UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For quarterly period ended: March 31, 2008
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 |
|
73-0679879 |
(State or other jurisdiction of |
|
(I.R.S. Employer I.D. Number) |
incorporation or organization) |
|
|
(Address of principal executive office)(Zip Code)
(918) 742-5531
(Registrants telephone number, including area code)
(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 o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a small reporting company. See the definitions of large accelerated filer, accelerated filer and small reporting company in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer x |
|
Accelerated filer o |
|
|
|
Non-accelerated filer o |
|
Smaller reporting company o |
(Do not check if a smaller reporting company) |
|
|
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes o No x
CLASS |
|
OUTSTANDING AT April 30, 2008 |
|
Common Stock, $0.10 par value |
|
104,328,568 |
|
|
|
|
|
|
|
Total Number of Pages - 33 |
|
HELMERICH & PAYNE, INC. AND SUBSIDIARIES
TABLE OF CONTENTS
2
HELMERICH & PAYNE, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(Unaudited)
(in thousands, except share and per share amounts)
|
|
March 31, |
|
September 30, |
|
||
|
|
2008 |
|
2007 |
|
||
ASSETS |
|
|
|
|
|
||
Current assets: |
|
|
|
|
|
||
Cash and cash equivalents |
|
$ |
90,736 |
|
$ |
89,215 |
|
Accounts receivable, less reserve of $3,641 at March 31, 2008 and $2,957 at September 30, 2007 |
|
361,253 |
|
339,819 |
|
||
Inventories |
|
33,499 |
|
29,145 |
|
||
Deferred income tax |
|
17,534 |
|
11,559 |
|
||
Prepaid expenses and other |
|
40,963 |
|
29,226 |
|
||
Total current assets |
|
543,985 |
|
498,964 |
|
||
|
|
|
|
|
|
||
Investments |
|
205,660 |
|
223,360 |
|
||
Property, plant and equipment, net |
|
2,395,862 |
|
2,152,616 |
|
||
Other assets |
|
10,611 |
|
10,429 |
|
||
|
|
|
|
|
|
||
Total assets |
|
$ |
3,156,118 |
|
$ |
2,885,369 |
|
|
|
|
|
|
|
||
LIABILITIES AND SHAREHOLDERS EQUITY |
|
|
|
|
|
||
Current liabilities: |
|
|
|
|
|
||
Accounts payable |
|
$ |
110,865 |
|
$ |
124,556 |
|
Accrued liabilities |
|
100,131 |
|
102,056 |
|
||
Total current liabilities |
|
210,996 |
|
226,612 |
|
||
|
|
|
|
|
|
||
Noncurrent liabilities: |
|
|
|
|
|
||
Long-term notes payable |
|
480,000 |
|
445,000 |
|
||
Deferred income taxes |
|
404,534 |
|
363,534 |
|
||
Other |
|
46,508 |
|
34,707 |
|
||
Total noncurrent liabilities |
|
931,042 |
|
843,241 |
|
||
|
|
|
|
|
|
||
Shareholders equity: |
|
|
|
|
|
||
Common stock, $.10 par value, 160,000,000 shares authorized, 107,057,904 shares issued |
|
10,706 |
|
10,706 |
|
||
Preferred stock, no par value, 1,000,000 shares authorized, no shares issued |
|
|
|
|
|
||
Additional paid-in capital |
|
152,040 |
|
143,146 |
|
||
Retained earnings |
|
1,841,218 |
|
1,645,766 |
|
||
Accumulated other comprehensive income |
|
58,695 |
|
75,885 |
|
||
Treasury stock, at cost |
|
(48,579 |
) |
(59,987 |
) |
||
Total shareholders equity |
|
2,014,080 |
|
1,815,516 |
|
||
|
|
|
|
|
|
||
Total liabilities and shareholders equity |
|
$ |
3,156,118 |
|
$ |
2,885,369 |
|
The accompanying notes are an integral part of these statements.
3
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, |
|
||||||||
|
|
2008 |
|
2007 |
|
2008 |
|
2007 |
|
||||
|
|
|
|
|
|
|
|
|
|
||||
Operating revenues: |
|
|
|
|
|
|
|
|
|
||||
Drilling U.S. Land |
|
$ |
365,263 |
|
$ |
269,145 |
|
$ |
712,907 |
|
$ |
539,045 |
|
Drilling Offshore |
|
29,789 |
|
28,703 |
|
57,070 |
|
64,457 |
|
||||
Drilling International Land |
|
75,757 |
|
71,950 |
|
154,359 |
|
149,796 |
|
||||
Real Estate |
|
2,835 |
|
2,738 |
|
5,971 |
|
5,637 |
|
||||
|
|
473,644 |
|
372,536 |
|
930,307 |
|
758,935 |
|
||||
|
|
|
|
|
|
|
|
|
|
||||
Operating costs and other: |
|
|
|
|
|
|
|
|
|
||||
Operating costs, excluding depreciation |
|
253,958 |
|
199,456 |
|
489,753 |
|
398,923 |
|
||||
Depreciation |
|
51,872 |
|
32,952 |
|
95,856 |
|
63,103 |
|
||||
General and administrative |
|
14,090 |
|
13,350 |
|
27,993 |
|
23,963 |
|
||||
Gain from involuntary conversion of long-lived assets |
|
|
|
(5,170 |
) |
(4,810 |
) |
(5,170 |
) |
||||
Income from asset sales |
|
(1,946 |
) |
(32,336 |
) |
(2,788 |
) |
(32,822 |
) |
||||
|
|
317,974 |
|
208,252 |
|
606,004 |
|
447,997 |
|
||||
|
|
|
|
|
|
|
|
|
|
||||
Operating income |
