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Form 8-K ATWOOD OCEANICS INC For: Aug 01

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August 1, 2016 4:39 PM EDT


 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): August 1, 2016

ATWOOD OCEANICS, INC.
(Exact name of registrant as specified in its charter)

Texas
1-13167
74-1611874
(State or other jurisdiction of incorporation)
(Commission File Number)
(I.R.S. Employer Identification No.)

15011 Katy Freeway, Suite 800, Houston, Texas
77094
(Address of principal executive offices)
(Zip Code)
 
 
 
 
 Registrant’s telephone number, including area code: (281) 749-7800

 
N/A
 
 
(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)
 


Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 




ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION.

Our press release dated August 1, 2016, concerning financial results for the second quarter ended June 30, 2016, furnished as Exhibit 99.1, is incorporated herein by reference.

SECTION 9 - FINANCIAL STATEMENTS AND EXHIBITS

ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS
(d)
EXHIBITS

The exhibits to this report furnished pursuant to item 9.01 are as follows:

99.1
Press Release dated August 1, 2016.






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 hereunto duly authorized.


 
ATWOOD OCEANICS, INC.
 
(Registrant)
Date: August 1, 2016


 
/s/ Mark W. Smith
 
Mark W. Smith
 
Senior Vice President and Chief Financial Officer





EXHIBIT INDEX


EXHIBIT NO
DESCRIPTION
 
 
99.1
 
Press Release dated August 1, 2016






Exhibit 99.1
FOR IMMEDIATE RELEASE - EARNINGS

HOUSTON, August 1, 2016 -- Atwood Oceanics, Inc. (NYSE: ATW) ("Company"), announced today that it had earned net income of $99.5 million or $1.53 per diluted share, on revenues of $227.8 million for the quarter ended June 30, 2016 compared to $122.4 million or $1.89 per diluted share, on revenues of $296.4 million for the quarter ended March 31, 2016 and compared to net income of $113.0 million or $1.73 per diluted share on revenues of $330.6 million for the quarter ended June 30, 2015. For the nine months ended June 30, 2016, the Company earned net income of $261.0 million or $4.02 per diluted share, on revenues of $832.0 million compared to net income of $281.9 million or $4.33 per diluted share, on revenues of $1.0 billion for the nine months ended June 30, 2015.

During the three months ended June 30, 2016, we repurchased, through open market transactions, $145.8 million aggregate principal amount of our Senior Notes for $97.4 million, including $2.4 million of accrued interest, representing an average discount of 34.8%. As a result of the repurchases, we recognized a gain on debt retirement, net of the related debt issuance costs and premium of $0.3 million, of $50.5 million ($35.7 million, net of tax, or $0.55 per diluted share) in Gains on extinguishment of debt on our Condensed Consolidated Statements of Operations for the three ended June 30, 2016.

During the three months ended March 31, 2016, we repurchased, through open market transactions, $13.5 million aggregate principal of our Senior Notes at an aggregate cost of $5.1 million, including a minimal amount of accrued interest, representing an average discount of 62.2%. As a result of the repurchases, we recognized a gain on debt retirement, net of the related debt issuance costs, of $8.4 million ($8.4 million, net of tax, or $0.13 per diluted share) in Gains on extinguishment of debt on the Condensed Consolidated Statements of Operations for the three and six months ended March 31, 2016.

On July 25, 2016, following consummation of our modified “Dutch Auction” tender offer (the “Offer”), we acquired $42.0 million aggregate principal amount of the Senior Notes. Including the purchase price for the Senior Notes, which totaled $31.5 million, and accrued interest payable on the Senior Notes acquired and related fees, the total cost of the Offer was $33.0 million. The purchase price in the Offer represented a discount to the principal amount of the Senior Notes of 25.0%.

These repurchases, in the three month periods ended March 31, 2016 and June 30, 2016 and in July 2016, allowed us to reduce our outstanding indebtedness and related interest expense at a significant discount to the face value of our Senior Notes. The gain associated with the repurchases is subject to tax and will increase our effective tax rate. However, due to the availability of operating loss carry-forwards the actual cash tax impact will be minimal. The repurchases were made using available cash balances. Following these repurchases, the Company has $448.7 million Senior Notes outstanding.

 
For the Three Months Ended
 
(Unaudited)
(In thousands, except per share amounts)
June 30,
2016
 
March 31,
2016
 
June 30,
2015
Revenues
$
227,797

 
$
296,351

 
$
330,562

Income before Income Taxes
120,116

 
136,426

 
122,539

Provision for Income Taxes
(20,611
)
 
(13,989
)
 
(9,547
)
Net Income
$
99,505

 
$
122,437

 
$
112,992

 
 
 
 
 
 
Earnings per Common Share -
 
 
 
 
 
Basic
$
1.54

 
$
1.89

 
$
1.75

Diluted
$
1.53

 
$
1.89

 
$
1.73



5


 
 
 
Nine Months Ended
 
 
 
(Unaudited)
(In thousands, except per share amounts)
 
