FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 30549
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For quarterly period ended: June 30, 1994
OR
/ / TRANSACTION 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 JUNE 30, 1994
Common Stock, .10 par value 24,702,416
AUTHORIZED AT JUNE 30, 1994
26,764,476
Total number of Pages 11
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HELMERICH & PAYNE, INC. AND SUBSIDIARIES
INDEX
PART I. FINANCIAL INFORMATION PAGE NO.
Consolidated Condensed Balance Sheets -
June 30, 1994 and September 30, 1993 . . . . . . . . . . . . . . . . . . . 3
Consolidated Condensed Statements of Income -
Three Months and Nine Months Ended
June 30, 1994 and 1993 . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Consolidated Condensed Statements of Cash Flows -
Nine Months Ended June 30, 1994 and 1993 . . . . . . . . . . . . . . . . . 5
Notes to Consolidated Condensed Financial Statements . . . . . . . . . . . 6
Deferred Tax Liability . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Revenues and Income by Business Segments . . . . . . . . . . . . . . . . . 8
Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . . . . . . . . . . . . . 9&10
PART II. Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Signature Page . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
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PART I. FINANCIAL INFORMATION
HELMERICH & PAYNE, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(Thousands of Dollars)
June 30 September 30
1994 1993
-------- ------------
ASSETS
Current Assets
Cash and cash equivalents $ 44,972 $ 61,656
Short-term investments 8,997 9,109
Accounts receivable, net 55,145 56,305
Inventories 20,936 17,646
Other current assets 5,359 5,783
-------- --------
Total Current Assets $135,679 $150,499
Investments 86,873 84,945
Property, Plant and Equipment, Net 381,027 358,798
Other Assets 17,897 16,693
-------- --------
Total Assets $621,476 $610,935
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Current maturities of long-term debt $ 1,492 $ 5,679
Accounts payable 19,184 23,836
Accrued liabilities 21,137 16,899
-------- --------
Total Current Liabilities $ 41,813 $ 46,414
-------- --------
Non-Current Liabilities
Long-term debt, less current maturities $ 5,200 $ 3,600
Deferred Federal income taxes 44,038 44,723
Other 6,194 7,271
-------- --------
Total Non-Current Liabilities $ 55,432 $ 55,594
-------- --------
Shareholders' Equity
Common stock, par value .10 per share $ 2,677 $ 2,677
Preferred stock, no shares issued -- --
Additional paid-in capital 48,327 47,412
Retained earnings 496,131 482,405
-------- --------
$547,135 $532,494
Less treasury stock, at cost 22,904 23,567
-------- --------
Total Shareholders' Equity $524,231 $508,927
-------- --------
$621,476 $610,935
======== ========
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See accompanying notes to financial statements.
HELMERICH & PAYNE, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(Unaudited)
(Thousands of Dollars Except per Share Data)
Quarter Ended Nine Months Ended
6/30/94 6/30/93 6/30/94 6/30/93
------- ------- -------- --------
REVENUES:
Sales and other operating revenues $77,052 $72,095 $244,055 $233,342
Income from investments 1,646 1,512 4,712 6,614
------- ------- -------- --------
78,698 73,607 248,767 239,956
------- ------- -------- --------
COST AND EXPENSES:
Operating costs $51,952 $46,440 $158,902 $145,292
General and administrative 1,842 1,704 6,765 5,220
Interest 111 308 334 715
Depreciation, depletion and amortization 12,337 11,893 37,599 37,548
Dry holes and abandonments 2,055 1,267 4,671 6,417
Taxes, other than Federal income taxes 3,666 3,793 12,057 11,458
------- ------- -------- --------
71,963 65,405 220,328 206,650
------- ------- -------- --------
INCOME BEFORE FEDERAL INCOME TAXES EQUITY IN
INCOME (LOSS) OF AFFILIATE AND CHANGE IN
ACCOUNTING PRINCIPLE $ 6,735 $ 8,202 $ 28,439 $ 33,306
FEDERAL INCOME TAX EXPENSE 2,141 3,091 10,784 13,338
EQUITY IN INCOME (LOSS) OF AFFILIATE,
net of income taxes 66 (180) 413 (550)
------- ------- -------- --------
INCOME BEFORE CHANGE IN ACCOUNTING PRINCIPLE $ 4,660 $ 4,931 $ 18,068 $ 19,418
CUMULATIVE EFFECT OF A CHANGE IN ACCOUNTING
PRINCIPLE -- -- 4,000 --
------- ------- -------- --------
NET INCOME $ 4,660 $ 4,931 $ 22,068 $ 19,418
======= ======= ======== ========
INCOME PER COMMON SHARE BEFORE CHANGE IN
ACCOUNTING PRINCIPLE $ 0.19 $ 0.20 $ 0.74 $ 0.80
CUMULATIVE EFFECT OF A CHANGE IN ACCOUNTING
PRINCIPLE $ 0.00 $ 0.00 $ 0.16 $ 0.00
