============================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1996
or
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission file number 1-5587
READING & BATES CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 73-0642271
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
901 Threadneedle, Suite 200, Houston, Texas 77079
(Address of principal executive offices)(Zip Code)
(713)496-5000
(Registrant's telephone number, including area code)
NONE
(Former name, former address and former fiscal year, if changed since
last report.)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes X No___
NUMBER OF SHARES OUTSTANDING OF REGISTRANT'S COMMON STOCK
AT APRIL 12, 1996 : 62,218,949
============================================================================
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Company or Group of Companies for Which Report is Filed:
Reading & Bates Corporation and Subsidiaries
The financial statements for the three months ended March 31, 1996 and
1995, include, in the opinion of the Company, all adjustments (which
consist only of normal recurring adjustments) necessary to present
fairly the financial position and results of operations for such periods.
The financial data for the three months ended March 31, 1996 included
herein have been subjected to a limited review by Arthur Andersen LLP,
the registrant's independent public accountants, whose report is included
herein. Results of operations for the three months ended March 31, 1996
are not necessarily indicative of results of operations which will be
realized for the year ending December 31, 1996. The financial statements
should be read in conjunction with the Company's Form 10-K for the year
ended December 31, 1995.
READING & BATES CORPORATION
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(in thousands)
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1996 1995
--------- ------------
(unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 30,166 $ 36,171
Accounts receivable:
Trade, net 49,104 41,324
Other 6,036 4,815
Materials and supplies inventory 10,491 8,911
Other current assets 4,099 4,567
--------- ---------
Total current assets 99,896 95,788
--------- ---------
PROPERTY AND EQUIPMENT:
Drilling 782,268 758,688
Other 32,909 29,898
--------- ---------
Total property and equipment 815,177 788,586
Accumulated depreciation and
amortization (289,794) (282,981)
--------- ---------
Net property and equipment 525,383 505,605
--------- ---------
DEFERRED CHARGES AND OTHER ASSETS 3,326 4,387
--------- ---------
TOTAL ASSETS $ 628,605 $ 605,780
========= =========
</TABLE>
The accompanying notes are an integral part of the consolidated
financial statements.
READING & BATES CORPORATION
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(in thousands)
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1996 1995
---------- -----------
(unaudited)
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term obligations $ 12,000 $ 12,000
Long-term obligations due
within one year 19,583 18,333
Accounts payable - trade 6,334 3,639
Accrued liabilities 19,407 20,518
--------- ---------
Total current liabilities 57,324 54,490
LONG-TERM OBLIGATIONS 96,283 95,040
OTHER NONCURRENT LIABILITIES 59,022 51,718
DEFERRED INCOME TAXES 2,977 2,977
--------- ---------
Total liabilities 215,606 204,225
--------- ---------
COMMITMENTS AND CONTINGENCIES
MINORITY INTEREST 42,100 44,504
--------- ---------
STOCKHOLDERS' EQUITY:
Preferred stock, $1.00 par value 2,983 2,985
Common stock, $.05 par value 3,102 3,095
Capital in excess of par value 363,836 362,910
Retained earnings (deficit)
from March 31, 1991 9,242 (3,017)
Other (8,264) (8,922)
--------- ---------
Total stockholders' equity 370,899 357,051
--------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $ 628,605 $ 605,780
========= =========
</TABLE>
The accompanying notes are an integral part of the consolidated
financial statements.
READING & BATES CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
(in thousands except per share amounts)
(unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
---------------------
1996 1995
-------- --------
<S> <C> <C>
OPERATING REVENUES $ 61,190 $ 47,975
-------- --------
COSTS AND EXPENSES:
Operating expenses 30,831 31,911
Depreciation 7,568 7,433
General and administrative 4,590 4,081
-------- --------
Total costs and expenses 42,989 43,425
-------- --------
OPERATING INCOME 18,201 4,550
-------- --------
OTHER INCOME (EXPENSE):
Interest expense (2,781) (3,814)
Interest income 499 425
Other, net (96) (210)
-------- --------
Total other income (expense) (2,378) (3,599)
-------- --------
INCOME BEFORE INCOME TAX EXPENSE
AND MINORITY INTEREST 15,823 951
INCOME TAX EXPENSE 1,093 1,163
-------- --------
INCOME (LOSS) AFTER INCOME TAX EXPENSE
AND BEFORE MINORITY INTEREST 14,730 (212)
MINORITY INTEREST (1,258) (157)
-------- --------
NET INCOME (LOSS) 13,472 (369)
DIVIDENDS ON PREFERRED STOCK 1,213 1,215
-------- --------
NET INCOME (LOSS) APPLICABLE TO
COMMON STOCKHOLDERS $ 12,259 $ (1,584)
======== ========
NET INCOME (LOSS) PER COMMON SHARE $ .20 $ (.03)
======== ========
</TABLE>
The accompanying notes are an integral part of the consolidated
financial statements.