|
155,670 |
|
164,284 |
|
324,303 |
|
310,938 |
|
||||
|
|
|
|
|
|
|
|
|
|
||||
Other income (expense): |
|
|
|
|
|
|
|
|
|
||||
Interest and dividend income |
|
1,220 |
|
1,034 |
|
2,335 |
|
2,278 |
|
||||
Interest expense |
|
(4,773 |
) |
(1,913 |
) |
(9,604 |
) |
(2,832 |
) |
||||
Gain on sale of investment securities |
|
5,476 |
|
177 |
|
5,606 |
|
26,514 |
|
||||
Other |
|
180 |
|
66 |
|
(436 |
) |
130 |
|
||||
|
|
2,103 |
|
(636 |
) |
(2,099 |
) |
26,090 |
|
||||
|
|
|
|
|
|
|
|
|
|
||||
Income before income taxes and equity in income of affiliate |
|
157,773 |
|
163,648 |
|
322,204 |
|
337,028 |
|
||||
|
|
|
|
|
|
|
|
|
|
||||
Income tax provision |
|
58,784 |
|
59,338 |
|
118,930 |
|
123,436 |
|
||||
Equity in income of affiliate net of income taxes |
|
3,065 |
|
2,551 |
|
6,610 |
|
4,055 |
|
||||
|
|
|
|
|
|
|
|
|
|
||||
NET INCOME |
|
$ |
102,054 |
|
$ |
106,861 |
|
$ |
209,884 |
|
$ |
217,647 |
|
|
|
|
|
|
|
|
|
|
|
||||
Earnings per common share: |
|
|
|
|
|
|
|
|
|
||||
Basic |
|
$ |
.98 |
|
$ |
1.04 |
|
$ |
2.02 |
|
$ |
2.11 |
|
Diluted |
|
$ |
.96 |
|
$ |
1.02 |
|
$ |
1.98 |
|
$ |
2.08 |
|
|
|
|
|
|
|
|
|
|
|
||||
Weighted average shares outstanding: |
|
|
|
|
|
|
|
|
|
||||
Basic |
|
103,883 |
|
103,239 |
|
103,695 |
|
103,276 |
|
||||
Diluted |
|
106,090 |
|
104,832 |
|
105,740 |
|
104,841 |
|
||||
|
|
|
|
|
|
|
|
|
|
||||
Dividends declared per common share |
|
$ |
0.0450 |
|
$ |
0.0450 |
|
$ |
0.0900 |
|
$ |
0.0900 |
|
The accompanying notes are an integral part of these statements.
4
HELMERICH & PAYNE, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
|
|
Six Months Ended |
|
||||
|
|
March 31, |
|
||||
|
|
2008 |
|
2007 |
|
||
OPERATING ACTIVITIES: |
|
|
|
|
|
||
Net income |
|
$ |
209,884 |
|
$ |
217,647 |
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
|
||
Depreciation |
|
95,856 |
|
63,103 |
|
||
Provision for bad debt |
|
688 |
|
99 |
|
||
Equity in income of affiliate before income taxes |
|
(10,662 |
) |
(6,540 |
) |
||
Stock-based compensation |
|
3,712 |
|
3,560 |
|
||
Gain on sale of investment securities |
|
(5,476 |
) |
(26,376 |
) |
||
Gain from involuntary conversion of long-lived assets |
|
(4,810 |
) |
(5,170 |
) |
||
Income from sale of assets |
|
(2,788 |
) |
(32,822 |
) |
||
Deferred income tax expense |
|
42,029 |
|
27,354 |
|
||
Change in assets and liabilities- |
|
|
|
|
|
||
Accounts receivable |
|
(25,809 |
) |
(21,115 |
) |
||
Inventories |
|
(4,354 |
) |
140 |
|
||
Prepaid expenses and other |
|
(11,919 |
) |
(18,566 |
) |
||
Accounts payable |
|
(31,994 |
) |
34,920 |
|
||
Accrued liabilities |
|
(1,195 |
) |
8,792 |
|
||
Deferred income taxes |
|
4,244 |
|
2,416 |
|
||
Other noncurrent liabilities |
|
5,849 |
|
(1,577 |
) |
||
|
|
|
|
|
|
||
Net cash provided by operating activities |
|
263,255 |
|
245,865 |
|
||
|
|
|
|
|
|
||
INVESTING ACTIVITIES: |
|
|
|
|
|
||
Capital expenditures |
|
(321,711 |
) |
(433,900 |
) |
||
Insurance proceeds from involuntary conversion |
|
8,500 |
|
5,170 |
|
||
Proceeds from sale of investments |
|
7,769 |
|
84,812 |
|
||
Proceeds from asset sales |
|
3,668 |
|
37,947 |
|
||
Other |
|
|
|
214 |
|
||
Net cash used in investing activities |
|
(301,774 |
) |
(305,757 |
) |
||
|
|
|
|
|
|
||
FINANCING ACTIVITIES: |
|
|
|
|
|
||
Repurchase of common stock |
|
|
|
(17,621 |
) |
||
Decrease in notes payable |
|
|
|
(3,721 |
) |
||
Proceeds from line of credit |
|
1,710,000 |
|
305,000 |
|
||
Payments on line of credit |
|
(1,675,000 |
) |
(150,000 |
) |
||
Decrease in bank overdraft |
|
|
|
(10,195 |
) |
||
Dividends paid |
|
(9,354 |
) |
(9,311 |
) |
||
Proceeds from exercise of stock options |
|
8,284 |
|
872 |
|
||
Excess tax benefit from stock-based compensation |
|
6,110 |
|
155 |
|
||
Net cash provided by financing activities |
|
40,040 |
|
115,179 |
|
||
|
|
|
|
|
|
||
Net increase in cash and cash equivalents |
|
1,521 |
|
55,287 |
|
||
Cash and cash equivalents, beginning of period |
|
89,215 |
|
33,853 |
|
||
Cash and cash equivalents, end of period |
|
$ |
90,736 |
|
$ |
89,140 |
|
The accompanying notes are an integral part of these statements.
5
HELMERICH & PAYNE, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENT OF SHAREHOLDERS EQUITY
SIX MONTHS ENDED MARCH 31, 2008
(in thousands, except per share amounts)
The accompanying notes are an integral part of these statements.
