<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
(MARK ONE)
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1998
-----------------
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 [NO FEE REQUIRED]
For the transition period from _________________ to ________________
Commission file number 1-7179
----------
TRANSOCEAN OFFSHORE SAVINGS PLAN
(Full Title of the Plan and the Address of
the Plan, if Different from that of the
Issuer named below)
TRANSOCEAN OFFSHORE INC.
4 Greenway Plaza
Houston, Texas 77046
(Name of Issuer of the Securities Held Pursuant
to the Plan and Address of its
Principal Executive Office)
<PAGE>
REQUIRED INFORMATION
- --------------------
AUDITED FINANCIAL STATEMENTS
----------------------------
Report of Independent Auditors 1
Statements of Net Assets Available for Benefits -
as of December 31, 1998 and 1997 2
Statements of Changes in Net Assets Available for
Benefits For the Years Ended December 31, 1998 and 1997 3
Notes to Financial Statements 4
SUPPLEMENTAL SCHEDULES
----------------------
Item 27(a) - Schedule of Assets Held for Investment Purposes 14
Item 27(d) - Schedule of Reportable Transactions 15
EXHIBITS
--------
Number Description Method of Filing
- ------ ----------- ----------------
1. - Consent of Independent Auditors Filed herewith
<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Administrative Committee
Transocean Offshore Savings Plan
We have audited the accompanying statements of net assets available for benefits
of the Transocean Offshore Savings Plan as of December 31, 1998 and 1997, and
the related statements of changes in net assets available for benefits for the
years then ended. These financial statements are the responsibility of the
Plan's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Plan at
December 31, 1998 and 1997, and the changes in its net assets available for
benefits for the years then ended, in conformity with generally accepted
accounting principles.
Our audits were performed for the purpose of forming an opinion on the financial
statements taken as a whole. The accompanying supplemental schedules of assets
held for investment purposes as of December 31, 1998, and reportable
transactions for the year then ended, are presented for the purpose of
additional analysis and are not a required part of the financial statements but
are supplementary information required by the Department of Labor's Rules and
Regulations for Reporting and Disclosure under the Employee Retirement Income
Security Act of 1974. These supplemental schedules are the responsibility of
the Plan's management. The supplemental schedules have been subjected to the
auditing procedures applied in our audits of the basic financial statements and,
in our opinion, are fairly stated in all material respects in relation to the
basic financial statements taken as a whole.
June 11, 1999
Houston, Texas /s/Ernst & Young LLP
1
<PAGE>
TRANSOCEAN OFFSHORE SAVINGS PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
<TABLE>
<CAPTION>
December 31,
1998 1997
------------ ------------
<S> <C> <C>
Investments, at Fair Value (Note 3):
Short-term investments $ 75,308 $ 131,208
Sonat Inc. common stock 4,033,287 8,990,744
Transocean Offshore Inc. common stock (Note 1) 10,885,875 15,533,482
Fidelity Retirement Government Money Market Portfolio 2,880,864 2,224,528
Fidelity Intermediate Bond Fund - 530,201
Fidelity Puritan Fund 4,568,182 4,004,838
Fidelity Magellan Fund 7,839,340 5,356,917
Spartan U.S. Equity Index Portfolio 4,170,197 2,642,440
Templeton Foreign Fund I 123,433 -
MAS Fixed Income Portfolio 155,381 -
Neuberger & Berman Partners Trust 477,168 -
Investments, at Estimated Fair Value (Notes 2 and 3)
Participant loans 1,288,597 -
- ----------------------------------------------------------------------------------------
Total Investments 36,497,632 39,414,358
Contributions Receivable:
Employee - 163,809
Employer - 90,528
- ----------------------------------------------------------------------------------------
Net Assets Available for Benefits $36,497,632 $39,668,695
========================================================================================
</TABLE>
See accompanying notes.
