<PAGE> 1
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2000
COMMISSION FILE NUMBER: 1-9245
--------------------
NABORS INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 93-0711613
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
515 W. GREENS ROAD, SUITE 1200
HOUSTON, TEXAS 77067
(Address of principal executive offices) (Zip Code)
281-874-0035
(Registrant's telephone number, including area code)
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
------ -----
The number of shares of Common Stock, par value $.10 per share,
outstanding as of November 1, 2000 was 146,937,651.
================================================================================
<PAGE> 2
NABORS INDUSTRIES, INC. AND SUBSIDIARIES
INDEX
-----
<TABLE>
<CAPTION>
PAGE NO.
Part I Financial Information --------
<S> <C> <C>
Item 1. Financial Statements
Condensed Consolidated Balance Sheets as of
September 30, 2000 and December 31, 1999......................................2
Condensed Consolidated Statements of
Income for the Three Months and Nine Months Ended
September 30, 2000 and 1999...................................................3
Condensed Consolidated Statements of
Changes in Stockholders' Equity for the Nine
Months Ended September 30, 2000 and 1999......................................4
Condensed Consolidated Statements of Cash
Flows for the Nine Months Ended September 30,
2000 and 1999.................................................................5
Notes to Condensed Consolidated
Financial Statements..........................................................6
Report of Independent Accountants.............................................10
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations...................................................................11
Part II Other Information
Item 1. Legal Proceedings.............................................................16
Item 5. Other Information.............................................................17
Item 6. Exhibits and Reports on Form 8-K..............................................17
Signatures..............................................................................18
</TABLE>
<PAGE> 3
PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
NABORS INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
2000 1999
---------------- ----------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 256,541 $ 80,580
Marketable securities 329,140 31,086
Accounts receivable, net 292,626 205,643
Inventory and supplies 21,432 25,758
Prepaid expenses and other current assets 111,225 118,226
---------------- ----------------
Total current assets 1,010,964 461,293
Property, plant and equipment, net 1,717,947 1,669,466
Goodwill, net 164,085 169,054
Other long-term assets 120,747 98,190
---------------- ----------------
Total assets $ 3,013,743 $ 2,398,003
---------------- ----------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term obligations $ 3,774 $ 3,599
Trade accounts payable 82,049 80,343
Accrued liabilities 131,043 160,546
Income taxes payable 24,418 20,988
---------------- ----------------
Total current liabilities 241,284 265,476
Long-term obligations 878,628 482,600
Other long-term liabilities 76,423 86,849
Deferred income taxes 83,647 93,004
---------------- ----------------
Total liabilities 1,279,982 927,929
---------------- ----------------
Commitments and contingencies (Note 5)
Stockholders' equity:
Capital stock, par value $.10 per share:
Authorized common shares 400,000 and 200,000,
respectively; issued 146,885 and 137,421 14,689 13,742
Capital in excess of par value 1,128,303 958,704
Accumulated other comprehensive income (loss) 6,869 (3,828)
Retained earnings 588,717 506,273
Less treasury stock, at cost, 589 common shares (4,817) (4,817)
---------------- ----------------
Total stockholders' equity 1,733,761 1,470,074
---------------- ----------------
Total liabilities and stockholders' equity $ 3,013,743 $ 2,398,003
---------------- ----------------
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
2
<PAGE> 4
NABORS INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SEPTEMBER 30, NINE MONTHS ENDED SEPTEMBER 30,
2000 1999 2000 1999
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Revenues and other income:
Operating revenues $ 344,506 $ 142,355 $ 914,915 $ 421,683
Earnings from unconsolidated affiliates 9,533 35 30,276 3,633
Interest income 9,315 2,600 11,746 7,316
Other income, net 5,719 1,846 17,868 7,026
--------------- --------------- --------------- ---------------
Total revenues and other income 369,073 146,836 974,805 439,658
--------------- --------------- --------------- ---------------
Costs and other deductions:
Direct costs 230,492 93,491 620,760 268,086
General and administrative expenses 26,164 14,989 78,716 46,368
Depreciation and amortization 38,086 23,888 112,430 69,074
Interest expense 10,066 6,697 26,162 23,339
--------------- --------------- --------------- ---------------
Total costs and other deductions 304,808 139,065 838,068 406,867
--------------- --------------- --------------- ---------------
Income before income taxes and extraordinary gain 64,265 7,771 136,737 32,791
--------------- --------------- --------------- ---------------
Income taxes:
Current 3,756 1,455 12,490 6,517
Deferred 21,949 1,575 43,653 6,271
--------------- --------------- --------------- ---------------
Total income taxes 25,705 3,030 56,143 12,788
--------------- --------------- --------------- ---------------
Income before extraordinary gain 38,560 4,741 80,594 20,003
Extraordinary gain, net 147 -- 1,850 --
--------------- --------------- --------------- ---------------
Net income $ 38,707 $ 4,741 $ 82,444 $ 20,003
--------------- --------------- --------------- ---------------
Earnings per share:
Basic:
Before extraordinary gain $ .26 $ .04 $ .56 $ .19
Extraordinary gain, net -- -- .01 --
--------------- --------------- --------------- ---------------
Net income $ .26 $ .04 $ .57 $ .19
--------------- --------------- --------------- ---------------
Diluted:
Before extraordinary gain $ .25 $ .04 $ .53 $ .17
Extraordinary gain, net -- -- .01 --
--------------- --------------- --------------- ---------------
Net income $ .25 $ .04 $ .54 $ .17
--------------- --------------- --------------- ---------------
Weighted average number of shares outstanding:
Basic 146,062 114,382 143,660 106,887
--------------- --------------- --------------- ---------------
Diluted 162,396 123,099 151,711 115,604
--------------- --------------- --------------- ---------------
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
3
<PAGE> 5
NABORS INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES
IN STOCKHOLDERS' EQUITY
(IN THOUSANDS)
<TABLE>
<CAPTION>
CAPITAL ACCUMULATED
CAPITAL STOCK IN EXCESS OTHER TOTAL
------------------------- OF PAR COMPREHENSIVE RETAINED TREASURY STOCKHOLDERS'
