<PAGE> 1
NOBLE DRILLING CORPORATION 401(k) SAVINGS PLAN
INDEX TO FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULE
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PAGE
<S> <C>
Report of Independent Accountants 1
Financial Statements:
Statements of net assets available for benefits at December 31, 1999 and 1998 2
Statements of changes in net assets available for benefits for the years ended
December 31, 1999 and 1998 3
Notes to financial statements 4 - 10
Supplemental Schedule*:
Form 5500 - Schedule of assets held for investment purposes at end of year
(Schedule I) 11
</TABLE>
* Other schedules required by Section 2520.103-10 of the Department of Labor
Rules and Regulations for Reporting and Disclosure under ERISA have been
omitted since they are not applicable.
<PAGE> 2
REPORT OF INDEPENDENT ACCOUNTANTS
To the Participants and the Employee
Benefits Committee of the
Noble Drilling Corporation 401(k) Savings Plan
In our opinion, the accompanying statements of net assets available for benefits
and the related statements of changes in net assets available for benefits
present fairly, in all material respects, the net assets available for benefits
of the Noble Drilling Corporation 401(k) Savings Plan (the Plan) at December 31,
1999 and 1998, and the changes in net assets available for benefits for the
years then ended in conformity with accounting principles generally accepted in
the United States. These financial statements are the responsibility of the
Plan's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
statements in accordance with auditing standards generally accepted in the
United States, 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.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedule of Assets Held
for Investment Purposes at December 31, 1999 is presented for the purpose of
additional analysis and is not a required part of the basic financial statements
but is supplementary information required by the Department of Labor's Rules and
Regulations for Reporting and Disclosure under the Employee Retirement Income
Security Act of 1974. This supplemental schedule is the responsibility of the
Plan's management. The supplemental schedule has been subjected to the auditing
procedures applied in the audits of the basic financial statements and, in our
opinion, is fairly stated in all material respects in relation to the basic
financial statements taken as a whole.
PRICEWATERHOUSECOOPERS LLP
Houston, Texas
June 19, 2000
<PAGE> 3
NOBLE DRILLING CORPORATION 401(k) SAVINGS PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, 1999 AND 1998
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1999 1998
<S> <C> <C>
Assets:
Investments, at fair value:
Noble Drilling Corporation common stock $ 18,853,988 $ 6,817,292
Collective Investment Fund 3,106,013 2,895,709
Mutual funds 12,224,233 9,961,222
Contributions receivable:
Participants 298,385 284,708
Noble Drilling Corporation 164,076 150,635
Dividends and interest receivable 7,996 9,333
Participant loans 1,106,274 869,346
Loan interest receivable 6,813 5,904
------------ ------------
35,767,778 20,994,149
Liabilities:
Trust fees payable 11,839 6,426
------------ ------------
Net assets available for benefits $ 35,755,939 $ 20,987,723
============ ============
</TABLE>
The accompanying notes are an integral part of these financial
statements.
- 2 -
<PAGE> 4
NOBLE DRILLING CORPORATION 401(k) SAVINGS PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
YEARS ENDED DECEMBER 31, 1999 AND 1998
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1999 1998
<S> <C> <C>
Additions attributed to:
Interest and dividend income $ 720,489 $ 468,369
Net appreciation (depreciation) on investments 13,625,751 (7,279,106)
Contributions:
Participants 3,596,764 3,202,339
Employer 1,750,634 1,664,250
------------ ------------
Total additions (deductions) 19,693,638 (1,944,148)
------------ ------------
Deductions attributed to:
Withdrawals (5,169,322) (2,121,721)
Administrative and investment expenses (140,069) (121,184)
------------ ------------
Total deductions (5,309,391) (2,242,905)
Net increase (decrease) in net assets available for
benefits before rollovers from other plans 14,384,247 (4,187,053)
Rollovers from other plans 383,969 729,217
------------ ------------
Net increase (decrease) in net assets available for benefits 14,768,216 (3,457,836)
Net assets available for benefits, beginning of year 20,987,723 24,445,559
------------ ------------
Net assets available for benefits, end of year $ 35,755,939 $ 20,987,723
============ ============
</TABLE>
The accompanying notes are an integral part of these financial
statements.