2
<PAGE>
TRANSOCEAN OFFSHORE SAVINGS PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
<TABLE>
<CAPTION>
1998 1997
------------- -------------
<S> <C> <C>
Contributions:
Employee $ 4,544,224 $ 3,060,680
Employer 2,269,074 1,490,244
- ------------------------------------------------------------------------------------------------
Total Contributions 6,813,298 4,550,924
- ------------------------------------------------------------------------------------------------
Net Investment Income:
Net appreciation (depreciation) in fair value of investments (8,167,422) 5,468,343
Other investment income 1,352,354 1,105,665
- ------------------------------------------------------------------------------------------------
Net Investment Income (Loss) (6,815,068) 6,574,008
- ------------------------------------------------------------------------------------------------
Disbursements:
Participant loan processing fees (7,289) -
Benefits paid to participants (3,162,004) (2,033,083)
- ------------------------------------------------------------------------------------------------
Total Disbursements (3,169,293) (2,033,083)
- ------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Net Assets Available
for Benefits (3,171,063) 9,091,849
- ------------------------------------------------------------------------------------------------
Net Assets Available for Benefits:
Beginning of year 39,668,695 30,576,846
- ------------------------------------------------------------------------------------------------
End of year $36,497,632 $39,668,695
================================================================================================
</TABLE>
See accompanying notes.
3
<PAGE>
TRANSOCEAN OFFSHORE SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998
1. BACKGROUND AND PLAN HISTORY
---------------------------
On June 4, 1993, Sonat Offshore Drilling Inc. and its subsidiaries ("SODI")
completed an initial public offering (the "IPO") of its common stock which was
previously owned by Sonat Inc. Before the IPO, certain employees of SODI were
eligible to participate in the Sonat Offshore Savings Plan for Rig Employees
(the "Old Offshore Plan".) Other employees of SODI were eligible to participate
in the Sonat Inc. Savings Plan (the "Old Sonat Plan".) Participants in the Old
Offshore Plan and the Old Sonat Plan could make After-Tax and Before-Tax
contributions (see Note 2 for definition) to their respective plan and receive
SODI matching contributions based on the amount of their contributions, their
age, and length of service. Employees of SODI became ineligible to contribute to
the Old Offshore Plan and the Old Sonat Plan on the date the IPO was completed.
As a result, no contributions were made to those Plans on behalf of employees of
SODI after June 4, 1993.
On June 25, 1993, the Sonat Offshore Drilling Savings Plan (the "Plan") was
adopted by SODI's Board of Directors. On August 17, 1993, all accounts of
SODI's employees in the Old Sonat Plan were transferred to the Plan. Also on
that date, all accounts in the Old Offshore Plan were merged into the Plan.
Beginning October 1, 1993, the Plan permitted eligible employees of SODI to make
contributions by payroll deduction and to receive matching contributions from
SODI.
SODI acquired over 99 percent of the outstanding capital shares of
Transocean ASA, a Norwegian company, pursuant to an exchange offer for the
Company's common stock and cash completed during 1996 (the "Combination".) In
connection with the Combination, SODI's name was changed to Transocean Offshore
Inc. (together with its subsidiaries, the "Company".) On September 4, 1996, the
Sonat Offshore Drilling Savings Plan was renamed the Transocean Offshore Savings
Plan. There were no significant changes made to the Plan as a result of this
acquisition or plan name change.
2. PLAN DESCRIPTION
----------------
The following description of the Plan provides only general information.
Participants should refer to the Plan document for a more complete description
of the Plan's provisions, a copy of which is available from the Company.
GENERAL
The Plan, a defined contribution plan, was established to provide eligible
employees an opportunity to save for retirement and to acquire an ownership
interest in the Company. Participation in the Plan is voluntary. The Plan is
administered by an Administrative Committee, composed of at least three members,
which is appointed by the Finance/Benefits Committee of the Company's Board of
Directors. The Plan is subject to the provisions of the Employee Retirement
Income Security Act of 1974 (ERISA).
4
<PAGE>
TRANSOCEAN OFFSHORE SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998
2. PLAN DESCRIPTION (CONTINUED)
----------------------------
ELIGIBILITY
Effective January 1, 1998, all employees of the Company and its
participating subsidiaries, who are citizens or permanent residents of the
United States, are eligible to participate in the Plan after completion of one
full calendar month of service.
CONTRIBUTIONS
Participants may elect to make contributions to the Plan with pre-tax
dollars ("Before-Tax Contributions"), pursuant to Section 401(k) of the Internal
Revenue Code of 1986 (the "Code"), and/or contributions with after-tax dollars
("After-Tax Contributions") up to a maximum of 20% of earnings per pay period.
