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: JUNE 30, 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)
UTICA AT TWENTY-FIRST STREET, TULSA, OKLAHOMA 74114
(Address of principal executive office) (Zip Code)
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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.
CLASS OUTSTANDING AT JUNE 30, 1995
---------------------------- ----------------------------
Common Stock, .10 par value 24,758,495
AUTHORIZED AT JUNE 30, 1995
----------------------------
26,764,476
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Total Number of Pages 14
HELMERICH & PAYNE, INC. AND SUBSIDIARIES
INDEX
PAGE NO.
PART I. FINANCIAL INFORMATION
Consolidated Condensed Balance Sheets -
June 30, 1995 and September 30, 1994. . . . . . . . . . . . 3
Consolidated Condensed Statements of Income -
Three Months and Nine Months Ended
June 30, 1995 and 1994 . . . . . . . . . . . . . . . . . . . 4
Consolidated Condensed Statements of Cash Flows -
Nine Months Ended June 30, 1995 and 1994 . . . . . . . . . . 5
Consolidated Condensed Statements of Shareholders' Equity. . 6
Nine Months Ended June 30, 1995
Notes to Consolidated Condensed Financial Statements . . . . 7&8
Revenues and Income by Business Segments . . . . . . . . . . 9
Management's Discussion and Analysis of Financial
Condition and Results of Operations. . . . . . . . . . . . . 10&11
PART II. OTHER INFORMATION . . . . . . . . . . . . . . . . . . . 12
Signature Page . . . . . . . . . . . . . . . . . . . . . . . 13
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PART I FINANCIAL INFORMATION
HELMERICH & PAYNE, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(in thousands)
(Unaudited)
June 30 September 30
1995 1994
----------- ------------
ASSETS
------
Current Assets
Cash and cash equivalents $ 17,231 $ 29,447
Short-term investments 8,996 8,997
Accounts receivable, net 60,708 59,897
Inventories 20,093 20,995
Prepaid expenses and other 6,278 3,603
----------- -----------
Total Current Assets 113,306 122,939
Investments 153,553 87,414
Property, Plant and Equipment, net 437,597 400,651
Other Assets 14,933 13,823
----------- -----------
Total Assets $ 719,389 $ 624,827
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Current Liabilities
Accounts payable $ 27,122 $ 22,645
Accrued liabilities 22,556 24,056
Notes payable 20,200 -
----------- -----------
Total Current Liabilities 69,878 46,701
----------- -----------
Noncurrent Liabilities
Deferred income taxes 67,782 44,462
Other 12,794 9,330
----------- -----------
Total Noncurrent Liabilities 80,576 53,792
----------- -----------
Shareholders' Equity
Common stock, par value $.10 per share 2,677 2,677
Preferred stock, no shares issued - -
Additional paid-in capital 48,415 48,196
Net unrealized holding gains 36,865 -
Retained earnings 503,420 496,280
----------- -----------
591,377 547,153
Less treasury stock, at cost 22,442 22,819
----------- -----------
Total Shareholders' Equity 568,935 524,334
----------- -----------
$ 719,389 $ 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 Nine Months Ended
6/30/95 6/30/94 6/30/95 6/30/94
---------------------- ------------------------
REVENUES:
Sales and other operating revenues $ 76,413 $ 77,052 $231,077 $244,055
Income from investments 2,343 1,646 6,924 4,712
-------- ------- ------- --------
78,756 78,698 238,001 248,767
-------- ------- ------- --------
COST AND EXPENSES:
Operating costs 49,725 51,952 149,065 158,902
Depreciation, depletion and 13,792 12,337 40,606 37,599
amortization
Dry holes and abandonments 1,888 2,055 6,383 4,671
Taxes, other than income taxes 3,962 3,585 12,099 11,718
General and administrative 2,037 1,842 6,822 6,765
Interest 94 111 237 334
-------- ------- ------- --------
71,498 71,882 215,212 219,989
-------- ------- ------- --------
INCOME BEFORE INCOME TAXES, EQUITY
IN INCOME OF AFFILIATE AND
CUMULATIVE EFFECT OF CHANGE IN
ACCOUNTING PRINCIPLE 7,258 6,816 22,789 28,778
INCOME TAX EXPENSE 2,822 2,222 8,643 11,123
EQUITY IN INCOME OF AFFILIATE,
net of income taxes 148 66 674 413
-------- ------- ------- --------
INCOME BEFORE CUMULATIVE EFFECT OF
CHANGE IN ACCOUNTING PRINCIPLE 4,584 4,660 14,820 18,068
CUMULATIVE EFFECT OF A CHANGE IN
ACCOUNTING PRINCIPLE - - - 4,000
-------- ------- ------- --------
NET INCOME $ 4,584 $ 4,660 $14,820 $ 22,068
======== ======= ======= ========
PER COMMON SHARE:
INCOME BEFORE CUMULATIVE EFFECT OF
CHANGE IN ACCOUNTING PRINCIPLE $0.19 $0.19 $0.60 $0.74
CUMULATIVE EFFECT OF CHANGE IN
ACCOUNTING PRINCIPLE - - - 0.16
----- ----- ----- -----
NET INCOME $0.19 $0.19 $0.60 $0.90
===== ===== ===== =====
CASH DIVIDENDS (Note 2) $0.125 $0.12 $0.375 $0.36
AVERAGE COMMON SHARES OUTSTANDING 24,573 24,442 24,516 24,399
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See accompanying notes to financial statements.
