[GLOBAL MARINE LOGO] NEWS RELEASE
GLOBAL MARINE INC. 777 N. ELDRIDGE PKWY., HOUSTON, TX 77079-4493
(281) 596-5100 FAX (281) 596-5163
CONTACT: Michael R. Dawson
281/596-5809
GLOBAL MARINE REPORTS FOURTH QUARTER AND FULL-YEAR 2000 RESULTS
-- Earnings Improve 282% from Fourth Quarter 1999 --
-- Two New Ultradeep-water Drillships Placed in Service During 2000 --
HOUSTON, January 18, 2001 -- Global Marine Inc. (NYSE:GLM) today
reported net income for the year ended December 31, 2000, of $113.9
million, or $0.64 per diluted share, on revenues of $1.0 billion.
This compares to net income of $89.5 million, or $0.51 per diluted
share, on revenues of $791 million for the year ended December 31,
1999.
For the quarter ended December 31, 2000, the company reported net
income of $40.9 million, or $0.23 per diluted share, on revenues of
$332 million, as compared to net income of $10.7 million, or $0.06
per diluted share, on revenues of $199 million for the same quarter
of 1999.
IMPROVED RESULTS
Global Marine Chairman, President and Chief Executive Officer Bob
Rose said, "Our industry had an eventful year in 2000 as oil and
gas prices soared and exploration and production companies stepped
up their drilling programs. During 2000, worldwide offshore rig
utilization increased to 82% from a year-end 1999 level of 72%. In
the Gulf of Mexico, utilization of jackup rigs approached 90%, and
dayrates for most classes of these rigs more than doubled."
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At Global Marine, seven rigs that had been idled for lack of work
returned to service during 2000, and two new ultradeep-water,
dynamically-positioned drillships began earning dayrate. By year-end
2000, Global Marine's rig utilization rate had increased to 91%
from 71% at the beginning of the year, and the two remaining idle
semisubmersible rigs were preparing to begin operations in the
first quarter of 2001.
"Our drilling management services segment achieved record levels of
activity during 2000," Rose said. "Over the course of the year, we
drilled 122 turnkey wells and captured a 65% share of the Gulf of
Mexico turnkey market. However, due to a number of difficult
wells, this segment's fourth quarter operating profit declined to
$2.1 million from $6.2 million for the same period in the previous
year." For the full year, drilling management services contributed
$21.6 million of operating profit, the third highest level in the
company's history.
POSITIVE OUTLOOK
Commenting on the outlook for 2001, Rose said, "Our business is
poised for very strong financial performance in the coming year.
Customer budgets are projected to increase an average of about 20%
in 2001, with activity in the international markets expected to
accelerate as the major oil companies refocus on internal growth
opportunities. In addition, the Gulf of Mexico rig market should
continue to tighten as the industry drills aggressively to meet the
need for new natural gas supplies."
"In 2001, Global Marine will also benefit from the full-year
contribution of the new drillships placed in service during 2000.
The GLOMAR C.R. LUIGS and the GLOMAR JACK RYAN are state-of-the-art
rigs and represent the culmination of a five-year capital investment
program to expand the company's deep-water capabilities.
During 2000, Global Marine's capital spending totaled $178 million
and was dominated by final construction and commissioning costs of
the two new drillships. "With these projects completed," said
Rose, "our anticipated capital requirements for 2001 will be reduced
by almost 50%."
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Nearly half of the company's preliminary capital budget for 2001 is
earmarked for rig upgrades to meet growing customer demand for deeper
and more highly deviated wells. "These enhancements are expected
to generate only minimal unpaid downtime," Rose added.
In answer to concerns about the speculative construction of new offshore
drilling rigs in the foreseeable future, Rose said, "Global Marine will
not build new rigs on a speculative basis. If and when the market demands
new rigs, term contracts will be available to support construction."
Houston-based Global Marine is one of the largest offshore drilling
contractors with an active fleet of 33 mobile rigs worldwide. In
addition, the company is the world's largest provider of offshore
drilling management services.
# # #
Global Marine's analyst conference call to discuss the
fourth quarter and full year 2000 earnings can be heard
live on the company's website (www.glm.com). The call
will begin at 9:30 a.m. Central Standard Time (10:30 a.m.
Eastern Standard Time) on Thursday, January 18, 2001. To
listen to the call, it is recommended that you login on
our website approximately 8 to 10 minutes prior to the
start of the conference call.