SHARES PAR VALUE VALUE INCOME (LOSS) EARNINGS STOCK EQUITY
----------- ----------- ----------- ------------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Balances, December 31, 1998 101,382 $ 10,138 $ 394,562 $ (10,983) $ 478,569 $ (4,817) $ 867,469
----------- ----------- ----------- ----------- ----------- ----------- -----------
Comprehensive income:
Net income 20,003 20,003
Translation adjustment 586 586
Unrealized gain on marketable
securities, net 22,571 22,571
----------- ----------- ----------- ----------- ----------- ----------- -----------
Total comprehensive income -- -- -- 23,157 20,003 -- 43,160
----------- ----------- ----------- ----------- ----------- ----------- -----------
Issuance of common shares in
connection with the Bayard
acquisition 6,167 617 74,230 74,847
Issuance of common shares for stock
options exercised 480 48 4,873 4,921
Tax benefit on stock option deductions 30,415 30,415
Return and retirement of common
shares held in escrow in
connection with the Adcor merger (12) (1) 1 --
Conversion of 5% notes 9,508 950 169,471 170,421
----------- ----------- ----------- ----------- ----------- ----------- -----------
Subtotal 16,143 1,614 278,990 -- -- -- 280,604
----------- ----------- ----------- ----------- ----------- ----------- -----------
Balances, September 30, 1999 117,525 $ 11,752 $ 673,552 $ 12,174 $ 498,572 $ (4,817) $ 1,191,233
----------- ----------- ----------- ----------- ----------- ----------- -----------
Balances, December 31, 1999 137,421 $ 13,742 $ 958,704 $ (3,828) $ 506,273 $ (4,817) $ 1,470,074
----------- ----------- ----------- ----------- ----------- ----------- -----------
Comprehensive income:
Net income 82,444 82,444
Translation adjustment (2,394) (2,394)
Unrealized gain on marketable
securities, net 13,091 13,091
----------- ----------- ----------- ----------- ----------- ----------- -----------
Total comprehensive income -- -- -- 10,697 82,444 -- 93,141
----------- ----------- ----------- ----------- ----------- ----------- -----------
Issuance of common shares for
warrants exercised 70 7 1,636 1,643
Issuance of common shares for stock
options exercised 9,394 940 108,022 108,962
Tax benefit on stock option deductions 59,941 59,941
----------- ----------- ----------- ----------- ----------- ----------- -----------
Subtotal 9,464 947 169,599 -- -- -- 170,546
----------- ----------- ----------- ----------- ----------- ----------- -----------
Balances, September 30, 2000 146,885 $ 14,689 $ 1,128,303 $ 6,869 $ 588,717 $ (4,817) $ 1,733,761
----------- ----------- ----------- ----------- ----------- ----------- -----------
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
4
<PAGE> 6
NABORS INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30,
2000 1999
------------- -------------
<S> <C> <C>
Net cash provided by operating activities $ 92,562 $ 111,173
------------- -------------
Cash flows from investing activities:
Sales of marketable securities, trading 2,843 --
Purchases of marketable securities, available-for-sale (286,135) (12,544)
Sales of marketable securities, available-for-sale 20,141 3,089
Cash received from disposition of long-term assets 3,116 13,198
Cash paid for acquisitions of businesses, net -- (5,233)
Capital expenditures (157,731) (46,252)
Distributions from unconsolidated affiliates 2,000 1,575
------------- -------------
Net cash used for investing activities (415,766) (46,167)
------------- -------------
Cash flows from financing activities:
Decrease (Increase) in restricted cash 140 (1,165)
Proceeds from long-term borrowings 501,941 324,707
Debt issuance costs (6,738) (2,779)
Reduction of long-term borrowings (106,783) (178,632)
Decrease in short-term borrowings, net -- (73,565)
Common stock transactions 110,605 4,298
------------- -------------
Net cash provided by financing activities 499,165 72,864
------------- -------------
Net increase in cash and cash equivalents 175,961 137,870
Cash and cash equivalents, beginning of period 80,580 16,748
------------- -------------
Cash and cash equivalents, end of period $ 256,541 $ 154,618
------------- -------------
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
5
<PAGE> 7
NABORS INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Interim Financial Information
The unaudited condensed consolidated financial statements of Nabors
Industries, Inc. are prepared in conformity with generally accepted accounting
principles, or GAAP. Pursuant to the rules and regulations of the Securities and
Exchange Commission, certain information and footnote disclosures normally
included in annual financial statements prepared in accordance with GAAP have
been omitted. Therefore, these financial statements should be read along with
our 1999 Annual Report on Form 10-K.
In our management's opinion, the condensed consolidated financial
statements contain all adjustments necessary to present fairly the financial
position of the company as of September 30, 2000, and the results of our
operations for each of the three-month and nine-month periods ended September
30, 2000 and 1999 and the condensed consolidated statements of changes in
stockholders' equity and of cash flows for the nine-month periods ended
September 30, 2000 and 1999 in accordance with GAAP. Interim results for the
nine months ended September 30, 2000 may not be indicative of results that will
be realized for the full year ending December 31, 2000.
Change in Presentation
We have changed the presentation of our income statement to the
single-step format. Additionally, we have changed the presentation of the
comparable prior year periods.
Earnings Per Share
Basic earnings per share for all periods presented equals net income
divided by the weighted average number of shares of common stock outstanding
during the period, excluding shares of common stock held in treasury. Diluted
earnings per share for the three months ended September 30, 2000 reflects the
assumed conversion of our zero coupon convertible senior debentures, as the
conversion in that period would have been dilutive. As a result of the assumed
conversion, to calculate diluted earnings per share, third quarter net income is
adjusted to add back interest expense relating to the debentures totaling $2.0
million on an after-tax basis. This adjusted third quarter net income is then
divided by the sum of: (1) the weighted average number of shares of common stock
outstanding used for the basic computation, (2) the net effect of dilutive stock
options and warrants, and (3) for the three months ended September 30, 2000, 8.9
million shares of common stock assumed to be issued on the conversion of the
debentures. The zero coupon convertible senior debentures are not assumed to be
converted into common stock and net income is not adjusted to add back interest
expense for the nine months ended September 30, 2000, as this conversion would
be anti-dilutive.
