<PAGE> 1
================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1995
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: 0-13857
NOBLE DRILLING CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 73-374541
(State of incorporation) (I.R.S. employer identification number)
10370 Richmond Avenue, Suite 400 77042
Houston, Texas (Zip code)
(Address of principal executive offices)
Registrant's telephone number, including area code: (713) 974-3131
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. Yes [X] No. [ ]
Number of shares of Common Stock outstanding as of November 7, 1995: 94,516,339
================================================================================
<PAGE> 2
FORM 10-Q
PART 1. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
NOBLE DRILLING CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1995 1994
------------- -------------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents. . . . . . . . . . . . . . . . . . . . . . . $ 55,987 $ 95,163
Restricted cash. . . . . . . . . . . . . . . . . . . . . . . . . . . . 908 898
Investment in marketable debt securities . . . . . . . . . . . . . . . 23,327 39,673
Investment in marketable equity securities . . . . . . . . . . . . . . 6,711 9,489
Accounts receivable. . . . . . . . . . . . . . . . . . . . . . . . . . 58,962 61,563
Costs of uncompleted contracts in excess of billings . . . . . . . . . 2,445 841
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,636 14,008
Other current assets . . . . . . . . . . . . . . . . . . . . . . . . . 26,204 18,584
---------- -----------
Total current assets . . . . . . . . . . . . . . . . . . . . . . 190,180 240,219
---------- -----------
PROPERTY AND EQUIPMENT
Drilling equipment and facilities. . . . . . . . . . . . . . . . . . . 846,346 804,445
Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22,179 20,461
---------- -----------
868,525 824,906
Accumulated depreciation . . . . . . . . . . . . . . . . . . . . . . . (343,266) (331,584)
---------- -----------
525,259 493,322
---------- -----------
OTHER ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,406 6,348
---------- -----------
$ 722,845 $ 739,889
========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Current installments of long-term debt and short-term debt . . . . . . $ 520 $ 6,244
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . 30,578 34,662
Accrued payroll and related costs. . . . . . . . . . . . . . . . . . . 13,032 14,888
Taxes payable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,565 12,972
Interest payable . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,463 2,853
Other current liabilities. . . . . . . . . . . . . . . . . . . . . . . 12,221 10,715
---------- -----------
Total current liabilities. . . . . . . . . . . . . . . . . . . . 74,379 82,334
LONG-TERM DEBT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 126,286 126,546
OTHER LIABILITIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,704 2,767
MINORITY INTEREST. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 322 631
---------- -----------
202,691 212,278
---------- -----------
SHAREHOLDERS' EQUITY
$2.25 Preferred stock. . . . . . . . . . . . . . . . . . . . . . . . . - 2,989
$1.50 Preferred stock. . . . . . . . . . . . . . . . . . . . . . . . . 4,025 4,025
Common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,445 7,808
Capital in excess of par value . . . . . . . . . . . . . . . . . . . . 589,624 590,733
Unrealized losses on marketable securities . . . . . . . . . . . . . . (368) (1,847)
Minimum pension liability. . . . . . . . . . . . . . . . . . . . . . . (3,825) (3,825)
Cumulative translation adjustment. . . . . . . . . . . . . . . . . . . (1,726) (2,325)
Accumulated deficit. . . . . . . . . . . . . . . . . . . . . . . . . . (76,569) (68,197)
Treasury stock, at cost. . . . . . . . . . . . . . . . . . . . . . . . (452) (1,750)
---------- -----------
520,154 527,611
---------- -----------
COMMITMENTS AND CONTINGENCIES. . . . . . . . . . . . . . . . . . . . . . . . - -
---------- -----------
$ 722,845 $ 739,889
========== ===========
</TABLE>
See notes to interim financial statements.
2
<PAGE> 3
FORM 10-Q
NOBLE DRILLING CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SEPTEMBER 30,
--------------------------------
1995 1994
---------- ----------
<S> <C> <C>
OPERATING REVENUES
Contract drilling services. . . . . . . . . . . . . . . . . . . . . . . $ 48,208 $ 59,029
Labor contract drilling services. . . . . . . . . . . . . . . . . . . . 7,255 9,223
Turnkey drilling services . . . . . . . . . . . . . . . . . . . . . . . 24,092 27,080
Engineering and consulting services . . . . . . . . . . . . . . . . . . 3,918 1,092
Other revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,179 1,636
--------- ----------
84,652 98,060
--------- ----------
OPERATING COSTS AND EXPENSES
Contract drilling services. . . . . . . . . . . . . . . . . . . . . . . 33,336 38,434
Labor contract drilling services. . . . . . . . . . . . . . . . . . . . 5,496 7,129
Turnkey drilling services . . . . . . . . . . . . . . . . . . . . . . . 20,413 22,702
Engineering and consulting services . . . . . . . . . . . . . . . . . . 2,228 1,073
Other expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 309 997
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . 9,083 10,152
Selling, general and administrative . . . . . . . . . . . . . . . . . . 10,643 15,407
Minority interest . . . . . . . . . . . . . . . . . . . . . . . . . . . (96) (50)
--------- ----------
81,412 95,844
--------- ----------
OPERATING INCOME . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,240 2,216
OTHER INCOME (EXPENSE)
Interest expense. . . . . . . . . . . . . . . . . . . . . . . . . . . . (3,040) (3,213)
Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,336 1,469
Other, net. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 831 3,437
--------- ----------
INCOME BEFORE INCOME TAXES . . . . . . . . . . . . . . . . . . . . . . . . . 2,367 3,909
INCOME TAX PROVISION . . . . . . . . . . . . . . . . . . . . . . . . . . . . (52) (1,413)
--------- ----------
NET INCOME . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,315 2,496
PREFERRED STOCK DIVIDENDS. . . . . . . . . . . . . . . . . . . . . . . . . . (1,509) (3,191)
--------- ----------
NET INCOME (LOSS) APPLICABLE TO COMMON SHARES. . . . . . . . . . . . . . . . $ 806 $ (695)
========= ==========
NET INCOME (LOSS) APPLICABLE TO COMMON SHARES
PER SHARE (See Note 4). . . . . . . . . . . . . . . . . . . . . . . . . . $ 0.01 $ (0.01)
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING . . . . . . . . . . . . . . . . . 95,487 77,894
</TABLE>
See notes to interim financial statements.