6
HELMERICH & PAYNE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
1. Basis of Presentation
The accompanying unaudited consolidated condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States and applicable rules and regulations of the Securities and Exchange Commission (the Commission) pertaining to interim financial information. Accordingly, these interim financial statements do not include all information or footnote disclosures required by accounting principles generally accepted in the United States for complete financial statements and, therefore should be read in conjunction with the consolidated financial statements and notes thereto in the Companys 2007 Annual Report on Form 10-K and other current filings with the Commission. In the opinion of management, all adjustments, consisting of those of a normal recurring nature, necessary to present fairly the results of the periods presented have been included. The results of operations for the interim periods presented may not necessarily be indicative of the results to be expected for the full year.
Certain amounts in the accompanying consolidated financial statements for prior periods have been reclassified to conform to current year presentation. Specifically, fiscal year 2007 operating revenues for Drilling-Offshore and for Drilling-International Land have been restated to reflect a reclassification between those two segments.
2. 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 includes 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 (in thousands):
|
|
Three Months Ended |
|
Six Months Ended |
|
||||
|
|
March 31, |
|
March 31, |
|
||||
|
|
2008 |
|
2007 |
|
2008 |
|
2007 |
|
|
|
|
|
|
|
|
|
|
|
Basic weighted average shares |
|
103,883 |
|
103,239 |
|
103,695 |
|
103,276 |
|
Effect of dilutive shares: |
|
|
|
|
|
|
|
|
|
Stock options and restricted stock |
|
2,207 |
|
1,593 |
|
2,045 |
|
1,565 |
|
Diluted weighted average shares |
|
106,090 |
|
104,832 |
|
105,740 |
|
104,841 |
|
For the three and six months ended March 31, 2008, options to purchase 710,000 shares of common stock were outstanding but were not included in the computation of diluted earnings per share. Inclusion of these shares would be antidilutive.
For the three months ended March 31, 2007, options to purchase 605,511 shares of common stock were outstanding but were not included in the computation of diluted earnings per share. Inclusion of these shares would be antidilutive.
For the six months ended March 31, 2007, options to purchase 1,332,036 shares of common stock were outstanding but were not included in the computation of diluted earnings per share. Inclusion of these shares would be antidilutive.
3. Inventories
Inventories consist primarily of replacement parts and supplies held for use in the Companys drilling operations.
7
HELMERICH & PAYNE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
4. Investments
The following is a summary of available-for-sale securities, which excludes those accounted for under the equity method of accounting, investments in limited partnerships carried at cost and assets held in a Non-qualified Supplemental Savings Plan.
|
|
|
|
Gross |
|
Gross |
|
Est. |
|
||||
|
|
|
|
Unrealized |
|
Unrealized |
|
Fair |
|
||||
|
|
Cost |
|
Gains |
|
Losses |
|
Value |
|
||||
|
|
(in thousands) |
|
||||||||||
|
|
|
|
|
|
|
|
|
|
||||
Equity Securities 03/31/08 |
|
$ |
9,035 |
|
$ |
89,927 |
|
$ |
|
|
$ |
98,962 |
|
Equity Securities 09/30/07 |
|
$ |
11,329 |
|
$ |
117,646 |
|
$ |
|
|
$ |
128,975 |
|
The investment in the limited partnership carried at cost was $12.4 million at March 31, 2008 and September 30, 2007. The estimated fair value of the investments carried at cost was $20.2 million and $22.3 million at March 31, 2008 and September 30, 2007, respectively. The assets held in the Non-qualified Supplemental Savings Plan are valued at fair market which totaled $7.1 million at March 31, 2008 and $7.8 million at September 30, 2007. The recorded amounts for investments accounted for under the equity method are $87.2 million and $74.2 million at March 31, 2008 and September 30, 2007, respectively. During the six months ended March 31, 2008, the Company increased the equity investment $2.3 million ($1.4 million, net of tax) to account for capital transactions of the equity investee.
5. Comprehensive Income
Comprehensive income, net of related income taxes, is as follows (in thousands):
|
|
Three Months Ended |
|
Six Months Ended |
|
||||||||
|
|
March 31, |
|
March 31, |
|
||||||||
|
|
2008 |
|
2007 |
|
2008 |
|
2007 |
|
||||
Net Income |
|
$ |
102,054 |
|
$ |
106,861 |
|
$ |
209,884 |
|
$ |
217,647 |
|
Other comprehensive income: |
|
|
|
|
|
|
|
|
|
||||
Unrealized appreciation (depreciation) on securities |
|
(13,719 |
) |
10,402 |
|
(22,112 |
) |
10,550 |
|
||||
Income taxes |
|
5,213 |
|
(3,952 |
) |
8,402 |
|
(4,008 |
) |
||||
|
|
(8,506 |
) |
6,450 |
|
(13,710 |
) |
6,542 |
|
||||
Reclassification of realized gains in net income |
|
(5,476 |
) |
(177 |
) |
(5,606 |
) |
(26,514 |
) |
||||
Income taxes |
|
2,081 |
|
67 |
|
2,130 |
|
10,075 |
|
||||
|
|
(3,395 |
) |
(110 |
) |
(3,476 |
) |
(16,439 |
) |
||||
Minimum pension liability adjustments |
|
(3 |
) |
|
|
(6 |
) |
|
|
||||
Income taxes |
|
1 |
|
|
|
2 |
|
|
|
||||
|
|
(2 |
) |
|
|
(4 |
) |
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive income |
|
$ |
90,151 |
|
$ |
113,201 |
|
$ |
192,694 |
|
$ |
207,750 |
|
8
HELMERICH & PAYNE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
The components of accumulated other comprehensive income, net of related income taxes, are as follows (in thousands):
|
|
March 31, |
|
September 30, |
|
||
|
|
2008 |
|
2007 |
|
||
Unrealized appreciation on securities, net |
|
$ |
55,755 |
|
$ |
72,941 |
|
Minimum pension liability |
|
2,940 |
|
2,944 |
|
||
Accumulated other comprehensive income |
|
$ |
58,695 |
|
$ |
75,885 |
|
6. Financial Instruments
During the six months ended March 31, 2007, the Company liquidated its position in auction rate securities with no realized gains or losses. The proceeds of $48.3 million were included in the sale of investments under investing activities on the Consolidated Condensed Statements of Cash Flows. There were no purchases or sales of auction rate securities in the six months ended March 31, 2008.
