SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (date of earliest event reported): September 3, 1996
TRANSOCEAN OFFSHORE INC.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation)
1-7746 72-0464968
(Commission File Number) (IRS Employer Identification No.)
4 Greenway Plaza, Houston, Texas 77046
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (713) 871-7500
Sonat Offshore Drilling Inc.
(Former name, if changed since last report)
<PAGE>
Item 2. Acquisition or Disposition of Assets
On September 3, 1996, Transocean Offshore Inc., formerly known as Sonat
Offshore Drilling Inc. (the "Company"), acquired 50,857,948 shares of Transocean
ASA ("Transocean"), which constitutes approximately 94% of the outstanding
Transocean shares. Such Transocean shares were acquired from the public
shareholders of Transocean pursuant to an exchange offer (the "Exchange Offer")
providing for consideration of 0.53 shares of Company common stock for each of
43,248,358 Transocean shares (subject to payment of cash in lieu of fractional
shares) and $27.25 for each remaining Transocean share. A total of 22,920,840
shares of Company common stock and $207,405,228 in cash was delivered by the
Company in exchange for the tendered Transocean shares pursuant to the Exchange
Offer. The cash portion of such consideration was funded from the Company's
available cash resources and borrowings under the Company's Secured Credit
Agreement, dated as of July 30, 1996 (the "Credit Agreement"), among ABN Amro
Bank N.V., Houston Agency, as Agent, Bank of Montreal, Houston Agency, The Fuji
Bank Limited, Royal Bank of Canada and Wells Fargo Bank (Texas), National
Association, as Co-Agents, and SunTrust Bank, Atlanta, and Credit Lyonnais, New
York Branch, as Documentation Agents. Pursuant to the requirements of Norwegian
law, the Company intends to commence in the near future an offer (the "Mandatory
Offer") to acquire the remaining publicly-held Transocean shares for $28.74 per
share in cash.
Transocean, a Norwegian company based in Tananger, Norway, is a major
offshore drilling company and also operates two other business segments: (i) oil
and gas platform drilling and well intervention and (ii) oil services
engineering and construction.
In connection with the consummation of the foregoing acquisition, on
September 3, 1996, the Certificate of Incorporation of the Company was amended
to increase the authorized number of shares of Company common stock to
150,000,000 and to change the name of the Company to Transocean Offshore Inc.
<PAGE>
Item 7. Financial Statements and Exhibits
(a) Financial statements of business acquired.
The financial statements of Transocean for each of the three years
ended December 31, 1995, and for the three-month periods ended March 31, 1996
and 1995, are filed as Exhibit 99.1 hereto.
(b) Pro forma financial information.
The following Unaudited Condensed Pro Forma Combined Balance Sheet as
of June 30, 1996 and the Unaudited Condensed Pro Forma Combined Statements of
Operations for the six-month period ended June 30, 1996 and the year ended
December 31, 1995 have been prepared to illustrate the estimated effects of the
combination of the Company and Transocean (the "Combination") pursuant to the
Exchange Offer, the Mandatory Offer and the anticipated compulsory acquisition
under Norwegian law (the "Compulsory Acquisition") of any remaining
publicly-held Transocean shares applying U.S. GAAP under the purchase method of
accounting. Allocations of purchase price have been determined based on
preliminary estimates of fair values and are subject to change. The Unaudited
Condensed Pro Forma Combined Balance Sheet as of June 30, 1996 was prepared as
if the Combination were consummated on June 30, 1996. The Unaudited Condensed
Pro Forma Combined Statements of Operations for the six-month period ended June
30, 1996 and the year ended December 31, 1995 were prepared as if the
Combination were consummated as of January 1, 1995. The Unaudited Condensed Pro
Forma Combined Financial Statements are based on the historical consolidated
financial statements of the Company and Transocean giving effect to the
Combination under the assumptions and adjustments outlined in the accompanying
Notes to Unaudited Condensed Pro Forma Combined Financial Statements.
The Unaudited Condensed Pro Forma Combined Financial Statements reflect
a total purchase price, including direct transaction costs, of $1,497,632,000,
which is calculated based on the average of the closing prices of Company common
stock over the five-day period commencing two days before May 20, 1996, the date
on which the revised offering price was announced, assuming 50,857,948 shares of
<PAGE>
Transocean Stock were exchanged for 22,920,840 shares of Company common stock
and $207,405,288 in cash. In addition, it is assumed that $28.74 is paid for
each remaining share of Transocean under the Mandatory Offer and any required
Compulsory Acquisition.