NOTE 2 ACQUISITIONS
During November 1999, we completed our acquisition of Pool Energy
Services Co. Each of the approximately 19.2 million shares of Pool not owned by
Nabors prior to the merger were exchanged for 1.025 shares of our common stock
(approximately 19.7 million shares). During April 1999, we completed our
acquisition of Bayard Drilling Technologies, Inc. Each of the approximately 18.3
million shares of Bayard common stock were exchanged for .3375 shares of our
common stock and $.30 per share in cash (approximately 6.2 million shares and
$5.5 million in cash in the aggregate).
We accounted for the Pool and Bayard acquisitions using the purchase
method of accounting. Accordingly, Pool's and Bayard's results of operations
each have been included in our consolidated financial statements commencing on
the applicable effective date of the acquisition.
The following unaudited pro forma summary financial information
presents our consolidated results of operations as if the acquisitions of Pool
and Bayard had occurred at the beginning of the period presented, after
including the impact of certain adjustments including: (1) the elimination of
nonrecurring merger-related costs, (2) reduced depreciation expense reflecting
the reduction in value assigned to property, plant and equipment, (3) increased
amortization of goodwill, (4) reduced interest expense associated primarily with
the elimination of certain financing costs and (5) the related income tax
effects of these adjustments.
6
<PAGE> 8
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30, 1999
------------------------------------
(IN THOUSANDS, EXCEPT
PER SHARE AMOUNTS)
AS REPORTED PRO FORMA
------------- -------------
<S> <C> <C>
Operating revenues and Earnings
from unconsolidated
affiliates $ 425,316 $ 679,958
------------- -------------
Net income $ 20,003 $ 9,975
------------- -------------
Net income per diluted share $ .17 $ .07
------------- -------------
Weighted average number of
diluted shares outstanding 115,604 137,426
------------- -------------
</TABLE>
The pro forma financial information does not purport to indicate: (1)
what the combined results of operations would have been had the acquisitions
occurred at the beginning of the period presented or (2) the results of
operations that may be obtained in the future. Additionally, the pro forma
financial information does not reflect any anticipated cost savings resulting
from the integration of Nabors', Pool's and Bayard's operations.
NOTE 3 LONG-TERM OBLIGATIONS
During June 2000, we completed a private placement of zero coupon
convertible senior debentures due 2020. The aggregate principal amount of the
debentures at maturity will be $825 million. The debentures were issued at a
discount with net proceeds to Nabors, after expenses, totaling approximately
$495 million. The yield to maturity of the debentures is 2.5% compounded
semi-annually with no periodic cash payments of interest. At the holder's
option, the debentures can be converted at any time prior to maturity or their
earlier redemption, into Nabors common stock at a conversion rate of 10.738
shares per $1,000 principal amount at maturity. The conversion rate may be
adjusted from time to time, upon the occurrence of specified events. Instead of
delivering shares of common stock upon conversion of any debentures, we may
elect to pay the holder cash for all or a portion of the debentures. The
debentures can be put to us on June 20, 2003, June 20, 2008 and June 20, 2013
for a purchase price equal to the issue price plus accrued original issue
discount to the date of repurchase. We may elect to pay all or a portion of the
purchase price in common stock instead of cash. We cannot redeem the debentures
before June 20, 2003. On and after June 20, 2003, we may redeem all or a portion
of the debentures for cash at any time at their accreted value. The proceeds
from the issuance of the debentures will be used for general corporate purposes,
including but not limited to, working capital, investment in subsidiaries and
possible future business acquisitions. As of September 30, 2000, the proceeds
are included in cash and marketable securities on our balance sheet.
Nabors Holding Company, the successor by merger to Pool, completed a
mandatory change of control cash tender offer to purchase the Pool 8-5/8% Senior
Subordinated Notes due 2008 at a redemption price of 101% in February 2000. In
addition, during the nine months ended September 30, 2000, Nabors Holding
purchased additional notes in the open market at prices ranging from 100.5% to
101.75%. A total of $105.8 million of the Pool notes were acquired as a result
of these transactions leaving $44.2 million outstanding as of September 30,
2000. We recognized a $1.9 million ($.01 per share) extraordinary gain, net of
income taxes, during the nine months ended September 30, 2000 resulting from the
repurchase of the notes for less than the amount recorded on our books. As of
February 14, 2000, we unconditionally guaranteed the obligations under the Pool
notes.
NOTE 4 CAPITAL STOCK
During the nine months ended September 30, 2000, various employees and
directors exercised options to acquire 9.4 million shares of Nabors common stock
at prices ranging from $1.07 to $31.04 per share. This amount includes 7.5
million shares of common stock exercised by three senior officers of the company
in March 2000. Our proceeds from all option exercises totaled $109.0 million.
Additionally, during the period, various holders exercised Bayard warrants to
purchase approximately 70,000 shares of Nabors common stock at prices ranging
from $22.81 to $28.74 per share. We received proceeds totaling $1.6 million from
these warrant exercises.
At the June 6, 2000 annual meeting of Nabors Industries, Inc., the
stockholders approved an increase in Nabors' authorized common stock from 200
million to 400 million shares.
7
<PAGE> 9
NOTE 5 COMMITMENTS AND CONTINGENCIES
Capital Expenditures
As of September 30, 2000, we had outstanding capital expenditure
purchase commitments of approximately $41.0 million, including approximately
$10.0 million for logistical equipment and $31.0 million for drill pipe,
refurbishment of rigs to be reactivated, and rig related sustaining capital
expenditures.
Contingencies
A subsidiary of Nabors is a defendant in Verdin v. R&B Falcon Drilling
USA, Inc., et al., Civil Action No. G-00-488, in the United States District
Court for the Southern District of Texas, Galveston Division. R&B Falcon
Drilling USA is a wholly-owned, indirect subsidiary of R&B Falcon Corporation.
