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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 (Fee Required)
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1995
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 (No Fee Required)
FOR THE TRANSITION PERIOD FROM ___________ TO _____________
Commission file number: 0-13857
NOBLE DRILLING CORPORATION
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(Exact name of registrant as specified in its charter)
DELAWARE 73-0374541
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(State of incorporation) (I.R.S. employer identification number)
10370 RICHMOND AVENUE, SUITE 400, HOUSTON, TEXAS 77042
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(Address of principal executive offices) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (713) 974-3131
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Securities registered pursuant to Section 12(b) of the Act:
NONE
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Title of each class Name of each exchange on which registered
Securities registered pursuant to Section 12(g) of the Act:
COMMON STOCK, PAR VALUE $.10 PER SHARE
$1.50 CONVERTIBLE PREFERRED STOCK, PAR VALUE $1.00 PER SHARE
PREFERRED STOCK PURCHASE RIGHTS
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(Title of class)
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 / /
Indicated by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. /x/
Aggregate market value of Common Stock held by nonaffiliates as of
March 4, 1996: $770,050,560
Number of shares of Common Stock outstanding as of March 4, 1996:
94,462,850
DOCUMENTS INCORPORATED BY REFERENCE
Listed below are documents parts of which are incorporated herein by
reference and the part of this report into which the document is incorporated:
(1) Proxy statement for the 1996 annual meeting of stockholders -
Part III
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TABLE OF CONTENTS
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PAGE
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PART ITEM 1. BUSINESS..................................................................... 1
I General........................................................................... 1
Business Strategy................................................................. 1
Acquisition of Assets............................................................. 1
Recent Developments............................................................... 1
Letter of Intent to Purchase Assets of Neddrill.............................. 1
Asset Rationalization Program................................................ 2
Linn Richardson Damage....................................................... 2
Rig Utilization................................................................... 2
Drilling Contracts................................................................ 2
Offshore Drilling Operations...................................................... 3
International Contract Drilling.............................................. 3
Domestic Contract Drilling................................................... 3
Labor Contracts.............................................................. 3
Land Drilling Operations.......................................................... 4
Turnkey Drilling and Engineering Services ........................................ 4
Competition and Risks............................................................. 4
Governmental Regulation and Environmental Matters ................................ 5
Employees......................................................................... 6
Financial Information About Foreign and Domestic Operations....................... 6
ITEM 2. PROPERTIES................................................................... 6
Drilling Rig Fleet................................................................ 6
Offshore Drilling Rigs....................................................... 6
Land Drilling Rigs........................................................... 9
Facilities........................................................................ 10
ITEM 3. LEGAL PROCEEDINGS............................................................ 10
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.......................... 10
EXECUTIVE OFFICERS OF THE REGISTRANT...................................................... 10
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PART ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
II STOCKHOLDER MATTERS.......................................................... 11
ITEM 6. SELECTED FINANCIAL DATA...................................................... 12
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.......................................... 13
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.................................. 18
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE.......................................... 41
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PART ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT........................... 41
III ITEM 11. EXECUTIVE COMPENSATION....................................................... 41
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT............... 41
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS............................... 41
==========================================================================================================
PART ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.............. 42
IV
SIGNATURES................................................................................ 43
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(i)
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PART I
ITEM 1. BUSINESS
GENERAL
Noble Drilling Corporation is a leading provider of diversified
services for the oil and gas industry worldwide. The Company's activities
include offshore and land drilling services, turnkey drilling services and
engineering and production management services. The Company's drilling fleet is
broadly diversified, allowing it to work in a variety of operating conditions.
Noble Drilling Corporation ("Noble Drilling") was organized as a
Delaware corporation in 1939. Noble Drilling and its predecessors have been
engaged in the contract drilling of oil and gas wells for others domestically
since 1921 and internationally during various periods since 1939. As used
herein, unless otherwise required by the context, the term "Noble Drilling"
refers to Noble Drilling Corporation and the term "Company" refers to Noble
Drilling and its consolidated subsidiaries.
BUSINESS STRATEGY
The Company's business strategy has been to expand its international
and deepwater offshore capabilities through acquisitions, redeployments and rig
modifications, and to position itself in geologically promising areas. The
Company has actively pursued its strategy in recent years. During 1995, the
Company increased its international presence by transferring two independent leg
jackup rigs and one mat slot rig from the U.S. Gulf of Mexico to the West Coast
of Africa. The Company also transferred one of its two rigs located in Mexico to
Qatar during 1995. The domestic land drilling operations of the Company have
become less significant as the Company has emphasized its offshore and
international operations.
The offshore contract drilling industry has, in recent years,
experienced a series of asset sales and consolidations among drilling
contractors, and the Company expects this trend to continue as drilling
contractors position themselves strategically in the market. The Company, from
time to time, has discussions with third parties regarding asset acquisitions or
business combinations and intends to continue to consider business opportunities
that it believes promote this business strategy.
The Company's revenues are balanced between international and domestic
sources. The following table sets forth, for the periods indicated, the
percentages of international and domestic operating revenues:
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Year Ended December 31,
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1995 1994 1993 1992 1991
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OPERATING REVENUES
International............ 49% 48% 53% 73% 50%
Domestic................. 51% 52% 47% 27% 50%
</TABLE>
ACQUISITION OF ASSETS
In October 1995, the Company purchased two jackup drilling units and
related equipment for a total of $10,100,000 in cash. The Azteca, which the
Company plans to rename the Gene Rosser after the pending purchase of that rig
is completed, and the Maya are both Levingston 111, 300-foot, independent leg
jackup rigs. The Azteca is currently located in a shipyard undergoing
refurbishment and conversion to a cantilever rig. The Maya is scheduled to
commence such refurbishment and cantilever modification in the second quarter of
1996.
RECENT DEVELOPMENTS
LETTER OF INTENT TO PURCHASE ASSETS OF NEDDRILL
On March 13, 1996, the Company entered into a letter of intent with
Royal Nedlloyd N.V. and its wholly owned subsidiary, Neddrill Holding B.V. and
its subsidiaries (collectively, "Neddrill"), to acquire the assets, including
$25,000,000 in net working capital, and the personnel used by Neddrill in its
offshore contract drilling, accommodation and other oil and gas exploration and
production related service businesses. The purchase price would be $300,000,000
in cash plus 5,000,000 shares of Noble Drilling common stock. The Company
currently plans to access the public securities markets to finance the cash
portion of the purchase price.
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Neddrill's operations are managed from its headquarters in Rotterdam,
The Netherlands. Its fleet includes two dynamically positioned drillships, one
of which is currently operating in Angola, the second in Brazil; one second
generation semisubmersible rig operating in the North Sea, and six harsh
environment jackup drilling rigs (five operating in the North Sea and one in
Argentina). Neddrill operates a third dynamically positioned drillship in which
it owns a partial interest through a joint venture arrangement. In addition, the
Company would acquire rights, under a bareboat charter, to a seventh harsh
environment jackup rig operating as a hotel accommodation unit in the North Sea.
All the above units are currently under contract, with commitments extending
through 1997 to 2001, depending on the unit.
Negotiations have reached the stage that justifies the expectation that
an agreement on the proposed acquisition can be reached. Notices have been
given by Nedlloyd to the Social and Economic Council in The Netherlands and
the Central Works Council of Nedlloyd in accordance with applicable laws,
regulations and practices in The Netherlands.
Consummation of the acquisition is subject to customary due diligence,
execution and delivery of an agreement of sale and purchase, financing being
obtained by the Company, and satisfaction of customary closing conditions
expected to be contained in the agreement of sale and purchase.
ASSET RATIONALIZATION PROGRAM
Consistent with the Company's plan to focus on deepwater drilling, the
Company has sold one of its posted barge units (Gus Androes) and has contracted
to sell a second posted barge unit (Gene Rosser). The closing of the sale of
this second barge unit is scheduled to occur on or before March 29, 1996.
The Company plans to use the net proceeds from these sales, together
with working capital if needed, to enhance the deepwater capability of its
fleet. On February 26, 1996, the Company purchased the Odin Explorer, to be
renamed the Gus Androes, a 300-foot independent leg cantilevered jackup rig
located offshore Sharjah, U.A.E. This rig has been stacked and will require
substantial refurbishment prior to being returned to service. In addition, the
Company received notification on March 6, 1996 of acceptance of its offer to
purchase the rig Dana, a 250-foot independent leg cantilevered jackup rig, which
is currently under a management contract in Qatar.
LINN RICHARDSON DAMAGE
On December 15, 1995, the Linn Richardson, a 250-foot mat slot rig,
lost overboard approximately 200 feet of leg while under tow to perform a
contract offshore Senegal, Africa. On the following day, the rig lost overboard
approximately 240 feet of a second leg which also caused damage to equipment and
facilities on the deck of the rig. Pursuant to a preliminary assessment plan
developed jointly by the Company and its insurance underwriters, the third leg
of the rig has been removed and the rig has been towed to the U.S. Gulf of
Mexico where a complete evaluation will take place. A charge of $1,778,000
related to the cost of mobilizing the rig to Senegal was accrued in the fourth
quarter of 1995. This amount represents management's best estimate of the total
loss. Management does not believe this incident will have any other material
adverse effect on its financial condition or results of operations.
RIG UTILIZATION
The following table sets forth the average rig utilization rates for
the Company's rig fleet for the periods indicated:
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Year Ended December 31,
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1995 1994 1993 1992 1991
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AVERAGE RIG UTILIZATION RATES (1)
Offshore
International............... 75% 82% 73% 99% 72%
Domestic.................... 84% 82% 89% 45% 67%
Land
International .............. 53% 77% 43% 22% 41%
Domestic.................... 69% 51% 39% 48% 32%
</TABLE>
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(1) Information reflects the policy of the Company to report utilization
rates based on the number of actively marketed rigs owned in the fleet.
During the periods presented, the Company purchased and sold certain
drilling rigs. Utilization rates for the periods prior to sales and
purchases of such rigs have not been adjusted.
DRILLING CONTRACTS
The Company's drilling contracts are obtained through competitive
bidding or as a result of negotiations with customers. Contracts for land rigs
are normally for a single well, while contracts involving offshore drilling
frequently are
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for a period of time and may involve several wells. The Company's offshore
drilling is normally contracted on a dayrate basis, except for its turnkey
operations (see "Business - Turnkey Drilling and Engineering Services"). Land
drilling is performed on either a dayrate or a footage basis. The risk of loss
to the Company on wells drilled on a turnkey or footage basis is significantly
higher than on wells drilled on a dayrate basis.
OFFSHORE DRILLING OPERATIONS
The Company's offshore drilling operations are conducted worldwide.
Principal regions of operations currently include the Gulf of Mexico, West
Africa, Venezuela and, to a lesser extent, India, Mexico and Qatar. The offshore
fleet consisted of 46 rigs, comprising 35 jackup drilling rigs, eight
submersible rigs and three posted barges at February 26, 1996. For information
regarding recent changes in the composition of the Company's fleet, see
"Business - Recent Developments."
In 1995, one of the Company's customers, Lagoven, a subsidiary of the
government-owned oil company of Venezuela, accounted for approximately 11
percent of the Company's total operating revenues.
INTERNATIONAL CONTRACT DRILLING
The Company's international offshore contract drilling operations are
conducted in Nigeria, Venezuela, Qatar, Zaire, Mexico, and India. At February
26, 1996, the Company's international offshore contract drilling fleet consisted
of 19 rigs, of which 15 were working under contract, one was available for
bidding, one was under contract for sale, one was in the shipyard, and one was
under evaluation following damages sustained during transportation.
In 1995, approximately 55 percent of the Company's international
offshore contract drilling revenues was derived from contracts with major oil
and gas companies, 37 percent from government-owned companies and the balance
from contracts with independent operators.
The Company has seven jackup rigs and two posted barges located along
the West Coast of Africa. Six of the jackup rigs are under long-term contracts
extending through dates ranging from December 1996 to June 1998, with major oil
companies. The seventh jackup rig is available for work. The two posted barges
are under contract through June 1996. A third posted barge has been transported
recently from Nigeria to Singapore in connection with its impending sale.
The Company has four jackup rigs located in Venezuela. Three of these
rigs are under long-term contracts extending through dates ranging from July
1997 to June 2000. The fourth is working under a well-to-well contract.
The Company also has a jackup rig working in Qatar under a long-term
contract that expires in 1998, a jackup rig working in India under a long-term
bareboat charter agreement that expires in September 1996 and a jackup rig
working in Mexico under a long-term contract that expires in November 1996. The
recently purchased Odin Explorer is located in Sharjah, U.A.E.
DOMESTIC CONTRACT DRILLING
The Company's domestic offshore contract drilling fleet consisted of 27
rigs at February 26, 1996, of which 18 were working under contract, two were
being refurbished, and seven were being held in various stages of readiness to
enter the marketplace. The Company continually evaluates the economics of
re-entering the market with these rigs and expects to do so when conditions
warrant.
Two of the Company's independent slot rigs, the Eddie Paul and the John
Sandifer, completed refurbishment projects in 1995. The Eddie Paul was converted
to an Extended Reach Cantilever ("ERC") rig to enable this unit to drill over
larger platforms. This rig's legs were extended from 467 feet to 500 feet to
increase the water depth capacity to approximately 390 feet. A top drive
drilling system and cascading mud system were also installed on this rig. The
modifications make the Eddie Paul the largest rig in the Gulf of Mexico in terms
of cantilever reach and one of the largest in terms of water depth. The John
Sandifer was converted to a cantilever rig with a top drive system and cascading
mud system to make the rig more versatile. The total cost of these two projects
approximated $35,134,000 over 1994 and 1995. Both rigs were contracted for work
prior to completion of shipyard work and have been under contract since
departure from the shipyard.
In 1995, approximately 55 percent of the Company's domestic offshore
contract drilling revenues was derived from contracts with major oil and gas
companies and the remaining 45 percent was derived from contracts with
independent operators.
LABOR CONTRACTS
The Company's offshore operations also include labor contracts for
drilling and workover activities covering 13 rigs operating in the U.K. North
Sea and one offshore rig operating in Qatar. These rigs are not owned or leased
by the Company. Under its labor contracts, the Company provides the personnel
necessary to manage and perform the drilling operations from drilling platforms
owned by the operator. The contracts are generally renewable no more frequently
than on an annual basis. After drilling operations are completed, workover
operations usually become an important element of each platform's activity.
Thus, drilling contractor crews usually remain on the platform until a field is
depleted by production.
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The Company was awarded a contract in 1994 by Hibernia Management and
Development Company Ltd. for offshore production drilling and related services.
The contract calls for the Company to commission, operate and maintain two
state-of-the-art platform rigs to be installed on the concrete gravity-based
structure that will be used to develop the Hibernia field off the coast of
Newfoundland. The Company established an office in St. Johns, Newfoundland in
late 1994. A team of six experienced personnel are employed in St. Johns and are
presently participating in the preparation of operating, equipment maintenance
and procedures manuals, and the procurement of equipment. Commissioning of the
drilling and related equipment will commence in May 1996 through November 1996.
The gravity-based structure is scheduled for tow out to location in May 1997,
with commencement of the first well scheduled to occur in early September 1997.
The Company has a five-year contract with Hibernia with an option for a
five-year extension. It is anticipated that the Company will have approximately
120 employees assigned to this project at its peak in 1997.
LAND DRILLING OPERATIONS
The Company's land drilling operations are conducted in Canada, Texas
and Louisiana. At February 26, 1996, 19 of the Company's 46 land rigs were
available for active bidding by the Company. Of these 19 rigs, 10 were located
in the United States and nine were located in Canada. Thirteen of the 19
actively-marketed rigs were operating under contract and six were available for
bidding at that date. Twenty-seven rigs were stacked and not being actively
marketed. The remaining net book value of these stacked rigs is not material.
The Company's domestic land drilling operations have become less significant as
the Company has emphasized its offshore and international operations.
TURNKEY DRILLING AND ENGINEERING SERVICES
Through its wholly owned subsidiary, Triton Engineering Services
Company ("Triton"), the Company provides turnkey drilling, drilling project
management, drilling and completion planning and design, specialized drilling
tools and services, and contract engineering and consulting manpower. Turnkey
drilling, Triton's major service, involves the coordination of all equipment,
materials, services and management to drill a well to a specified depth, for a
fixed price. Under turnkey drilling contracts, Triton bears the financial risk
of delays in the completion of the well. In providing its services, Triton can
use drilling rigs owned either by the Company or by a third party, depending on
availability. The drilling of a turnkey well is generally completed within 30 to
50 days. Twenty-seven wells were completed by Triton in 1995 compared to 35
wells for 1994. Seven of the 35 wells were completed prior to the Company's
acquisition of Triton in April 1994. Revenues from turnkey drilling services
represented 22 percent and 16 percent of consolidated operating revenues in 1995
and 1994, respectively. The revenue percentage for 1994 consists of Triton's
revenues from the time of the acquisition in April 1994 through year end 1994.
The Company provides engineering services relating primarily to the
design of drilling equipment for offshore development and production services
and to the recertification of oilfield equipment. The Company works, on a
contract basis, with operators and prime construction contractors of drilling
and production platforms in the design of drilling equipment configurations
aimed at optimizing the operational efficiency of developmental drilling by
maximizing platform space utilization and load capability.
Through its operations in Venezuela, the Company provides engineering
services in the form of an alliance program with Lagoven. The Company utilizes
its own drilling rigs and employs Triton personnel for the engineering and
operating expertise.
COMPETITION AND RISKS
The contract drilling industry is a highly competitive and cyclical
business characterized by high capital and maintenance costs. Although
conditions in recent years in the oil and gas industry have precipitated
consolidation of industry participants, there remains an oversupply of drilling
equipment. As a consequence, there has been intense competition for available
drilling contracts resulting in much equipment being idle for long periods of
time and generally unfavorable terms and prices for contract drilling. Certain
competitors of the Company may have access to greater financial resources than
the Company.
Competition in contract drilling involves numerous factors, including
price, the experience of the work force, rig availability and suitability,
efficiency, condition of equipment, operating integrity, reputation, industry
standing and customer relations. Price is the major consideration in most
markets, especially with respect to domestic drilling. The Company believes it
competes favorably with respect to all these factors. The acquisition of Triton
has enabled the Company to compete more effectively in the turnkey drilling
market. Competition is primarily on a regional basis and may vary significantly
by region at a particular time. Demand for land and offshore drilling equipment
is also dependent on the exploration and development programs of oil and gas
producers, which are in turn influenced by the financial condition of such
producers, by general economic conditions and prices of oil and gas, and, from
time to time, by political considerations and policies.
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It is impracticable to estimate the number of competitors of the
Company. Many independent drilling contractors in recent years have sought
protection from creditors under bankruptcy laws or have combined with other
companies as a result of the depressed conditions in the contract drilling
industry. Although this has reduced the total number of competitors, management
of the Company believes that competition for drilling contracts will continue to
be intense for the foreseeable future.
The Company follows a policy of keeping its equipment well maintained
and technologically competitive. However, its equipment could be made obsolete
by the development of new techniques and equipment. In addition, industry-wide
shortages of supplies, services, skilled personnel and equipment necessary to
conduct the Company's business, such as drill pipe, have occurred from time to
time in the past, and such shortages could occur again.
The Company's operations are subject to the many hazards inherent in
the drilling business, including blowouts, cratering, fires and collisions or
groundings of offshore equipment, which could cause substantial damage to the
environment. In addition, the Company's operations are subject to damage or loss
from adverse weather and seas. These hazards could cause personal injury and
loss of life, suspend drilling operations or seriously damage or destroy the
property and equipment involved and, in addition to environmental damage, could
cause substantial damage to producing formations and surrounding areas. Although
the Company maintains insurance against many of these hazards, such insurance is
subject to substantial deductibles and provides for premium adjustments based on
claims. It also excludes certain matters from coverage, such as loss of earnings
on certain rigs. Also, while the Company generally obtains indemnification from
its customers for environmental damage with respect to offshore drilling, such
indemnification is generally only in excess of a specified amount, which
typically ranges from $100,000 to $250,000.
In the case of the turnkey drilling operations, the Company maintains
insurance against pollution and environmental damage in amounts ranging from
$5,000,000 to $50,000,000 depending on location, subject to self-insured
retentions of $25,000 to $1,000,000. Under turnkey drilling contracts, Triton
generally assumes the risk of pollution and environmental damage, but on
occasion receives indemnification from the customer for environmental and
pollution liabilities in excess of Triton's pollution insurance coverage.
Further, Triton is not insured against certain drilling risks that could result
in delays or nonperformance of a turnkey drilling contract, although it
generally maintains insurance against delays related to loss of well control.
Triton typically obtains contractual indemnification from the drilling
contractors that provide the rigs for Triton's turnkey drilling operations for
pollution arising from certain acts of such contractors.
The Company's international operations are also subject to certain
political, economic and other uncertainties including, among others, risks of
war and civil disturbances, expropriation, nationalization, renegotiation or
modification of existing contracts, taxation policies, foreign exchange
restrictions, international monetary fluctuations and other hazards arising out
of foreign governmental sovereignty over certain areas in which the Company
conducts operations. The Company has insurance covering expropriation and other
political risks to the extent available to the Company at rates it considers
prudent to pay.
GOVERNMENTAL REGULATION AND ENVIRONMENTAL MATTERS
Many aspects of the Company's operations are affected by domestic and
foreign political developments and are subject to numerous governmental
regulations that may relate directly or indirectly to the contract drilling
industry. The regulations applicable to the Company's operations include certain
provisions that regulate the discharge of materials into the environment or
require remediation of contamination, under certain circumstances. Usually these
environmental laws and regulations impose "strict liability," rendering a person
liable without regard to negligence or fault on the part of such person. Such
environmental laws and regulations may expose the Company to liability for the
conduct of, or conditions caused by, others, or for acts of the Company that
were in compliance with all applicable laws at the time such acts were
performed.
The U.S. Oil Pollution Act of 1990 ("OPA '90") and the regulations
promulgated pursuant thereto impose certain additional operational requirements
on the Company's domestic offshore rigs and govern liability for leaks, spills
and blowouts. Regulations under OPA '90 may increase the level of financial
assurance required of owners and operators of rigs in the waters of the United
States. The Company has monitored these regulations and does not believe that
they are likely to have a material adverse effect on the Company's financial
condition or results of operations.
The Company has made and will continue to make expenditures to comply
with environmental requirements. The Company does not believe that it has to
date expended material amounts in connection with such activities or that
compliance with such requirements will have a material adverse effect upon its
capital expenditures, results of operations or competitive position. Although
such requirements do have a substantial impact upon the energy and energy
services industries, generally they do not appear to affect the Company any
differently or to any greater or lesser extent than other companies in the
energy services industry.
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The Company believes that insurance in place and indemnities the
Company generally seeks to include in its drilling contracts provide the Company
with an appropriate degree of protection from liability resulting from current
governmental regulation that might have a material adverse effect on the
Company, including environmental regulation. However, notwithstanding the
indemnity coverage provided to, and insurance coverage carried by, the Company,
the occurrence of a significant event not fully indemnified against or insured
for or the failure of a customer to meet its indemnification obligations could
materially and adversely affect the Company's operations and financial
condition.
The modification of existing laws or regulations or the adoption of new
laws or regulations curtailing exploratory or development drilling for oil and
gas for economic, environmental or other reasons could materially and adversely
affect the Company's operations by limiting drilling opportunities.
EMPLOYEES
At December 31, 1995, the Company had approximately 2,977 employees, of
whom 56 percent were engaged in international operations and 44 percent were
engaged in domestic operations. Over many years, the Company has developed and
maintained a well-trained and experienced workforce.
The Company is not a party to any collective bargaining agreements that
are material to the Company. The Company considers its employee relations to be
satisfactory.
Although there continues to be an oversupply of drilling equipment
industry-wide, shortages of supplies and equipment, as well as qualified
personnel for rig crews, have occurred from time to time in the past. A
substantial increase in demand for oilfield services could make it more
difficult to retain and recruit qualified rig crew members without significant
increases in compensation.
FINANCIAL INFORMATION ABOUT FOREIGN AND DOMESTIC OPERATIONS
Information regarding operating revenues, operating income and loss,
and identifiable assets attributable to each of the Company's geographic areas
of operations for the last three fiscal years is presented in Note 15 of Notes
to Consolidated Financial Statements included elsewhere herein.
ITEM 2. PROPERTIES
DRILLING RIG FLEET
OFFSHORE DRILLING RIGS
The Company's offshore drilling rig fleet consisted of 35 jackup rigs,
eight submersible rigs and three posted barges at February 26, 1996. Each type
of rig is described further below. There are several factors that determine the
type of rig most suitable for a particular job, the more significant of which
include the water depth and bottom conditions at the proposed drilling location,
whether the drilling is being done over a platform or other structure, and the
intended well depth.
Seventeen of the Company's 46 offshore rigs have a top drive unit, and
the Company has three additional top drive units which have not been installed
on rigs. A top drive unit is a technologically-advanced drilling tool used in
many drilling applications both offshore and on land. Twenty-eight of the
Company's 46 offshore rigs are equipped with cascading solids control systems. A
cascading solids control system is a highly efficient method for controlling the
solids in drilling mud, the use of which enhances removal of well bore cuttings
and results in better bit performance and reduced mud conditioning costs to the
operator. In addition, ten of the Company's 46 offshore rigs are equipped with
zero discharge capability.
JACKUP RIGS. The Company had 35 jackup rigs in the fleet at February
26, 1996. Jackup rigs are mobile self-elevating drilling platforms equipped with
legs which can be lowered to the ocean floor until a foundation is established
to support the drilling platform. The rig hull includes the drilling rig,
jacking system, crew quarters, loading and unloading facilities, storage areas
for bulk and liquid materials, helicopter landing deck and other related
equipment. The rig legs may operate independently or have a mat attached to the
bottom of them in order to provide a more stable foundation in soft bottom
areas. Twenty-two of the Company's jackup rigs are independent leg rigs and 13
are mat supported rigs. Moving a rig to the drill site involves jacking up its
legs until the hull is floating on the surface of the water. The hull is then
towed to the drill site by tugs and the legs are jacked down to the ocean floor.
The jacking operation continues until the hull is raised out of the water and
drilling operations are conducted with the hull in its raised position. A
cantilevered jackup has a feature that permits the drilling platform to be
extended out from the hull, allowing it to perform drilling or workover
operations over pre-existing platforms or structures. Slot type jackup rigs are
configured for the drilling operations to take place through a slot in the hull.
The Company's jackup rigs are capable of drilling to a maximum depth of 25,000
feet in water depths ranging between 8 and 390 feet, depending on the jackup
rig.
6
<PAGE> 9
SUBMERSIBLE RIGS. The Company had eight submersibles in the fleet at
February 26, 1996. Submersible rigs are mobile drilling platforms which are
towed to the drill site and submerged to drilling position by flooding the lower
hull until it rests on the sea floor, with the upper deck above the water
surface. The Company's submersible rigs are capable of drilling to a maximum
depth of 30,000 feet in water depths ranging between 12 and 100 feet, depending
on the submersible rig.
POSTED BARGES. The Company had three posted barges in the fleet at
February 26, 1996. Use of the posted barge is not part of the Company's
long-term strategic objectives. See "Business - Business Strategy" and "Business
- - Recent Developments."
The following table sets forth certain information concerning the
Company's offshore drilling rig fleet at February 26, 1996. The table does not
include 14 offshore rigs owned by operators for which the Company had labor
contracts as of February 26, 1996. Unless otherwise indicated, the Company owns
and operates the rigs included in the table.