The Unaudited Condensed Pro Forma Combined Financial Statements have
been prepared applying U.S. GAAP. The financial statements of Transocean have
been converted from Norwegian GAAP to U.S. GAAP and translated into U.S. dollars
for purposes of this presentation (see Note 1 to the Unaudited Condensed Pro
Forma Combined Financial Statements). Norwegian GAAP differs in certain
significant respects from U.S. GAAP. A reconciliation of net income (loss) and
shareholders' equity of Transocean from Norwegian GAAP to U.S. GAAP is presented
in Note 34 to the Consolidated Financial Statements of Transocean and Note 5 to
the Condensed Consolidated Financial Statements of Transocean included as
Exhibit 99.1 to this Report.
The Unaudited Condensed Pro Forma Combined Financial Statements are
provided for illustrative purposes only and do not purport to represent what the
financial position or results of operations of the Company would actually have
been if the Combination had in fact occurred on the dates indicated or to
project the financial position or results of operations for any future date or
period. Although the Company expects to realize cost reductions from the
Combination, no effect has been given in the Company's Unaudited Condensed Pro
Forma Combined Financial Statements to any such benefits. The Unaudited
Condensed Pro Forma Combined Financial Statements should be read in conjunction
with the notes thereto and the consolidated financial statements of the Company
and Transocean and the related notes thereto contained in the Company's reports
and registration statement filed with the Securities and Exchange Commission
during 1996 prior to the date hereof.
<PAGE>
Unaudited Condensed Pro Forma Combined Balance Sheet
As of June 30, 1996
<TABLE>
<CAPTION>
Historical Pro Forma
------------------------ --------------------------
Company Transocean(1) Adjustments Combined
------- ------------- ----------- --------
(U.S. Dollar amounts in thousands)
<S> <C> <C> <C> <C> <C>
Cash and Cash Equivalents ..................... $ 60,431 $ 41,754 $ 314,445 (4) $ 102,185
(299,445)(2b)
(6,000)(2c)
(6,000)(3)
(3,000)(5)
Accounts and Notes Receivable ................. 72,894 80,366 153,260
Other Current Assets .......................... 28,661 18,335 46,996
--------- ---------- ----------- -----------
Total Current Assets ...................... 161,986 140,455 302,441
Property and Equipment, net ................... 370,229 488,422 414,478 (2e) 1,273,129
Goodwill and Intangibles ...................... 736,506 (2f) 736,506
Other Assets .................................. 42,301 21,977 3,000 (5) 67,278
--------- ---------- ----------- -----------
Total Assets .................................. $ 574,516 $ 650,854 $ 1,153,984 $ 2,379,354
========= ========== ============ ===========
Current Liabilities ........................... $ 62,491 $ 112,548 $ 27,000 (4) $ 202,039
Long-Term Debt ............................... 30,000 111,096 287,445 (4) 428,541
Deferred Taxes and Other Credits .............. 84,278 8,514 66,048 (2g) 158,840
Stockholders' Equity .......................... 397,747 418,696 (418,696)(2d) 1,589,934
1,198,187 (2a)
(6,000)(3)
--------- ---------- ----------- -----------
Total Liabilities and Stockholders' Equity .... $ 574,516 $ 650,854 $ 1,153,984 $ 2,379,354
========= ========== ============ ===========
</TABLE>
See accompanying notes to the Unaudited Condensed Pro Forma Combined Financial
Statements.