The original plaintiff and proposed representative of a purported class of
offshore workers has been replaced as plaintiff and proposed representative by
Thomas Bryant, who claims to be an "offshore worker" previously employed by
Global Marine Drilling Company, Atwood Oceanics, Inc., Hercules (which was
subsequently acquired by Parker Drilling Company) and Sedco Forex (which was
subsequently acquired by Transocean Offshore, Inc.). The plaintiff alleges that
his former employers listed above and a number of other offshore drilling
contractors, including our subsidiary, have engaged in a conspiracy to depress
wages and benefits paid to their offshore employees. Plaintiff contends that
this alleged conduct violates federal and state antitrust laws. Plaintiff seeks
an unspecified amount of treble damages, attorneys' fees and costs on behalf of
himself and an alleged class of offshore workers. Nabors vigorously denies these
allegations. While this action is in a very preliminary stage, we do not expect
that the outcome of this matter will have a material adverse effect on Nabors'
consolidated financial position, cash flows or results of operations.
The only other material pending litigation involving Nabors or one of
its subsidiaries is Yuan v. Bayard Drilling Technologies, Inc. et al., which has
been previously reported. There were no material developments in the Yuan case
during the third quarter of 2000.
Nabors and its subsidiaries are defendants or otherwise involved in a
number of other lawsuits in the ordinary course of their business. In the
opinion of management, the ultimate liability with respect to these pending
lawsuits is not expected to have a significant or material adverse effect on
Nabors' consolidated financial position, cash flows or results of operations.
NOTE 6 SUPPLEMENTAL INCOME STATEMENT INFORMATION
We recorded realized gains on sales of marketable securities totaling
$12.0 million and unrealized holding gains on marketable securities classified
as trading totaling $2.1 million for the nine month period ended September 30,
2000. During the nine month period ended September 30, 1999, we recorded
realized gains on sales of marketable securities totaling $1.2 million,
unrealized holding gains on marketable securities classified as trading totaling
$2.1 million and gains on the disposition of long-term assets totaling $2.3
million.
8
<PAGE> 10
NOTE 7 SEGMENT INFORMATION
The following table sets forth financial information with respect to
our operating segments:
<TABLE>
<CAPTION>
THREE MONTHS ENDED SEPTEMBER 30, NINE MONTHS ENDED SEPTEMBER 30,
2000 1999 2000 1999
------------ ------------ ------------ ------------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Operating revenues and Earnings from
unconsolidated affiliates:
Contract drilling(1) $ 327,856 $ 132,043 $ 875,512 $ 399,203
Manufacturing and logistics(2) 45,658 12,625 115,746 32,311
Other(3) (19,475) (2,278) (46,067) (6,198)
------------ ------------ ------------ ------------
Total $ 354,039 $ 142,390 $ 945,191 $ 425,316
------------ ------------ ------------ ------------
Income derived from operating activities:(4)
Contract drilling(1) $ 54,495 $ 12,156 $ 126,550 $ 47,934
Manufacturing and logistics(2) 11,411 831 27,029 4,670
Other(5) (6,609) (2,965) (20,294) (10,816)
------------ ------------ ------------ ------------
Total $ 59,297 $ 10,022 $ 133,285 $ 41,788
Interest expense (10,066) (6,697) (26,162) (23,339)
Interest income 9,315 2,600 11,746 7,316
Other income, net 5,719 1,846 17,868 7,026
------------ ------------ ------------ ------------
Income before income taxes and
extraordinary gain $ 64,265 $ 7,771 $ 136,737 $ 32,791
------------ ------------ ------------ ------------
</TABLE>
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
2000 1999
--------------- -----------------
<S> <C> <C>
Total assets:
Contract drilling(6) $ 2,069,722 $ 1,920,129
Manufacturing and logistics(7) 290,477 286,501
Other(5) 653,544 191,373
--------------- -----------------
Total assets $ 3,013,743 $ 2,398,003
--------------- -----------------
</TABLE>
(1) Includes Earnings (losses) from unconsolidated affiliates, accounted
for by the equity method, of $5.1 million, $(.19) million, $12.9
million and $.2 million for the three months ended September 30, 2000,
September 30, 1999 and the nine months ended September 30, 2000 and
September 30, 1999, respectively.
(2) Includes Earnings from unconsolidated affiliates, accounted for by the
equity method, of $4.4 million, $.23 million, $17.4 million and $3.4
million for the three months ended September 30, 2000, September 30,
1999 and the nine months ended September 30, 2000 and September 30,
1999, respectively.
(3) Elimination of inter-segment manufacturing and logistics sales.
(4) "Income derived from operating activities" has historically been
referred to as "operating income". It is computed by subtracting:
direct costs, general and administrative expenses, and depreciation and
amortization from Operating revenues and then adding Earnings from
unconsolidated affiliates.
(5) Includes the elimination of inter-segment transactions and unallocated
corporate expenses.
(6) Includes $38.0 million and $33.2 million of investments in
unconsolidated affiliates, accounted for by the equity method, at
September 30, 2000 and December 31, 1999, respectively.
(7) Includes $30.8 million and $20.9 million of investments in
unconsolidated affiliates, accounted for by the equity method, at
September 30, 2000 and December 31, 1999, respectively.
9
<PAGE> 11
Report of Independent Accountants
To the Stockholders and Board of Directors
of Nabors Industries, Inc.:
We have reviewed the accompanying condensed consolidated balance sheet of Nabors
Industries, Inc. and its subsidiaries as of September 30, 2000, and the related
condensed consolidated statements of income for each of the three-month and
nine-month periods ended September 30, 2000 and 1999 and the condensed
consolidated statements of changes in stockholders' equity and of cash flows for
the nine-month periods ended September 30, 2000 and 1999. These financial
statements are the responsibility of the Company's management.
We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to financial
data and making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance
with generally accepted auditing standards, the objective of which is the
expression of an opinion regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the accompanying condensed consolidated interim financial statements
for them to be in conformity with accounting principles generally accepted in
the United States of America.
We previously audited, in accordance with auditing standards generally accepted
in the United States of America, the consolidated balance sheet as of December
31, 1999, and the related consolidated statement of income, changes in
stockholders' equity and of cash flows for the year then ended (not presented
herein), and in our report dated February 9, 2000 we expressed an unqualified
opinion on those consolidated financial statements. In our opinion, the
information set forth in the accompanying condensed consolidated balance sheet
as of September 30, 2000, is fairly stated in all material respects in relation
to the consolidated balance sheet from which it has been derived.
