UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark one)
| x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended September 30, 2004
OR
| ¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission File Number 1-8590
MURPHY OIL CORPORATION
(Exact name of registrant as specified in its charter)
| Delaware | 71-0361522 | |
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification Number) | |
| 200 Peach Street P. O. Box 7000, El Dorado, Arkansas |
71731-7000 | |
| (Address of principal executive offices) | (Zip Code) | |
(870) 862-6411
(Registrant’s telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. x Yes ¨ No
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). x Yes ¨ No
Number of shares of Common Stock, $1.00 par value, outstanding at September 30, 2004 was 92,008,761.
PART I – FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Murphy Oil Corporation and Consolidated Subsidiaries
CONSOLIDATED BALANCE SHEETS
(Thousands of dollars)
| (Unaudited) September 30, |
December 31, 2003 |
||||||
| ASSETS |
|||||||
| Current assets |
|||||||
| Cash and cash equivalents |
$ | 955,129 | 252,425 | ||||
| Accounts receivable, less allowance for doubtful accounts of $11,284 in 2004 and $10,735 in 2003 |
666,203 | 450,201 | |||||
| Inventories, at lower of cost or market |
|||||||
| Crude oil and blend stocks |
48,942 | 46,626 | |||||
| Finished products |
161,861 | 157,078 | |||||
| Materials and supplies |
64,502 | 66,806 | |||||
| Prepaid expenses |
54,208 | 44,779 | |||||
| Deferred income taxes |
32,715 | 20,940 | |||||
| Total current assets |
1,983,560 | 1,038,855 | |||||
| Property, plant and equipment, at cost less accumulated depreciation, depletion and amortization of $2,810,486 in 2004 and $3,472,133 in 2003 |
3,509,374 | 3,530,800 | |||||
| Goodwill, net |
41,444 | 64,873 | |||||
| Deferred charges and other assets |
67,776 | 78,119 | |||||
| Total assets |
$ | 5,602,154 | 4,712,647 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY |
|||||||
| Current liabilities |
|||||||
| Current maturities of long-term debt |
$ | 42,561 | 67,224 | ||||
| Accounts payable and accrued liabilities |
938,561 | 659,609 | |||||
| Income taxes |
160,209 | 83,493 | |||||
| Total current liabilities |
1,141,331 | 810,326 | |||||
| Notes payable |
1,032,213 | 1,061,410 | |||||
| Nonrecourse debt of a subsidiary |
14,854 | 28,897 | |||||
| Deferred income taxes |
518,435 | 421,700 | |||||
| Asset retirement obligations |
185,443 | 252,397 | |||||
| Accrued major repair costs |
37,083 | 20,513 | |||||
| Deferred credits and other liabilities |
182,638 | 166,521 | |||||
| Stockholders’ equity |
|||||||
| Cumulative Preferred Stock, par $100, authorized 400,000 shares, none issued |
— | — | |||||
| Common Stock, par $1.00, authorized 200,000,000 shares, issued 94,613,379 shares |
94,613 | 94,613 | |||||
| Capital in excess of par value |
510,288 | 504,809 | |||||
| Retained earnings |
1,867,249 | 1,357,910 | |||||
| Accumulated other comprehensive income |
91,402 | 65,246 | |||||
| Unamortized restricted stock awards |
(5,407 | ) | — | ||||
| Treasury stock, 2,604,618 shares of Common Stock in 2004 and 2,742,781 shares in 2003, at cost |
(67,988 | ) | (71,695 | ) | |||
| Total stockholders’ equity |
2,490,157 | 1,950,883 | |||||
| Total liabilities and stockholders’ equity |
$ | 5,602,154 | 4,712,647 | ||||
See Notes to Consolidated Financial Statements, page 5.
The Exhibit Index is on page 26.
