Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

     
þ   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For quarterly period ended: March 31, 2004

OR

     
o   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)

1437 South Boulder Avenue, Tulsa, Oklahoma,74119
(Address of principal executive office)(Zip Code)

(918) 742-5531
(Registrant’s telephone number, including area code)

N/A
(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     þ     No     o

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes     þ     No     o

     
CLASS   OUTSTANDING AT APRIL 30, 2004
Common Stock, $0.10 par value   50,401,798

Total Number of Pages — 23

 

HELMERICH & PAYNE, INC. AND SUBSIDIARIES

TABLE OF CONTENTS

             
        Page No.
PART I.          
Item 1.          
        3  
        4  
        5  
        6  
        7-13  
Item 2.       14-22  
Item 3.       20  
Item 4.       21  
PART II.       21  
Item 4.       21  
Item 6.       21-22  
Signatures     23  
  Certification of Chief Executive Officer
  Certification of Chief Financial Officer
  Certification of CEO & CFO Pursuant to 18 U.S.C.

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PART I. FINANCIAL INFORMATION
HELMERICH & PAYNE, INC. AND SUBSIDIARIES

CONSOLIDATED CONDENSED BALANCE SHEETS
(in thousands, except per share amounts)

ITEM 1. FINANCIAL STATEMENTS

                 
    Unaudited    
    March 31,   September 30,
    2004
  2003
ASSETS
               
Current assets:
               
Cash and cash equivalents
  $ 30,558     $ 38,189  
Accounts receivable, less reserve of $1,326 at March 31, 2004 and $1,319 at September 30, 2003
    101,982       91,088  
Inventories
    21,712       22,533  
Income tax receivable
    44,160       32,619  
Prepaid expenses and other
    14,449       13,102  
 
   
  		     
  		 
Total current assets
    212,861       197,531  
 
   
  		     
  		 
Investments
    173,195       158,770  
Property, plant and equipment, net
    1,063,923       1,058,205  
Other assets
    1,021       1,329  
 
   
  		     
  		 
Total assets
  $ 1,451,000     $ 1,415,835  
 
   
  		     
  		 
LIABILITIES AND SHAREHOLDERS’ EQUITY
               
Current liabilities:
               
Notes payable
  $ 25,000     $ 30,000  
Accounts payable
    22,830       29,630  
Accrued liabilities
    28,203       28,988  
 
   
  		     
  		 
Total current liabilities
    76,033       88,618  
 
   
  		     
  		 
Noncurrent liabilities:
               
Long-term notes payable
    200,000       200,000  
Deferred income taxes
    206,431       181,737  
Other
    31,544       28,229  
 
   
  		     
  		 
Total noncurrent liabilities
    437,975       409,966  
 
   
  		     
  		 
SHAREHOLDERS’ EQUITY
               
Common stock, par value $.10 per share:
               
Authorized common 80,000; issued 53,529
    5,353       5,353  
Preferred stock, no shares issued
    —       —  
Additional paid-in capital
    85,038       83,302  
Retained earnings
    844,403       840,776  
Unearned compensation
    —       (10 )
Accumulated other comprehensive income
    44,713       33,668  
 
   
  		     
  		 
 
    979,507       963,089  
Less treasury stock, at cost, 3,142 shares and 3,389 shares at March 31, 2004 and September 30, 2003, respectively
    42,515       45,838  
 
   
  		     
  		 
Total shareholders’ equity
    936,992       917,251  
 
   
  		     
  		 
Total liabilities and shareholders’ equity
  $ 1,451,000     $ 1,415,835  
 
   
  		     
  		 

The accompanying notes are an integral part of these statements.

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HELMERICH & PAYNE, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(Unaudited)
(in thousands, except per share data)

                                 
    Three Months Ended   Six Months Ended
    March 31,
  March 31,
    2004
  2003
  2004
  2003
REVENUES
                               
Operating revenues
  $ 143,463     $ 125,459     $ 278,333     $ 237,963  
Income from investments
    7,723       861       11,747       1,670  
 
   
  		     
  		     
  		     
  		 
 
    151,186       126,320       290,080       239,633  
 
   
  		     
  		     
  		     
  		 
COST AND EXPENSES
                               
Direct operating costs
    104,660       87,353       198,187     $ 168,409  
Depreciation
    23,402       19,943       45,670       38,179  
General and administrative
    9,789       11,536       18,891       22,516  
Interest
    3,112       3,032       6,334       5,802  
 
   
  		     
  		     
  		     
  		 
 
    140,963       121,864       269,082       234,906  
 
   
  		     
  		     
  		     
  		 
Income before income taxes and equity in income (loss) of affiliates
    10,223       4,456       20,998       4,727  
Provision for income taxes
    4,484       1,915       9,010       2,032  
Equity in income (loss) of affiliates net of income taxes
    309       33       (311 )     486  
 
   
  		     
  		     
  		     
  		 
NET INCOME
  $ 6,048     $ 2,574     $ 11,677     $ 3,181  
 
   
  		     
  		     
  		     
  		 
Earnings per common share:
                               
Basic
  $ 0.12     $ 0.05     $ 0.23     $ 0.06  
Diluted
  $ 0.12     $ 0.05     $ 0.23     $ 0.06  
Cash Dividends (Note 3)
  $ 0.08     $ 0.08     $ 0.16     $ 0.16  
AVERAGE COMMON SHARES OUTSTANDING:
                               
Basic
    50,263       50,023       50,209       50,001  
Diluted
    50,903       50,539       50,784       50,503  

The accompanying notes are an integral part of these statements.

