UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
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x |
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) |
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OF THE SECURITIES EXCHANGE ACT OF 1934 |
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For quarterly period ended: June 30, 2008 |
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OR |
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o |
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) |
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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)
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Delaware |
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73-0679879 |
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(State or other jurisdiction of |
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(I.R.S. Employer I.D. Number) |
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incorporation or organization) |
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(Address of principal executive office)(Zip Code)
(918) 742-5531
(Registrant’s 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.
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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 smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
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Large accelerated filer x |
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Accelerated filer o |
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Non-accelerated filer o |
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Smaller reporting company o |
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(Do not check if a smaller reporting company) |
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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
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Yes o |
No x |
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CLASS |
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OUTSTANDING AT July 31, 2008 |
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Common Stock, $0.10 par value |
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105,210,721 |
Total Number of Pages – 39
HELMERICH & PAYNE, INC. AND SUBSIDIARIES
TABLE OF CONTENTS
2
HELMERICH & PAYNE, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(Unaudited)
(in thousands, except share and per share amounts)
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June 30, |
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September 30, |
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2008 |
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2007 |
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ASSETS |
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Current assets: |
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Cash and cash equivalents |
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$ |
99,018 |
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$ |
89,215 |
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Accounts receivable, less reserve of $3,649 at June 30, 2008 and $2,957 at September 30, 2007 |
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396,623 |
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339,819 |
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Inventories |
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31,880 |
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29,145 |
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Deferred income tax |
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18,350 |
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11,559 |
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Assets held for sale |
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5,724 |
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— |
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Prepaid expenses and other |
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59,804 |
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29,226 |
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Total current assets |
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611,399 |
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498,964 |
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Investments |
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218,869 |
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223,360 |
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Property, plant and equipment, net |
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2,534,931 |
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2,152,616 |
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Other assets |
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13,322 |
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10,429 |
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Total assets |
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$ |
3,378,521 |
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$ |
2,885,369 |
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LIABILITIES AND SHAREHOLDERS’ EQUITY |
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Current liabilities: |
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Notes payable |
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$ |
2,259 |
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$ |
— |
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Accounts payable |
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156,559 |
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124,556 |
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Accrued liabilities |
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113,290 |
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102,056 |
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Total current liabilities |
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272,108 |
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226,612 |
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Noncurrent liabilities: |
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Long-term notes payable |
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455,000 |
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445,000 |
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Deferred income taxes |
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435,912 |
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363,534 |
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Other |
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49,329 |
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34,707 |
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Total noncurrent liabilities |
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940,241 |
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843,241 |
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Shareholders’ equity: |
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Common stock, $.10 par value, 160,000,000 shares authorized, 107,057,904 shares issued |
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10,706 |
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10,706 |
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Preferred stock, no par value, 1,000,000 shares authorized, no shares issued |
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— |
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— |
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Additional paid-in capital |
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167,456 |
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143,146 |
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Retained earnings |
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1,961,306 |
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1,645,766 |
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Accumulated other comprehensive income |
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62,615 |
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75,885 |
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Treasury stock, at cost |
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(35,911 |
) |
(59,987 |
) |
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Total shareholders’ equity |
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2,166,172 |
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1,815,516 |
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Total liabilities and shareholders’ equity |
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$ |
3,378,521 |
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$ |
2,885,369 |
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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)
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Three Months Ended |
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Nine Months Ended |
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June 30, |
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June 30, |
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2008 |
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2007 |
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2008 |
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2007 |
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Operating revenues: |
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Drilling – U.S. Land |
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$ |
391,755 |
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$ |
303,514 |
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$ |
1,104,662 |
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$ |
842,559 |
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Drilling – Offshore |
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47,298 |
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29,626 |
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104,368 |
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94,083 |
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Drilling – International Land |
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80,585 |
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85,357 |
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234,944 |
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235,153 |
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Other |
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2,879 |
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2,777 |
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8,850 |
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8,414 |
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522,517 |
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421,274 |
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1,452,824 |
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1,180,209 |
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Operating costs and other: |