3
<PAGE> 4
FORM 10-Q
NOBLE DRILLING CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30,
----------------------------------
1995 1994
--------- ---------
<S> <C> <C>
OPERATING REVENUES
Contract drilling services. . . . . . . . . . . . . . . . . . . . . . . $ 145,743 $ 188,405
Labor contract drilling services. . . . . . . . . . . . . . . . . . . . 27,176 27,369
Turnkey drilling services . . . . . . . . . . . . . . . . . . . . . . . 58,785 42,309
Engineering and consulting services . . . . . . . . . . . . . . . . . . 8,371 2,448
Other revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,658 4,045
--------- ---------
243,733 264,576
--------- ---------
OPERATING COSTS AND EXPENSES
Contract drilling services. . . . . . . . . . . . . . . . . . . . . . . 98,512 120,387
Labor contract drilling services. . . . . . . . . . . . . . . . . . . . 20,401 21,489
Turnkey drilling services . . . . . . . . . . . . . . . . . . . . . . . 54,819 35,188
Engineering and consulting services . . . . . . . . . . . . . . . . . . 6,547 2,039
Other expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,715 2,642
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . 26,924 29,460
Selling, general and administrative . . . . . . . . . . . . . . . . . . 31,004 35,295
Minority interest . . . . . . . . . . . . . . . . . . . . . . . . . . . (139) 189
--------- ---------
240,783 246,689
--------- ---------
OPERATING INCOME . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,950 17,887
OTHER INCOME (EXPENSE)
Interest expense. . . . . . . . . . . . . . . . . . . . . . . . . . . . (9,122) (9,327)
Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,422 4,002
Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,796 15,131
--------- ---------
INCOME BEFORE INCOME TAXES . . . . . . . . . . . . . . . . . . . . . . . . . 46 27,693
INCOME TAX PROVISION . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,730) (4,678)
--------- ---------
NET (LOSS) INCOME. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,684) 23,015
PREFERRED STOCK DIVIDENDS. . . . . . . . . . . . . . . . . . . . . . . . . . (5,688) (9,574)
--------- ---------
NET (LOSS) INCOME APPLICABLE TO COMMON SHARES. . . . . . . . . . . . . . . . $ (8,372) $ 13,441
========= =========
NET (LOSS) INCOME APPLICABLE TO COMMON SHARES
PER SHARE (See Note 4). . . . . . . . . . . . . . . . . . . . . . . . . . $ (0.12) $ 0.17
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING . . . . . . . . . . . . . . . . . 88,024 77,275
</TABLE>
See notes to interim financial statements.
4
<PAGE> 5
FORM 10-Q
NOBLE DRILLING CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30,
---------------------------------
1995 1994
---------- ----------
<S> <C> <C>
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES
Net (loss) income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (2,684) $ 23,015
Adjustments to reconcile net (loss) income to net cash . . . . . . . . . .
provided by operating activities:
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . 26,924 29,460
Loss (gain) on sale of assets . . . . . . . . . . . . . . . . . . . . . 104 (8,772)
Loss on foreign exchange . . . . . . . . . . . . . . . . . . . . . . . 153 528
Deferred income tax (benefit) provision . . . . . . . . . . . . . . . . (1,288) 2,949
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (760) (6,180)
Changes in current assets and liabilities:
Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . 4,572 22,458
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . (7,423) 12,675
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . (3,260) (9,822)
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . 2,721 (12,255)
--------- ----------
19,059 54,056
--------- ----------
CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES
Purchase of property and equipment . . . . . . . . . . . . . . . . . . . . . (62,226) (36,360)
Proceeds from acquisition, net of negative non-cash working capital
of $3,532 acquired . . . . . . . . . . . . . . . . . . . . . . . . . . . -- 13,600
Proceeds from sale of property and equipment . . . . . . . . . . . . . . . . 1,179 12,748
Sale of (investment in) marketable securities. . . . . . . . . . . . . . . . 17,825 (3,505)
Sale of (investment in) unconsolidated affiliate and equity securities . . . 3,187 (263)
Payments to minority interest holders, net . . . . . . . . . . . . . . . . . -- (4,478)
--------- ----------
(40,035) (18,258)
--------- ----------
CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES
Payment of long-term debt. . . . . . . . . . . . . . . . . . . . . . . . . . (260) (279)
Dividends paid on preferred stock. . . . . . . . . . . . . . . . . . . . . . (8,879) (9,574)
Issuance of common stock, net of preferred conversion payment. . . . . . . . (1,163) 2,380
Payment of short-term debt . . . . . . . . . . . . . . . . . . . . . . . . . (5,724) (1,566)
Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,401) (136)
--------- ----------
(18,427) (9,175)
--------- ----------
EFFECT OF EXCHANGE RATE CHANGES ON CASH . . . . . . . . . . . . . . . . . . . . 227 (94)
--------- ----------
DECREASE IN CASH AND CASH EQUIVALENTS . . . . . . . . . . . . . . . . . . . . . (39,176) 26,529
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD. . . . . . . . . . . . . . . . . 95,163 69,177
--------- ----------
CASH AND CASH EQUIVALENTS, END OF PERIOD. . . . . . . . . . . . . . . . . . . . $ 55,987 $ 95,706
========= ==========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period for:
Interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 5,781 $ 5,852
Income taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 4,357 $ 3,094
Noncash investing and financing activities:
Triton acquisition with common stock. . . . . . . . . . . . . . . . . . . $ 1,500 $ 5,169
Triton acquisition with notes payable . . . . . . . . . . . . . . . . . . $ -- $ 4,000
Triton acquisition, minority interest assumed . . . . . . . . . . . . . . $ -- $ 5,392
</TABLE>
See notes to interim financial statements.
