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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
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FORM 10-K
ANNUAL REPORT UNDER SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR FISCAL YEAR ENDED SEPTEMBER 30, 2002
COMMISSION FILE NUMBER 1-13167
ATWOOD OCEANICS, INC.
(Exact name of registrant as specified in its charter)
TEXAS
(State or other jurisdiction of 74-1611874
incorporation or organization) (I.R.S. Employer Identification No.)
15835 Park Ten Place Drive 77084
Houston, Texas (Zip Code)
(Address of principal executive offices)
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Registrant's telephone number, including area code:
281-749-7800
Securities registered pursuant to
Section 12(b) of the Act:
Common Stock, $1 par value
(Title of Class)
Securities registered pursuant to
Section 12(g) of the Act:
NONE
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Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 15 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 filings
requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation in S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definite proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K [ ].
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Exchange Act Rule 12b-2). Yes [X] No [ ]
The aggregate market value of the voting stock held by non-affiliates of the
registrants as of December 18, 2002 is $328,605,045.
The number of shares outstanding of the issuer's class of Common Stock, as of
December 18, 2002: 13,845,051 shares of Common Stock, $1 par value.
DOCUMENTS INCORPORATED BY REFERENCE
(1) Annual Report to Shareholders for the fiscal year ended September 30, 2002 -
Referenced in Parts I, II and IV of this report.
(2) Proxy Statement for Annual Meeting of Shareholders to be held February 13,
2003 - Referenced in Part III of this report.
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PART I
ITEM 1. BUSINESS
Atwood Oceanics, Inc. (which together with its subsidiaries is identified
as the "Company" or "Registrant", unless the context requires otherwise), a
corporation organized in 1968 under the laws of the State of Texas, is engaged
in the international offshore drilling of exploratory and developmental oil and
gas wells in offshore areas and related support, management and consulting
services. Currently, the Company's fleet includes seven active, wholly-owned
drilling units, which include two semisubmersibles capable of drilling in up to
5,000 feet of water, one semisubmersible capable of drilling in up to 3,500 feet
of water, one semisubmersible capable of drilling in up to 2,000 feet of water,
one 300 feet cantilever jack-up, one semisubmersible self-erecting tender-assist
rig and one submersible unit. In December 2000, the Company purchased a
semisubmersible hull for future conversion to a tender-assist unit. In addition
to the owned rigs, the Company manages the operations of two operator-owned
platform rigs offshore northwest Australia. The Company is also constructing a
KFELS MOD-V, Enhanced B-Class, Jack-up at Keppel Fels Limited, a shipyard in
Singapore, to be named the ATWOOD BEACON. The Company expects the construction
of the ATWOOD BEACON to be completed in June 2003, with a total cost, including
owner-furnished equipment and capitalized interest, of approximately $125
million.
Since 1996, the Company has expended approximately $340 million in
upgrading all of its currently active offshore mobile drilling units. In
November 2002, the Company completed the upgrade of the ATWOOD EAGLE at an
aggregate cost of approximately $90 million of which an aggregate total of $62
million was incurred as of September 30, 2002. The rig is currently enroute to
Angola. In November 2001, the Company completed the upgrade of the ATWOOD
HUNTER, at a shipyard in the United States at an aggregate cost of approximately
$58 million. The rig was relocated to Egypt, where it continues to work. The
upgrades to both rigs included extending their capacity to drill in up to 5,000
feet of water, new 120-bed quarters, new higher capacity cranes, along with
upgraded well control, drilling and mud systems, in addition to other
improvements in drilling and subsea completion capabilities. Fiscal year 2002
marked the Company's ninth consecutive profitable year, with the results for the
year being consistent with results for 2001 and 2000. The Company's ability to
continue to produce strong financial performance depends on a high demand for
drilling equipment, which is dependent on worldwide oil and gas exploration and
development activities. Due to the current soft market conditions, which have
resulted in lower level of dayrate for deep-water work, the Company expects
operating cash flows and net income for fiscal year 2003 to be below results of
fiscal year 2002.
During the Company's thirty-four year history, the majority of its drilling
units have operated outside of United States water. Approximately 95%, 82% and
72% of the Company's contract revenues were derived from foreign operations in
fiscal years 2002, 2001 and 2000, respectively. The submersible RICHMOND is the
Company's only drilling unit currently working in United States waters. In
addition to operating in United States waters, the Company is currently involved
in active foreign operations in the territorial waters of Australia, Malaysia,
Egypt, Italy and expects to commence active operations off the coast of Angola
in February 2003. For information relating to the contract revenues, operating
income and identifiable assets attributable to specific geographic areas of
operations, see Note 12 of Notes to Consolidated Financial Statements contained
in the Company's Annual Report to Shareholders for fiscal year 2002,
incorporated by reference herein.