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Operating costs, excluding depreciation |
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274,168 |
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229,025 |
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763,921 |
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627,948 |
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Depreciation |
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51,210 |
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38,125 |
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147,066 |
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101,228 |
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General and administrative |
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14,723 |
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11,538 |
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42,716 |
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35,501 |
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Research and development |
|
522 |
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— |
|
522 |
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— |
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Acquired in-process research and development |
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11,129 |
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— |
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11,129 |
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— |
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Gain from involuntary conversion of long-lived assets |
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(5,426 |
) |
(5,900 |
) |
(10,236 |
) |
(11,070 |
) |
||||
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Income from asset sales |
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(1,616 |
) |
(6,186 |
) |
(4,404 |
) |
(39,008 |
) |
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344,710 |
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266,602 |
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950,714 |
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714,599 |
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Operating income |
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177,807 |
|
154,672 |
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502,110 |
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465,610 |
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Other income (expense): |
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Interest and dividend income |
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1,034 |
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962 |
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3,369 |
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3,240 |
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Interest expense |
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(4,651 |
) |
(3,260 |
) |
(14,255 |
) |
(6,092 |
) |
||||
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Gain on sale of investment securities |
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16,388 |
|
25,298 |
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21,994 |
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51,812 |
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Other |
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66 |
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120 |
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(370 |
) |
250 |
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12,837 |
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23,120 |
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10,738 |
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49,210 |
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Income before income taxes and equity in income of affiliate |
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190,644 |
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177,792 |
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512,848 |
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514,820 |
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Income tax provision |
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70,187 |
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64,960 |
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189,117 |
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188,396 |
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Equity in income of affiliate net of income taxes |
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4,912 |
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2,372 |
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11,522 |
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6,427 |
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NET INCOME |
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$ |
125,369 |
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$ |
115,204 |
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$ |
335,253 |
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$ |
332,851 |
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Earnings per common share: |
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|
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Basic |
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$ |
1.20 |
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$ |
1.11 |
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$ |
3.22 |
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$ |
3.22 |
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Diluted |
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$ |
1.18 |
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$ |
1.09 |
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$ |
3.16 |
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$ |
3.17 |
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||||
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Weighted average shares outstanding: |
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|
|
|
|
|
|
|
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||||
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Basic |
|
104,530 |
|
103,323 |
|
103,973 |
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103,292 |
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||||
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Diluted |
|
106,689 |
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105,313 |
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106,130 |
|
104,990 |
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Dividends declared per common share |
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$ |
0.0500 |
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$ |
0.0450 |
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$ |
0.1400 |
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$ |
0.1350 |
|
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)
|
|
|
Nine Months Ended |
|
||||
|
|
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June 30, |
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||||
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|
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2008 |
|
2007 |
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OPERATING ACTIVITIES: |
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|
|
|
|
||
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Net income |
|
$ |
335,253 |
|
$ |
332,851 |
|
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
|
||
|
Depreciation |
|
147,066 |
|
101,228 |
|
||
|
Provision for bad debt |
|
696 |
|
23 |
|
||
|
Equity in income of affiliate before income taxes |
|
(18,584 |
) |
(10,367 |
) |
||
|
Stock-based compensation |
|
5,610 |
|
5,279 |
|
||
|
Gain on sale of investment securities |
|
(21,864 |
) |
(51,674 |
) |
||
|
Gain from involuntary conversion of long-lived assets |
|
(10,236 |
) |
(11,070 |
) |
||
|
Income from asset sales |
|
(4,404 |
) |
(39,008 |
) |
||
|
Acquired in-process research and development |
|
11,129 |
|
— |
|
||
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Other |
|
(1 |
) |
— |
|
||
|
Deferred income tax expense |
|
66,593 |
|
51,768 |
|
||
|
Change in assets and liabilities- |
|
|
|
|
|
||
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Accounts receivable |
|
(61,787 |
) |
(37,184 |
) |
||
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Inventories |
|
(2,735 |
) |
(2,233 |
) |
||
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Prepaid expenses and other |
|
(31,594 |
) |
(16,832 |
) |
||
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Accounts payable |
|
(974 |
) |
51,707 |
|
||
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Accrued liabilities |
|
13,120 |
|
5,794 |
|
||
|
Deferred income taxes |
|
7,774 |
|
3,765 |
|
||
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Other noncurrent liabilities |
|
8,526 |
|
1,352 |
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||
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|
|
|
|
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Net cash provided by operating activities |
|
443,588 |
|
385,399 |
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||
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INVESTING ACTIVITIES: |
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|
|
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|
||
|
Capital expenditures |
|
(509,018 |
) |
(681,149 |
) |
||
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Acquisition of business, net of cash acquired |
|
(12,024 |
) |
— |
|
||
|
Insurance proceeds from involuntary conversion |
|
13,926 |
|
11,070 |
|
||
|
Proceeds from sale of investments |
|
25,507 |
|
112,938 |
|
||
|
Proceeds from asset sales |
|
6,077 |
|
45,526 |
|
||
|
Net cash used in investing activities |
|
(475,532 |
) |
(511,615 |
) |
||
|
|
|
|
|
|
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FINANCING ACTIVITIES: |
|
|
|
|
|
||
|
Repurchase of common stock |
|
— |
|
(17,621 |
) |
||
|
Increase (decrease) in notes payable |
|
2,259 |
|
(3,721 |
) |
||
|
Proceeds from line of credit |
|
2,630,000 |
|
805,000 |
|
||
|
Payments on line of credit |
|
(2,620,000 |
) |
(600,000 |
) |
||
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Increase (decrease) in bank overdraft |
|
4,465 |
|
(11,293 |
) |
||
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Dividends paid |
|
(14,060 |
) |
(13,971 |
) |
||
|
Proceeds from exercise of stock options |
|
14,267 |
|
3,277 |
|
||
|
Excess tax benefit from stock-based compensation |
|
24,816 |
|
1,254 |
|
||
|
Net cash provided by financing activities |
|
41,747 |
|
162,925 |
|
||
|
|
|
|
|
|
|
||
|
Net increase in cash and cash equivalents |
|
9,803 |
|
36,709 |
|
||
|
Cash and cash equivalents, beginning of period |
|
89,215 |
|
33,853 |
|
||
|
Cash and cash equivalents, end of period |
|
$ |
99,018 |
|
$ |
70,562 |
|
The accompanying notes are an integral part of these statements.