7. Cash Dividends
The $0.045 cash dividend declared December 4, 2007, was paid March 3, 2008. On March 5, 2008, a cash dividend of $0.045 per share was declared for shareholders of record on May 15, 2008, payable June 2, 2008.
8. Stock-Based Compensation
The Company has one plan providing for common-stock based awards to employees and to non-employee Directors. The plan permits the granting of various types of awards including stock options and restricted stock awards. Restricted stock may be granted for no consideration other than prior and future services. The purchase price per share for stock options may not be less than market price of the underlying stock on the date of grant. Stock options expire ten years after the grant date. Vesting requirements are determined by the Human Resources Committee of the Companys Board of Directors. Readers should refer to Note 5 of the consolidated financial statements in the Companys Annual Report on Form 10-K for the fiscal year ended September 30, 2007 for additional information related to stock-based compensation.
The Company uses the Black-Scholes formula to estimate the value of stock options granted. The fair value of the options is amortized to compensation expense on a straight-line basis over the requisite service periods of the stock awards, which are generally the vesting periods. The Company has the right to satisfy option exercises from treasury shares and from authorized but unissued shares.
9
HELMERICH & PAYNE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
During the six months ended March 31, 2007, the Company repurchased 681,900 shares of its common stock at an aggregate cost of $15.9 million. The Company has not repurchased any common stock during fiscal 2008 but may repurchase additional shares if the share price is favorable.
A summary of compensation cost for stock-based payment arrangements recognized in general and administrative expense and cash received from the exercise of stock options is as follows (in thousands, except per share amounts):
|
|
Three Months Ended |
|
Six Months Ended |
|
||||||||
|
|
March 31, |
|
March 31, |
|
||||||||
|
|
2008 |
|
2007 |
|
2008 |
|
2007 |
|
||||
Compensation expense |
|
|
|
|
|
|
|
|
|
||||
Stock options |
|
$ |
1,468 |
|
$ |
1,382 |
|
$ |
3,165 |
|
$ |
2,890 |
|
Restricted stock |
|
185 |
|
343 |
|
547 |
|
670 |
|
||||
|
|
$ |
1,653 |
|
$ |
1,725 |
|
$ |
3,712 |
|
$ |
3,560 |
|
|
|
|
|
|
|
|
|
|
|
||||
After-tax stock based compensation |
|
$ |
1,025 |
|
$ |
1,069 |
|
$ |
2,302 |
|
$ |
2,207 |
|
|
|
|
|
|
|
|
|
|
|
||||
Per basic share |
|
$ |
.01 |
|
$ |
.01 |
|
$ |
.02 |
|
$ |
.02 |
|
Per diluted share |
|
$ |
.01 |
|
$ |
.01 |
|
$ |
.02 |
|
$ |
.02 |
|
|
|
|
|
|
|
|
|
|
|
||||
Cash received from exercise of stock options |
|
$ |
6,919 |
|
$ |
401 |
|
$ |
8,284 |
|
$ |
872 |
|
STOCK OPTIONS
The following summarizes the weighted-average assumptions utilized in determining the fair value of options granted during the six months ended March 31, 2008 and 2007:
|
|
2008 |
|
2007 |
|
|
|
|
|
|
|
Risk-free interest rate |
|
3.3 |
% |
4.6 |
% |
Expected stock volatility |
|
31.1 |
% |
35.9 |
% |
Dividend yield |
|
.5 |
% |
.7 |
% |
Expected term (in years) |
|
4.8 |
|
5.5 |
|
Risk-Free Interest Rate. The risk-free interest rate is based on U.S. Treasury securities for the expected term of the option.
Expected Volatility Rate. Expected volatility is based on the daily closing price of the Companys stock based upon historical experience over a period which approximates the expected term of the option.
Dividend Yield. The expected dividend yield is based on the Companys current dividend yield.
Expected Term. The expected term of the options granted represents the period of time that they are expected to be outstanding. The Company estimates the expected term of options granted based on historical experience with grants and exercises.