If the aggregate Before-Tax Contributions or After-Tax Contributions of
"highly compensated" employees exceed certain limits imposed by U.S. federal
income tax laws, Before-Tax Contributions and/or After-Tax Contributions of the
"highly compensated" employees will be reduced so that such contributions to the
plan no longer exceed those limits. In some instances, the reduction in
allowable Before-Tax Contributions or After-Tax Contributions will result in a
reduction in Company contributions to the Plan for "highly compensated"
employees. For this purpose, the term "highly compensated" is defined by U.S.
federal income tax laws.
In July 1996, the Plan was amended to allow rollovers from other qualified
plans into the Plan. Participants may invest their rollovers into the
Transocean Offshore Inc. common stock fund or any of the mutual funds available
under the Plan. Amounts rolled over can be withdrawn at any time.
INVESTMENT OPTIONS
Participants in the Plan may invest their contributions in units of the
Company's common stock and in one or more mutual fund options selected for the
Plan by the Administrative Committee. Shown below are the specific mutual fund
options and a general description of each fund's objectives.
Fidelity Retirement Government Money Market Portfolio - This fund invests in
obligations issued or guaranteed as to principal and interest by the U.S.
Government, its agencies or instrumentalities.
Fidelity Puritan Fund - This fund invests in a broadly diversified portfolio
of high yielding securities including common stocks, preferred stocks and
bonds.
Fidelity Magellan Fund - This fund invests primarily in common stocks and
securities convertible into common stocks.
Spartan U.S. Equity Index Portfolio - This fund invests primarily in common
stocks and attempts to duplicate the performance of the companies
comprising the Standard & Poor's 500 Index.
5
<PAGE>
TRANSOCEAN OFFSHORE SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998
2. PLAN DESCRIPTION (CONTINUED)
MAS Fixed Income Portfolio - This fund invests in a diversified portfolio of
U.S. Government securities, corporate bonds (including both investment
grade bonds and bonds rated below investment grade, commonly referred to
as junk bonds), foreign fixed-income securities and mortgage-backed
securities of domestic issuers and other fixed-income securities. The
portfolio's average weighted maturity will ordinarily be greater than five
years. This investment choice was added January 1, 1998.
Neuberger & Berman Partners Trust - This fund invests principally in common
stocks of medium-to-large-capitalization established companies. It seeks
capital growth through an investment approach that is intended to increase
capital with reasonable risk. This investment choice was added January 1,
1998.
Templeton Foreign Fund I - This fund invests in stocks and debt obligations
of companies and governments outside the United States. The fund may
invest no more than 5% of its total assets in securities. This investment
choice was added January 1, 1998.
Fidelity Intermediate Bond Fund - This fund earns income by investing in
high and upper medium grade, fixed-income bonds with average maturity
ranges between three and ten years. Included in these investments are
corporate bonds as well as U. S. Government obligations. This fund was
eliminated as a Plan investment fund effective March 31, 1998.
Each of the mutual funds listed above is registered with the Securities and
Exchange Commission under the Investment Company Act of 1940.
Sonat Inc. common stock is not a current investment option for the Plan.
Participants do, however, hold Sonat Inc. common stock in the Plan as a result
of the transfer of balances from the Old Sonat Plan to the Plan and the merging
of the Old Offshore Plan into the Plan. Dividends received and participant loan
repayments relating to the Sonat Inc. common stock fund are reinvested into such
fund, but no additional units may be purchased by participants. Participants in
the Plan must transfer their investment balances in the Sonat Inc. common stock
fund to one of the current investment options by July 1, 1999. If no action is
taken to liquidate the fund before July 1, 1999, the balance in this stock fund
will automatically be transferred to the Fidelity Retirement Government Money
Market Portfolio.
Participants may change their investment options daily.
COMPANY MATCHING CONTRIBUTIONS
The Company's matching contributions for each participant is equal to the
sum of 100% of the first 3% of earnings contributed by the participant to the
Plan, plus 50% of the next 3% of earnings contributed by the participant to the
Plan. Such percentages are applied on a pay period by pay period basis.
Earnings are defined as base pay plus overtime pay associated with base pay.