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HELMERICH & PAYNE, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)

                 
    Six Months Ended
    March 31,
    2004
  2003
OPERATING ACTIVITIES:
               
Net income
  $ 11,677     $ 3,181  
Adjustments to reconcile net income to net cash provided by operating activities:
               
Depreciation
    45,670       38,179  
Equity in (income) loss of affiliates before income taxes
    502       (781 )
Amortization of deferred compensation
    10       152  
Gain on sale of securities
    (10,412 )     (297 )
Gain on sale of property, plant & equipment
    (1,635 )     (530 )
Deferred income tax expense
    18,017       16,822  
Other, net
    33       335  
Change in assets and liabilities-
               
Accounts receivables
    (10,894 )     2,689  
Inventories
    821       400  
Prepaid expenses and other
    (1,039 )     (4,058 )
Income tax receivable
    (11,541 )     (16,127 )
Accounts payable
    (6,800 )     (1,019 )
Accrued liabilities
    428       (356 )
Deferred income taxes
    (93 )     (828 )
Other noncurrent liabilities
    2,429       1,318  
 
   
  		     
  		 
Net cash provided by operating activities
    37,173       39,080  
 
   
  		     
  		 
INVESTING ACTIVITIES:
               
Capital expenditures
    (52,657 )     (137,803 )
Proceeds from sale of securities
    14,033       2,416  
Proceeds from sales of property, plant and equipment
    2,907       316  
 
   
  		     
  		 
Net cash used in investing activities
    (35,717 )     (135,071 )
 
   
  		     
  		 
FINANCING ACTIVITIES:
               
Proceeds from notes payable
    —       100,000  
Payment of short-term notes
    (5,000 )     —  
Dividends paid
    (8,050 )     (8,004 )
Proceeds from exercise of stock options
    3,963       360  
 
   
  		     
  		 
Net cash provided by (used in) financing activities
    (9,087 )     92,356  
 
   
  		     
  		 
Net decrease in cash and cash equivalents
    (7,631 )     (3,635 )
Cash and cash equivalents, beginning of period
    38,189       46,883  
 
   
  		     
  		 
Cash and cash equivalents, end of period
  $ 30,558     $ 43,248  
 
   
  		     
  		 

The accompanying notes are an integral part of these statements.

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HELMERICH & PAYNE, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENT OF SHAREHOLDERS’ EQUITY
(in thousands — except per share data)

                                                                         
                                                            Accumulated    
    Common Stock   Additional                   Treasury Stock   Other   Total
   
  Paid-In   Unearned   Retained  
  Comprehensive   Shareholders'
    Shares
  Amount
  Capital
  Compensation
  Earnings
  Shares
  Amount
  Income
  Equity
Balance, September 30, 2003
    53,529     $ 5,353     $ 83,302     $ (10 )   $ 840,776       3,389     $ (45,838 )   $ 33,668     $ 917,251  
Comprehensive Income:
                                                                       
Net Income
                                                                       
Other comprehensive income,
                                    11,677                               11,677  
Unrealized gains on available- for-sale securities, net
                                                            10,973       10,973  
Amortization of unrealized loss on derivative instruments, net
                                                            72       72  
 
                                                                   
  		 
Total other comprehensive income
                                                                    11,045  
 
                                                                   
  		 
Comprehensive income
                                                                    22,722  
 
                                                                   
  		 
Cash dividends ($0.16 per share)
                                    (8,050 )                             (8,050 )
Exercise of Stock Options
                    640                       (247 )     3,323               3,963  
Tax benefit of stock-based awards
                    1,096                                               1,096  
Amortization of deferred compensation
                            10                                       10  
 
   
  		     
  		     
  		     
  		     
  		     
  		     
  		     
  		     
  		 
Balance, March 31, 2004
    53,529     $ 5,353     $ 85,038     $ —     $ 844,403       3,142     $ (42,515 )   $ 44,713     $ 936,992  
 
   
  		     
  		     
  		     
  		     
  		     
  		     
  		     
  		     
  		 

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HELMERICH & PAYNE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
     
1.
  Basis of Presentation -
  In the opinion of the Company, the accompanying unaudited consolidated condensed financial statements contain all adjustments, consisting only of those of a normal recurring nature, necessary to present fairly the results of the periods presented. The results of operations for the three and six months ended March 31, 2004, and March 31, 2003, are not necessarily indicative of the results to be expected for the full year. These consolidated condensed financial statements should be read in conjunction with the consolidated financial statements and notes thereto in the Company’s 2003 Annual Report on Form 10K.
 
   
2.
  Employee Stock-Based Awards -
  Employee stock-based awards are accounted for under Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees” and related interpretations. Fixed plan common stock options generally do not result in compensation expense, because the exercise price of the options issued by the Company equals the market price of the underlying stock on the date of grant. The following table illustrates the effect on net income and earnings per share as if the Company had applied the fair value recognition provisions of Statement of Financial Accounting Standards (SFAS) No. 123, “Accounting for Stock-Based Compensation”.
                                 
    Three Months Ended   Six Months Ended
    March 31,
  March 31,
    2004
  2003
  2004
  2003
    (in thousands except per share amounts)
Net income, as reported
  $ 6,048     $ 2,574     $ 11,677     $ 3,181  
Add: Stock-based employee compensation expense included in the Consolidated Statements of Income, net of related tax effects
    —       9       6       94  
Deduct: Total stock-based employee compensation expense determined under fair value based method for all awards, net of related tax effects
    (1,013 )     (1,091 )     ( 2,122 )     (2,206 )
 
   
  		     
  		     
  		     
  		 
Pro forma net income
  $ 5,035     $ 1,492     $ 9,561     $ 1,069  
 
   
  		     
  		     
  		     
  		 
Earnings per share:
                               
Basic-as reported
  $ 0.12     $ 0.05     $ 0.23     $ 0.06  
 
   
  		     
  		     
  		     
  		 
Basic-pro forma
  $ 0.10     $ 0.03     $ 0.19     $ 0.02  
 
   
  		     
  		     
  		     
  		 
Diluted-as reported
  $ 0.12     $ 0.05     $ 0.23     $ 0.06  
 
   
  		     
  		     
  		     
  		 
Diluted-pro forma
  $ 0.10     $ 0.03     $ 0.19     $ 0.02  
 
   
  		     
  		     
  		     
  		 
     
3.
  Cash Dividends -
  The $.08 cash dividend declared in December, 2003, was paid March 1, 2004. On March 3, 2004, a cash dividend of $.08 per share was declared for shareholders of record on May 14, 2004, payable June 1, 2004.
 
   
4.
  Inventories -
  Inventories consist primarily of replacement parts and supplies held for use in the Company’s drilling operations.
 
   
5.
  Sale of Investments -
  Net income includes after-tax gains from the sale of available-for-sale securities of $4,337,000 ($0.09 per diluted share) and $6,435,000 ($0.13 per diluted share) during the second quarter and first six months of fiscal 2004, respectively, and $182,000 for both the three and six months ended March 31, 2003.