5
HELMERICH & PAYNE, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENT OF SHAREHOLDERS’ EQUITY
NINE MONTHS ENDED JUNE 30, 2008
(in thousands, except per share amounts)
|
|
|
|
|
|
|
|
|
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Accumulated |
|
|
|
|
|
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|
||||||
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Additional |
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Other |
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Total |
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||||||
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|
|
Common Stock |
|
Paid-In |
|
Retained |
|
Comprehensive |
|
Treasury Stock |
|
Shareholders’ |
|
||||||||||
|
|
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Shares |
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Amount |
|
Capital |
|
Earnings |
|
Income |
|
Shares |
|
Amount |
|
Equity |
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
||||||
|
Balance, September 30, 2007 |
|
107,058 |
|
$ |
10,706 |
|
$ |
143,146 |
|
$ |
1,645,766 |
|
$ |
75,885 |
|
3,573 |
|
$ |
(59,987 |
) |
$ |
1,815,516 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Adjustment to initially apply FASB Interpretation No. 48 |
|
|
|
|
|
|
|
(5,048 |
) |
|
|
|
|
|
|
(5,048 |
) |
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Comprehensive Income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Net income |
|
|
|
|
|
|
|
335,253 |
|
|
|
|
|
|
|
335,253 |
|
||||||
|
Other comprehensive
income, |
|
|
|
|
|
|
|
|
|
(13,264 |
) |
|
|
|
|
(13,264 |
) |
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Amortization of net periodic benefit costs-net actuarial gain (net of $4 income tax) |
|
|
|
|
|
|
|
|
|
(6 |
) |
|
|
|
|
(6 |
) |
||||||
|
Total comprehensive income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
321,983 |
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Capital adjustment of equity investee |
|
|
|
|
|
1,546 |
|
|
|
|
|
|
|
|
|
1,546 |
|
||||||
|
Cash dividends ($0.140 per share) |
|
|
|
|
|
|
|
(14,665 |
) |
|
|
|
|
|
|
(14,665 |
) |
||||||
|
Exercise of stock options |
|
|
|
|
|
(9,753 |
) |
|
|
|
|
(1,721 |
) |
24,020 |
|
14,267 |
|
||||||
|
Tax benefit of stock-based awards, including excess tax benefits of $24,816 |
|
|
|
|
|
26,963 |
|
|
|
|
|
|
|
|
|
26,963 |
|
||||||
|
Treasury stock issued for vested restricted stock |
|
|
|
|
|
(56 |
) |
|
|
|
|
(3 |
) |
56 |
|
— |
|
||||||
|
Stock-based compensation |
|
|
|
|
|
5,610 |
|
|
|
|
|
|
|
|
|
5,610 |
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Balance, June 30, 2008 |
|
107,058 |
|
$ |
10,706 |
|
$ |
167,456 |
|
$ |
1,961,306 |
|
$ |
62,615 |
|
1,849 |
|
$ |
(35,911 |
) |
$ |
2,166,172 |
|
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 Company’s 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 and the Real Estate segment previously shown separately has been included with all other non-reportable business 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 |
|
Nine Months Ended |
|
||||
|
|
|
June 30, |
|
June 30, |
|
||||
|
|
|
2008 |
|
2007 |
|
2008 |
|
2007 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic weighted average shares |
|
104,530 |
|
103,323 |
|
103,973 |
|
103,292 |
|
|
Effect of dilutive shares: |
|
|
|
|
|
|
|
|
|
|
Stock options and restricted stock |
|
2,159 |
|
1,990 |
|
2,157 |
|
1,698 |
|
|
Diluted weighted average shares |
|
106,689 |
|
105,313 |
|
106,130 |
|
104,990 |
|
For the nine months ended June 30, 2008 and 2007, options to purchase shares of common stock outstanding but not included in the computation of diluted earnings per share were 25,132 and 597,950, respectively. Inclusion of these shares would be antidilutive. For the three months ended June 30, 2008 and 2007 all options were included in the computation of diluted earnings per share.
3. Inventories
Inventories consist primarily of replacement parts and supplies held for use in the Company’s 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 securities 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 06/30/08 |
|
$ |
7,685 |
|
$ |
96,254 |
|
$ |
— |
|
$ |
103,939 |
|
|
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 June 30, 2008 and September 30, 2007. The estimated fair value of the investments carried at cost was $19.5 million and $22.3 million at June 30, 2008 and September 30, 2007, respectively. The assets held in the Non-qualified Supplemental Savings Plan are valued at fair market which totaled $7.3 million at June 30, 2008 and $7.8 million at September 30, 2007. The recorded amounts for investments accounted for under the equity method are $95.3 million and $74.2 million at June 30, 2008 and September 30, 2007, respectively. During the nine months ended June 30, 2008, the Company increased the equity investment $2.5 million ($1.5 million, net of tax) to account for capital transactions of Atwood Oceanics, Inc. (Atwood). At June 30, 2008, the Company owned 4,000,000 shares of Atwood. Subsequent to June 30, 2008, Atwood had a 2-for-1 stock split and the Company received an additional 4,000,000 shares. The additional shares will not have any affect on the Company’s recorded investment.
