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: MARCH 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
--- ---
CLASS OUTSTANDING AT MARCH 31, 1995
- ---------------------------- -----------------------------
Common Stock, .10 par value 24,718,020
AUTHORIZED AT MARCH 31, 1995
----------------------------
26,764,476
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HELMERICH & PAYNE, INC. AND SUBSIDIARIES
INDEX
PART I. FINANCIAL INFORMATION PAGE NO.
Consolidated Condensed Balance Sheets -
March 31, 1995 and September 30, 1994. . . . . . . . . . . . . 3
Consolidated Condensed Statements of Income -
Three Months and Six Months Ended
March 31, 1995 and 1994. . . . . . . . . . . . . . . . . . . . 4
Consolidated Condensed Statements of Cash Flows -
Six Months Ended March 31, 1995 and 1994 . . . . . . . . . . . 5
Notes to Consolidated Condensed Financial Statements . . . . . 6
Revenues and Income by Business Segments . . . . . . . . . . . 7
Management's Discussion and Analysis of Financial
Condition and Results of Operations. . . . . . . . . . . . . . 8
PART II. OTHER INFORMATION . . . . . . . . . . . . . . . . . . . . 9
Signature page . . . . . . . . . . . . . . . . . . . . . . . . 10
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PART I FINANCIAL INFORMATION
HELMERICH & PAYNE, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(in thousands)
March 31 September 30
1995 1994
----------- ------------
ASSETS
- ------
Current Assets
Cash and cash equivalents $ 16,621 $ 29,447
Short-term investments 8,996 8,997
Accounts receivable, net 51,872 59,897
Inventories 21,515 20,995
Prepaid expenses and other 4,580 3,603
----------- ------------
Total Current Assets 103,584 122,939
Investments 150,159 87,414
Property, Plant and Equipment, Net 422,760 400,651
Other Assets 13,790 13,823
----------- ------------
Total Assets $ 690,293 $ 624,827
=========== ============
LIABILITIES AND SHAREHOLDERS' EQUITY
- ------------------------------------
Current Liabilities
Accounts payable $ 27,799 $ 22,645
Accrued liabilities 17,539 24,056
----------- ------------
Total Current Liabilities 45,338 46,701
----------- ------------
Noncurrent Liabilities
Deferred income taxes 67,893 44,462
Other 11,773 9,330
----------- ------------
Total Noncurrent Liabilities 79,666 53,792
----------- ------------
Shareholders' Equity
Common stock, par value $.10 per share 2,677 2,677
Preferred stock, no shares issued - -
Additional paid-in capital 48,003 48,196
Net unrealized holding gains 35,836 -
Retained earnings 501,507 496,280
----------- ------------
588,023 547,153
Less treasury stock, at cost 22,734 22,819
----------- ------------
Total Shareholders' Equity 565,289 524,334
----------- ------------
$ 690,293 $ 624,827
=========== ============
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See accompanying notes to financial statements.
HELMERICH & PAYNE, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(Unaudited)
(in thousands, except per share data)
Quarter Ended Six Months Ended
3/31/95 3/31/94 3/31/95 3/31/94
---------------------- ----------------------
REVENUES
Sales and other operating revenues $ 76,109 $ 86,359 $154,664 $167,003
Income from investments 3,192 1,524 4,581 3,066
-------- -------- -------- --------
79,301 87,883 159,245 170,069
-------- -------- -------- --------
COSTS AND EXPENSES
Operating costs 48,092 56,439 99,340 106,950
Depreciation, depletion and
amortization 13,184 13,444 26,814 25,262
Dry holes and abandonments 2,316 1,306 4,495 2,616
Taxes, other than income taxes 4,159 3,843 8,137 8,133
General and administrative 2,691 2,241 4,785 4,923
Interest 44 41 143 223
-------- -------- -------- --------
70,486 77,314 143,714 148,107
-------- -------- -------- --------
INCOME BEFORE INCOME TAXES, EQUITY
IN INCOME OF AFFILIATE AND
CUMULATIVE EFFECT OF CHANGE IN
ACCOUNTING PRINCIPLE 8,815 10,569 15,531 21,962
INCOME TAX EXPENSE 3,340 4,610 5,821 8,901
EQUITY IN INCOME OF AFFILIATE,
net of income taxes 345 196 526 347
-------- -------- -------- ---------
INCOME BEFORE CUMULATIVE EFFECT OF
CHANGE IN ACCOUNTING PRINCIPLE 5,820 6,155 10,236 13,408
CUMULATIVE EFFECT OF CHANGE IN
ACCOUNTING PRINCIPLE - - - 4,000
-------- -------- -------- ---------
NET INCOME $ 5,820 $ 6,155 $ 10,236 $ 17,408
======== ======== ======== =========
PER COMMON SHARE:
INCOME BEFORE CUMULATIVE EFFECT OF
CHANGE IN ACCOUNTING PRINCIPLE $0.24 $0.25 $0.42 $0.55
CUMULATIVE EFFECT OF CHANGE IN
ACCOUNTING PRINCIPLE $ - $ - $ - $0.16
----- ----- ----- -----
NET INCOME $0.24 $0.25 $0.42 $0.71
===== ===== ===== =====
CASH DIVIDENDS (Note 2) $0.125 $0.12 $0.25 $0.24
AVERAGE COMMON SHARES OUTSTANDING 24,497 24,408 24,488 24,377
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See accompanying notes to financial statements.