PricewaterhouseCoopers LLP
Houston, Texas
October 24, 2000
10
<PAGE> 12
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 2000 COMPARED TO THREE MONTHS
AND NINE MONTHS ENDED SEPTEMBER 30, 1999
Operating revenues and Earnings from unconsolidated affiliates for the
third quarter of fiscal year 2000 totaled $354.0 million, representing an
increase of $211.6 million, or 149%, as compared to the prior year period.
Current quarter income derived from operating activities(1) and net income
totaled $59.3 million and $38.7 million ($.25 per diluted share), respectively,
representing increases of 492% and 716% compared to the prior year period.
Operating revenues and Earnings from unconsolidated affiliates for the first
nine months of fiscal year 2000 totaled $945.2 million, representing an increase
of $519.9, or 122%, compared to the prior year period. Income derived from
operating activities and net income totaled $133.3 million and $82.4 million
($.54 per diluted share), respectively, representing increases of 219% and 312%
compared to the prior year period. The results for the current quarter and first
nine months of 2000 include the operating results of Pool, which was acquired on
November 24, 1999.
The increase in our operating results is due to substantial
year-over-year improvements in all of our business units and the addition of the
Pool operations acquired in November 1999. The Pool acquisition was accounted
for using the purchase method of accounting. Pool's results of operations have
been included in our financial statements commencing on the effective date of
the acquisition. Therefore, Pool's operating results were not included in the
prior year period results. The improvement in our business units' performance
reflects a continuation of a positive trend that began in the third quarter of
1999 in response to higher average oil and natural gas prices. Natural gas
prices, which averaged $2.11 per mcf during the first nine months of 1999, have
increased steadily during the past year and averaged $3.46 per mcf during the
first nine months of 2000. Oil prices have increased by an even greater
percentage during this period with average prices totaling $29.84 per barrel
during the first nine months of 2000, up from $17.58 per barrel during the first
nine months of 1999. The increase in oil and natural gas prices has resulted in
increased capital spending by our customers for services provided by Nabors.
This increased spending has been especially evident in the US Lower 48, Canada
and the Gulf of Mexico operations for natural gas-related drilling and workover
activities. The increase in North American land drilling activity is illustrated
by the increase in the total US active land rig count which averaged 713 working
rigs during the nine months ended September 30, 2000 compared to 452 working
rigs during the nine months ended September 30, 1999. Looking forward into 2001,
we expect continued improvement in both dayrates and utilization in virtually
all areas of our operations. Our optimism is based on the positive supply and
demand fundamentals for oil and natural gas that are currently in place and
expected to continue for the next several quarters, barring any major unforeseen
event.
(1) "Income derived from operating activities" has historically been referred to
as "operating income." It is computed by subtracting: direct costs, general
and administrative expenses, and depreciation and amortization from
Operating revenues and then adding Earnings from unconsolidated affiliates.
11
<PAGE> 13
The following tables set forth certain financial information with
respect to our operating segments, rig activity and certain industry data:
<TABLE>
<CAPTION>
THREE MONTHS ENDED SEPTEMBER 30, NINE MONTHS ENDED SEPTEMBER 30,
INCREASE INCREASE
2000 1999 (DECREASE) 2000 1999 (DECREASE)
--------- --------- ------------------ -------- -------- -----------------
(IN THOUSANDS, EXCEPT PERCENTAGES)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Operating revenues and Earnings
from unconsolidated
affiliates:
Contract drilling(1) $ 327,856 $ 132,043 $ 195,813 148% $ 875,512 $ 399,203 $ 476,309 119%
Manufacturing and
logistics(2) 45,658 12,625 33,033 262% 115,746 32,311 83,435 258%
Other(3) (19,475) (2,278) (17,197) 755% (46,067) (6,198) (39,869) 643%
--------- --------- --------- --------- --------- ---------
Total $ 354,039 $ 142,390 $ 211,649 149% $ 945,191 $ 425,316 $ 519,875 122%
--------- --------- --------- --------- --------- ---------
Income derived from operating
activities:(4)
Contract drilling(1) $ 54,495 $ 12,156 $ 42,339 348% $ 126,550 $ 47,934 $ 78,616 164%
Manufacturing and
logistics(2) 11,411 831 10,580 (5) 27,029 4,670 22,359 479%
Other(6) (6,609) (2,965) (3,644) 123% (20,294) (10,816) (9,478) 88%
--------- --------- --------- --------- --------- ---------
Total $ 59,297 $ 10,022 $ 49,275 492% $ 133,285 $ 41,788 $ 91,497 219%
--------- --------- --------- --------- --------- ---------
</TABLE>
(1) Includes Earnings (losses) from unconsolidated affiliates, accounted for by
the equity method, of $5.1 million, $(.19) million, $12.9 million and $.2
million for the three months ended September 30, 2000, September 30, 1999
and the nine months ended September 30, 2000 and September 30, 1999,
respectively.
(2) Includes Earnings from unconsolidated affiliates, accounted for by the
equity method, of $4.4 million, $.23 million, $17.4 million and $3.4 million
for the three months ended September 30, 2000, September 30, 1999 and the
nine months ended September 30, 2000 and September 30, 1999, respectively.
(3) Elimination of inter-segment manufacturing and logistics sales.
(4) "Income derived from operating activities" has historically been referred to
as "operating income". It is computed by subtracting: direct costs, general
and administrative expenses, and depreciation and amortization from
Operating revenues and then adding Earnings from unconsolidated affiliates.
(5) The percentage is so large that it is not meaningful.
(6) Includes the elimination of inter-segment transactions and unallocated
corporate expenses.
<TABLE>
<CAPTION>
THREE MONTHS ENDED SEPTEMBER 30, NINE MONTHS ENDED SEPTEMBER 30,
2000 1999 INCREASE 2000 1999 INCREASE
---------- ---------- ------------------ ---------- ---------- -----------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Rig activity(1):
Rig years(2) 261.6 144.1 117.5 82% 238.5 133.0 105.5 79%
Rig utilization 48% 29% 19% 66% 44% 28% 16% 57%
</TABLE>
(1) Excludes labor contracts, land well-servicing rigs and rigs owned by joint
ventures.