Diversification of Company matching contributions is permitted. Participants
may direct Company matching contributions into any investment fund offered by
the Plan on a daily basis. Participants may also transfer Company match account
balances between all investment funds on a daily basis.
6
<PAGE>
TRANSOCEAN OFFSHORE SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998
2. PLAN DESCRIPTION (CONTINUED)
----------------------------
INVESTMENT OF EARNINGS
All dividends paid on Company stock or Sonat Inc. stock credited to
participant accounts are used to purchase additional units of that stock fund.
Earnings on mutual funds are reinvested in that fund.
VESTING
Participants are immediately vested in their After-Tax, Before-Tax and
Company matching contributions plus actual earnings thereon.
WITHDRAWALS
A participant may not withdraw Before-Tax Contributions and earnings thereon
until the earliest of termination of employment, attainment of age 59-1/2 or in
the event of financial hardship (see Note 7), as approved by the Administrative
Committee. Effective January 1, 1998, there shall be no limit on the number of
withdrawals which may be made by a participant from their accounts after age
70 1/2. Participants can withdraw After-Tax Contributions and earnings once in
any 12-month period after one year of Plan participation. Except as noted below,
Company matching contributions and earnings thereon cannot be withdrawn from the
Plan prior to termination of employment. Company matching contributions and
earnings thereon from the Old Sonat Plan and the Old Offshore Plan can be
withdrawn once in any 12-month period. All distributions from mutual funds will
be made in cash. All amounts invested in the Company's common stock fund or
Sonat Inc.'s common stock fund, whether purchased with participant or Company
contributions, will be distributed in the form of stock certificates or cash at
the participant's election. Dividends paid to Fidelity on units purchased for or
credited to the participant's account prior to the distribution of such units to
the participant will be applied to the purchase of additional units for the
participant's account.
If upon termination of service for any reason, a participant's account is
less than or equal to $5,000, the account balance will automatically be
distributed to the participant within 12 months following termination unless
otherwise requested. Participants may request distributions upon termination for
accounts greater than $5,000.
PARTICIPANT LOANS
Participants may borrow from their account balance up to a maximum of 50% of
their balance, with a minimum loan amount of $1,000 and maximum of $50,000.
Participants may have two loans outstanding at any one time-- a "general loan"
which can be used for any purpose and is to be repaid over five years or less
and a "home loan" which can only be used to purchase a primary residence and is
required to be repaid in equal amounts over 15 years or less. Loans bear
interest at prime at the beginning of the quarter in which the loan originates
plus 1% which is fixed for the term of the loan. Interest is repaid to the
participant's account. There is a one-time loan origination fee of $35 per loan
and an annual maintenance fee of $15 for each calendar year the loan is
outstanding. These fees are deducted from the participant's account.
Outstanding loan amounts are due upon termination of employment.
7
<PAGE>
TRANSOCEAN OFFSHORE SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998
2. PLAN DESCRIPTION (CONTINUED)
----------------------------
PLAN TERMINATION
It is the Company's intention to continue the Plan, although the Company is
free to amend or discontinue the Plan at any time. In the event the Plan is
terminated, the full amount credited to each participant's account will be
payable as soon as practicable following such termination.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
------------------------------------------
BASIS OF ACCOUNTING
The financial statements of the Plan are prepared under the accrual method
of accounting in accordance with generally accepted accounting principles.
USE OF ESTIMATES
The preparation of these financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results may differ from those estimates.
CREDIT RISK
The Plan is exposed to credit risk in the event of default by the issuers of
the investments to the extent of amounts recorded on the Statement of Net Assets
Available for Benefits.
CONTRIBUTIONS
Contributions to the Plan consist of before-tax and/or after-tax employee
contributions made by payroll deduction and additional matching contributions
made by the Company. Company contributions may include certain reinstated
forfeitures related to the Old Offshore Plan and the Old Sonat Plan for
participants whose employment was reinstated during the year (see Note 2.)
INVESTMENT VALUATION
Plan assets are held by the Plan trustee, Fidelity Management Trust Company
("Fidelity".) Amounts invested in the investment funds are carried at fair value
as determined by Fidelity, generally based on the last reported sales price of
the year. Participant loans receivable are valued at amortized cost which
approximates fair value.
