- -------------------------------------------------------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
Form 10-Q
|X| QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR QUARTERLY PERIOD ENDED JUNE 30, 2004
COMMISSION FILE NUMBER 1-13167
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
ATWOOD OCEANICS, INC.
(Exact name of registrant as specified in its charter)
TEXAS 74-1611874
(State or other jurisdiction of (I.R.S. employer identification no.)
incorporation or organization)
15835 Park Ten Place Drive 77084
Houston, Texas (Zip Code)
(Address of principal executive offices)
281-749-7800
Registrant's telephone number, including area code
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 and (2) has been subject to such filings
requirements for the past 90 days. Yes X No___
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act. Yes X No __.
Indicate the number of shares outstanding of each of the issuer's classes
of Common Stock, as of July 31, 2004: 13,866,201 shares of Common Stock, $1 par
value.
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ATWOOD OCEANICS, INC.
FORM 10-Q
For the Quarter Ended June 30, 2004
INDEX
Part I. Financial Information
Item 1. Unaudited Financial Statements Page
a) Condensed Consolidated Statements of Operations
For the Three Months and Nine Months Ended June 30, 2004 and 2003..............5
b) Condensed Consolidated Balance Sheets
As of June 30, 2004 and September 30, 2003.....................................6
c) Condensed Consolidated Statements of Cash Flows
For the Nine Months Ended June 30, 2004 and 2003.........................8
d) Notes to Condensed Consolidated FinancialStatements...........................................9
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations...........................................13
Item 3. Quantitative and Qualitative Disclosures about Market Risk....................18
Item 4. Controls and Procedures.......................................................19
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K..............................................20
Signatures......................................................................................22
PART I. FINANCIAL INFORMATION
ATWOOD OCEANICS, INC. AND SUBSIDIARIES
This Form 10-Q for the quarterly period ended June 30, 2004 includes
statements which are not historical facts (including any statements concerning
plans and objectives of management for future operations or economic
performance, or assumptions related thereto) which are forward-looking
statements. In addition, we and our representatives may from to time to time
make other oral or written statements which are also forward-looking statements.
These forward-looking statements are made based upon management's current
plans, expectations, estimates, assumptions and beliefs concerning future events
impacting us and therefore involve a number of risks and uncertainties. We
caution that forward-looking statements are not guarantees and that actual
results could differ materially from those expressed or implied in the
forward-looking statements.
Important factors that could cause our actual results of operations or our
actual financial conditions to differ include, but are not necessarily limited
to:
- our dependence on the oil and gas industry;
- the operational risks involved in drilling for oil and gas;
- changes in rig utilization and dayrates in response to the level of
activity in the oil and natural gas industry, which is significantly
affected by indications and expectations regarding the level and
volatility of oil and natural gas prices, which in turn are affected by
such things as political, economic and weather conditions affecting or
potentially affecting regional or worldwide demand for oil and natural
gas, actions or anticipated actions by OPEC, inventory levels,
deliverability constraints, and future market activity;
- the extent to which customers and potential customers continue to pursue
deepwater drilling;
- exploration success or lack of exploration success by our customers and
potential customers;
- the highly competitive and cyclical nature of our business, with periods
of low demand and excess rig availability;
- the impact of the war with Iraq or other military operations, terrorist
acts or embargoes elsewhere;
- our ability to enter into and the terms of future drilling contracts;
- the availability of qualified personnel;
- our failure to retain the business of one or more significant customers;
- the termination or renegotiation of contracts by customers;
- the availability of adequate insurance at a reasonable cost;
- the occurrence of an uninsured loss;
- the risks of international operations, including possible economic,
political, social or monetary instability, and compliance with foreign
laws;
- the effect SARS or other public health concerns could have on our
international operations and financial results;
- compliance with or breach of environmental laws;
- the incurrence of secured debt or additional unsecured indebtedness or
other obligations by us or our subsidiaries;
- the adequacy of sources of liquidity;
- currently unknown rig repair needs and/or additional opportunities to
accelerate planned maintenance expenditures due to presently
unanticipated rig downtime;
- higher than anticipated accruals for performance-based compensation due
to better than anticipated performance by us, higher than anticipated
severance expenses due to unanticipated employee terminations, higher
than anticipated legal and accounting fees due to unanticipated financing
or other corporate transactions, and other factors that could increase
G&A expenses;
- the actions of our competitors in the oil and gas drilling industry,
which could significantly influence rig dayrates and utilization;
- changes in the geographic areas in which our customers plan to operate,
which in turn could change our expected effective tax rate;
- changes in oil and natural gas drilling technology or in our competitors'
drilling rig fleets that could make our drilling rigs less competitive or
require major capital investments to keep them competitive;
- rig availability;
- the effects and uncertainties of legal and administrative proceedings
and other contingencies;
- the impact of governmental laws and regulations and the uncertainties
involved in their administration, particularly in some foreign
jurisdictions;
- changes in accepted interpretations of accounting guidelines and other
accounting pronouncements and tax laws;
- the risks involved in the construction and upgrade of our drilling units.
Undue reliance should not be placed on these forward-looking
statements, which are applicable only on the date hereof. Neither we nor our
representatives have a general obligation to revise or update these
forward-looking statements to reflect events or circumstances that arise after
the date hereof or to reflect the occurrence of unanticipated events.