10
HELMERICH & PAYNE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
A summary of stock option activity under the Plan for the three months ended March 31, 2008 and 2007 is presented in the following tables:
|
|
|
|
|
|
Weighted- |
|
|
|
||
|
|
|
|
Weighted- |
|
Average |
|
Aggregate |
|
||
|
|
|
|
Average |
|
Remaining |
|
Intrinsic |
|
||
March 31, 2008 |
|
Shares |
|
Exercise |
|
Contractual |
|
Value |
|
||
Options |
|
(in thousands) |
|
Price |
|
Term |
|
(in thousands) |
|
||
|
|
|
|
|
|
|
|
|
|
||
Outstanding at January 1, 2008 |
|
6,657 |
|
$ |
18.02 |
|
|
|
|
|
|
Granted |
|
|
|
|
|
|
|
|
|
||
Exercised |
|
(560 |
) |
12.36 |
|
|
|
|
|
||
Forfeited/Expired |
|
(77 |
) |
26.42 |
|
|
|
|
|
||
Outstanding at March 31, 2008 |
|
6,020 |
|
$ |
18.44 |
|
5.70 |
|
$ |
171,134 |
|
Vested and expected to vest at March 31, 2008 |
|
5,988 |
|
$ |
18.37 |
|
5.68 |
|
$ |
170,686 |
|
|
|
|
|
|
|
|
|
|
|
||
Exercisable at March 31, 2008 |
|
4,375 |
|
$ |
14.16 |
|
4.56 |
|
$ |
143,135 |
|
|
|
|
|
|
|
Weighted- |
|
|
|
||
|
|
|
|
Weighted- |
|
Average |
|
Aggregate |
|
||
|
|
|
|
Average |
|
Remaining |
|
Intrinsic |
|
||
March 31, 2007 |
|
Shares |
|
Exercise |
|
Contractual |
|
Value |
|
||
Options |
|
(in thousands) |
|
Price |
|
Term |
|
(in thousands) |
|
||
|
|
|
|
|
|
|
|
|
|
||
Outstanding at January 1, 2007 |
|
6,307 |
|
$ |
15.72 |
|
|
|
|
|
|
Granted |
|
2 |
|
27.45 |
|
|
|
|
|
||
Exercised |
|
(33 |
) |
12.02 |
|
|
|
|
|
||
Forfeited/Expired |
|
(5 |
) |
28.90 |
|
|
|
|
|
||
Outstanding at March 31, 2007 |
|
6,271 |
|
$ |
15.74 |
|
5.98 |
|
$ |
91,551 |
|
Vested and expected to vest at March 31, 2007 |
|
6,208 |
|
$ |
15.63 |
|
5.95 |
|
$ |
91,322 |
|
|
|
|
|
|
|
|
|
|
|
||
Exercisable at March 31, 2007 |
|
4,560 |
|
$ |
12.73 |
|
4.98 |
|
$ |
80,304 |
|
A summary of stock option activity under the Plan for the six months ended March 31, 2008 and 2007 is presented in the following table:
|
|
Six months ended March 31, |
|
|
|||||||||
|
|
2008 |
|
2007 |
|
|
|
||||||
|
|
|
|
Weighted- |
|
|
|
Weighted- |
|
|
|||
|
|
Shares |
|
Average |
|
Shares |
|
Average |
|
|
|||
|
|
(in |
|
Exercise |
|
(in |
|
Exercise |
|
|
|||
|
|
thousands) |
|
Price |
|
thousands) |
|
Price |
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|||
Outstanding at October 1, |
|
6,032 |
|
$ |
15.80 |
|
5,619 |
|
$ |
14.24 |
|
|
|
Granted |
|
742 |
|
35.11 |
|
731 |
|
26.90 |
|
|
|||
Exercised |
|
(677 |
) |
12.25 |
|
(74 |
) |
10.62 |
|
|
|||
Forfeited/Expired |
|
(77 |
) |
26.42 |
|
(5 |
) |
28.90 |
|
|
|||
Outstanding at March 31, |
|
6,020 |
|
$ |
18.44 |
|
6,271 |
|
$ |
15.72 |
|
|
The weighted-average fair value of options granted in the first quarter of fiscal 2008 was $10.81. No options were granted in the second quarter of fiscal 2008. The weighted-average fair value of options granted in the first quarter of fiscal 2007 was $10.36 and the weighted-average fair value of options granted in the second quarter of fiscal 2007 was $9.11.
11
HELMERICH & PAYNE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
The total intrinsic value of options exercised during the three and six months ended March 31, 2008 was $17.3 and $20.2 million respectively. The total intrinsic value of options exercised during the three and six months ended March 31, 2007 was $0.5 million and $1.0 million, respectively.
As of March 31, 2008, the unrecognized compensation cost related to the stock options was $14.9 million. That cost is expected to be recognized over a weighted-average period of 2.8 years.
RESTRICTED STOCK
Restricted stock awards consist of the Companys common stock and are time vested over 3-5 years. The Company recognizes compensation expense on a straight-line basis over the vesting period. The fair value of restricted stock awards is determined based on the closing trading price of the Companys shares on the grant date. The weighted-average grant-date fair value of shares granted for the six months ended March 31, 2008 and 2007 was $35.19 and $26.90, respectively.
A summary of the status of the Companys restricted stock awards as of March 31, 2008 and 2007, and changes during the six months then ended is presented below:
|
|
Six months ended March 31, |
|
||||||||
|
|
2008 |
|
2007 |
|
||||||
|
|
|
|
Weighted- |
|
|
|
Weighted- |
|
||
|
|
|
|
Average |
|
|
|
Average |
|
||
|
|
Shares |
|
Grant-Date |
|
Shares |
|
Grant-Date |
|
||
Restricted Stock Awards |
|
(in thousands) |
|
Fair Value |
|
(in thousands) |
|
Fair Value |
|
||
|
|
|
|
|
|
|
|
|
|
||
Unvested at October 1, |
|
240 |
|
$ |
29.27 |
|
213 |
|
$ |
29.57 |
|
Granted |
|
22 |
|
35.19 |
|
27 |
|
26.90 |
|
||
Vested |
|
(3 |
) |
16.01 |
|
|
|
|
|
||
Forfeited |
|
(14 |
) |
30.24 |
|
|
|
|
|
||
Unvested at March 31, |
|
245 |
|
$ |
29.92 |
|
240 |
|
$ |
29.27 |
|
As of March 31, 2008, there was $4.4 million of total unrecognized compensation cost related to unvested restricted stock options granted under the Plan. That cost is expected to be recognized over a weighted-average period of 3.0 years.
9. Notes Payable and Long-term Debt
At March 31, 2008, the Company had the following unsecured long-term debt outstanding:
Maturity Date |
|
Interest Rate |
|
|
|
|
Fixed rate debt: |
|
|
|
|
|
|
August 15, 2009 |
|
5.91% |
|
$ |
25,000,000 |
|
August 15, 2012 |
|
6.46% |
|
75,000,000 |
|
|
August 15, 2014 |
|
6.56% |
|
75,000,000 |
|
|
Senior credit facility: |
|
|
|
|
|
|
December 18, 2011 |
|
2.95%-3.44% |
|
305,000,000 |
|
|
|
|
|
|
$ |
480,000,000 |
|
The terms of the fixed rate debt obligations require the Company to maintain a minimum ratio of debt to total capitalization.
