AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 21, 2004
REGISTRATION NO. 333-
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
ATWOOD OCEANICS, INC.
(Exact name of registrant as specified in its charter)
TEXAS 74-1611874
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
15835 PARK TEN PLACE DRIVE JAMES M. HOLLAND
HOUSTON, TEXAS 77084 SENIOR VICE PRESIDENT
(281)-749-7800 ATWOOD OCEANICS, INC.
(Address, including zip code, and telephone number, 15835 PARK TEN PLACE DRIVE
including HOUSTON, TEXAS 77084
area code, of registrant's principal executive (281)-749-7800
offices) (Name, address, including zip code, and telephone
number,
including area code, of agent for service)
COPY TO:
W. GARNEY GRIGGS, ESQ.
STRASBURGER & PRICE, LLP
1401 MCKINNEY, SUITE 2200
HOUSTON, TEXAS 77010-4035
(713) 951-5600
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after the effective date of this Registration Statement, as determined
in light of market conditions and other factors.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
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TITLE OF EACH CLASS PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
OF SECURITIES TO BE AMOUNT TO BE OFFERING PRICE AGGREGATE REGISTRATION
REGISTERED REGISTERED PER UNIT(1) OFFERING PRICE FEE
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Common Stock, including associated
preferred stock purchase rights...... 3,000,000 shares $43.24 $129,720,000 $16,435.53
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(1) Based on the average of the high and low price per share of our common stock
as reported on the New York Stock Exchange on July 15, 2004.
THE REGISTRANT HAS AN EFFECTIVE REGISTRATION STATEMENT ON FORM S-3 (NO. 333-
92388) RELATING TO $250 MILLION OF COMMON STOCK, PREFERRED STOCK, DEBT
SECURITIES AND WARRANTS (THE "EXISTING REGISTRATION STATEMENT"). THIS
REGISTRATION STATEMENT RELATES SOLELY TO 3,000,000 SHARES OF OUR COMMON STOCK
OWNED BY THE SELLING SHAREHOLDER IDENTIFIED HEREIN. PURSUANT TO RULE 429 UNDER
THE SECURITIES ACT, THE PROSPECTUS INCLUDED IN THIS REGISTRATION STATEMENT ALSO
RELATES TO THE EXISTING REGISTRATION STATEMENT. PURSUANT TO RULE 429(B), THIS
REGISTRATION STATEMENT CONSTITUTES A POST-EFFECTIVE AMENDMENT TO THE EXISTING
REGISTRATION STATEMENT, WHICH SHALL HEREAFTER BECOME EFFECTIVE CONCURRENTLY WITH
THE EFFECTIVENESS OF THIS REGISTRATION STATEMENT IN ACCORDANCE WITH SECTION 8 OF
THE SECURITIES ACT.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. THE
SELLING SHAREHOLDER MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION
STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS
PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN
OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT
PERMITTED.
SUBJECT TO COMPLETION -- JULY 21, 2004
ATWOOD OCEANICS, INC.
$250,000,000
COMMON STOCK,
PREFERRED STOCK,
DEBT SECURITIES,
AND/OR WARRANTS TO PURCHASE COMMON STOCK
AND
3,000,000 SHARES OF COMMON STOCK OWNED BY THE SELLING SHAREHOLDER
---------------------
We may from time to time offer up to $250,000,000 of common stock,
preferred stock, debt securities, and/or warrants to purchase our common stock.
The selling shareholder identified in this prospectus may offer up to an
additional 3,000,000 shares of our common stock. We will not receive any of the
proceeds from the sale of any shares being sold by the selling shareholder.
Our common stock is listed on the New York Stock Exchange under the symbol
"ATW".
SEE "RISK FACTORS" ON PAGE 7 TO READ ABOUT FACTORS YOU SHOULD CONSIDER
BEFORE BUYING SHARES OF OUR COMMON STOCK OR OTHER SECURITIES WE MAY OFFER FOR
SALE.
The selling shareholder and we may offer these securities to or through
underwriters, and also to other purchasers or through agents. The names of the
underwriters will be set forth in a prospectus supplement. The prospectus
supplement may also update or change the information contained in this
prospectus. You should read this prospectus and any related prospectus
supplement carefully before you invest in our securities.
---------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY OTHER REGULATORY
BODY HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
---------------------
Prospectus dated July 21, 2004.
TABLE OF CONTENTS
PAGE
----
Special Note Regarding Forward-Looking Statements........... 2
About this Prospectus....................................... 4
Available Information....................................... 4
Documents Incorporated by Reference......................... 5
The Company................................................. 6
Risk Factors................................................ 7
Use of Proceeds............................................. 13
Ratio of Earnings to Fixed Charges.......................... 13
Description of Common Stock................................. 14
Description of Preferred Stock.............................. 17
Description of Debt Securities.............................. 18
Description of Warrants..................................... 25
Selling Shareholder......................................... 27
Plan of Distribution........................................ 28
Legal Matters............................................... 30
Experts..................................................... 30
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Statements included in this prospectus which are not historical facts
(including any statements concerning plans and objectives of management for
future operations or economic performance, or assumptions related thereto) 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;
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- 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;
and
- such other factors as may be discussed under the caption "Risk Factors"
beginning on page 7 of this prospectus and in our other reports filed
with the Securities and Exchange Commission.
These factors are not necessarily all of the important factors that could
cause actual results to differ materially from those expressed in any of our
forward-looking statements. Other unknown or unpredictable factors could also
have material adverse effects on future results. The words "believe," "impact,"
"intend," "estimate," "anticipate," "plan" and similar expressions identify
forward-looking statements. When considering any forward-looking statement, you
should also keep in mind the risk factors described under the section entitled
"Risk Factors" beginning on page 7 of this prospectus and any other risk factors
3
described in an applicable prospectus supplement. 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.
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we filed with the
SEC using a shelf registration process. Under this shelf registration process,
we may offer from time to time any combination of the securities described in
this prospectus in one or more offerings up to a total dollar amount of
$250,000,000 and the selling shareholder may offer from time to time up to
3,000,000 shares of common stock in one or more offerings.
This prospectus provides you with a general description of the securities
that we or the selling shareholder may offer. Each time we or the selling
shareholder offers securities, we or the selling shareholder will provide a
prospectus supplement that will contain specific information about the terms of
that offering. The prospectus supplement may also add to or update other
information contained in this prospectus. You should read both this prospectus
and the accompanying prospectus supplement, together with additional information
described below under the headings "Available Information" and "Documents
Incorporated by Reference."
As used in this prospectus generally, the terms "Atwood," "the Company,"
"we," "our" or "us" means Atwood Oceanics, Inc. and its direct or indirect
subsidiaries.
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS OR ANY PROSPECTUS SUPPLEMENT. WE HAVE NOT
AUTHORIZED ANYONE ELSE TO PROVIDE YOU WITH DIFFERENT INFORMATION. WE ARE NOT
MAKING AN OFFER OF THESE SECURITIES IN ANY STATE WHERE THE OFFER IS NOT
PERMITTED. YOU SHOULD NOT ASSUME THAT THE INFORMATION IN THIS PROSPECTUS OR ANY
PROSPECTUS SUPPLEMENT IS ACCURATE AS OF ANY DATE OTHER THAN THE DATE ON THE
FRONT OF THAT DOCUMENT. OUR BUSINESS, FINANCIAL CONDITION, RESULTS OF OPERATIONS
AND PROSPECTS MAY HAVE CHANGED SINCE THOSE DATES.
AVAILABLE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. Our SEC filings are available to the public over the
internet at the SEC's web site at http://www.sec.gov. Our website address is
www.atwd.com. We make available free of charge on or through our website our
annual report on Form 10-K, quarterly reports on Form 10-Q, and current reports
on Form 8-K, and amendments to those reports filed or furnished pursuant to
Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable
after we electronically file such material with, or furnish it to, the SEC.
Information on our website is not incorporated by reference into this prospectus
or made a part hereof for any purpose. You may also read and copy any document
we file at the SEC's Public Reference Room at 450 Fifth Street, NW, Washington,
DC 20549. Please call the SEC at 1-800-SEC-0330 for further information on the
public reference rooms and copy charges.
We have filed a registration statement and related exhibits on Form S-3
with the SEC under the Securities Act of 1933. The registration statement
contains additional information about us and our securities. You may read the
registration statement and exhibits without charge at the SEC's public reference
rooms, you may access same at the SEC's web site described above, or you may
obtain copies from the SEC at prescribed rates.
4
DOCUMENTS INCORPORATED BY REFERENCE
The SEC allows us to "incorporate by reference" the information we file
with the SEC, which means that we can disclose important information to you by
referring to other documents on file with the SEC. Some information that we
currently have on file is incorporated by reference and is an important part of
this prospectus. Some information that we file later with the SEC will
automatically update and supersede this information.
We incorporate by reference the following documents that we have filed or
may file with the SEC pursuant to the Securities Exchange Act of 1934:
- Description of our common stock, par value $1.00 per share (Common
Stock), contained in our Registration Statement on Form 8-A, filed on
July 2, 1997;
- Description of our preferred stock purchase rights, contained in our
Registration Statement on Form 8-A, filed on October 21, 2002;
- Annual Report on Form 10-K for the fiscal year ended September 30, 2003,
filed on December 29, 2003;
- Quarterly Reports on Form 10-Q for the fiscal quarter ended December 31,
2003, filed on February 11, 2004 and for the fiscal quarter ended March
31, 2004, filed on May 11, 2004;
- Current Reports on Form 8-K filed January 29, 2004, March 3, 2004, April
15, 2004, April 28, 2004, May 19, 2004, and May 26, 2004 (except for
information and exhibits furnished pursuant to Rule 101(e)(1) of
regulation FD (CFR 243.101(e)(1)) which are not incorporated herein); and
- All documents filed by us with the SEC pursuant to Sections 13(a), 13(c),
14 or 15(d) of the Securities Exchange Act of 1934 after the date of this
prospectus and prior to the termination of this offering.
Upon your written or oral request, we will provide you with a free copy of
any of these filings (except for exhibits, unless the exhibits are specifically
incorporated by reference into the filing). You may request copies by writing or
telephoning us at: 15835 Park Ten Place Drive Houston, Texas 77084 (281)-749-
7800, Attention: James M. Holland.
5
THE COMPANY
We are engaged in the international offshore drilling of exploratory and
developmental oil and gas wells, and related support, management and consulting
services. We are headquartered in Houston, Texas, USA, and were incorporated as
a Texas corporation in 1968. We commenced operations in 1970.
Our fleet currently consists of eight active, wholly-owned drilling units:
- two semisubmersibles capable of drilling in up to 5,000 feet of water;
- one semisubmersible capable of drilling in up to 3,700 feet of water;
- one semisubmersible capable of drilling in up to 2,000 feet of water;
- one 400 foot cantilever jack-up;
- one 300 foot cantilever jack-up;
- one semisubmersible self-erecting tender-assist rig; and
- one submersible.