PART I. ITEM I - FINANCIAL STATEMENTS
ATWOOD OCEANICS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
Three Months Ended Nine Months Ended
June 30, June 30,
----------------------------------- -----------------------------------
2004 2003 2004 2003
---- ---- ---- ----
(Unaudited) (Unaudited)
REVENUES:
Contract drilling $ 48,386 $ 41,847 $120,521 $106,761
-------- -------- -------- --------
COSTS AND EXPENSES:
Contract drilling 26,572 27,635 70,519 71,094
Depreciation 7,898 6,783 23,587 18,025
General and administrative 3,008 3,023 8,683 8,822
------- ------- ------- -------
37,478 37,441 102,789 97,941
------- ------- ------- ------
OPERATING INCOME 10,908 4,406 17,732 8,820
------- ------- ------- ------
OTHER INCOME (EXPENSE):
Interest expense (2,330) (2,239) (6,998) (2,950)
Interest income 11 40 26 139
-- ------ ------ ------
(2,319) (2,199) (6,972) (2,811)
------- ------ ------ ------
INCOME BEFORE INCOME TAXES 8,589 2,207 10,760 6,009
PROVISION FOR INCOME TAXES 2,904 2,289 6,517 4,554
------- ------- ------- --------
NET INCOME (LOSS) $ 5,685 $ (82) $ 4,243 $ 1,455
======= ======= ======== ========
EARNINGS (LOSS) PER SHARE:
Basic $ 0.41 $ (0.01) $ 0.31 $ 0.11
Diluted $ 0.40 $ (0.01) $ 0.30 $ 0.10
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING:
Basic 13,860 13,847 13,858 13,846
Diluted 14,073 13,847 13,999 13,903
The accompanying notes are an integral part of these condensed consolidated
financial statements.
PART I. ITEM I - FINANCIAL STATEMENTS
ATWOOD OCEANICS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
June 30, September 30,
2004 2003
--------------- -------------
(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 17,508 $21,551
Accounts receivable 33,204 30,864
Income tax receivable 3,278 3,278
Inventories of materials and supplies,
at lower of average cost or market 12,023 12,583
Deferred tax assets 380 550
Prepaid expenses and other 4,304 7,186
-------- --------
Total Current Assets 70,697 76,012
-------- --------
NET PROPERTY AND EQUIPMENT 423,229 443,102
-------- --------
DEFERRED COSTS AND OTHER ASSETS 3,721 3,560
-------- --------
$497,647 $522,674
======== ========
The accompanying notes are an integral part of these condensed consolidated
financial statements.
PART I. ITEM I - FINANCIAL STATEMENTS
ATWOOD OCEANICS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
June 30, September 30,
2004 2003
--------------- ---------------
(Unaudited)
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of notes payable $ 33,000 $ 24,000
Accounts payable 4,248 10,403
Accrued liabilities 7,641 8,851
Deferred credits 3,200 6,695
-------- -----
Total Current Liabilities 48,089 49,949
-------- ------
LONG-TERM DEBT, net of current maturities: 154,000 181,000
------- -------
OTHER LONG-TERM LIABILITIES:
Deferred income taxes 20,518 21,217
Deferred credits and other 7,042 7,041
------- -----
27,560 28,258
------- ------
SHAREHOLDERS' EQUITY:
Preferred stock, no par value;
1,000,000 shares authorized, none outstanding --- ---
Common stock, $1 par value;
20,000,000 shares authorized with 13,866,000
and 13,851,000 shares issued and outstanding
at June 30, 2004 and September 30, 2003, respectively 13,866 13,851
Paid-in-capital 57,677 57,404
Retained earnings 196,455 192,212
-------- -------
Total Shareholders' Equity 267,998 263,467
-------- -------
$497,647 $522,674
======== ========
The accompanying notes are an integral part of these condensed consolidated
financial statements.
PART I. ITEM I - FINANCIAL STATEMENTS
ATWOOD OCEANICS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Nine Months Ended June 30,
--------------------------
2004 2003
------- -------
(Unaudited)
CASH FLOW FROM OPERATING ACTIVITIES:
Net Income (loss) $ 4,243 $ 1,455
------- -------
Adjustments to reconcile net income (loss) to net cash
provided (used) by operating activities:
Depreciation 23,587 18,025
Amortization of debt issuance costs 524 1,630
Amortization of deferred items 425 409
Deferred income tax provision (benefit) (700) 875
Changes in assets and liabilities:
Increase in accounts receivable (2,340) (4,484)
Decrease (increase) in inventory 560 (2,623)
Decrease in prepaids and other 4,207 4,868
Increase in deferred costs and other assets (611) (1,078)
Decrease in accounts payable (6,155) (1,163)
Decrease in accrued liabilities (1,210) (5,008)
Net mobilization fees and credits (4,755) (6,805)
------ ------
13,532 4,646
------ ------
Net cash provided by operating activities 17,775 6,101
------ ------
CASH FLOW FROM INVESTING ACTIVITIES:
Capital expenditures (3,729) (87,371)
Proceeds from sale of Rig 200 -- 500
Other 15 (38)
------ -------
Net cash used by investing activities (3,714) (86,909)
CASH FLOW FROM FINANCING ACTIVITIES:
Proceeds from credit facilities -- 247,500
Debt issuance costs paid (392) (3,405)
Principal payments on debt (18,000) (177,402)
Proceeds from exercises of stock options 288 10
------- --
Net cash provided (used) by financing activities (18,104) 66,703
------- --------
NET DECREASE IN CASH AND CASH EQUIVALENTS (4,043) (14,105)
CASH AND CASH EQUIVALENTS, at beginning of period 21,551 27,055
-------- --------
CASH AND CASH EQUIVALENTS, at end of period $ 17,508 $ 12,950
======== ========
- ---------------------------
Supplemental disclosure of cash flow information:
Cash paid for domestic and foreign income taxes $ 6,295 $ 6,805
======== ========
Cash paid for interest, net of amounts capitalized $ 7,099 $ 2,298
======== ========
The accompanying notes are an integral part of these condensed consolidated
financial statements.
PART I. ITEM 1 - FINANCIAL STATEMENTS
ATWOOD OCEANICS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. UNAUDITED INTERIM INFORMATION
The unaudited interim condensed consolidated financial statements as of
June 30, 2004 and for each of the three month and nine month periods ended June
30, 2004 and 2003, included herein, have been prepared in accordance with
accounting principles generally accepted in the United States of America for
interim financial information and with the instructions for Form 10-Q and
Article 10 of Regulation S-X. The year end condensed consolidated balance sheet
data was derived from the audited financial statements as of September 30, 2003.