5
<PAGE> 6
NOBLE DRILLING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN TABLES ARE IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
NOTE 1 -- BASIS OF ACCOUNTING
The Consolidated Balance Sheet as of September 30, 1995 of Noble Drilling
Corporation ("Noble Drilling" or, together with its consolidated subsidiaries,
unless the context requires otherwise, the "Company"), the related Consolidated
Statements of Operations for the three-month and nine-month periods ended
September 30, 1995 and 1994 and Consolidated Statements of Cash Flows for the
nine-month periods ended September 30, 1995 and 1994 are unaudited. In the
opinion of management, all adjustments, consisting only of normal recurring
adjustments, necessary for a fair presentation of such financial statements
have been included. These interim financial statements and notes are presented
in condensed form as permitted by Form 10-Q.
On September 15, 1994, the Company completed the merger of Chiles Offshore
Corporation ("Chiles") with a wholly owned subsidiary of Noble Drilling (the
"Chiles Merger"). The consolidated financial statements reflect the
restatement of the Company's historical financial statements to reflect the
Chiles Merger as a pooling of interests as of the beginning of the earliest
period presented.
Certain reclassifications have been made to the 1994 consolidated financial
statements to conform to the classifications used in the 1995 consolidated
financial statements.
NOTE 2 -- CONVERSION OF $2.25 CONVERTIBLE EXCHANGEABLE PREFERRED STOCK
In March 1995, an aggregate of 923,862 shares of Noble Drilling's $2.25
Convertible Exchangeable Preferred Stock ("$2.25 Preferred Stock") were
converted into 5,006,830 shares of Noble Drilling common stock. The Company
paid an aggregate of approximately $1.5 million in cash ("Preferred Conversion
Payment") in the first quarter of 1995 in connection with this conversion. In
the second quarter of 1995, the Company called for redemption all remaining
outstanding shares of the $2.25 Preferred Stock. Of the 2,065,238 shares then
outstanding, 2,062,537 were surrendered for conversion and 2,701 were redeemed
by the Company, resulting in the Company's issuance of 11,192,359 shares of
common stock (including 14,637 shares sold to a standby underwriter).
NOTE 3 - CHANGE IN ACCOUNTING ESTIMATES
Effective January 1, 1995, the Company revised its estimates of salvage
values and remaining depreciable lives of certain rigs to better reflect their
economic lives and to be consistent with other similar assets owned by the
Company. The effect of this change in estimates was a decrease in the net loss
applicable to common shares for the nine-month period ended September 30, 1995
of $3.3 million, or $0.04 per share. If the change in estimates had been made
on January 1, 1994, net income applicable to common shares for the nine-month
period ended September 30, 1994 would have been increased by approximately $2.5
million, or $0.03 per share.
NOTE 4 - NET INCOME (LOSS) APPLICABLE TO COMMON SHARES PER SHARE
Net income (loss) applicable to common shares per share has been computed
on the basis of the weighted average number of common shares and, where
dilutive, common share equivalents outstanding during the indicated periods.
The calculation of net income (loss) applicable to common shares per share
assuming full dilution was antidilutive; therefore, fully diluted amounts are
not presented. The Preferred Conversion Payment of approximately $1.5 million
in March 1995 was accounted for as a reduction of net earnings applicable to
common shares for purposes of calculating the net loss per common share. This
accounting treatment increased the net loss applicable to common shares per
share from $0.10 to $0.12 for the nine-month period ended September 30, 1995.
NOTE 5 - MERGER AND ACQUISITION
The Chiles Merger was consummated on September 15, 1994, through the
exchange of 28,598,777 shares of Noble Drilling common stock for all the
outstanding shares of common stock of Chiles. In addition, 4,025,000 shares of
$1.50 Convertible Preferred Stock ("$1.50 Preferred Stock") were issued at the
time of the Chiles Merger and exchanged for all of the outstanding shares of
the Chiles $1.50 convertible preferred stock. Noble Drilling also issued
480,000 shares of its common stock in exchange for the cancellation of
outstanding Chiles stock options. The Chiles Merger was accounted for as a
pooling of interests and all financial information for the current and prior
periods has been restated to reflect this merger.