8
<PAGE>
TRANSOCEAN OFFSHORE SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
------------------------------------------------------
INCOME TAX STATUS
On February 20, 1998, the Plan received a ruling from the Internal Revenue
Service that the Plan, as written, is qualified under Section 401(a) of the
Code. Continued qualification depends upon the operation of the Plan. It is the
opinion of the plan administrator and management that the Plan is operating as a
qualified plan. As such, the trust is exempt from federal income taxes under
the provisions of Section 501(a) of the Code.
UNIT ACCOUNTING
The Plan utilizes the unit method of accounting which allows each stock fund
to hold a small amount of cash for liquidity purposes. The value of each unit
does not vary significantly from the stock price of the stock held in the fund.
The stock price is readily available to the participants and is printed in many
publications. Each participant holds units of the stock fund representing their
proportionate interest in both the stock and cash held in the fund.
STOCK SPLIT
In August 1997, the Board of Directors of the Company declared a two-for-one
stock split to be effected in the form of a 100 percent stock dividend. The
dividend was paid September 19, 1997, to stockholders of record on September 5,
1997. All references in the financial statements of the Plan to number of
shares of the Company's common stock have been retroactively restated to reflect
the increased number of shares of common stock issued and outstanding as a
result of the dividend.
9
<PAGE>
TRANSOCEAN OFFSHORE SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998
<TABLE>
<CAPTION>
4. Fund Information:
-----------------
For the Year Ended December 31, 1998
----------------------------------------------------------------------------------------------
Fidelity Fidelity Spartan
Company Sonat Inc. Ret Gov't Intermediate Fidelity Fidelity U.S. Equity
Common Common Money Mkt Bond Puritan Magellan Index
Stock Stock Portfolio Fund Fund Fund Portfolio
----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Contributions
Employer $ 1,627,414 $ - $ 82,347 $ 1,494 $ 91,285 $ 221,777 $ 177,919
Employee 1,228,329 - 274,123 15,485 719,938 1,250,163 813,911
- ---------------------------------------------------------------------------------------------------------------------------------
Total Contributions 2,855,743 - 356,470 16,979 811,223 1,471,940 991,830
- ---------------------------------------------------------------------------------------------------------------------------------
Net Appreciation (Depreciation)
in Fair Value of Investments (7,404,876) (3,191,060) - 1,349 188,195 1,512,278 762,162
Other Investment Income 51,275 183,898 119,401 6,768 453,102 356,088 73,661
Loan repayment (interest) 61,552 371 4,905 2 1,529 3,121 2,687
- ---------------------------------------------------------------------------------------------------------------------------------
Net Investment Income (7,292,049) (3,006,791) 124,306 8,119 642,826 1,871,487 838,510
- ---------------------------------------------------------------------------------------------------------------------------------
Participant Loan Processing Fees (5,024) (1,294) (4) - (116) (128) (78)
Benefits Paid to Participants (710,547) (383,752) (702,369) (17,089) (439,945) (370,798) (475,141)
- ---------------------------------------------------------------------------------------------------------------------------------
Total Paid (715,571) (385,046) (702,373) (17,089) (440,061) (370,926) (475,219)
- ---------------------------------------------------------------------------------------------------------------------------------
Loan Repayment (Principal) 179,654 663 9,558 4 17,595 18,857 18,058
Loan Withdrawal (1,148,599) (9,006) (128,270) (840) (59,795) (107,429) (103,865)
Interfund Transfers - Net 1,354,055 (1,612,275) 982,752 (543,336) (442,555) (451,683) 226,507
- ---------------------------------------------------------------------------------------------------------------------------------
Total Transfers 385,110 (1,620,618) 864,040 (544,172) (484,755) (540,255) 140,700
- ---------------------------------------------------------------------------------------------------------------------------------
Increase (Decrease) in Net Assets
Available for Benefits (4,766,767) (5,012,455) 642,443 (536,163) 529,233 2,432,246 1,495,821
Net Assets Available for Benefits:
Beginning of Year 15,691,063 9,082,629 2,238,421 536,163 4,038,949 5,407,094 2,674,376
- ---------------------------------------------------------------------------------------------------------------------------------
End of Year $10,924,296 $ 4,070,174 $2,880,864 $ - $ 4,568,182 $ 7,839,340 $ 4,170,197
=================================================================================================================================
---------------------------------------------------------------------------------------------
Neuberger &
Templeton MAS Fixed Berman
Foreign Income Partners Participant
Fund I Portfolio Trust Loans Total
---------------------------------------------------------------------------------------------
Contributions
Employer $ 15,861 $ 9,428 $ 41,549 $ - $ 2,269,074
Employee 55,034 27,803 159,438 - 4,544,224
- --------------------------------------------------------------------------------------------------------------------------------
Total Contributions 70,895 37,231 200,987 - 6,813,298