<PAGE>
Unaudited Condensed Pro Forma Combined Statement of Operations
For the Six Months Ended June 30, 1996
<TABLE>
<CAPTION>
Historical Pro Forma
------------------------ -----------------------
Company Transocean(1) Adjustments Combined
------- ------------- ----------- ----------
(U.S. Dollar amounts in thousands, except per share amounts)
<S> <C> <C> <C> <C>
Operating Revenues ..................... $ 190,101 $ 182,757 $ 372,858
--------- --------- --------- ---------
Costs and Expenses
Operating and Maintenance ......... 123,328 137,337 260,665
Depreciation and Amortization ..... 12,358 23,730 $ 11,233 (6) 47,321
General and Administrative ........ 10,230 15,771 26,001
--------- --------- --------- ---------
145,916 176,838 11,233 333,987
--------- --------- --------- ---------
Operating Income ....................... 44,185 5,919 (11,233) 38,871
Other Income (Expense), Net ............ 13,221 27,840 (9,066)(7) 31,995
--------- --------- ---------
Income (Loss) from Continuing Operations
Before Taxes ...................... 57,406 33,759 (20,299) 70,866
Income Taxes ........................... 20,104 534 (3,106)(8) 17,532
--------- --------- --------- ---------
Income (Loss) from Continuing Operations $ 37,302 $ 33,225 $ (17,193) $ 53,334
========= ========= ========== =========
Income (Loss) from Continuing Operations
per Common Share .................. $ 1.31 $ 0.62 $ 1.04
========= ========= =========
Weighted Average Shares Outstanding .... 28,455 53,343 51,376(9)
========= ========= =========
</TABLE>
See accompanying notes to the Unaudited Condensed Pro Forma Combined Financial
Statements.
<PAGE>
Unaudited Condensed Pro Forma Combined Statement of Operations
For the Year Ended December 31, 1995
<TABLE>
<CAPTION>
Historical Pro Forma
--------------------------- ------------------------------
Company Transocean(1) Adjustments Combined
------- -------------- ------------- --------
(U.S. Dollar amounts in thousands, except per share amounts)
<S> <C> <C> <C> <C>
Operating Revenues.......................... $ 322,658 $ 348,112 $ 670,770
Costs and Expenses
Operating and Maintenance.............. 222,367 268,259 490,626
Depreciation........................... 26,995 49,608 $ 24,812 (6) 101,415
General and Administrative............. 21,208 36,924 58,132
----------- ------------ ------------ ---------
270,570 354,791 24,812 650,173
----------- ------------ ------------ ---------
Operating Income (Loss)..................... 52,088 (6,679) (24,812) 20,597
Other Income (Expense), Net................. 23,061 7,337 (19,360)(7) 11,038
----------- ------------ ------------ ---------
Income (Loss) from Continuing Operations
Before Taxes........................... 75,149 658 (44,172) 31,635
Income Taxes................................ 28,201 405 (7,213)(8) 21,393
----------- ------------ ------------ ---------
Income from Continuing Operations........... $ 46,948 $ 253 $ (36,959) $ 10,242
=========== ============= ============ =========
Income from Continuing Operations per
Common Share........................... $ 1.65 $ 0.01 $ 0.20
=========== ============= ========
Weighted Average Shares Outstanding......... 28,374 52,550 51,295(9)
=========== ============= ========
</TABLE>
See accompanying notes to the Unaudited Condensed Pro Forma Combined Financial
Statements.
<PAGE>
Notes to Unaudited Condensed Pro Forma Combined Financial Statements
(1) The Unaudited Condensed Pro Forma Combined Financial Statements
have been prepared applying U.S. GAAP. The financial statements of Transocean
have been converted from Norwegian GAAP to U.S. GAAP and translated into U.S.
dollars for purposes of this presentation at a rate of $1.00 = Nkr 6.501 as of
June 30, 1996 and using the weighted average rates of exchange for the six-month
period ended June 30, 1996 and for the year ended December 31, 1995 of $1.00 =
Nkr 6.464 and 6.329, respectively. Norwegian GAAP differs in certain significant
respects from U.S. GAAP. A reconciliation of net income (loss) and shareholders'
equity of Transocean from Norwegian GAAP to U.S. GAAP is presented in Note 34 to
the Consolidated Financial Statements of Transocean and Note 5 to the Condensed
Consolidated Financial Statements of Transocean included as Exhibit 99.1 to this
Report. Certain reclassifications have been made to conform the Transocean
historical financial statements to the pro forma presentation. Such
reclassifications have no effect on total stockholders' equity or net income
(loss) from continuing operations.
(2) To reflect the purchase of 100% of the outstanding shares of
Transocean for a total consideration of $1,497,632,000, assuming 50,857,948
shares of Transocean were exchanged for 22,920,840 shares of Company common
stock and $207,405,228 in cash. In addition, it is assumed that $28.74 will be
paid for each remaining share of Transocean under the Mandatory Offer and any
required Compulsory Acquisition. The value of Company common stock issued in the
Combination was calculated based on $52.275, which was the average of the
closing prices of Company common stock over the five-day period commencing two
days before May 20, 1996, the date on which the revised offer was announced.