7
<PAGE> 10
OFFSHORE DRILLING RIGS
<TABLE>
<CAPTION>
YEAR WATER MAXIMUM
BUILT OR DEPTH DRILLING
NAME MAKE TYPE (1) REBUILT (2) RATING DEPTH LOCATION STATUS (3)
- ------------------- ----------------- -------- ----------- ------ -------- -------- ----------
(FEET) (FEET)
<S> <C> <C> <C> <C> <C> <C> <C>
JACKUP RIGS
Eddie Paul(4) MLT 84-E.R.C. IC 1995 R 390 25,000 U.S. Gulf Active
Coral Sea MLT 53-S IS 1972 320 25,000 U.S. Gulf Stacked
Nimitz MLT 84-S IS 1975 300 25,000 U.S. Gulf Stacked
Carl Norberg MLT Class 82-C IC 1976 250 20,000 Venezuela Active
Charles Copeland(4) MLT Class 82-SD-C IC 1995 R 250 20,000 Venezuela Active
Earl Frederickson MLT Class 82-SD-C IC 1979 250 20,000 Venezuela Active
Ed Noble(4) MLT Class 82-SD-C IC 1990 R 250 20,000 Nigeria Active
Lloyd Noble(4) MLT Class 82-SD-C IC 1990 R 250 20,000 Nigeria Active
Tom Jobe(4) MLT Class 82-SD-C IC 1982 250 25,000 U.S. Gulf Active
Azteca Levingston 111-C IC 1996 R 300 20,000 U.S. Gulf Shipyard
Ed Holt(5) Levingston 111-C IC 1994 R 300 25,000 India Active
John Sandifer(4) Levingston 111-C IC 1995 R 300 25,000 U.S. Gulf Active
Maya Levingston 111-C IC 1996 R 300 20,000 U.S. Gulf Shipyard
Odin Explorer(9) Levingston 111-C IC 1996 R 300 25,000 Sharjah Shipyard
Sam Noble(4) Levingston 111-C IC 1982 300 25,000 Mexican Gulf Active
George McLeod(4) F&G L-780 MOD II IC 1995 R 300 25,000 Qatar Active
Percy Johns(4) F&G L-780 MOD II IC 1995 R 300 25,000 Nigeria Active
Roy Butler(4)(6) F&G L-780 MOD II IC 1982 300 25,000 Zaire Active
Tommy Craighead(4) F&G L-780 MOD II IC 1990 R 300 25,000 Nigeria Active
Johnnie Hoffman(4) Baker Marine BMC 300 IC 1993 R 300 25,000 U.S. Gulf Active
Dick Favor Baker Marine BMC 150 IC 1993 R 150 20,000 Venezuela Active
Don Walker(4) Baker Marine BMC 150 IC 1982 150 20,000 Nigeria Active
Marvin Winters Bethlehem JU-250 MC 1982 250 20,000 U.S. Gulf Active
Duke Hinds Bethlehem JU-200 MC 1990 R 200 25,000 U.S. Gulf Active
Frank Lamaison Bethlehem JU-200 MC 1982 200 20,000 U.S. Gulf Active
Mac McCoy Bethlehem JU-200 MC 1982 200 20,000 U.S. Gulf Active
Red McCarty Bethlehem JU-200 MC 1982 200 25,000 U.S. Gulf Active
W.T. Johnson Bethlehem JU-200 MC 1982 200 20,000 U.S. Gulf Active
Cecil Forbes Bethlehem JU-300 MS 1974 300 20,000 U.S. Gulf Stacked
Cliff Matthews Bethlehem JU-250 MS 1976 250 20,000 U.S. Gulf Active
Frank Reiger Bethlehem JU-250 MS 1975 250 20,000 U.S. Gulf Stacked
Jack Clark(8) Bethlehem JU-250 MS 1974 250 20,000 U.S. Gulf Active
Jim Bawcom Bethlehem JU-250 MS 1981 250 25,000 U.S. Gulf Active
Linn Richardson Bethlehem JU-250 MS 1994 R 250 20,000 In transit Damage
Assessment
NN-1(7) Bethlehem JU-45 MS 1990 R 45 20,000 Nigeria Available
SUBMERSIBLE RIGS
Amos Runner(4) Column Stabilized 1982 100 25,000 U.S. Gulf Active
Jim Thompson Column Stabilized 1993 100 25,000 U.S. Gulf Active
Max Smith Column Stabilized 1980 100 25,000 U.S. Gulf Active
Paul Romano(4) Column Stabilized 1981 100 30,000 U.S. Gulf Active
Paul Wolff Column Stabilized 1981 100 30,000 U.S. Gulf Active
Joe Alford Column Stabilized 1982 85 25,000 U.S. Gulf Stacked
Lester Pettus Column Stabilized 1982 85 25,000 U.S. Gulf Stacked
Fri Rodli Column Stabilized 1979 70 25,000 U.S. Gulf Stacked
POSTED BARGES
Lewis Dugger(4) Ideco E 3000 1990 R 18 30,000 Nigeria Active
Gene Rosser National 1625 DE 1990 R 18 25,000 In transit Sale Pending
Chuck Syring(4) Oilwell E 3000 1990 R 18 25,000 Nigeria Active
</TABLE>
- ------------------------
(1) Type codes are defined as follows:
IC .... Independent Leg Cantilevered jackup rig
IS .... Independent Leg Slot jackup rig
MC .... Mat Supported Cantilevered jackup rig
MS .... Mat Supported Slot jackup rig
(2) Rigs designated with an "R" were modified, refurbished, or otherwise
upgraded in such year by capital expenditures in an amount material
to the net book value of such rig.
(FOOTNOTES CONTINUED ON FOLLOWING PAGE)
8
<PAGE> 11
(3) Rigs listed as "active" were operating under contract and rigs listed as
"available" were available for bidding as of February 26, 1996. Rigs
listed as "stacked" were not operating under contract and were either in
need of expenditures to reactivate or not being actively marketed at
such date. Rigs listed as "shipyard" are undergoing refurbishment. The
rigs listed as "stacked" were protected at the time of deactivation,
utilizing procedures recommended by the original equipment manufacturer.
A rig that has undergone this deactivation procedure generally takes
less cost and lead time in order to be returned to active service than a
rig that has not undergone such procedure.
(4) Equipped with a top drive unit.
(5) Bareboat chartered to a third party under which the Company maintains
operating control of the rig.
(6) Although the rig is designed to drill in a maximum water depth of 300
feet, the rig is currently equipped with legs adequate to drill in
approximately 125 feet of water. The Company has fabricated an
additional 120 feet of legs, which will be installed in 1996.
(7) Owned by NN-1 Limited Partnership, of which Noble Drilling is the
general partner and in which it has a majority interest. The rig is
mortgaged under a first preferred ship mortgage in favor of the United
States government to secure repayment of the U.S. Government Guaranteed
Ship Financing Sinking Fund Bonds issued in 1978 by the predecessor of
the partnership in connection with the construction and purchase of the
rig.
(8) Reactivation project completed in January 1996.
(9) Purchased February 26, 1996.
LAND DRILLING RIGS
The Company's land drilling fleet consists of 46 rigs, of which 19 are
being or can be actively bid by the Company. See "Business - Land Drilling
Operations." Intended well depth, drill site conditions and drilling
applications are the principal factors in determining the size and type of land
rig to be used for a particular job. Of the 19 actively bid rigs in the fleet,
seven are mechanical and 12 are electric. Mechanical land rigs transmit the
engine power to the rig equipment through converters, compounds, chains and
V-belts. Electric land rigs transmit the engine power to rig equipment through
generators and electric cables to electric motors on the rig components.
The following table sets forth certain information concerning the
Company's 19 actively bid land drilling rigs at February 26, 1996. The table
does not include 27 mothballed or stacked rigs.
LAND DRILLING RIGS
<TABLE>
<CAPTION>
MAXIMUM
YEAR DRILLING
NAME MAKE/TYPE BUILT DEPTH LOCATION STATUS (1)
- ------------------- ------------------------- --------- -------- ------------------ ----------
(FEET)
<S> <C> <C> <C> <C> <C>
International
Canada
OW-842 Oilwell/Electric 1980 20,000 Newfoundland Active
N-134 National/Electric 1977 20,000 Alberta Available
E-1501 Emsco/Electric 1980 18,000 Alberta Active
E-1502 Emsco/Electric 1977 18,000 British Columbia Available
OW-762 Oilwell/Electric 1981 15,000 British Columbia Active
OW-763 Oilwell/Electric 1981 15,000 Alberta Active
N-821 National/Mechanical 1980 15,000 Alberta Available
GD-501 Gardner Denver/Mechanical 1979 9,000 Alberta Active
GD-502 Gardner Denver/Mechanical 1979 9,000 British Columbia Active
Domestic
Gulf Coast Land
OW-23 Oilwell/Electric 1981 25,000 Texas Active
OW-24 Oilwell/Electric 1981 25,000 Texas Available
OW-841 Oilwell/Electric 1982 20,000 Texas Active
S-101 Superior/Electric 1981 15,000 Texas Available
S-102 Superior/Electric 1981 15,000 Texas Available
N-815 National/Electric 1982 15,000 Texas Active
N-818 National/Mechanical 1981 15,000 Texas Active
N-611 National/Mechanical 1980 12,500 Texas Active
N-612 National/Mechanical 1981 12,500 Texas Active
N-614 National/Mechanical 1981 12,500 Texas Active
</TABLE>
(FOOTNOTE ON FOLLOWING PAGE)
9
<PAGE> 12
- ------------------------
(1) Rigs listed as "active" were operating under contract and rigs listed
as "available" were available for bidding at February 26, 1996.
Noble Canada Ltd. owns nine land rigs, five of which are pledged as
collateral to secure a $1,000,000 credit facility of such company. There was no
amount outstanding under such facility at December 31, 1995.
FACILITIES
The Company's principal executive offices are located in Houston,
Texas, and leased through the year 2000. The Company also leases administrative
and marketing offices, and sites used primarily for storage, maintenance and
repairs for drilling rigs and equipment in Williston, North Dakota; Evanston and
Casper, Wyoming; New Orleans and Lafitte, Louisiana; Calgary and St. Johns,
Canada; Warri, Lagos and Port Harcourt, Nigeria; Aberdeen, Scotland; Maracaibo
and Cuidad Ojeda, Venezuela; and Doha, Qatar.
The Company owns certain tracts of land, including office and
administrative buildings, warehouse facilities and a manufacturing facility, in
Harris and Waller Counties, Texas; Lafayette, Shreveport and Bayou Black,
Louisiana; Nisku, Canada; Aberdeen, Scotland; and Tulsa and Oklahoma City,
Oklahoma.
ITEM 3. LEGAL PROCEEDINGS
There are no material pending legal proceedings to which the Company is
a party or of which certain of its property is the subject. The Company is
involved in certain routine litigation incidental to the business of the
Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
EXECUTIVE OFFICERS OF THE REGISTRANT
The following table sets forth certain information as of March 4, 1996
with respect to the executive officers of Noble Drilling.
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
James C. Day 52 Chairman, President and Chief Executive Officer
and Director
Byron L. Welliver 50 Senior Vice President - Finance, Treasurer and Controller
Julie J. Robertson 40 Corporate Secretary and Vice President - Administration of
Noble Drilling Services Inc.
</TABLE>
James C. Day has served as Chairman of Noble Drilling since October 22,
1992, and as President and Chief Executive Officer since January 1, 1984. From
January 1983, until his election as President and Chief Executive Officer, Mr.
Day served as Vice President of Noble Drilling. Prior to 1983, Mr. Day served as
Vice President and Assistant Secretary of Noble Affiliates, Inc. He has been a
director of Noble Drilling since 1984. Mr. Day is also a director of Global
Industries Limited, Noble Affiliates, Inc., and the YMCA of Greater Houston.
Byron L. Welliver has served as Senior Vice President - Finance of
Noble Drilling since April 1989, as Treasurer of Noble Drilling since July 1986,
and as Controller of Noble Drilling since September 1994. Mr. Welliver had
served as Controller from April 1989 to April 1991. From July 1986 to April
1989, he also served as Vice President - Finance for Noble Drilling. He joined
Noble Drilling in October 1985, as Controller. Prior to joining Noble Drilling,
Mr. Welliver served consecutively as Tax Manager, Controller and Treasurer of
Noble Affiliates, Inc. beginning in March 1981.
Julie J. Robertson has served as Corporate Secretary of Noble Drilling
since December 1993, and as Vice President - Administration of Noble Drilling
Services Inc. since September 1994. From January 1989 to September 1994, Ms.
Robertson served consecutively as Manager of Benefits and Director of Human
Resources. Prior to 1989, she served in the capacities of Risk and Benefits
Manager and Marketing Services Coordinator for Bawden Drilling Inc. Ms.
Robertson joined Bawden Drilling Inc. in 1979.
10
<PAGE> 13
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
Noble Drilling's Common Stock, par value $.10 per share ("Common Stock"),
is traded in the Nasdaq National Market under the symbol "NDCO." The following
table sets forth for the periods indicated the high and low sales prices of the
Common Stock as reported in the Nasdaq National Market. Application has been
made to list the Common Stock and the $1.50 Convertible Preferred Stock on the
New York Stock Exchange.
<TABLE>
<CAPTION>
HIGH LOW
------- --------
<S> <C> <C>
1995
First quarter............................... $ 6 1/2 $ 5
Second quarter.............................. 7 7/8 5 7/8
Third quarter............................... 8 3/8 6 5/16
Fourth quarter.............................. 9 1/8 6 1/2
1994
First quarter............................... $ 9 1/8 $ 6 3/8
Second quarter.............................. 8 6 3/8
Third quarter............................... 8 3/8 6 1/4
Fourth quarter.............................. 7 5/8 5 1/4
</TABLE>
The Company has not paid any cash dividends on the Common Stock since
becoming a publicly held corporation in October 1985, and does not anticipate
paying dividends on the Common Stock at any time in the foreseeable future. The
outstanding $1.50 Convertible Preferred Stock of the Company has priority as to
dividends over the Common Stock, and no dividend (other than dividends payable
solely in Common Stock) may be declared, paid or set apart for payment on the
Common Stock unless all accrued and unpaid dividends on such preferred stock
have been paid or declared and set apart for payment. Furthermore, certain
provisions of the indenture governing the Company's 9 1/4% Senior Notes Due 2003
issued in 1993 restrict the Company's ability to pay cash dividends on the
Common Stock.
At March 4, 1996, there were 2,360 record holders of Common Stock.
11
<PAGE> 14
ITEM 6. SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------------------------
1995 1994 1993 1992 1991
--------- --------- -------- -------- ---------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA(1)
Operating revenues............................. $ 327,968 $ 351,988 $264,531 $184,166 $ 230,151
Operating costs(2)............................ 240,102 243,208 178,684 135,252 179,490
Depreciation and amortization(3)............... 36,492 39,519 28,886 27,248 30,052
Selling, general and administrative............ 40,139 47,606 28,284 30,716 32,684
Restructuring charges/asset write-downs(4)..... - 3,661 - 21,120 11,134
Minority interest.............................. (214) (169) (232) 89 78
--------- --------- -------- -------- ---------
Operating income (loss)........................ 11,449 18,163 28,909 (30,259) (23,287)
Interest expense............................... (12,156) (12,351) (8,038) (13,274) (20,411)
Interest income................................ 5,323 5,640 2,497 3,276 2,155
Other income, net.............................. 250 15,743 1,047 3,675 4,786
--------- --------- -------- -------- ---------
Income (loss) from continuing operations before
income taxes and extraordinary item......... 4,866 27,195 24,415 (36,582) (36,757)
Income tax provision........................... (3,272) (5,672) (3,333) (3,396) (2,417)
--------- --------- -------- -------- ---------
Income (loss) from continuing operations....... 1,594 21,523 21,082 (39,978) (39,174)
Discontinued operations........................ - - - (3,372) (1,815)
Extraordinary item(5).......................... - - 1,770 - 4,978
--------- --------- -------- -------- ---------
Net income (loss).............................. 1,594 21,523 22,852 (43,350) (36,011)
Preferred stock dividends...................... (7,199) (12,764) (7,936) (6,728) (721)
--------- --------- -------- -------- ---------
Net (loss) income applicable to common shares.. $ (5,605) $ 8,759 $ 14,916 $(50,078) $ (36,732)
========= ========= ======== ======== =========
Net (loss) income applicable to common shares
per share(6)(9)............................. $ (0.08) $ 0.11 $ 0.22 $ (1.05) $ (0.81)
Weighted average common shares outstanding..... 89,736 77,576 66,923 47,762 45,554
BALANCE SHEET DATA (AT END OF PERIOD)(1)
Working capital (deficit)(7)................... $ 101,623 $ 157,885 $150,535 $ 42,993 $ (3,239)
Property and equipment, net.................... $ 542,978 $ 493,322 $482,029 $338,382 $ 384,182
Total assets................................... $ 741,392 $ 739,889 $696,553 $456,529 $ 560,987
Long-term debt................................. $ 129,923 $ 126,546 $127,144 $ 87,280 $ 73,145
Total debt(8).................................. $ 142,133 $ 132,790 $127,690 $114,477 $ 182,784
Shareholders' equity........................... $ 523,493 $ 527,611 $516,770 $301,634 $ 324,367
OTHER DATA(1)
Cash dividend per common share................. $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00
Capital expenditures........................... $ 87,428 $ 55,834 $173,501 $ 5,997 $ 129,986
</TABLE>
- -------------------
(1) The Selected Financial Data presents the restatement of the Company's
historical financial statements for 1994 and prior periods to reflect the
1994 merger of Chiles Offshore Corporation ("Chiles") into Noble Offshore
Corporation ("NOC"), a wholly-owned subsidiary of the Company, which was
accounted for as a pooling of interests. The Selected Financial Data also
includes the acquisition of Triton in April 1994 and the October 1993
acquisition of nine offshore rigs and associated assets from The Western
Company of North America, both of which were accounted for under the
purchase method.
(2) Consists of operating costs and expenses other than depreciation and
amortization, selling, general and administrative, minority interest,
restructuring charges and write-down of assets charges.
(3) Effective January 1, 1995, the Company revised its estimates of salvage
values and remaining depreciable lives of certain rigs. The effect of
this change was a reduction to depreciation and amortization of
$6,160,000, or $0.07 per common share for the year ended December 31,
1995.
(4) Consists of provisions resulting from write-downs of certain assets,
facility consolidation costs and, to a lesser extent, severance costs.
(5) Consists of a gain on extinguishment of debt in 1993 and a gain on an
insurance settlement in 1991.
(6) Net (loss) income applicable to common shares per share before
extraordinary item was $0.20 and $(0.92) for the years ended December 31,
1993 and 1991, respectively. Loss applicable to common shares per share
from discontinued operations was $(0.07) and $(0.04) for the years ended
December 31, 1992 and 1991, respectively.
(7) Chiles reclassified $50,500,000 of its outstanding indebtedness from
long-term to current liabilities in 1991.
(footnotes continued on following page)
12
<PAGE> 15
This reclassification was made because as of December 31, 1991, Chiles
anticipated not being able to remain in compliance, and subsequently was
not able to remain in compliance, with all of the terms of its debt
agreements.
(8) Consists of short-term debt and current installments of long-term debt
and long-term debt.
(9) Includes the $0.02 per share effect of the March 1995 preferred
conversion payment related to the conversion of 923,862 shares of the
Company's $2.25 Convertible Exchangeable Preferred Stock. The payment of
$1,524,000 was accounted for as a reduction of net earnings applicable
to common shares when calculating the net loss per common share.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
GENERAL
The following discussion is intended to assist in understanding the
Company's financial position as of December 31, 1995 and 1994, and its results
of operations for each of the three years in the period ended December 31, 1995.
Reference is also made to the Consolidated Financial Statements and the Notes
thereto, included elsewhere herein, which should be read in conjunction with
this discussion.
For information regarding a proposed acquisition by the Company, see
"Business - Recent Developments - Letter of Intent to Purchase Assets of
Neddrill."
OUTLOOK
The Company's operating strategy has been to pursue drilling
opportunities in the U.S. and various international markets. Worldwide drilling
conditions vary substantially from region to region; however, the Company
operates in many markets where there is a demand for offshore 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, many
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 increased pressure on dayrates. By mid-year 1995,
rig demand in the international arena began to strengthen. Improved political
stability and strengthened world oil prices caused more favorable market
conditions which led the Company to mobilize rigs out of the U.S. Gulf of
Mexico to international markets. Simultaneously, the U.S. Gulf of Mexico market
strengthened due to improved gas prices, subsalt drilling, and deepwater
drilling.
The Company anticipates that the domestic offshore market will experience
significant activity levels in the first two quarters of 1996. However, the
Company is cautious and does not predict these robust levels to continue all
year. The international market is anticipated to remain strong, assuming oil
prices remain at current levels and the political environment remains stable. If
the price of natural gas decreases in the near future, the Company's dayrates
and utilization rates in the U.S. Gulf could be adversely affected. The Company
can predict neither the future level of demand for its drilling services nor the
future conditions in the offshore contract drilling industry.
The Company had seven offshore drilling rigs under contract and one
offshore drilling rig available for bidding in Nigeria at February 26, 1996. The
contracts under which the seven rigs are operating each contain provisions
permitting the operator to suspend operations in the event of force majeure and
to terminate the contract if the force majeure continues; however, no operator
has elected to suspend operations pursuant to these provisions. 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 certain events or upon termination by the underwriter
on seven days' notice. In recent periods, the Nigerian economy has experienced
high inflation. During these periods, the Company's operations were not
materially affected, and the Company received timely payment for its services in
U.S. dollars. Revenues from drilling activities in Nigeria accounted for
approximately 14 percent and 13 percent, respectively, of the Company's
operating revenues in 1995 and 1994.
The Company began to operate in Venezuela in late 1993 and currently has
four rigs located in that country. Three jackup rigs were under contract with
Lagoven, a subsidiary of the government-owned oil company of Venezuela, and one
jackup rig was under contract with Shell Venezuela S.A. as of February 26, 1996.
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. During this
period, the Company's operations were not materially affected, and the Company
received 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
13
<PAGE> 16
affect the Company's operations in Venezuela. Revenues from drilling activities
in Venezuela accounted for approximately 10 percent of the Company's operating
revenues in each of 1995 and 1994.
LIQUIDITY AND CAPITAL RESOURCES
The Company had working capital of $101,623,000 and $157,885,000 as of
December 31, 1995 and 1994, respectively. The decrease in working capital of
$56,262,000 was primarily due to 1995 capital expenditures of $87,428,000 offset
by cash provided by operating activities. The ratio of current assets to current
liabilities at December 31, 1995, was 2.18:1 compared to 2.92:1 at December 31,
1994. The decrease in the current ratio was primarily the result of decreased
cash and marketable securities utilized for capital projects during 1995. In
addition, the Company had long-term debt related to the financing of the
Company's insurance package, of which the short-term portion was $11,690,000 at
December 31, 1995. The ratio of long-term debt to long-term debt plus
shareholders' equity was 0.20:1 and 0.19:1 at December 31, 1995, and December
31, 1994, respectively.
The Company continues to have cash requirements for debt interest and
principal payments, and for preferred dividends, when and if declared. In 1996,
debt interest and principal payments are estimated to be approximately
$23,900,000. Cumulative dividends on the 4,025,000 outstanding shares of Noble
Drilling's $1.50 Convertible Preferred Stock ("$1.50 Preferred Stock") are
estimated to be approximately $6,038,000 for 1996. The Company expects to fund
these 1996 obligations of $29,938,000 out of cash and short-term investments as
well as cash expected to be provided by operations.
At December 31, 1995, the Company had planned capital expenditures for
1996 of approximately $66,000,000 related to upgrades of several drilling rigs
and replacements of equipment and drill pipe. The Company expects to fund these
improvements to its assets out of cash provided by operations, to the extent
available, and/or existing cash balances.
CREDIT FACILITIES AND LONG-TERM DEBT
On November 3, 1995, the Company entered into a financing agreement with
Transamerica Insurance Finance for a period of 18 months related to the renewal
of its Marine Package, Protection and Indemnity, and Excess Liability insurance
policies. The amount financed totaled $16,561,000 at a fixed interest rate of
6.23 percent.
On June 16, 1994, the Company entered into a credit agreement with First
Interstate Bank of Texas, N.A. for a $25,000,000 revolving credit facility and a
$5,000,000 letter of credit facility (see Note 5 of Notes to Consolidated
Financial Statements included elsewhere herein). At December 31, 1995, the
Company had lines of credit totaling $26,000,000 and letter of credit facilities
aggregating $5,000,000, subject to the Company's maintenance of certain levels
of collateral. Based on the levels of collateral at December 31, 1995, the
Company had $26,000,000 available under these lines of credit and $895,000
available to support the issuance of letters of credit. No amounts were
outstanding under the lines of credit at December 31, 1995.
In 1993, the Company issued $125,000,000 aggregate principal amount of
9 1/4% Senior Notes Due 2003 (the "Senior Notes"), which 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
the 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 sale of
assets, sales and leasebacks, transactions with affiliates, and merger or
consolidations.
In connection with the initial construction of the NN-1, the predecessor
of NN-1 Limited Partnership issued its U.S. Government Guaranteed Ship Financing
Sinking Fund Bonds, of which $1,546,000 was outstanding at December 31, 1995.
The bonds are secured by the vessel, and the applicable security agreement
contains certain restrictions, including restrictions on distributions to
partners, dispositions of assets and 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.
Minimum principal payments on the long-term debt as described above are
$12,210,000 in 1996, $4,417,000 in 1997, $506,000 in 1998, and $125,000,000 due
in 2003.
SUBSEQUENT EVENTS
In March 1995, Statement of Financial Accounting Standards No. 121,
Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
Be Disposed Of, was issued. This statement requires that long-lived assets and
certain identifiable intangibles held and used by an entity be reviewed for
impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. The Company adopted this
standard effective January
14
<PAGE> 17
1, 1996. The Company expects the adoption of this standard to require a charge
to net income of approximately $7,000,000 in the first quarter of 1996.
Subsequent to December 31, 1995, the Company sold for cash a posted barge
rig located in the U.S. Gulf of Mexico. The Company will record a gain on the
sale of this asset of approximately $4,815,000 in the first quarter of 1996.
RESULTS OF OPERATIONS
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>
Year Ended December 31,
------------------------------------
1995 1994 1993
----- ----- -----
<S> <C> <C> <C>
Operating revenues
Contract drilling services
International offshore............................................. 29.9% 29.7% 29.8%
Domestic offshore.................................................. 24.7 33.0 44.6
International land................................................. 4.2 5.6 7.3
Domestic land...................................................... 3.8 2.7 2.8
Labor contract drilling services..................................... 10.7 10.3 12.9
Turnkey drilling services............................................ 21.7 16.0 -
Engineering and consulting services.................................. 3.4 1.1 0.9
Other revenue........................................................ 1.6 1.6 1.7
----- ----- -----
100.0 100.0 100.0
Operating costs
Contract drilling services........................................... (42.2) (45.5) (55.2)
Labor contract drilling services..................................... (8.1) (8.1) (10.5)
Turnkey drilling services............................................ (19.7) (13.3) -
Engineering and consulting services.................................. (2.2) (0.8) (0.8)
Other expense........................................................ (1.0) (1.4) (1.1)
Depreciation and amortization........................................... (11.1) (11.2) (10.9)
Selling, general and administrative..................................... (12.2) (13.5) (10.7)
Other income (expense), net(1).......................................... 0.1 (1.0) 0.1
----- ----- -----
Operating income........................................................ 3.6 5.2 10.9
Interest expense........................................................ (3.7) (3.5) (3.0)
Interest income......................................................... 1.6 1.6 0.9
Other income, net....................................................... 0.1 4.5 0.4
----- ----- -----
Income from continuing operations before
income tax and extraordinary item.................................... 1.6 7.8 9.2
Income tax provision.................................................... (1.0) (1.6) (1.3)
----- ----- -----
Income from continuing operations before extraordinary item............. 0.6 6.2 7.9
Extraordinary item...................................................... - - 0.7
----- ----- -----
Net income.............................................................. 0.6 6.2 8.6
Preferred stock dividends............................................... (2.2) (3.6) (3.0)
----- ----- -----
Net (loss) income applicable to common shares........................... (1.6)% 2.6% 5.6%
===== ===== =====
</TABLE>
- -------------------
(1) Consists of minority interest in 1995 and 1993 and minority interest and
restructuring charges in 1994.
1995 COMPARED WITH 1994
OPERATING REVENUES. During 1995, the Company generated operating revenues
of $327,968,000 compared to operating revenues of $351,988,000 in 1994. This
decrease of $24,020,000 was due primarily to reduced contract drilling services
revenue caused by a softening of market conditions in the U.S. Gulf of Mexico
and Canada. This decrease was partially offset by increased turnkey engineering
and consulting services revenues.
The Company's contract drilling fleet statistics are shown below.
<TABLE>
<CAPTION>
OPERATING DAYS AVERAGE DAYRATE
------------------- ---------------------
1995 1994 1995 1994
------ ------ -------- --------
<S> <C> <C> <C> <C>
CONTRACT DRILLING SERVICES
Offshore..................... 10,127 11,013 $ 17,698 $ 20,024
Land......................... 4,453 4,332 $ 5,811 $ 6,763
</TABLE>
15
<PAGE> 18
Labor contract drilling services revenue decreased by $1,067,000 due to
the decrease in labor contracts and fewer operating days in the U.K.
Turnkey drilling services revenues were $71,273,000 in 1995, compared to
$56,380,000 in 1994, an increase of $14,893,000. Twenty-seven wells were
completed in 1995, compared to twenty-eight in 1994. The increase in revenues
was due to completion of turnkey wells of longer duration in 1995. In 1995, the
average turnkey well was drilled in 50 days compared to the 1994 average of 30
days. Triton's turnkey success ratio deteriorated in 1995, primarily because of
significant operational problems on two domestic wells which caused losses of
$7,293,000.