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. In
December 2000, we purchased a semisubmersible hull for future conversion to a
tender-assist vessel. We also manage the operations of two operator-owned
platform rigs offshore northwest Australia.
From 1996 to 2003, we spent approximately $340 million in upgrading seven
of our active offshore mobile drilling units. The ATWOOD HUNTER and ATWOOD EAGLE
were both upgraded to 5,000 ft. water depth capability in 2001 and 2002,
respectively. The upgrades to both rigs included new 120-bed quarters, new
higher capacity cranes, along with upgraded well control, drilling and mud
systems, in addition to other improvements to the drilling and subsea completion
capabilities of the units. In addition, construction of the new $120 million
KFELS MOD-V, Enhanced B-Class, jack-up drilling unit, the ATWOOD BEACON, was
completed on schedule and the unit commenced operation as our eighth active
mobile offshore drilling unit in early August 2003.
During our history, we have conducted drilling operations in most of the
major offshore exploration areas of the world including: the Arabian Gulf, the
Red Sea, Australia, East and West Africa, Southeast Asia, the Far East, Papua
New Guinea, India, the Mediterranean Sea, Central and South America and the U.S.
Gulf of Mexico. Our current worldwide operations revolve around eight premium
offshore mobile drilling units located in four areas of the world -- the United
States, Southeast Asia, the Mediterranean Sea, and Australia. Historically, the
majority of our drilling units have operated outside of U.S. waters.
Approximately 94%, 95% and 82% of our contract revenues were derived from
foreign operations in fiscal years 2003, 2002 and 2001, respectively. The
submersible RICHMOND is our only drilling unit currently working in U.S. waters.
We support our operations from our Houston headquarters and affiliated offices
in Australia, Malaysia, Indonesia, the United Kingdom and Egypt.
6
RISK FACTORS
An investment in our securities involves significant risks. You should
carefully consider the risk factors described below before deciding whether to
invest in our securities. The risks and uncertainties described below are not
the only ones we face. You should also carefully read and consider all of the
information we have included, or incorporated by reference, in this prospectus,
before you decide to invest in our securities. Additional risks and
uncertainties not presently known to us or that we currently deem immaterial may
also impair our business.
WE RELY ON THE OIL AND NATURAL GAS INDUSTRY AND VOLATILE OIL AND NATURAL GAS
PRICES IMPACT DEMAND FOR OUR SERVICES.
Demand for our services depends on activity in offshore oil and natural gas
exploration, development and production. The level of exploration, development
and production activity is affected by factors such as:
- prevailing oil and natural gas prices;
- expectations about future prices;
- the cost of exploring for, producing and delivering oil and natural gas;
- the sale and expiration dates of available offshore leases;
- worldwide demand for petroleum products;
- current availability of oil and natural gas resources;
- the rate of discovery of new oil and natural gas reserves in offshore
areas;
- local and international political and economic conditions;
- technological advances;
- ability of oil and natural gas companies to generate or otherwise obtain
funds for capital;
- the ability of the Organization of Petroleum Exporting Countries, or
OPEC, to set and maintain production levels and pricing;
- political or other disruptions that limit exploration, development and
production in oil-producing countries;
- the level of production by non-OPEC countries; and
- laws and governmental regulations that restrict exploration and
development of oil and natural gas in various jurisdictions.
During recent years, the level of offshore exploration, development and
production activity has been volatile. Such volatility is likely to continue in
the future. A decline in the worldwide demand for oil and natural gas or
prolonged low oil or natural gas prices in the future would likely result in
reduced exploration and development of offshore areas and a decline in the
demand for our services. Even during periods of high prices for oil and natural
gas, companies exploring for oil and gas may cancel or curtail programs, or
reduce their levels of capital expenditures for exploration and production for a
variety of reasons. Any such decrease in activity is likely to reduce our day
rates and our utilization rates and, therefore, could have a material adverse
effect on our financial condition, results of operations and cash flows.
7
RIG CONVERSIONS, UPGRADES OR NEWBUILDS MAY BE SUBJECT TO DELAYS AND COST
OVERRUNS.
From time to time we may undertake to increase our fleet capacity through
conversions or upgrades to rigs or through new construction. These projects are
subject to risks of delay or cost overruns inherent in any large construction
project resulting from numerous factors, including the following:
- shortages of equipment, materials or skilled labor;
- unscheduled delays in the delivery of ordered materials and equipment;
- unanticipated cost increases;
- weather interferences;
- difficulties in obtaining necessary permits or in meeting permit
conditions;
- design and engineering problems; and
- shipyard failures.
GOVERNMENT REGULATION AND ENVIRONMENTAL RISKS REDUCE OUR BUSINESS OPPORTUNITIES
AND INCREASE OUR COSTS.
We must comply with extensive government regulation in the form of
international conventions, federal, state and local laws and regulations in
jurisdictions where our vessels operate and are registered. These conventions,
laws and regulations govern oil spills and matters of environmental protection,
worker health and safety, and the manning, construction and operation of
vessels, and vessel and port security. We believe that we are in material
compliance with all applicable environmental, health and safety, and vessel and
port security laws and regulations. We are not a party to any pending
governmental litigation or similar proceeding, and we are not aware of any
threatened governmental litigation or proceeding which, if adversely determined,
would have a material adverse effect on our financial condition or results of
operations. However, the risks of incurring substantial compliance costs,
liabilities and penalties for non-compliance are inherent in our industry.
Compliance with environmental, health and safety, and vessel and port security
laws increases our costs of doing business. Additionally, environmental, health
and safety, and vessel and port security laws change frequently. Therefore, we
are unable to predict the future costs or other future impact of environmental,
health and safety, and vessel and port security laws on our operations. There is
no assurance that we can avoid significant costs, liabilities and penalties
imposed as a result of governmental regulation in the future.
OPERATING HAZARDS INCREASE OUR RISK OF LIABILITY; WE MAY NOT BE ABLE TO FULLY
INSURE AGAINST THESE RISKS.
Our operations are subject to various operating hazards and risks,
including:
- catastrophic marine disaster;
- adverse sea and weather conditions;
- mechanical failure;
- navigation errors;
- collision;
- oil and hazardous substance spills, containment and clean up;
- labor shortages and strikes;
- damage to and loss of drilling rigs and production facilities; and
- war, sabotage and terrorism.
These risks present a threat to the safety of personnel and to our rigs,
cargo, equipment under tow and other property, as well as the environment. We
could be required to suspend our operations or request that others suspend their
operations as a result of these hazards. Third parties may have significant
claims
8
against us for damages due to personal injury, death, property damage, pollution
and loss of business if such event were to occur in our operations.
We maintain insurance coverage against the casualty and liability risks
listed above. We believe our insurance is adequate, and we have never
experienced a loss in excess of policy limits. However, we may not be able to
renew or maintain our existing insurance coverage at commercially reasonable
rates or at all. Additionally, there is no assurance that our insurance coverage
will be adequate to cover future claims that may arise.
OUR RELIANCE ON FOREIGN OPERATIONS EXPOSES US TO ADDITIONAL RISKS NOT GENERALLY
ASSOCIATED WITH DOMESTIC OPERATIONS, WHICH COULD HAVE AN ADVERSE EFFECT ON OUR
OPERATIONS OR FINANCIAL RESULTS.
During the past five years, we derived substantially all of our revenues
from foreign sources. We, therefore, face risks inherent in conducting business
internationally, such as:
- legal and governmental regulatory requirements;
- difficulties and costs of staffing and managing international operations;
- language and cultural differences;
- potential vessel seizure or nationalization of assets;
- import-export quotas or other trade barriers;
- renegotiation or nullification of existing contracts;
- difficulties in collecting accounts receivable and longer collection
periods;
- foreign and domestic monetary policies;
- political and economic instability;
- terrorist acts, war and civil disturbances;
- assault on property or personnel;
- travel limitations or operational problems caused by severe acute
respiratory syndrome (SARS) or other public health threats;
- imposition of currency exchange controls; and
- potentially adverse tax consequences, including those due to changes in
laws or interpretation of existing laws.
In the past, these conditions or events have not materially affected our
operations. However, we cannot predict whether any such conditions or events
might develop in the future. Also, we organized our subsidiary structure and our
operations, in part, based on certain assumptions about various foreign and
domestic tax laws, currency exchange requirements, and capital repatriation
laws. While we believe our assumptions are correct, there can be no assurance
that taxing or other authorities will reach the same conclusion. If our
assumptions are incorrect, or if the relevant countries change or modify such
laws or the current interpretation of such laws, we may suffer adverse tax and
financial consequences, including the reduction of cash flow available to meet
required debt service and other obligations. Any of these factors could
materially adversely affect our international operations and, consequently, our
business, operating results and financial condition.
WE MAY SUFFER LOSSES AS A RESULT OF FOREIGN EXCHANGE RESTRICTIONS AND FOREIGN
CURRENCY FLUCTUATIONS.
A significant portion of the contract revenues of our foreign operations
are paid in U.S. dollars; however, some payments are made in foreign currencies.
As a result, we are exposed to currency fluctuations and exchange rate risks as
a result of our foreign operations. To minimize the financial impact of these
risks when we are paid in foreign currency, we attempt to match the currency of
operating costs
9
with the currency of contract revenue. However, any increase in the value of the
U.S. dollar in relation to the value of applicable foreign currencies could
adversely affect our operating revenues when translated into U.S. dollars. To
date, currency fluctuations have not had a material impact on our financial
condition or results of operations.
WE ARE SUBJECT TO WAR, SABOTAGE AND TERRORISM, WHICH COULD HAVE AN ADVERSE
EFFECT ON OUR BUSINESS.
The terrorist attacks of September 11, 2001 have had a continuing impact,
including those related to the current U.S. military campaigns in Afghanistan
and Iraq, on the energy industry. It is unclear what impact the current U.S.
military campaigns or possible future campaigns will have on the energy industry
in general, or us in particular, in the future. Uncertainty surrounding
retaliatory military strikes or a sustained military campaign may affect our
operations in unpredictable ways, including changes in the insurance markets,
disruptions of fuel supplies and markets, particularly oil, and the possibility
that infrastructure facilities, including pipelines, production facilities,
refineries, electric generation, transmission and distribution facilities, could
be direct targets of, or indirect casualties of, an act of terror. War or risk
of war may also have an adverse effect on the economy.
The terrorist attacks have resulted in a hardening of the insurance market.