(2) Rig years represents a measure of the number of equivalent rigs operating
during a given period. For example, one rig operating 182.5 days during a
365-day period represents 0.5 rig years.
<TABLE>
<CAPTION>
THREE MONTHS ENDED SEPTEMBER 30, NINE MONTHS ENDED SEPTEMBER 30,
2000 1999 INCREASE 2000 1999 INCREASE
---------- ---------- ------------------ ---------- ---------- -----------------
<S> <C> <C> <C> <C> <C> <C> <C>
Industry data:
Average West Texas
intermediate crude oil
spot price ($/bbl)(1) $ 31.65 $ 21.72 $ 9.93 46% $ 29.84 $ 17.58 $ 12.26 70%
Average US natural gas
spot price ($/mcf)(1) $ 4.28 $ 2.45 $ 1.83 75% $ 3.46 $ 2.11 $ 1.35 64%
Average US land rig
count(2) 812 516 296 57% 713 452 261 58%
Average International
land rig count(2) 490 398 92 23% 453 407 46 11%
(1) Source: Bloomberg
(2) Source: Baker Hughes
</TABLE>
12
<PAGE> 14
Contract drilling. This segment includes our drilling, workover and
well-servicing operations, on land and offshore. Third quarter 2000 Operating
revenues and Earnings from unconsolidated affiliates for the contract drilling
segment totaled $327.9 million and income derived from operating activities
totaled $54.5 million, representing increases of 148% and 348%, respectively,
compared to the prior year quarter. Equivalent rig years (excluding labor
contracts, land well-servicing rigs and rigs owned by joint ventures) increased
to 261.6 years during the third quarter of 2000 from an average of 144.1 years
during the prior year quarter. For the nine months ended September 30, 2000,
contract drilling Operating revenues and Earnings from unconsolidated affiliates
totaled $875.5 million and income derived from operating activities totaled
$126.6 million, representing increases of 119% and 164%, respectively, compared
to the prior year period. Equivalent rig years increased to 238.5 years from an
average of 133.0 years during the prior year period. Most of our contract
drilling operations recorded higher revenues as compared to the prior year
periods as a result of increased drilling and workover activity due to higher
oil and natural gas prices and the addition of the Pool rigs acquired on
November 24, 1999.
Alaskan revenues increased during the current quarter and year-to-date
due to higher average dayrates and higher equivalent rig years resulting from
the addition of working Pool rigs.
Canadian revenues were higher during the current quarter and
year-to-date due to higher equivalent rig years and dayrates associated with
continued strong demand for natural gas drilling services throughout the
Canadian market.
US Lower 48 drilling revenues increased dramatically during the current
quarter and year-to-date as a result of increased demand for drilling services.
The prolonged strength of the North American natural gas market has resulted in
significant increases in both equivalent rig years and dayrates.
International revenues increased during the current quarter and
year-to-date due to the addition of Pool operations in South America and the
Middle East, and rigs working in Colombia, Kenya, Qatar and Yemen under new
contracts. This was partially offset by decreased revenues due to lower activity
in certain areas, such as Bolivia, Kazakhstan and the United Arab Emirates.
Additionally, effective January 1, 2000, our Saudi Arabia rigs began operating
as part of Pool Arabia, Ltd., a joint venture with a Saudi Arabian partner. The
joint venture is accounted for using the equity method of accounting and
accordingly, its results of operations are included in Earnings from
unconsolidated affiliates.
Offshore revenues increased during the current quarter and year-to-date
both in the Gulf of Mexico and internationally. The increase in revenues in the
Gulf of Mexico resulted from the addition of the active Pool rigs and increased
platform, jack-up and barge workover activity. This increase was partially
offset by reduced drilling activity. Internationally, offshore revenues
increased due to the addition of the active Pool rigs.
US land well-servicing operations improved during the current quarter
and year-to-date due to increased activity and rates per hour resulting from
higher oil and natural gas prices. Because this unit was acquired in November
1999, its operations were not included in the comparable prior year period.
Manufacturing and logistics. This segment includes our supply vessel,
top-drive manufacturing, rig instrumentation and software, and construction and
transportation operations. Manufacturing and logistics Operating revenues and
Earnings from unconsolidated affiliates were $45.7 million during the current
quarter, representing an increase of 262% compared with the prior year quarter.
Income derived from operating activities increased to $11.4 million compared to
$.8 million in the prior year quarter. For the nine months ended September 30,
2000, manufacturing and logistics Operating revenues and Earnings from
unconsolidated affiliates totaled $115.7 million and income derived from
operating activities totaled $27.0 million, representing increases of 258% and
479%, respectively, compared to the prior year period. Increases in this segment
resulted from increased top-drive sales, and a strong construction season on the
North Slope of Alaska by our joint venture construction entity. Additionally,
the inclusion of our US Lower 48 trucking operations which became 100% owned by
Nabors in November 1999, and our supply vessel operation acquired as part of the
Pool transaction, contributed to the increases.
13
<PAGE> 15
Generally, Nabors' gross margin percentage is affected by changes in
the mix of revenues derived from its various areas of operations. For example,
contracts in the US Lower 48 typically earn a lower gross margin percentage than
Alaska, international and offshore contracts. Gross margin percentage is
calculated by dividing gross margin by Operating revenues. Gross margin is
calculated by subtracting direct costs from Operating revenues. The gross margin
percentage decreased in the three month and the nine month periods ended
September 30, 2000 primarily due to a higher percentage of revenues being
generated from US Lower 48 operations than in the comparable prior year periods.
As a result of the addition of Pool's US land well-servicing operations and the
increase in activity in the US Lower 48 drilling operations, combined revenues
from the US Lower 48 drilling and well-servicing operations, as a percentage of
total revenues, equaled 54% in the current quarter and year-to-date compared to
48% and 40%, respectively, in the comparable prior periods for the US Lower 48
drilling operations alone. This decrease in gross margin percentage has been
somewhat offset during the current quarter by increasing gross margin
percentages in most of the company's business units due to higher dayrates.
