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, 1994
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
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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, 1994
- - -------------------------- -------------------------------
Common Stock, .10 par value 24,667,482
AUTHORIZED AT MARCH 31, 1994
-------------------------------
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, 1994 and September 30, 1993 . . . . . . . . . . . . . . . 3
Consolidated Condensed Statements of Income -
Three Months and Six Months Ended
March 31, 1994 and 1993 . . . . . . . . . . . . . . . . . . . . . . 4
Consolidated Condensed Statements of Cash Flows -
Six Months Ended March 31, 1994 and 1993 . . . . . . . . . . . . . 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
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PART I FINANCIAL INFORMATION
HELMERICH & PAYNE, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(Thousands of Dollars)
March 31 September 30
1994 1993
----------- ------------
ASSETS
- - ------
Current Assets
Cash and Cash Equivalents $ 67,676 $ 61,656
Short-term Investments 8,997 9,109
Accounts Receivable, net 59,107 56,305
Inventories 18,754 17,646
Other Current Assets 7,880 5,783
---------- ----------
Total Current Assets $ 162,414 $ 150,499
Investments 86,764 84,945
Property, Plant and Equipment, Net 358,381 358,798
Other Assets 17,652 16,693
---------- ----------
Total Assets $ 625,211 $ 610,935
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
- - ------------------------------------
Current Liabilities
Current maturities of long-term debt $ 1,219 $ 5,679
Accounts Payable 25,278 23,836
Accrued Liabilities 20,250 16,899
---------- ----------
Total Current Liabilities $ 46,747 $ 46,414
---------- ----------
Non-Current Liabilities
Long-term debt, less current maturities $ 6,000 $ 3,600
Deferred Federal income taxes 44,563 44,723
Other 6,588 7,271
---------- ----------
Total Non-Current Liabilities $ 57,151 $ 55,594
--------- ----------
Shareholders' Equity
Common Stock, Par Value .10 per share $ 2,677 $ 2,677
Preferred stock, no shares issued - -
Additional paid-in capital 47,893 47,412
Retained earnings 493,977 482,405
---------- ----------
$ 544,547 $ 532,494
Less Treasury stock, at cost 23,234 23,567
---------- ----------
Total Shareholders' Equity $ 521,313 $ 508,927
---------- ----------
$ 625,211 $ 610,935
========== ==========
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See accompanying notes to financial statements.
HELMERICH & PAYNE, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENT OF INCOME
(Unaudited)
(Thousands of Dollars Except per Share Data)
Quarter Ended Six Months Ended
3/31/94 3/31/93 3/31/94 3/31/93
------------------- --------------------
REVENUES
Sales and other operating revenues $ 86,359 $ 81,245 $ 167,003 $ 161,247
Income from investments 1,524 2,106 3,066 5,102
-------- --------- --------- ---------
87,883 83,351 170,069 166,349
-------- --------- --------- ---------
COSTS AND EXPENSES
Operating costs 56,439 50,200 106,950 98,852
General and administrative 2,241 1,749 4,923 3,516
Interest 41 85 223 407
Depreciation, depletion and
amortization 13,444 12,802 25,262 25,655
Dry holes and abandonments 1,306 1,910 2,616 5,150
Taxes, other than Federal
income taxes 3,993 4,005 8,391 7,665
-------- --------- --------- ---------
77,464 70,751 148,365 141,245
-------- --------- --------- ---------
INCOME BEFORE FEDERAL INCOME TAXES,
EQUITY IN INCOME(LOSS) OF AFFILIATE
AND CHANGE IN ACCOUNTING PRINCIPLE 10,419 12,600 21,704 25,104
FEDERAL INCOME TAX EXPENSE 4,460 5,147 8,643 10,247
EQUITY IN INCOME(LOSS) OF AFFILIATE
net of income taxes 196 (185) 347 (370)
-------- ---------- --------- ----------
INCOME BEFORE CHANGE IN ACCOUNTING
PRINCIPLE 6,155 7,268 13,408 14,487
CUMULATIVE EFFECT OF A CHANGE IN
ACCOUNTING PRINCIPLE - - 4,000 -
-------- --------- --------- ---------
NET INCOME $ 6,155 $ 7,268 $ 17,408 $ 14,487
======== ========= ========= =========
INCOME PER COMMON SHARE
BEFORE CHANGE IN ACCOUNTING PRINCIPLE $0.25 $0.30 $0.55 $0.60
CUMULATIVE EFFECT OF A CHANGE IN
ACCOUNTING PRINCIPLE $0.00 $0.00 $0.16 $0.00
INCOME PER COMMON SHARE $0.25 $0.30 $0.71 $0.60
AVERAGE COMMON SHARES OUTSTANDING 24,407,649/24,268,234/24,376,861/24,257,700
CASH DIVIDENDS PER COMMON SHARE $0.12 $0.12 $0.24 $0.24
(Note 3)
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See accompanying notes to financial statements.