We maintain insurance coverage against casualty and liability risks and have
renewed our primary insurance program for the insurance year 2004-2005. We will
evaluate the need to maintain this coverage as it applies to our drilling fleet
in the future. We believe our insurance is adequate, and we have never
experienced a loss in excess of policy limits. There is no assurance that our
insurance coverage will be available or affordable and, if available, whether it
will be adequate to cover future claims that may arise.
Instability in the financial markets as a result of war, sabotage or
terrorism could also affect our ability to raise capital and could also
adversely affect the oil, gas and power industries and restrict their future
growth.
THE INTENSE PRICE COMPETITION AND CYCLICALITY OF OUR INDUSTRY, WHICH IS MARKED
BY PERIODS OF LOW DEMAND, EXCESS RIG AVAILABILITY AND LOW DAYRATES, COULD HAVE
AN ADVERSE EFFECT ON OUR REVENUES, PROFITABILITY AND CASH FLOWS.
The contract drilling business is highly competitive with numerous industry
participants. The industry has experienced consolidation in recent years and may
experience additional consolidation. Recent mergers among oil and natural gas
exploration and production companies have reduced the number of available
customers.
Drilling contracts are, for the most part, awarded on a competitive bid
basis. Price competition is often the primary factor in determining which
qualified contractor is awarded a job, although rig availability and the quality
and technical capability of service and equipment are also factors. We compete
with approximately ten other drilling contractors, most of which are
substantially larger and have appreciably greater resources than us.
The industry in which we operate historically has been cyclical, marked by
periods of low demand, excess rig supply and low dayrates, followed by periods
of high demand, short rig supply and increasing dayrates. Periods of excess rig
supply intensify the competition in the industry and often result in rigs being
idled. Several markets in which we operate are currently oversupplied. Lower
utilization and dayrates in one or more of the regions in which we operate would
adversely affect our revenues and profitability. Prolonged periods of low
utilization and dayrates could also result in the recognition of impairment
charges on certain of our drilling rigs if future cash flow estimates, based
upon information available to management at the time, indicate that the carrying
value of these rigs may not be recoverable. We may be required to idle rigs or
to enter into lower-rate contracts in response to market conditions in the
future.
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WE RELY HEAVILY ON A SMALL NUMBER OF CUSTOMERS AND THE LOSS OF A SIGNIFICANT
CUSTOMER COULD HAVE AN ADVERSE IMPACT ON OUR FINANCIAL RESULTS.
Our contract drilling business is subject to the usual risks associated
with having a limited number of customers for our services. ExxonMobil, Woodside
Energy Ltd., and Esso Exploration Angola provided approximately 33%, 17%, and
13%, respectively of our consolidated revenues in fiscal year 2003. Our results
of operations could be materially adversely affected if any of our major
customers terminate its contracts with us, fails to renew our existing contracts
or refuses to award new contracts to us.
WE MAY SUFFER LOSSES IF OUR CUSTOMERS TERMINATE OR SEEK TO RENEGOTIATE THEIR
CONTRACTS.
Certain of our contracts with customers may be cancelable upon specified
notice at the option of the customer. Other contracts require the customer to
pay a specified early termination payment upon cancellation, which payments may
not fully compensate us for the loss of the contract. Contracts customarily
provide for either automatic termination or termination at the option of the
customer in the event of total loss of the drilling rig or if drilling
operations are suspended for extended periods of time by reason of acts of God
or excessive rig downtime for repairs, or other specified conditions. Early
termination of a contract may result in a rig being idle for an extended period
of time. Our revenues may be adversely affected by customers' early termination
of contracts, especially if we are unable to recontract the affected rig within
a short period of time. During depressed market conditions, a customer may no
longer need a rig that is currently under contract or may be able to obtain a
comparable rig at a lower daily rate. As a result, customers may seek to
renegotiate the terms of their existing drilling contracts or avoid their
obligations under those contracts. The renegotiation of a number of our drilling
contracts could adversely affect our financial position, results of operations
and cash flows.
OUR SIGNIFICANT DEBT LEVEL MAY HINDER OUR OPERATIONAL FLEXIBILITY AND MAKE IT
DIFFICULT TO MEET OUR DEBT SERVICE OBLIGATIONS.
We have significant indebtedness and will require substantial cash flow to
meet our debt service requirements. At June 30, 2004, our long-term debt was
$187 million. A high level of indebtedness will affect our future operations in
several ways, including the following:
- We may be more vulnerable to general adverse economic and industry
conditions than some of our competitors who have less debt, and
therefore, we may be at a competitive disadvantage.
- Covenants in our debt obligations require us to meet certain financial
tests and limit our ability to borrow additional funds, make certain
capital expenditures, sell assets, pay dividends, or repurchase any of
our outstanding common stock.
- We may experience difficulties in obtaining additional financing in the
future for working capital, capital expenditures, acquisitions or general
corporate purposes.
Our ability to meet our debt obligations will depend on our future
performance, which will be affected by a range of economic, competitive, and
business factors. We cannot control many of these factors, such as general
economic and financial conditions in the oil and gas industry, the economy at
large and competitive initiatives of our competitors. Our future cash flows may
be insufficient to meet all of our debt obligations and commitments, and any
insufficiency could negatively impact our business. To the extent that we are
unable to repay our indebtedness as it becomes due or at maturity with cash on
hand or from other sources, we will need to refinance our debt, sell assets or
repay the debt with the proceeds of an equity offering. There is no assurance
that additional indebtedness or equity financing will be available to us in the
future for the refinancing or repayment of existing indebtedness, nor can we
give any assurance as to the timing of any asset sales or the proceeds that
could be realized by us from any such asset sale.
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THE SUBSTANTIAL EQUITY INTEREST OWNED BY CERTAIN SHAREHOLDERS MAY LIMIT THE
ABILITY OF OTHER SHAREHOLDERS TO INFLUENCE THE OUTCOME OF DIRECTOR ELECTIONS AND
OTHER MATTERS REQUIRING SHAREHOLDER APPROVAL.
As of June 30, 2004, Helmerich & Payne International Drilling Co., owns of
record and beneficially 3,000,000 shares of our common stock, or approximately
21.64% of the issued and outstanding shares of our common stock. Two of our
directors, Hans Helmerich and George S. Dotson, are executive officers of
Helmerich & Payne, Inc, the parent company of Helmerich & Payne International
Drilling Co. The ownership and board representation of Helmerich & Payne, Inc.
enables it to exercise substantial influence over the election of directors and
other corporate matters requiring shareholder or board of directors' approval.
To the extent Helmerich & Payne International Drilling Co. does not sell all or
a substantial portion of the 3,000,000 shares of common stock covered by this
prospectus, it may continue to exercise substantial influence over the election
of directors and other corporate matters requiring shareholder or board of
directors' approval.
Additionally, as of June 30, 2004, T. Rowe Price Associates, Inc. owns
approximately 1,378,900 shares of our common stock, or approximately 9.95% of
our issued and outstanding shares.
FUTURE SALES OF OUR COMMON STOCK BY HELMERICH & PAYNE INTERNATIONAL DRILLING CO.
COULD ADVERSELY AFFECT ITS MARKET PRICE.
Helmerich & Payne International Drilling Co. has advised us that,
consistent with its pursuit of a strategy of focusing on its core drilling
business, it intends to evaluate its entire investment portfolio, which includes
shares of our common stock, and its cash requirements on a continuous basis and
that it may seek to dispose of all or a portion of the shares of our common
stock owned by it when and as necessary, from time to time, to fund its
corporate needs. Until the sale of all of the shares of common stock owned by
Helmerich & Payne International Drilling Co. which are registered on the Form
S-3 to which this prospectus relates are sold or are de-registered, we will or
may have a large number of shares of common stock outstanding and available for
resale beginning at various points in the future. Sales of a substantial number
of shares of our common stock in the public market, or the possibility that
these sales may occur, could also make it more difficult for us to sell our
common stock or other equity securities in the future at a time and at a price
that we deem appropriate. Helmerich & Payne International Drilling Co. has
agreed not to dispose of any shares of common stock it owns except in a
simultaneous public offering with us during the period which began on the date
of execution of the registration rights agreement and which ends 180 days after
the completion of the simultaneous public offering. Subject to certain other
conditions, if there is no simultaneous public offering with us, Helmerich &
Payne International Drilling Co. has agreed not to dispose of any shares of
common stock it owns during the seven days prior to and for 90 days after the
completion of a public offering by us. See "Selling Shareholder."
FAILURE TO OBTAIN AND RETAIN KEY PERSONNEL COULD IMPEDE OUR OPERATIONS.
We depend to a significant extent upon the efforts and abilities of our
executive officers and other key management personnel. There is no assurance
that these individuals will continue in such capacity for any particular period
of time. The loss of the services of one or more of our executive officers or
key management personnel could adversely affect our operations.
SARS COULD HAVE AN ADVERSE EFFECT ON OUR INTERNATIONAL OPERATIONS AND OUR
FINANCIAL RESULTS.
SARS is a highly communicable disease, outbreaks of which occurred earlier
in 2003 in Southeast Asia and other parts of the world in which we operate.
Scientists are predicting that SARS may reappear during the next flu season. The
reappearance of SARS could adversely impact the global economy, the worldwide
demand for oil and natural gas and the level of demand for our services. SARS or
other public health threats could also bring about quarantines of our personnel,
the inability to access our offices or rigs, or restrictions on travel to or
through countries in which we operate. These restrictions could curtail our
ability to operate our rigs. The SARS outbreak in 2003 was most severe in
Southeast Asia where we conduct operations and maintain offices (in Indonesia
and Malaysia). Any quarantine of personnel or
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inability to access our offices or rigs could adversely affect us. Travel
restrictions or operational problems in any part of the world in which we
operate, or any reduction in the demand for drilling services caused by SARS or
other public health threats in the future, may materially impact operations and
adversely affect our financial results.
WE HAVE BEEN UNABLE TO OBTAIN A WRITTEN CONSENT FROM ARTHUR ANDERSEN LLP
RELATING TO THE INCORPORATION BY REFERENCE OF AUDITED FINANCIAL STATEMENTS INTO
THIS REGISTRATION STATEMENT.
Arthur Andersen LLP has not consented to the inclusion of their report in
this prospectus, and we have dispensed with the requirement to file their
consent in reliance upon Rule 437a of the Securities Act of 1933. Because Arthur
Andersen LLP has not consented to the inclusion of their report in this
prospectus, you will not be able to recover against Arthur Andersen LLP under
Section 11 of the Securities Act for any untrue statements of a material fact
contained in the financial statements audited by Arthur Andersen LLP or any
omissions to state a material fact required to be stated therein.
USE OF PROCEEDS
We will not receive any proceeds from the sale of the shares of our common
stock by the selling shareholder. Unless we state otherwise in a prospectus
supplement, we will use the net proceeds from the sale of securities sold by us
for general corporate purposes, which may include the repayment of debt,
acquisitions, capital expenditures and working capital. We may temporarily
invest funds we receive from the sale of securities by us that we do not
immediately need for these purposes.