Although these financial statements and related information have been prepared
without audit, and certain information and note disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted, we believe that the note disclosures
are adequate to make the information not misleading. The interim financial
results may not be indicative of results that could be expected for a full year.
It is suggested that these condensed consolidated financial statements be read
in conjunction with the consolidated financial statements and the notes thereto
included in our Annual Report to Shareholders for the year ended September 30,
2003. In our opinion, the unaudited interim financial statements reflect all
adjustments (consisting of normal recurring adjustments) considered necessary
for a fair presentation of our financial position and results of operations the
periods presented.
2. SIGNIFICANT ACCOUNTING POLICIES
We apply the recognition and measurement principles of APB Opinion No. 25
"Accounting for Stock Issued to Employees", and related interpretations.
Accordingly, no compensation costs have been recognized in net income (loss)
from the granting of options pursuant to our stock option plans, as all options
granted under those plans had an exercise price equal to the market value of the
underlying common stock on the date of grant. Had compensation costs been
determined based on the fair value at the grant dates consistent with the fair
value method of SFAS No. 123 "Accounting for Stock-Based Compensation", our net
income (loss) and earnings (loss) per share would have been reduced to the pro
forma amounts indicated below (in thousands, except for per share amounts):
Three Months Ended Nine Months Ended
June 30, June 30,
------------------------ ----------------------------
2004 2003 2004 2003
-------- ------- ------- ------
Net income (loss), as reported $ 5,685 $ (82) $4,243 $1,455
-------- ------- ------- ------
Deduct: Total stock-based employee
compensation expense determined under
fair value based method for all
awards, net of related tax effects (625) (537) (1,875) (1,612)
------- ------- ------- ------
Pro Forma, net income $ 5,060 $ (619) $ 2,368 $ (157)
======= ======= ======= ======
Earnings (loss) per share:
Basic - as reported $ 0.41 $ (0.01) $ 0.31 $ 0.11
Basic - pro forma $ 0.37 $ (0.04) $ 0.17 $(0.01)
Diluted - as reported $ 0.40 $ (0.01) $ 0.30 $ 0.10
Diluted - pro forma $ 0.36 $ (0.04) $ 0.17 $(0.01)
3. EARNINGS PER COMMON SHARE
The computation of basic and diluted earnings per share, or EPS, of our
outstanding common stock is as follows (in thousands, except per share amounts):
Three Months Ended Nine Months Ended
------------------------------ --------------------------------
Net Per Share Net Per Share
Income Shares Amount Income Shares Amount
------ ------ -------- ------ ------ ---------
June 30, 2004:
Basic earnings per share $ 5,685 13,860 $ 0.41 $ 4,243 13,858 $ 0.31
Effect of dilutive securities-
Stock Options --- 213 (0.01) --- 141 (0.01)
------- ------ ----- ------- ------ ------
Diluted earnings per share $ 5,685 14,073 $ 0.40 $ 4,243 13,999 $ 0.30
------- ------ ------ ------- ------ ------
June 30, 2003:
Basic earnings per share $ (82) 13,847 $(0.01) $ 1,455 13,846 $ 0.11
Effect of dilutive securities-
Stock Options --- --- --- --- 57 (0.01)
------- ------ ------ ------- ------ ------
Diluted earnings per share $ (82) 13,847 $(0.01) $ 1,455 13,903 $ 0.10
------ ------ ------ ------- ------ ------
The calculation of diluted EPS of our outstanding common stock for the
three month and nine month periods ending June 30, 2004, excludes consideration
of 103,000 shares of our common stock which would be issued if all our
outstanding stock options were exercised, respectively, because such options
were anti-dilutive. These options could potentially dilute basic EPS in the
future.
4. PROPERTY AND EQUIPMENT
A summary of property and equipment by classification is as follows (in
thousands):
June 30, September 30,
2004 2003
------------ ------------
Drilling vessels and related equipment
Cost $622,578 $ 618,943
Accumulated depreciation (204,016) (181,924)
--------- ---------
418,562 437,019
--------- ---------
Drill pipe
Cost 10,198 10,224
Accumulated depreciation (6,967) (6,010)
--------- ---------
Net book value 3,231 4,214
--------- ---------
Furniture and other
Cost 9,143 9,072
Accumulated depreciation (7,707) (7,203)
-------- ---------
Net book value 1,436 1,869
-------- --------
NET PROPERTY AND EQUIPMENT $423,229 $ 443,102
======== =========
Effective October 1, 2003, we extended the remaining depreciable life of
the RICHMOND from 2 to 5 years, due to our recent assessment of the rig's
commercial viability, coupled with our intent to continue marketing and
operating the rig beyond 2 years. We believe that this change in depreciable
life provides a better matching of the revenues and expenses of this asset over
its anticipated remaining useful life. As a result of this change in depreciable
life, depreciation expense was reduced and net income was increased for the
three months and nine months ended June 30, 2004, by approximately $325,000, or
$.02 per share, and $925,000, or $.07 per share, respectively.
5. LONG-TERM DEBT
In November 2003, our $250 million Senior Secured Credit Facility was
amended to redefine the calculation of the ratio of outstanding debt to
earnings, before interest, income taxes and depreciation. The amendment
increased the permitted ratio levels from 5.75 to 6.25 at December 31, 2003,
through and including March 30, 2004, reducing to 5.50 at March 31, 2004,
through and including September 29, 2004, 4.00 at September 30, 2004, through
and including December 30, 2004, and 3.00 thereafter. We are in compliance with
all financial covenants at June 30, 2004.