General and administrative expenses and depreciation and amortization
expense as a percentage of Operating revenues decreased during the current
quarter and year-to-date September 30, 2000 due to the increase in our revenues,
as these expenses were spread over a larger revenue base.
Interest expense increased during the current quarter and year-to-date
due to the issuance of the $825 million zero coupon convertible senior
debentures in June 2000. Interest income increased during the current quarter
and year-to-date due to higher average cash balances resulting from proceeds
from the issuance of the $825 million zero coupon debentures.
Other income increased during the current quarter and year-to-date due
to higher gains on sales of marketable securities owned by Nabors. We recorded
realized gains on sales of marketable securities totaling $3.7 million and
unrealized holding gains on marketable securities classified as trading totaling
$.6 million during the current quarter. For the nine months ended September 30,
2000, we recorded realized gains on sales of marketable securities totaling
$12.0 million and unrealized holding gains on marketable securities classified
as trading totaling $2.1 million.
The effective tax rate equaled 40% and 41% during the current quarter
and year-to-date, respectively, compared to 39% in the prior year periods. This
year-to-date increase is primarily due to the amortization of non-deductible
goodwill that was recorded as part of the acquisitions of Pool and Bayard during
1999.
LIQUIDITY AND CAPITAL RESOURCES
We generate significant cash from operations over the course of a
twelve-month period. We also have substantial borrowing capacity under various
credit facility arrangements, and have access to public debt and equity capital
markets. Our senior unsecured debt ratings as provided by Moody's Investor
Service and Standard & Poor's are "A3" and "A-", respectively. Nabors was
admitted as a member of the Standard & Poor 500 on October 17, 2000.
During June 2000, we completed a private placement of zero coupon
convertible senior debentures due 2020. The aggregate principal amount of the
debentures at maturity will be $825 million. The debentures were issued at a
discount with net proceeds to Nabors, after expenses, totaling approximately
$495 million. The yield to maturity of the debentures is 2.5% compounded
semi-annually with no periodic cash payments of interest. At the holder's
option, the debentures can be converted at any time prior to maturity or their
earlier redemption, into Nabors common stock at a conversion rate of 10.738
shares per $1,000 principal amount at maturity. The conversion rate may be
adjusted from time to time, upon the occurrence of specified events. Instead of
delivering shares of common stock upon conversion of any debentures, we may
elect to pay the holder cash for all or a portion of the debentures. The
debentures can be put to us on June 20, 2003, June 20, 2008 and June 20, 2013
for a purchase price equal to the issue price plus accrued original issue
discount to the date of repurchase. We may elect to pay all or a portion of the
purchase price in common stock instead of cash. We cannot redeem the debentures
before June 20, 2003. On and after June 20, 2003, we may redeem all or a portion
of the debentures for cash at any time at their accreted value. The proceeds
from the issuance of the debentures will be used for general corporate purposes,
including but not limited to, working capital, investment in subsidiaries and
possible future business acquisitions. As of September 30, 2000, the proceeds
are included in cash and marketable securities on our balance sheet.
14
<PAGE> 16
During the nine months ended September 30, 2000, various employees and
directors exercised options to acquire 9.4 million shares of Nabors common stock
at prices ranging from $1.07 to $31.04 per share. This amount includes 7.5
million shares of common stock exercised by three senior officers of the company
in March 2000. Our proceeds from all option exercises totaled $109.0 million.
Additionally, during the period, various holders exercised Bayard warrants to
purchase approximately 70,000 shares of Nabors common stock at prices ranging
from $22.81 to $28.74 per share. We received proceeds totaling $1.6 million from
these warrant exercises.
As a result of the Pool acquisition, Nabors Holding Company, the
successor by merger to Pool, completed a mandatory change of control cash tender
offer to purchase the Pool 8-5/8% Senior Subordinated Notes due 2008 at a
redemption price of 101%. During the nine months ended September 30, 2000, a
total of $105.8 million of the notes were purchased pursuant to the offer and in
the open market at prices ranging from 100.5% to 101.75%. As of September 30,
2000, $44.2 million of the notes remained outstanding. We recognized a $1.9
million ($.01 per share) extraordinary gain, net of income taxes, during the
nine months ended September 30, 2000 resulting from the repurchase of the notes
for less than the amount recorded on our books. As of February 14, 2000, we
unconditionally guaranteed the obligations under the Pool notes.
We had working capital of $769.7 million as of September 30, 2000,
representing a $573.9 million increase compared to December 31, 1999. The
increase in working capital is primarily attributable to our receipt of proceeds
from the issuance of the zero coupon debentures as well as an increase in
accounts receivable resulting from the increase in rig activity. In addition,
accrued liabilities were lower due to the payment of Pool merger expenses during
the current year.
Our ratio of funded debt to funded debt plus stockholders' equity,
commonly referred to as the funded debt to capital ratio, was 0.34:1 as of
September 30, 2000, as compared to 0.25:1 as of December 31, 1999. This increase
is due to the issuance of the zero coupon debentures.
Net cash provided by operating activities totaled $92.6 million during
the nine months ended September 30, 2000, compared to $111.2 million during the
prior year period. During the nine month period, net income was increased for
non-cash items such as depreciation, amortization and deferred taxes and
decreased for equity in earnings from unconsolidated affiliates and gain on sale
of marketable securities. Cash was used by an overall increase in our working
capital accounts. During the prior year period, net income was increased for
non-cash items such as depreciation, amortization and deferred taxes and cash
was provided by an overall decrease in the company's working capital accounts.
Net cash used for investing activities totaled $415.8 million during
the current nine month period, compared to $46.2 million during the prior year
period. We used cash primarily for purchases of marketable securities and for
capital expenditures during both the current period and the prior year period.
The sale of marketable securities during the current period and the disposition
of long-term assets during both the current period and the prior year period
provided our cash.