RATIO OF EARNINGS TO FIXED CHARGES
Our ratio of earnings to fixed charges for the periods indicated below was
as follows:
YEARS ENDED SEPTEMBER 30,
-------------------------------- 6 MONTHS ENDED
1999 2000 2001 2002 2003 MARCH 31, 2004
---- ---- ---- ---- ---- --------------
10.8 10.0 12.5 9.9 0.9(1) 1.5
---------------
(1) Earnings were insufficient to cover fixed charges by $1,387,000 for the
fiscal year ended September 30, 2003.
Our ratios of earnings to fixed charges are calculated by dividing earnings by
fixed charges for the period indicated, where:
- "earnings," is defined as consolidated income or loss from continuing
operations plus income taxes, minority interest and fixed charges, except
capitalized interest; and
- "fixed charges," is defined as consolidated interest on indebtedness,
including capitalized interest, amortization of debt discount and
issuance cost, and the estimated portion of rental expense deemed to be
equivalent to interest.
Because we have no preferred stock issued and outstanding, dividends relating to
preferred stock are not included in the calculation of fixed charges.
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DESCRIPTION OF COMMON STOCK
GENERAL
Our restated articles of incorporation, as amended from time to time,
authorize us to issue up to 20,000,000 shares of common stock, par value $1.00
per share, and up to 1,000,000 shares of preferred stock, without par value. As
of June 30, 2004, an aggregate of 13,864,201 shares of common stock and no
shares of preferred stock were outstanding. Our common stock is listed on the
New York Stock Exchange under the symbol "ATW." We have summarized certain
provisions of our articles of incorporation and bylaws below, but you should
read our articles of incorporation and bylaws for a more complete description of
the rights of holders of our common stock.
VOTING RIGHTS
Holders of common stock are entitled to one vote for each share on all
matters submitted to a vote of our shareholders. Upon prior written notice, a
holder of common stock may cumulate his vote in the election of directors.
ELECTION OF DIRECTORS
The candidates for directors receiving the highest number of votes, up to
the number of directors to be elected, are elected. At each annual meeting, our
shareholders elect directors for one year terms.
REMOVAL OF DIRECTORS; FILLING VACANCIES ON BOARD OF DIRECTORS; SIZE OF THE BOARD
Our directors may be removed, with or without cause at any meeting of
shareholders at which a quorum is present, by vote of the holders of two-thirds
of the shares then entitled to vote at such meeting and that are present in
person or by proxy. Vacancies in a directorship may be filled by the vote of a
majority of the remaining directors then in office, even though less than a
quorum. Any directors elected to fill a vacancy on the board serves for the
remainder of the unexpired term of his predecessor and until his successor is
elected and qualified. In the case of an increase in the number of directors,
the additional director or directors will be elected at an annual meeting or at
a special meeting of the shareholders. Currently, the size of the board of
directors is seven, but one directorship is vacant.
SPECIAL MEETINGS OF THE SHAREHOLDERS
Our amended and restated bylaws provide that a special meeting of
shareholders may be called by the chairman of the board, if any, our president,
the board of directors, or the holders of at least one-tenth of all shares
entitled to vote at the meeting.
DIVIDENDS
Subject to any preferences that may be applicable to any then-outstanding
shares of preferred stock, holders of common stock are entitled to receive
dividends at such times and amounts as may be declared by our board of
directors. We do not intend to pay any cash dividends on our common stock in the
foreseeable future. Certain of our financing arrangements restrict the payment
of cash dividends.
LIQUIDATION OR DISSOLUTION
In the event we liquidate, dissolve, or wind up our affairs, prior to any
distributions to the holders of our common stock, our creditors and the holders
of our preferred stock, if any, will receive any payments to which they are
entitled. Subsequent to those payments, the holders of our common stock will
share ratably, according to the number of shares held, in our remaining assets,
if any.
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OTHER PROVISIONS
Each share of our common stock is associated with one right pursuant to a
rights agreement adopted by our board of directors. See "-- Description of
Rights Agreement." Except for those rights, our common stock has no
subscription, conversion or preemptive rights.
DESCRIPTION OF RIGHTS AGREEMENT
GENERAL
Our rights agreement is an anti-takeover device, or "poison-pill", which is
designed to fend off a change in control that our board of directors does not
believe to be in our best interests. Our board of directors declared a dividend
of one right per share of common stock outstanding on November 5, 2002. Each
share of common stock issued in the future while the rights agreement remains in
effect will also be associated with a right. Currently, the rights are not
exercisable and trade only with our common stock. The rights expire November 5,
2012 unless extended by our board. Prior to the distribution date (discussed
below), we may redeem the rights for $0.01 per right and the board of directors
may supplement or amend the terms of the rights agreement. After the
distribution date, we will no longer be able to redeem the rights and will be
limited in our ability to supplement or amend the terms of the rights agreement
without approval of the holders of the rights.
DISTRIBUTION DATE
The distribution date will occur 10 days following (i) a public
announcement that any person or group has acquired 15% or more of our
outstanding common stock or (ii) commencement of a tender or exchange offer
which would result in any person or group having ownership of 15% or more of our
outstanding common stock; provided that a shareholder who held 15% or more of
our outstanding common stock on November 5, 2002 will not trigger this provision
until it acquires an additional 5% of our outstanding common stock.
Upon the distribution date, rights certificates will be printed and mailed
to all holders of our common stock. The rights will then be transferable and
trade separately from our common stock. Each right entitles the holder to
purchase one one-thousandth of a share of our Series A Junior Participating
Preferred Stock for $150.
PREFERRED SHARE TERMS
Each one one-thousandth of a share of our Series A Junior Participating
Preferred Stock is designed to have the attributes and equivalent value of one
share of our common stock. Each share of our Series A Junior Participating
Preferred Stock is entitled to a preferential quarterly dividend payment of
$0.01 plus a dividend of 1,000 times the dividend declared per share of our
common stock. Upon liquidation, each share of our Series A Junior Participating
Preferred Stock is entitled to a preferential liquidation payment of the greater
of $1 or a payment of 1,000 times the payment made per share of our common
stock. Each share of our Series A Junior Participating Preferred Stock has 1,000
votes, voting together with our shares of common stock. Upon a merger or
consolidation, each share of our Series A Junior Participating Preferred Stock
is entitled to receive 1,000 times the amount received per share of our common
stock.
FLIP-IN & FLIP-OVER EVENTS
A flip-in event occurs if any person or group acquires 15% or more of our
outstanding common stock; provided that a shareholder who held 15% or more of
our outstanding common stock on November 5, 2002 will not trigger this provision
until it acquires an additional 5% of our outstanding common stock. Upon a
flip-in event, each right would entitle the holder to acquire shares of our
common stock having a market value of two times the exercise price of the right
(i.e. a 50% discount). For example, at an exercise price of $150, each right
would entitle the holder to purchase $300 worth of our common stock for $150.
15
Alternatively, we may exchange each right for one share of our common stock or
one one-thousandth of a share of our Series A Junior Participating Preferred
Stock.
A flip-over event occurs if we are acquired in a merger or business
combination or if 50% or more of our assets or earning power are sold. Upon a
flip-over event, each right would entitle the holder to acquire shares of the
acquiring company having a market value of two times the exercise price of the
right (i.e. a 50% discount). For example, at an exercise price of $150, each
right would entitle the holder to purchase $300 worth of the common stock of the
acquiring company for $150.
OTHER PROVISIONS
If there are insufficient authorized, unissued (or issued but not
outstanding) shares to permit the exercise of the rights, we may seek
shareholder approval to authorize additional shares or substitute cash, other
equity securities, or assets (i) for the shares issuable upon exercise of the
rights or (ii) for the difference between the value of the shares issuable upon
exercise of the rights and the exercise price (i.e. the spread) without
requiring payment of the exercise price. The number of rights outstanding,
exercise price and number of shares issuable upon exercise of the rights are
subject to adjustment to prevent dilution upon certain events (e.g. stock
dividends or stock splits).
TRANSFER AGENT AND REGISTRAR
The Transfer Agent and Registrar for our common stock is Continental Stock
Transfer & Trust Company.
LIMITATION OF DIRECTORS LIABILITY
Our articles of incorporation contain provisions eliminating the personal
liability of our directors to us and our shareholders for monetary damages for
breaches of their fiduciary duties as directors to the fullest extent currently
permitted by Texas law. Under Texas law and our articles of incorporation, our
directors will not be liable for a breach of his or her duty except for
liability for:
- a breach of his or duty of loyalty to us or our shareholders;
- acts or omissions not in good faith or that involve intentional
misconduct or a knowing violation of the law;
- any transaction from which he or she receives an improper personal
benefit, whether or not the benefit resulted from an action taken within
the scope of the director's office; and
- other acts or omissions for which the liability of a director is
expressly provided for by statute, such as the payment of unlawful
dividends.
These provisions pertain only to breaches of duty by directors as directors
and not in any other corporate capacity, such as officers. In addition, these
provisions limit liability only for breaches of fiduciary duties under Texas
corporate law and not for violations of other laws such as the federal
securities laws.
As a result of these provisions in our articles of incorporation, our
shareholders may be unable to recover monetary damages against directors for
actions taken by them that constitute negligence or gross negligence or that are
in violation of their fiduciary duties. However, our shareholders may obtain
injunctive or other equitable relief for these actions. These provisions also
reduce the likelihood of derivative litigation against directors that might
benefit us.
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DESCRIPTION OF PREFERRED STOCK
Our articles of incorporation authorizes us to issue, without shareholder
approval, up to 1,000,000 shares of preferred stock, without par value. As of
the date of this prospectus, we have not issued any preferred stock. However,
our board of directors has designated a class of preferred stock, Series A
Junior Participating Preferred Stock, in connection with a rights agreement. We
have summarized certain provisions of our articles of incorporation and bylaws
below, but you should read our articles of incorporation and bylaws for a more
complete description of the rights of holders of our preferred stock.
SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
Each one one-thousandth of a share of our Series A Junior Participating
Preferred Stock is designed to have the attributes and equivalent value of one
share of our common stock. Each share of our Series A Junior Participating
Preferred Stock is entitled to a preferential quarterly dividend payment of
$0.01 plus a dividend of 1,000 times the dividend declared per share of our
common stock. Upon liquidation, each share of our Series A Junior Participating
Preferred Stock is entitled to a preferential liquidation payment of the greater
of $1 or a payment of 1,000 times the payment made per share of our common
stock. Each share of our Series A Junior Participating Preferred Stock has 1,000
votes, voting together with our shares of common stock. Upon a merger or
consolidation, each share of our Series A Junior Participating Preferred Stock
is entitled to receive 1,000 times the amount received per share of our common
stock. For more information, see "Description of Common Stock -- Description of
Rights Agreement."