12
HELMERICH & PAYNE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
The Company has an agreement with a multi-bank syndicate for a $400 million senior unsecured credit facility which matures December 2011. While the Company has the option to borrow at the prime rate for maturities of less than 30 days, the Company anticipates that the majority of all of the borrowings over the life of the facility will accrue interest at a spread over LIBOR. The Company pays a commitment fee based on the unused balance of the facility. The spread over LIBOR as well as the commitment fee is determined according to a scale based on a ratio of the Companys total debt to total capitalization. The LIBOR spread ranges from .30 percent to ..45 percent depending on the ratios. At March 31, 2008, the LIBOR spread on borrowings was .35 percent and the commitment fee was ..075 percent per annum.
Financial covenants in the facility require the Company to maintain a funded leverage ratio (as defined) of less than 50 percent and an interest coverage ratio (as defined) of not less than 3.00 to 1.00. The facility contains additional terms, conditions, and restrictions that the Company believes are usual and customary in unsecured debt arrangements for companies that are similar in size and credit quality. At March 31, 2008, the Company had three letters of credit totaling $25.9 million under the facility and had $305 million borrowed against the facility with $69.1 million available to borrow. The advances bear interest ranging from 2.95 percent to 3.44 percent.
The Company also has an agreement with a single bank for an unsecured line of credit for $5 million. Pricing on the line of credit is prime minus 1.75 percent. The covenants and other terms and conditions are similar to the aforementioned senior credit facility except that there is no commitment fee. At March 31, 2008, the Company had no outstanding borrowings against this line.
The Company maintains a $5 million unsecured credit facility with a financial institution which it uses to issue letters of credit in order to obtain surety bonds for its international operations. At March 31, 2008, the letters of credit outstanding totaled $4.4 million.
10. Income Taxes
The Companys effective tax rate for the first six months of fiscal 2008 and 2007 was 36.9 percent and 36.6 percent, respectively. The effective tax rate for the three months ended March 31, 2008 and 2007 was 37.3 percent and 36.3 percent, respectively. The effective rate differs from the U.S. federal statutory rate of 35.0 percent primarily due to state and foreign taxes.
The Company adopted FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes an interpretation of FASB Statement No. 109 (FIN 48) on October 1, 2007. FIN 48 clarifies the accounting and disclosure requirements for uncertainty in tax positions. FIN 48 requires a two-step approach to evaluate tax positions and determine if they should be recognized. The first step is recognition based on a determination of whether it is more-likely-than-not that a tax position will be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position. In evaluating whether a tax position has met the more-likely-than-not recognition threshold, the enterprise should presume that the position will be examined by the appropriate taxing authority having full knowledge of all relevant information. The second step is to measure a tax position that meets the more-likely-than-not threshold. The tax position is measured as the largest amount of benefit, determined on a cumulative probability basis, that is greater than 50 percent likely of being realized upon ultimate settlement. The cumulative effect of initially applying the Interpretation must be reported as an adjustment to the opening balance of retained earnings in the year of adoption.
13
HELMERICH & PAYNE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
The net impact to the Company of the cumulative effect of adopting FIN 48 was a decrease of approximately $5.0 million in retained earnings.
At October 1, 2007, the Companys liability for unrecognized tax benefits, after the adoption of FIN 48, was $4.6 million, of which $4.3 million represents tax benefits that, if recognized, would favorably impact the effective tax rate. Unrecognized tax benefits increased to $5.1 million at March 31, 2008, mainly due to increases occurring in the first six months related to tax positions taken during the current year. Included in this balance is $4.8 million which, if recognized, would affect our effective tax rate.
The Company recognizes accrued interest related to unrecognized tax benefits in interest expense, and penalties in other expense in the consolidated statements of income. At October 1, 2007 and March 31, 2008, the Company had accrued interest and penalties of $2.0 million.
The Company files a consolidated U.S. federal income tax return, as well as income tax returns in various states and foreign jurisdictions. The tax years that remain open to examination by U.S. federal and state jurisdictions include fiscal years 2003 to 2007. Audits in foreign jurisdictions are generally complete through fiscal year 2001.
It is reasonably possible that the amount of the unrecognized tax benefit with respect to certain unrecognized tax positions will increase or decrease during the next 12 months; however, the Company does not expect the change to have a material effect on results of operations or financial position.
11. Contingent Liabilities and Commitments
In conjunction with the Companys current drilling rig construction program, purchase commitments for equipment, parts and supplies of approximately $131.1 million are outstanding at March 31, 2008.
Various legal actions, the majority of which arise in the ordinary course of business, are pending. The Company maintains insurance against certain business risks subject to certain deductibles. None of these legal actions are expected to have a material adverse effect on the Companys financial condition, cash flows or results of operations.
The Company is contingently liable to sureties in respect of bonds issued by the sureties in connection with certain commitments entered into by the Company in the normal course of business. The Company has agreed to indemnify the sureties for any payments made by them in respect of such bonds.
12. Segment Information
The Company operates principally in the contract drilling industry. The Companys contract drilling business includes the following reportable operating segments: U.S. Land, Offshore, and International Land. The contract drilling operations consist mainly of contracting Company-owned drilling equipment primarily to major oil and gas exploration companies. The Companys primary international areas of operation include Venezuela, Colombia, Ecuador and other South American countries. The International Land operations have similar services, have similar types of customers, operate in a consistent manner and have similar economic and regulatory characteristics. Therefore, the Company has aggregated its International Land operations into one reportable segment. The Company also has a Real Estate segment whose operations are conducted exclusively in the metropolitan area of Tulsa, Oklahoma. The key areas of operation include a 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.
14
HELMERICH & PAYNE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
The Company evaluates segment performance based on income or loss from operations (segment operating income) 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, income from asset sales and other corporate income and expense.
General and administrative costs are allocated to the segments based primarily on specific identification and, to the extent that such identification is not practical, on other methods which the Company believes to be a reasonable reflection of the utilization of services provided.
Segment operating income is a non-GAAP financial measure of the Companys performance, as it excludes general and administrative expenses, corporate depreciation, income from asset sales and other corporate income and expense.
