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, 1996
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)
|
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, 1996
- ---------------------------- -----------------------------
Common Stock, .10 par value 24,821,848
AUTHORIZED AT MARCH 31, 1996
------------------------------
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, 1996 and September 30, 1995. . . . . . . . . . . . 3
Consolidated Condensed Statements of Income -
Three Months and Six Months Ended
March 31, 1996 and 1995. . . . . . . . . . . . . . . . . . . 4
Consolidated Condensed Statements of Cash Flows -
Six Months Ended March 31, 1996 and 1995 . . . . . . . . . . 5
Consolidated Condensed Statement of Shareholders' Equity -
Six Months Ended March 31, 1996. . . . . . . . . . . . . . . 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)
March 31 September 30
1996 1995
----------- ------------
ASSETS
- ------
Current Assets
Cash and cash equivalents $ 13,137 $ 19,661
Short-term investments 3,000 8,989
Accounts receivable, net 65,231 59,314
Inventories 21,240 21,313
Prepaid expenses and other 6,138 5,717
----------- ------------
Total Current Assets 108,746 114,994
----------- ------------
Investments 169,639 156,908
Property, Plant and Equipment, Net 450,340 423,762
Other Assets 14,460 14,501
----------- -----------
Total Assets $ 743,185 $ 710,165
=========== ============
LIABILITIES AND SHAREHOLDERS' EQUITY
- ------------------------------------
Current Liabilities
Accounts payable $ 25,336 $ 26,382
Accrued liabilities 32,654 21,529
Notes payable 2,000 21,700
----------- ------------
Total Current Liabilities 59,990 69,611
----------- ------------
Noncurrent Liabilities
Deferred income taxes 74,871 66,047
Other 15,081 12,072
----------- ------------
Total Noncurrent Liabilities 89,952 78,119
----------- ------------
Shareholders' Equity
Common stock, par value $.10 per share 2,677 2,677
Preferred stock, no shares issued - -
Additional paid-in capital 49,032 48,436
Net unrealized holding gains 50,695 38,004
Retained earnings 512,745 495,692
----------- ------------
615,149 584,809
Less treasury stock, at cost 21,906 22,374
----------- ------------
Total Shareholders' Equity 593,243 562,435
----------- ------------
$ 743,185 $ 710,165
=========== ============
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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
3/31/96 3/31/95 3/31/96 3/31/95
------------------ -----------------
REVENUES
Sales and other operating revenues $ 99,619 $ 76,109 $193,037 $154,664
Income from investments 1,302 3,192 2,469 4,581
-------- -------- -------- --------
100,921 79,301 195,506 159,245
-------- -------- -------- --------
COSTS AND EXPENSES
Operating costs 58,282 48,092 114,659 99,340
Depreciation, depletion and
amortization 14,645 13,184 28,382 26,814
Dry holes and abandonments 3,230 2,316 4,158 4,495
Taxes, other than income taxes 4,888 4,159 8,721 8,137
General and administrative 2,704 2,691 5,052 4,785
Interest 248 44 327 143
-------- -------- -------- --------
83,997 70,486 161,299 143,714
-------- -------- -------- --------
INCOME BEFORE INCOME TAXES AND
EQUITY IN INCOME OF AFFILIATE 16,924 8,815 34,207 15,531
INCOME TAX EXPENSE 6,238 3,340 12,622 5,821
EQUITY IN INCOME OF AFFILIATE,
net of income taxes 341 345 535 526
-------- -------- -------- --------
NET INCOME $ 11,027 $ 5,820 $ 22,120 $ 10,236
======== ======== ======== ========
NET INCOME PER AVERAGE COMMON
SHARE $ 0.45 $ 0.24 $ 0.90 $ 0.42
======== ======== ======== ========
CASH DIVIDENDS (Note 2) $ 0.125 $ 0.125 $ 0.25 $ 0.25
AVERAGE COMMON SHARES OUTSTANDING 24,655 24,497 24,628 24,488
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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
1996 1995
----------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
- ------------------------------------
Net Income $ 22,120 $ 10,236
Adjustments to reconcile net income to net
cash provided by operating activities-
Depreciation, depletion and amortization 28,382 26,814
Dry holes and abandonments 4,158 4,495
Equity in income of affiliate
before income taxes (863) (849)
Amortization of deferred compensation 866 612