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HELMERICH & PAYNE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS — Continued
(Unaudited)

     
6.
  Summary of Available-for-Sale Securities -
  The following is a summary of available-for-sale securities, which excludes those accounted for under the equity method of accounting. The recorded amounts for investments accounted for under the equity method are $56.2 million and $56.7 million at March 31, 2004 and September 30, 2003, respectively.
                                 
            Gross   Gross   Est.
            Unrealized   Unrealized   Fair
    Cost
  Gains
  Losses
  Value
    (in thousands)
Equity Securities 03/31/04
  $ 29,644     $ 81,973     $ —     $ 111,617  
Equity Securities 09/30/03
  $ 33,300     $ 64,276     $ —     $ 97,576  
     
7.
  Comprehensive Income -
  Comprehensive income, net of related tax, is as follows (in thousands):
                                 
    Three Months Ended   Six Months Ended
    March 31,
  March 31,
    2004
  2003
  2004
  2003
Net Income
  $ 6,048     $ 2,574     $ 11,677     $ 3,181  
Other comprehensive income:
                               
Net unrealized gain (loss) on securities
    4,691       (3,908 )     10,973       1,949  
Amortization of unrealized loss on derivative instruments
    —       242       72       489  
 
   
  		     
  		     
  		     
  		 
Other comprehensive income (loss)
    4,691       (3,666 )     11,045       2,438  
 
   
  		     
  		     
  		     
  		 
Comprehensive income (loss)
  $ 10,739     $ (1,092 )   $ 22,722     $ 5,619  
 
   
  		     
  		     
  		     
  		 
     
 
  The components of accumulated other comprehensive income, net of related taxes, are as follows (in thousands):
                 
    March 31,   September 30,
    2004
  2003
Unrealized gain on securities, net
  $ 50,824     $ 39,851  
Unrealized loss on derivative instruments
    —       (72 )
Minimum pension liability
    (6,111 )     (6,111 )
 
   
  		     
  		 
Accumulated other comprehensive income
  $ 44,713     $ 33,668  
 
   
  		     
  		 
     
8.
  Notes payable and long-term debt -
  At March 31, 2004, the Company had $200 million in long-term debt outstanding at fixed rates and maturities as summarized in the following table.
                 
Issue Amount
  Maturity Date
  Interest Rate
$25,000,000
  August 15, 2007     5.51%  
$25,000,000
  August 15, 2009     5.91%  
$75,000,000
  August 15, 2012     6.46%  
$75,000,000
  August 15, 2014     6.56%  
     
 
  The terms of the debt obligations require the Company to maintain a minimum ratio of debt to total capitalization. The proceeds of the debt issuances were used to repay $50 million of outstanding debt, fund the Company’s rig construction program and for other general corporate purposes.

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HELMERICH & PAYNE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS — Continued
(Unaudited)

     
  At March 31, 2004, the Company had a committed unsecured line of credit totaling $125 million. Short-term loans totaling $25 million and letters of credit totaling $13.7 million were outstanding against the line, leaving $86.3 million available to borrow. The weighted average interest rate on short-term loans at March 31, 2004 was 2.1 percent. Under terms of the line of credit, the Company must maintain certain financial ratios including debt to total capitalization and debt to earnings before interest, taxes, depreciation, and amortization, and maintain certain levels of liquidity and tangible net worth. A non-use fee of 0.15 percent per annum is calculated on the average daily unused amount, payable quarterly. The interest rate varies based on LIBOR plus .875 to 1.125 percent or prime minus 1.75 percent to prime minus 1.50 percent depending on the ratios described above, as well as, the maturity selected by the Company. The line of credit matures in July, 2004.
 
   
  Effective May 4, 2004, the Company elected to reduce the aggregate committed revolving amount under its line of credit from $125 million to $50 million. The maturity date on the facility remains unchanged.
 
   
9.
  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   Six Months Ended
    March 31,
  March 31,
    2004
  2003
  2004
  2003
    (in thousands)
Basic weighted-average shares
    50,263       50,023       50,209       50,001  
Effect of dilutive shares:
                               
Stock options
    640       514       575       500  
Restricted stock
    —       2       —       2  
 
   
  		     
  		     
  		     
  		 
 
    640       516       575       502  
 
   
  		     
  		     
  		     
  		 
Diluted weighted-average shares
    50,903       50,539       50,784       50,503  
 
   
  		     
  		     
  		     
  		 
     
  At March 31, 2003 , options to purchase 1,058,836 shares of common stock at a weighted average price of $27.84 were outstanding but were not included in the computation of diluted earnings per common share. Inclusion of these shares would be antidilutive.
 
   
10.
  Income Taxes -
  The Company’s effective tax rate was 42.9% in the first six months of fiscal 2004, compared to 43.0% in the first six months of fiscal 2003. The fiscal 2004 effective tax rate increased from the first quarter primarily as the result of the tax treatment of the devaluation loss in Venezuela.

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HELMERICH & PAYNE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS — Continued
(Unaudited)

     
11.
  Segment information -
  The Company operates principally in the contract drilling industry. The Company’s contract drilling business includes the following operating segments: U.S. Land, U.S. Offshore Platform, and International. The contract drilling operations consist primarily of contracting Company-owned drilling equipment primarily to major oil and gas exploration companies. The Company’s primary international areas of operation include Venezuela, Colombia, Ecuador, Argentina and Bolivia. The Company also has a Real Estate Segment whose operations are conducted exclusively in the metropolitan area of Tulsa, Oklahoma. The primary areas of operations include a major shopping center and several multi-tenant warehouses. Each reportable segment is a strategic business unit which is managed separately. Other includes investments and corporate operations.
 
   
  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; direct operating costs; depreciation; and allocated general and administrative costs; but excludes corporate costs for other depreciation and other income and expense. General and administrative costs are allocated to the segments based primarily on specific identification, and to the extent that such identification was not practical, on other methods which the Company believes to be a reasonable reflection of the utilization of services provided.
 