Engineering and consulting revenues increased from $3,796,000 in 1994 to
$11,264,000 in 1995. The increase of $7,468,000 is mainly attributable to bonus
revenues generated from the alliance program ("Alliance") between the Company
and Lagoven, a subsidiary of the government-owned oil company in Venezuela.
OPERATING COSTS. Operating costs ("Operating Costs") consist of
operating costs and expenses other than depreciation and amortization, selling,
general and administrative costs, minority interest and restructuring charges.
Operating Costs were $240,102,000, or 73 percent of operating revenues, during
1995 compared to $243,208,000, or 69 percent of operating revenues, in 1994.
Contract drilling services costs in 1995 decreased $21,769,000 from 1994 as a
result of reduced offshore activity levels, primarily in the U.S. Gulf of Mexico
and the Bay of Campeche, Mexico.
Labor contract drilling services costs in 1995 decreased $1,815,000 as
compared to 1994. This decrease was due to a reduced number of operating days in
1995 compared to 1994.
Turnkey drilling services costs increased $17,585,000 during 1995. As
noted above, Triton's average turnkey well drilling time increased in 1995,
partially due to operational issues on certain domestic wells. These operational
issues were also the primary cause of the decline in turnkey profit margins to
10 percent in 1995 compared to 17 percent in 1994.
Engineering and consulting services costs in 1995 increased $4,353,000
from 1994. This increase was due primarily to the fact that the 1994 costs only
include amounts from the date the Company acquired Triton in April 1994 through
year end.
DEPRECIATION AND AMORTIZATION EXPENSE. Depreciation and amortization
expenses were $36,492,000 in 1995 compared to $39,519,000 in 1994. The decrease
of $3,027,000 was primarily due to a change in accounting estimates offset by
the effects of 1995 capital spending. Effective January 1, 1995, the estimated
salvage values and remaining depreciable lives of certain rigs were adjusted to
better reflect their economic lives and to be consistent with other similar
assets owned by the Company. The effect of this change in estimate was a
decrease in depreciation and amortization of $6,160,000, or $0.07 per share.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative ("SG&A") expenses were $40,139,000 during 1995 as compared to
$47,606,000 in 1994, a decrease of $7,467,000. SG&A expenses decreased from 1994
due in part to reductions in overhead achieved as a result of restructuring and
consolidation efforts. The 1994 SG&A expenses included approximately $5,300,000
in pooling expenses related to the Chiles Merger.
RESTRUCTURING CHARGES. A restructuring charge of $3,661,000 related to
the Chiles Merger was recorded in 1994 as a result of facility consolidation,
including the write-down of certain of the Company's owned properties and, to a
lesser extent, severance costs.
OTHER, NET. Other, net was $250,000 during 1995 compared to $15,743,000
during 1994. This decrease was principally due to the 1994 gain of $8,000,000 on
the sale of a drilling rig, net unrealized gains of $4,162,000 on marketable
equity investments, and a gain of $1,530,000 on the recovery of a previously
written-off note receivable, offset by realized losses on marketable debt
securities of $2,199,000.
INCOME TAX PROVISION. Provisions for income taxes of $3,272,000 and
$5,672,000 were recorded in 1995 and 1994, respectively. This decrease was
primarily due to a $2,100,000 U.S. separate return year loss carryback benefit
recorded by Triton.
At December 31, 1995, the Company had approximately $6,000,000 in
withholding tax receivables related to withholding taxes in Nigeria. Management
believes that this amount will be realized by obtaining the required tax
certificates from the related operators.
16
<PAGE> 19
1994 COMPARED WITH 1993
OPERATING REVENUES. During 1994, the Company generated operating revenues
of $351,988,000 compared to operating revenues of $264,531,000 in 1993. This
increase of $87,457,000 was due primarily to the acquisition of Triton and to
recording a full year's revenue from the assets purchased from The Western
Company of North America in October 1993. The Company's contract drilling fleet
statistics are shown below.
<TABLE>
<CAPTION>
OPERATING DAYS AVERAGE DAYRATE
------------------ ---------------------
1994 1993 1994 1993
------ ----- -------- --------
<S> <C> <C> <C> <C>
CONTRACT DRILLING SERVICES
Offshore.................... 11,013 9,137 $ 20,024 $ 21,105
Land........................ 4,332 3,464 $ 6,763 $ 7,449
</TABLE>
Labor contract drilling services revenue increased by $1,729,000 in 1994
due to the increased number of labor contracts compared to 1993.
Turnkey drilling services revenues were $56,380,000 in 1994, which
represents revenue from the date of the acquisition of Triton. Twenty-eight
wells were completed in 1994, subsequent to the acquisition of Triton, for
average revenues per completed well of approximately $2,000,000.
The 1994 increases in engineering and consulting services revenues and
other revenue of $1,504,000 and $1,345,000, respectively, were primarily due to
the Triton acquisition.
OPERATING COSTS. Operating Costs were $243,208,000, or 69 percent of
operating revenues, during 1994, compared to $178,684,000, or 68 percent of
operating revenues, in 1993. The increase in Operating Costs is due to the
increase in turnkey drilling services expense and the increase in operating days
as discussed above.
DEPRECIATION AND AMORTIZATION EXPENSE. Depreciation and amortization
expenses were $39,519,000 in 1994, as compared to $28,886,000 in 1993. The
increase of $10,633,000 was principally due to a full year's depreciation on the
assets purchased from Western in October 1993 and the increase of approximately
$35,000,000 in capital expenditures compared to 1993.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. SG&A expenses were
$47,606,000 during 1994, as compared to $28,284,000 in 1993, an increase of
$19,322,000. SG&A expenses increased from 1993 due to the Triton acquisition
($7,800,000), pooling expenses related to the Chiles Merger ($5,300,000), and a
full year of administrative expense from the Venezuela and Zaire operations
($2,800,000), with the balance due to an increased level of corporate personnel.
RESTRUCTURING CHARGES. A restructuring charge of $3,661,000 related to
the Chiles Merger was recorded in 1994 as a result of facility consolidation,
including the write-down of certain of the Company's owned properties and, to a
lesser extent, severance costs.
INTEREST EXPENSE, NET OF INTEREST INCOME. Interest expense, net of
interest income, was $6,711,000 in 1994, as compared to net interest expense of
$5,541,000 in 1993. This increase in net interest expense was due to increased
interest expense of $4,313,000 related to the issuance of the Senior Notes in
October 1993, partially offset by additional interest income of $3,143,000. The
increase in interest income is attributable to the cash proceeds from Chiles'
preferred stock offering in October 1993 (see Note 6 of Notes to Consolidated
Financial Statements included elsewhere herein).
OTHER, NET. Other, net was $15,743,000 during 1994, compared to
$1,047,000 in 1993. This increase was principally due to a gain of $8,000,000 on
the sale of a drilling rig, net unrealized gains of $4,162,000 on marketable
equity investments, and a gain of $1,530,000 on the recovery of a previously
written-off note receivable, offset by realized losses on marketable debt
securities of $2,199,000.
INCOME TAX PROVISION. Provisions for income taxes of $5,672,000 and
$3,333,000 were recorded in 1994 and 1993, respectively. This increase was due
to the foreign deferred tax provision of $3,073,000 in 1994, related to the book
and tax depreciation differences for the assets deployed in Venezuela and
Mexico.
17
<PAGE> 20
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The following financial statements are filed in this Item 8:
Report of Independent Accountants (Price Waterhouse LLP)
Report of Independent Public Accountants (Arthur Andersen LLP)
Consolidated Balance Sheets at December 31, 1995 and 1994
Consolidated Statements of Operations for each of the three years in
the period ended December 31, 1995
Consolidated Statements of Cash Flows for each of the three years in
the period ended December 31, 1995
Consolidated Statements of Shareholders' Equity for each of the
three years in the period ended December 31, 1995
Notes to Consolidated Financial Statements
18
<PAGE> 21
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of Noble Drilling Corporation
In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of operations, of cash flows and of changes in
shareholders' equity present fairly, in all material respects, the financial
position of Noble Drilling Corporation and its subsidiaries (the "Company") at
December 31, 1995 and 1994, and the results of their operations and their cash
flows for the two years ended December 31, 1995, in conformity with generally
accepted accounting principles. These financial statements are the
responsibility of the Company's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with generally accepted auditing
standards which 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, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
Houston, Texas
January 31, 1996, except as to Note 16, which is as of March 13, 1996
19
<PAGE> 22
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors and Shareholders of Noble Drilling Corporation:
We have audited the accompanying consolidated statements of operations, cash
flows and shareholders' equity of Noble Drilling Corporation (a Delaware
corporation) and subsidiaries for the year ended December 31, 1993. These
financial statements reflect a restatement of the Company's previously reported
amounts for the merger with Chiles Offshore Corporation ("Chiles"), see Note 2.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audit.
We conducted our audit 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 audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the results of operations and cash flows of Noble
Drilling Corporation and subsidiaries (including Chiles) for year ended December
31, 1993, in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Houston, Texas
September 15, 1994
20
<PAGE> 23
NOBLE DRILLING CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except par value amounts)
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------
1995 1994
--------- ---------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents......................................................... $ 41,307 $ 95,163
Restricted cash................................................................... - 898
Investment in marketable equity securities........................................ 6,131 9,489
Investment in marketable debt securities.......................................... 17,031 39,673
Accounts receivable (net allowance of $1,280 and $691)............................ 60,251 61,563
Costs of uncompleted contracts in excess of billings.............................. 6,646 841
Inventories....................................................................... 19,795 14,008
Other current assets.............................................................. 36,851 18,584
--------- ---------
Total current assets............................................................ 188,012 240,219
--------- ---------
PROPERTY AND EQUIPMENT
Drilling equipment and facilities................................................. 871,539 804,445
Other............................................................................. 23,891 20,461
--------- ---------
895,430 824,906
--------- ---------
Accumulated depreciation.......................................................... (352,452) (331,584)
--------- ---------
542,978 493,322
--------- ---------
OTHER ASSETS......................................................................... 10,402 6,348
--------- ---------
$ 741,392 $ 739,889
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Short-term debt and current installments of long-term debt........................ $ 12,210 $ 6,244
Accounts payable.................................................................. 30,782 34,662
Accrued payroll and related costs................................................. 13,674 14,888
Taxes payable..................................................................... 12,953 12,972
Interest payable.................................................................. 2,860 2,853
Other current liabilities......................................................... 13,910 10,715
--------- ---------
Total current liabilities....................................................... 86,389 82,334
LONG-TERM DEBT....................................................................... 129,923 126,546
OTHER LIABILITIES.................................................................... 1,338 2,767
MINORITY INTEREST.................................................................... 249 631
--------- ---------
217,899 212,278
--------- ---------
SHAREHOLDERS' EQUITY
$2.25 Preferred stock-par value $1; all shares converted or redeemed as of
December 31, 1995; 15,000 shares authorized; 2,989 issued and outstanding
as of December 31, 1994......................................................... - 2,989
$1.50 Preferred stock-par value $1; convertible; cumulative; redeemable at the
option of the Company; aggregate liquidation preference of $100,625; 15,000
shares authorized; 4,025 issued and outstanding................................. 4,025 4,025
Common stock-par value $.10; 200,000 shares authorized; 94,548 issued and
94,483 outstanding in 1995; 78,076 issued and 77,826 outstanding in 1994........ 9,455 7,808
Capital in excess of par value.................................................... 589,866 590,733
Unrealized losses on marketable securities........................................ (115) (1,847)
Minimum pension liability......................................................... (3,403) (3,825)
Cumulative translation adjustment................................................. (2,081) (2,325)
Accumulated deficit............................................................... (73,802) (68,197)
Treasury stock, at cost........................................................... (452) (1,750)
--------- ---------
523,493 527,611
--------- ---------
COMMITMENTS AND CONTINGENCIES........................................................ - -
--------- ---------
$ 741,392 $ 739,889
========= =========
</TABLE>
See accompanying notes to the consolidated financial statements.
21
<PAGE> 24
NOBLE DRILLING CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
OPERATING REVENUES
Contract drilling services...................... $205,110 $249,820 $223,321
Labor contract drilling services................ 35,136 36,203 34,474
Turnkey drilling services....................... 71,273 56,380 -
Engineering and consulting services............. 11,264 3,796 2,292
Other revenue................................... 5,185 5,789 4,444
-------- -------- --------
327,968 351,988 264,531
-------- -------- --------
OPERATING COSTS AND EXPENSES
Contract drilling services...................... 138,340 160,109 146,008
Labor contract drilling services................ 26,540 28,355 27,857
Turnkey drilling services....................... 64,471 46,886 -
Engineering and consulting services............. 7,311 2,958 2,083
Other expense................................... 3,440 4,900 2,736
Depreciation and amortization................... 36,492 39,519 28,886
Selling, general and administrative............. 40,139 47,606 28,284
Restructuring charges........................... - 3,661 -
Minority interest............................... (214) (169) (232)
-------- -------- --------
316,519 333,825 235,622
-------- -------- --------
OPERATING INCOME................................... 11,449 18,163 28,909
OTHER INCOME (EXPENSE)
Interest expense................................ (12,156) (12,351) (8,038)
Interest income................................. 5,323 5,640 2,497
Other, net...................................... 250 15,743 1,047
-------- -------- --------
INCOME FROM CONTINUING OPERATIONS BEFORE
INCOME TAXES AND EXTRAORDINARY ITEM............. 4,866 27,195 24,415
INCOME TAX PROVISION............................... (3,272) (5,672) (3,333)
-------- -------- --------
INCOME FROM CONTINUING OPERATIONS BEFORE
EXTRAORDINARY ITEM............................... 1,594 21,523 21,082
-------- -------- --------
EXTRAORDINARY ITEM................................. - - 1,770
-------- -------- --------
NET INCOME......................................... 1,594 21,523 22,852
PREFERRED STOCK DIVIDENDS.......................... (7,199) (12,764) (7,936)
-------- -------- --------
NET (LOSS) INCOME APPLICABLE TO COMMON SHARES... $ (5,605) $ 8,759 $ 14,916
======== ======== ========
NET (LOSS) INCOME APPLICABLE TO COMMON SHARES
PER SHARE:
Before extraordinary item....................... $ (0.08) $ 0.11 $ 0.20
Extraordinary item.............................. - - 0.02
-------- -------- --------
NET (LOSS) INCOME APPLICABLE TO COMMON
SHARES PER SHARE................................. $ (0.08) $ 0.11 $ 0.22
======== ======== ========
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING......... 89,736 77,576 66,923
</TABLE>
See accompanying notes to the consolidated financial statements.
22
<PAGE> 25
NOBLE DRILLING CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------
1995 1994 1993
-------- -------- ---------
<S> <C> <C> <C>
CASH PROVIDED BY OPERATING ACTIVITIES
Net income..................................................... $ 1,594 $ 21,523 $ 22,852
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization................................ 36,492 39,519 28,886
Gain on sale of assets....................................... (829) (9,546) (785)
(Gain) loss on foreign exchange.............................. (206) 76 (79)
Deferred income tax (benefit) provision...................... (449) 3,433 -
Restructuring charges........................................ - 3,661 -
Extraordinary item........................................... - - (1,770)
Other........................................................ 132 (6,009) 227
Changes in current assets and liabilities:
Accounts receivable........................................ (8,480) 20,208 (18,694)
Proceeds from sale of marketable equity securities, net.... 3,398 - -
Other assets............................................... (17,361) 20,791 (11,508)
Accounts payable........................................... 11,356 (2,635) 7,863
Other liabilities.......................................... 3,836 (12,365) 7,806
-------- -------- ---------
29,483 78,656 34,798
-------- -------- ---------
CASH (USED IN) INVESTING ACTIVITIES
Purchase of property and equipment............................. (91,202) (55,834) (20,259)
Acquisition of Western rigs and related assets................. - - (150,000)
Proceeds from Triton acquisition, net of negative
noncash working capital of $3,532 acquired................. - 13,600 -
Proceeds from sale of property and equipment................... 1,879 13,792 1,712
Proceeds from sale of (investment in) marketable debt
securities................................................. 24,374 (2,069) (15,100)
Investment in unconsolidated affiliate......................... - (342) (983)
Payments to minority interest holders, net..................... - (4,478) -
-------- -------- ---------
(64,949) (35,331) (184,630)
-------- -------- ---------
CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES
Preferred stock conversion costs............................... (2,406) - -
Proceeds from long-term debt................................... - - 125,000
Payment of long-term debt...................................... (520) (598) (109,592)
Dividends paid on preferred stock.............................. (8,881) (12,764) (7,936)
Proceeds from issuance of common stock, net.................... 356 2,604 97,451
Proceeds from issuance of preferred stock, net................. - - 96,500
Payment of short-term debt..................................... (6,698) (7,500) (2,449)
Other.......................................................... 898 1,211 (820)
-------- -------- ---------
(17,251) (17,047) 198,154
-------- -------- ---------
EFFECT OF EXCHANGE RATE CHANGES ON CASH........................... (1,139) (292) 645
-------- -------- ---------
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS.................. (53,856) 25,986 48,967
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD.................... 95,163 69,177 20,210
-------- -------- ---------
CASH AND CASH EQUIVALENTS, END OF PERIOD.......................... $ 41,307 $ 95,163 $ 69,177
======== ======== =========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period for:
Interest..................................................... $ 11,738 $ 11,947 $ 7,033
Income taxes................................................. $ 3,946 $ 6,254 $ 2,123
Noncash investing and financing activities:
Insurance financing agreement................................ $ 14,838 - -
Triton acquisition with common stock......................... - $ 5,169 -
Triton acquisition with notes payable........................ - $ 4,000 -
Triton acquisition, minority interest assumed................ - $ 5,392 -
Rig purchase with common stock............................... - - $ 5,725
</TABLE>
See accompanying notes to the consolidated financial statements.
23
<PAGE> 26
NOBLE DRILLING CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(In thousands)
<TABLE>
<CAPTION>
$2.25 PREFERRED STOCK $1.50 PREFERRED STOCK COMMON STOCK
--------------------- --------------------- --------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
JANUARY 1, 1993...................... 2,990 $ 2,990 - - 63,088 $6,308
Net income........................... - - - - - -
Issuance of stock:
Sale of common stock............... - - - - 12,041 1,204
Sale of preferred stock............ - - 4,025 $4,025 - -
Purchase of Portal rigs............ - - - - 626 63
Exercise of stock options.......... - - - - 486 49
Contribution to benefit plans...... - - - - 130 13
Stock options granted at discount.... - - - - - -
Dividends on preferred stock......... - - - - - -
Translation adjustment............... - - - - - -
----- ------- ----- ------ ------ ------
DECEMBER 31, 1993.................... 2,990 2,990 4,025 4,025 76,371 7,637
Net income........................... - - - - - -
Issuance of stock:
Purchase of Triton................. - - - - 752 75
Exercise of stock options.......... - - - - 197 20
Contribution to benefit plans...... - - - - 271 27
Exchange of Chiles options......... - - - - 480 48
Stock options granted at discount.... - - - - - -
Conversion of preferred stock........ (1) (1) - - 5 1
Dividends on preferred stock......... - - - - - -
Net unrealized losses on
marketable securities............... - - - - - -
Minimum pension liability............ - - - - - -
Translation adjustment............... - - - - - -
----- ------- ----- ------ ------ ------
DECEMBER 31, 1994.................... 2,989 2,989 4,025 4,025 78,076 7,808
Net income........................... - - - - - -
Conversion/redemption of
preferred stock..................... (2,989) (2,989) - - 16,199 1,620
Preferred stock conversion costs..... - - - - - -
Net unrealized losses on
marketable securities............... - - - - - -
Minimum pension liability............ - - - - - -
Translation adjustment............... - - - - - -
Dividends on preferred stock......... - - - - - -
Issuance of stock:
Exercise of stock options.......... - - - - 109 11
Contribution to benefit plans...... - - - - 164 16
Contribution of treasury stock to
restricted stock plan............ - - - - - -
Restricted stock plan shares
returned to treasury............. - - - - - -
----- ------- ----- ------ ------ ------
DECEMBER 31, 1995.................... - $ - 4,025 $4,025 94,548 $9,455
===== ======= ===== ====== ====== ======
</TABLE>
See accompanying notes to the consolidated financial statements.
24
<PAGE> 27
NOBLE DRILLING CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY -- (CONTINUED)
(In thousands)
<TABLE>
<CAPTION>
UNREALIZED
CAPITAL LOSSES ON MINIMUM CUMULATIVE TREASURY
IN EXCESS OF MARKETABLE PENSION TRANSLATION ACCUMULATED ---------------
PAR VALUE SECURITIES LIABILITY ADJUSTMENT DEFICIT SHARES AMOUNT
------------ ---------- --------- ----------- ----------- ------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
JANUARY 1, 1993...................... $388,453 - - $(2,495) $(91,872) 250 $(1,750)
Net income........................... - - - - 22,852 - -
Issuance of stock:
Sale of common stock............... 93,705 - - - - - -
Sale of preferred stock............ 92,475 - - - - - -
Purchase of Portal rigs............ 5,662 - - - - - -
Exercise of stock options.......... 2,047 - - - - - -
Contribution to benefit plans...... 560 - - - - - -
Stock options granted at discount.... 208 - - - - - -
Dividends on preferred stock......... - - - - (7,936) - -
Translation adjustment............... - - - 209 - - -
-------- ------- ------- ------- -------- ---- -------
DECEMBER 31, 1993.................... 583,110 - - (2,286) (76,956) 250 (1,750)
Net income........................... - - - - 21,523 - -
Issuance of stock:
Purchase of Triton................. 5,094 - - - - - -
Exercise of stock options.......... 1,208 - - - - - -
Contribution to benefit plans...... 1,781 - - - - - -
Exchange of Chiles options......... (480) - - - - - -
Stock options granted at discount.... 20 - - - - - -
Conversion of preferred stock........ - - - - (12,764) - -
Dividends on preferred stock......... - - - - - - -
Net unrealized losses on
marketable securities............... - $(1,847) - - - - -
Minimum pension liability............ - - $(3,825) - - - -
Translation adjustment............... - - - (39) - - -
-------- ------- ------- ------- -------- ---- -------
DECEMBER 31, 1994.................... 590,733 (1,847) (3,825) (2,325) (68,197) 250 (1,750)
Net income........................... - - - - 1,594 - -
Conversion/redemption of
preferred stock..................... 1,369 - - - - - -
Preferred stock conversion costs..... (2,406) - - - - - -
Net unrealized losses on
marketable securities............... - 1,732 - - - - -
Minimum pension liability............ - - 422 - - - -
Translation adjustment............... - - - 244 - - -
Dividends on preferred stock......... - - - - (7,199) - -
Issuance of stock:
Exercise of stock options.......... 345 - - - - - -
Contribution to benefit plans...... 1,123 - - - - - -
Contribution of treasury stock to
restricted stock plan............ (1,480) - - - - (211) 1,480
Restricted stock plan shares
returned to treasury............... 182 - - - - 26 (182)
-------- ------- ------- ------- -------- ---- -------
DECEMBER 31, 1995.................... $589,866 $ (115) $(3,403) $(2,081) $(73,802) 65 $ (452)
======== ======= ======= ======= ======== ==== =======
</TABLE>
See accompanying notes to the consolidated financial statements.
25
<PAGE> 28
NOBLE DRILLING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands,
except per share amounts)
NOTE 1 -- ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION AND BUSINESS
Noble Drilling Corporation ("Noble Drilling" or, together with its
consolidated subsidiaries, unless the context requires otherwise, the "Company")
is primarily engaged in domestic and international contract oil and gas drilling
and workover operations. The Company's international operations are conducted in
the United Kingdom, Nigeria, Zaire, India, Venezuela, Mexico, Canada, and Qatar.
On September 15, 1994, Chiles Offshore Corporation ("Chiles") merged with Noble
Offshore Corporation ("NOC"), a wholly owned subsidiary of Noble Drilling (the
"Chiles Merger"). See Note 2.
The contract drilling industry is a highly competitive and cyclical
business characterized by high capital and maintenance costs. Although
conditions in recent years in the oil and gas industry have precipitated
consolidation of industry participants, there remains an oversupply of drilling
equipment. As a consequence, there has been intense competition for available
drilling contracts resulting in equipment being idle for long periods of time
and at generally unfavorable terms and prices for contract drilling.
The Company follows a policy of keeping its equipment well maintained and
technologically competitive. However, its equipment could be made obsolete by
the development of new techniques and equipment. In addition, industry-wide
shortages of supplies, services, skilled personnel, and equipment necessary to
conduct the Company's business, such as drill pipe, have occurred from time to
time in the past and such shortages could occur again.
The Company's operations are subject to the many hazards inherent in the
drilling business, including blowouts, cratering, fires and collisions or
groundlings of offshore equipment, which could cause substantial damage to the
environment. In addition, the Company's operations are subject to damage or loss
from adverse weather and seas. These hazards could cause personal injury and
loss of life, suspend drilling operations or seriously damage or destroy the
property and equipment involved and, in addition to the environmental damage,
could cause substantial damage to producing formations and surrounding areas.
Although the Company maintains insurance against many of these hazards, such
insurance is subject to substantial deductibles and provides for premium
adjustments based on claims. It also excludes certain matters from coverage,
such as loss of earnings on certain rigs.
Under turnkey drilling contracts, Triton Engineering Services Company
("Triton") generally assumes the risk of pollution and environmental damage, but
on occasion receives indemnification from the customer for environmental and
pollution liabilities in excess of Triton's pollution insurance coverage.
Further, Triton is not insured against certain drilling risks that could result
in delays or nonperformance of a turnkey drilling contract, although it
generally maintains insurance against delays related to loss of well control.
The Company's international operations are also subject to certain
political, economic and other uncertainties including, among others, risks of
war and civil disturbances, expropriation, nationalization, renegotiation or
modification of existing contracts, taxation policies, foreign exchange
restrictions, international monetary fluctuations and other hazards arising out
of foreign governmental sovereignty over certain areas in which the Company
conducts operations. The Company has insurance covering expropriation and other
political risks to the extent available to the Company at rates it considers
prudent to pay.
CONSOLIDATION
The consolidated financial statements include the accounts of the
Company, its wholly owned subsidiaries, and the Company's share of the assets,
liabilities and operations of Perforadora Faja de Oro, S.A. de C.V. ("Faja Joint
Venture") and NN-1 Limited Partnership, of which the Company is the general
partner. The minority interest in Faja Joint Venture (10 percent) and NN-1
Limited Partnership (approximately 10 percent) is included in the balance sheets
and the statements of operations as minority interest. In 1994, the Company made
distributions of $4,500,000 to its partner in Faja Joint Venture. All
significant intercompany accounts and transactions have been eliminated in
consolidation.
Certain reclassifications have been made in the 1994 and 1993
consolidated financial statements to conform to the classifications used in the
1995 consolidated financial statements. These reclassifications have no impact
on net income or loss.
FOREIGN CURRENCY TRANSLATION
The Company follows a translation policy in accordance with Statement of
Financial Accounting Standards ("SFAS") No. 52, Foreign Currency Translation.
The U.S. dollar has been designated as the functional currency where
appropriate, based on an evaluation of such factors as the markets in which the
subsidiary operates, generation of cash flow, financing
26
<PAGE> 29
NOBLE DRILLING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(Unless otherwise indicated, dollar amounts in tables are in thousands,
except per share amounts)
activities and intercompany arrangements. For the Company's subsidiaries in the
United Kingdom and Canada, the local currency is the functional currency. Assets
and liabilities are translated at the rates of exchange on the balance sheet
date. Income and expense items are translated at average rates of exchange. The
resulting gains or losses arising from the translation of accounts from the
functional currency to the U.S. dollar are included as a separate component of
shareholders' equity designated as cumulative translation adjustment.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents include cash on hand, demand deposits with
banks and all highly liquid investments with original maturities of three months
or less.
In accordance with SFAS No. 95, Statement of Cash Flows, cash flows from
the Company's operations in the United Kingdom and Canada are calculated based
on their functional currency. As a result, amounts related to assets and
liabilities reported on the Consolidated Statements of Cash Flows will not
necessarily agree with changes in the corresponding balances on the Consolidated
Balance Sheets. The effect of exchange rate changes on cash balances held in
foreign currencies is reported on a separate line below cash (used in) provided
by financing activities.
The restricted cash balance of $898,000 at December 31, 1994, was
restricted as a result of collateral requirements imposed by a lender of the
Company. This restriction was lifted in 1995.