- 3 -
<PAGE> 5
NOBLE DRILLING CORPORATION 401(k) SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
--------------------------------------------------------------------------------
1. DESCRIPTION OF PLAN
The following brief description of the provisions of the Noble Drilling
Corporation 401(k) Savings Plan (the Plan) is provided for general
information purposes only. Participants should refer to the plan
document for a more complete description of the Plan's provisions.
GENERAL
Noble Drilling Corporation (the Company) established the Noble Drilling
Corporation Thrift Plan (the Thrift Plan) effective January 1, 1986.
Prior to October 1, 1985, the Company was a wholly-owned subsidiary of
Noble Affiliates, Inc. (NAI). Effective as of that date, the Company
was recapitalized, and its common stock was distributed to the
shareholders of NAI in a tax-free spin-off. The Company's employees had
participated in the NAI Thrift and Profit Sharing Plan (the NAI Plan)
prior to October 1, 1985 and continued to participate in the NAI Plan
through December 31, 1985. Participants in the NAI Plan carried over
certain service, eligibility and vesting benefits upon entering the
Plan.
Effective October 1, 1997, the Thrift Plan was amended and restated to
incorporate prior amendments and increase the maximum participant
contribution percentage from 10% to 12%. In addition, the Thrift Plan
was renamed the Noble Drilling Corporation 401(k) Savings Plan.
The Plan is a defined contribution plan. All domestic and expatriate
employees are eligible to enroll in the Plan. The Plan is subject to
the provisions of the Employee Retirement Income Security Act of 1974
(ERISA), as amended, and is administered by the Employee Benefits
Committee of the Company, whose members are appointed by the Company's
Board of Directors.
Effective October 1, 1997, the Charles Schwab Trust Company, Inc. was
appointed the Plan Trustee and Milliman & Robertson, Inc. became the
Plan's recordkeeper. Under the terms of the Plan, the Trustee, on
behalf of the Plan, acquires, holds and disposes of securities,
including the common stock of the Company owned by the Plan.
SIGNIFICANT ROLLOVERS FROM OTHER PLANS
Effective May 1, 1996, and in connection with the acquisition of Chiles
Offshore Corporation, the net assets available for plan benefits of the
Chiles Offshore Corporation (Chiles) 401(k) Plan were merged into the
Plan.
Effective January 1, 1998 the net assets available for plan benefits of
the Triton Profit Sharing Plan were merged into the Plan. Triton
Engineering Services Company is a wholly-owned subsidiary of the
Company.
- 4 -
<PAGE> 6
NOBLE DRILLING CORPORATION 401(k) SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
--------------------------------------------------------------------------------
CONTRIBUTIONS
Participants may contribute on a pre-tax basis up to 12% (up to a limit
of $10,000 for both 1999 and 1998) of their base compensation to the
Plan.
The Plan provides for the following amounts of employer matching
contributions based on the participant's years of vesting service:
<TABLE>
<CAPTION>
PERCENTAGE OF MATCHING CONTRIBUTION
PARTICIPANT'S PARTICIPANT'S CONTRIBUTION LIMITED TO THE FOLLOWING
YEARS OF VESTING MATCHED BY PERCENTAGE OF
SERVICE THE COMPANY PARTICIPANT'S COMPENSATION
<S> <C> <C> <C>
Less than 15 70% 6%
15 or more 100% 6%
</TABLE>
The Plan provides that matching contributions are made in the form of
cash or the Company's common stock. Pass-through voting rights for
shares of common stock of the Company are credited to a participant's
account, whether or not vested.