HELMERICH & PAYNE, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
(Unaudited)
(in thousands)
Nine Months Ended
06/30/95 06/30/94
------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
-------------------------------------
Net Income $ 14,820 $ 22,068
Adjustments to reconcile net income to net
cash provided by operating activities-
Depreciation, depletion and amortization 40,606 37,599
Dry holes and abandonments 6,383 4,671
Cumulative effect of change in accounting principle - (4,000)
Equity in income of affiliate before income taxes (1,087) (667)
Amortization of deferred compensation 1,037 1,356
Gain on sale of securities (2,947) -
Other, net (771) (684)
Change in assets and liabilities-
(Increase)Decrease in accounts receivable (811) 166
(Increase)Decrease in inventories 902 (3,290)
Increase in prepaid expenses and other (3,785) (780)
Increase(Decrease) in accounts payable 4,477 (4,652)
Increase in accrued liabilities 1,500 5,515
Increase in deferred income taxes 726 3,315
Increase(Decrease) in other noncurrent liabilities 3,464 (1,077)
--------- ---------
Total Adjustments 49,694 37,472
--------- ---------
Net cash provided by operating activities 64,514 59,540
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
-------------------------------------
Capital expenditures, including dry hole costs (88,345) (66,546)
Proceeds from sales of property, plant and equipment 2,156 2,962
Purchase of investments (9,927) (1,500)
Proceeds from sale of investments 7,294 -
Purchase of short-term investments - (12)
Proceeds from sale of short-term investments - 124
--------- ---------
Net cash used in investing activities (88,822) (64,972)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
-------------------------------------
Proceeds from notes payable 20,200 -
Payments made on long-term debt - (3,139)
Dividends paid (9,265) (8,877)
Proceeds from exercise of stock options 1,157 764
--------- ---------
Net cash provided by (used in) financing
activities 12,092 (11,252)
--------- ---------
NET DECREASE IN CASH AND CASH EQUIVALENTS (12,216) (16,684)
CASH AND CASH EQUIVALENTS, beginning of period 29,447 61,656
--------- ---------
CASH AND CASH EQUIVALENTS, end of period $ 17,231 $ 44,972
========= =========
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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
CONSOLIDATED CONDENSED STATEMENTS OF SHAREHOLDERS' EQUITY
(in thousands)
Net
Unrlzed
Common Stock Paid-In Holding Retained Treasury Stock
Shares Amount Capital Gains Earnings Shares Amount
--------------- ------- -------- -------- ---------------------
Balance, September 30, 1994 26,764 $2,677 $48,196 - $496,280 2,054 $(22,819)
Adoption of FASB Statement No. 115 - - - 34,435 - - -
Increase during fiscal 1995 - - - 2,430 - - -
Cash dividends ($0.375 per share) - - - - (9,277) - -
Exercise of stock options - - 610 - - (63) 546
Forfeiture of restricted stock
award - - (391) - 560 15 (169)
Amortization of deferred
compensation - - - - 1,037 - -
Net income - - - - 14,820 - -
-------------------------------------------------------------------------------------
Balance, June 30, 1995 26,764 $2,677 $48,415 $36,865 $503,420 2,006 $(22,442)
=====================================================================================
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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 results of the periods presented. The results of operations for the nine months ended June 30, 1995, and June 30, 1994, are not necessarily indicative of the results to be expected for the full year.
2. The $.125 cash dividend declared in March was paid June 1, 1995. On June 7, 1995, a cash dividend of $.125 per share was declared for shareholders of record on August 15, 1995, payable September 1, 1995.