INVESTMENT IN MARKETABLE SECURITIES
Pursuant to the cash management policy implemented in 1992, the Company
invests in marketable debt securities. Effective January 1, 1994, the Company
adopted SFAS No. 115, Accounting for Certain Investments in Debt and Equity
Securities. The Company classifies its investments in marketable debt securities
as available for sale and its investments in marketable equity securities as
trading. See Note 3.
INVESTMENT IN UNCONSOLIDATED AFFILIATES
The Company uses the equity method to account for affiliates in which it
does not have voting control.
INVENTORIES
Inventories of spare parts, material and supplies held for consumption
are stated principally at average cost.
PROPERTY AND EQUIPMENT
Property and equipment is stated at cost, reduced by provisions to
recognize economic impairment in value when management determines that such
impairment has occurred. Drilling equipment and facilities are depreciated using
the straight-line method over estimated remaining useful lives ranging from
three to twenty-five years from the date of construction or major refurbishment.
All other property and equipment is depreciated using the straight-line method
over useful lives ranging from three to twenty years.
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 reduction in the net loss
applicable to common shares of $6,160,000, or $0.07 per common share, for the
year ended December 31, 1995.
Maintenance and repairs on drilling equipment are charged to expense as
incurred. Total maintenance and repair expenses for the years ended December 31,
1995, 1994, and 1993, were approximately $26,189,000, $33,700,000, and
$25,900,000, respectively. When assets are sold, retired or otherwise disposed
of, the cost and related accumulated depreciation are eliminated from the
accounts and the gain or loss is recognized.
In March 1995, SFAS No. 121, Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to Be Disposed Of, was issued. This statement
requires that long-lived assets and certain identifiable intangibles held and
used by an entity be reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. The Company adopted this standard effective January 1, 1996. The
Company expects the adoption of this standard to require a charge to net income
of approximately $7,000,000 in the first quarter of 1996.
OTHER ASSETS
In 1995, other assets primarily included deferred debt issuance costs in
connection with the October 7, 1993, issuance of debt securities (see Note 4),
the long-term portion of prepaid insurance costs and goodwill related to the
Triton acquisition. The deferred debt issuance costs in connection with the
October 7, 1993 issuance of debt securities (see Note 4)
27
<PAGE> 30
NOBLE DRILLING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(Unless otherwise indicated, dollar amounts in tables are in thousands,
except per share amounts)
totaled $4,015,000 and are being amortized over the life of the debt securities.
The accumulated amortization at December 31, 1995 and 1994, was $864,000 and
$540,000, respectively. The prepaid insurance costs totaled $3,230,000 at
December 31, 1995, and are being amortized over the term of the insurance
policy. The goodwill related to Triton totaled $1,775,000 at December 31, 1995,
and is being amortized over seventeen years.
REVENUE RECOGNITION
Revenues generated from the Company's dayrate-basis drilling contracts
are recognized as services are performed. The Company's turnkey drilling
contracts are of a short-term, fixed fee nature, and accordingly, revenues and
expenses are recognized using the completed contract method. When estimates of
projected revenues and costs indicate a loss, the total estimated loss is
accrued.
CONCENTRATION OF CREDIT RISK
The primary market for the Company's services is the offshore oil and gas
industry, and the Company's customers consist primarily of major oil companies,
independent oil and gas producers and government-owned oil companies. The
Company performs ongoing credit evaluations of its customers and generally does
not require material collateral. The Company provides allowances for potential
credit losses when necessary.
NET (LOSS) INCOME APPLICABLE TO COMMON SHARES PER SHARE
Net (loss) income 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.
Each outstanding share of the $2.25 Preferred Stock and $1.50 Convertible
Preferred Stock ("$1.50 Preferred Stock") was assumed to be converted, at
January 1, 1995, into 5.41946 and 2.4446 shares of common stock, respectively,
for purposes of calculating fully diluted earnings per share. The calculation of
net (loss) income applicable to common shares per share assuming full dilution
was antidilutive; therefore, fully diluted amounts are not presented. The
Preferred Conversion Payment of approximately $1,524,000 in March 1995 (see Note
6) 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
$0.06 to $0.08 for the year ended December 31, 1995. See Note 13.
CERTAIN SIGNIFICANT ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amount of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
NOTE 2 -- ACQUISITIONS AND MERGERS
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 common stock of Chiles and the exchange of 4,025,000 shares of Noble
Drilling $1.50 convertible preferred stock ("$1.50 Preferred Stock")
(liquidation preference $25.00 per share), par value $1.00 per share, for all
the outstanding shares of Chiles $1.50 convertible preferred stock. The Chiles
Merger was accounted for as a pooling of interests and all financial information
for the year of the transaction and prior periods has been restated to reflect
this merger. In addition, Noble Drilling issued an additional 480,000 shares of
its common stock in exchange for the cancellation of outstanding Chiles stock
options.
On April 22, 1994, the Company acquired all of the issued and outstanding
shares of common stock (the "Shares") of Triton pursuant to the terms of the
Stock Purchase Agreement dated April 22, 1994. In consideration for the Shares,
the Company paid approximately $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 to pay additional
consideration on April 22, 1996, including issuance of up to 254,551 shares of
Noble Drilling common stock, if certain financial conditions are achieved. The
acquisition of Triton has been accounted for under the purchase method, and
accordingly, Triton's operating results have been included in the consolidated
operating results since the date of acquisition.
The Company acquired nine mobile offshore jackup drilling rigs and
associated assets (the "Western Acquisition") from The Western Company of North
America ("Western") for $150,000,000 in cash on October 7, 1993. The Western
28
<PAGE> 31
NOBLE DRILLING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(Unless otherwise indicated, dollar amounts in tables are in thousands,
except per share amounts)
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 data that give effect to the acquisition of
Triton as if it had occured on January 1, 1994 and January 1, 1993 and the
acquisition of Western as it had occurred on January 1, 1993.
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------
1994 1993
-------- --------
(Unaudited)
<S> <C> <C>
Operating revenues ................................. $378,123 $428,284
Net income applicable to common shares ............. $ 8,853 $ 9,256
Net income applicable to common shares per share ... $ 0.11 $ 0.12
</TABLE>
On September 16, 1994, the Company exchanged its interest in Grasso
Corporation for 645,656 shares of common stock of Offshore Logistics, Inc. This
investment is classified as a marketable equity security. See Note 3.
NOTE 3 -- MARKETABLE SECURITIES
Effective January 1, 1994, the Company adopted 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. Realized gains and losses on sales
of investments are included in income on a specific identification basis.
As of December 31, 1995, the Company classified all of its debt
securities with original maturities of more than three months 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 December 31, 1995 and December 31, 1994:
<TABLE>
<CAPTION>
December 31, 1995
--------------------------------------
Amortized Unrealized
Debt Security/Maturity Cost Fair Value Losses
- --------------------------------------- --------- ---------- ----------
<S> <C> <C> <C>
Corporate Obligations
Mature within 1 year ............... $ 1,520 $ 1,520 --
Mature after 1 year through 5 years 7,258 7,214 $ (44)
-------- -------- --------
8,778 8,734 (44)
-------- -------- --------
U.S. Government Obligations
Mature after 1 year through 5 years 8,368 8,297 (71)
-------- -------- --------
Total ................................. $ 17,146 $ 17,031 $ (115)
======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
December 31, 1994
--------------------------------------
Amortized Unrealized
Debt Security/Maturity Cost Fair Value Losses
- --------------------------------------- --------- ---------- ----------
<S> <C> <C> <C>
Corporate Obligations
Mature within 1 year ............... $ 11,526 $ 11,447 $ (79)
Mature after 1 year through 5 years 4,485 4,412 (73)
-------- -------- --------
16,011 15,859 (152)
-------- -------- --------
U.S. Government Obligations
Mature within 1 year ............... $ 5,156 $ 5,010 $ (146)
Mature after 1 year through 5 years 20,353 18,804 (1,549)
-------- -------- --------
25,509 23,814 (1,695)
-------- -------- --------
Total ................................. $ 41,520 $ 39,673 $ (1,847)
======== ======== ========
</TABLE>
29
<PAGE> 32
NOBLE DRILLING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(Unless otherwise indicated, dollar amounts in tables are in thousands,
except per share amounts)
The unrealized loss on debt securities of $115,000 and $1,847,000 as of
December 31, 1995 and 1994, respectively, is included as a reduction of
shareholders' equity in accordance with SFAS No. 115. Total realized losses
related to short-term investments for the twelve months ended December 31, 1995
and 1994, were $15,000 and $2,199,000, respectively.
The Company categorizes its investments in marketable equity securities
as trading securities. These investments are classified as current assets and
were recorded at a fair value of $6,131,000 at December 31, 1995. Total proceeds
from the sale of these securities were $3,670,000 and $0 for the years ended
December 31, 1995 and 1994, respectively. Total realized gains on these equity
investments for the years ended December 31, 1995 and 1994 were $371,000 and $0,
respectively. Total net unrealized (losses) and gains related to these equity
investments for the years ended December 31, 1995 and 1994, were $(56,000) and
$4,162,000, respectively.
NOTE 4 -- DEBT
On November 3, 1995, the Company entered into a financing agreement with
Transamerica Insurance Finance for a period of eighteen months related to the
renewal of its Marine Package, Protection and Indemnity, and Excess Liability
insurance policies. The amount financed totaled $16,561,000 at a fixed interest
rate of 6.23 percent per annum.
On October 14, 1993, the Company prepaid a promissory note with proceeds
from the Public Offerings (as defined below). The terms of the note provided
that interest did not accrue from September 1, 1991 through December 31, 1992,
after which date interest on the unpaid principal amount accrued at a fixed rate
of 7.5 percent per annum. The Company had accrued interest on the note at 4.9
percent for all periods, which was the imputed rate based on the revised note
terms. An extraordinary gain of $1,770,000 for extinguishment of debt was
recognized in 1993 (see Note 10) from the prepayment of the note, representing
excess accrued interest.
On October 7, 1993, in connection with the Western Acquisition and the
issuance of 12,041,000 shares of Noble Drilling common stock in an underwritten
public offering (the "Stock Offering") (see Note 6), the Company issued
$125,000,000 principal amount of 9 1/4% Senior Notes Due 2003 ("Senior Notes")
(the Stock Offering and the issuance of Senior Notes are collectively referred
to as the "Public Offerings"). 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 leaseback, transactions with affiliates, and mergers or
consolidations.
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 $1,546,000 principal amount was outstanding at
December 31, 1995. The bonds mature in 1998, and bear interest at the rate of
8.95 percent per annum, payable semi-annually on June 15 and December 15. 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 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 net book value of the vessel at
December 31, 1995, was $12,131,000. The Company's sharing percentage in NN-1
Limited Partnership's distribution from operations is generally 90 percent. The
NN-1 has not been under contract since March of 1993.
The Company and its wholly owned subsidiary, Noble Drilling (West Africa)
Inc. ("NDWA"), were parties to a secured loan agreement (the "Project Loan
Agreement") with US WEST Financial Services, Inc. dated as of October 31, 1990,
as amended, pursuant to which NDWA borrowed $52,500,000 for the purpose of
financing, in part, the equipping, refurbishment and mobilization to Nigeria of
four offshore drilling rigs: the NN-1, Gene Rosser, Lewis Dugger and Chuck
Syring. On July 2, 1993, the final installment of $6,562,000 plus accrued
interest was paid in accordance with the terms of the Project Loan Agreement.
Interest was charged under the Project Loan Agreement at the fixed rate of 11.12
percent per annum.
Annual maturities of long-term debt are $12,210,000 in 1996, $4,417,000
in 1997, $506,000 in 1998, and $125,000,000 due in 2003.
30
<PAGE> 33
NOBLE DRILLING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(Unless otherwise indicated, dollar amounts in tables are in thousands,
except per share amounts)
The following table summarizes the Company's long-term debt:
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------
1995 1994
--------- ---------
<S> <C> <C>
9 1/4% Senior Notes Due 2003 .................................. $ 125,000 $ 125,000
U.S. Government Guaranteed Ship Financing Sinking Fund Bonds .. 1,546 2,066
Insurance financing ........................................... 15,587 --
--------- ---------
142,133 127,066
Current installments .......................................... (12,210) (520)
--------- ---------
$ 129,923 $ 126,546
========= =========
</TABLE>
The fair value of the Company's long-term debt at December 31, 1995,
estimated based on the quoted market prices for similar issues or on the current
rates offered to the Company for debt of similar remaining maturities, was
approximately $130,300,000.
NOTE 5 -- CREDIT FACILITIES
At December 31, 1995, the Company had available credit facilities
aggregating $31,000,000, as described below, of which $26,000,000, subject to
certain limitations, is related to lines of credit and $5,000,000 is related to
letter of credit facilities. Based on the level of the borrowing base at
December 31, 1995, the Company had $26,000,000 available under the credit lines
and $895,000 available to support issuance of letters of credit at that date.
The Company has an unsecured credit agreement with First Interstate Bank
of Texas, N.A., which provided for a $25,000,000 revolving credit line facility
and $5,000,000 letter of credit facility at December 31, 1995. The Company pays
a quarterly commitment fee on the unused portion of the facility. The agreement
contains certain restrictive and financial covenants, including those related to
indebtedness, net worth and fixed charges, and provides for guarantees of the
indebtedness by certain subsidiaries of Noble Drilling.
NOTE 6 -- SHAREHOLDERS' EQUITY
On October 25, 1993, the Company issued 626,410 shares of common stock to
purchase two rigs from Portal as discussed in Note 12. The shares were issued to
Portal pursuant to a private placement, and the Company does not have an
obligation to register the resale of the shares under the Securities Act of
1933, as amended.
Chiles completed a public offering of $1.50 convertible preferred stock
on October 21, 1993 with the sale and issuance to the public of 4,025,000 shares
by Chiles at $25.00 per share. Net proceeds to Chiles were approximately
$96,500,000 after underwriting discounts and issuance costs. Chiles utilized
approximately $45,200,000 of these proceeds to retire all of Chiles' outstanding
long-term indebtedness, including principal and interest, during the fourth
quarter of 1993. In the Chiles Merger, this series of preferred stock was
converted into and exchanged for an equivalent number of shares of $1.50
Preferred Stock having substantially the same rights, privileges, preferences
and voting power as the Chiles preferred stock. Holders of the $1.50 Preferred
Stock are entitled to receive cumulative cash dividends at an annual rate of
$1.50 per share, when, as and if declared by the board of directors of Noble
Drilling, payable quarterly. Each share of $1.50 Preferred Stock is convertible,
at the option of the holder, into 2.4446 shares of common stock (subject to
adjustment in certain circumstances). The $1.50 Preferred Stock is not
redeemable prior to December 31, 1996. On or after such date, the $1.50
Preferred Stock is redeemable at the option of the Company, in whole or part, at
$26.05 per share if redeemed prior to December 31, 1997, and at prices
decreasing in increments of $0.15 per year to $25.00 per share on and after
December 31, 2003, plus accrued and unpaid dividends to the redemption date.
On October 7, 1993, the Company issued and sold 12,041,000 shares of
common stock in the Stock Offering (see Note 4) at an initial offering price of
$8.375 per share. This resulted in net proceeds of $94,900,000, after deducting
underwriting discounts, commissions and other related costs. The net proceeds of
the Public Offerings (see Note 4) were used to purchase the nine jackup rigs and
related assets discussed previously in Note 2, and to prepay a promissory note
discussed in Note 4, with the balance of the proceeds, approximately
$26,000,000, used for general corporate purposes.
In 1991, the Company issued and sold 2,990,000 shares of a new series of
$2.25 Convertible Exchangeable Preferred Stock ("$2.25 Preferred Stock"), par
value $1.00 per share. Holders of the $2.25 Preferred Stock received a cash
dividend at an annual rate of $2.25 per share. In March 1995, an aggregate of
923,862 shares of $2.25 Preferred Stock were
31
<PAGE> 34
NOBLE DRILLING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(Unless otherwise indicated, dollar amounts in tables are in thousands,
except per share amounts)
converted into 5,006,830 shares of Noble Drilling common stock. The Company paid
an aggregate of approximately $1,524,000 in cash ("Preferred Conversion
Payment") in the first quarter in connection with this conversion. In the second
quarter of 1995, the Company called for the redemption of 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 7 -- STOCK OPTIONS
1991 STOCK OPTION PLAN
The Company's 1991 Stock Option and Restricted Stock Plan (the "1991
Plan") was amended and restated ("Amended 1991 Plan") in September 1994. The
Amended 1991 Plan was adopted by the board of directors of Noble Drilling in
July 1994 and approved by stockholders on September 15, 1994. The Company's two
other employee stock option plans, adopted in 1985 and 1987, were amended in
connection with the adoption of the 1991 Plan to provide that no further grants
would be made under those plans after April 25, 1991; however, all options
outstanding at that date ("Pre-1991 Options") remained in effect in accordance
with their respective terms.
Under the Amended 1991 Plan, a maximum of 5,200,000 shares of the
Company's common stock may be subject to grants of options or awards of
restricted stock to participants, who are selected from regular salaried
officers or other employees of the Company. Options may be either incentive
options or nonqualified options, and may be with or without stock appreciation
rights ("SARs"). The option price under the Amended 1991 Plan may not be less
than 100 percent of the fair market value of the common stock at the time of
grant, in the case of an incentive option, and may not be less than 50 percent
of the fair market value of the common stock at the time of grant, in the case
of a nonqualified option. The Amended 1991 Plan also limits to 1,500,000 the
total number of shares of common stock that may be made subject to grants of
options or stock appreciation rights or awards of restricted stock to any one
person during any five-year period. All Pre-1991 Options were granted at an
option price of at least 100 percent of the fair market value of the common
stock at the time of grant. The exercise of either the tandem SAR or the option
serves to cancel the other. At December 31, 1995, 2,571,767 shares were
available for grant under the Amended 1991 Plan.
As of January 1, 1995, there were 250,000 shares of common stock held by
the Company as treasury shares. During February 1995, 211,500 treasury shares
were issued to certain employees pursuant to the terms of the Amended 1991 Plan
and the applicable restricted stock agreements. The issued shares of restricted
stock have been placed in escrow subject to satisfaction of various performance
criteria during a three-year period. In June 1995, 26,000 of these shares were
returned to treasury stock following the resignation of one employee. As of
December 31, 1995, 64,500 shares were held as treasury stock. Subsequent to
December 31, 1995, 250,000 shares of common stock were purchased by the company
and returned to treasury stock, increasing the balance of treasury stock to
314,500 shares. In January 1996, 108,750 shares of treasury stock were issued to
certain employees as restricted stock under the Amended 1991 Plan and have been
placed in escrow under the aforementioned terms.
The following is a summary of option transactions under the plans:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------
1995 1994
---------- ----------
<S> <C> <C>
Outstanding, beginning of the year ................................................. 1,810,472 1,312,617
Granted ............................................................................ 1,240,400 728,000
Canceled ........................................................................... (141,975) (58,875)
Exercised (at share prices ranging from $1.72 to $7.69) ............................ (109,150) (171,270)
---------- ----------
Outstanding at end of year (at share prices ranging from $1.72 to $7.69 in 1995) .. 2,799,747 1,810,472
========== ==========
Exercisable at end of year (at share prices ranging from $1.72 to $7.69 in 1995) .. 1,273,505 855,672
========== ==========
</TABLE>
Options granted in 1995 under the Amended 1991 Plan become exercisable on
certain dates that range from February 2, 1996, through February 2, 1998, at a
price $5.188 per share.
32
<PAGE> 35
NOBLE DRILLING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(Unless otherwise indicated, dollar amounts in tables are in thousands,
except per share amounts)
OTHER STOCK OPTIONS
During 1987, in addition to the options described above, options to
purchase a total of 300,000 shares of Noble Drilling's common stock at $2.50 per
share were granted to certain non-employee directors of the Company pursuant to
stock option agreements which were approved by stockholders at the 1988 annual
meeting. Options to purchase 160,000 shares were outstanding and exercisable at
December 31, 1995.
In 1993, the stockholders approved the 1992 Nonqualified Stock Option
Plan for Non-Employee Directors (the "1992 Option Plan"). Under the 1992 Option
Plan, non-employee directors received a one-time grant of an option to purchase
10,000 shares of common stock, and thereafter, after each annual meeting of
shareholders of the Company, receive an annual grant of an option to purchase
3,500 shares of common stock. The options are granted at fair market value on
the grant date and are exercisable from time to time over a period commencing
one year from the grant date and ending on the expiration of ten years from the
grant date, unless terminated sooner as described in the 1992 Option Plan.
Options to purchase 77,500 shares were outstanding and exercisable at December
31, 1995.
SFAS NO. 123 - ACCOUNTING FOR STOCK-BASED COMPENSATION
In October 1995, SFAS No. 123, Accounting for Stock-Based Compensation,
was issued. This statement establishes financial accounting and reporting
standards for stock-based employee compensation plans. Those plans include all
arrangements by which employees receive shares of stock or other equity
instruments of the employer or the employer incurs liabilities to employees in
amounts based on the price of the employer's stock. The Company adopted this
standard effective January 1, 1996. As provided in the statement, the Company
elected to continue to measure compensation cost using the guidelines of APB
Opinion No. 25 and to include disclosures of net income and earnings per share
as if the fair value based method of accounting were utilized.
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 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 8 -- INCOME TAXES
The Company follows SFAS No. 109, Accounting for Income Taxes, which
requires the use of the liability method of accounting for deferred income
taxes. Under SFAS No. 109, deferred tax assets and liabilities are recognized
based upon differences between the financial statement and tax bases of assets
and liabilities using presently enacted tax rates. If it is more likely than not
that some portion or all of a deferred tax asset will not be realized, a
valuation allowance is recognized.
Amounts of deferred tax assets and liabilities are as follows at:
<TABLE>
<CAPTION>
December 31,
----------------------
1995 1994
-------- --------
<S> <C> <C>
Deferred tax asset, net of valuation allowance of $22,243 in 1995 and $21,329 in 1994 .. $ 57,443 $ 47,696
Deferred tax liability ................................................................. (59,919) (51,089)
-------- --------
Net, total ............................................................................. $ (2,476) $ (3,393)
======== ========
</TABLE>
33
<PAGE> 36
NOBLE DRILLING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(Unless otherwise indicated, dollar amounts in tables are in thousands,
except per share amounts)
The components of and changes in the net deferred taxes were as follows:
<TABLE>
<CAPTION>
DEFERRED
DECEMBER EXPENSE DECEMBER
31, 1994 (CREDIT) 31, 1995
-------- -------- --------
<S> <C> <C> <C>
Deferred tax assets:
Domestic
Net operating loss carryforwards ................... $ 63,117 $ 11,663 $ 74,780
Investment tax credit carryforward ................. 1,457 -- 1,457
Other .............................................. 149 -- 149
International
Net operating loss carryforwards ................... 3,055 (404) 2,651
Tax basis of assets in excess of book basis ........ 1,247 (598) 649
-------- -------- --------
Total ................................................... 69,025 10,661 79,686
Valuation allowance ..................................... (21,329) (914) (22,243)
-------- -------- --------
Net deferred tax assets ................................. $ 47,696 $ 9,747 $ 57,443
======== ======== ========
Deferred tax liabilities:
Domestic
Excess of net book basis over remaining tax basis .. $(45,884) $(10,910) $(56,794)
International
Excess of net book basis over remaining tax basis .. (5,205) 2,080 (3,125)
-------- -------- --------
Deferred tax liabilities ................................ $(51,089) $ (8,830) $(59,919)
======== ======== ========
</TABLE>
Income (loss) from continuing operations before income taxes and
extraordinary items consisted of the following:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------------
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
Domestic ...................... $ (9,578) $ 7,024 $ 16,948
International ................. 14,444 20,171 7,467
-------- -------- --------
Total ......................... $ 4,866 $ 27,195 $ 24,415
======== ======== ========
</TABLE>
The income tax provision consisted of the following:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------
1995 1994 1993
------- ------- -------
<S> <C> <C> <C>
Current - domestic ............... $(2,093) -- $ 205
Current - international .......... 6,282 $ 2,599 3,128
Deferred - international ......... (917) 3,073 --
------- ------- -------
Total ............................ $ 3,272 $ 5,672 $ 3,333
======= ======= =======
</TABLE>
Included in the current domestic tax benefit for the year ended December
31, 1995, is $2,100,000 related to a separate return year loss carryback benefit
recorded by Triton.
34
<PAGE> 37
NOBLE DRILLING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(Unless otherwise indicated, dollar amounts in tables are in thousands,
except per share amounts)
A reconciliation of Federal statutory and effective income tax rates is
shown below:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------
1995 1994 1993
----- ---- -----
<S> <C> <C> <C>
Statutory rate ...................................................... 35.0% 35.0% 35.0%
Effect of:
U.S. operating loss generating no current tax benefit ............. 68.9 -- --
U.S. operating loss carryforward/carryback benefit ................ (43.1) (9.0) (23.6)
Canadian operating loss carryforward benefit ...................... -- -- (2.2)
International tax rates which are different than the U. S. rate ... 6.4 (5.8) 3.7
Other ............................................................. -- .7 .8
----- ---- -----
Effective rate ...................................................... 67.2% 20.9% 13.7%
===== ==== ====
</TABLE>
The Company had available at December 31, 1995, unused investment tax
credits, which may be used to offset future U.S. taxes payable, of $1,457,000
expiring in various years from 1998 to 2001. In addition, Noble Drilling had net
operating loss carryforwards ("NOLs") for tax purposes of approximately
$145,902,000 at December 31, 1995, which expire in the years 2000 through 2010,
and NOC has NOLs for tax purposes of approximately $67,756,000 which expire in
the years 2004 through 2009.
The Chiles Merger qualifies as a tax-free reorganization. NOC, as the
surviving entity, inherited all of Chiles' tax attributes, including NOL
carryforwards. In accordance with the "Separate Return Limitation Year" rules of
the Internal Revenue Code of 1986, as amended (the "Code"), Chiles' NOL
carryforwards may only be used to reduce Noble Drilling's future taxable income
to the extent of NOC's taxable income.
If a corporation undergoes an "ownership change" within the meaning of
Section 382 of the Code, the corporation's right to use its then existing NOLs
(and certain other tax attributes) is limited during each future year to a
percentage of the fair market value of such corporation's stock immediately
before the ownership change (the "Section 382 Limitation"). In general, there is
an "ownership change" under Section 382 if over a three-year period certain
shareholders increase their percentage ownership of a corporation by more than
50 percent. To the extent the amount of the NOLs existing at the time of an
ownership change that are used in any subsequent year is less than the annual
Section 382 Limitation, the otherwise available Section 382 Limitation is
correspondingly increased for future years. An ownership change for purposes of
Section 382 took place on September 15, 1994, as a result of the Chiles Merger.
The cumulative Section 382 Limitation attributable to the Noble Drilling
pre-merger carryforwards is $47,231,000. The cumulative Section 382 Limitation
attributable to NOC is $22,185,000.
Applicable U.S. income and foreign withholding taxes have not been
provided on undistributed earnings of the Company's international subsidiaries.
Management does not intend to repatriate such undistributed earnings for the
foreseeable future except for distributions upon which incremental income taxes
would not be material.
NOTE 9 -- ADDITIONAL BALANCE SHEET AND STATEMENT OF OPERATIONS INFORMATION
Other current assets consisted of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------
1995 1994
------- -------
<S> <C> <C>
Prepaid expenses ............................. $15,364 $ 9,287
Withholding tax receivable ................... 8,886 5,223
Operating costs and mobilization ............. 7,907 26
Other ........................................ 4,694 4,048
------- -------
$36,851 $18,584
======= =======
</TABLE>
35
<PAGE> 38
NOBLE DRILLING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(Unless otherwise indicated, dollar amounts in tables are in thousands,
except per share amounts)
Other current liabilities consisted of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------
1995 1994
------- -------
<S> <C> <C>
Deferred revenue ........................... $ 4,290 $ 1,421
Accrued dividends .......................... 1,510 3,191
Accrued restructuring costs ................ 817 844
Other ...................................... 7,293 5,259
------- -------
$13,910 $10,715
======= =======
</TABLE>
Rent expense was $1,918,000, $1,200,000, and $1,297,000 for 1995, 1994,
and 1993, respectively.
Withholding tax receivables include approximately $6,000,000 related to
withholding taxes in Nigeria. To recognize these receivables, the Company must
receive tax certificates from the applicable operators. Management believes that
the full amount of these receivables will be realized.
Operating costs and mobilization for the year ended December 31, 1995
consists of costs incurred in mobilizing rigs from the U.S. Gulf of Mexico to
various international locations. Such costs are amortized over the term of the
related contract.