PREFERRED STOCK GENERALLY
Additionally, our board of directors may from time to time authorize us to
issue one or more other series of preferred stock and may fix the designations,
terms, and relative rights and preferences, including the dividend rate, voting
rights, conversion rights and privileges, redemption and sinking fund provisions
and liquidation preferences of each of these series.
Thus, our board of directors could authorize us to issue preferred stock
with voting, conversion and other rights that could adversely affect the voting
power and other rights of holders of our common stock, the Series A Junior
Participating Preferred Stock or other series of preferred stock. Also, the
issuance of Series A Junior Participating Preferred Stock or other preferred
stock could have the effect of delaying, deferring or preventing a change in
control of our company.
Our articles of incorporation provide that dividends on preferred stock are
cumulative and that no dividends will be paid on our common stock unless full
dividends on the preferred stock have been declared and paid. Upon liquidation,
our preferred stock will have a preference over the common stock and any
payments to the holders of the preferred stock will be made prior to those made
to the holders of the common stock. Our preferred stock is redeemable at our
option.
The particular terms of any series of preferred stock other than Series A
Junior Participating Preferred Stock that we may offer with this prospectus will
be described in the prospectus supplement relating to that series of preferred
stock. Those terms may include:
- the designation of the series, which may be by distinguishing number,
letter and title;
- the number of shares of the series;
- the price at which the preferred stock will be issued;
- the dividend rate, if any;
- the dates at which dividends, if any, shall be payable;
- the redemption rights and price or prices, if any;
- the terms and amount of any sinking fund; the liquidation preference per
share;
17
- whether the shares of the series shall be convertible, and if so, the
specification of the securities into which such preferred stock is
convertible;
- the conversion price or prices or rate or rates, and any adjustments
thereof, the dates as of which such shares shall be convertible, and all
other terms and conditions upon which such conversion may be made;
- restrictions on the issuance of shares of the same series or of any other
class or series; and
- the voting rights, if any.
DESCRIPTION OF DEBT SECURITIES
GENERAL
We may issue debt securities from time to time in one or more series. The
following description, together with any applicable prospectus supplement,
summarizes the material terms and provisions of the debt securities that we may
offer under this prospectus and any related indenture.
We have summarized below some of the provisions that will apply to the debt
securities unless the applicable prospectus supplement provides otherwise. The
summary may not contain all information that is important to you. The indenture
and any supplemental indenture will be included or incorporated by reference as
exhibits to the registration statement of which this prospectus is a part. You
should read the indenture and any supplemental indenture. You should also read
the prospectus supplement, which will contain additional information and which
may update or change some of the information below.
We will describe the specific terms of the series of debt securities being
offered in the related prospectus supplement. These terms will include some or
all of the following:
- the designation or title of the debt securities;
- any limit on the aggregate principal amount of the debt securities;
- the percentage of the principal amount at which debt securities will be
issued;
- any terms relating to the subordination of the debt securities;
- whether any of the debt securities are to be issuable as a global
security and whether global securities are to be issued in temporary
global form or permanent global form;
- the person to whom any interest on the debt security will be payable if
other than the person in whose name the debt security is registered on
the record date;
- the date or dates on which the debt securities will mature;
- the rate or rates of interest, if any, that the debt securities will
bear, or the method of calculation of the interest rate or rates;
- the date or dates from which any interest on the debt securities will
accrue, the dates on which any interest will be payable and the record
date for any interest payable on any interest payment date;
- the place or places where payments on the debt securities will be
payable;
- whether we will have the right or obligation to redeem or repurchase any
of the debt securities, and the terms applicable to any optional or
mandatory redemption or repurchase;
- the denominations in which the debt securities will be issuable;
- any index or formula used to determine the amount of payments on the debt
securities;
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- the portion of the principal amount of the debt securities that will be
payable if there is an acceleration of the maturity of the debt
securities, if that amount is other than the principal amount;
- the terms of any guarantee of the payment of amounts due on the debt
securities;
- any restrictive covenants for the benefit of the holders of the debt
securities;
- the events of default with respect to the debt securities; and
- any other terms of the debt securities.
PRIORITY OF THE DEBT SECURITIES
Unless otherwise described in the accompanying prospectus, the debt
securities will be our general unsecured obligations and will rank pari passu
(i.e., equally and ratably) with all of our other senior unsecured and
unsubordinated indebtedness. The debt securities will be effectively
subordinated to all of our secured indebtedness to the extent of the value of
the assets securing that indebtedness. In the event of insolvency, our creditors
who are holders of secured indebtedness, as well as some of our general
creditors, may recover more, ratably, than the holders of the debt securities.
With respect to any offering of debt securities, we will describe in the
accompanying prospectus supplement or the information incorporated by reference
the approximate amount of our outstanding indebtedness as of the end of our most
recent fiscal quarter.
GUARANTEES
One or more of our subsidiaries, as guarantors, may guarantee our
obligations under the debt securities. Any such guarantee will fully and
unconditionally guarantee our obligations under the debt securities on a joint
and several basis subject to the limitation described in the next paragraph. If
we default in payment of the principal of, or premium, if any, or interest on,
the debt securities, the guarantors, jointly and severally, will be
unconditionally obligated to duly and punctually make such payments. The
prospectus supplement for a particular issue of debt securities will describe
any subsidiary guarantors and any material terms of the guarantees for such
securities.
Each guarantor's obligations will be limited to the lesser of the following
amounts:
- the aggregate amount of our obligations under the debt securities and the
indenture;
- and the amount, if any, which would not have rendered such guarantor
"insolvent" under Federal or appropriate state law as will be designated
in the indenture, or have left it with unreasonably small capital, at the
time it entered into the guarantee.
Each guarantor that makes a payment or distribution under its guarantee
shall be entitled to contribution from each other guarantor in a pro rata amount
based on the net assets of each guarantor.
FORM AND DENOMINATIONS
The debt securities will be issued in fully registered form and in
denominations of $1,000 and integral multiples thereof, unless otherwise
specified in a prospectus supplement.
TRANSFER AND EXCHANGE
You may have your debt securities broken into more debt securities of
smaller denominations or combined into fewer debt securities of larger
denominations, as long as the total principal amount is not changed. This is
called an "exchange."
You may exchange or transfer debt securities at any office we maintain for
this purpose in accordance with the terms of the indenture. The trustee acts as
our agent for registering debt securities in the names of holders and
transferring debt securities. We may change this appointment to another entity
or perform
19
these tasks ourselves. The entity performing the role of maintaining the list of
registered holders is called the "security registrar."
You will not be required to pay a service charge to transfer or exchange
debt securities, but you may be required to pay for any tax or other
governmental charge associated with the exchange or transfer. The transfer or
exchange will only be made if the security registrar is satisfied with your
proof of ownership.
If we designate additional transfer agents, they will be named in the
prospectus supplement. We may cancel the designation of any particular transfer
agent. We may also approve a change in the office through which any transfer
agent acts.
If we redeem less than all of the debt securities, we may block the
transfer or exchange of debt securities during the period beginning 15 days
before the day we mail the notice of redemption and ending on the day of that
mailing, in order to freeze the list of holders to prepare the mailing. We may
also refuse to register transfers or exchanges of debt securities selected for
redemption, except that we will continue to permit transfers and exchanges of
the unredeemed portion of any security being partially redeemed. Additionally,
we may refuse to register transfers or exchanges between a record date and the
next succeeding interest payment date.
REDEMPTION
Unless otherwise provided in the applicable prospectus supplement, we may
redeem the debt securities at our option on the terms set forth in the
indenture. Upon the occurrence of either a change of control (as defined in the
indenture) or certain asset sales, we may be required to offer to purchase
outstanding debt securities, in whole or in part, if we have sale proceeds
exceeding some reasonable amount which will be provided for in the indenture and
consistent with the industry and the sale proceeds are not timely applied toward
repayment of debt or investment in other assets useful to our business.
PAYMENT AND PAYING AGENTS
Unless otherwise provided in a prospectus supplement, we will pay interest
to you on June 1st and December 1st if you are a direct holder listed in the
trustee's records at the close of business on May 15th and November 15th,
respectively, even if you no longer own the security on the interest due date.
Holders buying and selling debt securities must work out between them how to
compensate for the fact that we will pay all the interest for an interest period
to the one who is the registered holder on the record date. The most common
manner is to adjust the sale price of the debt securities to allocate interest
fairly between buyer and seller. This allocated interest amount is called
"accrued interest."
We will pay interest, principal and any other money due on the debt
securities at the corporate trust office of the trustee. We may also choose to
pay interest by mailing checks.
INTEREST RATES AND DISCOUNTS
The debt securities will earn interest at a fixed or floating rate or rates
for the period or periods of time specified in the applicable prospectus
supplement. Unless otherwise specified in the applicable prospectus supplement,
the debt securities will bear interest on the basis of a 360-day year consisting
of twelve 30-day months.
We may sell debt securities at a substantial discount below their stated
principal amount, bearing no interest or interest at a rate that at the time of
issuance is below market rates. Federal income tax consequences and special
considerations that apply to any series will be described in the applicable
prospectus supplement.
GLOBAL SECURITIES
We may issue the debt securities in whole or in part in the form of one or
more global securities. A global security is a security, typically held by a
depositary such as The Depository Trust Company, which
20
represents the beneficial interests of a number of purchasers of such security.
We may issue the global securities in either temporary or permanent form. We
will deposit global securities with the depositary identified in the prospectus
supplement. A global security may be transferred as a whole only as follows:
- by the depositary to a nominee of the depositary;
- by a nominee of the depositary to the depositary or another nominee of
the depositary; or
- by the depositary or any nominee to a successor depositary or any nominee
of the successor.
We will describe the specific terms of the depositary arrangement with
respect to a series of debt securities in a prospectus supplement. We expect
that the following provisions will generally apply to depositary arrangements.
After we issue a global security, the depositary will credit on its
book-entry registration and transfer system the respective principal amounts of
the debt securities represented by such global security to the accounts of
persons that have accounts with such depositary (herein, participants). The
underwriters or agents participating in the distribution of the debt securities
will designate the accounts to be credited. If we offer and sell the debt
securities directly or through agents, either we or our agents will designate
the accounts. Ownership of beneficial interests in a global security will be
limited to participants or persons that hold interests through participants.
Ownership of beneficial interests in the global security will be shown on, and
the transfer of that ownership will be effected only through, records maintained
by the depositary and its participants.
We and the trustee will treat the depositary or its nominee as the sole
owner or holder of the debt securities represented by a global security.
Principal, any premium and any interest payments on debt securities represented
by a global security registered in the name of a depositary or its nominee will
be made to such depositary or its nominee as the registered owner of such global
security.