6
<PAGE> 7
NOBLE DRILLING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN TABLES ARE IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
On April 22, 1994, the Company acquired all of the issued and outstanding
shares of common stock (the "Shares") of Triton Engineering Services Company
("Triton") pursuant to the terms of the Stock Purchase Agreement dated April
22, 1994 ("Triton Acquisition"). In consideration for the Shares, the Company
paid $4,085,000 in cash, issued promissory notes in the aggregate amount of
$4,000,000 and issued 751,864 shares of Noble Drilling common stock valued at
$5,169,000. The promissory notes were paid on October 21, 1994. In addition,
the Company has a contingent obligation on April 22, 1996 to pay additional
consideration of up to 254,551 shares of Noble Drilling common stock. As of
September 30, 1995, the Company has recorded a liability of $1.5 million
related to this obligation. The Triton Acquisition has been accounted for
under the purchase method, and accordingly, the operating results have been
included in the consolidated operating results since the date of acquisition.
The following table summarizes certain unaudited pro forma condensed
consolidated results of operations information that gives effect to the Triton
Acquisition as if this transaction had occurred on January 1, 1994.
<TABLE>
<CAPTION>
NINE MONTHS
ENDED
SEPTEMBER 30, 1994
------------------
<S> <C>
Operating revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 290,711
Net income applicable to common shares . . . . . . . . . . . . . . . . . $ 13,535
Net income applicable to common shares per share . . . . . . . . . . . . $ 0.17
</TABLE>
NOTE 6 - MARKETABLE SECURITIES
During 1994, the Company adopted Statement of Financial Accounting
Standards ("SFAS") No. 115, "Accounting for Certain Investments in Debt and
Equity Securities." Under the provisions of SFAS No. 115, investments in debt
and equity securities are required to be classified into one of three
categories: held to maturity, available for sale or trading securities. At
each reporting date, the appropriateness of such classification is required to
be reassessed.
As of September 30, 1995, the Company classified all of its debt
securities, with original maturities of three months or more, as available for
sale. These investments are classified as marketable securities within current
assets on the accompanying consolidated balance sheets. The following table
highlights information applicable to the Company's investments classified as
available for sale as of September 30, 1995:
<TABLE>
<CAPTION>
NET
AMORTIZED UNREALIZED
DEBT SECURITY/MATURITY COST FAIR VALUE (LOSSES)
---------------------- --------- ---------- ------------
<S> <C> <C> <C>
Corporate Obligations:
Mature within 1 year. . . . . . . . . . . . . $ 1,521 $ 1,520 $ (1)
Mature after 1 year through 5 years . . . . . 2,136 2,120 (16)
--------- ------------ ----------
3,657 3,640 (17)
--------- ------------ ----------
U.S. Government Obligations:
Mature within 1 year . . . . . . . . . . . . 6,505 6,408 (97)
Mature after 1 year through 3 years . . . . . 13,562 13,279 (283)
--------- ------------ ----------
20,067 19,687 (380)
--------- ------------ ----------
Total . . . . . . . . . . . . . . . . . . . . . $ 23,724 $ 23,327 $ (397)
========= ============ ==========
</TABLE>
An allowance for unrealized losses has been included as a reduction of
shareholders' equity. Total realized losses related to short-term investments
for the nine-month period ended September 30, 1995 amounted to $15,000.
The Company categorizes its investments in marketable equity securities of
$6.7 million as trading securities and such investments are classified as
current assets and are recorded at fair value at September 30, 1995. Total net
unrealized and realized gains related to these equity investments for the
nine-month period ended September 30, 1995 were $699,000 and $275,000,
respectively. Total net unrealized and realized gains related to these equity
investments for the three-month period ended September 30, 1995 were $486,000
and $28,000, respectively.
7
<PAGE> 8
FORM 10-Q
NOTE 7 - SUPPLEMENTAL LOSS PER SHARE DISCLOSURE
Assuming that all shares of $2.25 Preferred Stock had been converted on
January 1, 1995 (see Notes 2 and 4 above), the supplemental primary net loss
applicable to common shares per share for the nine months ended September 30,
1995 would have changed from $0.12 to $0.08. Supplemental fully diluted net
loss applicable to common shares per share for the nine months ended September
30, 1995 is the same as supplemental primary net loss applicable to common
shares per share since the effect of the conversion is anti-dilutive.
NOTE 8 - STOCKHOLDER RIGHTS PLAN
The Company adopted a stockholder rights plan on June 28, 1995 designed to
assure that the Company's stockholders receive fair and equal treatment in the
event of any proposed takeover of the Company and to guard against partial
tender offers and other abusive takeover tactics to gain control of the Company
without paying all stockholders a fair price. The rights plan was not adopted
in response to any specific takeover proposal. Under the rights plan, the
Company declared a dividend of one right ("Right") on each share of Noble
Drilling common stock. Each Right will entitle the holder to purchase one
one-hundredth of a share of a new Series A Junior Participating Preferred
Stock, par value $1.00 per share, at an exercise price of $35.00. The Rights
are not currently exercisable and will become exercisable only in the event a
person or group acquires beneficial ownership of 15 percent or more of Noble
Drilling's outstanding common stock or announces a tender offer or exchange
offer to acquire such ownership level. The Rights are subject to redemption by
the Company for $.01 per Right at any time prior to the tenth day after the
first public announcement of the acquisition by any person or group of
beneficial ownership of 15 percent or more of Noble Drilling common stock. The
dividend distribution was made on July 10, 1995 to stockholders of record at
the close of business on that date. The Rights will expire on July 10, 2005.
NOTE 9 - SUBSEQUENT EVENT
On November 3, 1995, the Company entered into a financing agreement for a
period of 18 months related to the renewal of its Marine Package, Protection and
Indemnity, and Excess Liability insurances. The insurance premium aggregated
$17.4 million at a variable interest rate starting at 6.23%. The financing
agreement calls for a cash down payment of $1.6 million and monthly payments of
$974,175 beginning December 1, 1995.