($ in thousands)
----------------
(a) Company common stock issued............. $1,198,187
(b) Cash consideration paid................. 299,445
----------
Total consideration to be paid....... 1,497,632
(c) Direct transaction costs................ 6,000
----------
Total purchase price................. $1,503,632
==========
<PAGE>
The purchase price will be allocated based upon estimated fair values
of the Transocean assets and liabilities. For purposes of the Unaudited
Condensed Pro Forma Combined Financial Statements, the purchase price has been
allocated as follows:
($ in thousands)
----------------
(d) Historical net book value of
Transocean............................. $ 418,696
(e) Fair value adjustment of property
and equipment, net..................... 414,478
(f) Excess of purchase price over the
sum of fair value of identifiable
assets acquired less liabilities
assumed................................ 736,506
(g) Adjustment for related deferred income
taxes payable.......................... (66,048)
----------
Total purchase price.................. $1,503,632
==========
(3) To record costs directly associated with the issuance of Company
common stock.
(4) To record financing obtained in connection with the Combination
including $15 million of related costs, consisting of $6 million in direct
transaction costs, $6 million in costs directly associated with the issuance of
Company common stock, and $3 million in debt refinancing costs.
(5) To record costs directly associated with financing obtained in
connection with the Combination.
(6) To record additional depreciation expense and amortization of
goodwill resulting from the allocation of the purchase price. The pro forma
adjustment assumes estimated remaining useful lives ranging from 6 to 24 years
for depreciation and a 40-year amortization period for goodwill.
(7) To adjust interest expense, including amortization of debt issuance
costs, assuming that the additional financing was obtained as of January 1,
1995. Interest expense has been calculated using an interest rate of 6.056%,
based on the 3-month LIBOR rate of 5.656% as of September 12, 1996 plus a margin
of .40% and assumes principal repayments of $40.5 million over the pro forma
period as required by the Credit Agreement. A one-half percent change in
interest rates would impact interest expense in the amount of approximately $2
million over the 18-month pro forma period.
<PAGE>
(8) To record income tax expense on the effect of the pro forma
adjustments to depreciation and interest expense. The Norwegian statutory income
tax rate of 28% has been used. Goodwill amortization has been treated as a
permanent difference for income tax purposes; therefore, it does not give rise
to an income tax effect.
(9) Weighted average shares outstanding as if the 22.9 million shares
to be issued by the Company in consideration of the Transocean shares had taken
place on January 1, 1995.
(c) Exhibits.
The Index to Exhibits to this Report is incorporated herein by
reference.
<PAGE>
SIGNATURE
-----------
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this Report to be signed on its behalf by the
undersigned hereunto duly authorized.
TRANSOCEAN OFFSHORE INC.
By /s/ Robert L. Long
-------------------------
Date: September 18, 1996 Robert L. Long
Senior Vice President
<PAGE>
INDEX TO EXHIBITS
Exhibit No. Description
- ----------- -----------
23.1 Consent of Coopers & Lybrand ANS -- filed herewith
99.1 Report of Coopers & Lybrand ANS and Consolidated Financial
Statements of Transocean for each of the three years ended
December 31, 1995 and (unaudited) for the three-month periods
ended March 31, 1996 and 1995 -- incorporated by reference from
pages F-29 through F-77, inclusive, of the Company's Registration
Statement on Form S-4 (No. 333-09105)
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference into the Registration Statement on
Form S-8 (File No. 33-64776) and Form S-8 (File No. 33-66036) of Transocean
Offshore Inc. (formerly Sonat Offshore Drilling Inc.) of our report dated June
15, 1996, except as to the information presented in Note 33, for which the date
is July 26, 1996 contained in the Registration Statement of Sonat Offshore
Drilling Inc. on Form S-4 (No. 333-09105), on our audits of the financial
statements of Transocean ASA and Subsidiaries as of December 31, 1995, 1994 and
1993. We also consent to the inclusion in the prospectus documents relating to
such Registration Statements of a statement that the foregoing consolidated
financial statements of Transocean ASA and Subsidiaries have been incorporated
by reference in such Registration Statements in reliance on our report and upon
the authority of our firm as experts in accounting and auditing.
COOPERS & LYBRAND ANS
Oslo, Norway
September 18, 1996