OFFSHORE DRILLING EQUIPMENT
The Company's diversified fleet of owned or operated drilling rigs
currently consists of ten rigs - four semisubmersibles, one jack-up, one
semisubmersible tender assist vessel and one semisubmersible to be converted to
a tender assist vessel at a future date, one submersible, and two modular,
self-contained platform rigs. The ultra-premium jack-up being constructed will
bring the total to eleven rigs. Each type of drilling rig is designed for
different purposes and applications, for operations in different water depths,
bottom conditions, environments and geographical areas, and for different
drilling and operating requirements. The following descriptions of the various
types of drilling rigs owned or operated by the Company illustrate the
diversified range of application of the Company's rig fleet.
Each semisubmersible drilling unit has two hulls, the lower of which is
capable of being flooded. Drilling equipment is mounted on the main hull. After
the drilling unit is towed to location, the lower hull is flooded, lowering the
entire drilling unit to its operating draft, and the drilling unit is anchored
in place. On completion of operations, the lower hull is deballasted, raising
the entire drilling unit to its towing draft. This type of drilling unit is
designed to operate in greater water depths than a jack-up and in more
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severe sea conditions than a drillship. Semisubmersible units are generally more
expensive to operate than jack-up rigs and are often limited in the amount of
supplies that can be stored on board.
Semisubmersible tender assist vessels operate like a semisubmersible
except that their drilling equipment is temporarily installed on permanently
constructed offshore support platforms. The semisubmersible vessel provides crew
accommodations, storage facilities and other support for the drilling
operations.
A jack-up drilling unit contains all of the drilling equipment on a
single hull designed to be towed to the well site. Once on location, legs are
lowered to the sea floor and the unit is raised out of the water by jacking the
hull up the legs. On completion of the well, the unit is jacked down, and towed
to the next location. A jack-up drilling unit can operate in more severe sea and
weather conditions than a drillship and is less expensive to operate than a
semisubmersible. However, because it must rest on the sea floor, a jack-up
cannot operate in water as deep as other units.
The submersible drilling unit owned by the Company has two hulls, the
lower being a mat, which is capable of being flooded. Drilling equipment and
crew accommodations are located on the main hull. After the drilling unit is
towed to its location, the lower hull is flooded, lowering the entire unit to
its operating draft at which it rests on the sea floor. On completion of
operations, the lower hull is deballasted, raising the entire unit to its towing
draft. This type of drilling unit is designed to operate in shallow water depths
ranging from 9 to 70 feet and can operate in moderately severe sea conditions.
Although drilling units of this type are less expensive to operate, like the
jack-up rig, they cannot operate in as deep water as other units.
A modular platform rig is similar to a land rig in its basic
components. Modular platform rigs are temporarily installed on permanently
constructed offshore support platforms in order to perform the drilling
operations. After the drilling phase is completed, the modular rig is broken
down into convenient packages and moved by workboats. A platform rig usually
stays at a location for several months, if not years, since several wells are
typically drilled from a support platform.
DRILLING CONTRACTS
The contracts under which the Company operates its vessels are obtained
either through individual negotiations with the customer or by submitting
proposals in competition with other contractors and vary in their terms and
conditions. The initial term of contracts for the Company's owned and/or
operated vessels has ranged from the length of time necessary to drill one well
to several years and is generally subject to early termination in the event of a
total loss of the drilling vessel, a force majeure event, excessive equipment
breakdown or failure to meet minimum performance criteria. It is not unusual for
contracts to contain renewal provisions at the option of the customer.
The rate of compensation specified in each contract depends on the
nature of the operation to be performed, the duration of the work, the amount
and type of equipment and services provided, the geographic areas involved,
market conditions and other variables. Generally, contracts for drilling,
management and support services specify a basic rate of compensation computed on
a dayrate basis. Such agreements generally provide for a reduced dayrate payable
when operations are interrupted by equipment failure and subsequent repairs,
field moves, adverse weather conditions or other factors beyond the control of
the Company. Some contracts also provide for revision of the specified dayrates
in the event of material changes in certain items of cost. Any period during
which a vessel is not earning a full operating dayrate because of the above
conditions or because the vessel is idle and not on contract will have an
adverse effect on operating profits. An over-supply of drilling rigs in any
market area can adversely affect the Company's ability to employ its drilling
vessels. The Company's active rig utilization for fiscal years 2002, 2001 and
2000 was 86%, 80% and 71%, respectively.