READING & BATES CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(in thousands)
(unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
----------------------
1996 1995
--------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 13,472 $ (369)
Adjustments to reconcile net
income (loss) to net cash provided
by (used in) operating activities:
Depreciation 7,568 7,433
Loss (gain) on dispositions of
property and equipment (688) 171
Recognition of deferred expenses 491 2,655
Minority interest in income of
consolidated subsidiaries 1,258 157
Changes in assets and liabilities:
Accounts receivable, net (7,955) (8,191)
Materials and supplies inventory (872) (1,282)
Deferred charges and other assets 1,036 (2,659)
Accounts payable - trade 2,695 99
Accrued liabilities (784) (749)
Accrued interest 1,028 1,643
Deferred revenue 7,284 500
Income taxes (489) 5
Deferred income taxes - (98)
Other, net 392 182
--------- ---------
Net cash provided by (used in)
operating activities 24,436 (503)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Dispositions of property and equipment 122 166
Purchases of property and equipment (28,714) (4,806)
Business acquisitions - (300)
Decrease (increase) in investments in and
advances to unconsolidated investees 62 (139)
--------- ---------
Net cash used in investing activities (28,530) (5,079)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net payments on short-term obligations - (6,532)
Net proceeds from revolving credit facility 7,000 -
Principal payments on long-term obligations (5,000) (5,933)
Exercise of stock options 964 -
Dividends paid on preferred stock (1,213) (1,215)
Distribution to minority shareholders
of consolidated subsidiary (3,662) -
--------- ---------
Net cash used in financing activities (1,911) (13,680)
--------- ---------
NET DECREASE IN CASH AND CASH EQUIVALENTS (6,005) (19,262)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 36,171 42,319
--------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 30,166 $ 23,057
========= =========
Supplemental Cash Flow Disclosures:
Interest paid $ 2,259 $ 2,551
Income taxes paid $ 1,518 $ 1,258
</TABLE>
The accompanying notes are an integral part of the consolidated
financial statements.
READING & BATES CORPORATION
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
A) CONTINGENCIES
LITIGATION - On March 17, 1995, an action was filed by Louis
Silverman, individually and on behalf of all other shareholders of
Reading & Bates Corporation similarly situated, against the Company and
the individual members of its board of directors in the Court of
Chancery of the State of Delaware, New Castle County. On April 7, 1995
three additional actions were filed on behalf of Congregation Beth
Joseph, Harry Lewis and Mortimer Shulman against the Company and its
directors in the Court of Chancery of the State of Delaware. In each of
the four actions, the plaintiff alleged, inter alia, that the directors
breached their fiduciary duties by rejecting the previously announced
unsolicited merger proposal made by Sonat Offshore Drilling Inc. and by
adopting the previously announced shareholder rights plan. Each of the
named plaintiffs in the four actions purported to be an owner of the
Company's Common Stock and sought to represent a class of shareholders
of the Company who are similarly situated. Each of the plaintiffs
sought injunctive relief, damages in unspecified amounts and certain
other relief, including costs and expenses. In March 1996, the
plaintiffs in each of the four actions voluntarily dismissed same on a
without prejudice basis, and the court entered orders accordingly.