Other income - other, net consisted of the following:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
Gain on sale of property and equipment ................... $ 829 $ 8,858 $ 737
Unrealized (loss) gain on marketable equity investments .. (56) 4,162 --
Realized gain (loss) on marketable investments ........... 356 (2,199) 272
Recovery of written-off notes receivable ................. -- 1,530 --
Linn Richardson mobilization costs ....................... (1,778) -- --
Adjustment related to Triton acquisition ................. 1,078 -- --
Other .................................................... (179) 3,392 38
-------- -------- --------
$ 250 $ 15,743 $ 1,047
======== ======== ========
</TABLE>
On December 15, 1995, the Linn Richardson, a 250-foot mat slot rig, lost
overboard approximately 200 feet of leg while under tow to perform a contract
offshore Senegal, Africa. On the following day, the rig lost overboard
approximately 240 feet of a second leg which also caused damage to equipment and
facilities on the deck of the rig. Pursuant to a preliminary assessment plan
developed jointly by the Company and its insurance underwriters, the third leg
of the rig has been removed and the rig has been towed to the U.S. Gulf of
Mexico where a complete evaluation will take place. A charge of $1,778,000
related to the cost of mobilizing the rig to Senegal was accrued in the fourth
quarter of 1995. This amount represents management's best estimate of the total
loss. Management does not believe this incident will have any other material
adverse effect on its financial condition or results of operations.
A restructuring charge of $3,661,000 related to the Chiles Merger was
recorded in 1994 as a result of facility consolidation, including the write-down
of certain of the Company's owned properties, and to a lesser extent severance
costs. This restructuring plan was developed in the fourth quarter of 1994 and
approved by the board of directors of Noble Drilling.
NOTE 10 -- EXTRAORDINARY ITEM
The Company prepaid a promissory note in the fourth quarter of 1993 with
proceeds from the Public Offerings (see Notes 4 and 6). This prepayment resulted
in an extraordinary gain from extinguishment of debt of $1,770,000 ($0.02 per
common share), representing excess accrued interest.
36
<PAGE> 39
NOBLE DRILLING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(Unless otherwise indicated, dollar amounts in tables are in thousands,
except per share amounts)
NOTE 11 -- EMPLOYEE BENEFIT PLANS
The Company has a noncontributory defined benefit plan which covers
substantially all salaried employees and a noncontributory defined benefit
pension plan which covers certain field employees. The benefits from these plans
are based primarily on years of service and employees' compensation near
retirement. The Company's funding policy is consistent with funding requirements
of applicable laws and regulations. The assets of these plans consist of
corporate equity securities, municipal and government bonds, and cash
equivalents. The Company, when required, makes contributions to the domestic
plan in the form of Noble Drilling common stock. As of September 30, 1995, the
domestic plan assets included $2,067,000 of Noble Drilling's common stock valued
at fair value at that date. The Company changed the measurement date of the plan
to September 30 beginning in 1995. This change did not have a material impact to
the financial results of the Company.
Noble Drilling (U.K.) Limited, a wholly owned subsidiary of Noble
Drilling, maintains a pension plan which covers all of its salaried, nonunion
employees. Benefits are based on credited service and the average of the highest
three years of qualified salary within the past ten years of participation.
Pension cost includes the following components:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------------------------------------------------------
1995 1994 1993
------------------------ ------------------------ ------------------------
INTERNATIONAL DOMESTIC INTERNATIONAL DOMESTIC INTERNATIONAL DOMESTIC
------------- -------- ------------- -------- ------------- --------
<S> <C> <C> <C> <C> <C> <C>
Service costs (benefits
earned during
the year) ................ $ 581 $ 1,201 $ 544 $ 758 $ 563 $ 535
Interest cost on projected
benefit obligation ....... 702 1,890 607 1,698 549 1,534
Actual return on assets ..... (870) (2,439) (787) 1,806 (597) (2,506)
Amortization of net (gain)
loss at January 1 ........ (44) 757 (77) (3,758) 12 563
------- ------- ------- ------- ------- -------
Net pension (credit)
expense .................. $ 369 $ 1,409 $ 287 $ 504 $ 527 $ 126
======= ======= ======= ======= ======= =======
</TABLE>
The funded status of the plans is as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------------------------------------
1995 1994
---------------------------- -------------------------
INTERNATIONAL DOMESTIC INTERNATIONAL DOMESTIC
------------- -------- ------------- --------
<S> <C> <C> <C> <C>
Actuarial present value of benefit obligations
Vested benefits ................................... $ (7,449) $(21,359) $ (6,578) $(18,513)
Nonvested benefits ................................ -- (780) -- (373)
-------- -------- -------- --------
Accumulated benefits .............................. (7,449) (22,139) (6,578) (18,886)
Effect of projected future compensation levels .... (1,114) (3,982) (1,223) (1,895)
-------- -------- -------- --------
Projected benefits ................................... (8,563) (26,121) (7,801) (20,781)
Plan assets at fair value ............................ 9,725 21,274 8,625 19,192
-------- -------- -------- --------
Plan assets in excess (shortfall) of projected benefit
obligations ....................................... 1,162 (4,847) 824 (1,589)
Unrecognized net (loss) gain ......................... (1,831) 9,708 (1,595) 8,327
Unrecognized prior service cost ...................... -- (69) -- (79)
Unrecognized transition obligation (asset) ........... 107 (1,509) 120 (1,966)
Additional liability ................................. -- (3,403) -- (3,825)
-------- -------- -------- --------
(Accrued liability) prepaid asset .................... $ (562) $ (120) $ (651) $ 868
======== ======== ======== ========
</TABLE>
In accordance with SFAS No. 87, Employers' Accounting for Pensions, the
Company recorded an additional minimum liability of $3,403,000 and $3,825,000 at
December 31, 1995 and 1994, respectively. This liability represents the excess
of the accumulated benefit obligations over the fair value of plan assets and
accrued pension liabilities of the domestic salaried pension plan. This
additional minimum pension liability is reported as a separate reduction of
shareholders' equity.
37
<PAGE> 40
NOBLE DRILLING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(Unless otherwise indicated, dollar amounts in tables are in thousands,
except per share amounts)
The projected benefit obligations for the international and domestic
plans were determined using an assumed discount rate of 8.5 percent and 7.5
percent, respectively, in 1995, 9.0 percent and 8.5 percent, respectively, in
1994 and 8.0 percent and 7.25 percent, respectively, in 1993. Assumed long-term
rate of return on international plan assets was 9.25 percent, 9.75 percent and
8.75 percent in 1995, 1994 and 1993, respectively. Assumed long-term rate of
return on domestic plan assets was 9.0 percent in each of the years presented.
The projected benefit obligations for the international plan assume a
compensation increase of 6.25 percent, 6.75 percent and 5.75 percent in 1995,
1994 and 1993, respectively, and 6.0 percent per annum for the domestic plan in
each of the years presented.
The Company presently sponsors medical and other plans for the benefit of
its employees. The cost of maintaining these plans aggregated $6,628,000,
$5,500,000, and $3,793,000 in 1995, 1994, and 1993, respectively.
The Company does not provide post-retirement benefits (other than
pensions) or any post-employment benefits to its employees.
NOTE 12 -- COMMITMENTS, CONTINGENCIES AND OBLIGATIONS
On October 25, 1993, the Company purchased two submersible offshore
drilling rigs from Portal Rig Corporation ("Portal") for 626,410 shares of Noble
Drilling common stock. The Company acquired the rigs subject to certain federal
income tax "safe harbor leases" and a related preferred ship mortgage relating
to a tax benefit transaction entered into in 1982 by a predecessor of Portal.
Portal has agreed to indemnify the Company for any potential liabilities as a
result of this earlier tax benefit transaction.
During 1993, Chiles entered into severance agreements with its officers
and certain managerial employees, including Chiles' rig management personnel.
These agreements provide for severance payments equal to between six months and
two years of such person's annual salary in the event a person's employment is
terminated otherwise than for cause within one year following the occurrence of
a change in control of Chiles or in the event that a person voluntarily
terminates his employment within one year of a change in control of Chiles for
"good reason," as defined in the agreement.
The Company is a defendant in certain other claims and litigation arising
out of operations in the normal course of business. In the opinion of
management, uninsured losses, if any, will not be material to the Company's
financial position or results of operations.
In connection with the damage sustained on the Linn Richardson, the
Company has recorded an estimated loss of $1,778,000 related to mobilization
costs. See Note 9.
At December 31, 1995, the Company had certain noncancellable long-term
operating leases, principally for office space and facilities, with various
expiration dates. Future minimum rentals under sub-leases aggregate $1,630,000
for 1996, $1,292,000 for 1997, $1,169,000 for 1998, $1,148,000 for 1999,
$866,000 for 2000, and $2,923,000 thereafter.
NOTE 13 --SUPPLEMENTAL LOSS PER SHARE DISCLOSURE
Assuming that all shares of $2.25 Preferred Stock had been converted on
January 1, 1995 the supplemental primary net loss applicable to common shares
per share for the year ended December 31, 1995 would have changed from $0.08 to
$0.06. Supplemental fully diluted net loss applicable to common shares per share
for the year ended December 31, 1995 is the same as supplemental primary net
loss applicable to common shares per share since the effect of the conversion is
anti-dilutive.
38
<PAGE> 41
NOBLE DRILLING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(Unless otherwise indicated, dollar amounts in tables are in thousands,
except per share amounts)
NOTE 14 -- UNAUDITED INTERIM FINANCIAL DATA
Unaudited interim financial information for the years ended December 31,
1995 and 1994 is as follows:
<TABLE>
<CAPTION>
QUARTER ENDED
--------------------------------------------------
MARCH 31 JUNE 30 SEPT. 30 DEC. 31
-------- -------- -------- --------
<S> <C> <C> <C> <C>
1995
Operating revenues ....................................... $ 85,096 $ 73,985 $ 84,652 $ 84,235
Operating income (3) ..................................... $ 2,013 $ (2,303) $ 3,240 $ 8,499
Net (loss) income applicable to common shares (1) ........ $ (3,331) $ (5,847) $ 806 $ 2,767
Net (loss) income applicable to common shares
per share (1) (2) (3) .................................. $ (0.06) $ (0.07) $ 0.01 $ 0.03
1994
Operating revenues ....................................... $ 78,921 $ 87,595 $ 98,060 $ 87,412
Operating income ......................................... $ 10,362 $ 5,309 $ 2,216 $ 276
Net income (loss) applicable to common shares ............ $ 4,930 $ 9,206 $ (695) $ (4,682)
Net income (loss) applicable to common shares per share .. $ 0.06 $ 0.12 $ (0.01) $ (0.06)
</TABLE>
- --------
(1) Included in the quarters ended September 30, 1995 and December 31, 1995
were $800,000 ($0.01 per share) and $1,300,000 ($0.01 per share),
respectively of separate return year loss carryback benefit related to
Triton. See Note 8.
Included in the quarter ended December 31, 1995 is a credit of
$1,078,000 ($0.01 per share) related to the adjustment of the
Triton acquisition contingency.
Included in the quarter ended December 31, 1995 is a charge of $1,778,000
($0.02 per share) related to the mobilization costs of the Linn
Richardson to the West Coast of Africa. See Note 9.
(2) Included in the quarter ended March 31, 1995 results is the $0.02 per
share impact of the $1,524,000 Preferred Conversion Payment made in
conjunction with the conversion of 923,862 shares of $2.25 Preferred
Stock into common stock. See Note 6.
(3) Included in the quarters ended March 31, June 30, September 30 and
December 31, 1995 were $1,116,000 ($0.01 per share), $1,116,000 ($0.01
per share), $1,116,000 ($0.01 per share) and $2,812,000 ($0.03 per
share), respectively, related to the effect of change in estimates of
salvage values and remaining depreciable lives. See Note 1.
NOTE 15 - GEOGRAPHICAL INFORMATION
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
Operating revenues
Domestic ..................... $165,391 $181,950 $125,505
International
Canada ..................... 13,929 20,059 19,141
India ...................... 3,771 2,041 4,093
Mexico ..................... 9,398 21,269 10,503
Nigeria .................... 45,860 44,195 58,630
Qatar ...................... 2,452 -- --
United Kingdom ............. 37,891 39,939 40,036
Venezuela .................. 40,223 34,155 3,736
Zaire ...................... 8,860 7,781 1,763
Other ...................... 193 599 1,124
-------- -------- --------
Total .................... $327,968 $351,988 $264,531
======== ======== ========
</TABLE>
39
<PAGE> 42
NOBLE DRILLING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(Unless otherwise indicated, dollar amounts in tables are in thousands,
except per share amounts)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
Operating income (loss)
Domestic ..................... $ (6,068) $ (3,852) $ 20,057
International
Canada ..................... 2,521 4,549 363
India ...................... 283 (676) (116)
Mexico ..................... 94 5,434 5,316
Nigeria .................... 3,597 1,727 734
Qatar ...................... (2,455) -- --
United Kingdom ............. 4,766 3,505 1,486
Venezuela .................. 7,178 6,289 832
Zaire ...................... 2,139 1,613 400
Other ...................... (606) (426) (163)
-------- -------- --------
Total .................... $ 11,449 $ 18,163 $ 28,909
======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------------------
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
Identifiable assets
Domestic ..................... $312,099 $404,010 $393,525
International
Canada ..................... 13,206 12,421 8,416
India ...................... 21,104 20,912 16,422
Mexico ..................... 32,328 51,167 36,999
Nigeria .................... 179,934 138,716 140,542
Qatar ...................... 37,506 -- --
United Kingdom ............. 15,051 14,147 13,394
Venezuela .................. 84,042 73,977 64,025
Zaire ...................... 25,023 22,833 21,602
Other ...................... 21,099 1,706 1,628
-------- -------- --------
Total .................... $741,392 $739,889 $696,553
======== ======== ========
</TABLE>
Customer A accounted for approximately 11 percent of the Company's
consolidated operating revenues during 1995. Customer B accounted for
approximately 11 percent and 17 percent of the Company's consolidated operating
revenues during 1994 and 1993, respectively. Customer C accounted for
approximately 13 percent of the Company's consolidated operating revenues during
1993.
NOTE 16 -- SUBSEQUENT EVENTS
Subsequent to December 31, 1995, the Company sold for cash a posted barge
rig located in the U.S. Gulf of Mexico. The Company will record a gain on the
sale of this asset of approximately $4,815,000 in the first quarter of 1996.
On March 13, 1996, the Company entered into a letter of intent with Royal
Nedlloyd N.V. and its wholly owned subsidiary, Neddrill Holding B.V. and its
subsidiaries (collectively, "Neddrill"), to acquire the assets, including
$25,000,000 in net working capital, and the personnel used by Neddrill in its
offshore contract drilling, accommodation and other oil and gas exploration and
production related service businesses. The purchase price would be $300,000,000
in cash plus 5,000,000 shares of Noble Drilling common stock. The Company
currently plans to access the public securities markets to finance the cash
portion of the purchase price.
Consummation of the acquisition is subject to customary due diligence,
execution and delivery of an agreement of sale and purchase, financing being
obtained by the Company, and satisfaction of customary closing conditions
expected to be contained in the agreement of sale and purchase.
40
<PAGE> 43
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
The Board of Directors of the Company has appointed the accounting firm
of Price Waterhouse LLP, which has audited the Company's financial statements
since October 7, 1994, as independent accountants to audit the financial
statements of the Company for the year ending December 31, 1996.
The accounting firm of Arthur Andersen LLP served as the independent
accountant for the Company from August 1, 1988 until October 7, 1994. The
decision to change accountants was recommended by the audit committee of the
board of directors of Noble Drilling. Arthur Andersen LLP's report on the
financial statements of the Company for the year ended December 31, 1993,
contained no adverse opinion or disclaimer of opinion and was not qualified or
modified as to uncertainty, audit scope, or accounting principles, or as to any
other matter. During the year ended December 31, 1993, and the subsequent
interim period preceding the dismissal, there were no disagreements with Arthur
Andersen LLP on any matter of accounting principles or practices, financial
statement disclosure, or accounting scope or procedure, which disagreements if
not resolved to the satisfaction of Arthur Andersen LLP would have caused it to
make reference thereto in its reports on the financial statements of the Company
for such years. Additionally, no "reportable events" (as such term is defined
under the applicable rules and regulations of the Securities and Exchange
Commission) occurred during the year ended December 31, 1993, or the subsequent
interim periods preceding Arthur Andersen LLP's dismissal.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The sections entitled "Election of Directors" and "Section 16(a)
Reporting Delinquencies" appearing in Noble Drilling's proxy statement for the
annual meeting of stockholders to be held on April 25, 1996 (the "1996 Proxy
Statement"), set forth certain information with respect to the directors of
Noble Drilling and with respect to reporting under Section 16(a) of the
Securities Exchange Act of 1934, and are incorporated herein by reference.
Certain information with respect to the executive officers of Noble
Drilling is set forth under the caption "Executive Officers of the Registrant"
in Part I of this report.
ITEM 11. EXECUTIVE COMPENSATION
The section entitled "Executive Compensation" appearing in the 1996 Proxy
Statement sets forth certain information with respect to the compensation of
management of Noble Drilling, and, except for the report of the compensation and
stock option committees of the board of directors of Noble Drilling on executive
compensation and the information therein under "Performance Graph," is
incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The sections entitled "Security Ownership of Certain Beneficial Owners"
and "Security Ownership of Management" appearing in the 1996 Proxy Statement set
forth certain information with respect to the ownership of voting securities and
equity securities of Noble Drilling, and are incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Not applicable.
41
<PAGE> 44
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) The following documents are filed as part of this report:
(1) A list of the financial statements filed as a part of this report
is set forth in Item 8 on page 18 and is incorporated herein by
reference.
(2) Financial Statement Schedules:
All schedules are omitted because they are either not applicable
or the required information is shown in the financial statements
or notes thereto.
(3) Exhibits:
The information required by this Item 14(a)(3) is set forth in the
Index to Exhibits accompanying this Annual Report on Form 10-K.
(4) Financial Statements required by Form 11-K for the fiscal year
ended December 31, 1995, with respect to the Noble Drilling
Corporation Thrift Plan (to be filed by amendment).
(b) No reports on Form 8-K were filed by the Registrant during the
quarter ended December 31, 1995.
42
<PAGE> 45
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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: March 13, 1996
By: JAMES C. DAY
---------------------------------
James C. Day, Chairman, President
and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed by the following individuals on behalf of the Registrant
and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE CAPACITY IN WHICH SIGNED DATE
- ------------------------------ ------------------------------------------------------- --------------
<S> <C> <C>
JAMES C. DAY Chairman, President and Chief Executive Officer March 13, 1996
- ------------------------------ and Director
James C. Day
BYRON L. WELLIVER Senior Vice President - Finance, Treasurer and March 13, 1996
- ------------------------------ Controller (Principal Financial and Accounting Officer)
Byron L. Welliver
MICHAEL A. CAWLEY Director March 13, 1996
- ------------------------------
Michael A. Cawley
LAWRENCE J. CHAZEN Director March 13, 1996
- ------------------------------
Lawrence J. Chazen
TOMMY C. CRAIGHEAD Director March 13, 1996
- ------------------------------
Tommy C. Craighead
Director
- ------------------------------
James L. Fishel
JOHNNIE W. HOFFMAN Director March 13, 1996
- ------------------------------
Johnnie W. Hoffman
MARC E. LELAND Director March 13, 1996
- ------------------------------
Marc E. Leland
JOHN F. SNODGRASS Director March 13, 1996
- ------------------------------
John F. Snodgrass
BILL M. THOMPSON Director March 13, 1996
- ------------------------------
Bill M. Thompson
</TABLE>
43
<PAGE> 46
INDEX TO EXHIBITS
EXHIBIT
NUMBER EXHIBIT
- --------------------------------------------------------------------------------
2.1 -Assets Purchase Agreement dated as of August 20, 1993 (the
"Western Assets Purchase Agreement"), between the Registrant and
The Western Company of North America (filed as Exhibit 2.1 to the
Registrant's Registration Statement on Form S-3 (No. 33-67130) and
incorporated herein by reference).
2.2 -Agreement dated as of October 7, 1993, among the Registrant, Noble
Drilling (U.S.) Inc., Noble International Limited, The Western
Company of North America and Offshore International Ltd., amending
the Western Assets Purchase Agreement (filed as Exhibit 2.2 to the
Registrant's Form 8-K dated October 15, 1993 and incorporated
herein by reference).
2.3 -Exchange Agreement dated as of June 4, 1993, by and among the
Registrant, Grasso Corporation, Offshore Logistics, Inc.,
PPI-Seahawk, Inc. and Noble Production Services Inc. (filed as
Exhibit 2.2 to the Registrant's Registration Statement on Form S-3
(No. 33-67130) and incorporated herein by reference).
2.4 -Amendment No. 1 dated October 29, 1993 to the Exchange Agreement
by and among the Registrant, Grasso Corporation, Offshore
Logistics, Inc., PPI-Seahawk Services, Inc. and Noble Production
Services Inc. (filed as Exhibit 2.4 to the Registrant's Annual
Report on Form 10-K for the year ended December 31, 1993 and
incorporated herein by reference).
2.5 -Assets Purchase Agreement dated as of August 20, 1993 (the "Portal
Assets Purchase Agreement"), between the Registrant and Portal Rig
Corporation (filed as Exhibit 2.3 to the Registrant's Registration
Statement on Form S-3 (No. 33-67130) and incorporated herein by
reference).
2.6 -Agreement dated as of October 25, 1993, among the Registrant,
Noble (Gulf of Mexico) Inc. and Portal Rig Corporation, amending
the Portal Assets Purchase Agreement (filed as Exhibit 2.5 to the
Registrant's Quarterly Report on Form 10-Q for the three-month
period ended September 30, 1993 and incorporated herein by
reference).
2.7 -Assignment and Assumption Agreement made as of October 28, 1993 by
and between Noble Production Management Inc., Noble Production
Services Inc., OLOG Production Management Inc., PPI-Seahawk
Services, Inc. and Grasso Corporation (filed as Exhibit 2.7 to the
Registrant's Annual Report on Form 10-K for the year ended December
31, 1993 and incorporated herein by reference).
2.8 -Stock Purchase Agreement dated April 22, 1994 among Joseph E.
Beall, George H. Bruce, Triton Engineering Services Company and the
Registrant (filed as Exhibit 2.1 to the Registrant's Form 8-K dated
May 6, 1994 and incorporated herein by reference).
2.9 -Agreement and Plan of Merger dated June 13, 1994 among the
Registrant, Chiles Offshore Corporation and Noble Offshore
Corporation (filed as Appendix I to the joint proxy
statement/prospectus of the Registrant and Chiles Offshore
Corporation dated August 12, 1994 constituting Part I of the
Registration Statement on Form S-4 (No. 33-54495) and incorporated
herein by reference).
2.10 -Letter of Intent dated March 13, 1996 among the Registrant,
Neddrill Holding B.V. and Royal Nedlloyd N.V.
3.1 -Restated Certificate of Incorporation of the Registrant dated
August 29, 1985 (filed as Exhibit 3.7 to the Registrant's
Registration Statement on Form 10 (No. 0-13857) and incorporated
herein by reference).
3.2 -Certificate of Amendment of Restated Certificate of Incorporation
of the Registrant dated May 5, 1987 (filed as Exhibit 4.2 to the
Registrant's Registration Statement on Form S-3 (No. 33-67130) and
incorporated herein by reference).
3.3 -Certificate of Amendment of Restated Certificate of Incorporation
of the Registrant dated June 1, 1987 (filed as Exhibit 4.3 to the
Registrant's Registration Statement on Form S-3 (No. 33-67130) and
incorporated herein by reference).
3.4 -Certificate of Amendment of Restated Certificate of Incorporation
of the Registrant dated April 28, 1988 (filed as Exhibit 3.12 to
the Registrant's Annual Report on Form 10-K for the year ended
December 31, 1988 and incorporated herein by reference).
3.5 -Certificate of Amendment of Restated Certificate of Incorporation
of the Registrant dated April 27, 1989 (filed as Exhibit 3.13 to
the Registrant's Annual Report on Form 10-K for the year ended
December 31, 1989, as amended, and incorporated herein by
reference).
44
<PAGE> 47
3.6 -Certificate of Amendment of Certificate of Incorporation of the
Registrant dated August 1, 1991 (filed as Exhibit 3.16 to the
Registrant's Annual Report on Form 10-K for the year ended December
31, 1991 and incorporated herein by reference).
3.7 -Certificate of Designations of $2.25 Convertible Exchangeable
Preferred Stock, par value $1.00 per share, of the Registrant,
dated as of November 18, 1991 (filed as Exhibit 3.17 to the
Registrant's Annual Report on Form 10-K for the year ended December
31, 1991 and incorporated herein by reference).
3.8 -Certificate of Designations of $1.50 Convertible Preferred Stock,
par value of $1.00 per share, of the Registrant, dated as of
September 15, 1994 (filed as Exhibit 3.8 to the Registrant's Annual
Report on Form 10-K for the year ended December 31, 1994 and
incorporated herein by reference).
3.9 -Certificate of Amendment of Certificate of Incorporation of the
Registrant dated September 15, 1994 (filed as Exhibit 3.1 to the
Registrant's Quarterly Report on Form 10-Q for the three-month
period ended March 31, 1995 and incorporated herein by reference).
3.10 -Certificate of Elimination of shares of $2.25 Convertible
Exchangeable Preferred Stock of the Registrant dated June 8, 1995
(filed as Exhibit 3.1 to the Registrant's Quarterly Report on Form
10-Q for the three-month period ended June 30, 1995 and
incorporated herein by reference).
3.11 -Certificate of Designations of Series A Junior Participating
Preferred Stock, par value $1.00 per share, of the Registrant
dated as of June 29, 1995 (filed as Exhibit 3.2 to the Registrant's
Quarterly Report on Form 10-Q for the three-month period ended June
30, 1995 and incorporated herein by reference).
3.12 -Composite copy of the Bylaws of the Registrant as currently in
effect (filed as Exhibit 3.4 to the Registrant's Quarterly Report
on Form 10-Q for the three-month period ended June 30, 1995 and
incorporated herein by reference).
4.1 -Indenture governing the Senior Notes (filed as Exhibit 4.1 to the
Registrant's Quarterly Report on Form 10-Q for the three-month
period ended September 30, 1993 and incorporated herein by
reference).
4.2 -Form of Senior Notes (included in Section 2.02 of the Indenture
filed as Exhibit 4.1 to the Registrant's Quarterly Report on Form
10-Q for the three-month period ended September 30, 1993 and
incorporated herein by reference).
4.3 -Rights Agreement dated as of June 28, 1995 between the Registrant
and Liberty Bank and Trust Company of Oklahoma City, N.A. (filed as
Exhibit 4 to the Registrant's Form 8-K dated June 30, 1995 and
incorporated herein by reference).
10.1 -Amended and Restated Noble-National Joint Venture Partnership
Agreement between the Registrant and National Enerdrill Corporation
dated December 7, 1990 (filed as Exhibit 10.4 to the Registrant's
Annual Report on Form 10-K for the year ended December 31, 1990 and
incorporated herein by reference).
10.2 -Limited Partnership Agreement between the Registrant and National
Enerdrill Corporation dated as of January 16, 1992 (filed as
Exhibit 10.5 to the Registrant's Annual Report on Form 10-K for the
year ended December 31, 1991 and incorporated herein by reference).
10.3 -Certificate of Limited Partnership of NN-1 Limited Partnership
(filed as Exhibit 10.6 to the Registrant's Annual Report on Form
10-K for the year ended December 31, 1991 and incorporated herein
by reference).
10.4* -Noble Drilling Corporation 1991 Stock Option and Restricted Stock
Plan (as amended and restated through September 15, 1994) (filed as
Exhibit 10.1 to the Registrant's Form 8-K dated December 8, 1994
and incorporated herein by reference).
10.5* -Noble Drilling Corporation 1987 Stock Option Plan (filed as
Exhibit 10.7 to the Registrant's Annual Report on Form 10-K for
the year ended December 31, 1986, as amended, and incorporated
herein by reference).
10.6* -Noble Drilling Corporation Thrift Trust Agreement (filed as
Exhibit 4.2 to the Registrant's Registration Statement on Form S-8
(No. 33-18966) and incorporated herein by reference).
10.7* -Amendment No. 1 to the Noble Drilling Corporation Thrift Trust
dated January 27, 1992 (filed as Exhibit 10.11 to the Registrant's
Annual Report on Form 10-K for the year ended December 31, 1991 and
incorporated herein by reference).
10.8* -Noble Drilling Corporation Thrift Plan, as amended and restated,
dated July 27, 1989 (filed as Exhibit 10.12 to the Registrant's
Annual Report on Form 10-K for the year ended December 31, 1991 and
incorporated herein by reference).