Of the Company's current seven active drilling units, only the VICKSBURG and
SEAHAWK have contract terms that extend beyond fiscal year 2003. Even though the
Company currently expects to maintain high utilization of its equipment in
fiscal year 2003, there is no guarantee that the Company will not experience
some idle time on some of its drilling units during fiscal year 2003.
For long moves of drilling equipment, the Company attempts to obtain
either a lump sum or a dayrate as mobilization compensation for expenses
incurred during the period in transit. A surplus of certain types of units,
either worldwide or in particular operating areas, can result in the Company's
acceptance of a contract which provides only partial, or no recovery of
relocation costs. In 2000, the Company incurred net costs of approximately $1.2
million in relocating the ATWOOD SOUTHERN CROSS from Australia to the
Mediterranean Sea. In 2001, the Company incurred costs of approximately $2.1
million in relocating the ATWOOD HUNTER to the Mediterranean Sea. The Company
can give no assurance that it will receive full recovery of any future
relocation costs. During fiscal 2003, the Company expects to incur net costs in
excess of $1 million in relocating the ATWOOD EAGLE from Greece to Angola.
3
Operation of the Company's drilling equipment is subject to the
offshore drilling requirements of petroleum exploration companies and agencies
of foreign governments. These requirements are, in turn, subject to fluctuations
in government policies, world demand and prices for petroleum products, proved
reserves in relation to such demand and the extent to which such demand can be
met from onshore sources.
The Company also contracts to provide various types of services to
third party owners of drilling rigs. These contracts are normally for a stated
term or until termination of operations or stages of operation at a particular
facility or location. The services may include, as in the case of contracts
entered into by the Company in connection with operations offshore Australia,
the supply of personnel and rig design, fabrication, installation and operation.
The contracts normally provide for reimbursement to the Company for all
out-of-pocket expenses, plus a service or management fee for all of the services
performed. In most instances, the amount charged for the services may be
adjusted if there are changes in conditions, scope or costs of operations. The
Company generally obtains insurance or a contractual indemnity from the owner
for liabilities which could be incurred in operations.
OPERATIONAL RISKS AND INSURANCE
The Company's operations are subject to the usual hazards associated
with the drilling of oil and gas wells, such as blowouts, explosions and fires.
In addition, the Company's vessels are subject to those perils peculiar to
marine operations, such as capsizing, grounding, collision and damage from
severe weather conditions. Any of these risks could result in damage or
destruction of drilling rigs and oil and gas wells, personal injury and property
damage, suspension of operations or environmental damage through oil spillage or
extensive, uncontrolled fires. The Company's operations are also subject to
disruption due to terrorism. As a result of significant losses incurred by the
insurance industry over the last two years due to terrorism and other events,
the Company has experienced significant increases in premium for certain
insurance coverages. Although the Company believes that it is adequately insured
against normal and foreseeable risks in its operations in accordance with
industry standards, such insurance may not be adequate to protect the Company
against liability from all consequences of well disasters, marine perils,
extensive fire damage, damage to the environment or disruption due to terrorism.
To date, the Company has not experienced difficulty in obtaining insurance
coverage, although no assurance can be given as to the future availability of
such insurance or cost thereof. The occurrence of a significant event against
which the Company is not fully insured could have a material adverse effect on
the Company's financial position.
ENVIRONMENTAL PROTECTION
Under the Federal Water Pollution Control Act, as amended by the Oil
Pollution Act of 1990, operators of vessels in navigable United States waters
and certain offshore areas are liable to the United States government for the
costs of removing oil and certain other pollutants for which they may be held
responsible, subject to certain limitations, and must establish financial
responsibility to cover such liability. The Company has taken all steps
necessary to comply with this law, and has received a Certificate of Financial
Responsibility (Water Pollution) from the U.S. Coast Guard. The Company's
operations in United States waters are also subject to various other
environmental regulations regarding pollution and control thereof, and the
Company has taken steps to ensure compliance therewith.
CUSTOMERS
During fiscal year 2002, the Company performed operations for 14
customers. Because of the relatively limited number of customers for which the
company can operate at any given time, sales to each of 4 different customers
amounted to 10% or more of the Company's fiscal 2002 revenues. Shell
Philippines/Sarawak Shell/Sabah Shell, Burullus Gas Company, ExxonMobil
Production Malaysia, Inc., and Carigali-Triton Operating Company accounted for
22%, 18%, 16% and 14%, respectively, of fiscal year 2002 revenues. The Company's
business operations are subject to the risks associated with a business having a
limited number of customers for its products or services, and a decrease in the
drilling programs of these customers in the areas where they employ the Company
may adversely affect the Company's revenues.