3. Inventories consisted of the following (in thousands of dollars):
06-30-95 09-30-94
-------- --------
Raw Materials $ 47 $ 75
Works in Progress 337 361
Finished Goods 866 1,027
Materials & Supplies 18,843 19,532
-------- --------
$ 20,093 $ 20,995
======== ========
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4. Income from investments includes $2,947,000 from gains on sales of securities during the first nine months of 1995, and no gains on sales of securities during the first nine months of 1994.
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. 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 June 30, 1995, the net unrealized holding gains of the Company's securities classified as available-for-sale increased by $1,029,000 (net of $630,000 in deferred income taxes). For the nine months ended June 30, 1995, the net unrealized holding gains increased by $2,430,000 (net of $1,488,000 in deferred income taxes).
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. The Company maintains a line of credit agreement with certain banks which provides for maximum borrowing of $75,000,000 at adjustable interest rates based on London Interbank Offered Rates (LIBOR). The borrowings will mature either in May of 1996 or May of 1998. A $30,000,000 portion of the line is for a 364 day term and a $45,000,000 portion is for a three year term. As of June 30, 1995, the Company had borrowed $20,200,000 against the line of credit, at a weighted average interest rate of 6.45%, leaving an unused portion of $54,800,000. The funds were used to pay for current capital expenditures in excess of cash flows.
HELMERICH & PAYNE, INC. AND SUBSIDIARIES
REVENUES AND INCOME BY BUSINESS SEGMENTS
(in thousands)
FISCAL YEAR 1995 FY 1994
1st Qtr 2nd Qtr 3rd Qtr Nine Mos. Nine Mos.
----------------------------------------------- ---------
Sales and Other Revenues:
Contract Drilling-Domestic $25,488 $23,553 $21,599 $ 70,640 $ 61,355
Contract Drilling-Internat'l 22,150 24,609 28,889 75,648 71,338
------- ------- ------- -------- --------
Total Contract Drilling
Division 47,638 48,162 50,488 146,288 132,693
------- ------- ------- -------- --------
Exploration and Production 13,471 11,037 11,694 36,202 47,567
Natural Gas Marketing 9,479 8,948 8,140 26,567 42,399
------- ------- ------- -------- --------
Total Oil & Gas Division 22,950 19,985 19,834 62,769 89,966
------- ------- ------- -------- --------
Chemical Division 5,951 5,951 4,108 16,010 14,928
Real Estate Division 1,846 1,892 1,886 5,624 5,968
Investments and other 1,559 3,311 2,440 7,310 5,212
------- ------- ------- -------- --------
Total Revenues $79,944 $79,301 $78,756 $238,001 $248,767
======= ======= ======= ======== ========
OPERATING PROFIT:
Contract Drilling-Domestic $ 1,125 $ 1,359 $ 1,766 $ 4,250 $ 3,979
Contract Drilling-Internat'l 3,355 4,754 4,432 12,541 9,926
------- ------- ------- -------- --------
Total Contract Drilling
Division 4,480 6,113 6,198 16,791 13,905
------- ------- ------- -------- --------
Exploration and Production (538) (1,691) (671) (2,900) 9,450
Natural Gas Marketing 287 711 386 1,384 1,062
------- ------- ------- -------- --------
Total Oil & Gas Division (251) (980) (285) (1,516) 10,512
------- ------- ------- -------- --------
Chemical Division 2,636 2,732 629 5,997 5,177
Real Estate Division 1,121 1,026 1,063 3,210 3,493
------- ------- ------- -------- --------
Total Operating Profit 7,986 8,891 7,605 24,482 33,087
------- ------- ------- -------- --------
OTHER (1,270) (76) (347) (1,693) (4,309)
------- ------- ------- -------- --------
INCOME BEFORE INCOME TAXES,
EQUITY IN INCOME OF AFFILIATE
AND CUMULATIVE EFFECT OF
CHANGE IN ACCOUNTING PRINCIPLE $ 6,716 $ 8,815 $ 7,258 $ 22,789 $ 28,778
======= ======= ======= ======== ========
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HELMERICH & PAYNE, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
JUNE 30, 1995
Results of Operations
The Company's net income was $4,584,000 ($0.19 per share) on revenues of $78,756,000 for the third quarter of fiscal year 1995, compared with net income of $4,660,000 ($0.19 per share) on revenues of $78,698,000 during the third quarter of fiscal 1994. Net income for the first nine months totaled $14,820,000 ($0.60 per share), compared with $22,068,000 ($0.90 per share) last year. Last year's first nine months' net income includes the cumulative effect on prior years' income ($.016 per share) caused by the change in accounting method for deferred taxes as required by FASB Statement 109.
Net income for the nine months ended June 30, 1995, includes $1,800,000 after-tax gains from the sale of securities, compared with no after-tax gain from the sale of securities for the same period in 1994.