Gain on sale of securities - (1,828)
Other, net 212 (603)
Change in assets and liabilities-
(Increase)decrease in accounts receivable (5,917) 8,025
(Increase)decrease in inventories 73 (521)
Increase in prepaid expenses and other (380) (943)
Increase in accounts payable 16 5,154
Increase(decrease) in accrued liabilities 14,079 (3,517)
Increase in deferred income taxes 1,046 1,467
Increase in other noncurrent liabilities 3,009 2,443
------------ ------------
Total Adjustments 44,681 40,749
------------ ------------
Net cash provided by operating activities 66,801 50,985
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
- -------------------------------------
Capital expenditures, including dry hole costs (55,965) (56,958)
Proceeds from sales of property, plant
and equipment 1,185 1,123
Purchase of investments 24 (6,844)
Proceeds from sale of investments - 4,588
Proceeds from sale of short-term investments 6,000 -
------------ ------------
Net cash used in investing activities (48,756) (58,091)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
- -------------------------------------
Proceeds from notes payable 23,000 -
Payments made on notes payable (42,700) -
Dividends paid ( 6,204) (6,172)
Proceeds from exercise of stock options 1,335 452
------------ ------------
Net cash used in financing activities (24,569) (5,720)
------------ ------------
NET DECREASE IN CASH AND CASH EQUIVALENTS (6,524) (12,826)
CASH AND CASH EQUIVALENTS, beginning of period 19,661 29,447
------------ ------------
CASH AND CASH EQUIVALENTS, end of period $ 13,137 $ 16,621
============ ============
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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 Unrealized 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 $7,779 - - - 12,691 - - -
Cash dividends ($0.25 per share) - - - - (6,204) - -
Exercise of stock options - - 757 - - (67) 579
Forfeiture of restricted stock award - - (161) - 271 10 (111)
Amortization of deferred compensation - - - - 866 - -
Net income - - - - 22,120 - -
------ ------ ------ - ------- -------- ----- --------
Balance, March 31, 1996 26,764 $2,677 $49,032 $50,695 $512,745 1,943 $(21,906)
====== ====== ======= ======= ======== ===== ========
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See accompanying notes to financial statements.
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 six months ended March 31, 1996, and six months ended March 31, 1995, are not necessarily indicative of the results expected for the full year.
2. The $.125 cash dividend declared in December, 1995, was paid March 1, 1996. On March 6, 1996, a cash dividend of $.125 per share was declared for shareholders of record on May 15, 1996, payable June 1, 1996.
3. Inventories consisted of the following (in thousands of dollars):
03-31-96 09-30-95
-------- --------
Raw Materials $ 150 $ 100
Works in Progress 231 315
Finished Goods 1,478 1,435
Materials & Supplies 19,381 19,463
-------- --------
$ 21,240 $ 21,313
======== ========
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4. Income from investments includes $1,828,000 gain on sales of securities during the first six months of 1995, and no gains on sales of securities during the first six months of 1996.
5. The following is a summary of available-for-sale securities, which excludes those accounted for under the equity method of accounting. The cost of securities accounted for under the equity method is $23,358,000.
Gross Gross Est.
Unrealized Unrealized Fair
Cost Gains Losses Value
(in thousands)
------------------------------------------
Equity Securities 03/31/96 $64,515 $81,782 $ 16 $146,281
Equity Securities 09/30/95 $64,804 $61,455 $158 $126,101
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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 March 31, 1996, the Company had borrowed $2,000,000 at a weighted average interest rate of 5.79% leaving an unused portion of $73,000,000. Under the line of credit agreement, the Company must meet certain requirements regarding levels of debt, net worth and earnings.
HELMERICH & PAYNE, INC. AND SUBSIDIARIES
REVENUES AND INCOME BY BUSINESS SEGMENTS
(in thousands)
FISCAL YEAR 1996 FY 1995
1st Qtr 2nd Qtr Six Mos. Six Mos.