- --------------------------------------------------------------------------------------------------------------------------------
Net Appreciation (Depreciation)
in Fair Value of Investments (25,999) (4,958) (4,513) - (8,167,422)
Other Investment Income 11,631 9,889 11,579 - 1,277,292
Loan repayment (interest) 397 - 498 - 75,062
- --------------------------------------------------------------------------------------------------------------------------------
Net Investment Income (13,971) 4,931 7,564 - (6,815,068)
- --------------------------------------------------------------------------------------------------------------------------------
Participant Loan Processing Fees (185) (124) (336) - (7,289)
Benefits Paid to Participants (622) (16,284) (8,162) (37,295) (3,162,004)
- --------------------------------------------------------------------------------------------------------------------------------
Total Paid (807) (16,408) (8,498) (37,295) (3,169,293)
- --------------------------------------------------------------------------------------------------------------------------------
Loan Repayment (Principal) 2,049 - 5,888 (252,326) -
Loan Withdrawal (331) (6,421) (13,662) 1,578,218 -
Interfund Transfers - Net 65,598 136,048 284,889 - -
- --------------------------------------------------------------------------------------------------------------------------------
Total Transfers 67,316 129,627 277,115 1,325,892 -
- --------------------------------------------------------------------------------------------------------------------------------
Increase (Decrease) in Net Assets
Available for Benefits 123,433 155,381 477,168 1,288,597 (3,171,063)
Net Assets Available for Benefits:
Beginning of Year - - - - 39,668,695
- --------------------------------------------------------------------------------------------------------------------------------
End of Year $ 123,433 $ 155,381 $ 477,168 $ 1,288,597 $ 36,497,632
================================================================================================================================
</TABLE>
10
<PAGE>
TRANSOCEAN OFFSHORE SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998
4. FUND INFORMATION (CONTINUED)
----------------------------
For the Year Ended December 31, 1997:
<TABLE>
<CAPTION>
Nonparticipant-
Directed Participant - Directed
------- ------------------------------------------------------------------------------------------
Fidelity Fidelity Spartan
Company Company Sonat Inc. Ret Gov't Intermediate Fidelity Fidelity U.S. Equity
Common Common Common Money Mkt Bond Puritan Magellan Index
Stock Stock Stock Portfolio Fund Fund Fund Portfolio Total
------- ------- ---------- --------- ------------ -------- -------- ----------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Contributions:
Employer $ - $ 1,313,302 $ - $ 31,660 $ 6,617 $ 33,215 $ 47,906 $ 57,544 $ 1,490,244
Employee - 648,159 - 341,478 113,798 609,655 885,632 461,958 3,060,680
- --------------------------------------------------------------------------------------------------------------------------------
Total Contributions - 1,961,461 - 373,138 120,415 642,870 933,538 519,502 4,550,924
- --------------------------------------------------------------------------------------------------------------------------------
Net Appreciation
(Depreciation)
in Fair Value of
Investments 4,958,721 (1,098,122) - 5,341 371,839 768,010 462,554 5,468,343
Other Investment Income 42,753 232,600 89,933 32,962 320,195 337,075 50,147 1,105,665
- --------------------------------------------------------------------------------------------------------------------------------
Net Investment Income 5,001,474 (865,522) 89,933 38,303 692,034 1,105,085 512,701 6,574,008
- --------------------------------------------------------------------------------------------------------------------------------
Benefits Paid to
Participants - (687,446) (514,131) (259,278) (30,526) (177,656) (280,794) (83,252) (2,033,083)
- --------------------------------------------------------------------------------------------------------------------------------
Interfund Transfers -
Net (7,514,014) 7,708,368 (1,447,393) 1,396,900 (91,980) 52,499 (544,615) 440,235 -
- --------------------------------------------------------------------------------------------------------------------------------
Increase (Decrease)
in Net Assets Available
for Benefits (7,514,014) 13,983,857 (2,827,046) 1,600,693 36,212 1,209,747 1,213,214 1,389,186 9,091,849
Net Assets Available
for Benefits:
Beginning of year 7,514,014 1,707,206 11,909,675 637,728 499,951 2,829,202 4,193,880 1,285,190 30,576,846
- --------------------------------------------------------------------------------------------------------------------------------
End of year $ - $15,691,063 $ 9,082,629 $2,238,421 $536,163 $4,038,949 $5,407,094 $2,674,376 $39,668,695
================================================================================================================================
</TABLE>
11
<PAGE>
TRANSOCEAN OFFSHORE SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998
5. TRANSACTIONS WITH PARTIES-IN-INTEREST
-------------------------------------
Fidelity executed all mutual fund investment transactions for the years
ended December 31, 1998 and 1997. Fidelity also provides certain accounting
services to the Plan. The Company has paid all administrative expenses of the
Plan, including legal, accounting and trustee fees.