8
<PAGE> 9
FORM 10-Q
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
GENERAL
THE COMPANY
The Company's offshore fleet at September 30, 1995 consisted of 44 rigs,
comprising 32 jack-up drilling rigs, eight submersible rigs and four posted
barges. As of September 30, 1995, the offshore fleet was diversified
geographically as follows: U.S. Gulf - 27 rigs; Mexican Gulf - one rig; West
Africa - 10 rigs; Venezuela - four rigs; Qatar - one rig; and India - one rig.
Subsequently, the Company commenced preparation of one rig to be mobilized from
the U. S. Gulf to Senegal, Africa. The Company's offshore operations also
include labor contracts for drilling and workover activities covering 14 rigs
operating in the U.K. sector of the North Sea and one rig operating in the
Middle East. These rigs are not owned or leased by the Company. Through its
wholly owned subsidiary, Triton Engineering Services Company ("Triton"), the
Company provides turnkey drilling services and other engineering and consulting
services to the oil and gas industry. The Company's land drilling operations
are conducted principally in Canada, Texas and Louisiana with an active fleet
of 20 land drilling rigs.
On November 3, 1995, the Company completed the purchase of two 300-foot
independent leg jack-up rigs, the Azteca and the Maya, for a total of
approximately $10.1 million in cash.
As used herein, unless otherwise required by the context, "Noble Drilling"
refers to Noble Drilling Corporation and the "Company" refers to Noble Drilling
and its consolidated subsidiaries.
INDUSTRY CONDITIONS AND RISKS
The Company's operating strategy has been to pursue drilling opportunities
in the U.S. and in certain international markets. Worldwide drilling
conditions vary substantially from region to region; however, the Company
operates in most markets where there is a demand for offshore drilling rigs.
During late 1992, U.S. natural gas prices improved, resulting in greater
demand and higher dayrates for drilling rigs. Increasing U.S. natural gas
prices resulted in significant improvements in the U.S. Gulf of Mexico ("U.S.
Gulf") rig demand and dayrates during the second half of 1993. Declining
world oil prices during this period reduced rig demand outside the U.S. Gulf.
As a result of declining international rig demand and improved market
conditions in the U.S. Gulf, certain contractors mobilized rigs from
international markets to the U.S. Gulf in late 1993 and early 1994. The
increased supply of drilling rigs in the U.S. Gulf more than offset the
increased level of U.S. Gulf rig demand during 1994 and the first half of 1995,
causing dayrates to deteriorate. Some improvement in dayrates has occurred
during the third quarter of 1995.
U.S. natural gas prices have declined from a several year high in February
1994 to a low which had not existed since mid-1992, and have remained
relatively flat since September 1994. Oil prices have improved slightly during
the same period. The average dayrate charged by the Company in the first nine
months of 1995 in the U.S. Gulf was 14 percent lower than the average dayrate
charged by the Company in the first nine months of 1994. If the price of
natural gas remains at current levels indefinitely, the Company's dayrates and
utilization rates in the U.S. Gulf could be adversely affected. The Company
also believes that, absent further improvement in rig demand outside the U.S.
Gulf, the supply of rigs in the U.S. Gulf could continue to cause pressure on
dayrates and utilization levels of the Company's rig fleet through 1995 and
into 1996. The Company cannot predict either the future level of demand for
its drilling services or future conditions in the offshore contract drilling
industry.
A major portion of the Company's revenues has been attributable to
international operations. Revenues from international sources accounted for
approximately 48 percent of the Company's operating revenues for both the
nine-month period ended September 30, 1995 and the year ended December 31,
1994.
Currently, the Company has seven offshore drilling units under contract
and two offshore drilling rigs available for bidding in Nigeria. The Company
maintains war and political risk insurance (covering physical damage or loss up
to the insured value of each rig), subject, in the case of certain coverages,
to immediate termination upon the occurrence of certain events or upon
termination by the underwriter on seven days' notice. Revenues from drilling
activities in Nigeria accounted for approximately 12 percent and 13 percent,
respectively, of the Company's operating revenues for the nine-month period
ended September 30, 1995 and the year ended December 31, 1994. No assurance can
be given that the political and economic climate in Nigeria will remain stable
or that it will not worsen.
9
<PAGE> 10
FORM 10-Q
The Company began to operate in Venezuela in late 1993. The Company's
operations commenced with four rigs under long-term contracts with Lagoven, a
subsidiary of the government-owned oil company of Venezuela. The contracts
with Lagoven relative to these four rigs expired in the first quarter of 1995.
The Company has subsequently contracted two of the four rigs with Lagoven under
new long-term contracts terminating in the year 2000. A third rig completed
refurbishment in the third quarter of 1995 and has commenced work under a
long-term contract with Shell de Venezuela S.A. This contract extends through
June 1997. The Company's fourth rig in Venezuela is currently operating on a
well-to-well basis for Lagoven. The Company is actively pursuing long-term
commitments for this rig in Venezuela and elsewhere. In recent periods, the
Venezuelan economy has experienced high inflation and a shortage of foreign
currency. During a banking crisis in July 1994, the Venezuelan government
imposed a program of currency exchange controls and taxes on certain financial
transactions that temporarily limited the ability of the government-owned oil
companies and their affiliates to make payment in U.S. dollars or other hard
currencies to oilfield service contractors. The Company's operations have not
been materially affected, and the Company continues to receive timely payment
for its services in U.S. dollars. Although timely U.S. dollar payments are
currently being made to the Company, future exchange control actions of the
Venezuelan government could adversely affect the Company's operations in
Venezuela. Revenues from drilling activities in Venezuela accounted for
approximately 10 and nine percent, respectively, of the Company's operating
revenues for the nine-month period ended September 30, 1995 and the year ended
December 31, 1994.