1
Murphy Oil Corporation and Consolidated Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME (unaudited)
(Thousands of dollars except per share amounts)
| Three Months Ended September 30, |
Nine Months Ended September 30, |
||||||||||||
| 2004 |
2003* |
2004 |
2003* |
||||||||||
| REVENUES |
|||||||||||||
| Sales and other operating revenues |
$ | 2,262,288 | 1,251,390 | 5,987,494 | 3,684,801 | ||||||||
| Gain on sale of assets |
39,100 | 10,353 | 69,900 | 59,651 | |||||||||
| Interest and other income (loss) |
(7,933 | ) | 1,238 | 1,480 | 3,433 | ||||||||
| Total revenues |
2,293,455 | 1,262,981 | 6,058,874 | 3,747,885 | |||||||||
| COSTS AND EXPENSES |
|||||||||||||
| Crude oil and product purchases |
1,732,904 | 898,372 | 4,428,926 | 2,646,150 | |||||||||
| Operating expenses |
174,385 | 126,540 | 522,821 | 421,035 | |||||||||
| Exploration expenses, including undeveloped lease amortization |
70,118 | 44,644 | 142,476 | 88,091 | |||||||||
| Selling and general expenses |
33,622 | 30,169 | 97,497 | 86,291 | |||||||||
| Depreciation, depletion and amortization |
75,594 | 67,648 | 238,504 | 183,949 | |||||||||
| Impairment of long-lived assets |
— | 3,488 | — | 3,488 | |||||||||
| Accretion of asset retirement obligations |
2,575 | 2,364 | 7,549 | 7,325 | |||||||||
| Interest expense |
13,858 | 14,455 | 42,325 | 42,688 | |||||||||
| Interest capitalized |
(6,017 | ) | (10,027 | ) | (15,083 | ) | (29,675 | ) | |||||
| Total costs and expenses |
2,097,039 | 1,177,653 | 5,465,015 | 3,449,342 | |||||||||
| Income from continuing operations before income taxes |
196,416 | 85,328 | 593,859 | 298,543 | |||||||||
| Income tax expense |
80,643 | 18,541 | 229,255 | 76,544 | |||||||||
| Income from continuing operations |
115,773 | 66,787 | 364,604 | 221,999 | |||||||||
| Income from discontinued operations, net of tax |
2,950 | 1,950 | 202,231 | 20,529 | |||||||||
| Income before cumulative effect of change in accounting principle |
118,723 | 68,737 | 566,835 | 242,528 | |||||||||
| Cumulative effect of change in accounting principle, net of tax |
— | — | — | (6,993 | ) | ||||||||
| NET INCOME |
$ | 118,723 | 68,737 | 566,835 | 235,535 | ||||||||
| INCOME (LOSS) PER COMMON SHARE – BASIC |
|||||||||||||
| Income from continuing operations |
$ | 1.26 | .73 | 3.96 | 2.42 | ||||||||
| Income from discontinued operations |
.03 | .02 | 2.20 | .22 | |||||||||
| Cumulative effect of change in accounting principle |
— | — | — | (.08 | ) | ||||||||
| NET INCOME – BASIC |
$ | 1.29 | .75 | 6.16 | 2.56 | ||||||||
| INCOME (LOSS) PER COMMON SHARE – DILUTED |
|||||||||||||
| Income from continuing operations |
$ | 1.24 | .72 | 3.90 | 2.40 | ||||||||
| Income from discontinued operations |
.03 | .02 | 2.17 | .22 | |||||||||
| Cumulative effect of change in accounting principle |
— | — | — | (.08 | ) | ||||||||
| NET INCOME – DILUTED |
$ | 1.27 | .74 | 6.07 | 2.54 | ||||||||
| Average common shares outstanding – basic |
92,005,813 | 91,850,217 | 91,972,427 | 91,799,551 | |||||||||
| Average common shares outstanding – diluted |
93,568,421 | 92,848,308 | 93,365,547 | 92,612,911 | |||||||||
| * | Reclassified to conform to 2004 presentation. |
See Notes to Consolidated Financial Statements, page 5.
2
Murphy Oil Corporation and Consolidated Subsidiaries
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (unaudited)
(Thousands of dollars)
| Three Months Ended September 30, |
Nine Months Ended September 30, |
||||||||||||
| 2004 |
2003 |
2004 |
2003 |
||||||||||
| Net income |
$ | 118,723 | 68,737 | 566,835 | 235,535 | ||||||||
| Other comprehensive income, net of tax |
|||||||||||||
| Cash flow hedges |
|||||||||||||
| Net derivative gains (losses) |
(411 | ) | (978 | ) | 3,957 | (25,133 | ) | ||||||
| Reclassification adjustments |
(3,115 | ) | 10,872 | (8,589 | ) | 38,010 | |||||||
| Total cash flow hedges |
(3,526 | ) | 9,894 | (4,632 | ) | 12,877 | |||||||
| Net gain (loss) from foreign currency translation |
44,211 | (35,864 | ) | 30,788 | 107,239 | ||||||||
| Minimum pension liability adjustment |
— | — | — | (707 | ) | ||||||||
| COMPREHENSIVE INCOME |
$ | 159,408 | 42,767 | 592,991 | 354,944 | ||||||||
See Notes to Consolidated Financial Statements, page 5.
3
Murphy Oil Corporation and Consolidated Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
(Thousands of dollars)
| Nine Months Ended September 30, |
|||||||
| 2004 |
2003* |
||||||
| OPERATING ACTIVITIES |
|||||||
| Income from continuing operations |
$ | 364,604 | 221,999 | ||||
| Adjustments to reconcile income from continuing operations to net cash provided by operating activities |
|||||||
| Depreciation, depletion and amortization |
238,504 | 183,949 | |||||
| Provisions for major repairs |
22,692 | 20,687 | |||||
| Expenditures for major repairs and asset retirement obligations |
(14,700 | ) | (60,558 | ) | |||
| Dry hole costs |
100,370 | 48,282 | |||||
| Amortization of undeveloped leases |
11,705 | 10,927 | |||||
| Impairment of long-lived assets |
— | 3,488 | |||||
| Accretion of asset retirement obligations |
7,549 | 7,325 | |||||
| Deferred and noncurrent income taxes |
96,765 | (5,327 | ) | ||||
| Pretax gains from disposition of assets |
(69,900 | ) | (59,651 | ) | |||
| Net decrease in operating working capital other than cash and cash equivalents |
59,071 | 43,039 | |||||
| Other |
(6,817 | ) | 5,416 | ||||