HELMERICH & PAYNE, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
Six Months Ended
March 31
1995 1994
-----------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
- -------------------------------------
Net Income $ 10,236 $ 17,408
Adjustments to reconcile net income to net
cash provided by operating activities-
Depreciation, depletion and amortization 26,814 25,262
Dry holes and abandonments 4,495 2,180
Cumulative effect of change in accounting
principle - ( 4,000)
Equity in income of affiliate
before income taxes ( 849) ( 559)
Amortization of deferred compensation 612 897
Gain on sale of securities ( 1,828) -
Other, net ( 603) ( 548)
Change in assets and liabilities-
(Increase)decrease in accounts receivable 8,025 ( 2,802)
Increase in inventories ( 521) ( 1,108)
Increase in prepaid expenses and other ( 943) ( 3,056)
Increase in accounts payable 5,154 1,442
Increase(decrease) in accrued liabilities ( 3,517) 5,641
Increase in deferred income taxes 1,467 1,550
Increase in other noncurrent liabilities 2,443 408
------------ ------------
Total Adjustments 40,749 25,307
------------ ------------
Net cash provided by operating activities 50,985 42,715
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
- -------------------------------------
Capital expenditures, including dry hole costs (56,958) (28,505)
Proceeds from sales of property, plant
and equipment 1,123 2,265
Purchase of investments ( 6,844) ( 1,500)
Proceeds from sale of investments 4,588 -
Purchase of short-term investments - ( 12)
Proceeds from sale of short-term investments - 124
------------ ------------
Net cash used in investing activities (58,091) (27,628)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
- -------------------------------------
Payments made on long-term debt - ( 3,151)
Dividends paid ( 6,172) ( 5,916)
Proceeds from exercise of stock options 452 -
------------ ------------
Net cash used in financing activities ( 5,720) ( 9,067)
------------ ------------
NET INCREASE(DECREASE) IN CASH AND CASH
EQUIVALENTS (12,826) 6,020
CASH AND CASH EQUIVALENTS, beginning of period 29,447 61,656
------------ ------------
CASH AND CASH EQUIVALENTS, end of period $ 16,621 $ 67,676
============ ============
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See accompanying notes to financial statements.
Certain reclassifications have been made in the 1994 statement to conform to
the 1995 presentation.
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 March 31, 1995, and September 30, 1994, and the results of operations for the six months ended March 31, 1995, and 1994, and the statements of cash flows for the six months then ended. The results of operations for the six months ended March 31, 1995, and March 31, 1994, are not necessarily indicative of the results to be expected for the full year.
2. The $.125 cash dividend declared in December, 1994, was paid March 1, 1995. On March 1, 1995, a cash dividend of $.125 per share was declared for shareholders of record on May 15, 1995, payable June 1, 1995.
3. Inventories consisted of the following (in thousands of dollars):
03-31-95 09-30-94
-------- --------
Raw Materials $ 61 $ 75
Works in Progress 348 361
Finished Goods 1,062 1,027
Materials & Supplies 20,044 19,532
-------- --------
$ 21,515 $ 20,995
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4. Income from investments include $1,838,000 gains on sales of securities during the first six months of 1995, and no gains on sales of securities during the first six months of 1994.
5. Effective October 1, 1993, the Company adopted Financial Accounting Standards Board Statement No. 109, Accounting for Income Taxes (SFAS 109). The cumulative effect on prior years of adopting the change was recorded in the quarter ended December 31, 1993, and increased net income for the quarter by $4.0 million.
6. 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. In accordance with the Statement, prior period financial statements have not been restated to reflect the change in accounting principle. The change had no effect on net income. The opening balance of shareholders' equity was increased by $34,435,000 (net of $21,106,000 in deferred income taxes) to reflect the net unrealized holding gains on securities classified as available-for-sale previously carried at lower of cost or market.