6. YEAR 2000 ISSUE (UNAUDITED)
---------------------------
The Company has instituted a plan to address the Year 2000 issue for its
computer systems, microprocessors, operational and control systems and other
significant computer-based devices and applications (the "Y2K plan"). It is
possible that certain of these systems will not be able to process dates
beginning in the year 2000, as many such systems are based on storing two digits
to identify a particular year rather than a full four digits and are not
designed to take into account the start of a new century. The five phases of the
Company's plan--inventory, assessment, remediation, testing and verification,
and contingency planning--are in varying stages of completion, and ultimate
completion of the Y2K plan is expected by December 31, 1999. The Company's Y2K
plan will address any Year 2000 issues of the Plan.
The Company surveyed all of its internal hardware and software systems
worldwide. Key third-party businesses whose year 2000 failures would most
significantly impact the Company and the Plan were identified. The Company has
initiated written and telephonic communications with key third-party businesses
to ascertain and evaluate their efforts in addressing Year 2000 compliance.
Although the Company's failure to implement fully its Year 2000 compliance
plan or the occurrence of an unexpected Year 2000 problem could have an effect
on the Plan, based upon the work performed to date and the anticipated
completion of the Y2K plan during December 1999, the Company does not believe
that such matters will have a material adverse effect. During 1999, the Company
will continue and expand its efforts to address potential disruptions in areas
where the Company relies on third parties. However, there can be no assurance
that any resulting year 2000 issues would not have a material adverse effect on
the Plan. The nature and focus of the Company's efforts to address the Year 2000
problem may be revised periodically as interim goals are achieved or new issues
are identified.
7. SUBSEQUENT EVENTS
-----------------
Effective January 1, 1999, hardship withdrawals that are attributable to
Before-Tax Contributions are no longer eligible for direct rollover to an IRA or
other qualified plan and are no longer subject to 20% mandatory federal income
tax withholding. The participant may elect whether or not to have income tax
withheld from such hardship withdrawals. If the participant does not make a
withholding election for such hardship withdrawal, federal income tax will be
withheld at a rate of 10%. Although the participant may no longer elect a direct
rollover of a hardship withdrawal attributable to Before-Tax Contributions, the
participant may elect to rollover a hardship withdrawal made during 1999
attributable to Before-Tax Contributions by having the withdrawal paid to the
participant and then contributing it to an IRA or other qualified plan within 60
days of the date the participant received it. Effective January 1, 2000,
hardship withdrawals attributable to Before-Tax Contributions will not be
eligible for any type of rollover.
12
<PAGE>
TRANSOCEAN OFFSHORE SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998
7. SUBSEQUENT EVENTS (CONTINUED)
-----------------------------
The Administrative Committee approved an amendment to the Plan, effective
January 1, 1999, to adopt the "Safe Harbor" methods in Section 401(k)(12) and
Section 401(m)(11) of the Code for satisfying the Section 401(k) and the Section
401(m) nondiscrimination testing.
Effective May 14, 1999, the Company completed a corporate reorganization
that resulted in the Company becoming a Cayman Islands corporation rather than a
Delaware corporation. The corporate reorganization had no effect on the Plan.