 
June 30,
2016
 
June 30,
2015
Revenues
 
 
$
831,967

 
$
1,032,675

Income before Income Taxes
 
 
306,837

 
312,855

Provision for Income Taxes
 
 
(45,814
)
 
(30,976
)
Net Income
 
 
$
261,023

 
$
281,879

 
 
 
 
 
 
Earnings per Common Share -
 
 
 
 
 
Basic
 
 
$
4.03

 
$
4.37

Diluted
 
 
$
4.02

 
$
4.33


6



ATWOOD OCEANICS, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

 
Three Months Ended June 30,
 
Nine Months Ended June 30,
(In thousands, except per share amounts)
2016
 
2015
 
2016
 
2015
REVENUES:
 
 
 
 
 
 
 
Contract drilling
$
217,818

 
$
317,531

 
$
794,979

 
$
992,913

Revenues related to reimbursable expenses
9,979

 
13,031

 
36,988

 
39,762

Total revenues
227,797

 
330,562

 
831,967

 
1,032,675

 
 
 
 
 
 
 
 
COSTS AND EXPENSES:
 
 
 
 
 
 
 
Contract drilling
80,524

 
134,258

 
301,094

 
401,847

Reimbursable expenses
5,489

 
9,066

 
22,898

 
29,634

Depreciation
41,084

 
42,534

 
124,964

 
129,637

General and administrative
12,028

 
10,473

 
38,693

 
42,619

Asset impairment
(659
)
 
—

 
64,773

 
60,777

Loss on sale of assets
—

 
27

 
77

 
15,362

Other, net
16

 
—

 
(1,044
)
 
—

 
138,482

 
196,358

 
551,455

 
679,876

 
 
 
 
 
 
 
 
OPERATING INCOME
89,315

 
134,204

 
280,512

 
352,799

 
 
 
 
 
 
 
 
OTHER INCOME (EXPENSE):
 
 
 
 
 
 
 
Interest expense, net of capitalized interest
(19,674
)
 
(11,677
)
 
(50,533
)
 
(40,028
)
Interest income
9

 
12

 
19

 
84

Gains on extinguishment of debt

50,466

 
—

 
58,863

 
—

Other income
—

 
—

 
17,976

 
—

 
30,801

 
(11,665
)
 
26,325

 
(39,944
)
 
 
 
 
 
 
 
 
INCOME BEFORE INCOME TAXES
120,116

 
122,539

 
306,837

 
312,855

PROVISION FOR INCOME TAXES
20,611

 
9,547

 
45,814

 
30,976

NET INCOME
$
99,505

 
$
112,992

 
$
261,023

 
$
281,879

 
 
 
 
 
 
 
 
EARNINGS PER COMMON SHARE (NOTE 2):
 
 
 
 
 
 
 
Basic
$
1.54

 
$
1.75

 
$
4.03

 
$
4.37

Diluted
$
1.53

 
$
1.73

 
$
4.02

 
$
4.33

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING (NOTE 2):
 
 
 
 
 
 
 
Basic
64,795

 
64,649

 
64,750

 
64,557

Diluted
64,847

 
65,130

 
64,852

 
65,063



7


ATWOOD OCEANICS, INC. AND SUBSIDIARIES
UNAUDITED ANALYSIS OF REVENUES AND DRILLING COSTS

 
REVENUES
 
Three Months Ended
 
Nine Months Ended
(In millions)
June 30,
2016

March 31,
2016

June 30,
2015
 
June 30,
2016
 
June 30,
2015
Ultra-Deepwater
$
182

 
$
189

 
$
174

 
$
553

 
$
524

Deepwater
—

 
59

 
77

 
131

 
257

Jackups
36

 
34

 
67

 
111

 
212

Reimbursable
10

 
14

 
13

 
37

 
40

 
$
228

 
$
296

 
$
331

 
$
832

 
$
1,033



 
DRILLING COSTS
 
Three Months Ended
 
Nine Months Ended
(In millions)
June 30,
2016
 
March 31,
2016
 
June 30,
2015
 
June 30,
2016
 
June 30,
2015
Ultra-Deepwater
$
54

 
$
54

 
$
75

 
$
168

 
$
206

Deepwater
10

 
19

 
29

 
71

 
102

Jackups
16

 
19

 
29

 
62

 
91

Reimbursable
5

 
9

 
9

 
23

 
30

Other
1

 
(2
)
 
1

 
—

 
3

 
$
86

 
$
99

 
$
143

 
$
324

 
$
432





8


ATWOOD OCEANICS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except par value)
June 30,
2016
 
September 30,
2015
 
(Unaudited)
 
 
ASSETS
 
 
 
Cash
$
198,974

 
$
113,983

Accounts receivable, net
166,534

 
311,514

Income tax receivable
8,194

 
8,705

Inventories of materials and supplies, net
113,161

 
137,998

Prepaid expenses, deferred costs and other current assets
10,040

 
33,735

Total current assets
496,903

 
605,935

 
 
 
 
Property and equipment, net
4,198,069

 
4,172,132

 
 
 
 