During the quarter ended March 31, 1995, the net unrealized holding gains of the Company's securities classified as available-for-sale increased $5,136,000 (net of $3,147,000 in deferred income taxes).
HELMERICH & PAYNE, INC. AND SUBSIDIARIES
REVENUES AND INCOME BY BUSINESS SEGMENTS
(in thousands)
FISCAL YEAR 1995 FY 1994
1st Qtr 2nd Qtr Six Mos. Six Mos.
---------------------------------- --------
SALES AND OTHER REVENUES:
Contract Drilling-Domestic $25,488 $23,553 $ 49,041 $ 41,066
Contract Drilling-International 22,150 24,609 46,759 45,447
------- ------- -------- --------
Total Contract Drilling
Division 47,638 48,162 95,800 $ 86,513
------- ------- -------- --------
Exploration and Production 13,471 11,037 24,508 34,420
Natural Gas Marketing 9,479 8,948 18,427 30,427
------- ------- -------- --------
Total Oil & Gas Division 22,950 19,985 42,935 64,847
------- ------- -------- --------
Chemical Division 5,951 5,951 11,902 11,175
Real Estate Division 1,846 1,892 3,738 4,138
Investment and Other 1,559 3,311 4,870 3,396
------- ------- -------- --------
Total Revenues $79,944 $79,301 $159,245 $170,069
======= ======= ======== ========
OPERATING PROFIT:
Contract Drilling-Domestic $ 1,125 $ 1,359 $ 2,484 $ 2,177
Contract Drilling-International 3,355 4,754 8,109 5,799
------- ------- -------- --------
Total Contract Drilling
Division 4,480 6,113 10,593 7,976
------- ------- -------- --------
Exploration and Production ( 538) (1,691) (2,229) 9,445
Natural Gas Marketing 287 711 998 743
-------- -------- --------- --------
Total Oil & Gas Division ( 251) ( 980) (1,231) 10,188
-------- -------- --------- --------
Chemical Division 2,636 2,732 5,368 4,594
Real Estate Division 1,121 1,026 2,147 2,438
-------- -------- --------- ---------
Total Operating Profit 7,986 8,891 16,877 25,196
-------- -------- --------- ---------
OTHER (1,270) ( 76) (1,346) (3,234)
INCOME BEFORE INCOME TAXES, EQUITY
IN INCOME OF AFFILIATE AND CUMULATIVE
EFFECT OF CHANGE IN ACCOUNTING
-------- -------- --------- ---------
PRINCIPLE $ 6,716 $ 8,815 $ 15,531 $ 21,962
======== ======== ========= =========
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See accompanying notes to financial statements.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
MARCH 31, 1995
The Company reported net income of $5,820,000 ($0.24 per share) on revenues of $79,301,000 for the second quarter of fiscal year 1995, compared with net income of $6,155,000 ($0.25 per share) on revenues of $87,883,000 during the second quarter of fiscal 1994. Net income for the first six months totaled $10,236,000 ($0.42 per share), compared with $17,408,000 ($0.71 per share) last year. Last year's first six months' net income includes the cumulative effect on prior years' income ($0.16 per share) caused by the change in accounting method for deferred taxes as required by FASB Statement 109.
Net income for the six months ended March 31, 1995 includes $1,117,000 ($0.05 per share) after-tax gains from the sale of securities compared with no after-tax gains for the same period in 1994.
The Exploration and Production Division reported operating losses of $1,691,000 and $2,229,000 for the second quarter and first six months of fiscal 1995, respectively. Operating profits of $4,333,000 and $9,445,000, were reported for the same periods in fiscal 1994. The significant drop in operating profits from 1994 to 1995 is the result of lower natural gas prices, reduced natural gas production volumes and increased dry hole costs.
Natural gas prices for the second quarter and first six months of 1995 averaged $1.27 per mcf and $1.33 per mcf, respectively, compared with $1.86 per mcf and $1.85 per mcf in the same periods of 1994. Natural gas volumes for the first six months of 1995 were 71.9 mmcf/day compared with 85.3 mmcf/day for the first six months of 1994. Dry hole expense for the first six months of 1995 was $2,845,000 compared with $436,000 for the same period in 1994.
The Contract Drilling Division reported an operating profit of $10,593,000 for the first six months of 1995, compared with $7,976,000 for the same period of fiscal 1994. The 32.8% increase in operating profit was mainly from international operations, including both Venezuela and Colombia where profitability increased significantly as compared with 1994. Five additional rigs were placed in service in Venezuela during the first six months of fiscal 1995. The increase in profit from operations in Colombia has been due to increased revenues and better operating margins as compared with the first six months of fiscal 1994. Three additional rigs in Colombia and one rig in Bolivia are expected to commence operations during the third and fourth quarters of 1995.