COMPETITION
The Company competes with approximately 10 other drilling contractors,
most of which are substantially larger than the Company and possess appreciably
greater financial and other resources. Although some business combinations among
drilling companies have resulted in a decrease in the total number of
competitors, the drilling industry still remains very competitive, with no
single drilling contractor being dominant. Thus, there continues to be
competition in securing available drilling contracts.
Price competition is generally the most important factor in the
drilling industry, but the technical capability of specialized drilling
equipment and personnel at the time and place required by customers are also
important. Other competitive factors include
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work force experience, rig suitability, efficiency, condition of equipment,
reputation and customer relations. The Company believes that it competes
favorably with respect to these factors. If demand for drilling rigs increases
in the future, rig availability may also become a competitive factor.
Competition usually occurs on a regional basis and, although drilling rigs are
mobile and can be moved from one region to another in response to increased
demand, an oversupply of rigs in any region may result. Demand for drilling
equipment is also dependent on the exploration and development programs of oil
and gas companies, which are in turn influenced by the financial condition of
such companies, by general economic conditions, by prices of oil and gas, and,
from time to time, by political considerations and policies.
FOREIGN OPERATIONS
The operations of the Company are conducted primarily in foreign waters
and are subject to certain political, economic and other uncertainties not
encountered by purely domestic drilling contractors, including risks of
expropriation, nationalization, foreign exchange restrictions, foreign taxation,
changing conditions and foreign and domestic monetary policies, as well as a
higher risk for disruption of operations due to terrorism. Generally, the
Company purchases insurance to protect against some or all losses due to events
of political risk such as nationalization, expropriation, war, confiscation and
deprivation. Occasionally, customers will indemnify the Company against such
losses. Moreover, offshore drilling activity is affected by government
regulations and policies limiting the withdrawal of offshore oil and gas,
regulations affecting production, regulations restricting the importation of
foreign petroleum, environmental regulations and regulations which may limit
operations in offshore areas by foreign companies and/or personnel. See Note 12
to Consolidated Financial Statements contained in the Company's Annual Report to
Shareholders for fiscal year 2002, incorporated herein by reference, for a
summary of contract revenues, operating income and identifiable assets by
geographic region.
Because of the Company's foreign operations, its overall effective tax
rate may in the future be higher than the maximum United States corporate
statutory rate due to higher foreign tax rates in certain jurisdictions or less
than full creditability of foreign taxes paid.
EMPLOYEES
The Company currently employs approximately 800 persons in its domestic
and worldwide operations. In connection with its foreign drilling operations,
the Company has often been required by the host country to hire substantial
portions of its work force in that country and, in some cases, these employees
may be represented by foreign unions. To date, the Company has experienced
little difficulty in complying with such requirements, and the Company's
drilling operations have not been significantly interrupted by strikes or work
stoppages.
SECURITIES LITIGATION SAFE HARBOR STATEMENT
Some of the information presented in, or in connection with, this
Report constitutes "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995 that involve potential risks
and uncertainties. The Company's future results could differ materially from
those discussed here. Some of the factors that could cause or contribute to such
differences include:
o The Company's dependence on the oil and gas industry;
o the risks involved in the construction and upgrade of the Company's
rigs;
o the operational risks involved in drilling for oil and gas;
o the efforts of vigorous competition; o the risk of disruption in
operations by terrorism;
o the risk inherent in international operations, including possible
economic, political or monetary instability; and,
o governmental regulations and environmental matters.
The words "believe", "impact", "intend", "estimate", "anticipate",
"plan" and similar expressions identify forward-looking statements. These
forward-looking statements are found at various places throughout the
Management's Discussion and Analysis incorporated by reference in Part II and
elsewhere in this report.
Undue reliance should not be placed on these forward-looking
statements, which are applicable only on the date hereof. The Company and its
representatives have no 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.
5
COMPANY INFORMATION
The Company's filings made with the Securities and Exchange Commission
("SEC") may be obtained from the SEC at the physical address and internet
address indicated in the Company's Annual Report to Shareholders for fiscal year
2002, incorporated herein by reference. The Company's filings made with the SEC
pursuant to sections 13(a) and 15(d) of the Exchange Act of 1934 are also
available free of charge on the Company's website as soon as reasonably
practicable after filing or being furnished to the SEC. The Company's internet
address is http://www.atwd.com.
ITEM 2. PROPERTIES
Information regarding the location and general character of the
Company's principal assets may be found in the table with the caption heading
"Offshore Drilling Operations" in the Company's Annual Report to Shareholders
for fiscal year 2002, which is incorporated by reference herein.