   
  Summarized financial information of the Company’s reportable segments for the six months ended March 31, 2004, and 2003, is shown in the following tables:
                                 
    External   Inter-   Total   Operating
(in thousands)
  Sales
  Segment
  Sales
  Profit
March 31, 2004
                               
Contract Drilling:
                               
U.S. Land
  $ 158,513     $ —     $ 158,513     $ 13,305  
U.S. Offshore Platform
    39,766       —       39,766       8,481  
International
    75,421       —       75,421       5,344  
 
   
  		     
  		     
  		     
  		 
 
    273,700       —       273,700       27,130  
 
   
  		     
  		     
  		     
  		 
Real Estate
    4,633       517       5,150       2,303  
Other
    11,747       —       11,747       —  
Eliminations
    —       (517 )     (517 )     —  
 
   
  		     
  		     
  		     
  		 
Total
  $ 290,080     $ —     $ 290,080     $ 29,433  
 
   
  		     
  		     
  		     
  		 
                                 
    External   Inter-   Total   Operating
(in thousands)
  Sales
  Segment
  Sales
  Profit
March 31, 2003
                               
Contract Drilling:
                               
U.S. Land
  $ 124,450     $ —     $ 124,450     $ 4,539  
U.S. Offshore Platform
    55,790       —       55,790       16,354  
International
    52,975       —       52,975       656  
 
   
  		     
  		     
  		     
  		 
 
    233,215               233,215       21,549  
 
   
  		     
  		     
  		     
  		 
Real Estate
    4,748       722       5,470       2,526  
Other
    1,670       —       1,670       —  
Eliminations
    —       (722 )     (722 )     —  
 
   
  		     
  		     
  		     
  		 
Total
  $ 239,633     $ —     $ 239,633     $ 24,075  
 
   
  		     
  		     
  		     
  		 

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Table of Contents

HELMERICH & PAYNE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS — Continued
(Unaudited)

Summarized financial information of the Company’s reportable segments for the quarters ended March 31, 2004, and 2003, is shown in the following tables:

                                 
    External   Inter-   Total   Operating
(in thousands)
  Sales
  Segment
  Sales
  Profit
March 31, 2004
                               
Contract Drilling:
                               
U.S. Land
  $ 83,045     $ —     $ 83,045     $ 6,315  
U.S. Offshore Platform
    18,901       —       18,901       4,106  
International
    39,277       —       39,277       1,521  
 
   
  		     
  		     
  		     
  		 
 
    141,223       —       141,223       11,942  
 
   
  		     
  		     
  		     
  		 
Real Estate
    2,240       197       2,437       1,047  
Other
    7,723       —       7,723       —  
Eliminations
    —       (197 )     (197 )     —  
 
   
  		     
  		     
  		     
  		 
Total
  $ 151,186     $ —     $ 151,186     $ 12,989  
 
   
  		     
  		     
  		     
  		 
                                 
    External   Inter-   Total   Operating
(in thousands)
  Sales
  Segment
  Sales
  Profit
March 31, 2003
                               
Contract Drilling:
                               
U.S. Land
  $ 65,412     $ —     $ 65,412     $ 3,644  
U.S. Offshore Platform
    28,079       —       28,079       8,623  
International
    29,451       —       29,451       1,248  
 
   
  		     
  		     
  		     
  		 
 
    122,942       —       122,942       13,515  
 
   
  		     
  		     
  		     
  		 
Real Estate
    2,517       367       2,884       1,360  
Other
    861       —       861       —  
Eliminations
    —       (367 )     (367 )     —  
 
   
  		     
  		     
  		     
  		 
Total
  $ 126,320     $ —     $ 126,320     $ 14,875  
 
   
  		     
  		     
  		     
  		 

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Table of Contents

HELMERICH & PAYNE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS – Continued
(Unaudited)

The following table reconciles segment operating profit per the table above to income before income taxes and equity in income (loss) of affiliates as reported on the Consolidated Condensed Statements of Income.

                                 
    Three Months Ended   Six Months Ended
    March 31,
  March 31,
    2004
  2003
  2004
  2003
    (in thousands)
Segment operating profit
  $   12,989     $ 14,875     $ 29,433     $ 24,075  
Unallocated amounts:
                               
Income from investments
    7,723       861       11,747       1,670  
Corporate and administrative expense
    (6,594 )     (7,575 )     (12,414 )     (13,761 )
Interest expense
    (3,112 )     (3,032 )     (6,334 )     (5,802 )
Corporate depreciation
    (751 )     (627 )     (1,372 )     (1,233 )
Other corporate expense
    (32 )     (46 )     (62 )     (222 )
 
   
  		     
  		     
  		     
  		 
Total unallocated amounts
    (2,766 )     (10,419 )     (8,435 )     (19,348 )
 
   
  		     
  		     
  		     
  		 
Income before income taxes and equity in income (loss) of affiliates
  $ 10,223     $ 4,456     $ 20,998     $ 4,727  
 
   
  		     
  		     
  		     
  		 

The following table presents revenues from external customers by country based on the location of service provided.

                                 
    Three Months Ended   Six Months Ended
    March 31,
  March 31,
    2004
  2003
  2004
  2003
    (in thousands)
Revenues
                               
United States
  $ 111,909     $ 96,869     $ 214,659     $ 186,658  
Venezuela
    12,589       9,516       26,375       13,198  
Ecuador
    9,977       12,572       22,536       26,362  
Other Foreign
    16,711       7,363       26,510       13,415  
 
   
  		     
  		     
  		     
  		 
Total
  $ 151,186     $ 126,320     $ 290,080     $ 239,633  
 
   
  		     
  		     
  		     
  		 

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Table of Contents

HELMERICH & PAYNE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS – Continued
(Unaudited)

12. Pensions and Other Post-retirement Benefits

The following provides information at March 31 as to the Company’s sponsored domestic defined benefit pension plans as required by SFAS No. 132 (revised 2003), “Employers’ Disclosures About Pensions and Other Post-retirement Benefits.” The Company adopted the provisions of SFAS No. 132 (revised 2003) in the quarter ending March 31, 2004.