At the beginning of 1995, the Company had two rigs under long-term
contracts offshore Mexico. During the second quarter of 1995, both contracts
expired. The Company currently has one drilling unit working under a term
contract in the Bay of Campeche, Mexico. Mobilization of the second rig to
offshore Qatar was completed during the third quarter of 1995, and this rig has
been awarded a three-year term contract commencing during the fourth quarter of
1995.
SELECTED FINANCIAL INFORMATION
The following table sets forth selected consolidated financial information
of the Company expressed as a percentage of total operating revenues for the
periods indicated.
<TABLE>
<CAPTION>
THREE MONTHS ENDED SEPTEMBER 30, NINE MONTHS ENDED SEPTEMBER 30,
-------------------------------- -------------------------------
1995 1994 1995 1994
---------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Operating revenues
Contract drilling services
International offshore . . . . . . . . . . . . 27.8% 24.6% 28.0% 30.2%
Domestic offshore . . . . . . . . . . . . . . 24.0 28.5 23.7 33.2
International land . . . . . . . . . . . . . . 1.3 4.9 4.5 5.3
Domestic land . . . . . . . . . . . . . . . . 3.9 2.2 3.6 2.5
Labor contract drilling services. . . . . . . . . 8.6 9.4 11.2 10.4
Turnkey drilling services . . . . . . . . . . . . 28.5 27.6 24.1 16.0
Engineering and consulting services . . . . . . . 4.6 1.1 3.4 0.9
Other revenue . . . . . . . . . . . . . . . . . . 1.3 1.7 1.5 1.5
------ ------ ------ ------
100.0 100.0 100.0 100.0
Operating costs (1) . . . . . . . . . . . . . . . . (73.0) (71.7) (75.1) (68.7)
Depreciation and amortization . . . . . . . . . . . (10.7) (10.4) (11.1) (11.1)
Selling, general and administrative . . . . . . . . (12.6) (15.7) (12.7) (13.3)
Minority interest . . . . . . . . . . . . . . . . . 0.1 0.1 0.1 (0.1)
------ ------ ------ ------
Operating income . . . . . . . . . . . . . . . . . 3.8 2.3 1.2 6.8
Interest expense . . . . . . . . . . . . . . . . . (3.6) (3.3) (3.7) (3.5)
Interest income . . . . . . . . . . . . . . . . . . 1.6 1.5 1.8 1.5
Other, net . . . . . . . . . . . . . . . . . . . . 1.0 3.5 0.7 5.7
------ ------ ------ ------
Income before income tax . . . . . . . . . . . . . 2.8 4.0 0.0 10.5
Income tax provision. . . . . . . . . . . . . . . . (0.1) (1.4) (1.1) (1.8)
------ ------ ------ ------
Net income (loss) . . . . . . . . . . . . . . . . . 2.7 2.6 (1.1) 8.7
Preferred Stock dividends . . . . . . . . . . . . . (1.8) (3.3) (2.3) (3.6)
------ ------ ------ ------
Net income (loss) applicable to common shares . . . 0.9% (0.7%) (3.4%) 5.1%
====== ====== ====== ======
</TABLE>
(1) Consists of operating costs and expenses other than depreciation and
amortization, selling, general and administrative, and minority interest.
10
<PAGE> 11
FORM 10-Q
RESULTS OF OPERATIONS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994
OPERATIONAL REVIEW. During the three-month period ended September 30, 1995
(the "Current Quarter"), the Company generated operating revenues of $84.7
million compared to $98.1 million during the three-month period ended September
30, 1994 (the "Comparable Quarter"). The decrease in operating revenues was
primarily due to a softer market in the U.S. Gulf, lower international
utilization, and the effect of strategic relocation of assets into
international markets.
The utilization rate for the Company's domestic offshore rig fleet was 84
percent in the Current Quarter compared to 87 percent in the Comparable
Quarter. The Company's international offshore rig utilization rate decreased to
71 percent during the Current Quarter from 79 percent in the Comparable Quarter
due to the relocation of assets noted above. At September 30, 1995, the
Company had 15 rigs under labor contracts on operator-owned rigs in its
international operations compared to 16 rigs at the end of the Comparable
Quarter. The Company's domestic land rig utilization rate was 78 percent in the
Current Quarter as compared to 46 percent in the Comparable Quarter. The
utilization rate for the Company's international land rig fleet decreased to 21
percent in the Current Quarter compared to 87 percent in the Comparable
Quarter. The decrease in international land utilization was due primarily to
fluctuation in natural gas prices and seasonal activity.
Gross margins from contract drilling operations were $14.9 million, or 31
percent of contract drilling revenues, in the Current Quarter as compared to
$20.6 million, or 35 percent of drilling revenues, in the Comparable Quarter.
The decrease in gross margins was principally due to fewer operating days and
lower average dayrates from the domestic contract drilling operations. Labor
contract gross margins were $1.8 million, or 24 percent of labor contract
revenues, in the Current Quarter compared to $2.1 million, or 23 percent of
labor contract revenues, in the Comparable Quarter. Turnkey drilling
operations gross margins decreased to $3.7 million, or 15 percent of turnkey
drilling revenues, in the Current Quarter compared to gross margins of $4.4
million, or 16 percent of turnkey drilling revenues, in the Comparable Quarter.