Since 1996, the Company has expended approximately $340 million
in upgrading all of its current active drilling units. In 1997, the ATWOOD
HUNTER and ATWOOD SOUTHERN were upgraded at costs of $40 million and $35
million, respectively. In 1998, the ATWOOD FALCON and VICKSBURG were upgraded at
costs of $45 million and $35 million, respectively. In 1999, the SEAHAWK was
upgraded at a cost of $22 million. In June 2000, a small water-depth upgrade was
performed on the ATWOOD EAGLE along with an upgrade and refurbishment of the
RICHMOND at costs of $8 million and $7 million, respectively. In 2001, the
ATWOOD HUNTER was upgraded again at a cost of $58 million to among other things,
extend its drilling water-depth capabilities to 5,000 feet. In November 2002,
the major upgrade of the ATWOOD EAGLE to, among other things, extend its
drilling water-depth capabilities to 5,000 feet was completed at a cost of
approximately $90 million. In December 2000, the Company purchased the
semisubmersible unit SEASCOUT for $4.5 million. This unit was purchased for
conversion and upgrade to a semisubmersible tender assist vessel once an
acceptable contract opportunity has been secured. In July 2001, the Company
contracted to construct a ultra-premium jack-up estimated to cost $125 million,
with delivery scheduled for June 2003. For more information concerning these
costs, see Note 3 in Consolidated Financial Statements contained in the
Company's Annual Report to Shareholders for fiscal year 2002, incorporated by
reference herein.
ITEM 3. LEGAL PROCEEDINGS
The Company is party to a number of lawsuits which are ordinary,
routine litigation incidental to the Company's business, the outcome of which,
individually, or in the aggregate, is not expected to have a material adverse
effect on the Company's financial conditions or results of operations.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SHAREHOLDERS
During the fourth quarter of fiscal 2002, no matters were submitted to
a vote of shareholders through the solicitation of proxies or otherwise.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED SHAREHOLDER
MATTERS
As of December 18, 2002, there were over 750 beneficial owners of the
Company's common stock.
The Company did not pay cash dividends in fiscal years 2001 or 2002
and the Company does not anticipate paying cash dividends in the foreseeable
future because of the capital-intensive nature of its business. To enable the
company to maintain its high competitive profile in the industry, cash reserves
will be utilized, at the appropriate time, to upgrade existing equipment or to
acquire additional equipment. The Company's revolving credit facilities prohibit
the Company from paying cash dividends on common stock without lender approval.
6
Market information concerning the Company's common stock may be found
under the caption heading "Stock Price Information" in the Company's Annual
Report to Shareholders for fiscal year 2002, which is incorporated by reference
herein.
Equity compensation plan information required by this item may be found
in Note 6 to Consolidated Financial Statements contained in the Company's Annual
Report to Shareholders for fiscal year 2002, which is incorporated by reference
herein.
ITEM 6. SELECTED FINANCIAL DATA
Information required by this item may be found under the caption "Five
Year Financial Review" in the Company's Annual Report to Shareholders for fiscal
year 2002, which is incorporated by reference herein.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Information required by this item may be found in the Company's Annual
Report to Shareholders for fiscal year 2002, which is incorporated by reference
herein.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Information required by this item may be found under the caption
"Disclosures About Market Risk" in the Company's Annual Report to Shareholders
for fiscal year 2002, which is incorporated by reference herein.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Information required by this item may be found in the Company's Annual
Report to Shareholders for fiscal year 2002, which is incorporated by reference
herein.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
On May 14, 2002, the Company dismissed Arthur Andersen LLP ("Arthur
Andersen") as its independent public accountants and appointed
PricewaterhouseCoopers LLP as its new independent accountants. The decision to
dismiss Arthur Andersen and to retain PricewaterhouseCoopers was recommended by
the Company's Audit Committee and approved by its Board of Directors.
Arthur Andersen's reports on the Company's consolidated financial
statements for each of the years ended September 30, 2001 and 2000 did not
contain any adverse opinion or disclaimer of opinion, nor were they qualified or
modified as to uncertainty, audit scope, or accounting principles. During the
years ended September 30, 2001 and 2000, and the subsequent interim period
through May 14, 2002, there were no disagreements between the Company and Arthur
Andersen on any matter of accounting principles or practices, financial
statement disclosure, or auditing scope or procedure, which disagreements, if
not resolved to Arthur Andersen's satisfaction, would have caused them to make
reference to the subject matter of the disagreement in connection with their
report. None of the reportable events described in Item 304(a)(1)(v) of
Regulation S-K occurred during the years ended September 30, 2001 and 2000 or
during the subsequent interim period through May 14, 2002.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
This information is incorporated by reference from the Company's
definitive Proxy Statement for the Annual Meeting of Shareholders to be held
February 13, 2003, to be filed with the SEC not later than 120 days after the
end of the fiscal year covered by this Form 10-K.