6. COMMITMENTS AND CONTINGENCIES
We are party to a number of lawsuits which are ordinary, routine litigation
incidental to our business, the outcome of which, individually, or in the
aggregate, is not expected to have a material adverse effect on our financial
position, results of operations, or cash flows.
7. INCOME TAXES
Virtually all of our tax provision for the three months and nine months
ended June 30, 2004 and 2003 relates to taxes in foreign jurisdictions. Our
consolidated effective income tax rate for the year-to-date period is
significantly higher than the United States statutory income tax rate primarily
due to an increased level of operating losses in foreign jurisdictions with low
or zero effective tax rates.
8. SUBSEQUENT EVENTS
On July 25, 2004, the ATWOOD BEACON incurred damage to its three legs and
derrick as a result of an incident while positioning the rig for its next well
in Indonesia. We have insurance to cover the cost of the repairs in excess of a
$1 million deductible, and have loss of hire insurance of $70,000 per day up to
180 days that commences after a 30-day waiting period. Presently, we are unable
to determine the time necessary to complete the repairs, and consequently, we
are unable to determine if there will be any additional financial statement
impact other than the $1 million deductible and the 30-day waiting period of
zero dayrate revenue, which will be accounted for during the fourth quarter of
fiscal year 2004. Considering our insurance coverage, we estimate that this
incident will reduce net income in the fourth quarter of fiscal year 2004 by
approximately $3 million or approximately $0.20 per diluted share.
PART I. ITEM 2
ATWOOD OCEANICS, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS
All non-historical information set forth herein is based upon expectations
and assumptions we deem reasonable. We can give no assurance that such
expectations and assumptions will prove to be correct, and actual results could
differ materially from the information presented herein. Our periodic reports
filed with the Securities and Exchange Commission, or SEC, should be consulted
for a description of risk factors associated with an investment in us.
OUTLOOK
The current worldwide utilization of offshore drilling units is
approximately 83%. For the first time since we commenced our upgrade program in
1997, all eight of our active premium offshore mobile drilling units had 100%
contract commitments during the quarter ended June 30, 2004, with all units
except the ATWOOD EAGLE and ATWOOD FALCON having 100% revenue days for the
quarter. The ATWOOD EAGLE had six zero rate days during the quarter due to
certain equipment repairs and the ATWOOD FALCON was being mobilized the last
week of the quarter. Our equipment utilization for the nine months ended June
30, 2004 was approximately 94%. We continue to emphasize equipment utilization
over higher dayrates. The utilization of jack-up drilling units (current
worldwide utilization of approximately 88%) continues as the strongest sector of
the market with semisubmersible utilization (current worldwide utilization of
approximately 80%) remaining the weakest sector. For the first nine months of
fiscal year 2004, our two jack-up drilling units were fully utilized; while our
four semisubmersible drilling units had a combined 90% utilization rate. The
operating results for the quarter ended June 30, 2004 were our best since the
quarter ended September 30, 2002.
On July 25, 2004, the ATWOOD BEACON incurred damage to all three legs and
the derrick while positioning the rig for its next well in Indonesia. We have
insurance to cover the cost of the repairs in excess of a $1 million deductible
and have loss of hire insurance of $70,000 per day up to 180 days which
commences after a 30 day waiting period. Our current plan, which is subject to
future analysis and revision, is to remove the legs on location and then
transport the rig and legs to the builder's shipyard in Singapore for inspection
and repairs. Presently, we are unable to determine the time necessary for
repairs. The contract for the rig had approximately 60 days remaining in its
term, and as a result of the damage to the rig could terminate with effect from
July 28, 2004 or, under certain conditions, August 3, 2004. At the present time,
we are discussing the status of the contract with the operator, and until the
repair period for the rig is better defined, our future contract plans involving
the rig are uncertain.
During the quarter ended June 30, 2004, the ATWOOD FALCON completed its
drilling program in Japan, relocated and completed a short drilling program in
China. During the last week of June 2004, the rig commenced mobilizing to its
next contract location, which normally takes approximately twelve days to
complete; however, the rig stopped at a shipyard in the Philippines to undergo
some planned maintenance and upgrade of its quarters. This shipyard work has
subsequently been completed with the rig relocated to Malaysia where it has
commenced its next drilling program.
We expect that the ATWOOD HUNTER, ATWOOD EAGLE, VICKSBURG, RICHMOND, ATWOOD
SOUTHERN CROSS and SEAHAWK will be fully utilized during the fourth quarter of
fiscal year 2004. The ATWOOD SOUTHERN CROSS has been awarded a contract to drill
two firm wells plus an option to drill one additional well offshore Myanmar. It
currently has contract commitments until October 2004. Immediately upon the rig
completing its current contractual commitment, it will commence its next
drilling program offshore Myanmar.
We are attempting to expedite the repairs to the ATWOOD BEACON and expect
that the rig will be reemployed soon after completing all repairs. With the
ATWOOD BEACON incident and the ATWOOD FALCON having no revenues for the entire
month of July due to its quarters upgrade and planned maintenance and
mobilization to Malaysia, we expect earnings for the fourth quarter of fiscal
year 2004 to decline from the results in the third quarter of fiscal year 2004.
Despite the expected decline in earnings in the fourth quarter of fiscal year
2004, we remain optimistic about the longer-term outlook and fundamentals of the
offshore drilling market, and believe that we are well-positioned, in an
improving market environment, for increased earnings and cash flows.