5. Comprehensive Income
Comprehensive income, net of related income taxes, is as follows (in thousands):
|
|
|
Three Months Ended |
|
Nine Months Ended |
|
||||||||
|
|
|
June 30, |
|
June 30, |
|
||||||||
|
|
|
2008 |
|
2007 |
|
2008 |
|
2007 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
||||
|
Net Income |
|
$ |
125,369 |
|
$ |
115,204 |
|
$ |
335,253 |
|
$ |
332,851 |
|
|
Other comprehensive income: |
|
|
|
|
|
|
|
|
|
||||
|
Unrealized appreciation (depreciation) on securities |
|
22,714 |
|
24,314 |
|
602 |
|
34,863 |
|
||||
|
Income taxes |
|
(8,632 |
) |
(9,240 |
) |
(230 |
) |
(13,248 |
) |
||||
|
|
|
14,082 |
|
15,074 |
|
372 |
|
21,615 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
||||
|
Reclassification of realized gains in net income |
|
(16,388 |
) |
(25,298 |
) |
(21,994 |
) |
(51,812 |
) |
||||
|
Income taxes |
|
6,228 |
|
9,613 |
|
8,358 |
|
19,689 |
|
||||
|
|
|
(10,160 |
) |
(15,685 |
) |
(13,636 |
) |
(32,123 |
) |
||||
|
|
|
|
|
|
|
|
|
|
|
||||
|
Minimum pension liability adjustments |
|
(4 |
) |
— |
|
(10 |
) |
— |
|
||||
|
Income taxes |
|
2 |
|
— |
|
4 |
|
— |
|
||||
|
|
|
(2 |
) |
— |
|
(6 |
) |
— |
|
||||
|
Total comprehensive income |
|
$ |
129,289 |
|
$ |
114,593 |
|
$ |
321,983 |
|
$ |
322,343 |
|
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):
|
|
|
June 30, |
|
September 30, |
|
||
|
|
|
2008 |
|
2007 |
|
||
|
|
|
|
|
|
|
||
|
Unrealized appreciation on securities, net |
|
$ |
59,677 |
|
$ |
72,941 |
|
|
Minimum pension liability |
|
2,938 |
|
2,944 |
|
||
|
Accumulated other comprehensive income |
|
$ |
62,615 |
|
$ |
75,885 |
|
6. Financial Instruments
During the nine months ended June 30, 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 nine months ended June 30, 2008.
7. Cash Dividends
The $0.045 cash dividend declared March 5, 2008, was paid June 2, 2008. On June 4, 2008, a cash dividend of $0.05 per share was declared for shareholders of record on August 15, 2008, payable September 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 Company’s Board of Directors. Readers should refer to Note 5 of the consolidated financial statements in the Company’s 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 nine months ended June 30, 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 |
|
Nine Months Ended |
|
||||||||
|
|
|
June 30, |
|
June 30, |
|
||||||||
|
|
|
2008 |
|
2007 |
|
2008 |
|
2007 |
|
||||
|
Compensation expense |
|
|
|
|
|
|
|
|
|
||||
|
Stock options |
|
$ |
1,533 |
|
$ |
1,372 |
|
$ |
4,698 |
|
$ |
4,262 |
|
|
Restricted stock |
|
365 |
|
347 |
|
912 |
|
1,017 |
|
||||
|
|
|
$ |
1,898 |
|
$ |
1,719 |
|
$ |
5,610 |
|
$ |
5,279 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
After-tax stock based compensation |
|
$ |
1,176 |
|
$ |
1,066 |
|
$ |
3,478 |
|
$ |
3,273 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Per basic share |
|
$ |
.01 |
|
$ |
.01 |
|
$ |
.03 |
|
$ |
.03 |
|
|
Per diluted share |
|
$ |
.01 |
|
$ |
.01 |
|
$ |
.03 |
|
$ |
.03 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Cash received from exercise of stock options |
|
$ |
5,983 |
|
$ |
2,405 |
|
$ |
14,267 |
|
$ |
3,277 |
|
STOCK OPTIONS
The following summarizes the weighted-average assumptions utilized in determining the fair value of options granted during the nine months ended June 30, 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 Company’s 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 Company’s 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 June 30, 2008 and 2007 is presented in the following tables:
|
|
|
|
|
|
|
Weighted- |
|
|
|
||
|
|
|
|
|
Weighted- |
|
Average |
|
Aggregate |
|
||
|
|
|
|
|
Average |
|
Remaining |
|
Intrinsic |
|
||
|
June 30, 2008 |
|
Shares |
|
Exercise |
|
Contractual |
|
Value |
|
||
|
Options |
|
(in thousands) |
|
Price |
|
Term |
|
(in thousands) |
|
||
|
|
|
|
|
|
|
|
|
|
|
||
|
Outstanding at April 1, 2008 |
|
6,020 |
|
$ |
18.44 |
|
|
|
|
|
|
|
Granted |
|
— |
|
— |
|
|
|
|
|
||
|
Exercised |
|
(1,156 |
) |
11.54 |
|
|
|
|
|
||
|
Forfeited/Expired |
|
(16 |
) |
27.71 |
|
|
|
|
|
||
|
Outstanding at June 30, 2008 |
|
4,848 |
|
$ |
20.06 |
|
6.01 |
|
$ |
251,937 |
|
|
Vested and expected to vest at June 30, 2008 |
|
4,822 |
|
$ |
19.98 |
|
5.99 |
|