7
ITEM 11. EXECUTIVE COMPENSATION
This information is incorporated by reference from the Company's
definitive Proxy Statement for the Annual Meeting of Shareholders to be held
February 13, 2003, to be filed with the SEC not later than 120 days after the
end of the fiscal year covered by this Form 10-K.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
This information is incorporated by reference from the Company's
definitive Proxy Statement for the Annual Meeting of Shareholders to be held
February 13, 2003, to be filed with the SEC not later than 120 days after the
end of the fiscal year covered by this Form 10-K.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
This information is incorporated by reference from the Company's
definitive Proxy Statement for the Annual Meeting of Shareholders to be held
February 13, 2003, to be filed with the SEC not later than 120 days after the
end of the fiscal year covered by this Form 10-K.
ITEM 14. CONTROLS AND PROCEDURES
Within the 90 days prior to the date of this report, the Company
carried out an evaluation, under the supervision and with the participation of
the Company's management, including the Company's Chief Executive Officer and
Chief Financial Officer, of the effectiveness of the design and operation of the
Company's disclosure controls and procedures. The Company's disclosure controls
and procedures are designed to ensure that information required to be disclosed
by the Company in its periodic SEC filings is recorded, processed and reported
within the time periods specified in the SEC's rules and forms. Based upon that
evaluation, the Chief Executive Officer and Chief Financial Officer concluded
that the Company's disclosure controls and procedures are effective in timely
alerting them to material information relating to the Company (including its
consolidated subsidiaries) required to be included in the Company's periodic SEC
filings.
There were no significant changes in the Company's internal controls or
in other factors that could significantly affect these controls subsequent to
the date of the evaluation.
PART IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENTS, AND REPORTS ON FORM 8-K
(a) FINANCIAL STATEMENTS AND EXHIBITS
1. FINANCIAL STATEMENTS
The following financial statements, together with the report of
PricewaterhouseCoopers LLP dated December 18, 2002 appearing in the Company's
Annual Report to Shareholders, are incorporated by reference herein:
Report of Independent Public Accountants
Consolidated Balance Sheets as of September 30, 2002 and 2001
Consolidated Statements of Operations for each of the three years in
the period ended September 30, 2002
Consolidated Statements of Cash Flows for each of the three years in
the period ended September 30, 2002
Consolidated Statements of Changes in Shareholders' Equity for each of
the three years in the period ended September 30, 2002
Notes to Consolidated Financial Statements
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2. EXHIBITS
See the "EXHIBIT INDEX" for a listing of all of the Exhibits filed as
part of this report.
The management contracts and compensatory plans or arrangements required
to be filed as exhibits to this report are as follows:
Atwood Oceanics, Inc. 1990 Stock Option Plan - See Exhibit 10.1.1
hereof.
Form of Atwood Oceanics, Inc. Stock Option Agreement (1990 Stock
Option Plan) - See Exhibit 10.1.2 hereof
Amendment No. 1 to the Atwood Oceanics, Inc. 1990 Stock Option Plan -
See Exhibit 10.1.3 hereof
Form of Amendment No. 1 to the Atwood Oceanics, Inc. Stock Option
Agreement (1990 Stock Option Plan) - See Exhibit 10.1.4 hereof
Atwood Oceanics, Inc. 1996 Incentive Equity Plan - See Exhibit 10.3.1
hereof.
Form of Atwood Oceanics, Inc. Stock Option Agreement (1996 Incentive
Equity Plan) - See Exhibit 10.3.2 hereof
Amendment No. 1 to Atwood Oceanics, Inc. 1996 Incentive Equity Plan -
See Exhibit 10.3.3. hereof
Form of Amendment No. 1 to the Atwood Oceanics, Inc. Stock Option
Agreement (1996 Incentive Equity Plan) - See Exhibit 10.3.4 hereof
Amendment No. 2 to Atwood Oceanics, Inc. 1996 Incentive Equity Plan -
See Exhibit 10.3.5. hereof.
Atwood Oceanics, Inc. 2001 Stock Incentive Plan - See Exhibit 10.3.6.
hereof.
Atwood Oceanics, Inc. Retention Plan for Certain Salaried Employees
dated effective as of December 5, 2002 - See Exhibit 10.4. hereof.
Executive Agreement dated as of September 18, 2002 between the Company
and John R. Irwin - See Exhibit 10.5.1. hereof.