RESULTS OF OPERATIONS
Contract revenues for the three months and nine months ended June 30,
2004 increased 16% and 13%, respectively, compared to the three months and nine
months ended June 30, 2003. A comparative analysis of contract revenues is as
follows:
CONTRACT REVENUES
(In Millions)
-----------------------------------------------------------
Three Months Ended Nine Months Ended
June 30, June 30,
--------------------------- ----------------------------
2004 2003 Variance 2004 2003 Variance
---- ---- -------- ------ ------ --------
ATWOOD BEACON $ 6.1 $ --- $ 6.1 $ 15.2 $ --- $ 15.2
ATWOOD EAGLE 11.9 7.7 4.2 19.9 10.6 9.3
ATWOOD HUNTER 5.6 4.8 0.8 14.1 14.8 (0.7)
RICHMOND 2.4 2.2 0.2 6.9 6.3 0.6
VICKSBURG 6.0 6.3 (0.3) 18.2 18.6 (0.4)
SEAHAWK 4.6 5.9 (1.3) 14.0 16.9 (2.9)
ATWOOD SOUTHERN CROSS 3.5 4.9 (1.4) 9.1 12.8 (3.7)
ATWOOD FALCON 7.8 9.6 (1.8) 21.6 25.4 (3.8)
OTHER 0.5 0.4 0.1 1.5 1.4 0.1
----- ----- ----- ------ ------ ------
$48.4 $41.8 $ 6.6 $120.5 $106.8 $ 13.7
===== ===== ===== ====== ====== ======
The ATWOOD BEACON was under construction during the three month and nine
month periods of fiscal year 2003 and thus, generated no revenue compared to
being fully utilized during fiscal year 2004. The increase in revenue for the
ATWOOD EAGLE during the current quarter was due to a higher average dayrate
($110,000 versus $85,000 during the prior fiscal year quarter) and to an
increase in amortization of mobilization revenue from $700,000 in the prior
fiscal year to $2.7 million in the current quarter. The year-to-date increase in
revenue for the ATWOOD EAGLE also includes higher utilization during fiscal year
2004 compared to fiscal year 2003 due to the rig being upgraded and then
subsequently relocated to West Africa in fiscal year 2003. The ATWOOD HUNTER was
fully utilized during the second quarter of both fiscal years; however, the
average dayrate was approximately $62,000 for the second quarter of fiscal year
2004 compared to approximately $53,000 for the same quarter of the prior fiscal
year. The decrease in revenue for the ATWOOD HUNTER in the nine month period was
due to the rig being utilized only eight months in the current period compared
to being fully utilized in the same period during the prior fiscal year. The
increase in revenues for the RICHMOND was due to an increase in its dayrate in
2004 compared to 2003. The VICKSBURG continues to have consistent operations in
Malaysia. The decrease in revenue for the SEAHAWK for the three month and nine
month periods ended June 30, 2004 was due to the completion of amortizing
deferred revenues associated with the client reimbursement of a significant
portion of fiscal year 2000 upgrade costs at the end of the first quarter of the
current fiscal year. The decrease in revenue for the quarter for the ATWOOD
SOUTHERN CROSS was due to a decrease in its average dayrate from $52,000 in the
prior fiscal year quarter to $35,000 in the current quarter. The decrease in
revenue for the nine month period was due to the rig being utilized for
approximately five months at $35,000 per day plus $3.7 million of mobilization
revenue recognized during the period compared to being utilized for seven months
at approximately $58,000 per day in the prior fiscal year period. Utilization
for the ATWOOD FALCON was comparable for both the quarter and year-to-date
periods of the current and prior fiscal years. However, the June 2004 quarterly
average dayrate was approximately $85,000 compared to approximately $105,000 for
the June 2003 quarter. On a year-to-date basis, the ATWOOD FALCON had an average
dayrate of approximately $80,000 in fiscal year 2004 compared to approximately
$93,000 in fiscal year 2003.
Contract drilling costs for the three months and nine months ended June
30, 2004,decreased 4% and 1%, respectively, as compared to the same periods in
the prior fiscal year. An analysis of contract drilling costs by rig is as
follows:
CONTRACT DRILLING COSTS
(In Millions)
-------------------------------------------------------------------
Three Months Ended Nine Months Ended
June 30, June 30,
----------------------------- ----------------------------------
2004 2003 Variance 2004 2003 Variance
----- ----- -------- ----- ----- --------
ATWOOD BEACON $ 2.3 $ --- $ 2.3 $ 6.8 $ --- $ 6.8
ATWOOD EAGLE 7.3 6.8 0.5 14.1 8.9 5.2
VICKSBURG 2.2 2.2 --- 6.6 7.0 (0.4)
RICHMOND 2.1 2.2 (0.1) 6.0 6.3 (0.3)
ATWOOD HUNTER 3.1 3.3 (0.2) 8.9 10.1 (1.2)
SEAHAWK 2.0 2.2 (0.2) 6.2 7.6 (1.4)
ATWOOD SOUTHERN CROSS 2.8 3.9 (1.1) 9.6 11.9 (2.3)
ATWOOD FALCON 3.7 5.8 (2.1) 9.9 15.5 (5.6)
OTHER 1.1 1.2 (0.1) 2.4 3.8 (1.4)
----- ----- ----- ----- ----- ------
$26.6 $27.6 $(1.0) $70.5 $71.1 $(0.6)
===== ===== ===== ===== ===== ======
The ATWOOD BEACON was under construction during the three month and nine
month periods of fiscal year 2003 and thus, incurred no operating costs compared
to a full quarter and nine month period of operations for fiscal year 2004. The
increase in costs for the nine month period for the ATWOOD EAGLE was due to
incurring operating costs for seven months in the current fiscal year compared
to only four months in the prior fiscal year resulting from the timing and
length of upgrades and mobilizations. The level of operating costs for the
VICKSBURG and RICHMOND continue to be very consistent. The decrease in costs for
the ATWOOD HUNTER for the year-to-date period was due to a reduction of payroll
costs resulting from the greater utilization of local labor instead of
expatriate staff. The decrease in costs for the SEAHAWK during fiscal year 2004
was primarily due to lower repair and maintenance costs in the current fiscal
year compared to the prior fiscal year. The decrease in costs for the ATWOOD
SOUTHERN CROSS was due to the rig incurring lower operating costs in India and
Malaysia during the current fiscal year compared to operating in the higher cost
area of Italy in the prior year along with amortization of the planned
maintenance and upgrade costs in 2003 to meet Italian operating standards.