Unless otherwise indicated in the applicable prospectus supplement, owners
of beneficial interests in a global security will be entitled to have the debt
securities represented by such global security registered in their names and
will be entitled to receive physical delivery of such debt securities in
definitive form upon the terms set forth in the indenture. The laws of some
states require that certain purchasers of securities take physical delivery of
the securities. Such laws may impair the ability to transfer beneficial
interests in a global security.
We expect that the depositary or its nominee, upon receipt of any payments,
will immediately credit participants' accounts with payments in amounts
proportionate to their respective beneficial interests in the principal amount
of the global security as shown on the depositary's or its nominee's records. We
also expect that payments by participants to owners of beneficial interests in
the global security will be governed by standing instructions and customary
practices, as is the case with the securities held for the accounts of customers
registered in "street names" and will be the responsibility of such
participants.
If the depositary is at any time unwilling or unable to continue as
depositary and we do not appoint a successor depositary within ninety days, we
will issue individual debt securities in exchange for such global security. In
addition, we may at any time in our sole discretion determine not to have any of
the debt securities of a series represented by global securities and, in such
event, will issue debt securities of such series in exchange for such global
security.
Neither we, the trustee nor any paying agent will have any responsibility
or liability for any aspect of the records relating to or payments made on
account of beneficial ownership interests in such global security or for
maintaining, supervising or reviewing any records relating to such beneficial
ownership interests. No such person will be liable for any delay by the
depositary or any of its participants in identifying the owners of beneficial
interests in a global security, and we, the trustee and any paying agent may
conclusively rely on instructions from the depositary or its nominee for all
purposes.
21
COVENANTS
With respect to each series of debt securities, we will be required to:
- pay the principal of, and interest and any premium on, the debt
securities when due;
- maintain a place of payment;
- deliver certain periodic reports to the holders of the debt securities at
the times set forth in the indenture;
- provide to the trustee within 90 days after the end of each fiscal year a
certificate regarding our compliance with the obligations and covenants
in the indenture; and
- pay any material taxes.
The indenture for the debt securities will contain covenants limiting our
ability, or the ability of our subsidiaries, to:
- incur additional debt (including guarantees);
- make certain payments;
- engage in other business activities;
- issue other securities;
- dispose of assets;
- enter into certain transactions with our subsidiaries and other
affiliates;
- incur liens; and
- enter into certain mergers and consolidations involving us and our
subsidiaries.
Any additional covenants will be described in the applicable prospectus
supplement.
Unless we state otherwise in the applicable prospectus supplement, we will
agree not to consolidate with or merge into any individual, corporation,
partnership or other entity (each, a person) or sell, lease, convey, transfer or
otherwise dispose of all or substantially all of our assets to any person, or
permit any person to consolidate or merge into us or sell, lease, convey,
transfer or otherwise dispose of all or substantially all of its assets to us
unless:
- the person formed by or surviving the consolidation or merger (if not
us), or to which the sale, lease, conveyance, transfer or other
disposition is to be made is a corporation, limited liability company or
partnership organized and existing under the laws of the U.S. or any
state or the District of Columbia, and the person assumes by supplemental
indenture in a form satisfactory to the trustee all of our obligations
under any indenture;
- immediately before and after giving effect to the transaction and
treating any debt that becomes an obligation of ours or of any of our
subsidiaries as having been incurred by us or our subsidiary at the time
of the transaction, no default or event of default shall have occurred
and be continuing; and
- the person formed by or surviving such transaction (if not us) will be
able to incur additional indebtedness under the indenture after giving
effect to the transaction.
22
EVENTS OF DEFAULT
Unless we state otherwise in the applicable prospectus supplement, an
"event of default" with respect to the debt securities under the indenture
means:
- our default for 30 days in payment of any interest on the debt
securities;
- our default in payment of any principal or premium on the debt securities
of the series upon maturity or otherwise;
- our default in the observance of certain covenants as set forth in the
indenture;
- our default, for 30 days after delivery of written notice, in the
observance or performance of other covenants;
- our default in the payment of our other indebtedness;
- bankruptcy, insolvency or reorganization events relating to us or our
subsidiaries;
- the entry of a judgment in excess of the amount specified in the
indenture or any supplemental indenture against us or such significant
subsidiary which is not covered by insurance and not discharged, waived
or stayed; or
- any other event of default included in the indenture or any supplemental
indenture and described in the prospectus supplement.
The consequences of an event of default, and the remedies available under
the indenture or any supplemental indenture, will vary depending upon the type
of event of default that has occurred.
Unless we state otherwise in the applicable prospectus supplement, if an
event of default with respect to any debt securities has occurred and is
continuing, then either the trustee or the holders of at least 25% of the
principal amount specified in the indenture or any supplemental indenture of the
outstanding debt securities may declare the principal of all the affected debt
securities and interest accrued to be due and payable immediately.
Unless we state otherwise in the applicable prospectus supplement, if an
event of default with respect to any debt securities has occurred and is
continuing and is due to a bankruptcy, insolvency or reorganization event
relating to us, then the principal (or such portion of the principal as is
specified in the terms of the debt securities) of and interest accrued on all
debt securities then outstanding will become due and payable automatically,
without further action by the trustee or the holders.
Under conditions specified in the indenture and any supplemental indenture,
the holders of a majority of the principal amount of the debt securities may
annul or waive certain declarations and defaults described above. These holders
may not, however, waive a continuing default in payment of principal of (or
premium, if any) or interest on the debt securities.
The indenture will provide that subject to the duty of the trustee during a
default to act with the required standard of care, the trustee will have no
obligation to exercise any right or power granted to it under the indenture at
the request of holders of debt securities unless the holders have indemnified
the trustee. Subject to the provisions in the indenture and any supplemental
indenture for the indemnification of the trustee and other limitations specified
therein, the holders of a majority in principal amount of the outstanding debt
securities may direct the time, method and place of conducting any proceeding
for any remedy available to the trustee, or exercising any trust or power
conferred on the trustee with respect to the debt securities.
23
If you hold debt securities, you will not be permitted under the terms of
the indenture or any supplemental indenture to institute any action against us
in connection with any default (except actions for payment of overdue principal,
premium, or interest or other amounts) unless:
- you have given the trustee written notice of the default and its
continuance;
- holders of not less than 25% in principal amount of the debt securities
issued under the indenture have made a written request upon the trustee
to institute the action and have offered the trustee reasonable
indemnity;
- the trustee has not instituted the action within 60 days of the request;
and
- during such 60-day period, the trustee has not received directions
inconsistent with the written request by the holders of a majority in
principal amount of the outstanding debt securities issued under the
indenture.
DEFEASANCE PROVISIONS APPLICABLE TO THE DEBT SECURITIES
Unless otherwise specified in a prospectus supplement, under the indenture
or any supplemental indenture, we, at our option,
- will be discharged from our obligations in respect of the debt securities
under the indenture (except for certain obligations relating to the
trustee and obligations to register the transfer or exchange of debt
securities, replace stolen, lost or mutilated debt securities, maintain
paying agencies and hold moneys for payment in trust) or
- need not comply with certain restrictive covenants of the indenture or
supplemental indenture,
in each case, if we irrevocably deposit, in trust with the trustee, money or
U.S. government obligations which through the payment of interest and principal
will provide money sufficient to pay all the principal of, and interest and
premium, if any, on, the debt securities on the dates on which such payments are
due. We must also specify whether the debt securities are being defeased to
maturity or to a particular redemption date.
To exercise the above option, no default or event of default shall have
occurred or be continuing on the date of such deposit, and such defeasance must
not result in a breach of or constitute a default under any material agreement
to which we are bound. We also must deliver a certificate stating that the
deposit was not made with the intent of preferring holders of the debt
securities over our other creditors. In addition, we must deliver to the trustee
an opinion of counsel that:
- the deposit and related defeasance would not cause the holders of the
debt securities to recognize income, gain or loss for federal income tax
purposes and, in the case of a discharge pursuant to the first bullet
point above, the opinion will be accompanied by a private letter ruling
to that effect from the IRS or a revenue ruling concerning a comparable
form of transaction to that effect published by the IRS,
- after the 91st day following the deposit, the funds will not be subject
to the effect of any applicable bankruptcy, insolvency or similar laws,
and
- all conditions precedent relating to the defeasance have been complied
with.
MODIFICATION AND WAIVER
We and the trustee may, without the consent of holders, modify provisions
of the indenture for certain purposes, including, among other things, curing
ambiguities and maintaining the qualification of the indenture under the Trust
Indenture Act. Under the indenture, our rights and obligations and the rights of
holders may be modified with the consent of the holders of a majority in
aggregate principal amount of the outstanding debt securities affected by the
modification. However, unless indicated otherwise in the
24
applicable prospectus supplement, the provisions of the indenture may not be
modified without the consent of each holder of debt securities affected thereby
if the modification would:
- reduce the principal of or change the stated maturity of any such debt
securities;
- waive certain provisions regarding redemption in a manner adverse to the
rights of any holder of such debt securities;
- reduce the rate of or change the time for payment of interest on such
debt securities;
- waive a default in the payment of principal or interest on such debt
securities;
- change the currency in which any of such debt securities are payable;
- waive a redemption payment with respect to such debt securities (other
than as specified in the indenture); or
- change the provisions of the indenture regarding waiver and amendment.
THE TRUSTEE
We will include information regarding the trustee in the prospectus
supplement relating to any series of debt securities. If any event of default
shall occur (and be continuing) under the indenture or any supplemental
indenture, the trustee will be required to use the degree of care and skill of a
prudent man in the conduct of his own affairs. The trustee will be under no
obligation to exercise any of its powers at the request of any of the holders of
the debt securities, unless the holders shall have offered the trustee
reasonable indemnity against the costs, expenses and liabilities it might incur.
The indenture, any supplemental indenture, and the provisions of the Trust
Indenture Act incorporated by reference thereby, will contain limitations on the
rights of the trustee, should it become a creditor of ours, to obtain payment of
claims or to realize on property received by it in respect of any claims as
security or otherwise.
DESCRIPTION OF WARRANTS
We summarize below some of the provisions that will apply to the warrants
unless the applicable prospectus supplement provides otherwise. The summary may
not contain all information that is important to you. The complete terms of the
warrants will be contained in the applicable warrant certificate and warrant
agreement. These documents have been or will be included or incorporated by
reference as exhibits to the registration statement of which this prospectus is
a part. You should read the warrant certificate and the warrant agreement. You
should also read the prospectus supplement, which will contain additional
information and which may update or change some of the information below.
GENERAL
We may issue warrants to purchase common stock independently or together
with other securities. The warrants may be attached to or separate from the
other securities. We may issue warrants in one or more series. Each series of
warrants will be issued under a separate warrant agreement to be entered into
between us and a warrant agent. The warrant agent will be our agent and will not
assume any obligations to any holder or beneficial owner of the warrants.