$ |
250,937 |
|
|
|
|
|
|
|
|
|
|
|
|
||
|
Exercisable at June 30, 2008 |
|
3,220 |
|
$ |
15.09 |
|
4.75 |
|
$ |
183,281 |
|
|
|
|
|
|
|
|
Weighted- |
|
|
|
||
|
|
|
|
|
Weighted- |
|
Average |
|
Aggregate |
|
||
|
|
|
|
|
Average |
|
Remaining |
|
Intrinsic |
|
||
|
June 30, 2007 |
|
Shares |
|
Exercise |
|
Contractual |
|
Value |
|
||
|
Options |
|
(in thousands) |
|
Price |
|
Term |
|
(in thousands) |
|
||
|
|
|
|
|
|
|
|
|
|
|
||
|
Outstanding at April 1, 2007 |
|
6,271 |
|
$ |
15.74 |
|
|
|
|
|
|
|
Granted |
|
— |
|
— |
|
|
|
|
|
||
|
Exercised |
|
(186 |
) |
12.94 |
|
|
|
|
|
||
|
Forfeited/Expired |
|
(7 |
) |
28.81 |
|
|
|
|
|
||
|
Outstanding at June 30, 2007 |
|
6,078 |
|
$ |
15.81 |
|
5.77 |
|
$ |
119,183 |
|
|
Vested and expected to vest at June 30, 2007 |
|
6,021 |
|
$ |
15.71 |
|
5.75 |
|
$ |
118,677 |
|
|
|
|
|
|
|
|
|
|
|
|
||
|
Exercisable at June 30, 2007 |
|
4,373 |
|
$ |
12.71 |
|
4.75 |
|
$ |
99,314 |
|
A summary of stock option activity under the Plan for the nine months ended June 30, 2008 and 2007 is presented in the following table:
|
|
|
Nine months ended June 30, |
|
||||||||
|
|
|
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 |
|
(1,833 |
) |
11.81 |
|
(260 |
) |
12.62 |
|
||
|
Forfeited/Expired |
|
(93 |
) |
26.64 |
|
(12 |
) |
28.84 |
|
||
|
Outstanding at June 30, |
|
4,848 |
|
$ |
20.06 |
|
6,078 |
|
$ |
15.81 |
|
The weighted-average fair value of options granted in the first quarter of fiscal 2008 was $10.81. 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. No options were granted in the second quarter of fiscal 2008 or in the third quarters of fiscal 2008 and 2007.
11
HELMERICH & PAYNE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
The total intrinsic value of options exercised during the three and nine months ended June 30, 2008 was $60.7 million and $80.9 million respectively. The total intrinsic value of options exercised during the three and nine months ended June 30, 2007 was $4.0 million and $5.0 million, respectively.
As of June 30, 2008, the unrecognized compensation cost related to the stock options was $13.2 million. That cost is expected to be recognized over a weighted-average period of 2.7 years.
RESTRICTED STOCK
Restricted stock awards consist of the Company’s 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 Company’s shares on the grant date. The weighted-average grant-date fair value of shares granted for the nine months ended June 30, 2008 and 2007 was $35.19 and $26.90, respectively.
A summary of the status of the Company’s restricted stock awards as of June 30, 2008 and 2007, and changes during the nine months then ended is presented below:
|
|
|
Nine months ended June 30, |
|
||||||||
|
|
|
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 June 30, |
|
245 |
|
$ |
29.92 |
|
240 |
|
$ |
29.27 |
|
As of June 30, 2008, there was $4.0 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 2.75 years.
9. Notes Payable and Long-term Debt
At June 30, 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 |
|
2.74%-2.84% |
|
280,000,000 |
|
|
|
|
|
|
|
$ |
455,000,000 |
|
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 Company’s total debt to total capitalization. The LIBOR spread ranges from .30 percent to .45 percent depending on the ratios. At June 30, 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 June 30, 2008, the Company had three letters of credit totaling $25.9 million under the facility and had $280 million borrowed against the facility with $94.1 million available to borrow. The advances bear interest ranging from 2.74 percent to 2.84 percent. Subsequent to June 30, 2008, the debt was reduced $5.0 million.
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 June 30, 2008, the Company had no outstanding borrowings against this line.
The Company maintains an 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 June 30, 2008, unsecured letters of credit outstanding totaled $7.6 million.
At June 30, 2008, the Company had an unsecured note payable to a bank totaling $2.3 million denominated in a foreign currency. The interest rate of the note is 16.0 percent with a one year maturity payable in quarterly installments. Subsequent to June 30, 2008, the note was reduced $0.6 million.