Components of Net Periodic Benefit Cost -

                                 
    Three Months Ended   Six Months Ended
    March 31,
  March 31,
    2004
  2003
  2004
  2003
    (in thousands)
Service Cost
  $ 1,006     $ 1,464     $ 2,012     $ 2,881  
Interest Cost
    1,101       1,199       2,202       2,359  
Expected return on plan assets
    (1,058 )     (1,032 )     (2,117 )     (2,030 )
Amortization-prior service cost
    5       49       10       96  
Recognized net actuarial loss
    189       420       378       827  
 
   
  		     
  		     
  		     
  		 
Net pension expense
  $ 1,243     $ 2,100     $ 2,485     $ 4,133  
 
   
  		     
  		     
  		     
  		 

Employee Contributions -

The Company anticipates that no funding of the pension plan will be required in fiscal 2004.

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Table of Contents

Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
March 31, 2004

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 2003 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 and political 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 Financial Condition and Results of Operations 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

Three Months Ended March 31, 2004 vs Three Months Ended March 31, 2003

The Company reported net income of $6,048,000 ($0.12 per diluted share) from revenues of $151,186,000 for the second quarter ended March 31, 2004, compared with net income of $2,574,000 ($0.05 per diluted share) from revenues of $126,320,000 for the second quarter of fiscal year 2003. Net income for this year’s second quarter includes $4,337,000 ($0.09 per diluted share) of gains from the sale of available-for-sale securities. There were no material security gains in last year’s second quarter.

The following tables summarize operations by business segment for the three months ended March 31, 2004 and 2003. Operating statistics in the tables exclude the effects of offshore platform management contracts, and do not include reimbursements of “out-of-pocket” expenses in revenue, expense and margin per day calculations. Per day calculations for international operations also exclude gains and losses from translation of foreign currency transactions.

                 
    2004
  2003
US LAND OPERATIONS   (in 000's, except days and per day amounts)
Revenues
  $ 83,045     $ 65,412  
Direct operating expenses
    60,943       49,136  
General and administrative expense
    1,867       2,148  
Depreciation
    13,920       10,484  
 
   
  		     
  		 
Operating profit
  $ 6,315     $ 3,644  
Activity days
    6,758       5,357  
Average rig revenue per day
  $ 11,302     $ 11,428  
Average rig expense per day
  $ 8,032     $ 8,390  
Average rig margin per day
  $ 3,270     $ 3,038  
Rig utilization
    86 %     80 %

NOTE: Included in land revenues for the three months ended March 31, 2004 and 2003 are reimbursements for “out-of-pocket” expenses of $6.7 million and $4.2 million, respectively.

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Table of Contents

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
March 31, 2004
(continued)

U.S. LAND operating profit increased to $6.3 million for the second quarter of fiscal 2004 compared to $3.6 million in the same period of fiscal 2003. Revenues were $83.0 million and $65.4 million in the second quarter of fiscal 2004 and 2003 respectively. The $2.7 million increase in operating profit was primarily the result of increased rig days, partially offset by increased depreciation.

Average land rig margin per day was $3,270 and $3,038 for the second quarter of fiscal 2004 and 2003, respectively. The 8% increase in margins was due to reduced rig expense per day in fiscal 2004, as the result of a reduction in labor and other costs associated with efficiencies gained in our FlexRig3 program in the last year. Land rig utilization was 86% and 80% for the second quarter of fiscal 2004 and 2003, respectively. Land rig revenue days for the second quarter of 2004 were 6,758 compared with 5,357 for the same period of 2003, with an average of 74.3 and 59.5 rigs working during the second quarter of fiscal 2004 and 2003, respectively. The increase in rig days and average rigs working is attributable to additional FlexRig3s being added to the Company’s land fleet in 2003 and 2004. Land depreciation expense increased to $13.9 million in the second quarter of fiscal 2004, compared to $10.5 million in the same period of fiscal 2003. The sharp increase is the result of additional rigs added during fiscal 2003 and five new rigs in 2004.

The Company completed its FlexRig3 project and will suspend construction activities and review future possibilities and plans for the FlexRig program. Price competition remained strong in the second quarter but there were indications going into the third quarter that increased demand for rigs will put upward pressure on dayrates. During the quarter, the Company relocated five rigs to stronger markets with better economics and long-term prospects.

                 
    2004
  2003
US OFFSHORE OPERATIONS   (in 000's, except days and per day amounts)
Revenues
  $ 18,901     $ 28,079  
Direct operating expenses
    10,997       15,420  
General and administrative expense
    767       849  
Depreciation
    3,031       3,187  
 
   
  		     
  		 
Operating profit
  $ 4,106     $ 8,623  
Activity days
    455       540  
Average rig revenue per day
  $ 29,276     $ 38,146  
Average rig expense per day
  $ 14,481     $ 17,794  
Average rig margin per day
  $ 14,795     $ 20,352  
Rig utilization
    42 %     50 %

NOTE: Included in offshore revenues for the three months ended March 31, 2004 and 2003 are reimbursements for “out-of-pocket” expenses of $1.6 million and $2.6 million, respectively.

U.S. OFFSHORE revenues and operating profit for the second quarter of fiscal 2004 declined significantly as compared to the second quarter of fiscal 2003. The decline is primarily the result of a 16% decrease in revenue days and a 27% decrease in margins per day. The margin per day decrease is the result of one rig being stacked and two rigs going from a full dayrate to standby status.

Six of the Company’s 12 platform rigs are currently contracted. The Company continues to forecast a slow recovery in its offshore segment, but some inquiries for future work are being pursued and the Company is optimistic that one or two additional contracts will be secured by September 2004.

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Table of Contents

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
March 31, 2004
(continued)

                 
    2004
  2003
INTERNATIONAL OPERATIONS   (in 000's, except days and per day amounts)
Revenues
  $ 39,277     $ 29,451  
Direct operating expenses
    32,056       22,257  
General and administrative expense
    561       964  
Depreciation
    5,139       4,982  
 
   
  		     
  		 
Operating profit (loss)
  $ 1,521     $ 1,248  
Activity days
    1,473       1,205  
Average rig revenue per day
  $ 21,826     $ 19,439  
Average rig expense per day
  $ 16,645     $ 14,146  
Average rig margin per day
  $ 5,181     $ 5,293  
Rig utilization
    51 %     41 %

NOTE: Included in International Drilling revenues for the three months ended March 31, 2004 and 2003, respectively, are reimbursements for “out-of-pocket” expenses of $3.5 million and $2.7 million, respectively.