The Exploration and Production Division had operating losses of $671,000 and $2,900,000, respectively, for the third quarter and first nine months of fiscal 1995. Operating profits of $5,000 and $9,450,000 were reported for the same periods in fiscal 1994. The significant decrease in operating profits from 1994 to 1995 continues to be the result of lower natural gas prices, reduced natural gas volumes and increased dry hole costs.
Natural gas prices for the third quarter and first nine months of 1995 averaged $1.28 per mcf and $1.31 per mcf, respectively, compared with $1.59 per mcf and $1.77 per mcf in the same periods in 1994. Natural gas volumes for the first nine months of 1995 were 71,108 mmcf/day compared with 78,820 mmcf/day for the first nine months of 1994. Dry hole expense for the first nine months of 1995 was $4,078,000 compared with $977,000 for the same period in 1994.
The Contract Drilling Division had an operating profit of $16,791,000 for the first nine months of 1995, compared with $13,905,000 for the same period of fiscal 1994. The increase is due to expanded operations in Venezuela and Colombia. Two additional rigs in Colombia and one rig in Bolivia commenced operations at the end of the third quarter. The Company now has 35 international rigs, 35 U.S. land rigs and 11 platform rigs.
Liquidity and Capital Resources
Net cash provided by operating activities was $64,514,000 for the first nine months of fiscal 1995, compared with $59,540,000 for the same period in 1994.
Capital expenditures for the first nine months of 1995 were
$88,345,000, compared with $66,546,000 for the same period in 1994. Capital
expenditures related to our international drilling operations were $55,550,000
(63%) for the first nine months of fiscal 1995, compared with $20,300,000 (31%)
in fiscal 1994.
The Company has internally funded capital expenditures in excess of its cash flow over the past several years. The current year capital expenditures were partially funded through the sale of a portion of the Company's investment portfolio and through amounts borrowed under its line of credit agreement.
The line of credit agreement provides for maximum borrowing of $75,000,000 at adjustable interest rates based on London Interbank Offered Rates (LIBOR). As of June 30, 1995, the Company had borrowed $20,200,000 against the line of credit, leaving an unused portion of $54,800,000. The Company anticipates it will borrow additional amounts under its line of credit and sell additional portions of its equity investment portfolio to fund planned capital expenditures during fiscal 1996.
There were no other significant changes in the Company's financial position since September 30, 1994.
PART II. OTHER INFORMATION
HELMERICH & PAYNE, INC. AND SUBSIDIARIES
Item 6(b) Reports on Form 8-K
There were no reports on Form 8-K for the three months ended June 30, 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: AUGUST 14, 1995 /S/ DOUGLAS E. FEARS
---------------------- -----------------------------------------
Douglas E. Fears, Chief Financial Officer
Date: AUGUST 14, 1995 /S/ HANS C. HELMERICH
---------------------- -----------------------------------------
Hans C. Helmerich, President
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INDEX TO EXHIBITS
EXHIBIT NUMBER DESCRIPTION ------- ----------- 27 Financial Data Schedule |
| ARTICLE 5 |
| PERIOD TYPE | 9 MOS |
| FISCAL YEAR END | SEP 30 1995 |
| PERIOD START | OCT 01 1994 |
| PERIOD END | JUN 30 1995 |
| CASH | 17,231 |
| SECURITIES | 153,553 |
| RECEIVABLES | 61,197 |
| ALLOWANCES | 489 |
| INVENTORY | 20,093 |
| CURRENT ASSETS | 113,306 |
| PP&E | 1,010,086 |
| DEPRECIATION | 572,489 |
| TOTAL ASSETS | 719,389 |
| CURRENT LIABILITIES | 69,878 |
| BONDS | 0 |
| COMMON | 2,677 |
| PREFERRED MANDATORY | 0 |
| PREFERRED | 0 |
| OTHER SE | 566,258 |
| TOTAL LIABILITY AND EQUITY | 719,389 |
| SALES | 231,077 |
| TOTAL REVENUES | 238,001 |
| CGS | 208,153 |
| TOTAL COSTS | 208,153 |
| OTHER EXPENSES | 6,822 |
| LOSS PROVISION | 0 |
| INTEREST EXPENSE | 237 |
| INCOME PRETAX | 22,789 |
| INCOME TAX | 8,643 |
| INCOME CONTINUING | 14,820 |
| DISCONTINUED | 0 |
| EXTRAORDINARY | 0 |
| CHANGES | 0 |
| NET INCOME | 14,820 |
| EPS PRIMARY | .60 |
| EPS DILUTED | .60 |