B) OTHER NONCURRENT LIABILITIES
The components of "OTHER NONCURRENT LIABILITIES" were as follows
(in thousands):
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
---------- ------------
<S> <C> <C>
Postretirement benefit
obligations $ 15,848 $ 15,993
Accrued interest expense related
to the 8% Senior Subordinated
Convertible Debentures due
December 1998 10,779 10,410
Deferred revenue 7,284 -
Gain on sale of drilling unit 7,026 7,229
Foreign income taxes 5,893 5,893
Net liabilities associated with
discontinued operations 5,632 5,818
Pension obligations 5,299 5,090
Other 1,261 1,285
--------- ---------
Total $ 59,022 $ 51,718
========= =========
</TABLE>
In the first quarter of 1996, the Company recorded deferred revenue
as a result of receiving a partial payment of a mobilization fee in
advance for one of its drilling units which will mobilize from one
operating area to another later this year.
C) SUBSEQUENT EVENT
In April 1996, the Company sold its jackup drilling unit "D. K.
MCINTOSH" for $8.5 million in cash and will recognize a gain in the
second quarter of 1996 of approximately $3 million.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors and Stockholders
Reading & Bates Corporation
We have reviewed the accompanying consolidated balance sheet of
Reading & Bates Corporation (a Delaware corporation) and Subsidiaries
as of March 31, 1996, and the related consolidated statements of
operations and cash flows for the three months ended March 31, 1996
and 1995. 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 upon our review, we are not aware of any material
modifications that should be made to the financial statements referred
to above for them to be in conformity with generally accepted accounting
principles.
Arthur Andersen LLP
Houston, Texas
April 12, 1996
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
MATERIAL CHANGES IN FINANCIAL CONDITION
The Company intends to continue to modernize and expand its fleet, in
order to meet the requirements of competitive conditions in the offshore
drilling industry and the changing needs of its customers. In this regard,
the Company made significant capital expenditures, $28.7 million, in the
first quarter of 1996 primarily related to capital upgrades to the fleet to
fulfill obligations under existing contracts or to improve the
marketability of certain of the Company's drilling units. Also in this
regard, the Company has from time to time in the past engaged in, and
currently continues to engage in, preliminary discussions with other
industry participants with respect to business combinations that would
potentially strengthen its competitive position in the offshore drilling
industry. Moreover, the Company continues to consider the selective
acquisition of existing rigs, directly or through business combination
transactions.
In October 1995, the Company purchased an approximately 20% working
interest in the Green Canyon 254 Allegheny oil and gas development project
in the U.S. Gulf of Mexico from the operator, Enserch Exploration, Inc.
("Enserch"). Mobil Exploration & Producing Inc., an affiliate of Mobil
Corporation, has a 40% working interest in the project. Enserch is
expected to retain the remaining 40% working interest. The Company's
third-generation semisubmersible, the "M. G. HULME, JR." has been
contracted for three years to drill the development wells upon completion
of an upgrade of the unit for operation in up to 3,300 feet of water.
Also, the Company may act as contractor in the conversion of a second-
generation semisubmersible rig to a floating production vessel capable of
processing up to 70,000 barrels of oil per day. Originally, it was
expected that the working interest owners would utilize "RIG 41" for this
project. However, at the Company's request the working interest owners
have agreed to purchase a different second-generation semisubmersible rig
for the project thus freeing up "RIG 41" to be used as a drilling unit by
the Company. As of March 31, 1996, the Company had accumulated costs
related to its ownership in the project of approximately $26.1 million.
The Company continues to consider selective expansion in floating
production through additional management contracts, alliances with other
companies, the acquisition of floating production equipment and/or
participation in field development projects.
Liquidity of the Company should be considered in light of the
fluctuations in demand experienced by drilling contractors as changes in
oil and gas producers' expectations, budgets and drilling plans occur.
These fluctuations can impact the Company's liquidity as supply and demand
factors directly affect utilization and dayrates, which are the primary
determinants of cash flow from the Company's operations. As of March 31,
1996, approximately $4.4 million of total consolidated cash and cash
equivalents of $30.2 million are restricted from the Company's use outside
of Arcade Drilling AS, a majority owned subsidiary of the Company. The
Company received $10.6 million in the first quarter of 1996 with respect to
a distribution to stockholders declared by Arcade Drilling AS. The
Company's management currently expects that its cash flow from operations,
in combination with cash on hand and other sources, including new debt,
new equity, asset disposals and/or by proper scheduling of its planned
capital or other expenditures, will be sufficient to satisfy the Company's
1996 working capital needs, dividends on and the possible redemption of
Preferred Stock, planned investments, capital expenditures on its existing
fleet, debt, lease and other payment obligations. The Company currently
expects to call for redemption its Preferred Stock in accordance with its
terms on or after September 30, 1996. The Company expects that most, if
not all, holders of the Preferred Stock will convert their shares into
Common Stock rather than allow the Company to redeem their shares. At
present, the Company would expect to fund the Preferred Stock redemption,
if any, out of working capital.