10. Acquisition of TerraVici Drilling Solutions
On May 21, 2008, the Company acquired a private limited partnership, TerraVici Drilling Solutions (TerraVici) in a transaction accounted for under the purchase method of accounting. Under the purchase method of accounting, the assets acquired and liabilities assumed of TerraVici are recorded as of the acquisition date, at their respective fair values, and consolidated with those of the Company. TerraVici’s results of operations are included in the Company’s consolidated financial statements from the date of acquisition. TerraVici is included with all other non-reportable business segments.
The Company paid a total purchase price of $12.2 million to acquire TerraVici and it is now a wholly-owned subsidiary of the Company. The total purchase price included acquisition-related costs of $1.2 million. The transaction includes future contingency payments up to $11 million based on specific commerciality milestones plus certain earn-out provisions based on future earnings.
13
HELMERICH & PAYNE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
TerraVici is developing patented rotary steerable technology to enhance horizontal and directional drilling operations. The Company acquired TerraVici to complement technology currently used with the FlexRig. By combining this new technology with the Company’s existing capabilities, the Company expects to improve drilling productivity and reduce total well cost to the customer.
The acquisition was accounted for using the purchase method of accounting and the purchase price allocation resulted in the following amounts being allocated to the assets acquired and liabilities assumed at the acquisition date based upon their respective fair values.
|
Amounts in thousands |
|
May 21, 2008 |
|
|
|
Current assets |
|
$ |
352 |
|
|
Fixed assets |
|
4,257 |
|
|
|
Trademark |
|
919 |
|
|
|
In-process research and development |
|
11,129 |
|
|
|
Other noncurrent assets |
|
280 |
|
|
|
Assets acquired |
|
16,937 |
|
|
|
Liabilities assumed |
|
(5,452 |
) |
|
|
Net assets acquired |
|
11,485 |
|
|
|
Goodwill |
|
672 |
|
|
|
Acquisition cost |
|
$ |
12,157 |
|
The fair value of the acquired intangible assets consists primarily of trademarks of $0.9 million and non-compete agreements of $0.3 million. The weighted average amortization period for the non-compete agreements is 4.0 years.
In-process research and development, or IPR&D, represents rotary steerable system (RSS) tools under development by TerraVici at the date of acquisition that had not yet achieved technological feasibility, and would have no future alternative use. Accordingly, the purchase price allocated to IPR&D was expensed immediately subsequent to the acquisition. This charge will be amortized over 15 years for tax purposes. The $11.1 million estimated fair value of these intangible assets was derived using the multi-period excess-earnings method.
Detailed pro forma summary financial results for the three and nine months ended June 30, 2008 are not presented because the consolidated results of operations, assuming the acquisition of TerraVici had occurred at the beginning of the reporting period, are not materially different from the Consolidated Condensed Statement of Income as reported.
14
HELMERICH & PAYNE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
The excess of purchase price over the fair value assigned to the assets acquired and liabilities assumed represents the goodwill resulting from the acquisition. The amount allocated to goodwill is preliminary and subject to change, depending on the results of the final purchase price allocation. The Company does not expect any portion of this goodwill to be deductible for tax purposes. The goodwill attributable to the Company’s acquisition of TerraVici has been recorded as a noncurrent asset in the Company’s June 30, 2008 Consolidated Balance Sheet and will not be amortized, but is subject to review for impairment, on an annual basis, or as indicators of impairment exist.
The allocation of the purchase price is subject to finalization of the Company’s management analysis of the fair value of the assets acquired and liabilities assumed of TerraVici as of the acquisition date. The final allocation of the purchase price may result in additional adjustments to the recorded amounts of assets and liabilities and may also result in adjustments to depreciation, amortization and acquired in-process research and development. The final allocation is expected to be completed as soon as practicable but no later than 12 months after the acquisition date.
11. Income Taxes
The Company’s effective tax rate for the first nine months of fiscal 2008 and 2007 was 36.9 percent and 36.6 percent, respectively. The effective tax rate for the three months ended June 30, 2008 and 2007 was 36.8 percent and 36.5 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 prescribes a recognition threshold of more-likely-than-not, and a measurement attribute for all tax positions taken or expected to be taken on a tax return, in order to be recognized in the financial statements. The cumulative effect of initially applying the Interpretation was reported as an adjustment to the opening balance of retained earnings on October 1, 2007.
15
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. The liabilities for unrecognized tax benefits and related interest and penalties are included in other noncurrent liabilities on the balance sheet.
At October 1, 2007, the Company’s 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 $5.4 million at June 30, 2008, mainly due to the current period impact of tax positions taken in prior years. Included in this balance is $4.9 million which, if recognized, would favorably 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 June 30, 2008, the Company had accrued interest and penalties of $2.0 million and $2.2 million, respectively.
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 2004 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.
12. Contingent Liabilities and Commitments
In conjunction with the Company’s current drilling rig construction program, purchase commitments for equipment, parts and supplies of approximately $192.5 million are outstanding at June 30, 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 Company’s 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.
16
HELMERICH & PAYNE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
13. Segment Information
The Company operates principally in the contract drilling industry. The Company’s 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 Company’s 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. Each reportable segment is a strategic business unit which is managed separately. Other includes non-reportable operating segments.