Financing activities provided cash totaling $499.2 million during the
current nine month period compared to $72.9 during the prior year period. During
the current period, cash was primarily provided by our issuance of the zero
coupon convertible senior debentures during June 2000 and our receipt of payment
of the exercise prices in connection with the exercise of options to acquire 9.4
million shares of our common stock, partially offset by cash used for the
repurchase of approximately $105.8 million of the 8-5/8% notes. During the prior
year period, cash was provided by the issuance of our 6.80% notes and cash was
used to reduce long-term and short-term borrowings.
Our cash and cash equivalents and investments in short-term marketable
securities totaled $585.7 million as of September 30, 2000. We currently have
credit facility arrangements with various banks with total availability of
$236.6 million. As of September 30, 2000 remaining availability, after
borrowings on the facilities and outstanding letters of credit, totaled
approximately $212.3 million.
As of September 30, 2000, we had outstanding capital expenditure
purchase commitments of approximately $41.0 million, including approximately
$10.0 million for logistical equipment and $31.0 million for drill pipe,
refurbishment of rigs to be reactivated, and rig related sustaining capital
expenditures.
The current cash equivalents, short-term investments, credit facility
position, and projected cash flow generated from current operations are expected
to adequately finance our sustaining capital and debt service requirements for
the next twelve months.
15
<PAGE> 17
OTHER MATTERS
FORWARD-LOOKING STATEMENTS
The statements in this document that relate to matters that are not
historical facts are "forward-looking statements" within the meaning of Section
27A of the Securities Exchange Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. When used in this document, words such as "anticipate",
"believe", "expect", "plan", "intend", "estimate", "project", "will", "should"
"could", "may", "predict" and similar expressions are intended to identify
forward-looking statements. Future events and actual results may differ
materially from the results set forth in or implied in the forward-looking
statements. Factors that might cause such a difference include:
o fluctuations in worldwide prices of oil and natural gas and demand
for oil and natural gas;
o fluctuations in levels of oil and gas exploration and development
activities;
o fluctuations in the demand for contract drilling and workover
services;
o the existence of competitors, technological changes and
developments in the industry;
o the existence of operating risks inherent in the contract drilling
and workover industries;
o the existence of regulatory uncertainties;
o the possibility of political instability in any of the countries
in which we do business; and
o general economic conditions.
Our businesses depend, to a large degree, on the level of spending by
oil and gas companies for exploration, development and production activities.
Therefore, a sustained increase or decrease in the price of oil or natural gas,
which could have a material impact on exploration, development and production
activities, could also materially affect the company's financial condition,
results of operations and cash flows.
PART II OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
A subsidiary of Nabors is a defendant in Verdin v. R&B Falcon Drilling
USA, Inc., et al., Civil Action No. G-00-488, in the United States District
Court for the Southern District of Texas, Galveston Division. R&B Falcon
Drilling USA is a wholly-owned, indirect subsidiary of R&B Falcon Corporation.
The original plaintiff and proposed representative of a purported class of
offshore workers has been replaced as plaintiff and proposed representative by
Thomas Bryant, who claims to be an "offshore worker" previously employed by
Global Marine Drilling Company, Atwood Oceanics, Inc., Hercules (which was
subsequently acquired by Parker Drilling Company) and Sedco Forex (which was
subsequently acquired by Transocean Offshore, Inc.). The plaintiff alleges that
his former employers listed above and a number of other offshore drilling
contractors, including our subsidiary, have engaged in a conspiracy to depress
wages and benefits paid to their offshore employees. Plaintiff contends that
this alleged conduct violates federal and state antitrust laws. Plaintiff seeks
an unspecified amount of treble damages, attorneys' fees and costs on behalf of
himself and an alleged class of offshore workers. Nabors vigorously denies these
allegations. While this action is in a very preliminary stage, we do not expect
that the outcome of this matter will have a material adverse effect on Nabors'
consolidated financial position, cash flows or results of operations.
The only other material pending litigation involving Nabors or one of
its subsidiaries is Yuan v. Bayard Drilling Technologies, Inc. et al., which has
been previously reported. There were no material developments in the Yuan case
during the third quarter of 2000.
Nabors and its subsidiaries are defendants or otherwise involved in a
number of other lawsuits in the ordinary course of their business. In the
opinion of management, the ultimate liability with respect to these pending
lawsuits is not expected to have a significant or material adverse effect on the
Nabors' consolidated financial position, cash flows or results of operations.
16
<PAGE> 18
ITEM 5. OTHER INFORMATION
On September 8, 2000, Nabors' registration statement with respect to
resales of its $825 million principal amount at maturity of Zero Coupon
Convertible Senior Debentures due 2020 became effective. The debentures were
issued in a private placement pursuant to an exemption provided by Section 4(2)
under the Securities Act of 1933, as amended, to an initial purchaser who
immediately resold them to qualified institutional buyers, as defined in Rule
144A. The debentures may be resold by security holders named in the related
prospectus, as supplemented, with delivery of such prospectus.
On October 18, 2000, the National Labor Relations Board confirmed the
selection of a collective bargaining representative at our Alaska drilling
subsidiary. The unit to be represented is comprised of approximately 400 members
at November 1, 2000 and covers most non-supervisory drilling and related field
personnel working on or about our rigs within the State of Alaska. Negotiations
with the union are expected to commence in December 2000. We anticipate that our
relations with the union will be good, and that the formation and continuation
of a collective bargaining unit at our Alaska drilling subsidiary will not have
any materially adverse impact on the operations of that entity or Nabors as a
whole.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
11 Statement re: Computation of Per Share Earnings
15.1 Awareness Letter of Independent Accountants
27 Financial Data Schedule
(b) Reports on Form 8-K
None.
17
<PAGE> 19
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
NABORS INDUSTRIES, INC.
/s/ Anthony G. Petrello
---------------------------------------------
Anthony G. Petrello
President and Chief Operating Officer
/s/ Bruce P. Koch
Bruce P. Koch
---------------------------------------------
Vice President - Finance (principal financial
and accounting officer)
Dated: November 14, 2000
18
<PAGE> 20
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<S> <C>
11 Statement re: Computation of Per Share Earnings
15.1 Awareness Letter of Independent Accountants
27 Financial Data Schedule
</TABLE>