10.9* -Amendment No. 1 to the Noble Drilling Corporation Thrift Plan
dated February 13, 1992 (filed as Exhibit 10.13 to the Registrant's
Annual Report on Form 10-K for the year ended December 31, 1991 and
incorporated herein by reference).
45
<PAGE> 48
10.10* -Directors' Option Agreements dated October 29, 1987, between the
Registrant and each of Michael A. Cawley, Johnnie W. Hoffman and
John F. Snodgrass (filed as Exhibit 10.11 to the Registrant's
Annual Report on Form 10-K for the year ended December 31, 1988 and
incorporated herein by reference).
10.11 -Registration Rights Agreement dated as of January 29, 1988 between
the Registrant and General Electric Capital Corporation (filed as a
part of Exhibit 2.1 to the Registrant's Current Report on Form 8-K
dated February 11, 1988 and incorporated herein by reference).
10.12 -First Amendment to Registration Rights Agreement dated as of
February 5, 1993 between the Registrant and General Electric
Capital Corporation (filed as Exhibit 10.19 to the Registrant's
Annual Report on Form 10-K for the year ended December 31, 1992 and
incorporated herein by reference).
10.13 -Guarantee Agreement dated as of August 10, 1989 between the
Registrant and The Royal Bank of Canada (filed as Exhibit 10.28 to
the Registrant's Annual Report on Form 10-K for the year ended
December 31, 1989, as amended, and incorporated herein by
reference).
10.14 -Credit Agreement dated as of October 29, 1990 between Noble
Drilling (Canada) Ltd. and The Royal Bank of Canada (filed as
Exhibit 10.27 to the Registrant's Annual Report on Form 10-K for
the year ended December 31, 1991 and incorporated herein by
reference).
10.15 -Letter Agreement amending the Credit Agreement between Noble
Drilling (Canada) Ltd. and The Royal Bank of Canada dated October
25, 1993 (filed as Exhibit 10.18 to the Registrant's Annual Report
on Form 10-K for the year ended December 31, 1993 and incorporated
herein by reference).
10.16 -Credit Agreement dated as of October 29, 1990 between Noble
Enterprises Limited and The Royal Bank of Canada (filed as Exhibit
10.30 to the Registrant's Annual Report on Form 10-K for the year
ended December 31, 1991 and incorporated herein by reference).
10.17 -Letter Agreement amending the Credit Agreement between Noble
Enterprises Limited and The Royal Bank of Canada dated October 25,
1993 (filed as Exhibit 10.21 to the Registrant's Annual Report on
Form 10-K for the year ended December 31, 1993 and incorporated
herein by reference).
10.18 -Guarantee and Subordination Agreement dated as of July 30, 1992
between the Registrant and The Royal Bank of Canada (filed as
Exhibit 10.34 to the Registrant's Annual Report on Form 10-K for
the year ended December 31, 1992 and incorporated herein by
reference).
10.19* -Amendment No. 2 to the Noble Drilling Corporation Thrift Plan
dated effective as of August 1, 1992 (filed as Exhibit 4.2 to the
Registrant's Registration Statement on Form S-8 (No. 33-50270) and
incorporated herein by reference).
10.20 -Amended and Restated Letter of Credit Agreement, dated as of
October 25, 1993, among Portal Rig Corporation, Noble (Gulf of
Mexico) Inc., NationsBank of Texas, N.A., as agent and as one of
the "Banks" thereunder, and Marine Midland Bank, N.A., Bank of
America National Trust and Savings Association, and Norwest Bank
Minnesota, National Association (collectively, the "Banks") (filed
as Exhibit 10.1 to the Registrant's Quarterly Report on Form 10-Q
for the three-month period ended September 30, 1993 and
incorporated herein by reference).
10.21 -Assignment, Assumption and Amended and Restated Preferred Ship
Mortgage, dated October 25, 1993, by Noble (Gulf of Mexico) Inc. to
the Banks (filed as Exhibit 10.2 to the Registrant's Quarterly
Report on Form 10-Q for the three-month period ended September 30,
1993 and incorporated herein by reference).
10.22 -Security Agreement and Assignment, dated October 25, 1993, by
Noble (Gulf of Mexico) Inc. to the Banks (filed as Exhibit 10.3 to
the Registrant's Quarterly Report on Form 10-Q for the three-month
period ended September 30, 1993 and incorporated herein by
reference).
10.23 -Noble Support Agreement, dated October 25, 1993, among the
Registrant and the Banks (filed as Exhibit 10.4 to the Registrant's
Quarterly Report on Form 10-Q for the three-month period ended
September 30, 1993 and incorporated herein by reference).
10.24* -Noble Drilling Corporation 1992 Nonqualified Stock Option Plan for
Non-Employee Directors (filed as Exhibit 4.1 to the Registrant's
Registration Statement on Form S-8 (No. 33-62394) and incorporated
herein by reference).
10.25* -Amendment No. 3 to the Noble Drilling Corporation Thrift Plan
dated effective as of January 1, 1994 (filed as Exhibit 10.31 to
the Registrant's Annual Report on Form 10-K for the year ended
December 31, 1993 and incorporated herein by reference).
10.26 -Registration Agreement dated April 22, 1994 between the Registrant
and Joseph E. Beall (filed as Exhibit 10.1 to the Registrant's Form
8-K dated May 6, 1994 and incorporated herein by reference).
46
<PAGE> 49
10.27 -Employment Agreement dated April 22, 1994 between Triton
Engineering Services Company and Joseph E. Beall (filed as Exhibit
10.2 to the Registrant's Form 8-K dated May 6, 1994 and
incorporated herein by reference).
10.28 -Lease Indemnity Agreement dated April 22, 1994 among Joseph E.
Beall, Triton Engineering Services Company, 1201 Dairy Ashford Ltd.
and the Registrant (filed as Exhibit 10.3 to the Registrant's Form
8-K dated May 6, 1994 and incorporated herein by reference).
10.29 -Credit Agreement dated as of June 16, 1994 among the Registrant,
First Interstate Bank of Texas, N.A., in its individual capacity
and as agent, and Credit Lyonnais Cayman Island Branch (filed as
Exhibit 10.1 to the Registrant's Registration Statement on Form S-4
(No. 33-54495) and incorporated herein by reference).
10.30 -Revolving Credit Note dated June 16, 1994 of the Registrant in the
amount of $12,500,000 in favor of Credit Lyonnais Cayman Island
Branch (filed as Exhibit 10.2 to the Registrant's Registration
Statement on Form S-4 (No. 33-54495) and incorporated herein by
reference).
10.31 -Revolving Credit Note dated June 16, 1994 of the Registrant in the
amount of $12,500,000 in favor of First Interstate Bank of Texas,
N.A. (filed as Exhibit 10.3 to the Registrant's Registration
Statement on Form S-4 (No. 33-54495) and incorporated herein by
reference).
10.32 -Guaranty Agreement dated as of June 16, 1994 by and among Noble
Drilling (U.S.) Inc., Noble Drilling (West Africa) Inc. and Noble
Drilling (Mexico) Inc. (filed as Exhibit 10.4 to the Registrant's
Registration Statement on Form S-4 (No. 33-54495) and incorporated
herein by reference).
10.33 -Registration Rights Agreement dated as of September 15, 1994
between the Registrant and P.A.J.W. Corporation (filed as Exhibit
10.1 to the Registrant's Form 10-Q for the quarter ended September
30, 1994 and incorporated herein by reference).
10.34 -Severance Agreement dated as of July 1, 1993 between Noble
Offshore Corporation (as successor by merger to Chiles Offshore
Corporation) and C.R. Bearden (filed as Exhibit 10.2 to the
Registrant's Form 10-Q for the quarter ended September 30, 1994 and
incorporated herein by reference).
10.35* -Amendment No. 2 to the Noble Drilling Corporation Thrift Trust
dated June 24, 1994 (filed as Exhibit 10.42 to the Registrant's
Annual Report on Form 10-K for the year ended December 31, 1994 and
incorporated herein by reference).
10.36* -Amendment No. 4 to the Noble Drilling Corporation Thrift Plan
dated December 30, 1994 (filed as Exhibit 10.43 to the Registrant's
Form 10-K/A (Amendment No. 1) for the year ended December 31, 1994
and incorporated herein by reference).
10.37* -Amendment No. 1 to the Noble Drilling Corporation 1992
Nonqualified Stock Option Plan for Non-Employee Directors dated as
of July 28, 1994 (filed as Exhibit 10.44 to the Registrant's Annual
Report on Form 10-K for the year ended December 31, 1994 and
incorporated herein by reference).
10.38 -Guarantee dated August 26, 1994 between the Registrant and
Hibernia Management and Development Company Ltd. (filed as Exhibit
10.45 to the Registrant's Annual Report on Form 10-K for the year
ended December 31, 1994 and incorporated herein by reference).
10.39* -Noble Drilling Corporation Amended and Restated Thrift Restoration
Plan (filed as Exhibit 10.46 to the Registrant's Annual Report on
Form 10-K for the year ended December 31, 1994 and incorporated
herein by reference).
10.40* -Amendment No. 4 to the Noble Drilling Corporation Thrift Plan, as
in effect as of August 1, 1994, dated December 30, 1994 (filed as
Exhibit 10.47 to the Registrant's Annual Report on Form 10-K/A
(Amendment No. 1) for the year ended December 31, 1994 and
incorporated herein by reference).
10.41* -Amendment No. 5 to the Noble Drilling Corporation Thrift Plan,
dated effective as of May 1, 1995 (filed as Exhibit 10.1 to the
Registrant's Quarterly Report on Form 10-Q for the three-month
period ended March 31, 1995 and incorporated herein by reference).
10.42* -Noble Drilling Corporation Retirement Restoration Plan dated April
27, 1995 (filed as Exhibit 10.2 to the Registrant's Quarterly
Report on Form 10-Q for the three-month period ended March 31, 1995
and incorporated herein by reference).
10.43* -Noble Drilling Corporation Short-Term Incentive Plan (revised
April 1995).
10.44 -First Amendment dated as of June 30, 1995 to Credit Agreement
dated as of June 16, 1994 among the Registrant, First Interstate
Bank of Texas, N.A., in its individual capacity and as Agent, and
Credit Lyonnais Cayman Island Branch.
10.45 -Second Amendment dated as of February 28, 1996 to Credit Agreement
dated as of June 16, 1994 among the Registrant, First Interstate
Bank of Texas, N.A., in its individual capacity and as Agent, and
Credit Lyonnais Cayman Island Branch.
47
<PAGE> 50
10.46* -Form of Indemnity Agreement entered into between the Registrant
and each of the Registrant's directors and bylaw officers.
21.1 -Subsidiaries of the Registrant.
23.1 -Consent of Price Waterhouse LLP.
23.2 -Consent of Arthur Andersen LLP.
27 -Financial Data Schedule.
- --------------
* Management contract or compensatory plan or arrangement required to be
filed as an exhibit hereto.
48
<PAGE> 1
EXHIBIT 2.10
Noble Drilling Corporation
10370 Richmond Avenue
Suite 400
Houston, Texas 77042
713 974-3131
March 13, 1996
Royal Nedlloyd N.V.
Attn: Mr. H.H. Meijer
Boompjes 40
3011 XB Rotterdam
The Netherlands
Neddrill Holding B.V.
Attn: Mr. F.W. van Riet
Coolsingel 139
3012 A G Rotterdam
The Netherlands
Gentlemen:
This letter, when executed by you, will evidence (i) our mutual intent,
as set forth in Section I of this letter, with respect to the proposed
acquisition by Noble Drilling Corporation or its nominee ("Buyer"), of
substantially all the property, assets and rights, tangible and intangible, used
by Neddrill Holding B.V. ("Seller") and its Subsidiaries in the offshore/onshore
contract drilling, accommodation and other oil and gas exploration and
production related service businesses engaged in by Seller or any of its
Subsidiaries as conducted on the date of this letter, and (ii) certain binding
agreements, as set forth in Section II of this letter, relating to the proposed
acquisition. Seller is a wholly owned direct subsidiary of Royal Nedlloyd N.V.
("Parent").
The matters set forth in Section I of this letter constitute an
expression of our mutual good faith intention to negotiate and enter into a
definitive agreement among Buyer, Seller and Parent setting forth in detail the
terms, provisions and conditions for the proposed acquisition. Except for the
matters set forth in Section II of this letter, which constitute binding
agreements among Buyer, Seller and Parent, this letter is not, and is not
intended to be, a binding agreement among Buyer, Seller and Parent (except as to
Section II), and neither Buyer, Seller nor Parent shall have any liability to
the other (except as to Section II) upon the failure to execute a definitive
agreement for any reason.
<PAGE> 2
SECTION I.
PROPOSED ACQUISITION
1.1. Major Terms of Transaction. Annex I attached hereto and made a
part hereof sets forth the major terms upon which the transactions shall be
based. The terms defined in Annex I are used in this letter with the meanings
therein assigned.
1.2. Purchase Price. The purchase price for the Assets would consist of
(a) the cash amount of US$300,000,000 (subject to adjustment), (b) 5,000,000
shares of common stock, par value $.10 per share, of Buyer, and (c) the
assumption by Buyer of the Contractually Assumed Liabilities.
1.3. Definitive Agreement. Buyer, Seller and Parent would endeavor to
enter into a definitive agreement (the "definitive agreement") setting forth in
detail the terms, provisions and conditions for the proposed acquisition,
including representations, warranties, covenants, conditions, schedules and
exhibits customarily contained in agreements for transactions of a similar
nature and magnitude, and in connection therewith, Annex I would serve as the
basis for further discussion. It is the good faith intention of Buyer, Seller
and Parent to engage in further negotiations regarding the detailed terms,
provisions and conditions of the proposed acquisition and the definitive
agreement.
1.4. Certain Conditions. It is recognized that the proposed acquisition
would be subject to conditions precedent, certain of which would be satisfied
prior to execution and delivery of the definitive agreement, including, without
limitation, matters under the Social and Economic Council Resolution on Rules of
Conduct Relating to Mergers 1975 and the Works Council Act pursuant to which
Parent would seek advice from its Central Works Council, and certain of which
would be contained in the definitive agreement as conditions to closing.
SECTION II.
BINDING AGREEMENTS
2.1. Necessary Information. Seller and Parent shall furnish to Buyer
promptly upon its request all such information regarding Seller and its
business, assets, properties and financial condition which, in the reasonable
judgment of Buyer, is necessary to enable Buyer to conclude its due diligence
relating to the proposed acquisition. Buyer shall furnish to Seller and Parent
promptly upon their request all such information regarding Buyer and its
business, assets, properties and financial condition which, in the reasonable
judgment of Seller and/or Parent, is necessary to enable Seller and/or Parent to
conclude their due diligence relating to the proposed acquisition.
2.2. Public Announcement. Each party shall promptly advise and
cooperate with the others prior to issuing, or permitting any of its officers,
directors, employees, agents or other representatives to issue, any press
release or other information to the press or any third party with respect to the
proposed acquisition, provided that any party may issue a press release after
consulting with the other parties if the party issuing such press release
reasonably believes that
2
<PAGE> 3
the issuance of such press release is required by applicable law or the rules of
the NASDAQ Stock Market, New York Stock Exchange, Amsterdam Stock Exchange or
any other applicable securities market.
2.3. Expenses. Except as otherwise expressly provided in this letter,
each of the parties hereto shall assume and bear all expenses, costs and fees
incurred or assumed by such party in connection with negotiations to date
regarding the proposed acquisition and in compliance with and performance of the
agreements contained herein, regardless of whether the parties enter into the
definitive agreement or the transactions contemplated hereby are consummated.
2.4. Exclusive Negotiations. (a) To encourage Buyer to continue and
conclude its due diligence activity relating to the proposed acquisition,
neither Parent nor Seller nor any officer, director, employee, agent, adviser or
representative of Parent or any of its Affiliates shall, directly or indirectly,
solicit any offer from, initiate, encourage or engage in any discussions or
negotiations with, or provide any information to, any third party concerning any
possible proposal regarding any acquisition, merger, take-over bid, or sale of
the Business or the Assets or any sale of shares of the capital stock of Seller
or any of its Subsidiaries engaged in the Business, whether or not in writing
and whether or not delivered to the stockholders of Parent generally (including
without limitation by way of a tender offer), or similar transactions involving
Seller or any of its Subsidiaries (any of the foregoing inquiries or proposals
being referred to herein as an "Acquisition Proposal").
(b) Buyer shall not pursue or otherwise consider any possible proposal
which, in the good faith judgment of Buyer, would jeopardize the proposed
acquisition or the financing by the Buyer thereof. Parent and Seller, taken
together as one entity, preserves all rights to claim the full amount of damages
to which it may be lawfully entitled against Buyer for a breach of this Section
2.4(b). The amount of such damages shall be subject to reduction by the amount
of US$2,000,000 as liquidated damages for all legal, accounting, consulting and
investment advisory fees and expenses incurred by Parent and Seller, taken
together as one entity, in connection with negotiations regarding the proposed
acquisition.
2.5. Preservation of Claims for Damages in Lieu of Termination Fee;
Liquidated Out-of-Pockets. (a) The parties agree that, if the proposed
acquisition contemplated in this letter is not consummated by reason of Parent,
Seller or any of Seller's Subsidiaries entering into an agreement regarding the
Business or the Assets pursuant to an Acquisition Proposal, then Buyer will
suffer substantial damages, including but not limited to, damages for loss of
future profits. Buyer preserves all rights to claim the full amount of damages
to which it may be lawfully entitled against Parent or Seller or any third party
to any transaction that is related to any Acquisition Proposal. The amount of
such damages shall be subject to reduction by the amount of US$2,000,000 as
liquidated damages for all legal, accounting, consulting and investment advisory
fees and expenses incurred by Buyer in connection with negotiations regarding
the proposed acquisition.
(b) Parent shall immediately notify Buyer after receipt of any
Acquisition Proposal or any request for nonpublic information relating to Parent
or Seller or any of Seller's Subsidiaries in connection with an Acquisition
Proposal or for access to the properties, books
3
<PAGE> 4
or records of Parent or Seller or any of Seller's Subsidiaries by any person or
entity that informs Parent, Seller or such Subsidiary that it is considering
making, or has made, an Acquisition Proposal. Such notice to Buyer shall be made
orally and in writing and shall indicate in reasonable detail the identity of
the offeror and the terms and conditions of such proposal, inquiry or contact.
Parent shall keep Buyer advised of the status with respect to any such
Acquisition Proposal or request for information.
2.6. Confidentiality. This letter in no way supersedes the
Confidentiality Agreement between Buyer and Seller dated October, 1995.
2.7. Nonbinding Nature of Section I. It is understood by the parties
hereto that Section I of this letter merely constitutes a statement of the
mutual intentions of the parties with respect to the proposed acquisition
outlined herein and does not contain all matters upon which agreement must be
reached in order for the proposed acquisition to be consummated. A binding
commitment with respect to the proposed acquisition will result only from
execution and delivery of the definitive agreement. The provisions of Section II
of this letter, however, are agreed to be fully binding on the parties hereto
upon the execution of this letter, unless and until such provisions are
superseded by the definitive agreement.
2.8. Certain Representations. (a) Each of Parent and Seller represents
and warrants to Buyer that it has full corporate power and corporate authority
to execute and deliver this letter and perform the agreements in Section II of
this letter. The execution and delivery of this letter, and the performance of
the agreements in Section II of this letter, by each of Parent and Seller have
been duly authorized by all necessary corporate action of Parent and Seller.
This letter has been duly executed and delivered by each of Parent and Seller.
(b) Buyer hereby represents and warrants to Parent and Seller that it
has full corporate power and corporate authority to execute and deliver this
letter and perform the agreements in Section II of this letter. The execution
and delivery of this letter, and the performance of the agreements in Section II
of this letter, by Buyer have been duly authorized by all necessary corporate
action of Buyer. This letter has been duly executed and delivered by Buyer.
2.9. Assignment. Neither this letter nor any of the rights, interests
or obligations hereunder shall be assigned by any of the parties hereto without
the prior written consent of the other parties, except that Buyer may assign to
any Subsidiary thereof any of Buyer's rights, interests or obligations
hereunder, provided that such Subsidiary agrees in writing to be bound by all
the terms and provisions of this letter.
2.10. Notices. Any notice or other communication required or permitted
hereunder shall be in writing and shall be delivered by hand, by telex or
facsimile, or by certified or registered mail, postage prepaid. Any such notice
or communication shall be deemed given upon its receipt at the following
address:
4
<PAGE> 5
(a) If to Buyer, at: Noble Drilling Corporation
Attn: Mr. James C. Day
10370 Richmond Avenue, Suite 400
Houston, Texas 77042
Telefax: 713-953-1126
with a copy to:
Robert D. Campbell, Esq.
Thompson & Knight, P.C.
1700 Pacific Avenue, Suite 3300
Dallas, Texas 75201
Telefax: 214-969-1715
(b) If to the Seller, at: Neddrill Holding B.V.
Attn: Mr. F.W. van Riet
Coolsingel 139
3012 A G Rotterdam
The Netherlands
Telefax: 31 10 240 5625
with a copy to:
W. Garney Griggs, Esq.
Griggs & Harrison, P.C.
1301 McKinney, Suite 3200
Houston, Texas 77010-3033
Telefax: 713-651-1944
(c) If to Parent, at: Royal Nedlloyd N.V.
Attn: Mr. H.H. Meijer
Boompjes 40
3011 XB Rotterdam
The Netherlands
Telefax: 31 10 400 6190
with a copy to:
W. Garney Griggs, Esq.
Griggs & Harrison, P.C.
1301 McKinney, Suite 3200
Houston, Texas 77010-3033
Telefax: 713-651-1944
5
<PAGE> 6
2.11. Severability. If any provision of Section II of this letter is
declared void or unenforceable, such provision shall be deemed to have been
severed from such Section, which shall otherwise remain in full force and
effect.
2.12. Governing Law. This letter shall be governed by, and construed
and enforced in accordance with, the laws of The Netherlands. All disputes in
any way relating to, arising under, connected with, or incident to this letter
shall be litigated, if at all, exclusively in the competent court in Rotterdam,
The Netherlands, and, if necessary, the corresponding appellate courts.
* * * * *
If the foregoing correctly sets forth the understanding between us with
respect to the proposed acquisition outlined herein, please sign two copies of
this letter in the space provided below and return one executed copy to the
undersigned.
Very truly yours,
NOBLE DRILLING CORPORATION
By: /s/ JAMES C. DAY
-----------------------------------
Name: James C. Day
Title: Chairman, President and Chief
Executive Officer
ACCEPTED AND AGREED TO
as of the date first
above set forth.
NEDDRILL HOLDING B.V.
By: /s/ F.W. van Riet
-------------------------
Name: F.W. van Riet
Title: Managing Director
ROYAL NEDLLOYD N.V.
By: /s/ H.H. MEIJER
-------------------------
Name: H.H. Meijer
Title: Member of the Managing Board
[Annex I is omitted pursuant to Item 601.(b)(2) of Regulation S-K. The
Registrant agrees to furnish supplementally a copy of Annex I to the Commission
upon request.]
6
<PAGE> 1
EXHIBIT 10.43
NOBLE DRILLING CORPORATION
SHORT TERM INCENTIVE PLAN
Revised: April 1995*
PURPOSE
The success of Noble Drilling Corporation ("Noble Drilling") and its
subsidiaries (collectively, unless the context otherwise requires, the
"Company") is a result of the collective efforts of all employees. Each
position within the Company has the ability to make a positive contribution to
key factors making up the components used to measure a successful year. Those
components include factors such as: Increase in Shareholder Value, Cash Flow
from Operations, Major New Contracts/Operating Days, Net Income and Safety. In
order to intensify each employee's attention on available opportunities to
increase revenues, control costs and seek out profitable ventures, the Company
maintains a bonus program that rewards employees for successful achievement of
specific goals. It is management's belief that shareholders will benefit from
the creation of an environment that ties employee compensation to the success
of the Company.
PARTICIPATION AND ELIGIBILITY
The bonus plan covers all full-time employees in salary classifications 18 and
higher who have completed one year of service at the close of the bonus plan
year, which will be a calendar year. The bonus earned by employees with less
than two full years of service will be adjusted based upon the number of full
months employed compared to twenty-four months. Additionally, no bonus
payments will be made for partial year's service; the eligibility will be
determined from the employee roster at the close of the bonus plan year.
STRUCTURE
TARGET BONUS
The target bonus amount shall be determined on an aggregate basis for each
division and department. The target bonus shall be the base salary at year end
of eligible employees multiplied times the appropriate percentage factor
assigned to the salary classification. Salary classifications and target bonus
factors are as follows:
*Established 1977
-1-
<PAGE> 2
<TABLE>
<CAPTION>
Salary Classification Target Factor
--------------------- -------------
<S> <C>
18N through 23N 15%
24N through 25N 20%
26N through 27N 25%
28N through 32N 30%
30C through 32C 30%
33C through 36C 35%
37C 50%
</TABLE>
GOALS
At the end of each year, the total bonus pool will be determined by the Board
of Directors, considering target bonus levels, the Board's assessment of
overall company results, and attainment of specific, predetermined division or
corporate goals. Goals in the following categories will be recommended each
year by the Chief Executive Officer of Noble Drilling and approved by the Board
of Directors for the corporation and for each division. The percentage
weighting assigned to each goal shall be as follows subject to annual review by
the Board of Directors.
<TABLE>
<CAPTION>
Corporate Goals Assigned Weight
--------------- ---------------
<S> <C> <C>
1. Increase Shareholder Value 30%
2. Cash Flow from Operations 30%
3. Major New Contracts(1)/Operating Days 20%
4. Net Income 10%
5. Safety Results 10%
</TABLE>
<TABLE>
<CAPTION>
Division Goals Assigned Weight
-------------- ---------------
<S> <C> <C>
1. Operating Days 40%
2. Cash Flow from Operations 40%
3. Safety Results 10%
4. Rig Maintenance and Appearance 10%
</TABLE>
(1) Defined: One (1) year contract with a 20% internal rate of return,
$8.5 million in revenue -- applicable to the International
Divisions.
-2-
<PAGE> 3
The goal weighting percentage will be used in measuring overall performance,
considering measurement of actual results measured against the goal for each
factor. The adjustment to the goal weighting will be based upon the following
schedule.
<TABLE>
<CAPTION>
Goal Achievement Range Adjustment Factor
---------------------- -----------------
<S> <C>
Greater than 135% 2.00
125--135% 1.75
115--125% 1.50
105--115% 1.25
95--105% 1.00
85-- 95% .75
75-- 85% .50
Less than 75% .00
</TABLE>
The target bonus for corporate employees will be adjusted to reflect the
combined percentage of achievement of all assigned goals. The target bonus for
division employees will be adjusted to reflect the combined percentage of
achievement of all assigned goals using the ratio of 75 percent for division
goal achievement and 25 percent for corporate goal achievement. Accordingly,
the bonus payable to division employees is dependent on the level of
achievement of both division and corporate goals. The dollar amount of the
bonus payable, if any, will be calculated using the target bonus amount times
the applicable multiplier determined under the following adjustment schedule:
<TABLE>
<CAPTION>
Combined Target Bonus
Goal Achievement Payable
---------------- -------
<S> <C>
Greater than 160% 2.00
140--160% 1.75
130--140% 1.50
120--130% 1.40
105--120% 1.20
95--105% 1.00
75-- 95% .75
65-- 75% .25
Below 65% .00
</TABLE>
-3-
<PAGE> 4
BONUS ALLOCATION
Each division manager, department head and operating committee member shall
receive a bonus (assuming a bonus is payable) as calculated using the target
bonus times the applicable multiplier. The remaining bonus pool shall be
allocated to eligible employees within the division or department based upon
merit. Deviation above or below the target bonus percent must be justified in
writing by the employee's supervisor. Division managers and department heads
shall submit the allocated bonus listing to the Chief Executive Officer of
Noble Drilling for review and approval. All bonus calculations, allocations
and recommendations are subject to review and approval by the Compensation
Committee of the Board of Directors.
GOAL FLEXIBILITY
It is intended that the total bonus pool will reflect the best judgment of the
Board of Directors in determining overall Company performance for the year. In
determining overall Company performance, the Board will consider the Company's
performance in relation to the pre-determined goals and market conditions.
However, because the goals are established in November/December of the
preceding plan year, some consideration to subsequent budget revisions may be
given. It is expected that the Company will prepare budgets and forecasts in
March/April of the plan year. If such budgets have substantially changed due
to subsequent events, then the Chief Executive Officer of Noble Drilling shall,
at his discretion, submit revised goals to the Board of Directors of Noble
Drilling for its approval. Revision to the goals can be considered subsequent
to April at the Board's discretion.