Executive Agreement dated as of September 18, 2002 between the Company
and James M. Holland - See Exhibit 10.5.2. hereof.
Executive Agreement dated as of September 18, 2002 between the Company
and Glen P. Kelley - See Exhibit 10.5.3. hereof.
Rights Agreement dated effective September 27, 2002 between the
Company and Continental Stock Transfer & Trust Company - See Exhibit
10.9 hereof.
(b) REPORTS ON FORM 8-K
On July 15, 2002, the Company filed a report on Form 8-K announcing
that the ATWOOD SOUTHERN CROSS was awarded two new contracts.
On July 15, 2002, the Company filed a report on Form 8-K announcing
the filing of a $250 million shelf registration statement with the
Securities and Exchange Commission covering up to $250 million of
various debt and equity securities.
On July 31, 2002, the Company in conjunction with releasing its third
quarter operating results furnished a report Form 8-K reporting
certain information relating to FD disclosure.
On September 3, 2002, the Company filed a report on Form 8-K
announcing that the VICKSBURG was awarded a two-year contract with
ExxonMobil Exploration and Production Malaysia Inc.
9
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
/s/ JOHN R. IRWIN
JOHN R. IRWIN, President and
Chief Executive Officer
DATE: 18 December 2002
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
/s/ JAMES M. HOLLAND /s/ JOHN R. IRWIN
JAMES M. HOLLAND JOHN R. IRWIN
Senior Vice President and Chief Financial Officer President, Chief Executive Officer and Director
(Principal Financial and Accounting Officer) (Principal Executive Officer)
Date: 18 December 2002 Date: 18 December 2002
/s/ ROBERT W. BURGESS /s/ GEORGE S. DOTSON
ROBERT W. BURGESS GEORGE S. DOTSON
Director Director
Date: 18 December 2002 Date: 18 December 2002
/s/ HANS HELMERICH /s/ WILLIAM J. MORRISSEY
HANS HELMERICH WILLIAM J. MORRISSEY
Director Director
Date: 18 December 2002 Date: 18 December 2002
/s/ W.H. HELMERICH, III
W.H. HELMERICH, III
Director
DATE: 18 December 2002
10
CERTIFICATIONS
I, John R. Irwin, certify that:
1) I have reviewed this annual report on Form 10-K of Atwood Oceanics, Inc.
2) Based on my knowledge, this annual 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 annual
report;
3) Based on my knowledge, the financial statements, and other financial
information included in this annual 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 annual report;
4) The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
a) designed such disclosure controls and procedures 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 annual report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to
the filing date of this annual report (the "Evaluation Date";
and
c) presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based
on our evaluation as of the Evaluation date;
5) The registrant's other certifying officer and I have disclosed, based on our
most recent evaluation, 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 in the design or operation of
internal controls which could adversely affect the
registrant's ability to record, process summarize and report
financial data and have identified for the registrant's
auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management
or other employees who have a significant role in the
registrant's internal controls; and
6) The registrant's other certifying officer and I have indicated in this annual
report whether or not there were significant changes in internal controls or in
other factors that could significantly affect internal controls subsequent to
the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.
Dated: December 18, 2002
/s/JOHN R. IRWIN
John R. Irwin
Chief Executive Officer
11
I, James M. Holland, certify that:
1) I have reviewed this annual report on Form 10-K of Atwood Oceanics, Inc.
2) Based on my knowledge, this annual 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 annual
report;
3) Based on my knowledge, the financial statements, and other financial
information included in this annual 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 annual report;
4) The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
a) designed such disclosure controls and procedures 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 annual report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to
the filing date of this annual report (the "Evaluation Date";
and
c) presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based
on our evaluation as of the Evaluation date;
5) The registrant's other certifying officer and I have disclosed, based on our
most recent evaluation, 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 in the design or operation of
internal controls which could adversely affect the
registrant's ability to record, process summarize and report
financial data and have identified for the registrant's
auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management
or other employees who have a significant role in the
registrant's internal controls; and
6) The registrant's other certifying officer and I have indicated in this annual
report whether or not there were significant changes in internal controls or in
other factors that could significantly affect internal controls subsequent to
the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.
Dated: December 18, 2002
/s/JAMES M. HOLLAND
James M. Holland
Chief Financial Officer
12
EXHIBIT INDEX
*3.1.1 Restated Articles of Incorporation dated January 1972.
*3.1.2 Articles of Amendment dated March 1975.
*3.1.3 Articles of Amendment dated March 1992.
*3.1.4 Articles of Amendment dated November 7, 1997.