Other receivables
11,831

 
11,831

Deferred income taxes
150

 
150

Deferred costs and other assets
8,174

 
11,285

Total assets
$
4,715,127

 
$
4,801,333

 
 
 
 
LIABILITIES AND SHAREHOLDERS' EQUITY
 
 
 
Accounts payable
$
43,252

 
$
70,161

Accrued liabilities
12,496

 
23,572

Dividends payable
—

 
16,164

Interest payable
15,506

 
7,704

Income tax payable
13,530

 
13,906

Deferred credits and other liabilities
1,486

 
3,941

Total current liabilities
86,270

 
135,448

 
 
 
 
Long-term debt
1,374,780

 
1,678,268

Deferred income taxes
1,148

 
1,658

Deferred credits
—

 
800

Other
30,409

 
37,989

Total long-term liabilities
1,406,337

 
1,718,715

 
 
 
 
Commitments and contingencies (Note 8)
 
 
 
 
 
 
 
Preferred stock, no par value, 1,000 shares authorized, none outstanding
—

 
—

Common stock, $1.00 par value, 180,000 shares authorized with 64,798 issued and outstanding as of June 30, 2016 and 180,000 shares authorized and 64,654 shares issued and outstanding as of September 30, 2015
64,798

 
64,654

Paid-in capital
235,043

 
213,096

Retained earnings
2,925,589

 
2,670,148

Accumulated other comprehensive income
(2,910
)
 
(728
)
Total shareholders' equity
3,222,520

 
2,947,170

Total liabilities and shareholders' equity
$
4,715,127

 
$
4,801,333




9



ATWOOD OCEANICS, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

 
Nine Months Ended June 30,
(In thousands)
2016
 
2015
Cash flows from operating activities:
 
 
 
Net income
$
261,023

 
$
281,879

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Depreciation
124,964

 
129,637

Amortization
2,407

 
5,179

Provision for doubtful accounts
4,619

 
3,337

Deferred income tax benefit
(378
)
 
(3,453
)
Share-based compensation expense
8,224

 
9,277

Asset impairment
64,753

 
60,777

Loss on sale of assets
(71
)
 
15,362

(Gain) on extinguishment of debt
(58,863
)
 
—

Other, net
(1,137
)
 
—

Changes in assets and liabilities:
 
 
 
Accounts receivable
121,964

 
(17,917
)
Income tax receivable
511

 
(3,868
)
Inventories of materials and supplies
12,988

 
(16,917
)
Prepaid expenses, deferred costs and other current assets
19,377

 
13,274

Deferred costs and other assets
(1,019
)
 
(341
)
Accounts payable
(33,674
)
 
(17,511
)
Accrued liabilities
(3,274
)
 
24,049

Income tax payable
(376
)
 
(5,450
)
Deferred credits and other liabilities
(6,623
)
 
6,291

Net cash provided by operating activities
515,415

 
483,605

 
 
 
 
Cash flows from investing activities:
 
 
 
Capital expenditures
(198,248
)
 
(420,077
)
Proceeds from sale of assets
20,813

 
2,339

Net cash used in investing activities
(177,435
)
 
(417,738
)
 
 
 
 
Cash flows from financing activities:
 
 
 
Proceeds from borrowing of long-term debt
45,000

 
225,000

Principal repayments on long-term debt
(290,110
)
 
(250,000
)
Repayments on short-term debt, net
—

 
(11,885
)
Debt issuance costs paid
—

 
—

Dividends paid
(21,746
)
 
(32,397
)
Proceeds (payments) related to exercise of stock options
(930
)
 
1,279

Windfall tax benefits from share-based payment arrangements

14,797

 
—

Net cash used by financing activities
(252,989
)
 
(68,003
)
Net increase in cash and cash equivalents
84,991

 
(2,136
)
Cash and cash equivalents, at beginning of period
113,983

 
80,080

Cash and cash equivalents, at end of period
$
198,974

 
$
77,944

 
 
 
 
Non-cash activities:
 
 
 
Increase (decrease) in accounts payable and accrued liabilities related to capital expenditures
$
7,902

 
$
(15,501
)

10




Atwood Oceanics, Inc. is a leading offshore drilling company engaged in the drilling and completion of exploration and development wells for the global oil and gas industry. The Company currently owns 10 mobile offshore drilling units and is constructing two ultra-deepwater drillships. The Company was founded in 1968 and is headquartered in Houston, Texas. Atwood Oceanics, Inc. common stock is traded on the New York Stock Exchange under the symbol "ATW." For more information about the Company, please visit www.atwd.com.

Conference Call

The Company has scheduled a conference call and webcast related to its third quarter 2016 results on Tuesday, August 2, 2016, at 9:00 A.M. CDT (10:00 A.M. EDT). Interested parties are invited to listen to the call by dialing 1-800-862-9098, or internationally 1-785-424-1051, Conference ID - ATWOOD, Password 62456. Interested parties may also listen over the Internet through a link posted in the Investor Relations section of the Company's Web site.

A replay of the conference call will be available on the Company's Web site following the end of the live call.

Contact: Mark W. Smith
Senior Vice President and Chief Financial Officer
(281) 749-7840



11

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