 is shown in the following table:
External Inter- Total Operating
(in thousands) Sales Segment Sales Profit
------------------------------------------------------------------------------------
December 31, 1999
CONTRACT DRILLING
Domestic $ 50,219 $ 509 $ 50,728 $ 6,511
International 34,201 -- 34,201 2,510
---------- ---------- ---------- ----------
84,420 509 84,929 9,021
---------- ---------- ---------- ----------
OIL & GAS OPERATIONS
Exploration & Prod. 30,118 -- 30,118 12,694
Natural Gas Mktg. 18,315 -- 18,315 950
---------- ---------- ---------- ----------
48,433 -- 48,433 13,644
---------- ---------- ---------- ----------
REAL ESTATE 2,242 388 2,630 1,385
OTHER 4,258 -- 4,258 --
ELIMINATIONS -- (897) (897) --
---------- ---------- ---------- ----------
TOTAL $ 139,353 $ -- $ 139,353 $ 24,050
========== ========== ========== ==========
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PART I. FINANCIAL INFORMATION
HELMERICH & PAYNE, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Continued)
External Inter- Total Operating
(in thousands) Sales Segment Sales Profit
-----------------------------------------------------------------------------------
December 31, 1998
CONTRACT DRILLING
Domestic $ 45,985 $ 1,392 $ 47,377 $ 7,664
International 54,685 -- 54,685 9,941
---------------------------------------------------
100,670 1,392 102,062 17,605
---------------------------------------------------
OIL & GAS OPERATIONS
Exploration & Prod 26,428 -- 26,428 4,505
Natural Gas Mktg 13,175 -- 13,175 941
---------------------------------------------------
39,603 -- 39,603 5,446
---------------------------------------------------
REAL ESTATE 2,193 385 2,578 1,391
OTHER 1,398 -- 1,398 --
ELIMINATIONS -- (1,777) (1,777) --
---------------------------------------------------
TOTAL $ 143,864 $ -- $ 143,864 $ 24,442
===================================================
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The following table reconciles segment operating profit per the table above to income before income taxes and equity in income of affiliate as reported on the Consolidated Condensed Statements of Income (in thousands).
--------------------------------------------------------------------
Quarters Ended December 31, 1999 1998
--------------------------------------------------------------------
Segment operating profit $ 24,050 $ 24,442
Unallocated amounts:
Income from investments 4,159 1,346
General corporate expense (2,821) (3,590)
Interest expense (821) (1,602)
Corporate depreciation (405) (361)
Other corporate expense (180) (356)
-------------------------
Total unallocated amounts (68) (4,563)
-------------------------
Income before income taxes and equity in
Income of affiliate $ 23,982 $ 19,879
=========================
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The following table presents revenues from external customers by country based on the location of service provided (in thousands).
--------------------------------------------------------------------
Quarters Ended December 31, 1999 1998
--------------------------------------------------------------------
Revenues
United States $105,152 $ 89,179
Venezuela 9,047 22,318
Colombia 12,244 17,131
Other Foreign 12,910 15,236
------------------------
Total $139,353 $143,864
========================
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PART I. FINANCIAL INFORMATION
HELMERICH & PAYNE, INC.
REVENUES AND INCOME BY BUSINESS SEGMENTS
(UNAUDITED)
(in thousands)
Three Months Ended
12-31-99 12-31-98
--------------------
SALES AND OTHER REVENUES:
Contract Drilling-Domestic $ 50,219 $ 45,985
Contract Drilling-International 34,201 54,685
-------- --------
Total Contract Drilling 84,420 100,670
-------- --------
Exploration and Production 30,118 26,428
Natural Gas Marketing 18,315 13,175
-------- --------
Total Oil & Gas Operations 48,433 39,603
-------- --------
Real Estate 2,242 2,193
Other 4,258 1,398
-------- --------
TOTAL REVENUES $139,353 $143,864
======== ========
OPERATING PROFIT:
Contract Drilling-Domestic $ 6,511 $ 7,664
Contract Drilling-International 2,510 9,941
-------- --------
Total Contract Drilling 9,021 17,605
-------- --------
Exploration and Production 12,694 4,505
Natural Gas Marketing 950 941
-------- --------
Total Oil & Gas Operations 13,644 5,446
-------- --------
Real Estate 1,385 1,391
-------- --------
Total Operating Profit 24,050 24,442
-------- --------
OTHER (68) (4,563)
--------- --------
INCOME BEFORE INCOME TAXES AND
EQUITY IN INCOME OF AFFILIATE $ 23,982 $ 19,879
======== ========
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PART I. FINANCIAL INFORMATION
HELMERICH & PAYNE, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION
DECEMBER 31, 1999
RISK FACTORS AND FORWARD-LOOKING STATEMENTS
The following discussion should be read in conjunction with the consolidated condensed financial statements and related notes included elsewhere herein and the consolidated financial statements and notes thereto included in the Company's 1999 Annual Report on Form 10-K. The Company's future operating results may be affected by various trends and factors, which are beyond the Company's control. These include, among other factors, fluctuations in natural gas and crude oil prices, expiration or termination of drilling contracts, currency exchange losses, changes in general economic conditions, rapid or unexpected changes in technologies and uncertain business conditions that affect the Company's businesses. Accordingly, past results and trends should not be used by investors to anticipate future results or trends.