During most of the nine month period of fiscal year 2003, the ATWOOD FALCON
operated in Australia at approximately $20,000 per day higher operating costs
than in Asia, where the rig has worked during fiscal year 2004. The year-to-date
decrease in "Other" was due to the settlement of a contract dispute with a
customer during the current fiscal year which resulted in a $600,000 reversal of
a previously accrued expense and also due to the receipt of a $400,000 refund of
insurance premiums from the prior policy year resulting from the annual policy
year audit.
An analysis of depreciation expense by rig for the three months and nine
months ended June 30, 2004, as compared to the same periods in the prior fiscal
year is as follows:
DEPRECIATION EXPENSE
----------------------------------------------------------------------------
(In Millions)
Three Months Ended Nine Months Ended
June 30, June 30,
------------------------------------- -----------------------------------
2004 2003 Variance 2004 2003 Variance
-------- -------- ----------- ----- ---- --------
ATWOOD BEACON $ 1.3 $ --- $ 1.3 $ 4.0 $ --- $ 4.0
SEAHAWK 1.3 1.2 0.1 3.8 3.5 0.3
VICKSBURG 0.7 0.6 0.1 2.0 1.9 0.1
ATWOOD SOUTHERN CROSS 1.1 1.0 0.1 3.1 3.0 0.1
ATWOOD HUNTER 1.3 1.3 --- 4.0 4.0 ---
ATWOOD FALCON 0.7 0.7 --- 2.0 1.9 0.1
ATWOOD EAGLE 1.2 1.3 (0.1) 3.6 1.7 1.9
RICHMOND 0.2 0.5 (0.3) 0.6 1.4 (0.8)
OTHER 0.1 0.2 (0.1) 0.5 0.6 (0.1)
----- ----- ----- ----- ----- ---
$ 7.9 $ 6.8 $ 1.1 $23.6 $18.0 $ 5.6
===== ===== ===== ===== ===== =====
We do not recognize depreciation expense during the period a rig is out of
service for a significant upgrade or construction, which accounts for the
increase in depreciation expense for the current quarter and year-to-date period
for the ATWOOD BEACON and the year-to-date period for the ATWOOD EAGLE. The
decrease in depreciation expense for the RICHMOND is due to extending the
remaining depreciable life of the rig from two to five years at the beginning of
the current year fiscal year.
The increase in net interest expense for the three months and nine months
of fiscal year 2004 compared to the same periods of fiscal year 2003 is due to
an increase in the average amount of debt outstanding and to having no
capitalized interest during fiscal year 2004 due to all upgrade and construction
programs being completed during fiscal year 2003. During the three months and
nine month periods ended June 30, 2003, interest was capitalized in the amount
of $0.9 million and $3.9 million, respectively. No interest has been capitalized
during the current fiscal year.
Virtually all of our tax provision for the three months and nine months
ended June 30, 2004 and 2003 relates to taxes in foreign jurisdictions. Our
consolidated effective income tax rate for the year-to-date period is
significantly higher than the United States statutory tax rate primarily due to
a high level of operating losses in foreign jurisdictions with low or zero
effective tax rates. Although the total tax provision has increased for the
three month and nine month periods ended June 30, 2004 as compared to the prior
fiscal year periods due to increased revenues, our effective income tax rate has
decreased for both periods in the current fiscal year as compared to the prior
fiscal year due to a reduction in operating losses in foreign jurisdictions with
low or zero effective tax rates.
LIQUIDITY AND CAPITAL RESOURCES
During the first nine months of fiscal year 2004, we utilized $4.0 million
of cash on hand plus $17.8 million net cash provided by operating activities to
repay $18 million of long-term debt and finance $3.7 million of capital
expenditures.
The total costs to repair the ATWOOD BEACON is unknown at this time. We
expect insurance to cover all costs of the repairs in excess of the $1 million
deductible; however, we may have to temporarily fund a portion of the repair
costs prior to receiving insurance reimbursements. Depending upon timing of the
funding of ATWOOD BEACON repair costs to insurance reimbursements, we may have
to borrow additional funds under our Senior Secured Credit Facility. Currently,
we have $45 million of borrowing capacity under that credit facility. We
anticipate that any additional borrowings required for the ATWOOD BEACON repairs
will be repaid upon receipt of insurance proceeds.
Except for the pending repairs to the ATWOOD BEACON, we presently have no
plans to incur any repair or upgrade costs or other significant capital
projects. Thus far, in fiscal year 2004, we have repaid $18 million on the term
portion of our credit facility with another $6 million required payment due on
September 30, 2004 under our credit facility. We were in compliance with all
financial covenants at June 30, 2004. The bank group's collateral for the credit
facility consists primarily of preferred mortgages on all of our active drilling
fleet. Except for possible short-term funding requirements associated with the
ATWOOD BEACON repairs, we feel that our expected net cash to be provided by
operating activities will adequately meet all anticipated cash funding
requirements for the remainder of fiscal year 2004. We expect that any
short-term financing requirements to fund ATWOOD BEACON repairs will be
available under our current credit facility. As we continue to focus on
international operations of our premium equipment and on improvement in our
financial strength, we will continue to periodically review market conditions
for equity capital or additional debt financing.
PART I. ITEM 3
ATWOOD OCEANICS, INC. AND SUBSIDIARIES
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are exposed to market risk, including adverse change in interest rates
and foreign currency exchange rates as discussed below.
INTEREST RATE RISK
With the interest rate on our long-term debt under our current credit
facilities at a floating rate, the outstanding long-term debt of $187 million at
June 30, 2004, approximates its fair value. The impact on annual cash flow of a
10% change in the floating rate (approximately 40 basis points) would be
approximately $0.7 million, which we do not believe to be material. We did not
have any open derivative contracts relating to our floating rate debt at June
30, 2004.