HELMERICH & PAYNE, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
(Unaudited)
(Thousands of Dollars)
Six Months Ended
March 31
1994 1993
---------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
- - -------------------------------------
Net Income $ 17,408 $ 14,487
Adjustments to reconcile net income to net
cash provided by operating activities-
Depreciation, depletion and amortization 25,262 25,655
Abandonments and surrendered leases 2,180 1,932
Cumulative effect of a change in accounting
principle ( 4,000) -
Equity in (income)loss of affiliate
before income taxes ( 559) 400
Amortization of deferred compensation 897 858
Gain on sale of securities - ( 2,160)
Other, net ( 548) (449)
Change in assets and liabilities-
Increase in accounts receivables ( 2,802) (18,723)
(Increase)Decrease in inventories ( 1,108) 781
Increase in prepaid expenses/other ( 3,056) ( 6,382)
Increase in accounts payables 1,442 4,059
Increase in accrued liabilities 5,641 7,365
Increase in deferred Federal income taxes 1,550 1,745
Decrease in other non-current liabilities ( 683) ( 969)
--------- --------
Total Adjustments $ 24,216 $ 14,112
-------- --------
Net cash provided by operating activities $ 41,624 $ 28,599
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
- - -------------------------------------
Capital expenditures $(28,505) $(19,920)
Proceeds from sales of property, plant
and equipment 2,265 954
Purchase of investments ( 1,500) ( 400)
Proceeds from sale of investments - 4,547
Purchase of short-term investments ( 12) ( 21)
Proceeds from sale of short-term investments 124 5,034
-------- --------
Net cash used in investing activities $(27,628) $ (9,806)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
- - -------------------------------------
Proceeds from issuance of long-term debt $ 2,750 $ 2,070
Payments made on long-term debt ( 4,810) ( 576)
Dividends paid ( 5,916) (5,901)
Proceeds from exercise of stock options - 432
-------- --------
Net cash used in financing activities $( 7,976) $ (3,975)
--------- --------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS $ 6,020 $ 14,818
-------- --------
CASH AND CASH EQUIVALENTS, beginning of period $ 61,656 $ 37,586
-------- --------
CASH AND CASH EQUIVALENTS, end of period $ 67,676 $ 52,404
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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 financial position as of March 31, 1994, and September 30, 1993, and the results of operations for the six months ended March 31, 1994, and 1993, and changes in financial position for the six months then ended.
2. The results of operations for the six months ended March 31, 1994, and March 31, 1993, are not necessarily indicative of the results to be expected for the full year.
3. The $.12 cash dividend declared in December was paid March 1, 1994. On March 2, 1994, a cash dividend of $.12 per share was declared for shareholders of record on May 16, 1994, payable June 1, 1994. The dividend was included in accounts payable on the consolidated balance sheet at March 31, 1994.
4. Inventories consisted of the following (in thousands of dollars):
03-31-94 09-30-93
-------- --------
Raw Materials $ 33 $ 163
Works in Progress 200 210
Finished Goods 733 1,041
Materials & Supplies 17,788 16,232
--------- ---------
$ 18,754 $ 17,646
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5. Income from investments include no gains on sales of securities during the first six months of 1994, and $2,160,000 during the first six months of 1993.
6. In February 1992, the Financial Accounting Standards Board issued Statement No. 109, Accounting for Income Taxes (Statement 109). Statement 109 represents a new method of accounting for income taxes. It generally requires that deferred taxes be provided using a liability approach at currently enacted income tax rates, rather than the deferred approach at historical rates which had been required.