With the exception of historical information, the matters discussed in Management's Discussion & Analysis of Results of Operations and Financial Condition includes forward-looking statements. These forward-looking statements are based on various assumptions. The Company cautions that, while it believes such assumptions to be reasonable and makes them in good faith, assumed facts almost always vary from actual results. The differences between assumed facts and actual results can be material. The Company is including this cautionary statement to take advantage of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995 for any forward-looking statements made by, or on behalf of, the Company. The factors identified in this cautionary statement are important factors (but not necessarily all important factors) that could cause actual results to differ materially from those expressed in any forward-looking statement made by, or on behalf of, the Company.
RESULTS OF OPERATIONS
First Quarter 2000 vs First Quarter 1999
The Company reported net income of $14,120,000 ($0.28 per share) from revenues of $139,353,000 for the first quarter ended December 31, 1999, compared with net income of $12,811,000 ($0.26 per share) from revenues of $143,864,000 for the first quarter of the prior fiscal year. Net income in the first quarter of fiscal 2000 included $1,754,000 ($0.04 per share) from the sale of investment securities versus $71,000 in the same period of last year.
EXPLORATION and PRODUCTION
Exploration and Production reported operating profit of $12,694,000 for the first quarter compared with $4,505,000 for the same period of fiscal 1999. Oil & gas revenues increased to $30.1 million from $26.4 million.
Natural gas revenues increased $6.5 million, or 33 percent, due primarily to higher gas prices (28 percent) and natural gas volumes (4 percent). Oil revenues increased $1.9 million, or 95 percent, as oil prices more than doubled from the first quarter of fiscal 1999. Natural gas prices averaged $2.28 per mcf and $1.78 per mcf for the first quarter of fiscal 2000 and 1999, respectively. Natural gas volumes averaged 124.5 mmcf/d and 120.0 mmcf/d, respectively. Crude oil prices averaged $23.26 per bbl and $11.26 per bbl for the first quarter of fiscal 2000 and 1999, respectively. Crude oil volumes averaged 1,793 bbls/d and 1,821 bbls/d, respectively.
PART I. FINANCIAL INFORMATION
HELMERICH & PAYNE, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION
DECEMBER 31, 1999
(continued)
Included in revenues in the first quarter of fiscal 1999 were gains from the sale of producing properties of approximately $4.6 million. Segment operating profit was increased by a reduction in geophysical expense of $4.9 million.
As previously announced, the Company has completed, or was in the process of completing during the first quarter, 28 out of 29 wells in which the Company has participated. It is estimated that the aggregate net initial production from those wells would total approximately 25 mmcfd and 500 barrels of oil per day. However, because of normal production declines of both existing and new production, and the timing of the new completions, the affect of the new production will be spread over several months. Additional exploratory and developmental drilling is planned in these same areas of interest, as well as, in other prospects currently being developed.
DOMESTIC DRILLING
Domestic Drilling's operating profit decreased $1.2 million, due primarily to lower margins and rig utilization in land operations, a $1.5 million increase in depreciation, or 21 percent, offset by increased activity in offshore operations. Land rig utilization was 75% for the quarter compared with 85% in the first quarter of fiscal 1999, but was improved over rates of 53% and 65% for the third and fourth quarters of fiscal 1999. Average dayrates for the current quarter also improved approximately 4% over the fourth quarter of fiscal 1999. Domestic offshore platform rig activity was at 100% for the first quarter of fiscal 2000 and 1999.
INTERNATIONAL DRILLING
International Drilling's operating profit decreased to $2.5 million from $9.9 million. Revenues decreased to $34.2 million from $54.7 million. The decrease in operating profit is due primarily to lower rig utilization in Venezuela, Colombia and Australia and lower dayrates in Venezuela and Colombia. International rig utilization averaged 47% during the first quarter and 65% during last year's first quarter. Some improvement is anticipated in Ecuador, Argentina and Bolivia for the remainder of the fiscal year, but low activity may continue in Venezuela where 19 of the Company's 40 rigs are located and rig utilization has averaged 28% for the past three quarters.
OTHER
Revenues increased approximately $2.8 million due to an increase in gains from the sale of available-for-sale securities. Expenses were reduced, with interest expense decreasing to $.8 million from $1.6 million because of a substantial reduction in debt compared to the first quarter of fiscal 1999 and corporate general and administrative expense decreasing by 21% to $2.8 million, due primarily to lower airplane expense and advertising costs.