# # #
FORWARD-LOOKING STATEMENTS
Under the Private Securities Litigation Reform
Act of 1995, companies are provided a "safe
harbor" for discussing their expectations
regarding future performance. We believe it
is in the best interests of our stockholders
and the investment community to use these
provisions and provide such forward-looking
information. We do so in this news release
and in other communications. Our forward-
looking statements include things such
as the matters discussed under "Positive Outlook,"
including our statements that our business is
poised for a very strong financial performance
in the coming year; that customer budgets are
projected to increase an average of about 20%
in 2001, with activity in the international
markets expected to accelerate as the major oil
companies refocus on internal growth opportunities;
that the Gulf of Mexico rig market should continue
to tighten as the industry drills aggressively to
meet the need for new natural gas supplies; that in
2001 Global Marine will benefit from the full-year
contribution of the new drillships placed in service
during 2000; that our anticipated capital requirements
for 2001 will be reduced by almost 50%; that our rig
enhancements are expected to generate only minimal
unpaid downtime; that Global Marine will not build new
rigs on a speculative basis; that if and when the
market demands new rigs, term contracts will be available
to support construction; and other statements that are
not historical facts.
Our forward-looking statements speak only as
of the date of this news release and are based
on available industry, financial and economic
data and our operating plans as of that date.
They are also inherently uncertain,
and investors must recognize that events could
turn out to be materially different from what
we expect.
Factors that could cause or contribute to such
differences include, but are not limited to,
(a) changes in demand for our services resulting
from changes in our customer's budgets for their
oil and gas drilling programs worldwide or in certain
regions, which could be brought on by changes in oil
and gas prices or in operating costs due to general
economic trends affecting the need for oil and gas
or the prices for services and supplies, or by changes
affecting the risks of operating in international
markets, such as changes in political, economic,
trade, or regulatory climates; (b) renewed consolidation
or other corporate changes among the companies that
constitute our customer base; (c) the operational risks
and uncertainties inherent in offshore oil and gas
drilling, particularly on a turnkey basis;
(d) unanticipated drilling rig down-time due to mechanical
or operating problems, particularly on the newer and
more technologically advanced rigs or in connection with
the addition or operation of new rig enhancements; (e)
unanticipated rig upgrades to satisfy our customers'
needs or otherwise take advantage of new technological
advances; (f) fundamental changes in drilling markets,
such as a major shift away from term contracts and
toward well-to-well contracts; and (g) such other risk
factors as may be discussed in our latest annual report
on Form 10-K and subsequent reports filed with the
U.S. Securities and Exchange Commission.
We disclaim any obligation or undertaking to
disseminate any updates or revisions to our
statements, forward-looking or otherwise, to
reflect changes in our expectations or any
change in events, conditions or circumstances
on which any such statements are based.
<PAGE>
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GLOBAL MARINE INC. AND SUBSIDIARIES
Condensed Consolidated Statement of Income
(In millions, except per share amounts)
<CAPTION>
Three Months Ended Twelve Months Ended
December 31, December 31,
------------------ -------------------
2000 1999 2000 1999
----- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues:
Contract drilling $171.3 $103.1 $584.1 $507.7
Drilling management 154.5 92.4 435.6 275.0
Oil and gas 6.6 3.2 20.1 8.3
------ ------ ------- ------
Total revenues 332.4 198.7 1,039.8 791.0
Expenses:
Contract drilling 82.7 63.9 299.3 271.1
Drilling management 152.4 86.2 413.8 261.5
Oil and gas 1.1 0.6 3.4 2.7
Depreciation, depletion,
and amortization 29.4 23.1 107.0 88.8
Restructure costs - - 5.2 -
General and administrative 4.9 6.4 22.6 23.6
------ ------ ------ ------
Total operating expenses 270.5 180.2 851.3 647.7
------ ------ ------ ------
Operating income 61.9 18.5 188.5 143.3
Other income (expense):
Interest expense (14.0) (15.8) (63.6) (56.6)
Interest capitalized 3.6 8.9 26.4 25.9
Interest income 1.3 0.7 4.0 2.7
------ ------ ------ ------
Total other income (expense) (9.1) (6.2) (33.2) (28.0)
------ ------ ------ ------
Income before income taxes 52.8 12.3 155.3 115.3
Provision for income taxes:
Current tax provision 3.0 2.5 12.4 3.4
Deferred tax provision (benefit) 8.9 (0.9) 29.0 22.4