-4-
<PAGE> 1
EXHIBIT 10.44
================================================================================
FIRST AMENDMENT TO CREDIT AGREEMENT
BETWEEN
NOBLE DRILLING CORPORATION
FIRST INTERSTATE BANK OF TEXAS, N.A., AS AGENT
AND
CERTAIN BANKS
================================================================================
<PAGE> 2
FIRST AMENDMENT TO CREDIT AGREEMENT
THIS FIRST AMENDMENT TO CREDIT AGREEMENT (the "Amendment") is made
and entered into as of this 30th day of June, 1995, by and between NOBLE
DRILLING CORPORATION, a Delaware corporation ("Borrower"), FIRST INTERSTATE
BANK OF TEXAS, N.A., a national banking association executing this Amendment in
its individual capacity ("First Interstate") and as agent for Credit Lyonnais
Cayman Island Branch ("Credit Lyonnais"), and Credit Lyonnais.
W I T N E S S E T H:
WHEREAS, pursuant to the terms and subject to the conditions of
that certain Credit Agreement dated as of June 16, 1994, between the Borrower,
Credit Lyonnais, and First Interstate in its individual capacity and as agent
(the "Agent") for Credit Lyonnais (such Credit Agreement, as the same is hereby
amended and may hereafter be amended from time to time, being hereinafter
referred to as the "Credit Agreement"), certain credit facilities were made
available to the Borrower;
WHEREAS, the indebtedness and obligations of the Borrower to the
Banks (as defined in the Credit Agreement) have been evidenced by (i) the
Credit Agreement, (ii) the Applications, and (iii) each of the revolving notes
dated June 16, 1994, made by Borrower to the order of each of the Banks, copies
of which are attached hereto as Annex A (the "Previous Notes");
WHEREAS, the Borrower has requested and, pursuant to the terms
and subject to the conditions hereof and in connection herewith, the Banks have
agreed to change the Credit Maturity Date (as defined in the Credit Agreement),
subject to the terms and conditions hereinafter set forth;
WHEREAS, to secure, in part, the indebtedness under the Credit
Agreement and the Notes (as defined in the Credit Agreement), and all renewals,
extensions, modifications, increases and/or rearrangements thereof and in
connection therewith, and all other indebtedness, liabilities and obligations
of the Borrower to the Agent or the Banks, then existing or thereafter arising,
(i) each of Noble Drilling (U.S.), Inc., a Delaware corporation ("ND-US"),
Noble Drilling (West Africa), Inc., a Delaware corporation ("ND-WA"), and Noble
Drilling (Mexico), Inc., a Delaware corporation ("ND-M") (collectively, the
"Guarantors") have guaranteed to the Agent and the Banks the payment and
performance of the Obligations (as defined in the Credit Agreement) pursuant to
the Guaranties (as defined in the Credit Agreement), (ii) the Borrower has
executed and delivered to the Agent (as defined in the Credit Agreement) that
certain Security Agreement dated as of June 16, 1994, in favor of the Agent for
the benefit of the Banks (the "Security Agreement") and (iii) Intercompany
Revolving Credit Demand Notes, each dated June 16, 1994, made to the order of
Borrower in the original principal amount of
<PAGE> 3
$20,000,000 each by each of (a) Noble International Limited, a Cayman Islands
corporation ("Noble International"), (b) Noble Drilling (U.K.) Limited, a
Scotland corporation ("Noble UK"), (c) Noble Drilling De Venezuela C.A., a
Venezuela corporation ("Noble Venezuela"), and (d) Noble Drilling (West Africa)
Ltd., a Bermuda corporation ("Noble West Africa"), have been pledged by
Borrower to the Banks pursuant to the Security Agreement (such four
Intercompany Revolving Credit Demand Notes being hereinafter collectively
referred to as the "Prior Collateral Notes");
WHEREAS, to secure, in part, the indebtedness under the Credit
Agreement and each of the Previous Notes (and all renewals, extensions,
modifications and/or rearrangements thereof and in connection therewith) and
all other indebtedness, liabilities and obligations of the Borrower to the
Agent and the Banks then existing or thereafter arising, the Borrower has
heretofore executed in favor of the Agent for the benefit of the Banks: (i)
the Security Agreement, (ii) the Applications (as defined in the Credit
Agreement), (iii) the Guaranty, and (iv) all other security agreements,
guaranties, financing statements and other agreements executed in connection
with the Credit Agreement prior to the date hereof, all of which shall continue
as amended in connection herewith in full force and effect after the execution
of this Amendment, and shall secure the Borrower's payment of the Obligations
(as defined in the Credit Agreement) all as more fully set forth therein and
herein;
WHEREAS, in furtherance of the foregoing and to evidence the
agreements of the parties hereto in relation thereto the parties hereto desire
to amend the Credit Agreement as hereinafter provided;
NOW THEREFORE, for and in consideration of the mutual covenants
and agreements herein contained and for other good and valuable consideration
and reasonably equivalent value, the receipt and sufficiency of which are
hereby expressly acknowledged, the Borrower, the Agent and the Banks hereby
agree as follows:
I. CERTAIN DEFINITIONS
Section 1.01 Certain Definitions. All terms used herein shall
have the respective meanings set forth therefor in the Credit Agreement except
as otherwise expressly defined herein.
Section 1.02 Revised Definitions. Effective as of the date
hereof, as used in the Credit Agreement, the following terms shall have the
following meanings:
"Credit Maturity Date" means 12:00 o'clock noon Houston, Texas
time on June 30, 1997, or such earlier date and time on which the obligation of
Banks to make Loans and provide Letters of Credit hereunder is terminated and
all Obligations are immediately due and payable by Borrower, or such later date
as may result from the extension of the Credit Maturity Date as set forth in
Section 2.02 hereof, or as may be otherwise agreed in writing by Borrower
2
<PAGE> 4
and Banks.
"Revolving Note" shall mean the Revolving Note of Borrower, in
substantially the form attached hereto as Annex B, having the blanks therein
appropriately completed and duly executed, and otherwise in form and substance
satisfactory to Banks, together with any and all renewals, extensions,
rearrangements, modifications and increases.
II. AMENDMENT; CONDITIONS TO AMENDMENT
Section 2.01 Amendment and Restatement of Notes. (a) Each of
the Previous Notes shall, upon satisfaction of the conditions precedent set
forth in Section 2.02 hereof, be amended and restated in their entirety in the
forms set forth on Annex B as the Revolving Notes.
(b) Each of the Prior Collateral Notes shall, upon
satisfaction of the conditions precedent set forth in Section 2.02 hereof, be
amended and restated in their entirety in the forms set forth on Annex C, and
such amended and restated Intercompany Revolving Credit Demand Notes shall
constitute the "Collateral Notes", as defined in the Security Agreement,
pledged to the Agent for the benefit of the Banks pursuant to the Security
Agreement to secure payment of the Obligations (as defined in the Security
Agreement).
Section 2.02 Conditions to Amendment. This Amendment shall
become effective as of the date hereof upon satisfaction, to the Agent, of the
following conditions by the Borrower:
(a) The Borrower and each Significant Subsidiary other
than a Foreign Subsidiary (other than Noble Drilling (Canada)
Ltd.) shall have delivered to the Agent, in form and substance
satisfactory to the Agent, certified copies of resolutions of the
Board of Directors of each such Person authorizing the execution,
delivery and performance of the Revolving Note, and the
Intercompany Revolving Credit Notes respectively, (collectively,
the "New Notes"), this Amendment and any other Loan Documents
executed by each such Person in connection herewith;
(b) The Borrower and each Significant Subsidiary other
than a Foreign Subsidiary (other than Noble Drilling (Canada)
Ltd.) shall have delivered to the Agent, in form and substance
satisfactory to the Agent, certificates of incumbency certified
by the secretary or assistant secretary of the Borrower and each
such Significant Subsidiary with specimen signatures of the
president, vice president and secretary thereof;
(c) Noble Offshore Corporation, a Delaware corporation
("NOC") shall have executed and delivered to the Agent a Guaranty
in form and substance satisfactory to the Agent, together with
certified copies of resolutions of the Board of Directors
3
<PAGE> 5
of NOC authorizing the execution, delivery and performance of
such guaranty, and a certificate of incumbency certified by the
Secretary or Assistant Secretary of NOC with specimen signatures
of the President, Vice President and Secretary of NOC;
(d) The legal opinion of Thompson & Knight, counsel to
NOC, with respect to such matters and in form and substance
reasonably satisfactory to the Agent, shall be delivered to the
Agent;
(e) The Borrower shall have paid a $30,000 fee to the
Agent for the pro rata benefit of the Banks in accordance with
their respective interests in the Credit Agreement;
(f) The Borrower shall have paid all legal fees and
expenses incurred in connection with this Amendment; and
(g) The Borrower shall have duly executed and delivered
all other documents requested by the Agent in connection
herewith.
III. REPRESENTATIONS, WARRANTIES AND RATIFICATIONS
Section 3.01 Representations and Warranties. The Borrower, by
executing this Amendment, hereby represents and warrants to the Agent that the
representations and warranties contained in Section 3 of the Credit Agreement,
as amended hereby, and the exhibits thereto, and the information therein, are
true and correct on and as of the date hereof as though made on and as of the
date hereof (except as to representations and warranties that were limited by
their express terms to a specific date or as to which disclosure has been made
to, and written approval has been received from, the Agent), and no event has
occurred and is continuing which constitutes an Event of Default or which would
constitute an Event of Default but for the requirement of notice or lapse of
time or both.
Section 3.02 Ratification. (a) The terms and provisions set
forth in this Amendment shall modify and supersede all inconsistent terms and
provisions set forth in the Credit Agreement, but except as expressly modified
and superseded by this Amendment, the terms and provisions of the Credit
Agreement are ratified and confirmed and shall continue in full force and
effect, the Borrower hereby agreeing that the Credit Agreement, as amended
hereby, and the other Loan Documents, whether or not amended hereby, are and
shall continue to be outstanding, validly existing and enforceable in
accordance with their respective terms.
(b) Furthermore, the Borrower confirms, ratifies and continues as
valid and subsisting all liens and security interests established by the Loan
Documents to secure the Obligations, including, but without limitation,
indebtedness that has arisen, now exists or hereafter arises under or is
evidenced by the Previous Notes or the New Notes and all
4
<PAGE> 6
extensions, renewals, modifications, increases and rearrangements thereof, and
any and all other indebtedness, liabilities and obligations whatsoever of the
Borrower to the Banks, the Previous Notes and the New Notes having been
contemplated by the parties hereto and to the Loan Documents, and intended to
be secured by the Loan Documents.
Section 3.03 Continuity of Agreement and Promissory Notes. The
indebtedness of the Borrower to the Banks was and is governed by the terms of
the Credit Agreement, and has been evidenced in part by the Previous Notes, for
which the Revolving Notes are hereby substituted and exchanged. The terms of
any agreement, promissory note or any other document notwithstanding, the
Credit Agreement has been since its execution, and remains, in full force and
effect and, together with the New Notes and the Loan Documents, represents the
written obligation of the Borrower to make payments of the outstanding
principal balance of and interest on the outstanding principal balance of, the
Loans, the Reimbursement Obligations, and other indebtedness and liabilities to
the Agent or the Banks.
IV. MISCELLANEOUS
Section 4.01 Reference to Credit Agreement. Each of the Loan
Documents, including the Credit Agreement, the New Notes, and any and all other
promissory notes, mortgages, deeds of trust, security agreements and other Loan
Documents heretofore, now, or hereafter executed and delivered pursuant to the
terms hereof or pursuant to the terms of the Credit Agreement as amended
hereby, or as further evidence of or security for or in connection with the
Credit Agreement as amended hereby, are hereby amended so that any reference in
the Credit Agreement or the other Loan Documents to the Credit Agreement shall
mean a reference to the Credit Agreement as amended hereby.
Section 4.02 Execution in Counterparts. This Amendment may be
executed in any number of counterparts and by different parties hereto on
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which when taken together shall constitute but one and the
same instrument.
Section 4.03 Governing Law. THIS AMENDMENT SHALL BE DEEMED TO
BE A CONTRACT MADE UNDER THE LAWS OF THE STATE OF TEXAS AND FOR ALL PURPOSES
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE
OF TEXAS AND THE APPLICABLE LAWS OF THE UNITED STATES OF AMERICA. This
Amendment has been entered into in Harris County, Texas and shall be
performable for all purposes in Harris County, Texas. Courts within the State
of Texas shall have jurisdiction over any and all disputes arising under or
pertaining to this Amendment; and venue in any such dispute shall be laid in
Harris County--the county or judicial district of the Agent's principal place
of business.
Section 4.04 Parties Bound. This Amendment shall be binding
upon and inure to the benefit of Borrower and the Agent and the Banks, and
their respective successors and assigns; provided, however, that neither the
Borrower nor any of its successors or assigns may,
5
<PAGE> 7
without the prior written consent of the Agent and the Banks, assign any
rights, powers, duties or obligations hereunder.
Section 4.05 Labelling of Notes. Within forty-five (45) days
after satisfaction of the conditions specified in Section 2.01 hereof, the
Agent shall mark (a) the New Notes, with the blanks appropriately completed as
the Agent may require, "Amended and restated (but not extinguished) by that
certain promissory note dated as of June 30, 1995 executed by Noble Drilling
Corporation and in the stated principal amount of $12,500,000", and (b) the
Prior Collateral Notes, with the blanks appropriately completed as the Agent
may require, "Amended and restated (but not extinguished) by that certain
promissory note dated as of June 30, 1995, executed by [Name of Maker] and in
the stated principal amount of $20,000,000."
EXECUTED as of the date first above written.
NOBLE DRILLING CORPORATION
By:
------------------------------------
Print Name:
----------------------------
Print Title:
---------------------------
FIRST INTERSTATE BANK OF TEXAS, N.A.
By:
------------------------------------
Print Name:
------------------------
Print Title:
------------------------
CREDIT LYONNAIS CAYMAN ISLAND BRANCH
By:
------------------------------------
Print Name:
-------------------------
Print Title:
------------------------
Guarantors' Acknowledgment and Reaffirmation
of Amendment and Guaranty
Noble Drilling (U.S.), Inc., a Delaware corporation ("ND-US"),
Noble Drilling (West Africa), Inc., a Delaware corporation ("ND-WA"), and Noble
Drilling (Mexico), Inc.,
6
<PAGE> 8
a Delaware corporation ("ND-M"), having executed an unconditional guaranty
agreement, in favor of the Agent and the Banks and dated as of June 16, 1994,
guaranteeing the payment and performance of all indebtedness and obligations of
the Borrower to the Agent and the Banks, hereby acknowledge, consent and agree
to the terms of the foregoing First Amendment to Credit Agreement, and further
agree that the Guaranty Agreement executed and delivered by each of ND-US,
ND-WA and ND-M has been and continues in full force and effect in accordance
with its terms guaranteeing the payment and performance of all indebtedness and
obligations of the Borrower to the Agent and the Banks without limitation,
adverse effect or restriction by the foregoing First Amendment to Credit
Agreement.
ND-US
Noble Drilling (US), Inc.
By:
------------------------------------
Print Name:
----------------------------
Print Title:
---------------------------
ND-WA
Noble Drilling (West Africa), Inc.
By:
------------------------------------
Print Name:
----------------------------
Print Title:
---------------------------
ND-M
Noble Drilling (Mexico), Inc.
By:
------------------------------------
Print Name:
----------------------------
Print Title:
---------------------------
Index to Annexes
- ----------------
Annex A - Previous Notes
Annex B - Revolving Note
7
<PAGE> 9
Annex C - Form of Intercompany Note
8
<PAGE> 1
EXHIBIT 10.45
SECOND AMENDMENT TO CREDIT AGREEMENT
THIS SECOND AMENDMENT TO CREDIT AGREEMENT (the "Amendment") is made
and entered into as of this 16th day of February 1996, by and between NOBLE
DRILLING CORPORATION, a Delaware corporation ("Borrower"), FIRST INTERSTATE
BANK OF TEXAS, N.A., a national banking association executing this Amendment in
its individual capacity ("First Interstate") and as agent for Credit Lyonnais
Cayman Island Branch ("Credit Lyonnais"), and Credit Lyonnais.
W I T N E S S E T H:
WHEREAS, that certain Credit Agreement dated as of June 16, 1994,
between the Borrower, Credit Lyonnais, and First Interstate in its individual
capacity and as agent (the "Agent") for Credit Lyonnais was amended by that
certain First Amendment to Credit Agreement dated as of June 30, 1995 (such
Credit Agreement, as the same is hereby amended and may hereafter be amended
from time to time, being hereinafter referred to as the "Credit Agreement"),
certain credit facilities were made available to the Borrower;
WHEREAS, the indebtedness and obligations of the Borrower to the Banks
(as defined in the Credit Agreement) have been evidenced by (i) the Credit
Agreement, (ii) the Applications, and (iii) each of the revolving notes dated
June 30, 1995, made by Borrower to the order of each of the Banks (the
"Notes");
WHEREAS, to secure, in part, the indebtedness under the Credit
Agreement and the Notes (as defined in the Credit Agreement), and all renewals,
extensions, modifications, increases and/or rearrangements thereof and in
connection therewith, and all other indebtedness, liabilities and obligations
of the Borrower to the Agent or the Banks, then existing or thereafter arising,
(i) each of Noble Drilling (U.S.) Inc., a Delaware corporation ("ND-US"), Noble
Drilling (West Africa) Inc., a Delaware corporation ("ND-WA"), Noble Drilling
(Mexico) Inc., a Delaware corporation ("ND-M"), and Noble Offshore Corporation,
a Delaware corporation ("NOC") (collectively, the "Guarantors"), have
guaranteed to the Agent and the Banks the payment and performance of the
Obligations (as defined in the Credit Agreement) pursuant to the Guaranties (as
defined in the Credit Agreement), (ii) the Borrower has executed and delivered
to the Agent (as defined in the Credit Agreement) that certain Security
Agreement dated as of June 16, 1994, in favor of the Agent for the benefit of
the Banks (the "Security Agreement") and (iii) Intercompany Revolving Credit
Demand Notes, each dated June 16, 1994, made to the order of Borrower in the
original principal amount of $20,000,000 by each of (a) Noble International
Limited, a Cayman Islands corporation ("Noble International"), (b) Noble
Drilling (U.K.) Limited, a Scotland corporation ("Noble UK"), (c) Noble
Drilling De Venezuela C.A., a Venezuela corporation ("Noble Venezuela"), and
(d) Noble Drilling (West Africa) Ltd., a Bermuda corporation ("Noble West
Africa"), have been pledge by Borrower to the Banks
<PAGE> 2
pursuant to the Security Agreement (such four Intercompany Revolving Credit
Demand Notes hereinafter collectively referred to as the "Prior Collateral
Notes");
WHEREAS, to secure, in part, the indebtedness under the Credit
Agreement and each of the Notes (and all renewals, extensions, modifications
and/or rearrangements, liabilities and obligations of the Borrower to the Agent
and the Banks then existing or thereafter arising, the Borrower has heretofore
executed in favor of the Agent for the benefit of the Banks: (i) the Security
Agreement, (ii) the Applications (as defined in the Credit Agreement), (iii)
the Guaranty, and (iv) all other security agreements, guaranties, financing
statements and other agreements executed in connection with the Credit
Agreement prior to the date hereof, all of which shall continue as amended in
connection herewith in full force and effect after the execution of this
Amendment, and shall secure the Borrower's payment of the Obligations (as
defined in the Credit Agreement) all as more fully set forth therein and
herein;
WHEREAS, the Borrower desires to increase the total amount of Letter
of Credit available to it by reducing the total amount of the Revolving Loan
Commitment by the excess of Total Letter of Credit Liabilities over $5,000,000;
WHEREAS, in furtherance of the foregoing and to evidence the
agreements of the parties hereto in relation thereto the parties hereto desire
to amend the Credit Agreement as hereinafter provided;
NOW THEREFORE, for and in consideration of the mutual covenants and
agreements herein contained and for other good and valuable consideration and
reasonably equivalent value, the receipt and sufficiency of which are hereby
expressly acknowledged, the Borrower, the Agent and the Banks hereby agree as
follows:
I. CERTAIN DEFINITIONS:
Section 1.01 Certain Definitions. All terms used herein shall have the
respective meanings set forth therefor in the Credit Agreement except as
otherwise expressly defined herein.
(b) Revised Definitions. Effective as of the date hereof as used
in the Credit Agreement, the following terms shall have the following meanings:
"Loan Formula Certificate" means a duly certified report, in
form and substance substantially similar to that which is attached
hereto as Annex A attached hereto, with the blanks therein properly
and accurately completed, and setting forth the limitations on Total
Loans and the limitations on Letters of Credit in Article II hereof,
such certificate being executed by an Authorized Representative of
Borrower.
"Revolving Loan Commitment" means as of any date of
determination thereof, the commitment of the Banks to make Revolving
Loans as set forth in Section 2.03 hereof, up to the maximum aggregate
amount of the Total Credit Commitment less the sum of (a) $5,000,000,
and (b) the excess at any such date (if a positive number) of the
Total Letter of Credit Liabilities over $5,000,000.
II. AMENDMENT; CONDITIONS TO AMENDMENT
2
<PAGE> 3
Section 2.01 Amendments to Credit Agreement. (a) (Section 2.01(a) is
hereby amended so as to read in its entirety as follows:
(a) Subject to the terms and conditions of this
Agreement, each of the Banks severally agrees to lend to the Borrower,
and the Borrower has the right to borrow from each of the Banks, from
time to time during the period from the date hereof to and including
the Credit Maturity Date, amounts not to exceed at any one time
outstanding such Bank's Specified Percentage of the Revolving Loan
Commitment, provided, however, that (i) the sum of the aggregate
principal amount of all Revolving Loans by the Banks at any one time
outstanding together with all Letter of Credit Liabilities shall not
exceed the lesser of (a) the Total Credit Commitment, and (b) the
Borrowing Base in effect from time to time, and (ii) the aggregate
principal amount of all Revolving Loans by the Banks at any one time
outstanding shall not exceed the lesser of (a) $25,000,000 less the
excess (if a positive number) of Total Letter of Credit Liabilities
over $5,000,000 and (b) the Total Credit Commitment and (iii) all
Letter of Credit Liabilities shall not exceed $8,000,000. The credit
described in the preceding sentence shall be a revolving credit
entitling the Borrower to borrow, prepay and reborrow by means of
Advances of any Type in accordance with the terms hereof. Each Type
of Advance shall be made at Agent's Applicable Lending Office for such
Type of Advance.
(b) Section 2.08 of the Credit Agreement is hereby
amended so as to read in its entirety as follows:
2.08 Letters of Credit. Subject to all the terms of
this Agreement, prior to the Credit Maturity Date, First Interstate
agrees to issue, renew and extend Letters of Credit, and each of the
Banks agrees to maintain a participation interest, to the extent of
the Specified Percentage of each, in all such Letters of Credit;
provided that in no event shall Total Letter of Credit Liabilities
exceed nor shall any Letter of Credit be issued, renewed or extended
which would result in Total Letter of Credit Liabilities exceeding,
the lesser of (i) $8,000,000, (ii) the Total Credit Commitment, less
the aggregate principal amount of all Revolving Loans outstanding, and
(iii) the Borrowing Base. Each Letter of Credit shall be issued by
First Interstate with the Banks each participating based on their
respective Specified Percentages, shall be for the account of the
Borrower or any of its Subsidiaries, shall have an expiration date
prior to the Credit Maturity Date and shall be for the purpose of
securing the contractual obligations of the Borrower or any of its
Subsidiaries, provided however, that neither the Agent, First
Interstate nor any of the other Banks shall be obligated to issue any
Letter of Credit if the face amount thereof would exceed the various
limits on the Total Letter of Credit Liabilities as set forth in this
Agreement. If First Interstate makes a payment under any Letter of
Credit and the Borrower has not made available to First Interstate
sufficient funds to honor such payment, each of the Banks other than
First Interstate will forthwith upon request forward to or deposit
with Agent for the account of First Interstate an amount equal to its
Specified Percentage of such payment, with interest as set forth in
Section 2.10 hereof. Such deposit by the
3
<PAGE> 4
Banks shall not relieve the Borrower from its reimbursement
obligations under the applicable Application or hereunder.
Section 2.02 Conditions to Amendment. This Amendment shall become
effective as of the date hereof upon satisfaction, to the Agent, of the
following conditions by the Borrower:
(a) The Borrower and each Significant Subsidiary other
than a Foreign Subsidiary (other than Noble Drilling (Canada) Ltd.)
shall have delivered to the Agent, in form and substance satisfactory
to the Agent, certified copies of resolutions of the Board of
Directors of each such Person authorizing the execution, delivery and
performance of this Amendment and any other Loan Documents executed by
each such Person in connection herewith;
(b) The Borrower and each Significant Subsidiary other
than a Foreign Subsidiary (other than Noble Drilling (Canada) Ltd.
shall have delivered to the Agent, in form and substance satisfactory
to the Agent, certificates of incumbency certified by the secretary or
assistant secretary of the Borrower and each such Significant
Subsidiary with specimen signatures of the president, vice president
and secretary thereof;
(c) The Borrower shall have paid all legal fees and
expenses incurred in connection with this Amendment; and
(d) The Borrower shall have duly executed and delivered
all other documents requested by the Agent in connection herewith.
III. REPRESENTATIONS, WARRANTIES AND RATIFICATIONS
Section 3.01 Representations and Warranties. The Borrower, by
executing this Amendment, hereby represents and warrants to the Agent that the
representations and warranties contained in Section 3 of the Credit Agreement,
as amended hereby, and the exhibits thereto, and the information therein, are
true and correct on and as of the date hereof as though made on and as of the
date hereof (except as to representations and warranties that were limited by
their express terms to a specific date or as to which disclosure has been made
to, and written approval has been received from, the Agent), and no event has
occurred and is continuing which constitutes an Event of Default or which would
constitute an Event of Default but for the requirement of notice or lapse of
time or both.
Section 3.02 Ratification. (a) The terms and provisions set forth in
this Amendment shall modify and supersede all inconsistent terms and provisions
set forth in the Credit Agreement, but except as expressly modified and
superseded by this Amendment, the terms and provisions of the Credit Agreement
are ratified and confirmed and shall continue in full force and effect, the
Borrower hereby agreeing that the Credit Agreement, as amended hereby, and the
other Loan Documents, whether or not amended hereby, are and shall continue to
be outstanding, validly existing and enforceable in accordance with their
respective terms.
(b) Furthermore, the Borrower confirms, ratifies and continues as
valid and subsisting all liens and security interests established by the Loan
Documents to secure the Obligations, including, but without limitation, all
Reimbursement Obligations and all indebtedness that has arisen, now exists or
hereafter arises under or is evidenced by the Notes and all extensions,
4
<PAGE> 5
renewals, modifications, increases and rearrangements thereof, and any and all
other indebtedness, liabilities and obligations whatsoever of the Borrower to
the Banks, the Reimbursement Obligations and the Notes having been contemplated
by the parties hereto and to the Loan Documents, and intended to be secured by
the Loan Documents.
Section 3.03 Continuity of Agreement and Promissory Notes. The
indebtedness of the Borrower to the Banks was and is governed by the terms of
the Credit Agreement, and has been evidenced in part by the Notes and the
Credit Agreement. The terms of any agreement, promissory note or any other
document notwithstanding, the Credit Agreement has been since its execution,
and remains, in full force and effect and, together with the Notes and the Loan
Documents, represents the written obligation of the Borrower to make payments
of the outstanding principal balance of and interest on the outstanding
principal balance of, the Loans, the Reimbursement Obligations, and other
indebtedness and liabilities to the Agent or the Banks.
IV. MISCELLANEOUS
Section 4.01 Reference to Credit Agreement. Each of the Loan
Documents, including the Credit Agreement, the Notes, and any and all other
promissory notes, mortgages, deeds of trust, security agreements and other Loan
Documents heretofore, now, or hereafter executed and delivered pursuant to the
terms hereof or pursuant to the terms of the Credit Agreement as amended
hereby, or as further evidence of or security for or in connection with the
Credit Agreement as amended hereby, are hereby amended so that any reference in
the Credit Agreement or in the other Loan Documents to the Credit Agreement
shall mean a reference to the Credit Agreement as amended hereby.
Section 4.02 Execution in Counterparts. This Amendment may be executed
in any number of counterparts and by different parties hereto on separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which when taken together shall constitute but one and the same
instrument.