The Chemical Division reported another strong quarter. An operating profit of $5,368,000 was reported for the first six months of 1995 compared with $4,594,000 for the same period in 1994.
The Company has funded capital expenditures in excess of its cash flow internally over the past several years. However, the Company anticipates that it will sell additional portions of its investment portfolio and incur debt in order to help fund planned capital expenditures for the remainder of 1995. Capital expenditures budgeted for 1995 include expanded exploration activities, rig purchases and construction for Colombian and Venezuelan operations, as well as the Company's investment in a joint venture with its equity affiliate, Atwood Oceanics, Inc. The joint venture will construct a new generation offshore platform rig for work offshore Australia.
During the first quarter of fiscal 1995, effective 10-1-94, the Company adopted FASB Statement No. 115, "Accounting for Certain Investments in Debt and Equity Securities." The effect of adopting this Statement on the March 31, 1995, balance sheet was to increase investments by $57,800,000, increase deferred tax liabilities by $21,964,000 and increase shareholders' equity by $35,836,000.
There were no other significant changes to the Company's financial position since September 30, 1994.
PART II. OTHER INFORMATION
HELMERICH & PAYNE, INC. AND SUBSIDIARIES
Item 4. Submission of Matters to a Vote of Security Holders
The Annual Meeting of Stockholders of Helmerich & Payne, Inc. was held on March 1, 1995, for the purpose of electing three members of the Board of Directors. No other matters were submitted for vote to the stockholders. Proxies for the meeting were solicited by and on behalf of the management of Helmerich & Payne, Inc., and there was no solicitation in opposition to management's solicitation. Each of management's incumbent nominees for directorship were elected by the affirmative vote of a plurality of the shares of voted common stock. The number of votes for and withheld from each Director, respectively, were as follows: Hans Helmerich, 21,799,937 for, and 71,082 withheld; George S. Dotson, 21,801,678 for, and 69,341 withheld; and George A. Schaefer, 21,796,676 for, and 74,343 withheld. There were no broker non-votes nor other abstentions. The other Directors whose term of office as Director continued after the meeting are W. H. Helmerich, III, William L. Armstrong, Glenn A. Cox, C. W. Flint, Jr., H. W. Todd and John D. Zeglis.
Item 6(b) Reports on Form 8-K
There were no reports on Form 8-K for the three months ended March 31, 1995.
HELMERICH & PAYNE, INC. AND SUBSIDIARIES
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: MAY 11, 1995 /S/ DOUGLAS E. FEARS
---------------------- -----------------------------------------
Douglas E. Fears, Chief Financial Officer
Date: MAY 11, 1995 /S/ HANS C. HELMERICH
---------------------- -----------------------------------------
Hans C. Helmerich, President
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EXHIBIT INDEX
Exhibit Description - ------- ----------- 27 Financial Data Schedule |
| ARTICLE 5 |
| PERIOD TYPE | 6 MOS |
| FISCAL YEAR END | SEP 30 1995 |
| PERIOD START | OCT 01 1994 |
| PERIOD END | MAR 31 1995 |
| CASH | 16,621 |
| SECURITIES | 150,159 |
| RECEIVABLES | 52,902 |
| ALLOWANCES | 1,030 |
| INVENTORY | 21,515 |
| CURRENT ASSETS | 103,584 |
| PP&E | 988,530 |
| DEPRECIATION | 565,770 |
| TOTAL ASSETS | 690,293 |
| CURRENT LIABILITIES | 45,338 |
| BONDS | 0 |
| COMMON | 2,677 |
| PREFERRED MANDATORY | 0 |
| PREFERRED | 0 |
| OTHER SE | 562,612 |
| TOTAL LIABILITY AND EQUITY | 690,293 |
| SALES | 154,664 |
| TOTAL REVENUES | 159,245 |
| CGS | 138,786 |
| TOTAL COSTS | 138,786 |
| OTHER EXPENSES | 4,785 |
| LOSS PROVISION | 0 |
| INTEREST EXPENSE | 143 |
| INCOME PRETAX | 15,531 |
| INCOME TAX | 5,821 |
| INCOME CONTINUING | 10,236 |
| DISCONTINUED | 0 |
| EXTRAORDINARY | 0 |
| CHANGES | 0 |
| NET INCOME | 10,236 |
| EPS PRIMARY | .42 |
| EPS DILUTED | .42 |