The Company considers segment operating income to be an important supplemental measure of operating performance by presenting trends in the Companys core businesses. This measure is used by the Company to facilitate period-to-period comparisons in operating performance of the Companys reportable segments in the aggregate by eliminating items that affect comparability between periods. The Company believes that segment operating income is useful to investors because it provides a means to evaluate the operating performance of the segments and the Company on an ongoing basis using criteria that are used by our internal decision makers. Additionally, it highlights operating trends and aids analytical comparisons. However, segment operating income has limitations and should not be used as an alternative to operating income or loss, a performance measure determined in accordance with GAAP, as it excludes certain costs that may affect the Companys operating performance in future periods.
In the fourth quarter of fiscal 2007, the Company began mobilizing an offshore rig from the U.S. to an international location. Because an offshore rig requires different technology and marketing strategies, the chief operating decision-makers evaluation of performance and resource allocation for this rig is more appropriately aligned with the Offshore segment. Therefore the Company will continue to include the operations of this rig in the Offshore operating segment. Additionally, the Company determined that a management contract for a customer-owned platform rig located offshore in West Africa was more appropriately aligned with the Offshore segment for purposes of evaluating performance and resource allocation. Therefore, this management contract has been reclassified from the International segment to the Offshore segment for the quarter and year-to-date periods ending March 31, 2007. As a result, the International segment was renamed to International Land. Financial information for reportable segments for fiscal 2007 has been restated to reflect this change.
Summarized financial information of the Companys reportable segments for the six months ended March 31, 2008, and 2007, is shown in the following tables:
15
HELMERICH & PAYNE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
|
|
|
|
|
|
|
|
Segment |
|
||||
|
|
External |
|
Inter- |
|
Total |
|
Operating |
|
||||
(in thousands) |
|
Sales |
|
Segment |
|
Sales |
|
Income |
|
||||
March 31, 2008 |
|
|
|
|
|
|
|
|
|
||||
Contract Drilling: |
|
|
|
|
|
|
|
|
|
||||
U.S. Land |
|
$ |
712,907 |
|
$ |
|
|
$ |
712,907 |
|
$ |
287,581 |
|
Offshore |
|
57,070 |
|
|
|
57,070 |
|
7,717 |
|
||||
International Land |
|
154,359 |
|
|
|
154,359 |
|
33,908 |
|
||||
|
|
924,336 |
|
|
|
924,336 |
|
329,206 |
|
||||
Real Estate |
|
5,971 |
|
437 |
|
6,408 |
|
2,825 |
|
||||
|
|
930,307 |
|
437 |
|
930,744 |
|
332,031 |
|
||||
Eliminations |
|
|
|
(437 |
) |
(437 |
) |
|
|
||||
Total |
|
$ |
930,307 |
|
$ |
|
|
$ |
930,307 |
|
$ |
332,031 |
|
|
|
|
|
|
|
|
|
Segment |
|
||||
|
|
External |
|
Inter- |
|
Total |
|
Operating |
|
||||
(in thousands) |
|
Sales |
|
Segment |
|
Sales |
|
Income |
|
||||
March 31, 2007 |
|
|
|
|
|
|
|
|
|
||||
Contract Drilling: |
|
|
|
|
|
|
|
|
|
||||
U.S. Land |
|
$ |
539,045 |
|
$ |
|
|
$ |
539,045 |
|
$ |
228,190 |
|
Offshore |
|
64,457 |
|
|
|
64,457 |
|
11,185 |
|
||||
International Land |
|
149,796 |
|
|
|
149,796 |
|
43,948 |
|
||||
|
|
753,298 |
|
|
|
753,298 |
|
283,323 |
|
||||
Real Estate |
|
5,637 |
|
405 |
|
6,042 |
|
2,428 |
|
||||
|
|
758,935 |
|
405 |
|
759,340 |
|
285,751 |
|
||||
Eliminations |
|
|
|
(405 |
) |
(405 |
) |
|
|
||||
Total |
|
$ |
758,935 |
|
$ |
|
|
$ |
758,935 |
|
$ |
285,751 |
|
Summarized financial information of the Companys reportable segments for the three months ended March 31, 2008, and 2007, is shown in the following tables:
|
|
|
|
|
|
|
|
Segment |
|
||||
|
|
External |
|
Inter- |
|
Total |
|
Operating |
|
||||
(in thousands) |
|
Sales |
|
Segment |
|
Sales |
|
Income |
|
||||
March 31, 2008 |
|
|
|
|
|
|
|
|
|
||||
Contract Drilling: |
|
|
|
|
|
|
|
|
|
||||
U.S. Land |
|
$ |
365,263 |
|
$ |
|
|
$ |
365,263 |
|
$ |
143,740 |
|
Offshore |
|
29,789 |
|
|
|
29,789 |
|
3,603 |
|
||||
International Land |
|
75,757 |
|
|
|
75,757 |
|
12,752 |
|
||||
|
|
470,809 |
|
|
|
470,809 |
|
160,095 |
|
||||
Real Estate |
|
2,835 |
|
224 |
|
3,059 |
|
1,301 |
|
||||
|
|
473,644 |
|
224 |
|
473,868 |
|
161,396 |
|
||||
Eliminations |
|
|
|
(224 |
) |
(224 |
) |
|
|
||||
Total |
|
$ |
473,644 |
|
$ |
|
|
$ |
473,644 |
|
$ |
161,396 |
|
|
|
|
|
|
|
|
|
Segment |
|
||||
|
|
External |
|
Inter- |
|
Total |
|
Operating |
|
||||
(in thousands) |
|
Sales |
|
Segment |
|
Sales |
|
Income |
|
||||
March 31, 2007 |
|
|
|
|
|
|
|
|
|
||||
Contract Drilling: |
|
|
|
|
|
|
|
|
|
||||
U.S. Land |
|
$ |
269,145 |
|
$ |
|
|
$ |
269,145 |
|
$ |
109,782 |
|
Offshore |
|
28,703 |
|
|
|
28,703 |
|
3,805 |
|
||||
International Land |
|
71,950 |
|
|
|
71,950 |
|
19,874 |
|
||||
|
|
369,798 |
|
|
|
369,798 |
|
133,461 |
|
||||
Real Estate |
|
2,738 |
|
207 |
|
2,738 |
|
961 |
|
||||
|
|
372,536 |
|
207 |
|
372,536 |
|
134,422 |
|
||||
Eliminations |
|
|
|
(207 |
) |
(207 |
) |
|
|
||||
Total |
|
$ |
372,536 |
|
$ |
|
|
$ |
372,536 |
|
$ |
134,422 |
|
16
HELMERICH & PAYNE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
The following table reconciles segment operating income per the table above to income before income taxes and equity in income of affiliate as reported on the Consolidated Condensed Statements of Income.