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 Company’s performance, as it excludes general and administrative expenses, corporate depreciation, income from asset sales and other corporate income and expense.
17
HELMERICH & PAYNE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
The Company considers segment operating income to be an important supplemental measure of operating performance by presenting trends in the Company’s core businesses. This measure is used by the Company to facilitate period-to-period comparisons in operating performance of the Company’s 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 Company’s operating performance in future periods.
Due to the continued growth of the drilling segments over the past few years, the Company re-evaluated its reportable segments. With the growth of the drilling segments, the Real Estate segment has become a smaller percentage of total segment operating income. In the evaluation of segment reporting, the Company determined that the total of external revenues reported by the three reportable operating segments, U.S. Land, Offshore and International Land, comprised more than 75 percent of total consolidated revenue. As a result, the Real Estate segment previously shown as a reportable segment has been included with all other non-reportable business segments. Revenues included in all other consist primarily of rental income. Prior period balances have been restated to reflect this change.
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-maker’s 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 June 30, 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.
18
HELMERICH & PAYNE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
Summarized financial information of the Company’s reportable segments for the nine months ended June 30, 2008, and 2007, is shown in the following tables:
|
|
|
|
|
|
|
Segment |
|
|
|
||||
|
|
|
External |
|
Inter- |
|
Total |
|
Operating |
|
||||
|
(in thousands) |
|
Sales |
|
Segment |
|
Sales |
|
Income (Loss) |
|
||||
|
June 30, 2008 |
|
|
|
|
|
|
|
|
|
||||
|
Contract Drilling: |
|
|
|
|
|
|
|
|
|
||||
|
U.S. Land |
|
$ |
1,104,662 |
|
$ |
— |
|
$ |
1,104,662 |
|
$ |
446,994 |
|
|
Offshore |
|
104,368 |
|
— |
|
104,368 |
|
19,730 |
|
||||
|
International Land |
|
234,944 |
|
— |
|
234,944 |
|
51,400 |
|
||||
|
|
|
1,443,974 |
|
— |
|
1,443,974 |
|
518,124 |
|
||||
|
Other |
|
8,850 |
|
657 |
|
9,507 |
|
(7,596 |
) |
||||
|
|
|
1,452,824 |
|
657 |
|
1,453,481 |
|
510,528 |
|
||||
|
Eliminations |
|
— |
|
(657 |
) |
(657 |
) |
— |
|
||||
|
Total |
|
$ |
1,452,824 |
|
$ |
— |
|
$ |
1,452,824 |
|
$ |
510,528 |
|
|
|
|
|
|
|
|
|
|
Segment |
|
||||
|
|
|
External |
|
Inter- |
|
Total |
|
Operating |
|
||||
|
(in thousands) |
|
Sales |
|
Segment |
|
Sales |
|
Income |
|
||||
|
June 30, 2007 |
|
|
|
|
|
|
|
|
|
||||
|
Contract Drilling: |
|
|
|
|
|
|
|
|
|
||||
|
U.S. Land |
|
$ |
842,559 |
|
$ |
— |
|
$ |
842,559 |
|
$ |
342,809 |
|
|
Offshore |
|
94,083 |
|
— |
|
94,083 |
|
15,738 |
|
||||
|
International Land |
|
235,153 |
|
— |
|
235,153 |
|
72,821 |
|
||||
|
|
|
1,171,795 |
|
— |
|
1,171,795 |
|
431,368 |
|
||||
|
Other |
|
8,414 |
|
617 |
|
9,031 |
|
3,713 |
|
||||
|
|
|
1,180,209 |
|
617 |
|
1,180,826 |
|
435,081 |
|
||||
|
Eliminations |
|
— |
|
(617 |
) |
(617 |
) |
— |
|
||||
|
Total |
|
$ |
1,180,209 |
|
$ |
— |
|
$ |
1,180,209 |
|
$ |
435,081 |
|
19
HELMERICH & PAYNE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
Summarized financial information of the Company’s reportable segments for the three months ended June 30, 2008, and 2007, is shown in the following tables:
|
|
|
|
|
|
|
|
|
Segment |
|
||||
|
|
|
External |
|
Inter- |
|
Total |
|
Operating |
|
||||
|
(in thousands) |
|
Sales |
|
Segment |
|
Sales |
|
Income (Loss) |
|