The prospectus supplement and the warrant agreement relating to any series
of warrants will include specific terms of the warrants. These terms include the
following:
- the title and aggregate number of warrants;
- the price or prices at which the warrants will be issued;
- the amount of common stock for which the warrant can be exercised and the
price or the manner of determining the price or other consideration to
purchase the common stock;
- the date on which the right to exercise the warrant begins and the date
on which the right expires;
25
- if applicable, the minimum or maximum amount of warrants that may be
exercised at any one time;
- if applicable, the designation and terms of the securities with which the
warrants are issued and the number of warrants issued with each other
security;
- any provision dealing with the date on which the warrants and related
securities will be separately transferable;
- any mandatory or optional redemption provision;
- the identity of the warrant agent; and
- any other terms of the warrants.
The warrants will be represented by certificates. The warrants may be
exchanged under the terms outlined in the warrant agreement. We will not charge
any service charges for any transfer or exchange of warrant certificates, but we
may require payment for tax or other governmental charges in connection with the
exchange or transfer. Unless the prospectus supplement states otherwise, until a
warrant is exercised, a holder will not be entitled to any payments on or have
any rights with respect to the common stock issuable upon exercise of the
warrant.
EXERCISE OF WARRANTS
To exercise the warrants, the holder must provide the warrant agent with
the following:
- payment of the exercise price;
- any required information described on the warrant certificates;
- the number of warrants to be exercised;
- an executed and completed warrant certificate; and
- any other items required by the warrant agreement.
If a warrant holder exercises only part of the warrants represented by a
single certificate, the warrant agent will issue a new warrant certificate for
any warrants not exercised. Unless the prospectus supplement states otherwise,
no fractional shares will be issued upon exercise of warrants, but we will pay
the cash value of any fractional shares otherwise issuable.
The exercise price and the number of shares of common stock for which each
warrant can be exercised will be adjusted upon the occurrence of events
described in the warrant agreement, including the issuance of a common stock
dividend or a combination, subdivision or reclassification of common stock.
Unless the prospectus supplement states otherwise, no adjustment will be
required until cumulative adjustments require an adjustment of at least 1%. From
time to time, we may reduce the exercise price as may be provided in the warrant
agreement.
Unless the prospectus supplement states otherwise, if we enter into any
consolidation, merger, or sale or conveyance of our property as an entirety, the
holder of each outstanding warrant will have the right to acquire the kind and
amount of shares of stock, other securities, property or cash receivable by a
holder of the number of shares of common stock into which the warrants were
exercisable immediately prior to the occurrence of the event.
26
MODIFICATION OF THE WARRANT AGREEMENT
The common stock warrant agreement will permit us and the warrant agent,
without the consent of the warrant holders, to supplement or amend the agreement
in the following circumstances:
- to cure any ambiguity;
- to correct or supplement any provision which may be defective or
inconsistent with any other provisions; or
- to add new provisions regarding matters or questions that we and the
warrant agent may deem necessary or desirable and which do not adversely
affect the interests of the warrant holders.
SELLING SHAREHOLDER
The table below sets forth the beneficial ownership of our securities by
the selling shareholder as of July , 2004. Beneficial ownership includes
outstanding securities and securities that a person has the right to acquire
within 60 days of this prospectus. The selling shareholder has the sole power to
direct the voting and investment of the securities it owns.
TOTAL SECURITIES MAXIMUM NUMBER OF
OWNED BEFORE THE SECURITIES TO BE
NAME OFFERING OFFERED
---- ---------------- -----------------
Helmerich & Payne International Drilling Co. .... 3,000,000 shares 3,000,000 shares
of common stock of common stock
As of June 30, 2004, Helmerich & Payne International Drilling Co. owns of
record and beneficially 3,000,000 shares of our common stock, or approximately
21.64% of the issued and outstanding shares of our common stock. Two of our
directors, Hans Helmerich and George S. Dotson, are executive officers of
Helmerich & Payne, Inc., the parent company of Helmerich & Payne International
Drilling Co. Messrs. Dotson and Helmerich serve on our Executive and Nominating
and Corporate Governance Committees. In addition, Mr. Dotson also serves on our
Audit and Compensation Committees.
A prospectus supplement will set forth, with respect to the selling
shareholder:
- the nature of any other position, office or other material relationship
that the selling shareholder has had with us or any of our affiliates
within the prior three years;
- the number of shares of common stock to be offered for the selling
shareholder's account; and
- the number and (if one percent or more) the percentage of common stock to
be owned by the selling shareholder after the completion of the offering.
We have entered into a registration rights agreement with the selling
shareholder. The registration rights agreement generally provides that we will
file a registration statement for 3,000,000 shares of our common stock owned by
the selling shareholder. The selling shareholder will pay for filing fees for
such shares, fees and expenses, if any, of its counsel or other advisers, and
any underwriting discounts, brokerage fees and commissions incurred in
connection with the offering of such shares. Other offering expenses will be
allocated as set forth in the registration rights agreement.
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PLAN OF DISTRIBUTION
OFFERING AND SALE OF SECURITIES
The selling shareholder and we may sell the securities from time to time as
follows:
- through agents;
- to dealers or underwriters for resale;
- directly to purchasers; or
- through a combination of any of these methods of sale.
In some cases, the selling shareholder and we, or dealers acting with the
selling shareholder and us or on our behalves, may also purchase securities and
reoffer them to the public by one or more of the methods described above. This
prospectus may be used in connection with any offering of our securities through
any of these methods or other methods described in the applicable prospectus
supplement.
The securities the selling shareholder and we distribute by any of these
methods may be sold to the public, in one or more transactions, either:
- at a fixed price or prices, which may be changed;
- at market prices prevailing at the time of sale;
- at prices related to prevailing market prices; or
- at negotiated prices.
The selling shareholder and we may solicit offers to purchase securities
directly from the public from time to time. The selling shareholder and we may
also designate agents from time to time to solicit offers to purchase securities
from the public on our behalves. The prospectus supplement relating to any
particular offering of securities will name any agents designated to solicit
offers, and will include information about any commissions the selling
shareholder or we may pay the agents, in that offering. Agents may be deemed to
be "underwriters" as that term is defined in the Securities Act.
From time to time, the selling shareholder and we may sell securities to
one or more dealers acting as principals. The dealers, who may be deemed to be
"underwriters" as that term is defined in the Securities Act, may then resell
those securities to the public.
The selling shareholder and we may sell securities from time to time to one
or more underwriters, who would purchase the securities as principal for resale
to the public, either on a firm-commitment or best-efforts basis. If the selling
shareholder and we sell securities to underwriters, the selling shareholder and
we may execute an underwriting agreement with them at the time of sale and will
name them in the applicable prospectus supplement. In connection with those
sales, underwriters may be deemed to have received compensation from us and the
selling shareholder in the form of underwriting discounts or commissions and may
also receive commissions from purchasers of the securities for whom they may act
as agents. Underwriters may resell the securities to or through dealers, and
those dealers may receive compensation in the form of discounts, concessions or
commissions from the underwriters and/or commissions from purchasers for whom
they may act as agents. The applicable prospectus supplement will include any
required information about underwriting compensation the selling shareholder and
we may pay to underwriters, and any discounts, concessions or commissions
underwriters allow to participating dealers, in connection with an offering of
securities.
We may enter into derivative transactions with third parties, or sell
securities not covered by this prospectus to third parties in privately
negotiated transactions. If the applicable prospectus supplement indicates, in
connection with those derivatives, the third parties may sell securities covered
by this prospectus and the applicable prospectus supplement, including in short
sale transactions. If so, the third party may use securities pledged by us or
borrowed from us or others to settle those sales or to close out
28
any related open borrowings of stock, and may use securities received from us in
settlement of those derivatives to close out any related open borrowings of
stock. The third party in such sale transactions will be an underwriter and, if
not identified in this prospectus, will be identified in the applicable
prospectus supplement (or a post-effective amendment).
If we offer securities in a subscription rights offering to our existing
security holders, we may enter into a standby underwriting agreement with
dealers, acting as standby underwriters. We may pay the standby underwriters a
commitment fee for the securities they commit to purchase on a standby basis. If
we do not enter into a standby underwriting arrangement, we may retain a
dealer-manager to manage a subscription rights offering for us.
The selling shareholder and we may authorize underwriters, dealers and
agents to solicit from third parties offers to purchase securities under
contracts providing for payment and delivery on future dates. The applicable
prospectus supplement will describe the material terms of these contracts,
including any conditions to the purchasers' obligations, and will include any
required information about commissions the selling shareholder and we may pay
for soliciting these contracts.
Underwriters, dealers, agents and other persons may be entitled, under
agreements that they may enter into with us and the selling shareholder, to
indemnification by us or the selling shareholder against certain liabilities,
including liabilities under the Securities Act.
In connection with any underwritten offering, the underwriters may purchase
and sell shares of common stock in the open market. These transactions may
include short sales, stabilizing transactions and purchases to cover positions
created by short sales. Shorts sales involve the sale by the underwriters of a
greater number of shares than they are required to purchase in the offering.
"Covered" short sales are sales made in an amount not greater than the
underwriters' option to purchase additional shares from us in the offering. The
underwriters may close out any covered short position by either exercising their
option to purchase additional shares or purchasing shares in the open market. In
determining the source of shares to close out the covered short position, the
underwriters will consider, among other things, the price of shares available
for purchase in the open market as compared to the price at which they may
purchase shares through the overallotment option. "Naked" short sales are any
sales in excess of such option. The underwriters must close out any naked short
position by purchasing shares in the open market. A naked short position is more
likely to be created if the underwriters are concerned that there may be
downward pressure on the price of the common stock in the open market after
pricing that could adversely affect investors who purchase in the offering.
Stabilizing transactions consist of various bids for or purchases of common
stock made by the underwriters in the open market prior to the completion of the
offering.
The underwriters may also impose a penalty bid. This occurs when a
particular underwriter repays to the underwriters a portion of the underwriting
discount received by it because the representatives have repurchased shares sold
by or for the account of such underwriter in stabilizing or short covering
transactions.
Purchases to cover a short position and stabilizing transactions may have
the effect of preventing or retarding a decline in the market price of our
common stock, and together with the imposition of the penalty bid, may
stabilize, maintain or otherwise affect the market price of the common stock. As
a result, the price of the common stock may be higher than the price that
otherwise might exist in the open market. If these activities are commenced,
they may be discontinued at any time. These transactions may be effected on the
NYSE, in the over-the-counter market or otherwise.