TERMINATION
The Company reserves the right to amend or terminate the Plan, subject
to the provisions of ERISA. Upon notice of termination or permanent
suspension of contributions, the accounts of all participants affected
thereby will become fully vested and in the event of termination, will
be distributed in accordance with the provisions of the Plan.
LOANS
A participant has the ability to borrow funds from his or her vested
pre-tax and rollover amounts. A loan is secured by the participant's
account balance and bears interest at a fixed rate of prime plus 1%.
Interest rates on loans outstanding range from 7% to 10.52%. A
participant may borrow a maximum amount equal to the lesser of (i) 50%
of that participant's vested account balance under the Plan or (ii)
$50,000, reduced by the excess, if any, of the highest outstanding loan
balance outstanding in the previous year over the loan balance
currently outstanding. The loans are repayable within five years unless
used to acquire a principal residence. Repayment of the principal and
interest of a loan is invested according to the participant's current
investment directions for future pre-tax contributions to the Plan.
Upon leaving the Company, the Plan participant has 90 days to repay the
outstanding loan balance, with a lump sum payment. In the event the
loan is not paid within that time period, the loan balance will be
defaulted and become taxable to the participant.
- 5 -
<PAGE> 7
NOBLE DRILLING CORPORATION 401(k) SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
--------------------------------------------------------------------------------
During 1999 and 1998, $760,048 and $378,418, respectively, in new loans
were made to participants.
WITHDRAWALS
Withdrawals are permitted in the event of termination of employment,
retirement, permanent disability, death or financial hardship, as
defined in the Plan. In-service withdrawals may be made from a
participant's after-tax contribution or rollover account. Additionally,
vested participants may make in-service withdrawals from the Company's
matching account.
PARTICIPANT ACCOUNTS
Separate accounts are maintained for each participant. Participant
accounts are credited with pre-tax contributions, after-tax
contributions, rollover contributions, the Company's matching
contributions and an allocation of investment earnings and losses.
Furthermore, participant accounts are adjusted for withdrawals and
transfers among investment options, if any.
Participants have an option as to the manner in which their
contributions may be invested. Separate funds are maintained and
participants may direct their investments in 1% increments. A brief
description of the Plan's investment options follows. For a detailed
description of investment options and risk profiles, refer to the
respective fund's prospectus.
<TABLE>
<CAPTION>
FUND INVESTMENTS
<S> <C>
Firstar Institutional Investors' Guaranteed investment contracts, bank investment contracts and
Fund (Firstar) money-market instruments.
PIMCO Total Return Institutional United States government securities, corporate bonds, mortgage related
Fund (PIMCO) securities and money-market instruments.
Dodge & Cox Balanced Fund (Dodge Common stocks and convertible securities.
& Cox)
Vanguard Index 500 Fund Common stocks of small, growing companies as well as large, established
(Vanguard) companies.
Brandywine Fund (Brandywine) Common stocks of small to medium-sized companies that are expected to
demonstrate growth in earnings and revenue.
American Aadvantage Common stocks and debt securities of companies and governments outside
International Equity Fund - the United States.
Institutional Class (American
Aadvantage)
Fund ND Noble Drilling Corporation common stock
</TABLE>
- 6 -
<PAGE> 8
NOBLE DRILLING CORPORATION 401(k) SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
--------------------------------------------------------------------------------
Unallocated forfeitures are maintained in the Fund ND and the Firstar
Institutional Investors' Fund. Unallocated forfeitures are segregated
from all other participant records. Unallocated forfeitures of $91,212
and $24,180 at December 31, 1999 and 1998, respectively, may be used to
reduce future Company matching contributions.
VESTING
A participant's contributions are 100% vested at all times.
Participants become fully vested in the Company's matching
contributions upon five years of credited service. Also, a participant
becomes fully vested in the Company's matching contributions,
regardless of years of service, if employment is terminated due to
normal retirement, total disability or death.