INTERNATIONAL DRILLING’S operating profit for the second quarter of fiscal 2004 was $1.5 million, compared to $1.2 million in the same period of 2003. Increase in operating profit is due to increase in revenues, partially offset by $1.4 million exchange loss in Venezuela in second quarter 2004. Included in second quarter 2004 revenues are $4.1 million of new mobilization revenues at very low margins. Rig utilization for international operations averaged 51% for this year’s second quarter, compared with 41% for the second quarter of fiscal 2003. An average of 16.2 rigs worked during the current quarter, compared to 13.4 rigs in the second quarter of fiscal 2003. Revenues from International Drilling operations were $39.3 million in the second quarter of fiscal 2004 compared with $29.5 million in the second quarter of fiscal 2003.

Revenues in Venezuela increased $3.1 million in the second quarter of fiscal 2004 to $12.6 million, as the Company averaged 7.1 rigs in 2004, compared with 4.8 rigs in the second quarter of fiscal 2003. Operating days in Venezuela in the second quarter of 2004 and 2003 were 648 and 436, respectively. Included in second quarter 2004 direct operating expenses is a $1.4 million exchange loss related to currency devaluation. Effective February 5, 2004, the Central Bank of Venezuela authorized the devaluation of the bolivar from 1600 to 1920. Currently in Venezuela the Company has seven deep rigs operating and an eighth deep rig will go to work in the third quarter for PDVSA. A ninth deep rig is operating for an international operator. The Company is bidding on other contracts that offer possibilities for two 2000 HP deep land rigs in Venezuela and for other deep rigs that are idle in Colombia, Bolivia and Argentina. The Company is mobilizing a 3000 HP deep land rig from Argentina to Venezuela in the effort to secure additional contracts.

Revenues in Ecuador were $10.0 million and $12.6 million for the second quarter of fiscal 2004 and 2003, respectively, with 67% and 88% rig utilization for the same periods. An average of 5.4 rigs and 7.0 rigs worked in Ecuador during the second quarter of fiscal 2004 and 2003, respectively. The Company has five rigs currently working in Ecuador with a sixth rig contracted to begin working in May.

Revenues in Colombia were $1.7 million and $0.5 million, for the second quarter of fiscal 2004 and 2003, respectively. There were no revenue days in the second quarter of fiscal 2004 compared with 49 revenue days in the same period of fiscal 2003. There is a good opportunity to return one of the two rigs in Colombia back to work in the third quarter.

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Table of Contents

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
March 31, 2004
(continued)

Revenues in Hungary were $2.7 million for the current quarter, including $0.9 million of mobilization revenues. Operations began in Hungary during the fourth quarter of fiscal 2003.

The Company began operations in Chad in the second quarter of fiscal 2004. Revenues for the quarter were $5.2 million, including $3.2 million of mobilization revenues.

OTHER

Income from investments included $7.1 million and $0.3 million of gains on sale of available-for-sale securities in the second quarter of fiscal 2004 and 2003, respectively. Gains net of tax were $4.3 million ($0.09 per diluted share) and $0.2 million ($0.00 per diluted share), respectively. The Company sold its entire position of 140,000 shares in ConocoPhillips during the current quarter.

General and administrative expenses decreased from $11.5 million in the second quarter of fiscal 2003 to $9.8 million in the second quarter of fiscal 2004. The $1.7 million decrease is primarily related to a decrease of $0.9 million in pension expense and a $1.5 million decrease in bonuses, partially offset by an increase of $0.7 million in corporate liability insurance premiums.

Interest expense was $3.1 million in the second quarter of fiscal 2004, compared to $3.0 million in the same period of fiscal 2003. Capitalized interest was $0.2 million and $0.5 million for the same periods, respectively.

Six Months Ended March 31, 2004 vs Six Months Ended March 31, 2003

The Company reported net income of $11,677,000 ($0.23 per diluted share) from revenues of $290,080,000 for the six months ended March 31, 2004, compared with net income of $3,181,000 ($0.06 per diluted share) from revenues of $239,633,000 for the first six months of fiscal year 2003. Net income for the first six months of fiscal 2004 includes $6,435,000 ($0.13 per diluted share) of gains from the sale of available-for-sale securities. There were no material security gains in the first six months of fiscal 2003.

The following tables summarize operations by business segment for the six months ended March 31, 2004 and 2003. Operating statistics in the tables exclude the effects of offshore platform management contracts, and do not include reimbursements of “out-of-pocket” expenses in revenue, expense and margin per day calculations. Per day calculations for international operations also exclude gains and losses from translation of foreign currency transactions.

                 
    2004
  2003
US LAND OPERATIONS   (in 000's, except days and per day amounts)
Revenues
  $ 158,513     $ 124,450  
Direct operating expenses
    114,433       94,992  
General and administrative expense
    3,792       5,485  
Depreciation
    26,983       19,434  
 
   
  		     
  		 
Operating profit
  $ 13,305     $ 4,539  
Activity days
    13,038       10,372  
Average rig revenue per day
  $ 11,320     $ 11,377  
Average rig expense per day
  $ 7,940     $ 8,536  
Average rig margin per day
  $ 3,380     $ 2,841  
Rig utilization
    83 %     80 %

NOTE: Included in land revenues for the six months ended March 31, 2004 and March 31, 2003 are reimbursements for “out-of-pocket” expenses of $10.9 million and $6.5 million, respectively.

-17-

Table of Contents

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
March 31, 2004
(continued)

U.S. LAND operating results in the first six months of fiscal 2004 increased significantly from the same period in fiscal 2003. Operating profit was $13.3 million and $4.5 million in the first six months of fiscal 2004 and 2003, respectively.

Revenues were $158.5 million in the first six months of fiscal 2004, compared with $124.5 million in the same period of fiscal 2003. The $8.8 million increase in operating profit was primarily the result of higher land rig margins and increased rig days, partially offset by increased depreciation.