|
|
Three Months Ended |
|
Six Months Ended |
|
||||||||
|
|
2008 |
|
2007 |
|
2008 |
|
2007 |
|
||||
|
|
(in thousands) |
|
||||||||||
|
|
|
|
|
|
|
|
|
|
||||
Segment operating income |
|
$ |
161,396 |
|
$ |
134,422 |
|
$ |
332,031 |
|
$ |
285,751 |
|
Gain from involuntary conversion of long-lived assets |
|
|
|
5,170 |
|
4,810 |
|
5,170 |
|
||||
Income from asset sales |
|
1,946 |
|
32,336 |
|
2,788 |
|
32,822 |
|
||||
Corporate general and administrative costs and corporate depreciation |
|
(7,672 |
) |
(7,644 |
) |
(15,326 |
) |
(12,805 |
) |
||||
Operating income |
|
155,670 |
|
164,284 |
|
324,303 |
|
310,938 |
|
||||
|
|
|
|
|
|
|
|
|
|
||||
Other income (expense): |
|
|
|
|
|
|
|
|
|
||||
Interest and dividend income |
|
1,220 |
|
1,034 |
|
2,335 |
|
2,278 |
|
||||
Interest expense |
|
(4,773 |
) |
(1,913 |
) |
(9,604 |
) |
(2,832 |
) |
||||
Gain on sale of investment securities |
|
5,476 |
|
177 |
|
5,606 |
|
26,514 |
|
||||
Other |
|
180 |
|
66 |
|
(436 |
) |
130 |
|
||||
Total other income (expense) |
|
2,103 |
|
(636 |
) |
(2,099 |
) |
26,090 |
|
||||
|
|
|
|
|
|
|
|
|
|
||||
Income before income taxes and equity in income of affiliate |
|
$ |
157,773 |
|
$ |
163,648 |
|
$ |
322,204 |
|
$ |
337,028 |
|
|
|
|
|
|
|
March 31, |
|
September 30, |
|
||
|
|
|
|
|
|
2008 |
|
2007 |
|
||
|
|
|
|
|
|
(in thousands) |
|
||||
Total Assets |
|
|
|
|
|
|
|
|
|
||
U.S. Land |
|
|
|
|
|
$ |
2,307,092 |
|
$ |
2,073,015 |
|
Offshore |
|
|
|
|
|
154,895 |
|
124,014 |
|
||
International Land |
|
|
|
|
|
335,124 |
|
314,625 |
|
||
|
|
|
|
|
|
2,797,111 |
|
2,511,654 |
|
||
|
|
|
|
|
|
|
|
|
|
||
Real Estate |
|
|
|
|
|
29,823 |
|
30,351 |
|
||
Other |
|
|
|
|
|
329,184 |
|
343,364 |
|
||
|
|
|
|
|
|
$ |
3,156,118 |
|
$ |
2,885,369 |
|
The following table presents revenues from external customers by country based on the location of service provided.
|
|
Three Months Ended |
|
Six Months Ended |
|
||||||||
|
|
2008 |
|
2007 |
|
2008 |
|
2007 |
|
||||
|
|
(in thousands) |
|
||||||||||
Operating revenues |
|
|
|
|
|
|
|
|
|
||||
United States |
|
$ |
396,899 |
|
$ |
295,945 |
|
$ |
774,451 |
|
$ |
599,730 |
|
Venezuela |
|
38,050 |
|
22,832 |
|
79,705 |
|
46,732 |
|
||||
Ecuador |
|
14,225 |
|
25,597 |
|
33,517 |
|
52,545 |
|
||||
Other Foreign |
|
24,470 |
|
28,162 |
|
42,634 |
|
59,928 |
|
||||
Total |
|
$ |
473,644 |
|
$ |
372,536 |
|
$ |
930,307 |
|
$ |
758,935 |
|
17
HELMERICH & PAYNE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
13. Pensions and Other Post-retirement Benefits
The following provides information at March 31, 2008 and 2007 related to the Company-sponsored domestic defined benefit pension plan.
Components of Net Periodic Benefit Cost
|
|
Three Months Ended |
|
Six Months Ended |
|
||||||||
|
|
2008 |
|
2007 |
|
2008 |
|
2007 |
|
||||
|
|
(in thousands) |
|
||||||||||
|
|
|
|
|
|
|
|
|
|
||||
Service Cost |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
Interest Cost |
|
1,189 |
|
1,216 |
|
2,379 |
|
2,432 |
|
||||
Expected return on plan assets |
|
(1,458 |
) |
(1,281 |
) |
(2,916 |
) |
(2,562 |
) |
||||
Recognized net actuarial loss |
|
(3 |
) |
35 |
|
(6 |
) |
70 |
|
||||
Net pension expense |
|
$ |
(272 |
) |
$ |
(30 |
) |
$ |
(543 |
) |
$ |
(60 |
) |
Plan Assets
The weighted-average asset allocations for the pension plan by asset category follow:
At March 31, |
|
2008 |
|
2007 |
|
|
|
|
|
|
|
Asset Category |
|
|
|
|
|
Equity Securities |
|
75.7 |
% |
77.2 |
% |
Debt Securities |
|
22.9 |
% |
20.5 |
% |
Real Estate and Other |
|
1.4 |
% |
2.3 |
% |
Total |
|
100.0 |
% |