Chiles participants become vested in the Company's contributions and
the related earnings of such contributions after attainment of the
years of service specified below:
<TABLE>
<CAPTION>
VESTED AND NONFORFEITABLE
YEARS PERCENTAGE OF EMPLOYER'S
OF SERVICE CONTRIBUTION INTO THE PLAN
<S> <C>
1 20%
2 40%
3 60%
4 80%
5 100%
</TABLE>
In general, a participant will be deemed to have completed a "year of
service" for each calendar year during which the participant completes
at least 1,000 hours of service.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING
The Plan's financial statements are prepared on the accrual basis of
accounting in conformity with generally accepted accounting principles.
INVESTMENTS
Investments traded on national securities exchanges are valued at
closing prices on the last business day of the year; investments traded
on the over-the-counter market are valued at an average of the last
reported bid and ask prices. The investment in the bank commingled fund
(short-term investments) is highly liquid; therefore, the fair value
approximates cost. The cost of investments sold is determined on the
basis of average cost.
- 7 -
<PAGE> 9
NOBLE DRILLING CORPORATION 401(k) SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
--------------------------------------------------------------------------------
Shares in the Collective Investment Fund are valued at the fair value
of the fund's underlying net assets as determined by the quoted closing
price for those securities for which market quotations are available or
with respect to other assets, fair value as determined in good faith by
the fund manager. Investments in Mutual Funds are valued on the basis
of net asset value as reported by the respective Mutual Fund companies.
Purchases and sales of securities are reflected on a trade-date basis.
Dividend income is recorded on the ex-dividend date. Income from other
investments is recorded as earned on an accrual basis.
The Plan presents in the statement of changes in net assets available
for benefits the net appreciation (depreciation) in the fair value of
its investments, which consists of the realized gains or losses and the
unrealized appreciation (depreciation) on those investments.
EXPENSES
Plan administration expenses are paid by the Plan, unless paid by the
Company, at the Company's sole discretion. For the years ended December
31, 1999 and 1998, administrative expenses of $140,069 and $121,184,
respectively, were paid by the Plan.
EXCESS CONTRIBUTIONS REFUNDABLE TO EMPLOYEES
Excess contributions refundable to highly compensated employees
represent the refunds necessary to meet certain nondiscrimination
provisions of the Internal Revenue Code (the Code). There were no
excess contributions refundable to employees for the years ended
December 31, 1999 and 1998.
USE OF ESTIMATES
The preparation of the Plan's financial statements in conformity with
generally accepted accounting principles requires the Plan
administrator to make estimates and assumptions that affect the
reported amounts of net assets available for benefits at the date of
the financial statements and the changes in net assets available for
benefits during the reporting period, and when applicable, disclosure
of contingent assets and liabilities at the date of the financial
statements. Actual results could differ from those estimates.
CONCENTRATIONS OF CREDIT RISK
Certain financial instruments potentially subject the Plan to
concentrations of credit risk. These financial instruments consist of
various mutual funds and collective funds. The Plan does not obtain or
require collateral for these funds. Changes in the economic environment
have a direct impact on the market value of the funds. It is reasonably
possible that changes in the economic environment will occur in the
near term and that
- 8 -
<PAGE> 10
NOBLE DRILLING CORPORATION 401(k) SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
--------------------------------------------------------------------------------
such changes will have a material effect on the market value of the
funds included in the Plan.
3. TAX STATUS
The Plan obtained its latest determination letter on October 27, 1995,
in which the Internal Revenue Service stated that the Plan, as then
designed, was in compliance with the applicable requirements of the
Internal Revenue Code. A favorable determination letter allows the
Company to take a business expense deduction for contributions paid
within a specified period and for participants' benefits not to be
taxed until received by them. In addition, since the trust fund of the
Plan is treated as an exempt organization, its income is not subject to
federal or state income taxes.
The Plan has been amended since receiving the determination letter.
However, the Plan administrator and the Plan's tax counsel believe that
the Plan is currently designed and being operated in compliance with
the applicable requirements of the Code. Therefore, no provision for
income taxes has been included in the Plan's financial statements.