INCOME PER COMMON SHARE $ 0.19 $ 0.20 $ 0.90 $ 0.80
AVERAGE COMMON SHARES OUTSTANDING 24,442,212/24,344,864 24,398,645/24,286,754
CASH DIVIDENDS PER COMMON SHARE $ 0.12 $ 0.12 $ 0.36 $ 0.36
(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)
Nine Months Ended
June 30
----------------------
1994 1993
-------- --------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 22,068 $ 19,418
Adjustments to reconcile net income to net cash provided
by operating activities --
Depreciation, depletion and amortization 37,599 37,548
Abandonments and surrendered leases 3,694 3,147
Cumulative effect of a change in accounting principle (4,000) --
Equity in (income) loss of affiliates before income taxes (667) 595
Amortization of deferred compensation 1,356 1,288
Gain on sale of securities -- (2,110)
Other, net (684) (382)
Change in assets and liabilities --
Decrease (Increase) in accounts receivable 166 (16,870)
(Increase) Decrease in inventories (3,290) 991
Increase in prepaid expenses/other (780) (2,806)
(Decrease) Increase in accounts payable (4,652) 2,255
Increase in accrued liabilities 4,962 6,780
Increase in deferred Federal income taxes 3,315 2,198
Decrease in other non-current liabilities (1,077) (1,367)
-------- --------
Total Adjustments $ 35,942 $ 31,267
-------- --------
Net cash provided by operating activities $ 58,010 $ 50,685
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures $(65,569) $(30,017)
Proceeds from sales of property, plant and equipment $ 2,962 $ 3,278
Purchase of investments (1,500) (2,400)
Proceeds from sale of investments -- 6,518
Purchase of short-term investments (12) (3,026)
Proceeds from sale of short-time investments 124 7,042
-------- --------
Net cash used in investing activities $(63,995) $(18,605)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of long-term debt $ 2,750 $ 2,070
Payments made on long-term debt (5,336) (1,270)
Dividends paid (8,877) (8,852)
Proceeds from exercise of stock options 764 1,223
-------- --------
Net cash used in financing activities $(10,699) $ (6,829)
-------- --------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS $(16,684) $ 25,251
-------- --------
CASH AND CASH EQUIVALENTS, beginning of period $ 61,656 $ 37,586
-------- --------
CASH AND CASH EQUIVALENTS, end of period $ 44,972 $ 62,837
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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 June 30, 1994, and September 30, 1993, and the results of operations for the nine months ended June 30, 1994, and 1993, and changes in financial position for the nine months then ended.
2. The results of operations for the nine months ended June 30, 1994, and June 30, 1993, are not necessarily indicative of the results to be expected for the full year.
3. The $.12 cash dividend declared in March was paid June 1, 1994. On June 1, 1994, a cash dividend of $.125 per share was declared for shareholders of record on August 15, 1994, payable September 1, 1994. The dividend was included in accounts payable on the consolidated balance sheet at June 30, 1994.
4. Inventories consisted of the following (in thousands of dollars):
06-30-94 09-30-93
------- -------
Raw Materials $ 65 $ 163
Works in Progress 228 210
Finished Goods 881 1,041
Materials & Supplies 19,762 16,232
------- -------
$20,936 $17,646
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5. Income from investments includes no gains on sales of securities during the first nine months of 1994, and $2,110,000 during the first nine 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:
June 30 December 31
1994 1993
------- -----------
(in thousands)
Deferred Tax Liability:
Differences between book and tax basis of property,
plant and equipment $43,335 $46,508
Pension provision 4,585 4,548
Other 4,211 1,842
------- -------
Deferred tax liability 52,131 52,898
------- -------
Deferred Tax Asset:
Alternative minimum tax credit carry forward 1,284 1,652
Foreign tax credit carry forward 624 1,325
Deferred compensation 1,668 1,312
Insurance provisions 1,985 1,391
Deferred expenses -- international 1,522 2,013
Other 1,634 1,807
------- -------
Subtotal 8,717 9,500
------- -------
Valuation allowance (624) (1,325)
------- -------
Deferred tax asset 8,093 8,175
------- -------
Net Deferred Tax Liability $44,038 $44,723
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7. As of August 5, 1994, the Company's investment portfolio had an aggregate market value of $147,678,000. 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 2ND 3RD NINE NINE
QTR. QTR. QTR. MOS. MOS.