----------------------------- --------
SALES AND OTHER REVENUES:
Contract Drilling-Domestic $23,020 $ 26,088 $ 49,108 $ 49,041
Contract Drilling-International 33,935 33,585 67,520 46,759
------- -------- -------- --------
Total Contract Drilling
Division 56,955 59,673 116,628 $ 95,800
------- -------- -------- --------
Exploration and Production 15,460 18,084 33,544 24,508
Natural Gas Marketing 12,786 14,030 26,816 18,427
------- -------- -------- --------
Total Oil & Gas Division 28,246 32,114 60,360 42,935
------- -------- -------- --------
Chemical Division 6,158 5,708 11,866 11,902
Real Estate Division 2,008 2,079 4,087 3,738
Investment and Other 1,218 1,347 2,565 4,870
------- -------- -------- --------
Total Revenues $94,585 $100,921 $195,506 $159,245
======= ======== ======== ========
OPERATING PROFIT(LOSS):
Contract Drilling-Domestic $ 1,915 $ 2,776 $ 4,691 $ 2,484
Contract Drilling-International 8,309 7,885 16,194 8,109
------- -------- -------- --------
Total Contract Drilling
Division 10,224 10,661 20,885 10,593
------- -------- -------- --------
Exploration and Production 4,075 4,690 8,765 ( 2,229)
Natural Gas Marketing 757 695 1,452 998
------- -------- -------- --------
Total Oil & Gas Division 4,832 5,385 10,217 ( 1,231)
------- -------- -------- --------
Chemical Division 2,739 1,979 4,718 5,368
Real Estate Division 1,221 1,423 2,644 2,147
-------- ------- -------- --------
Total Operating Profit 19,016 19,448 38,464 16,877
-------- ------- -------- --------
OTHER (1,733) (2,524) (4,257) (1,346)
INCOME BEFORE INCOME TAXES AND
-------- -------- -------- --------
EQUITY IN INCOME OF AFFILIATE $17,283 $ 16,924 $ 34,207 $ 15,531
======== ======== ======== ========
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See accompanying notes to financial statements.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
MARCH 31, 1996
RESULTS OF OPERATIONS
The Company reported net income of $11,027,000 ($0.45 per share) from revenues of $100,921,000 for the second quarter of fiscal year 1996, compared with net income of $5,820,000 ($0.24 per share) from revenues of $79,301,000 during the second quarter of fiscal 1995. Net income for the first six months of this fiscal year totaled $22,120,000 ($0.90 per share) from revenues of $195,506,000, compared with $10,236,000 ($0.42 per share) from revenues of $159,245,000 for the same period last year.
Last year's net income for the second quarter and six month period included $1,117,000 ($0.05 per share) after tax gains from the sale of securities. There have been no sales of securities in the first six months of fiscal 1996.
Exploration and Production reported an operating profit of $8,765,000 for the first six months of fiscal 1996, compared with an operating loss of $2,229,000 in the first six months of fiscal 1995. Higher oil and natural gas prices and a significant increase in natural gas volumes are the primary reasons for the increase in operating profit.
Natural gas prices for the second quarter and first six months of 1996 averaged $1.70 per mcf and $1.61 per mcf, respectively, compared with $1.26 per mcf and $1.33 per mcf in the same periods of 1995. Natural gas volumes for the first six months of 1996 were 89.5 mmcf/day compared with 72.3 mmcf/day for the first six months of 1995. Oil prices for the second quarter and first six months of 1996 averaged $17.84 and $17.14, respectively, compared with $16.49 and $16.02, respectively, in the same periods of 1995. Dry hole expense for the first six months of 1996 was $2,435,000 compared with $2,845,000 for the same period in 1995.
The Contract Drilling Division reported an operating profit of $20,885,000 for the first six months of fiscal 1996, compared with $10,593,000 for the first six months of fiscal 1995. Operating profit from international operations increased 100% to $16,194,000 for the first six months of 1996, compared with $8,109,000 for the same period in 1995. Operating profit for the second quarter of fiscal 1996 was $7,885,000, compared with $4,754,000 for the second quarter of 1995. Additional rigs sent to Colombia (3) and Venezuela (4) during 1995 contributed substantially to the increase in operating profit for international operations. Venezuela's second quarter operating profit was negatively impacted by devaluation of that country's currency. Revenues from a standby rate effective 1/1/96 for the Company's interest in an offshore Australia platform rig also contributed to the improved second quarter operating profit in fiscal 1996. This rig should be shipped to Australia in early 1997.