The 19% increase in margins was due to reduced rig expense per day in fiscal 2004, as the result of a reduction in labor and other costs associated with efficiencies gained in our FlexRig3 program during 2003 and 2004. Land rig utilization was 83% and 80% for the six months of fiscal 2004 and 2003, respectively. Land rig revenue days for the first six months of 2004 were 13,038 compared with 10,372 for the same period of 2003, with an average of 71.2 and 57.0 rigs working during the first six months of fiscal 2004 and 2003, respectively. The increase in rig days and average rigs working is attributable to additional FlexRig3s being added to the Company’s land fleet in calendar 2003 and 2004. The 39% increase in depreciation is the result of additional rigs added during fiscal 2003 and five new rigs in 2004.

                 
    2004
  2003
US OFFSHORE OPERATIONS   (in 000's, except days and per day amounts)
Revenues
  $ 39,766     $ 55,790  
Direct operating expenses
    23,719       31,519  
General and administrative expense
    1,496       1,588  
Depreciation
    6,070       6,329  
 
   
  		     
  		 
Operating profit
  $ 8,481     $ 16,354  
Activity days
    915       1,112  
Average rig revenue per day
  $ 31,042     $ 37,084  
Average rig expense per day
  $ 16,041     $ 17,824  
Average rig margin per day
  $ 15,001     $ 19,260  
Rig utilization
    42 %     51 %

NOTE: Included in offshore revenues for the six months ended March 31, 2004 and March 31, 2003 are reimbursements for “out-of-pocket” expenses of $3.2 million and $4.6 million, respectively.

U.S. OFFSHORE operating revenues and profit declined, primarily as the result of one rig being stacked and two rigs going from full dayrate to standby status. Operating profit decreased to $8.5 million in the first six months of fiscal 2004 from $16.4 million in the first six months of 2003. Rig days were 915 and 1,112 for the first six months of fiscal 2004 and 2003, respectively. Rig utilization for the same periods was 42% and 51%, respectively.

Six of the Company’s 12 platform rigs are contracted and only a modest improvement in offshore platform results is anticipated for the third quarter of fiscal 2004. The Company continues to forecast a slow recovery in our platform rig activity, but is encouraged by inquiries for future possibilities and could secure contracts for one or two additional rigs by September 2004.

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Table of Contents

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
March 31, 2004
(continued)

                 
    2004
  2003
INTERNATIONAL OPERATIONS   (in 000's, except days and per day amounts)
Revenues
  $ 75,421     $ 52,975  
Direct operating expenses
    58,728       40,752  
General and administrative expense
    1,189       1,682  
Depreciation
    10,160       9,885  
 
   
  		     
  		 
Operating profit
  $ 5,344     $ 656  
Activity days
    3,007       2,196  
Average rig revenue per day
  $ 20,490     $ 19,092  
Average rig expense per day
  $ 14,988     $ 14,447  
Average rig margin per day
  $ 5,502     $ 4,645  
Rig utilization
    52 %     37 %

NOTE: Included in International Drilling revenues for the six months ended March 31, 2004 and 2003, respectively, are reimbursements for “out-of-pocket” expenses of $6.8 million and $4.5 million, respectively.

INTERNATIONAL DRILLING’S operating profit for the first six months of fiscal 2004 was $5.3 million, compared to $0.7 million in the same period of 2003. Rig utilization for international operations averaged 52% for the first six months of fiscal 2004, compared with 37% for the first six months of fiscal 2003. An average of 16.5 rigs worked during the first six months of fiscal 2004, compared to 12.1 rigs in the first six months of fiscal 2003. International revenues were $75.4 million and $53.0 million for the first six months of fiscal 2004 and 2003, respectively. Included in revenues for the first six months of fiscal 2004 were $4.1 million of new mobilization revenues at very low margins. The overall increase in margin per day was primarily the result of the increase in revenue days in Venezuela at attractive margins.

Revenues in Venezuela increased $13.2 million in the first six months of fiscal 2004 to $26.4 million, as the Company averaged 6.8 rigs in 2004, compared with 3.4 rigs in the first six months of fiscal 2003. Operating days in Venezuela in the first six months of 2004 and 2003 were 1,232 and 623, respectively. Included in direct operating expenses for the six months ended March 31, 2004 is a $1.4 million exchange loss related to currency devaluation. Effective February 5, 2004, the Central Bank of Venezuela authorized the devaluation of the bolivar from 1600 to 1920.

Revenues in Ecuador were $22.5 million and $26.4 million for the first six months of fiscal 2004 and 2003, respectively. Revenue days for the first six months of 2004 and 2003 were 1,109 and 1,343, respectively, with an average of 6.1 and 7.4 rigs working during the first six months fiscal 2004 and 2003, respectively. The Company has five rigs currently working in Ecuador with a sixth rig contracted to start in May.

Revenues in Hungary for the first six months of fiscal 2004 were $4.4 million, including $0.9 million of mobilization revenues. Operations in Hungary began in August, 2003.

Revenues from Chad in the first six months of fiscal 2004 were $5.2 million, including $3.2 million of mobilization revenues at low margins. Operations in Chad began in December, 2003.

Revenues in Argentina for the first six months of fiscal 2004 were $2.3 million. Revenue days were 182 for the same period. There were no revenues or rig activity days in the first six months of fiscal 2003 in Argentina.

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Table of Contents

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
March 31, 2004
(continued)

OTHER

Income from investments increased to $11.7 million in the first six months of fiscal 2004, compared to $1.7 million in the same period of fiscal 2003. The increase is related to gains from the sale of available-for-sale securities of $10.4 million, $6.4 million after-tax ($0.13 per diluted share) in the first six months of 2004.

General and administrative expenses decreased from $22.5 million in the first six months of fiscal 2003 to $18.9 million in the first six months of fiscal 2004. The $3.6 million decrease is primarily related to a decrease in training costs associated with the FlexRig3 construction project of $1.5 million, a decrease of $1.6 million in pension expense, and a decrease in bonuses of $1.9 million, partially offset by an increase of $1.3 million in corporate insurance premiums.

LIQUIDITY AND CAPITAL RESOURCES

Net cash provided by operating activities was $37,173,000 for the first six months of fiscal 2004, compared with $39,080,000 for the same period in 2003. Capital expenditures were $52,657,000 and $137,803,000 for the first six months of fiscal 2004 and 2003, respectively. The significant decrease in capital expenditures from 2003 is the result of the Company’s FlexRig3 construction project winding down in fiscal 2004. The Company has completed its FlexRig3 construction project and has suspended construction activities and will review future plans for the FlexRig program.