13
<PAGE>
ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
EIN: 72-0464968 PN: 002
DECEMBER 31, 1998
<TABLE>
<CAPTION>
Units/ Current
Identity of Issuer and Title Description Shares Cost Value
- ----------------------------- ----------- ------ ---- -------
<S> <C> <C> <C> <C>
Short-term Investments Cash N/A $ 75,308 $ 75,308
* Transocean Offshore Inc.
Common Stock Common Stock 406,000 11,473,826 10,885,875
Sonat Inc. Common Stock Common Stock 149,036 3,206,882 4,033,287
* Fidelity Ret. Government
Money Market Portfolio Mutual Fund 2,880,864 2,880,864 2,880,864
* Fidelity Puritan Fund Mutual Fund 227,612 4,014,637 4,568,182
* Fidelity Magellan Fund Mutual Fund 64,884 5,631,057 7,839,340
* Spartan U.S. Equity
Index Portfolio Mutual Fund 94,863 2,998,968 4,170,197
Templeton Foreign Fund I Mutual Fund 14,712 145,162 123,433
MAS Fixed Income Portfolio Mutual Fund 13,258 159,772 155,381
Neuberger & Berman
Partners Trust Mutual Fund 26,407 485,276 477,168
* Participant Loans Loans Receivable at 9.5% 191 N/A 1,288,597
- ----------------------------------------------------------------------------------------
Total Investments $31,071,752 $36,497,632
========================================================================================
</TABLE>
* Indicates a party-in-interest to the Plan.
14
<PAGE>
ITEM 27d - SCHEDULE OF REPORTABLE TRANSACTIONS
EIN: 72-0464968 PN: 002
FOR THE YEAR ENDED DECEMBER 31, 1998
Category (iii)
Series of transactions in excess of 5% of plan assets:
<TABLE>
<CAPTION>
Current
Value of
Number Cost Assets on Net
of Purchase Selling of Transaction Gain or
Identity of Party Involved Trades Price Price Asset Date (Loss)
- -------------------------- ------ -------- ------- ----- ----------- -------
<S> <C> <C> <C> <C> <C> <C>
Sonat Inc. Common Stock Fund 81 Purchases $ 1,034 $ 1,034 $ 1,034
78 Sales $2,006,326 1,077,238 2,006,326 $ 929,088
Transocean Offshore Inc. 238 Purchases 8,119,673 8,119,673 8,119,673
Common Stock Fund 206 Sales 5,414,583 4,403,986 5,414,583 1,010,597
Fidelity Retirement Government 174 Purchases 3,960,740 3,960,740 3,960,740
Money Market Portfolio 152 Sales 3,304,404 3,304,404 3,304,404 -
Fidelity Puritan Fund 177 Purchases 2,038,459 2,038,459 2,038,459
141 Sales 1,663,310 1,493,452 1,663,310 169,858
Fidelity Magellan Fund 198 Purchases 2,841,266 2,841,266 2,841,266
160 Sales 1,871,121 1,551,592 1,871,121 319,529
Spartan U.S. Equity Index Portfolio 186 Purchases 2,556,937 2,556,937 2,556,937
137 Sales 1,791,342 1,544,729 1,791,342 246,613
</TABLE>
15
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Transocean Offshore Savings Plan has duly caused this Annual Report on Form 11-K
to be signed on its behalf by the undersigned hereunto duly authorized, on the
23 day of June, 1999.
by TRANSOCEAN OFFSHORE SAVINGS PLAN
By /s/Marie B. Roberts
---------------------------
Marie B. Roberts
Plan Administrator
16
<PAGE>
EXHIBIT LIST
------------
Number
- ------
1. Consent of Independent Auditors Filed herewith
<PAGE>
EXHIBIT 1
CONSENT OF INDEPENDENT AUDITORS
-------------------------------
We consent to the incorporation by reference in the Registration Statement (Form
S-8 No. 33-66036) pertaining to the Transocean Offshore Savings Plan of
Transocean Offshore Inc. of our report dated June 11, 1999 with respect to the
financial statements and schedules of the Transocean Offshore Savings Plan
included in this Annual Report (Form 11-K) for the year ended December 31, 1998.
/s/Ernst & Young LLP
Houston, Texas
June 23, 1999