Effective October 1, 1993, the Company adopted the provisions of SFAS
109. The cumulative effect on prior years of adopting the change was
recorded in the quarter ended December 31, 1993, as provided by SFAS
109, and increased net income for the quarter by $4.0 million.
The components of the Company's net deferred tax liability are as follows:
March 31 December 31
1994 1993
-------- -----------
(in thousands)
Deferred Tax Liability:
Differences between book and tax
basis of property, plant and
equipment $ 42,361 $ 46,508
Pension provision 4,566 4,548
Other 4,156 1,842
-------- --------
Deferred tax liability 51,083 52,898
-------- --------
Deferred Tax Asset:
Alternative minimum tax credit
carryforward 679 1,652
Foreign tax credit carryforward 935 1,325
Deferred compensation 1,050 1,312
Insurance provisions 1,764 1,391
Deferred expenses - international 1,736 2,103
Other 1,291 1,807
-------- --------
Subtotal 7,455 9,500
-------- --------
Valuation allowance ( 935) ( 1,325)
--------- ---------
Deferred tax asset 6,520 8,175
-------- --------
Net Deferred Tax Liability $ 44,563 $ 44,723
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7. As of May 6, 1994, the Company's investment portfolio had an aggregate market value of $147,882,000. Each of the Company's major holdings had market values above their cost basis, including the Company's equity affiliate, Atwood Oceanics, Inc.
HELMERICH & PAYNE, INC. AND SUBSIDIARIES
REVENUES AND INCOME BY BUSINESS SEGMENTS
(Thousands of Dollars)
FISCAL YEAR 1994 FY 1993
1st Qtr 2nd Qtr Six Mos. Six Mos.
------------------------------------ --------
Sales and Other Revenues:
Contract Drilling-Domestic $19,817 $ 21,249 $ 41,066 $ 29,382
Contract Drilling-International 22,319 23,128 45,447 43,987
------- ---------- ----------- ----------
Total Contract Drilling
Division 42,136 44,377 86,513 $ 73,369
------- ---------- ----------- ----------
Oil and Gas Division 16,626 17,794 34,420 38,348
Gas Marketing Division 14,820 15,607 30,427 37,415
Real Estate Division 1,836 2,302 4,138 3,811
Chemical Division 5,046 6,129 11,175 8,070
Investments and Other
Income 1,722 1,674 3,396 5,336
------- ---------- ----------- ----------
Total Revenues $82,186 $ 87,883 $ 170,069 $ 166,349
======= ========== =========== ==========
INCOME (LOSS) BEFORE FEDERAL INCOME
TAX, EQUITY IN INCOME (LOSS) OF
AFFILIATE AND A CHANGE IN ACCOUNTING
PRINCIPLE:
Contract Drilling-Domestic $ 1,252 $ 935 $ 2,187 $ 292
Contract Drilling-International 3,590 2,209 5,799 9,474
------- ---------- ----------- ----------
Total Contract Drilling
Division 4,842 3,144 7,986 9,766
------- ---------- ----------- ----------
Oil and Gas Division 4,997 4,236 9,233 10,430
Gas Marketing Division 287 401 688 480
Real Estate Division 987 1,350 2,337 1,978
Chemical Division 1,791 2,773 4,564 2,397
Other (1,619) (1,485) (3,104) 53
------- ---------- ----------- ----------
INCOME BEFORE FEDERAL INCOME
TAX, EQUITY IN INCOME (LOSS)
OF AFFILIATE AND A CHANGE IN
ACCOUNTING PRINCIPLE $11,285 $ 10,419 $ 21,704 $ 25,104
======= ========== =========== ==========
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
MARCH 31, 1994
The Company reported net income of $6,155,000 ($0.25 per share) on revenues of $87,883,000 for the second quarter of fiscal year 1994, compared with net income of $7,268,000 ($0.30 per share) on revenues of $83,351,000 during the second quarter of fiscal 1993. Net income for the first six months totaled $17,408,000 ($0.71 per share), compared with $14,487,000 ($0.60 per share) last year. This year's first six months net income includes the cumulative effect on prior years' income ($.016 per share) caused by the change in accounting method for deferred taxes as required by FASB Statement 109.