Section 4.03 Governing Law. THIS AGREEMENT SHALL BE DEEMED TO BE A
CONTRACT MADE UNDER THE LAWS OF THE STATE OF TEXAS AND FOR ALL PURPOSES SHALL
BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
TEXAS AND THE APPLICABLE LAWS OF THE UNITED STATES OF AMERICA. This Amendment
has been entered into in Harris County, Texas and shall be performable for all
purposes in Harris County, Texas. Courts within the State of Texas shall have
jurisdiction over any and all disputes arising under or pertaining to this
Amendment; and venue in any such dispute shall be laid in Harris County--the
county or judicial district of the Agent's principal place of business.
Section 4.04 Parties Bound. This Amendment shall be binding upon and
inure to the benefit of Borrower and the Agent and the Banks, and their
respective successors and assigns; provided, however, that neither the Borrower
nor any of its successors or assigns may, without the prior written consent of
the Agent and the Banks, assign any rights, powers, duties or obligations
hereunder.
Section 4.05 Final Agreement. THIS AGREEMENT, TOGETHER WITH (i) THE
OTHER WRITTEN DOCUMENTS REQUIRED BY SECTION 2.02 HEREOF, (ii) THE CREDIT
AGREEMENT AND THE WRITTEN DOCUMENTS CONTEMPLATED IN
5
<PAGE> 6
SECTION 8 THEREOF, AND (iii) THE FIRST AMENDMENT TO CREDIT AGREEMENT DATED AS
OF JUNE 30, 1995, REPRESENT AND CONSTITUTE THE FINAL AGREEMENT BY AND AMONG THE
BORROWER, THE GUARANTORS, THE AGENT OR THE BANKS AND MAY NOT BE ALTERED,
MODIFIED OR CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT
ORAL AGREEMENTS OF THE BORROWER OR THE GUARANTORS WITH THE AGENT OR THE BANKS.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS OR COMMITMENTS AMONG THE BORROWER, THE
GUARANTORS, THE AGENT OR THE BANKS. THIS PROVISION SHALL CONSTITUTE NOTICE TO
THE BORROWER AND THE GUARANTORS UNDER SECTION 26.02 OF THE TEXAS BUSINESS &
COMMERCE CODE OF THE PROVISIONS THEREOF AND HEREOF.
EXECUTED as of the date first above stated.
NOBLE DRILLING CORPORATION
By:
----------------------------------
Print Name:
--------------------------
Print Title:
-------------------------
FIRST INTERSTATE BANK OF TEXAS, N.A.
By:
----------------------------------
Print Name:
--------------------------
Print Title:
-------------------------
CREDIT LYONNAIS CAYMAN ISLAND BRANCH
By:
----------------------------------
Print Name:
--------------------------
Print Title:
-------------------------
6
<PAGE> 7
Guarantors' Acknowledgment and Reaffirmation
of Amendment and Guaranty
Noble Drilling (U.S.) Inc., a Delaware corporation ("ND-US"), Noble
Drilling (West Africa) Inc., a Delaware corporation ("ND-WA"), Noble Drilling
(Mexico) Inc., a Delaware corporation ("ND-M"), having executed an
unconditional guaranty agreement, in favor of the Agent and the Banks and dated
as of June 16, 1994, and Noble Offshore Corporation, a Delaware corporation
("NOC"), having executed an unconditional guaranty agreement, in favor of the
Agent and the Banks and dated as of June 30, 1995, hereby acknowledge, consent
and agree to the terms of the foregoing Second Amendment to Credit Agreement,
and further agree that the Guaranty Agreements executed and delivered by each
of ND-US, ND-WA, ND-M and NOC has been and continues in full force and effect
in accordance with its terms guaranteeing the payment and performance of all
indebtedness and obligations of the Borrower to the Agent and the Banks without
limitation, adverse effect or restriction by the foregoing Second Amendment to
Credit Agreement.
ND-US
-----
Noble Drilling (U.S.) Inc.
By:
----------------------------------
Print Name:
--------------------------
Print Title:
-------------------------
ND-WA
-----
Noble Drilling (West Africa) Inc.
By:
----------------------------------
Print Name:
--------------------------
Print Title:
-------------------------
ND-M
----
Noble Drilling (Mexico) Inc.
By:
----------------------------------
Print Name:
--------------------------
Print Title:
-------------------------
Index to Annexes:
Annex A - Loan Formula Certificate
7
<PAGE> 1
EXHIBIT 10.46
INDEMNITY AGREEMENT
This Agreement made and entered into as of this _____ day of
______________, 19____, by and between NOBLE DRILLING CORPORATION, a Delaware
corporation (the "Company"), and ______________ ("Indemnitee"), who is
currently serving the Company in the capacity of a director and/or officer
thereof;
W I T N E S S E T H:
WHEREAS, the Company and Indemnitee recognize that the interpretation
of ambiguous statutes, regulations and court opinions and of the Certificate of
Incorporation and Bylaws of the Company, and the vagaries of public policy, are
too uncertain to provide the directors and officers of the Company with
adequate or reliable advance knowledge or guidance with respect to the legal
risks and potential liabilities to which they become personally exposed as a
result of performing their duties in good faith for the Company; and
WHEREAS, the Company and the Indemnitee are aware that highly
experienced and capable persons are often reluctant to serve as directors or
officers of a corporation unless they are protected to the fullest extent
permitted by law by comprehensive insurance or indemnification, especially
since the legal risks and potential liabilities, and the very threat thereof,
associated with lawsuits filed against the officers and directors of a
corporation, and the resultant substantial time, expense, harassment, ridicule,
abuse and anxiety spent and endured in defending against such lawsuits, whether
or not meritorious, bear no reasonable or logical relationship to the amount of
compensation received by the directors or officers from the corporation; and
WHEREAS, Section 145 of the General Corporation Law of the State of
Delaware, which sets forth certain provisions relating to the mandatory and
permissive indemnification of, and advancement of expenses to, officers and
directors (among others) of a Delaware corporation by such corporation, is
specifically not exclusive of other rights to which those indemnified
thereunder may be entitled under any bylaw, agreement, vote of stockholders or
disinterested directors or otherwise, and, thus, does not by itself limit the
extent to which the Company may indemnify persons serving as its officers and
directors (among others); and
WHEREAS, after due consideration and investigation of the terms and
provisions of this Agreement and the various other options available to the
Company and the Indemnitee in lieu thereof, the board of directors of the
Company has determined that the following Agreement is not only reasonable and
prudent but necessary to promote and ensure the best interests of the Company
and its stockholders; and
WHEREAS, the Company desires to have Indemnitee serve or continue to
serve as an officer and/or director of the Company, free from undue concern for
unpredictable, inappropriate
<PAGE> 2
or unreasonable legal risks and personal liabilities by reason of his acting in
good faith in the performance of his duty to the Company; and Indemnitee
desires to serve, or to continue to serve (provided that he is furnished the
indemnity provided for hereinafter), in either or both of such capacities;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Company and
Indemnitee, intending to be legally bound, do hereby agree as follows:
1. AGREEMENT TO SERVE. Indemnitee agrees to serve or continue to
serve as director and/or officer of the Company, at the will of the Company or
under separate contract, if such exists, for so long as he is duly elected or
appointed and qualified in accordance with the provisions of the Bylaws of the
Company or until such time as he tenders his resignation in writing.
2. DEFINITIONS. As used in this Agreement:
(a) The term "Proceeding" shall mean any action, suit or
proceeding, whether civil, criminal, administrative, arbitrative or
investigative, any appeal in such an action, suit or proceeding, and
any inquiry or investigation that could lead to such an action, suit
or proceeding, except one initiated by Indemnitee to enforce his
rights under this Agreement.
(b) The term "Expenses" includes, without limitation, all
reasonable attorneys' fees, retainers, court costs, transcript costs,
fees of experts, witness fees, travel expenses, duplicating costs,
printing and binding costs, telephone charges, postage, delivery
service fees and all other disbursements or expenses of the types
customarily incurred in connection with prosecuting, defending,
preparing to prosecute or defend, investigating, or being or preparing
to be a witness in a Proceeding.
(c) References to "other enterprise" shall include
employee benefit plans; references to "fines" shall include any (i)
excise taxes assessed with respect to any employee benefit plan and
(ii) penalties; references to "serving at the request of the Company"
shall include any service as a director, officer, employee or agent of
the Company which imposes duties on, or involves services by, such
director, officer, employee or agent with respect to an employee
benefit plan, its participants or beneficiaries; and a person who acts
in good faith and in a manner he reasonably believes to be in the
interest of the participants and beneficiaries of an employee benefit
plan shall be deemed to have acted in a manner "not opposed to the
best interests of the Company" as referred to in this Agreement.
2
<PAGE> 3
3. INDEMNITY IN THIRD PARTY PROCEEDINGS. The Company shall
indemnify Indemnitee in accordance with the provisions of this Section 3 if
Indemnitee is a party to or is threatened to be made a party to or otherwise
involved in any threatened, pending or completed Proceeding (other than a
Proceeding by or in the right of the Company to procure a judgment in its
favor) by reason of the fact that Indemnitee is or was a director and/or
officer of the Company, or is or was serving at the request of the Company as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against all Expenses, judgments, fines and
amounts paid in settlement actually and reasonably incurred by Indemnitee in
connection with such Proceeding, provided it is determined pursuant to Section
7 of this Agreement or by the court having jurisdiction in the matter, that
Indemnitee acted in good faith and in a manner that he reasonably believed to
be in or not opposed to the best interests of the Company, and, with respect to
any criminal Proceeding, had no reasonable cause to believe his conduct was
unlawful. The termination of any Proceeding by judgment, order, settlement or
conviction, or upon a plea of nolo contendere or its equivalent, shall not, of
itself, create a presumption that Indemnitee did not act in good faith and in a
manner that he reasonably believed to be in or not opposed to the best
interests of the Company, and, with respect to any criminal Proceeding, had
reasonable cause to believe that his conduct was unlawful.
4. INDEMNITY IN PROCEEDINGS BY OR IN THE RIGHT OF THE COMPANY.
The Company shall indemnify Indemnitee in accordance with the provisions of
this Section 4 if Indemnitee is a party to or is threatened to be made a party
to or otherwise involved in any threatened, pending or completed Proceeding by
or in the right of the Company to procure a judgment in its favor by reason of
the fact that Indemnitee is or was a director and/or officer of the Company, or
is or was serving at the request of the Company as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, against all Expenses actually and reasonably incurred by
Indemnitee in connection with the defense, settlement or other disposition of
such Proceeding, but only if he acted in good faith and in a manner that he
reasonably believed to be in or not opposed to the best interests of the
Company, except that no indemnification shall be made under this Section 4 in
respect of any claim, issue or matter as to which Indemnitee shall have been
adjudged to be liable to the Company unless and only to the extent that the
Delaware Court of Chancery or the court in which such Proceeding was brought
shall determine upon application that, despite the adjudication of liability
but in view of all the circumstances of the case, Indemnitee is fairly and
reasonably entitled to indemnity for such Expenses as the Delaware Court of
Chancery or such other court shall deem proper.
5. INDEMNIFICATION FOR EXPENSES OF SUCCESSFUL PARTY.
Notwithstanding any other provision of this Agreement to the contrary, to the
extent that Indemnitee has been successful on the merits or otherwise in
defense of any Proceeding referred to in Sections 3 and/or 4 of this Agreement,
or in defense of any claim, issue or matter therein, including dismissal
without prejudice, Indemnitee shall be indemnified against all Expenses
actually and reasonably incurred by Indemnitee in connection therewith.
6. ADVANCES OF EXPENSES. The Expenses incurred by Indemnitee
pursuant to Sections 3 and/or 4 of this Agreement in connection with any
Proceeding shall, at the written
3
<PAGE> 4
request of the Indemnitee, be paid by the Company in advance of the final
disposition of such Proceeding upon receipt by the Company of an undertaking by
or on behalf of Indemnitee ("Indemnitee's Undertaking") to repay such amount to
the extent that it is ultimately determined that Indemnitee is not entitled to
be indemnified by the Company. The request for advancement of Expenses by
Indemnitee and the undertaking to repay of Indemnitee, which need not be
secured, shall be substantially in the form of Exhibit A to this Agreement.
7. RIGHT OF INDEMNITEE TO INDEMNIFICATION OR ADVANCEMENT OF
EXPENSES UPON APPLICATION; PROCEDURE UPON APPLICATION.
(a) Any indemnification under Sections 3 and/or 4 of this
Agreement shall be made no later than 45 days after receipt by the
Company of the written request of Indemnitee, unless a determination
is made within said 45-day period by (i) a majority vote of the
directors of the Company who are not parties to the involved
Proceeding, even though less than a quorum, or (ii) independent legal
counsel in a written opinion (which counsel shall be appointed if
there are no such directors or if such directors so direct), that the
Indemnitee has not met the applicable standards for indemnification
set forth in Section 3 or 4, as the case may be.
(b) Any advancement of Expenses under Section 6 of this
Agreement shall be made no later than 10 days after receipt by the
Company of Indemnitee's Undertaking.
(c) In any action to establish or enforce the right of
indemnification or to receive advancement of Expenses as provided in
this Agreement, the burden of proving that indemnification or
advancement of Expenses is not appropriate shall be on the Company.
Neither the failure of the Company (including its board of directors
or independent legal counsel) to have made a determination prior to
the commencement of such action that indemnification or advancement of
Expenses is proper in the circumstances because Indemnitee has met the
applicable standard of conduct, nor an actual determination by the
Company (including its board of directors or independent legal
counsel) that Indemnitee has not met such applicable standard of
conduct, shall be a defense to the action or create a presumption that
Indemnitee has not met the applicable standard of conduct. Expenses
incurred by Indemnitee in connection with successfully establishing or
enforcing his right of indemnification or to receive advancement of
Expenses, in whole or in part, under this Agreement shall also be
indemnified by the Company.
8. INDEMNIFICATION AND ADVANCEMENT OF EXPENSES UNDER THIS
AGREEMENT NOT EXCLUSIVE. The rights of indemnification and to receive
advancement of Expenses as provided by this Agreement shall not be deemed
exclusive of any other rights to which Indemnitee may be entitled under the
Certificate of Incorporation or Bylaws of the Company, any other agreement, any
vote of stockholders or disinterested directors, the General Corporation Law of
the State of Delaware, or otherwise, both as to action in his official capacity
and as to action in another capacity while holding such office.
4
<PAGE> 5
9. PARTIAL INDEMNIFICATION. If Indemnitee is entitled under any
provision of this Agreement to indemnification or to receive advancement by the
Company for some or a portion of the Expenses, judgments, fines or amounts paid
in settlement actually and reasonably incurred by Indemnitee in the
investigation, defense, appeal, settlement or other disposition of any
Proceeding but not, however, for the total amount thereof, the Company shall
nevertheless indemnify Indemnitee for the portion thereof to which Indemnitee
is entitled.
10. RIGHTS CONTINUED. The rights of indemnification and to
receive advancement of Expenses as provided by this Agreement shall continue as
to Indemnitee even though Indemnitee may have ceased to be a director or
officer of the Company and shall inure to the benefit of Indemnitee's personal
or legal representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees.
11. NO CONSTRUCTION AS AN EMPLOYMENT AGREEMENT OR ANY OTHER
COMMITMENT. Nothing contained in this Agreement shall be construed as giving
Indemnitee any right to be retained in the employ of the Company or any of its
subsidiaries, if Indemnitee currently serves as an officer of the Company, or
to be renominated as a director of the Company, if Indemnitee currently serves
as a director of the Company.
12. LIABILITY INSURANCE. To the extent the Company maintains an
insurance policy or policies providing directors' and officers' liability
insurance, Indemnitee shall be covered by such policy or policies in accordance
with its or their terms, to the maximum extent of the coverage available for
any director or officer of the Company under such policy or policies.
13. NO DUPLICATION OF PAYMENTS. The Company shall not be liable
under this Agreement to make any payment of amounts otherwise indemnifiable
under this Agreement if, and to the extent that, Indemnitee has otherwise
actually received such payment under any contract, agreement or insurance
policy, the Certificate of Incorporation or Bylaws of the Company, or
otherwise.
14. SUBROGATION. In the event of payment under this Agreement,
the Company shall be subrogated to the extent of such payment to all the rights
of recovery of Indemnitee, who shall execute all papers required and shall do
everything that may be necessary to secure such rights, including without
limitation the execution of such documents as may be necessary to enable the
Company effectively to bring suit to enforce such rights.
15. EXCEPTIONS. Notwithstanding any other provision in this
Agreement, the Company shall not be obligated pursuant to the terms of this
Agreement, to indemnify or advance Expenses to the Indemnitee with respect to
any Proceeding, or any claim therein, (i) brought or made by Indemnitee
against the Company, or (ii) in which final judgment is rendered against the
Indemnitee for an accounting of profits made from the purchase and sale or the
sale and purchase by Indemnitee of securities of the Company pursuant to the
provisions of Section 16(b) of the Securities Exchange Act of 1934, as amended,
or similar provisions of any federal, state or local statute.
5
<PAGE> 6
16. NOTICES. Any notice or other communication required or
permitted to be given or made to the Company or Indemnitee pursuant to this
Agreement shall be given or made in writing by depositing the same in the
United States mail, with postage thereon prepaid, addressed to the person to
whom such notice or communication is directed at the address of such person on
the records of the Company, and such notice or communication shall be deemed
given or made at the time when the same shall be so deposited in the United
States mail. Any such notice or communication to the Company shall be
addressed to the Secretary of the Company.
17. CONTRACTUAL RIGHTS. The right to be indemnified or to receive
advancement of Expenses under this Agreement (i) is a contract right based upon
good and valuable consideration, pursuant to which Indemnitee may sue, (ii) is
and is intended to be retroactive and shall be available as to events occurring
prior to the date of this Agreement and (iii) shall continue after any
rescission or restrictive modification of this Agreement as to events occurring
prior thereto.
18. SEVERABILITY. If any provision or provisions of this
Agreement shall be held to be invalid, illegal or unenforceable for any reason
whatsoever, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby; and, to the
fullest extent possible, the provisions of this Agreement shall be construed so
as to give effect to the intent manifested by the provisions held invalid,
illegal or unenforceable.
19. SUCCESSORS; BINDING AGREEMENT. The Company shall require any
successor to all or substantially all of the business and/or assets of the
Company (whether direct or indirect, by purchase, merger, consolidation or
otherwise), by agreement in form and substance reasonably satisfactory to
Indemnitee, to expressly assume and agree to perform this Agreement in the same
manner and to the same extent that the Company would be required to perform if
no such succession had taken place. As used in this Agreement, "Company" shall
mean the Company as hereinbefore defined and any successor to its business
and/or assets as aforesaid which executes and delivers the agreement provided
for in this Section 19 or which otherwise becomes bound by the terms and
provisions of this Agreement by operation of law.
20. COUNTERPARTS, MODIFICATION, HEADINGS, GENDER.
(a) This Agreement may be executed in any number of
counterparts, each of which shall constitute one and the same
instrument, and either party hereto may execute this Agreement by
signing any such counterpart.
(b) No provisions of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is
agreed to in writing and signed by Indemnitee and an appropriate
officer of the Company. No waiver by any party at any time of any
breach by any other party of, or compliance with, any condition or
provision of this Agreement to be performed by any other party shall
be deemed a waiver of similar or dissimilar provisions or conditions
at the same time or at any prior or subsequent time.
6
<PAGE> 7
(c) Section headings are not to be considered part of
this Agreement, are solely for convenience of reference, and shall not
affect the meaning or interpretation of this Agreement or any
provision set forth herein.
(d) Pronouns in masculine, feminine and neuter genders
shall be construed to include any other gender, and words in the
singular form shall be construed to include the plural and vice versa,
unless the context otherwise requires.
21. ASSIGNABILITY. This Agreement shall not be assignable by
either party without the consent of the other.
22. EXCLUSIVE JURISDICTION; GOVERNING LAW. The Company and
Indemnitee agree that all disputes in any way relating to or arising under this
Agreement, including, without limitation, any action for advancement of
Expenses or indemnification, shall be litigated, if at all, exclusively in the
Delaware Court of Chancery, and, if necessary, the corresponding appellate
courts. This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of Delaware applicable to contracts made
and to be performed in such state without giving effect to the principles of
conflicts of laws. The Company and Indemnitee expressly submit themselves to
the personal jurisdiction of the State of Delaware.
23. TERMINATION.
(a) This Agreement shall terminate upon the mutual
agreement of the parties that this Agreement shall terminate or upon
the death of Indemnitee or the resignation, retirement, removal or
replacement of Indemnitee from all of his positions as a director
and/or officer of the Company.
(b) The termination of this Agreement shall not
terminate:
(i) the Company's liability for claims or actions
against Indemnitee arising out of or related to acts,
omissions, occurrences, facts or circumstances occurring or
alleged to have occurred prior to such termination; or
(ii) the applicability of the terms and conditions
of this Agreement to such claims or actions.
7
<PAGE> 8
IN WITNESS WHEREOF, the Company and Indemnitee have executed this
Agreement as of the date and year first above written.
NOBLE DRILLING CORPORATION
By:
------------------------------
Name: Byron L. Welliver
Title: Senior Vice President
- Finance, Treasurer
and Controller
INDEMNITEE
-----------------------------
Name:
8
<PAGE> 9
EXHIBIT A
INDEMNITEE'S UNDERTAKING
__________, 19__
Noble Drilling Corporation
10370 Richmond Avenue, Suite 400
Houston, Texas 77042
RE: INDEMNITY AGREEMENT
Gentlemen:
Reference is made to the Indemnity Agreement dated as of __________, 19__
by and between Noble Drilling Corporation and the undersigned Indemnitee, and
particularly to Section 6 thereof relating to advance payment by the Company of
certain Expenses incurred by the undersigned Indemnitee. Capitalized terms used
and not otherwise defined in this Indemnitee's Undertaking shall have the
respective meanings ascribed to such terms in the Agreement.
The undersigned Indemnitee has incurred Expenses pursuant to Section 3
and/or 4 of the Agreement in connection with a Proceeding. The types and
amounts of Expenses are itemized on Attachment I to this Indemnitee's
Undertaking. The undersigned Indemnitee hereby requests that the total amount
of these Expenses (the "Advanced Amount") be paid by the Company in advance of
the final disposition of such Proceeding in accordance with the Agreement.
The undersigned Indemnitee hereby agrees to repay the Advanced Amount to
the Company to the extent that it is ultimately determined that the undersigned
Indemnitee is not entitled to be indemnified by the Company. This agreement of
Indemnitee to repay shall be unsecured.
Very truly yours,
----------------------------------
Signature
----------------------------------
Name of Indemnitee (Type or Print)
<PAGE> 10
ATTACHMENT I TO
INDEMNITEE'S UNDERTAKING
ITEMIZATION OF
TYPES AND AMOUNTS OF EXPENSES
Attached hereto are receipts, statements or invoices for the following
qualifying Expenses which Indemnitee represents have been incurred by
Indemnitee in connection with a Proceeding:
TYPE AMOUNT
---- ------
1.
------------
Total Advanced Amount
------------
<PAGE> 1
EXHIBIT 21.1
SUBSIDIARIES
The following table sets forth the direct and indirect subsidiaries of Noble
Drilling Corporation as of February 29, 1996:
<TABLE>
<CAPTION>
SUBSIDIARY NAME INCORPORATED OR ORGANIZED IN
- -----------------------------------------------------------------------------------------------------
<S> <C>
NN-1 Limited Partnership(1) Texas
Noble Properties, Inc.(2) Oklahoma
Noble Drilling International Inc.(2) Delaware
Noble Drilling (U.S.) Inc.(2) Delaware
Noble Drilling Services Inc.(2) Delaware
Noble Production Management Inc.(2) Delaware
Noble Drilling (West Africa) Inc.(2) Delaware
Noble Offshore Corporation(2) Delaware
Triton Engineering Services Company(2) Texas
Noble Drilling (Mexico) Inc.(3) Delaware
Noble (Gulf of Mexico) Inc.(3) Delaware
Mexico Offshore Drilling Services Inc.(3) Delaware
Bawden Drilling Inc.(4) Delaware
Noble Drilling (Canada) Ltd.(4) Alberta
Drilhawk Service & Supply Ltd.(4) Alberta
Noble Offshore Limited (4) Alberta
372733 Alberta Inc.(4) Alberta
Noble International Limited(4) Cayman Islands
Noble Drilling International Ltd.(4) Bermuda
Noble Drilling (Europe) Ltd.(4) Bermuda
Noble Holdings Ltd.(4) Bermuda
International Directional Services Ltd.(4) Bermuda
Noble International Services Ltd.(4) Bermuda
Resolute Insurance Group Ltd.(4) Bermuda
Bawden Drilling International Ltd.(4) Bermuda
Noble Drilling (UK) Limited (4) Scotland
Noble Offshore Services Ltd.(4) Scotland
Noble Engineering Services Ltd.(4) Scotland
Noble Services SDN. BHD(4) Brunei
Noble Enterprises Limited(4) Cayman Islands
Noble Drilling Limited(4) Cayman Islands
Noble Drilling International Services PTE Ltd.(4) Singapore
Noble Drilling Arabia Ltd.(4) Saudi Arabia
Noble Drilling (West Africa) Ltd.(5) Bermuda
Noble Drilling (Nigeria) Ltd.(5) Nigeria
Noble Drilling (Malaysia) SDN. BHD.(6) Malaysia
Noble Drilling de Venezuela C.A.(4) Venezuela
Noble Offshore Africa, Inc.(7) Cayman Islands
Threadneedle Oil Company(8) Texas
Triton International, Inc.(8) Delaware
Triton USA, Inc.(8) Delaware
Triton Tool & Supply, Inc.(8) Texas
Triton Engineering Services Company, S.A.(8) Venezuela
Asociacion en Participacion(8) Mexico
Triton International de Mexico, S.A. de C.V.(9) Mexico
Rigquip Ltd.(10) Scotland
</TABLE>
(Footnotes appear on the following page.)
<PAGE> 2
- ----------------------------
(1) Noble Drilling Corporation is the sole general partner. Noble Drilling
Corporation's sharing percentage in NN-1 Limited Partnership's
distributions from operations is generally 90 percent.
(2) 100% owned by Noble Drilling Corporation.
(3) Direct or indirect subsidiary of Noble Drilling (U.S.) Inc.
(4) Direct or indirect subsidiary of Noble Drilling International Inc.
(5) 100% owned by Noble Drilling (West Africa) Inc.
(6) 70% owned indirectly by Noble Drilling International Inc.
(7) 100% owned by Noble Offshore Corporation.
(8) 100% owned by Triton Engineering Services Company.
(9) 100% owned by Triton International, Inc.
(10) 100% owned by Noble Drilling (UK) Limited.
<PAGE> 1
EXHIBIT 23.1
NOBLE DRILLING CORPORATION AND SUBSIDIARIES
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statements on Form S-8 (No. 33-3289), Form S-8 (33-15269), Form S-8 (No.
33-18966), Form S-8 (33-46724), Form S-8 (33-50270), Form S-8 (33-50272) and
Form S-8 (33-62394) of Noble Drilling Corporation of our report dated January
31, 1996, except as to Note 16, which is as of March 13, 1996, appearing
on page 19 of this Form 10-K.
PRICE WATERHOUSE LLP
Houston, Texas
March 13, 1996
<PAGE> 1
EXHIBIT 23.2
NOBLE DRILLING CORPORATION AND SUBSIDIARIES
CONSENT OF INDEPENDENT ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of
our report dated September 15, 1994 appearing on Page 20 of this Annual Report
on Form 10-K into Registration Statements, File Nos. 33-3289, 33-15269,
33-18966, 33-46724, 33-50270, 33-62394 and 33-57675.
ARTHUR ANDERSEN LLP
Houston, Texas
March 13, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 41,307
<SECURITIES> 23,162
<RECEIVABLES> 61,531
<ALLOWANCES> 1,280
<INVENTORY> 19,795
<CURRENT-ASSETS> 188,012
<PP&E> 895,430
<DEPRECIATION> 352,452
<TOTAL-ASSETS> 741,392
<CURRENT-LIABILITIES> 86,389
<BONDS> 129,923
<COMMON> 9,455
0
4,025
<OTHER-SE> 510,013
<TOTAL-LIABILITY-AND-EQUITY> 741,392
<SALES> 0
<TOTAL-REVENUES> 327,968
<CGS> 0
<TOTAL-COSTS> 240,102
<OTHER-EXPENSES> 76,417
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 12,156
<INCOME-PRETAX> 4,866
<INCOME-TAX> 3,272
<INCOME-CONTINUING> (5,605)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (5,605)
<EPS-PRIMARY> (0.08)
<EPS-DILUTED> 0
</TABLE>