DEPRECIATION AND AMORTIZATION EXPENSE. Depreciation and amortization
expenses were $9.1 million in the Current Quarter as compared to $10.2 million
in the Comparable Quarter, a decrease of 11 percent. In the first quarter of
1995, estimated salvage values and remaining depreciable lives of certain rigs
were adjusted to better reflect their remaining economic lives and to be
consistent with other similar assets held by the Company. The effect of this
change in accounting estimates was an increase to the Current Quarter net
income applicable to common shares of approximately $1.1 million, or $0.01 per
share.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative ("SG&A") expenses were $10.6 million in the Current Quarter
compared to $15.4 million in the Comparable Quarter. The 31 percent decrease in
SG&A expenses was principally attributable to reductions in overhead achieved
as a result of restructuring and consolidation efforts which commenced in the
fourth quarter of 1994. Reported SG&A costs include field office expenses of
$6.8 million in the Current Quarter compared to $7.9 in the Comparable Quarter.
INTEREST INCOME (EXPENSE). Interest expense, net of interest income, was
$1.7 million in the Current Quarter, unchanged from the Comparable Quarter.
OTHER, NET. Other, net was $831,000 in the Current Quarter as compared to
$3.4 million in the Comparable Quarter. The decrease in other, net was due
primarily to $3.1 million of net gains on the Company's marketable securities
in the Comparable Quarter.
TAX. Income tax provision for the Current Quarter was $52,000 compared to
$1.4 million in the Comparable Quarter. The Current Quarter income tax
provision includes a tax benefit of $800,000 resulting from the application of
carry-back losses from the Current Quarter to pre-1995 taxable income.
11
<PAGE> 12
FORM 10-Q
RESULTS OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994
OPERATIONAL REVIEW. During the nine-month period ended September 30, 1995
(the "Current Period"), the Company generated operating revenues of $243.7
million compared to $264.6 million during the nine-month period ended September
30, 1994 (the "Comparable Period"). The eight percent decline in operating
revenues was primarily due to a decrease in offshore contract drilling services
revenues, partially offset by revenues of Triton, which was acquired in April
1994.
The utilization rate for the Company's domestic offshore rig fleet was 80
percent in the Current Period, unchanged from the Comparable Period. The
Company's international offshore rig utilization rate decreased to 74 percent
during the Current Period from 83 percent in the Comparable Period. At
September 30, 1995, the Company had 15 rigs under labor contracts on
operator-owned rigs in its international operations compared to 16 rigs at the
end of the Comparable Period. The Company's domestic land rig utilization rate
was 69 percent in the Current Period as compared to 47 percent in the
Comparable Period. The utilization rate for the Company's international land
rig fleet decreased to 55 percent in the Current Period from 76 percent in the
Comparable Period.
Gross margins from contract drilling operations were $47.2 million, or 32
percent of contract drilling revenues, in the Current Period as compared to
$68.0 million, or 36 percent of drilling revenues, in the Comparable Period.
The decrease in gross margins was principally due to fewer operating days and
lower average dayrates from the contract drilling operations in the Current
Period. Labor contract gross margins were $6.8 million, or 25 percent of labor
contract revenues, in the Current Period compared to $5.9 million, or 21
percent of labor contract revenues, in the Comparable Period. Turnkey drilling
operations gross margins were $4.0 million, or seven percent of turnkey
drilling revenues, in the Current Period compared to a gross margin of $7.1
million, or 17 percent of turnkey drilling revenues, in the Comparable Period.
This decrease was primarily due to losses resulting from operational issues.
DEPRECIATION AND AMORTIZATION EXPENSE. Depreciation and amortization
expenses were $26.9 million in the Current Period as compared to $29.5 million
in the Comparable Period. The decrease of $2.6 million was due to a change in
accounting estimates. In the first quarter of 1995, estimated salvage values
and remaining depreciable lives of certain rigs were adjusted to better reflect
their remaining economic lives and to be consistent with other similar assets
held by the Company. The effect of this change in accounting estimates was a
decrease in the Current Period net loss applicable to common shares of
approximately $3.3 million, or $0.04 per share.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative ("SG&A") expenses were $31.0 million in the Current Period
compared to $35.3 million in the Comparable Period. The decrease was
principally due to reductions in overhead achieved as a result of restructuring
and consolidation efforts which commenced in the fourth quarter of 1994.
Reported SG&A costs include field office expenses of $19.6 million in the
Current Period compared to $17.3 million in the Comparable Period.
INTEREST INCOME (EXPENSE). Interest expense, net of interest income, was
$4.7 million in the Current Period compared to $5.3 million in the Comparable
Period. This net decrease of $600,000 was principally due to higher average
interest rates earned on the Company's investments in the Current Period.
OTHER, NET. Other, net was $1.8 million in the Current Period as compared
to $15.1 million in the Comparable Period. The decrease in other, net was
primarily due to an $8.0 million gain on the sale of a drilling unit, a net
gain of $3.1 million related to the Company's marketable securities and a gain
of $1.6 million from the recovery of a previously written-off note receivable
in the Comparable Period.
TAX. Income tax provision for the Current Period was $2.7 million compared
to $4.7 million for the Comparable Period. The Current Period income tax
provision includes a tax benefit of $800,000 resulting from application of
carry-back losses from the Current Period to pre-1995 taxable income.