MATTERS RELATING TO THE OFFERING AND MARKET-MAKING RESALES
Except for shares of common stock offered by the selling shareholder, each
series of securities will be a new issue, and there will be no established
trading market for any security prior to its original issue date. Other than our
common stock, we may not list any particular series of securities on a
securities exchange or quotation system. Any underwriters to whom we or the
selling shareholder sell securities for public offering may also make a market
in those securities. However, no underwriter that makes a market is
29
obligated to do so, and any of them may stop doing so at any time without
notice. No assurance can be given as to the liquidity or trading market for any
of the securities.
Unless otherwise indicated in the applicable prospectus supplement or
confirmation of sale, the purchase price of the securities will be required to
be paid in immediately available funds in New York City.
In this prospectus, the terms "this offering" means the initial offering of
the securities made in connection with their original issuance by Atwood
Oceanics, Inc. and the secondary offering of shares of common stock by the
selling shareholder. This term does not refer to any subsequent resales of
securities in market-making transactions.
LEGAL MATTERS
Strasburger & Price, LLP, Houston, Texas, will pass upon certain legal
matters relating to the validity of our common stock, preferred stock, debt
securities and warrants.
EXPERTS
The consolidated financial statements as of September 30, 2003 and 2002 and
for each of the two years in the period ended September 30, 2003 incorporated in
this prospectus by reference to our Annual Report on Form 10-K for the year
ended September 30, 2003 have been so incorporated in reliance on the report of
PricewaterhouseCoopers, LLP, independent registered public accounting firm,
given on the authority of said firm as experts in auditing and accounting.
The consolidated financial statements as of September 30, 2001, and for
each of the three years in the period ended September 30, 2001 incorporated by
reference in this prospectus and elsewhere in the registration statement have
been audited by Arthur Andersen LLP, independent public accountants, as
indicated in their report with respect thereto, and are included herein in
reliance upon the authority of said firm as experts in giving said report.
Arthur Andersen LLP has not consented to the inclusion of their report in this
prospectus, and we have dispensed with the requirement to file their consent in
reliance upon Rule 437a of the Securities Act of 1933. Because Arthur Andersen
LLP has not consented to the inclusion of their report in this prospectus, you
will not be able to recover against Arthur Andersen LLP under Section 11 of the
Securities Act for any untrue statements of a material fact contained in the
financial statements audited by Arthur Andersen LLP or any omissions to state a
material fact required to be stated therein.
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PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
Estimated expenses, other than underwriting discounts and commissions,
payable by the registrant in connection with the issuance and sale of the
securities being registered hereby, are as follows:
Securities Exchange Commission Registration Fee............. $ 16,436
*Printing and Engraving Expenses............................ 75,000
*Legal Fees and Expenses.................................... 100,000
*Accounting Fees and Expenses............................... 50,000
*Blue Sky Fees and Expenses................................. 15,000
*Transfer Agent Fees and Expenses........................... 5,000
*Miscellaneous.............................................. 18,564
Total....................................................... $290,000
---------------
* Estimated.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
GENERAL
Our amended and restated bylaws provide that we must indemnify our
directors, officers and certain other individuals to the full extent permitted
by Article 2.02-1 of the Texas Business Corporation Act. Our restated articles
of incorporation, as amended from time to time provide that our directors shall
not be liable to us or our shareholders except for liability for (i) breach of a
director's duty of loyalty to us and our shareholders; (ii) acts or omissions
not in good faith or that involve intentional misconduct or a knowing violation
of law; (iii) transactions from which a director derives improper personal
benefit; and (iv) other actions which are specifically provided for by statute,
such as for the payment of unlawful dividends.
Therefore, the personal liability of our directors to us or our
shareholders is limited and our directors are protected from monetary damages
for breach of their fiduciary duty of care. This limitation has no effect on
claims under the federal securities laws.
Any underwriting agreements to be filed or incorporated by reference with
this registration statement may contain reciprocal agreements of indemnity
between us and the underwriters as to certain liabilities, including liabilities
under the Securities Act of 1933, and may provide for indemnification of our
directors and officers in certain circumstances.
INDEMNIFICATION AND INSURANCE
Texas corporations may indemnify their directors and officers, as well as
other employees and individuals, against expenses (including attorney's fees),
judgments, penalties, fines and amounts paid in settlement in connection with
specified actions, suits or proceedings, whether civil, criminal,
administrative, arbitrative or investigative if the individuals acted in good
faith and in a manner they reasonably believed to be in or not opposed to the
best interests of the corporation and, with respect to any criminal action or
proceeding, had no reasonable cause to believe their conduct was unlawful. A
similar standard of care applies to actions by or in the right of the
corporation, except that indemnification extends only to expenses (including
attorneys' fees) incurred in connection with the proceeding and is not allowed
if the person if found liable for willful or intentional misconduct in the
performance of his duty to us.
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Our bylaws provide that we shall indemnify, to the full extent permitted by
Article 2.02-1 of the Texas Business Corporation Act, each of our current and
former directors and officers and each person, who, at our request, serves or
served as a director, officer, employee, partner, venturer, or agent of another
corporation, partnership, joint venture or other enterprise. Significant
payments by us in settlement of a claim or in satisfaction of a judgment against
any of our officers, directors or other indemnified individuals, as required by
these provisions and if permitted by Texas law, could materially reduce our
assets.
We are not aware of any threatened litigation or proceeding which may
result in a claim for indemnification, and there is no pending litigation or
proceeding involving any of our directors or officers in which indemnification
would be required or permitted by our articles of incorporation, our bylaws, or
Texas law.
ELIMINATION OF LIABILITY IN CERTAIN CIRCUMSTANCES
Our articles of incorporation protect our directors against monetary
damages for breach of the duty of care to the full extent currently permitted by
Texas law. These provisions do not eliminate the directors' duty of care. Under
these provisions, neither we nor our shareholders may assert a claim for money
damages against a director for certain breaches of fiduciary duty. In
appropriate circumstances, equitable remedies such as an injunction or other
forms of non-monetary relief are available under Texas law. These provisions
also do not affect the directors' responsibilities under any other laws, such as
the federal securities laws and state and federal environmental laws. These
provisions apply to our officers only if they are directors and are acting in
their capacity as directors, and do not apply to officers who are not directors.
Directors will remain subject to liability for the following:
- breach of a director's duty of loyalty to us and our shareholders;
- acts or omissions not in good faith or that involve intentional
misconduct or a knowing violation of law;
- transactions from which a director derives improper personal benefit; and
- other acts or omissions for which the liability of a director is
expressly provided for by statute, such as the payment of unlawful
dividends.
ITEM 16. EXHIBITS.
(a) Exhibits:
EXHIBIT
NO. DESCRIPTION
------- -----------
1.1* Form of Common Stock Underwriting Agreement
4.1 Restated Articles of Incorporation, as amended (filed as
Exhibits 3.1.1, 3.1.2, 3.1.3, 3.1.4, and 3.1.5 to our Annual
Report on Form 10-K for the fiscal year ended September 30,
2002 and incorporated by reference herein)
4.2 Amended and Restated Bylaws (filed as Exhibit 3.2 to our
Annual Report on Form 10-K for the fiscal year ended
September 30, 1993 and incorporated by reference herein)
4.3 Specimen Certificate for our common stock, $1.00 par value
(filed as Exhibit 5.1 of our Registration Statement on Form
S-3, Registration No. 33-39993, filed April 19, 1991 and
incorporated by reference herein)
4.4 Shareholder's Agreement and Registration Rights Agreement
5.1 Opinion of Strasburger & Price, LLP as to the legality of
the securities
12.1 Computation of ratio of earnings to fixed charges
23.1 Consent of Strasburger & Price, LLP (included in Exhibit 5.1
filed herewith)
23.2 Consent of PricewaterhouseCoopers LLP
II-2
---------------
* To be filed as an exhibit to a Current Report on Form 8-K of the registrant in
connection with a specific offering.
(b) Financial Statement Schedules:
The following financial statement schedules are included in Part II of
the Registration Statement:
None
All other schedules are omitted because they are inapplicable or the
requested information is shown in the financial statements or noted therein.
ITEM 17. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of this registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Securities and Exchange Commission pursuant to Rule 424(b) if,
in the aggregate, the changes in volume and price represent no more than
a 20% change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective registration
statement.
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement
or any material change to such information in this registration
statement;
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not
apply if the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports filed with
the Securities and Exchange Commission by the registrant pursuant to
Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in this registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona-fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona-fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
II-3
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
(d) The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of this registration statement in reliance upon Rule 430A and contained in
a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.
(2) For purposes of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
II-4
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Houston, State of Texas, on July 21, 2004.
ATWOOD OCEANICS, INC.
By: /s/ JAMES M. HOLLAND
------------------------------------
James M. Holland
Senior Vice President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ JOHN R. IRWIN President, Chief Executive Officer July 21, 2004
------------------------------------------------ and Director
(John R. Irwin)
/s/ JAMES M. HOLLAND Senior Vice President and Secretary July 21, 2004
------------------------------------------------ (Principal Financial and Accounting
(James M. Holland) Officer)
/s/ DEBORAH A. BECK Director July 21, 2004
------------------------------------------------
(Deborah A. Beck)
/s/ ROBERT W. BURGESS Director July 21, 2004
------------------------------------------------
(Robert W. Burgess)
/s/ GEORGE S. DOTSON Director July 21, 2004
------------------------------------------------
(George S. Dotson)
/s/ HANS HELMERICH Director July 21, 2004
------------------------------------------------
(Hans Helmerich)
/s/ WILLIAM J. MORRISSEY Director July 21, 2004
------------------------------------------------
(William J. Morrissey)
II-5
EXHIBIT INDEX
EXHIBIT
NO. DESCRIPTION
------- -----------
1.1* Form of Common Stock Underwriting Agreement
4.1 Restated Articles of Incorporation, as amended (filed as
Exhibits 3.1.1, 3.1.2, 3.1.3, 3.1.4, and 3.1.5 to our Annual
Report on Form 10-K for the fiscal year ended September 30,
2002 and incorporated by reference herein)
4.2 Amended and Restated Bylaws (filed as Exhibit 3.2 to our
Annual Report on Form 10-K for the fiscal year ended
September 30, 1993 and incorporated by reference herein)
4.3 Specimen Certificate for our common stock, $1.00 par value
(filed as Exhibit 5.1 of our Registration Statement on Form
S-3, Registration No. 33-39993, filed April 19, 1991 and
incorporated by reference herein)
4.4 Shareholder's Agreement and Registration Rights Agreement
5.1 Opinion of Strasburger & Price, LLP as to the legality of
the securities
12.1 Computation of ratio of earnings to fixed charges
23.1 Consent of Strasburger & Price, LLP (included in Exhibit 5.1
filed herewith)
23.2 Consent of PricewaterhouseCoopers LLP
---------------
* To be filed as an exhibit to a Current Report on Form 8-K of the registrant in
connection with a specific offering.