FOREIGN CURRENCY RISK
Certain of our subsidiaries have monetary assets and liabilities that are
denominated in a currency other than their functional currencies. Based on June
30, 2004, amounts, a decrease in the value of 10% in the foreign currencies
relative to the U.S. dollar from the year-end exchange rates would result in a
foreign currency translation loss of approximately $0.3 million, which we do not
believe to be material. We did not have any open derivative contracts relating
to foreign currencies at June 30, 2004.
PART I. ITEM 4
ATWOOD OCEANICS, INC. AND SUBSIDIARIES
CONTROLS AND PROCEDURES
(a) Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our chief executive officer and
chief financial officer, evaluated the effectiveness of our disclosure controls
and procedures as of the end of the period covered by this report. Based on that
evaluation, the chief executive officer and chief financial officer concluded
that our disclosure controls and procedures as of the end of the period covered
by this report have been designed and are functioning effectively to provide
reasonable assurance that the information required to be disclosed by us in our
periodic SEC filings is recorded, process, summarized and reported within the
time periods specified in the SEC's rules, regulations and forms. We believe
that a controls system, no matter how well designed and operated, cannot provide
absolute assurance that the objectives of the controls system are met, and no
evaluation of controls can provide absolute assurance that all control issues
and instances of fraud, if any, within a company have been detected.
(b) Changes in Internal Control over Financial Reporting
No change in our internal control over financial reporting occurred during
the fiscal quarter covered by this report that has materially affected, or is
reasonably likely to materially affect, our internal control over financial
reporting.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
3.1.1 Restated Articles of Incorporation dated January 1972
(Incorporated herein by reference to Exhibit 3.1.1 of our Form
10-K for the year ended September 30, 2002).
3.1.2 Articles of Amendment dated March 1975 (Incorporated herein
by reference to Exhibit 3.1.2 of our Form 10-K for the
year ended September 30, 2002).
3.1.3 Articles of Amendment dated March 1992 (Incorporated herein by
reference to Exhibit 3.1.3 of our Form 10-K for the year ended
September 30, 2002).
3.1.4 Articles of Amendment dated November 1997 (Incorporated herein
by reference to Exhibit 3.1.4 of our Form 10-K for
the year ended September 30, 2002).
3.1.5 Certificate of Designations of Series A Junior Participating
Preferred Stock of Atwood Oceanics, Inc. dated October 17,
2002 (Incorporated herein by reference to Exhibit 3.1.5 of our
Form 10-K for the year ended September 30, 2002).
3.2 Bylaws, as amended and restated, dated January 1993
(Incorporated herein by reference to Exhibit 3.2 of our Form
10-K for the year ended September 30, 1993).
4.1 Rights Agreement dated effective October 18, 2002 between the
Company and Continental Stock & Transfer & Trust Company
(Incorporated herein by reference to Exhibit 4.1 of our Form
8-A filed October 21, 2002).
*31.1 Certification of Chief Executive Officer
*31.2 Certification of Chief Financial Officer
*32.1 Certificate of Chief Executive Officer pursuant to Section
906 of Sarbanes - Oxley Act of 2002.
*32.2 Certificate of Chief Financial Officer pursuant to
Section 906 of Sarbanes - Oxley Act of 2002.
*Filed herewith
(b) Reports on Form 8-K
1) On April 15, 2004, we filed a report on Form 8-K announcing
that ExxonMobil Exploration and Production Malaysia, or
EMEPMI, would suspend the VICKSBURG contract upon completion
of drilling on the current platform, with the rig then moved
to Thailand to commence an approximate five-months drilling
program for Chevron Offshore (Thailand) Limited. EMEPMI will
reinstate the VICKSBURG contract immediately upon the rig
being redelivered to Malaysia.
2) On April 28, 2004, we furnished a report on Form 8-K
announcing our earnings for the quarter ended March 31, 2004,
along with supporting information.
3) On May 19, 2004, we filed a report on Form 8-K announcing that
Conoco Phillips Indonesia Ltd. had given a commitment to
utilize the ATWOOD BEACON for a drilling program offshore
Indonesia which includes the drilling of three firm wells plus
options for four additional wells.
4) On May 26, 2004, we filed a report on Form 8-K announcing that
Sarawak Shell had reinstated a contract for the ATWOOD FALCON
to drill two firm wells with options to drill three additional
wells offshore Malaysia. We also announced that Woodside
Energy Ltd. awarded the ATWOOD EAGLE a contract to drill two
firm wells, with an option to drill an additional well
offshore Australia.
5) On June 24, 2004, we furnished a report on Form 8-K announcing
that the ATWOOD FALCON had completed its contract in China and
was mobilizing to Malaysia for its next drilling program with
a stop at a shipyard in the Philippines to undergo some
planned maintenance and quarters upgrade, and that the ATWOOD
EAGLE had three remaining wells to drill for BHP Billiton
Petroleum Pty Ltd, or BHP, with BHP having an option to drill
one more well prior to the rig commencing its drilling program
for Woodside Energy Ltd.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ATWOOD OCEANICS, INC.
(Registrant)
Date: August 9, 2004 /s/JAMES M. HOLLAND
-----------------
James M. Holland
Senior Vice President, Chief Financial
Officer, Chief Accounting Officer and
Secretary
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
3.1.1 Restated Articles of Incorporation dated January 1972
(Incorporated herein by reference to Exhibit 3.1.1 of our Form
10-K for the year ended September 30, 2002).
3.1.2 Articles of Amendment dated March 1975 (Incorporated herein
by reference to Exhibit 3.1.2 of our Form 10-K for the
year ended September 30, 2002).
3.1.3 Articles of Amendment dated March 1992 (Incorporated herein by
reference to Exhibit 3.1.3 of our Form 10-K for the year ended
September 30, 2002).