------- ------- ------- -------- --------
Sales and Other Revenues:
Contract Drilling-Domestic........... $19,817 $21,249 $20,289 $ 61,355 $ 44,163
Contract Drilling-International...... 22,319 23,128 25,891 71,338 66,239
------- ------- ------- -------- --------
Total Contract Drilling...... 42,136 44,377 46,180 132,693 110,402
------- ------- ------- -------- --------
Oil and Gas.......................... 16,626 17,794 13,147 47,567 54,705
Gas Marketing........................ 14,820 15,607 11,972 42,399 51,504
Real Estate.......................... 1,836 2,302 1,830 5,968 5,729
Chemical............................. 5,046 6,129 3,753 14,928 10,620
Investments and other income......... 1,722 1,674 1,816 5,212 6,996
------- ------- ------- -------- --------
Total Revenues......................... $82,186 $87,883 $78,698 $248,767 $239,956
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INCOME (LOSS) BEFORE FEDERAL INCOME
TAX, EQUITY IN INCOME (LOSS) OF
AFFILIATE AND A CHANGE IN ACCOUNTING
PRINCIPLE:
Contract Drilling-Domestic........... $ 1,252 $ 935 $ 1,832 $ 4,019 $ 904
Contract Drilling-International...... 3,590 2,209 4,127 9,926 12,817
------- ------- ------- -------- --------
Total Contract Drilling...... 4,842 3,144 5,959 13,945 13,721
------- ------- ------- -------- --------
Oil and Gas.......................... 4,997 4,236 5 9,238 14,584
Gas Marketing........................ 287 401 230 918 528
Real Estate.......................... 987 1,350 997 3,334 2,967
Chemical............................. 1,791 2,773 575 5,139 2,434
Other................................ (1,619) (1,485) (1,031) (4,135) (928)
------- ------- ------- -------- --------
INCOME BEFORE FEDERAL INCOME TAX,
EQUITY IN INCOME (LOSS) OF AFFILIATE
AND A CHANGE IN ACCOUNTING
PRINCIPLE............................ $11,285 $10,419 $ 6,735 $ 28,439 $ 33,306
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HELMERICH & PAYNE, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
JUNE 30, 1994
The Company reported net income of $4,660,000 ($0.19 per share) on revenues of $78,698,000 for the third quarter of fiscal year 1994, compared with net income of $4,931,000 ($0.20 per share) on revenues of $73,607,000 during the third quarter of fiscal 1993. Net income for the first nine months totaled $22,068,000 ($0.90 per share), compared with $19,418,000 ($0.80 per share) last year. This year's first nine months' net income includes the cumulative effect on prior years' income ($.016 per share) caused by the change in accounting method for deferred taxes as required by FASB Statement 109.
Net income for the nine months ended June 30, 1994, includes no after-tax gains from the sale of securities, compared with $1,309,000 ($0.05 per share) for the same period in 1993.
Results from domestic drilling operations continued to show a significant improvement over the prior year, with pre-tax income of $4,019,000 for the nine months ended June 30, 1994, compared with $904,000 for the same period in fiscal 1993. The improvement is due primarily to increased land and offshore platform rig utilization at higher profit margins. On June 30, 1994, the Company purchased twelve land drilling rigs and a yard facility located in Alice, Texas, from ENSCO Drilling Company. The purchase is reflected in the Balance Sheet and Cash Flow Statement at June 30, 1994. Operating results will be reflected beginning in July, 1994.
Pre-tax income from international drilling operations was $9,926,000 for the nine months ended June 30, 1994, compared with $12,817,000 for the same nine months of fiscal 1993. Lower operating margins in Colombia due to increased expenses was the major factor in the 22.5% decrease in pre-tax income. Venezuela pre-tax income was down for the quarter due mainly to currency exchange losses recorded resulting from temporary bank closures in that country during May.
Oil and Gas pre-tax income for the nine months ended June 30, 1994, was $9,238,000, compared with $14,584,000 for the same period in fiscal 1993. Pre-tax income for the third quarter was $5,000, compared with $4,154,000 last year. Revenues for the quarter and nine months ended June 30, 1994, were $13,147,000 and $47,567,000, compared with $16,357,000 and $54,705,000 for the same periods last year. The decrease in both pre-tax income and revenues was due to lower natural gas prices and production volumes.
For the nine month period ended June 30, 1994, average natural gas prices were $1.78 (per mcf), compared with $1.84 (per mcf) last year. Natural gas production volumes were 78,784 (mcf/day) for 1994, compared with 83,474 (mcf/day) for 1993. Oil prices for the nine months were $14.05 (per bbl), compared with $18.20 (per bbl) last year. Dry hole expense was $977,000 for the nine months ended June 30, 1994, compared with $3,270,000 for the comparable period in fiscal 1993. Because of lower than expected natural gas prices, gas volumes will remain lower in the fourth quarter.
Deferred Federal income taxes were reduced in the first quarter of fiscal 1994, as required by adoption of SFAS 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 judgment 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
None
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 month period ended June 30, 1994. Such Form 8-K was filed on April 7, 1994, and disclosed the dismissal of Arthur Andersen & Co. and the appointment of Ernst & Young as the Registrant's certifying accountant. This Form 8-K also disclosed that the District Court of Harris County, Texas dismissed without prejudice the lawsuit styled Theresa Arceneaux, et al, v. Natural Gas Ordorizing, Inc., Case Number 93-568602, District Court Harris County, Texas, 165th Judicial District.
HELMERICH & PAYNE, INC. AND SUBSIDIARIES
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
HELMERICH & PAYNE, INC.
Date: AUGUST 11, 1994 /s/ DOUGLAS E. FEARS
Douglas E. Fears, Chief Financial Officer
Date: AUGUST 11, 1994 /s/ HANS C. HELMERICH
Hans C. Helmerich, President
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