PART I. FINANCIAL INFORMATION
HELMERICH & PAYNE, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION
DECEMBER 31, 1999
(continued)
The Company's effective income tax rate increased to 43% for the quarter compared to 39.5% for the first quarter of last year. The increase is due primarily to a larger proportionate income in higher-tax-rate jurisdictions in the Company's international drilling operations. The effective tax rate of 43% for fiscal 2000 could increase slightly, if projected operating results are not achieved.
Liquidity and Capital Resources
Net cash provided by operating activities was $44,360,000 for the first quarter of fiscal 2000, compared with $16,114,000 for the same period in 1999. Capital expenditures were $22,377,000 and $44,418,000 for the first quarter of fiscal 2000 and 1999, respectively.
The Company anticipates capital expenditures to be approximately $150 million for fiscal 2000, which is less than projected internally generated cash flows. During the quarter, the Company reduced borrowings by $5,000,000. The Company's indebtedness totaled $50,000,000 as of December 31, 1999, as described in note 7 to the Consolidated Condensed Financial Statements.
The Company's Board of Directors, at its December 1, 1999, quarterly Board meeting, approved an extension of the Company's previously approved stock repurchase program to allow the repurchase of up to an additional 1,000,000 shares of the Company's common stock. The original program authorized the repurchase of up to 2,000,000 shares or approximately four percent of its common stock. The Company repurchased 999,100 shares under the original program. The Company intends to periodically purchase additional shares in the open market or in private transactions. The repurchased shares will be held in treasury and used for general corporate purposes including use in the Company's benefit plans.
There were no other significant changes in the Company's financial position since September 30, 1999.
YEAR 2000 COMPLIANCE
During the past year the Company implemented various initiatives in an attempt to ensure that its hardware, software and equipment function properly with respect to dates before and after January 1, 2000 (the "Y2K Project"). The Company implemented the Y2K Project in four phases: identification, assessment, remediation and testing. The Company completed identification and assessment of all major systems that it believed could be affected by the Year 2000 issue. In response to the identification and assessment, the Company completed the remediation phase for all major Information Technology and Non-Information Technology systems. The Company completed system testing and implementation of all Y2K Project initiatives before the end of 1999.
PART I. FINANCIAL INFORMATION
HELMERICH & PAYNE, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION
DECEMBER 31, 1999
Additionally, the Company canvassed important raw material and service suppliers for Year 2000 compliance. The search did not reveal any irreplaceable suppliers that would materially impact our results of operations, liquidity or capital resources. The total cost of our Y2K project was approximately $800,000, which was funded through the Company's general funds.
To date, the Company has not experienced any significant Year 2000 related system failures nor, to our knowledge, have any of our irreplaceable suppliers. The Company intends to continue to monitor and test its systems for ongoing Year 2000 compliance; however, we cannot guarantee that our computer systems or the systems of other companies upon which our operations rely will not be adversely affected by problems associated with the Year 2000 issue.
PART II. OTHER INFORMATION
HELMERICH & PAYNE, INC.
Item 6(b) Reports on Form 8-K
There were no reports on Form 8-K for the three months ended December 31, 1999.
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 14, 2000 /s/ DOUGLAS E. FEARS
----------------------- -----------------------------------------
Douglas E. Fears, Chief Financial Officer
Date: FEBRUARY 14, 2000 /s/ HANS C. HELMERICH
----------------------- -----------------------------------------
Hans C. Helmerich, President
|
INDEX TO EXHIBITS
EXHIBIT NO. DESCRIPTION ----------- ----------- 27 Financial Data Schedule |
| ARTICLE 5 |
| MULTIPLIER: 1,000 |
| PERIOD TYPE | 3 MOS |
| FISCAL YEAR END | SEP 30 2000 |
| PERIOD START | OCT 01 1999 |
| PERIOD END | DEC 31 1999 |
| CASH | 38,544 |
| SECURITIES | 255,558 |
| RECEIVABLES | 99,525 |
| ALLOWANCES | 2,806 |
| INVENTORY | 24,421 |
| CURRENT ASSETS | 178,667 |
| PP&E | 1,466,985 |
| DEPRECIATION | 782,153 |
| TOTAL ASSETS | 1,138,108 |
| CURRENT LIABILITIES | 69,764 |
| BONDS | 0 |
| PREFERRED MANDATORY | 0 |
| PREFERRED | 0 |
| COMMON | 5,353 |
| OTHER SE | 864,271 |
| TOTAL LIABILITY AND EQUITY | 1,138,108 |
| SALES | 135,194 |
| TOTAL REVENUES | 139,353 |
| CGS | 108,058 |
| TOTAL COSTS | 108,058 |
| OTHER EXPENSES | 3,671 |
| LOSS PROVISION | 0 |
| INTEREST EXPENSE | 821 |
| INCOME PRETAX | 23,982 |
| INCOME TAX | 10,372 |
| INCOME CONTINUING | 14,120 |
| DISCONTINUED | 0 |
| EXTRAORDINARY | 0 |
| CHANGES | 0 |
| NET INCOME | 14,120 |
| EPS BASIC | .29 |
| EPS DILUTED | .28 |