Operating profit from the domestic drilling operations increased to $4,691,000 for the first six months of 1996, compared with $2,484,000 for the same period in 1995. The increase is the result of escalated activity in the offshore platform rig market and improved profit margins on the Company's land
rigs. A new offshore platform rig will commence operations in the third quarter for Shell Offshore Inc. The Company expects this will have a positive impact on domestic operating profit for the last six months of fiscal 1996 and for all of fiscal 1997. The Company expects two additional platform rigs to commence operations for Shell Offshore Inc. in the spring and summer of 1997.
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities was $66,801,000 for the first six months of fiscal 1996, compared with $50,985,000 for the same period in 1995. Capital expenditures for the first six months of fiscal 1996 were $55,965,000, compared with $56,958,000 for the first six months of fiscal 1995. Approximately 74% of capital expenditures were related to the Company's drilling operations for both years.
During the second quarter, the Company decreased the amount borrowed under its line of credit agreement to $2,000,000 as of March 31, 1996. In order to meet anticipated capital expenditures for the remainder of 1996, it may be necessary to borrow additional funds under the line of credit.
There were no other significant changes in the Company's financial position since September 30, 1995.
PART II. OTHER INFORMATION
HELMERICH & PAYNE, INC. AND SUBSIDIARIES
Item 1. Legal Proceedings.
The lawsuit "William G. Caldwell, et al. v. Helmerich & Payne, Inc. is described in the Company's 10-Q for the quarterly period ended December 31, 1995. Plaintiffs, on March 25, 1996, filed their Motion for Class Certification in this case. The Company believes that the court will schedule a hearing on this Motion in the near future. In the event a certified class is awarded a royalty share of the gas contract settlement, then any such award could have a material impact on income from continuing operations for the applicable quarter. The Company believes that any such award should not exceed approximately $2.7 million.
Item 4. Submission of Matters to a Vote of Security Holders
The Annual Meeting of Stockholders of Helmerich & Payne, Inc. was held on March 6, 1996, for the purpose of electing two 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: John D. Zeglis, 21,393,176 for, and 468,218 withheld; and William L. Armstrong, 21,379,619 for, and 481,775 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, Glenn A. Cox, Hans Helmerich, George S. Dotson and George A. Schafer.
Item 6(b) Reports on Form 8-K
There were no reports on Form 8-K for the three months ended March 31, 1996.
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 7, 1996 /s/ DOUGLAS E. FEARS
-----------------------------------------
Douglas E. Fears, Chief Financial Officer
Date: MAY 7, 1996 /s/ HANS C. HELMERICH
-----------------------------------------
Hans C. Helmerich, President
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INDEX TO EXHIBITS
EXHIBIT NUMBER DESCRIPTION - ------- ----------- 27 - Financial Data Schedule |
| ARTICLE 5 |
| MULTIPLIER: 1,000 |
| PERIOD TYPE | 6 MOS |
| FISCAL YEAR END | SEP 30 1996 |
| PERIOD START | OCT 01 1995 |
| PERIOD END | MAR 31 1996 |
| CASH | 13,137 |
| SECURITIES | 169,639 |
| RECEIVABLES | 65,693 |
| ALLOWANCES | 462 |
| INVENTORY | 21,240 |
| CURRENT ASSETS | 108,746 |
| PP&E | 1,056,734 |
| DEPRECIATION | 606,394 |
| TOTAL ASSETS | 743,185 |
| CURRENT LIABILITIES | 59,990 |
| BONDS | 0 |
| COMMON | 2,677 |
| PREFERRED MANDATORY | 0 |
| PREFERRED | 0 |
| OTHER SE | 590,566 |
| TOTAL LIABILITY AND EQUITY | 743,185 |
| SALES | 193,037 |
| TOTAL REVENUES | 195,506 |
| CGS | 155,920 |
| TOTAL COSTS | 155,920 |
| OTHER EXPENSES | 5,052 |
| LOSS PROVISION | 0 |
| INTEREST EXPENSE | 327 |
| INCOME PRETAX | 34,207 |
| INCOME TAX | 12,622 |
| INCOME CONTINUING | 22,120 |
| DISCONTINUED | 0 |
| EXTRAORDINARY | 0 |
| CHANGES | 0 |
| NET INCOME | 22,120 |
| EPS PRIMARY | .90 |
| EPS DILUTED | .90 |