4. RELATED PARTIES
The Trustee is authorized to invest in securities under its control.
Transactions resulting in Plan assets being transferred to, or used by,
a related party are prohibited under ERISA unless a specific exemption
exists. As of December 31, 1999 and 1998 and for the years then ended,
there were no transactions with any "party-in-interest" as defined by
ERISA for which there was not a specific exemption.
- 9 -
<PAGE> 11
NOBLE DRILLING CORPORATION 401(k) SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
--------------------------------------------------------------------------------
5. INVESTMENTS
The following presents investments that represent five percent or more
of the Plan's net assets:
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------------
1999 1998
<S> <C> <C>
Noble Drilling Corporation common stock,
575,694 and 526,940 shares, respectively $ 18,853,988 $ 6,817,292
Brandywine Fund, 64,674 and 62,412 shares,
respectively 2,773,216 1,587,045
Dodge & Cox Balanced Fund, 27,542 and
22,467 shares, respectively 1,809,772 1,468,315
Firstar Institutional Investors' Fund, 146,947
and 145,221 shares, respectively 3,106,013 2,895,709
PIMCO Total Return Institutional Fund, 122,956
and 159,950 shares, respectively 1,217,266* 1,685,875
Vanguard Index Trust 500 Fund, 42,239 and
40,408 shares, respectively 5,716,163 4,604,525
</TABLE>
----------
* Does not represent 5% or more of the Plan's net assets at December
31, 1999.
During 1999 and 1998, the Plan's investments (including gains and
losses on investments bought and sold, as well as held during the year)
appreciated/(depreciated) in value as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------
1999 1998
<S> <C> <C>
Common stock $ 11,794,225 $ (8,141,243)
Mutual funds 1,650,644 697,222
Collective Investment Fund 180,882 164,915
------------ ------------
$ 13,625,751 $ (7,279,106)
============ ============
</TABLE>
As of December 31, 1999 and 1998, the Plan held no nonparticipant
directed investments.
- 10 -
<PAGE> 12
SCHEDULE I
NOBLE DRILLING CORPORATION 401(k) SAVINGS PLAN
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES AT END OF YEAR
DECEMBER 31, 1999
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
(c) DESCRIPTION
-----------------------------------------
Number of (e)
(b) shares/units (d) Current
(a) Identity of issue Asset type of interest Cost value
<S> <C> <C> <C> <C>
* Noble Drilling Corporation Common stock 575,694 $ 8,773,838 $18,853,988
Firstar Institutional
Investors' Fund Collective Investment Fund 146,947 2,807,408 3,106,013
Vanguard Index 500 Fund Mutual fund 42,239 4,453,856 5,716,163
Brandywine Fund Mutual fund 64,674 2,192,270 2,773,216
PIMCO Total Return
Institutional Fund Mutual fund 122,956 1,301,332 1,217,266
Dodge & Cox Balanced Fund Mutual fund 27,542 1,877,712 1,809,772
* Participant loans Loans, interest rates
ranging from 7% - 10.52% 1,106,274 -- 1,106,274
American AAdvantage
International Equity Fund -
Institutional Class Mutual fund 36,113 646,076 707,816
----------- -----------
Total assets held for investment purposes $22,052,492 $35,290,508
=========== ===========
</TABLE>
* Indicates party-in-interest transaction, for which a statutory exemption
exists.
- 11 -
<PAGE> 13
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statements on Forms S-8 (Nos. 33-3289, 33-15269, 33-18966, 33-46724, 33-50270,
33-50272, 33-62394, 33-57675, 333-25857, 333-17407 and 333-80511) of Noble
Drilling Corporation of our report dated June 19, 2000 relating to the financial
statements, which appears in this Form 10-K/A.
PRICEWATERHOUSECOOPERS LLP
Houston, Texas
June 28, 2000
-12-