*3.1.5 Certificate of Designations of Series A Junior Participating Preferred
Stock of Atwood Oceanics, Inc.
3.2 Bylaws, as amended and restated (Incorporated herein by reference to
Exhibit 3.2 of the Company's Form 10-K for the year ended September 30,
1993).
10.1.1 Atwood Oceanics, Inc. 1990 Stock Option Plan (Incorporated herein by
reference to Exhibit 10.2 of the Company's Form 10-K for the year ended
September 30, 1993).
10.1.2 Form of Atwood Oceanics, Inc. Stock Option Agreement - 1990 Stock
Option Plan (Incorporated herein by reference to the Company's Form
10-K for the year ended September 30, 1999).
10.1.3 Amendment No.1 to the Atwood Oceanics, Inc. 1990 Stock Option Plan
(Incorporated herein by reference to the Company's Form 10-K for the
year ended September 30, 1999).
10.1.4 Form of Amendment No. 1 to the Atwood Oceanics, Inc. Stock Option
Agreement 1990 Stock Option Plan (Incorporated herein by reference to
the Company's Form 10-K for the year ended September 30, 1999).
10.2 Joint Venture Letter Agreement dated November 4, 1994 between the
Company and Helmerich & Payne, Inc. (Incorporated herein by reference
to Exhibit 10.3 of the Company's Form 10-K for the year ended September
30, 1994).
10.3.1 Atwood Oceanics, Inc. 1996 Incentive Equity Plan (Incorporated herein
by reference to Exhibit 10.2 of the Company's Form 10-Q for the quarter
ended June 30, 1997).
10.3.2 Form of Atwood Oceanics, Inc. Stock Option Agreement - 1996 Incentive
Equity Plan (Incorporated herein by reference to the Company's Form
10-K for the year ended September 30, 1999).
10.3.3 Amendment No. 1 to the Atwood Oceanics, Inc. 1996 Incentive Equity Plan
(Incorporated herein by reference to the Company's Form 10-K for the
year ended September 30, 1999).
10.3.4 Form of Amendment No. 1 to the Atwood Oceanics, Inc. Stock Option
Agreement -1996 Incentive Equity Plan (Incorporated herein by reference
to the Company's Form 10-K for the year ended September 30, 1999).
10.3.5 Amendment No. 2 to the Atwood Oceanics, Inc. 1996 Incentive Equity Plan
(Incorporated herein by reference to Appendix A to the Company's Form
DEF14A filed January 12, 2001).
10.3.6 Atwood Oceanics, Inc. 2001 Stock Incentive Plan (Incorporated herein by
reference to Appendix A to the Company's Form DEF14A filed January 15,
2002).
*10.4 Atwood Oceanics, Inc. Retention Plan for Certain Salaried Employees
dated effective as of December 5, 2002.
*10.5.1 Executive Agreement dated as of September 18, 2002 between the Company
and John R. Irwin.
13
*10.5.2 Executive Agreement dated as of September 18, 2002 between the Company
and James M. Holland.
*10.5.3 Executive Agreement dated as of September 18, 2002 between the Company
and Glen P. Kelley.
10.6 Vessel Construction Agreement dated July 24, 2001 between the Company
and Keppel Fels Limited to construct a KFELS Mod V Enhanced B-Class
Jack-up drilling unit (Incorporated herein by reference to Exhibit
10.9 of the Company's Form 10-K for the year ended September 30, 2001).
*10.7 Amended and Restated Credit Agreement dated February 20, 2002 between
the Company and Bank One, NA and Other Financial Institutions.
*10.8 Amended and Restated Credit Agreement dated February 20, 2002 between
the Company and Bank One, NA and Other Financial Institutions.
10.9 Rights Agreement dated effective September 27, 2002 between the Company
and Continental Stock & Transfer & Trust Company (Incorporated herein
by reference to Exhibit 4.1 of the Company's Form 8-A filed October 21,
2002).
*10.10 First Amendment to Amended and Restated Credit Agreement dated December
17, 2002 between the Company and Bank One, NA and other Financial
Institutions.
*10.11 First Amendment to Amended and Restated Credit Agreement dated December
17, 2002 between the Company and Bank One, NA and other Financial
Institutions.
*13.1 Annual Report to Shareholders.
16.1 Letter regarding change in certifying accountants (Incorporated herein
by reference to Exhibit 16.1 of the Company's 8-K filed May 21, 2002).
*21.1 List of Subsidiaries.
*23.1 Consent of Independent Public Accountants.
*99.1.1 Certification of Chief Executive Officer pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
*99.1.2 Certification of Chief Financial Officer pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
* Filed herewith
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