3.1.4 Articles of Amendment dated November 1997 (Incorporated herein
by reference to Exhibit 3.1.4 of our Form 10-K for
the year ended September 30, 2002).
3.1.5 Certificate of Designations of Series A Junior Participating
Preferred Stock of Atwood Oceanics, Inc. dated October 17,
2002 (Incorporated herein by reference to Exhibit 3.1.5 of our
Form 10-K for the year ended September 30, 2002).
3.2 Bylaws, as amended and restated, dated January 1, 1993
(Incorporated herein by reference to Exhibit 3.2 of our Form
10-K for the year ended September 30, 1993).
4.1 Rights Agreement dated effective October 18, 2002 between the
Company and Continental Stock & Transfer & Trust Company
(Incorporated herein by reference to Exhibit 4.1 of our Form
8-A filed October 21, 2002).
*31.1 Certification of Chief Executive Officer
*31.2 Certification of Chief Financial Officer
*32.1 Certificate of Chief Executive Officer pursuant to Section
906 of Sarbanes - Oxley Act of 2002.
*32.2 Certificate of Chief Financial Officer pursuant to Section 906
of Sarbanes - Oxley Act of 2002.
*Filed herewith
EXHIBIT 31.1
CERTIFICATIONS
I, John R. Irwin, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Atwood
Oceanics, Inc.;
2. Based on my knowledge, this report does not contain any untrue
statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the
circumstances under which such statements were made, not
misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other
financial information included in this report, fairly present
in all material respects the financial condition, results of
operations and cash flows of the registrant as of, and for,
the periods presented in this report;
4. The registrant's other certifying officer(s) and I are
responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules
13a-15(e) and 15d-15(e)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or
caused such disclosure controls and procedures to be designed
under our supervision, to ensure that material information
relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report
is being prepared;
(b) [Paragraph omitted in accordance with SEC transition
instructions contained in SEC Release 34-47986]; and
(c) Evaluated the effectiveness of the registrant's disclosure
controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure controls
and procedures, as of the end of the period covered by this
report based on such evaluation; and
(d) Disclosed in this report any change in the registrant's
internal control over financial reporting that occurred during
the registrant's most recent fiscal quarter (the registrant's
fourth fiscal quarter in the case of an annual report) that
has materially affected, or is reasonably likely to materially
affect, the registrant's internal control over financial
reporting; and
5. The registrant's other certifying officer(s) and I have
disclosed, based on our most recent evaluation of internal
control over financial reporting, to the registrant's auditors
and the audit committee of the registrant's board of directors
(or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in
the design or operation of internal control over financial
reporting which are reasonably likely to adversely affect the
registrant's ability to record, process, summarize and report
financial information; and
(b) Any fraud, whether or not material, that involves
management or other employees who have a significant role in
the registrant's internal control over financial reporting.
Date: August 9, 2004
/s/ JOHN R. IRWIN
John R. Irwin
Chief Executive Officer
EXHIBIT 31.2
CERTIFICATIONS
I, James M. Holland, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Atwood
Oceanics, Inc.;
2. Based on my knowledge, this report does not contain any untrue
statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the
circumstances under which such statements were made, not
misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other
financial information included in this report, fairly present in
all material respects the financial condition, results of
operations and cash flows of the registrant as of, and for, the
periods presented in this report;
4. The registrant's other certifying officer(s) and I are responsible
for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and
15d-15(e)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or
caused such disclosure controls and procedures to be designed
under our supervision, to ensure that material information
relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report
is being prepared;
(b) [Paragraph omitted in accordance with SEC transition
instructions contained in SEC Release 34-47986]; and
(c) Evaluated the effectiveness of the registrant's disclosure
controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure controls
and procedures, as of the end of the period covered by this
report based on such evaluation; and
(d) Disclosed in this report any change in the registrant's
internal control over financial reporting that occurred during
the registrant's most recent fiscal quarter (the registrant's
fourth fiscal quarter in the case of an annual report) that
has materially affected, or is reasonably likely to materially
affect, the registrant's internal control over financial
reporting; and
5. The registrant's other certifying officer(s) and I have disclosed,
based on our most recent evaluation of internal control over
financial reporting, to the registrant's auditors and the audit
committee of the registrant's board of directors (or persons
performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in
the design or operation of internal control over financial
reporting which are reasonably likely to adversely affect the
registrant's ability to record, process, summarize and report
financial information; and
(b) Any fraud, whether or not material, that involves
management or other employees who have a significant role in
the registrant's internal control over financial reporting.
Date: August 9, 2004
/s/ JAMES M. HOLLAND
James M. Holland
Chief Financial Officer
EXHIBIT 32.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Atwood Oceanics, Inc. (the
"Company") on Form 10-Q for the period ended March 31, 2004, as filed with the
Securities and Exchange Commission on the date hereof (the "Report"), I, John R.
Irwin, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C.
ss.1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002,
that, to the best of my knowledge:
(1) The Report fully complies with the requirements of Section 13(a) or
15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all
material respects, the financial condition and results of
operations of the Company for the periods presented.
Date: August 9, 2004 /s/ JOHN R. IRWIN
John R. Irwin
President and Chief Executive Officer
EXHIBIT 32.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Atwood Oceanics, Inc. (the
"Company") on Form 10-Q for the period ended March 31, 2004, as filed with the
Securities and Exchange Commission on the date hereof (the "Report"), I, James
M. Holland, Chief Financial Officer of the Company, certify, pursuant to 18
U.S.C. ss.1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002, that, to the best of my knowledge:
(1) The Report fully complies with the requirements of Section 13(a) or
15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all
material respects, the financial condition and results of
operations of the Company for the periods presented.
Date: August 9, 2004 /s/JAMES M. HOLLAND
James M. Holland
Senior Vice President and
Chief Financial Officer