||||
|
June 30, 2008 |
|
|
|
|
|
|
|
|
|
||||
|
Contract Drilling: |
|
|
|
|
|
|
|
|
|
||||
|
U.S. Land |
|
$ |
391,755 |
|
$ |
— |
|
$ |
391,755 |
|
$ |
159,413 |
|
|
Offshore |
|
47,298 |
|
— |
|
47,298 |
|
12,013 |
|
||||
|
International Land |
|
80,585 |
|
— |
|
80,585 |
|
17,492 |
|
||||
|
|
|
519,638 |
|
— |
|
519,638 |
|
188,918 |
|
||||
|
Other |
|
2,879 |
|
220 |
|
3,099 |
|
(10,421 |
) |
||||
|
|
|
522,517 |
|
220 |
|
522,737 |
|
178,497 |
|
||||
|
Eliminations |
|
— |
|
(220 |
) |
(220 |
) |
— |
|
||||
|
Total |
|
$ |
522,517 |
|
$ |
— |
|
$ |
522,517 |
|
$ |
178,497 |
|
|
|
|
|
|
|
|
|
|
Segment |
|
||||
|
|
|
External |
|
Inter- |
|
Total |
|
Operating |
|
||||
|
(in thousands) |
|
Sales |
|
Segment |
|
Sales |
|
Income |
|
||||
|
June 30, 2007 |
|
|
|
|
|
|
|
|
|
||||
|
Contract Drilling: |
|
|
|
|
|
|
|
|
|
||||
|
U.S. Land |
|
$ |
303,514 |
|
$ |
— |
|
$ |
303,514 |
|
$ |
114,619 |
|
|
Offshore |
|
29,626 |
|
— |
|
29,626 |
|
4,553 |
|
||||
|
International Land |
|
85,357 |
|
— |
|
85,357 |
|
28,873 |
|
||||
|
|
|
418,497 |
|
— |
|
418,497 |
|
148,045 |
|
||||
|
Other |
|
2,777 |
|
212 |
|
2,989 |
|
1,285 |
|
||||
|
|
|
421,274 |
|
212 |
|
421,486 |
|
149,330 |
|
||||
|
Eliminations |
|
— |
|
(212 |
) |
(212 |
) |
— |
|
||||
|
Total |
|
$ |
421,274 |
|
$ |
— |
|
$ |
421,274 |
|
$ |
149,330 |
|
20
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 |
|
Nine Months Ended |
|
||||||||
|
|
|
June 30, |
|
June 30, |
|
||||||||
|
|
|
2008 |
|
2007 |
|
2008 |
|
2007 |
|
||||
|
|
|
|
|
(in thousands) |
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
||||
|
Segment operating income |
|
$ |
178,497 |
|
$ |
149,330 |
|
$ |
510,528 |
|
$ |
435,081 |
|
|
Gain from involuntary conversion of long-lived assets |
|
5,426 |
|
5,900 |
|
10,236 |
|
11,070 |
|
||||
|
Income from asset sales |
|
1,616 |
|
6,186 |
|
4,404 |
|
39,008 |
|
||||
|
Corporate general and administrative costs and corporate depreciation |
|
(7,732 |
) |
(6,744 |
) |
(23,058 |
) |
(19,549 |
) |
||||
|
Operating income |
|
177,807 |
|
154,672 |
|
502,110 |
|
465,610 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
||||
|
Other income (expense): |
|
|
|
|
|
|
|
|
|
||||
|
Interest and dividend income |
|
1,034 |
|
962 |
|
3,369 |
|
3,240 |
|
||||
|
Interest expense |
|
(4,651 |
) |
(3,260 |
) |
(14,255 |
) |
(6,092 |
) |
||||
|
Gain on sale of investment securities |
|
16,388 |
|
25,298 |
|
21,994 |
|
51,812 |
|
||||
|
Other |
|
66 |
|
120 |
|
(370 |
) |
250 |
|
||||
|
Total other income (expense) |
|
12,837 |
|
23,120 |
|
10,738 |
|
49,210 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
||||
|
Income before income taxes and equity in income of affiliate |
|
$ |
190,644 |
|
$ |
177,792 |
|
$ |
512,848 |
|
$ |
514,820 |
|
|
|
|
June 30, |
|
September 30, |
|
||
|
|
|
2008 |
|
2007 |
|
||
|
|
|
(in thousands) |
|
||||
|
|
|
|
|
||||
|
Total Assets |
|
|
|
|
|
||
|
U.S. Land |
|
$ |
2,485,360 |
|
$ |
2,073,015 |
|
|
Offshore |
|
151,421 |
|
124,014 |
|
||
|
International Land |
|
352,985 |
|
314,625 |
|
||
|
Other |
|
35,559 |
|
30,351 |
|
||
|
|
|
3,025,325 |
|
2,542,005 |
|
||
|
Investments and Corporate Operations |
|
353,196 |
|
343,364 |
|
||
|
|
|
$ |
3,378,521 |
|
$ |
2,885,369 |
|
The following table presents revenues from external customers by country based on the location of service provided.
|
|
|
Three Months Ended |
|
Nine Months Ended |
|
||||||||
|
|
|
June 30, |
|
June 30, |
|
||||||||
|
|
|
2008 |
|
2007 |
|
2008 |
|
2007 |
|
||||
|
|
|
|
|
(in thousands) |
|
|
|
||||||
|
|
|
|
|
|
|
|
|
||||||
|
Operating revenues |
|
|
|
|
|
|
|
|
|
||||
|
United States |
|
$ |
434,230 |
|
$ |
331,201 |
|
$ |
1,208,681 |
|
$ |
930,931 |
|
|
Venezuela |
|
43,958 |
|
40,348 |
|
123,663 |
|
87,080 |
|
||||
|
Ecuador |
|
7,864 |
|
22,536 |
|
41,381 |
|
75,081 |
|
||||