Net income for the six months ended March 31, 1994, includes no after-tax gains from the sale of securities compared with $1,340,000 ($0.06 per share) for the same period in 1993.
The Contract Drilling Division reported a pre-tax income of $3,144,000 for the second quarter of fiscal 1994, compared with $6,245,000 for the same period of fiscal 1993. Pre-tax income for the comparable six month periods was $7,986,000 and $9,766,000, respectively.
Results from our domestic drilling operations were improved from the prior year, with pre-tax income of $2,167,000 for the first six months of fiscal 1994, compared with $292,000 for the same period in fiscal 1993. This improvement was due to increased offshore rig activity in both the Gulf of Mexico and offshore California. Pre-tax income from international drilling operations was $5,799,000 for the first six months of fiscal 1994, compared with $9,474,000 for the same period last year. Improvement in results from Venezuela, Ecuador and Trinidad was more than offset by a decrease in pre-tax income in Colombia. Revenues in Colombia were down $2,300,000 (10%) from last year and expenses were up $3,700,000 (25%) compared with last year. The increase in expenses was the result of extremely difficult drilling conditions over a number of months, however, steps are being taken to reduce operating costs.
Oil and Gas pre-tax income decreased to $9,233,000 for the six months ended March 31, 1994, compared with $10,430,000 for the same period last year. Revenues declined from $38,348,000 to $34,420,000 for the comparable six month periods. Oil revenues declined $2,655,000 (33%) due to the average oil price for the six months ended March 31, 1994, being $13.11 per barrel compared with $18.39 per barrel last year. Average natural gas prices for the six months ended March 31, 1994, were $l.84 (per mcf) compared with $1.81 (per mcf) last year. Volumes declined slightly to 86,075 (mcf/day) from 90,638 (mcf/day) last year. Dry hole expense for the first six months of fiscal 1994 was $436,000 compared with $3,218,000 for the same period in fiscal 1993.
The Company's Chemical Division reported pre-tax income for the six months ended March 31, 1994, of $4,584,000 compared with $2,397,000 for the same period in fiscal 1993. Increased product prices were the main reason for the significant increase in pre-tax income.
Deferred Federal income taxes were reduced in the first quarter of fiscal 1994, as required by adoption of Financial Accounting Standards Board Statement No. 109.
There were no significant changes in the Company's financial position since September 30, 1993. Capital expenditures, as projected, for the remainder of fiscal 1994 will most likely be funded out of operating cash flows.
PART II. OTHER INFORMATION
HELMERICH & PAYNE, INC. AND SUBSIDIARIES
Item 1. Legal Proceedings
The Registrant is not currently involved in any legal proceedings which, in the judgement of the registrant, subject it to liability that would be material and are not adequately covered by insurance.
Item 4. Submission of Matters to a Vote of Security Holders
The Annual Meeting of Stockholders of Helmerich & Payne, Inc. was held on March 2, 1994, 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 numbers of votes for and withheld from each Director, respectively, were as follows: W. H. Helmerich, III, 20,829,001 for, and 41,334 withheld; William L. Armstrong, 20,829,726 for, and 40,609 withheld; and Glenn A. Cox, 20,829,326 for, and 41,009 withheld. There were no broker non-votes nor other abstentions. The other Directors whose term of office as Director continued after the meeting are Hans Helmerich, George S. Dotson, George A. Schaefer, C. W. Flint, Jr., H. W. Todd and John D. Zeglis.
Item 6(a) Exhibits
None
Item 6(b) Reports on Form 8-K
There was one report on Form 8-K filed for the three months ended March 31, 1994. Such Form 8-K was filed on January 28, 1994, and disclosed that on January 18, 1994, the District Court of Harris County, Texas dismissed without prejudice the lawsuit styled Theresa Arceneaux, et al, v. Natural Gas Odorizing, Inc., Case Number 93-568602, District Court Harris County, Texas, 165th Judicial District. Prior to dismissal, plaintiffs had sought actual damages of $500 million dollars and punitive damages of $500 billion dollars against Registrant's wholly owned subsidiary, Natural Gas Odorizing, 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.
HELMERICH & PAYNE, INC.