The Company anticipates capital expenditures to be approximately $100 million for fiscal 2004. Included in the $100 million is approximately $25 million to complete the FlexRig3 program, most of which was spent by March 31, 2004. Capital expenditures will be financed primarily by internally generated cash flows. A total of five new rigs were completed during the six months ended March 31, 2004. Internally generated cash flows are projected to be approximately $110 million for fiscal 2004 and cash balances were $31 million at March 31, 2004. The Company’s indebtedness totaled $225 million at March 31, 2004, as described in Note 8 to the Consolidated Condensed Financial Statements.

Total proceeds from the sale of available-for-sale securities in the six months ended March 31, 2004 was $14.0 million. The value of the Company’s remaining portfolio was approximately $219 million at March 31, 2004. The after-tax value was approximately $150 million.

Effective May 4, 2004, the Company elected to reduce the aggregate committed revolving amount under its line of credit from $125 million to $50 million. The maturity date on the facility remains unchanged.

There were no other significant changes in the Company’s financial position since September 30, 2003.

Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

For a description of the Company’s market risks, see “Item 7 (a). Quantitative and Qualitative Disclosures About Market Risk” in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2003, Note 8 to the Consolidated Condensed Financial Statements contained in Part I Item 1 hereof with regard to interest rate risk, and discussion of Venezuela currency in Note 10 to the Consolidated Condensed Financial Statements contained in Part I Item 1 and on pages 15 and 19 of Results of Operations contained in Item 2 hereof with regard to foreign currency exchange rate risk.

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Table of Contents

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
March 31, 2004
(continued)

Item 4. CONTROLS AND PROCEDURES

  a)   Evaluation of disclosure controls and procedures. As of the end of the period covered by this Quarterly Report on Form 10-Q, the Company’s management, under the supervision and with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of the Company’s disclosure controls and procedures. Based on that evaluation, the Company’s Chief Executive Officer and Chief Financial Officer believe that:

  •   the Company’s disclosure controls and procedures are designed to ensure that information required to be disclosed by the Company in the reports it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms; and
 
  •   the Company’s disclosure controls and procedures operate such that important information flows to appropriate collection and disclosure points in a timely manner and are effective to ensure that such information is accumulated and communicated to the Company’s management, and made known to the Company’s Chief Executive Officer and Chief Financial Officer, particularly during the period when this Quarterly Report on Form 10-Q was prepared, as appropriate to allow timely decision regarding the required disclosure.

  b)   Changes in internal control over financial reporting. There have been no changes in the Company’s internal control over financial reporting during the Company’s last fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II. OTHER INFORMATION

Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

The Annual Meeting of Stockholders of Helmerich & Payne, Inc. was held on March 3, 2004, 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 Board of Directors of Helmerich & Payne, Inc., and there was no solicitation in opposition to such solicitation. Each of the 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: W.H. Helmerich, III, 44,056,081 for and 1,900,250 shares withheld; Glenn A. Cox, 43,923,698 for and 2,032,633 shares withheld; and Edward B. Rust, Jr., 44,576,731 for and 1,379,600 shares withheld. There were no broker non-votes or other abstentions. The other Directors whose term of office as Director continued after the meeting are Hans Helmerich, George S. Dotson, Paula Marshall-Chapman, John D. Zeglis, William L. Armstrong and L. F. Rooney, III.

Item 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits

31.1   Certification of Chief Executive Officer, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
 
31.2   Certification of Chief Financial Officer, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

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Table of Contents

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
March 31, 2004
(continued)

32   Certification of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

(b) Reports on Form 8-K

     For the three months ended March 31, 2004, Registrant furnished one Form 8-K dated January 22, 2004, reporting information required by Item 12 of Form 8-K by attaching a press release announcing results of operations and certain supplemental information, including financial statements.

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Table of Contents

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.
(Registrant)
 
       
Date: May 13, 2004
  By:   /S/HANS C. HELMERICH
      Hans C. Helmerich, President
 
       
 
       
Date: May 13, 2004
  By:   /S/ DOUGLAS E. FEARS
      Douglas E. Fears, Chief Financial Officer
      (Principal Financial Officer)

Exhibit Index

31.1   Certification of Chief Executive Officer, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
 
31.2   Certification of Chief Financial Officer, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
 
32   Certification of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

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EXHIBIT 31.1

CERTIFICATION

     I, Hans Helmerich, certify that:

     1. I have reviewed this quarterly report on Form 10-Q of Helmerich & Payne, Inc.;

     2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

     3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this quarterly report;

     4. The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Registrant and have:

  a)   designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
 
  b)   evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this quarterly report based on such evaluation; and
 
  c)   disclosed in this quarterly report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and

     5. The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions):

  a)   all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and
 
  b)   any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.

         
 
       
Date: May 13, 2004
       
  /s/ HANS HELMERICH    
 
Hans Helmerich, Chief Executive Officer 		   

 

EXHIBIT 31.2

CERTIFICATION

     I, Douglas E. Fears, certify that:

     1. I have reviewed this quarterly report on Form 10-Q of Helmerich & Payne, Inc.;

     2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

     3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this quarterly report;

     4. The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Registrant and have:

  a)   designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
 
  b)   evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this quarterly report based on such evaluation; and
 
  c)   disclosed in this quarterly report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and

     5. The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions):

  a)   all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and
 
  b)   any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.

         
Date: May 13, 2004
  /s/ DOUGLAS E. FEARS
Douglas E. Fears, Chief Financial Officer 		   

 

EXHIBIT 32

Certification of CEO and CFO Pursuant to
18 U.S.C. Section 1350,
As Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002

     In connection with the Quarterly Report of Helmerich & Payne, Inc. (the “Company”) on Form 10-Q for the period ending March 31, 2004 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), Hans Helmerich, as Chief Executive Officer of the Company, and Douglas E. Fears, as Chief Financial Officer of the Company, each hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to the best of his knowledge, that:

     (1) The Report fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934; and

     (2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

     

     
/s/ HANS HELMERICH
  /s/ DOUGLAS E. FEARS
 
Hans Helmerich
  Douglas E. Fears
Chief Executive Officer
  Chief Financial Officer
May 13, 2004
  May 13, 2004