12
<PAGE> 13
FORM 10-Q
LIQUIDITY AND CAPITAL RESOURCES
OVERVIEW
The Company had working capital of $115.8 million and $157.9 million as of
September 30, 1995 and December 31, 1994, respectively. The decrease in
working capital was primarily due to increased capital expenditures during the
Current Quarter. The ratio of current assets to current liabilities at
September 30, 1995 was 2.56:1 as compared to 2.92:1 at December 31, 1994. The
ratio of long-term debt to total debt plus shareholders' equity was 0.20:1 at
September 30, 1995, compared to 0.19:1 at December 31, 1994.
At September 30, 1995, the Company had cash, cash equivalents, restricted
cash and investments in marketable debt securities of $80.2 million and had
$26.0 million of funds available under various lines of credit. The Company
expects to generate positive cash flow from operations for the remainder of
1995 and the first nine months of 1996, assuming no material decrease in demand
for contract drilling and turnkey services. The Company will continue to have
cash requirements for debt principal and interest payments and preferred
dividends, when and if declared. For the remainder of 1995 and the first nine
months of 1996, debt principal and interest payments are estimated to be
approximately $14.1 million. Cumulative dividends on the $1.50 Preferred Stock
for the remainder of 1995 and the first nine months of 1996 are approximately
$6.0 million. The Company expects to fund these obligations, totaling $20.1
million, out of cash and short-term investments as well as cash expected to be
provided by operations.
Capital expenditures for the remainder of 1995 and the first nine months of
1996 are planned to aggregate approximately $85.0 million, of which the
majority are discretionary and relate to upgrades of equipment which management
considers desirable to improve the marketability of the fleet, but which could
be deferred if necessary. These capital expenditures will be funded from
operating cash flows to the extent available, existing cash balances and/or
available lines of credit.
CREDIT FACILITIES AND LONG-TERM DEBT
At September 30, 1995, the Company had lines of credit totaling $31.0
million and letter of credit facilities totaling $5.0 million, subject to the
Company's maintenance of certain levels of collateral. Based on levels of
collateral at September 30, 1995, the Company had $26.0 million available under
these lines of credit and $2.7 million available to support the issuance of
letters of credit.
In connection with the initial construction of the NN-1, the predecessor of
NN-1 Limited Partnership issued U.S. Government Guaranteed Ship Financing
Sinking Fund Bonds, of which $1.8 million was outstanding at September 30,
1995. Interest and principal is payable semi-annually on June 15 and December
15 of each year with interest at 8.95 percent, and the bonds mature in 1998.
The bonds are secured by the vessel, and the applicable security agreement
contains certain restrictions, among others, on distributions to partners,
dispositions of assets, and the provision of services to related parties. In
addition, there are minimum working capital, net worth and long-term debt to
net worth requirements applicable to NN-1 Limited Partnership. The Company's
sharing percentage in NN-1 Limited Partnership's distributions from operations
is generally 90 percent.
In 1993, the Company issued $125,000,000 aggregate principal amount of
9 1/4% Senior Notes Due 2003 (the "Senior Notes"). The Senior Notes will mature
on October 1, 2003. Interest on the Senior Notes is payable semi-annually on
April 1 and October 1 of each year. The Senior Notes are redeemable at the
option of the Company, in whole or in part, on or after October 1, 1998 at
103.47 percent of principal amount, declining ratably to par on or after
October 1, 2001, plus accrued interest. Mandatory sinking fund payments of 25
percent of the original principal amount of the Senior Notes at par plus
accrued interest will be required on October 1, 2001 and October 1, 2002. The
indenture governing the Senior Notes contains certain restrictive covenants,
including limitations on additional indebtedness and the ability to secure such
indebtedness; restrictions on dividends and certain investments; and
limitations on sales of assets, sales and leasebacks, transactions with
affiliates, and mergers or consolidations.
13
<PAGE> 14
FORM 10-Q
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
The information required by this Item 6(a) is set forth in the Index to
Exhibits accompanying this quarterly report and is incorporated herein by
reference.
(b) No reports on Form 8-K were filed by the Company during the quarter
ended September 30, 1995.
14
<PAGE> 15
FORM 10-Q
SIGNATURES
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 thereunto duly authorized.
NOBLE DRILLING CORPORATION
DATE: November 10, 1995 /S/ JAMES C. DAY
-------------------------------------------
JAMES C. DAY, Chairman, President and
Chief Executive Officer
DATE: November 10, 1995 /S/ BYRON L. WELLIVER
------------------------------------------
BYRON L. WELLIVER,
Senior Vice President-Finance,
Treasurer and Controller
(Principal Financial and Accounting Officer)
15
<PAGE> 16
FORM 10-Q
INDEX TO EXHIBITS
EXHIBIT
NUMBER EXHIBIT
-------- --------------------------------------------------------
27 Financial Data Schedule.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> 56,895
<SECURITIES> 30,038
<RECEIVABLES> 58,962
<ALLOWANCES> 0
<INVENTORY> 15,636
<CURRENT-ASSETS> 190,180
<PP&E> 868,525
<DEPRECIATION> (343,266)
<TOTAL-ASSETS> 722,845
<CURRENT-LIABILITIES> 74,379
<BONDS> 126,286
<COMMON> 9,445
0
4,025
<OTHER-SE> 506,684
<TOTAL-LIABILITY-AND-EQUITY> 722,845
<SALES> 243,733
<TOTAL-REVENUES> 243,733
<CGS> 182,994
<TOTAL-COSTS> 182,994
<OTHER-EXPENSES> 57,789
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (9,122)
<INCOME-PRETAX> 46
<INCOME-TAX> (2,730)
<INCOME-CONTINUING> (8,372)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (8,372)
<EPS-PRIMARY> (0.12)
<EPS-DILUTED> .00
</TABLE>