------ ------ ------ ------
Total provision for income taxes 11.9 1.6 41.4 25.8
------ ------ ------ ------
Net income $40.9 $10.7 $113.9 $89.5
====== ====== ====== ======
Earnings per share:
Basic $0.23 $0.06 $0.65 $0.51
Diluted $0.23 $0.06 $0.64 $0.51
Average common shares:
Basic 176.0 174.4 175.3 174.0
Diluted 179.9 177.4 179.3 176.8
</TABLE>
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<TABLE>
GLOBAL MARINE INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheet
(In millions)
<CAPTION>
December 31, December 31,
2000 1999
------------ ------------
<S> <C> <C>
Current assets:
Cash and cash equivalents $144.3 $83.3
Accounts receivable, net of allowances 189.7 101.1
Costs incurred on turnkey drilling
contracts in progress 11.2 12.9
Prepaid expenses 8.2 11.2
Future income tax benefits 50.0 -
Other current assets 1.4 4.5
------- -------
Total current assets 404.8 213.0
Net properties 1,940.1 1,868.6
Future income tax benefits 20.1 90.7
Other assets 31.8 92.2
------- -------
Total assets $2,396.8 $2,264.5
======= =======
Current liabilities:
Current maturities of long-term debt $ - $ 7.9
Accounts payable 116.7 94.0
Accrued liabilities 66.6 47.7
------- -------
Total current liabilities 183.3 149.6
Long-term debt 901.3 937.8
Capital lease obligation 17.3 17.5
Other long-term liabilities 24.0 24.6
Shareholders' equity:
Common stock and additional paid-in capital 367.7 346.0
Retained earnings 905.0 791.1
Accumulated other comprehensive loss (1.8) (2.1)
------- -------
Total shareholders' equity 1,270.9 1,135.0
------- -------
Total liabilities and shareholders' equity $2,396.8 $2,264.5
======= =======
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<TABLE>
GLOBAL MARINE INC. AND SUBSIDIARIES
Condensed Consolidated Statement of Cash Flows
(In millions)
<CAPTION>
Twelve Months Ended
December 31,
--------------------
2000 1999
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income $113.9 $89.5
Adjustments to reconcile net income to net
cash flow provided by operating activities:
Depreciation, depletion, and amortization 107.0 88.8
Deferred income taxes 29.0 22.4
(Increase) decrease in accounts receivable (89.3) 61.1
Decrease (increase) in costs incurred on turnkey
drilling contracts in progress 1.7 (6.3)
Decrease in prepaid expenses and other current assets 5.8 7.5
Decrease in noncurrent receivables 52.1 8.0
Increase (decrease) in accounts payable 22.7 (5.0)
Increase (decrease) in accrued liabilities 18.9 (5.2)
Other, net 18.8 11.1
------- -------
Net cash flow provided by operating activities 280.6 271.9
Cash flows from investing activities:
Capital expenditures (177.8) (448.1)
Proceeds from sales of properties and equipment 3.0 6.4
Other 0.3 (0.3)
------- -------
Net cash flow used in investing activities (174.5) (442.0)
Cash flows from financing activities:
Increases in long-term debt 754.2 604.0
Reductions of long-term debt (804.3) (409.1)
Proceeds from exercises of employee stock options 14.0 3.4
Debt issue costs (7.2) -
Other (1.8) (1.8)
------- -------
Net cash flow (used in) provided by
financing activities (45.1) 196.5
------- -------
Increase in cash and cash equivalents 61.0 26.4
Cash and cash equivalents at beginning of period 83.3 56.9
------- -------
Cash and cash equivalents at end of period $144.3 $83.3
======= =======
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<TABLE>
GLOBAL MARINE INC. AND SUBSIDIARIES
Results of Operations by Business Segment
(Dollars in millions, except for average dayrate)
<CAPTION>
Three Months Ended Twelve Months Ended
December 31, December 31,
------------------ -------------------
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues:
Contract drilling $172.0 $106.9 $589.2 $517.7
Drilling management 156.7 93.6 445.6 282.2
Oil and gas 6.6 3.2 20.1 8.3
Elimination (2.9) (5.0) (15.1) (17.2)
------ ------ ------ ------
Total revenues $332.4 $198.7 $1,039.8 $791.0
====== ====== ======= ======
Operating income:
Contract drilling $60.7 $18.2 $184.5 $153.5
Drilling management 2.1 6.2 21.6 13.3
Oil and gas 4.4 1.3 12.2 2.0
Restructure costs - - (5.2) -
Corporate expenses (5.3) (7.2) (24.6) (25.5)
------ ------ ------ ------
Total operating income 61.9 18.5 188.5 143.3
Interest expense, net of interest income (9.1) (6.2) (33.2) (28.0)
------ ------ ------ ------
Income before income taxes $52.8 $12.3 $155.3 $115.3
====== ====== ====== ======
Depreciation, depletion, and amortization
included in operating income:
Contract drilling $27.9 $21.0 $100.3 $ 83.1
Drilling management - - 0.2 0.2
Oil and gas 1.1 1.3 4.5 3.6
Corporate 0.4 0.8 2.0 1.9
------ ------ ------ ------
$29.4 $23.1 $107.0 $ 88.8
====== ====== ====== ======
Average rig utilization rate 90% 70% 84% 76%
Average dayrate $63,900 $53,000 $59,000 $59,600
Turnkey wells drilled 47 24 122 76
Turnkey well completions 6 7 27 16
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