MATERIAL CHANGES IN RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1996 COMPARED
TO THREE MONTHS ENDED MARCH 31, 1995
The Company's net income for the three months ended March 31, 1996 was
$13.5 million ($.20 earnings per share after preferred stock dividends of
$1.2 million) compared with a net loss of $.4 million ($.03 loss per share
after preferred stock dividends of $1.2 million) for the same period of
1995. Income from operations for the three months ended March 31, 1996 was
$18.2 million compared to income from operations of $4.5 million in 1995.
The Company's utilization for the three months ended March 31, 1996 and
1995 was 95% and 86%, respectively.
Operating revenues are primarily a function of dayrates and utilization.
The $13.2 million increase in operating revenues for the three months ended
March 31, 1996 over the same period in 1995 is due to increased dayrates
and utilization of the semisubmersible and jackup fleets. Average dayrates
for the Company's fourth-generation semisubmersible fleet, third-generation
semisubmersible fleet and jackup fleet increased 31%, 47% and 13%,
respectively, for the three months ended March 31,1996 as compared to the
same period in 1995 accounting for the largest part of the increase in
operating revenues. Additionally, the "IOLAIR", a third-generation
semisubmersible purchased in September 1995, contributed to operating
revenues in the first quarter of 1996. A decrease in the average dayrates
earned by the Company's two tenders slightly offset the improvements
contributed by the semisubmersible and jackup fleets.
Operating expenses do not necessarily fluctuate in proportion to changes
in operating revenues due to the continuation of personnel on board and
equipment maintenance when the Company's drilling units are stacked. It is
only during prolonged stacked periods that the Company is significantly
able to reduce labor costs and equipment maintenance expense.
Additionally, labor costs fluctuate due to the geographic diversification
of the Company's drilling units and the mix of labor between expatriates
and nationals as stipulated in the drilling contracts. In general, labor
costs increase primarily due to higher salary levels and inflation.
Equipment maintenance expenses fluctuate depending upon the type of
activity the drilling unit is performing and the age and condition of the
equipment. Scheduled maintenance of equipment and overhauls are performed
in accordance with the Company's preventive maintenance program.
The $1.1 million decrease in operating expenses for the three months
ended March 31, 1996 as compared to the same period in 1995 is primarily
due to reduced expenses associated with several drilling units. In
particular, management fees for the "PAUL B. LOYD, JR." decreased since the
management contract previously held by Sonat Offshore Drilling, Inc. expired
in December 1995 and is now held by a subsidiary of the Company. Also, the
"RON TAPPMEYER" incurred reduced operating expenses for the first quarter
of 1996 when it operated in Bangladesh as compared to the first quarter of
1995 when the rig operated in Australia, a relatively more expensive
operating area. Further, the "JIM CUNNINGHAM" experienced lower contract
preparation and mobilization amortization for the three months ended March
31, 1996 as compared to the same three month period ended March 31, 1995.
As an offset to these operating expense reductions, the Company had
increases in operating expenses for the quarter ended March 31, 1996 as
compared to the quarter ended March 31, 1995 due to the addition of the
"IOLAIR" to the fleet and increased lease expense associated with the
sale/lease-back of the "M. G. HULME, JR.".
Income tax expense decreased for the three months ended March 31, 1996
as compared to the same period in 1995 despite increases in revenues and
income before income tax expense. Such decrease is primarily due to a
change in the Company's foreign geographic areas of operations coupled with
the utilization of previously reserved net operating loss carryforwards.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
LITIGATION - The Company is one of the defendants in certain litigation
brought in July 1984 by the Cheyenne-Arapaho Tribes of Oklahoma in the U.S.
District Court for the Western District of Oklahoma, seeking to set aside
two communitization agreements with respect to three leases involving
tribal lands in which the Company previously owned interests and to have
those leases declared expired. In June 1989, the U.S. District Court
entered an interim order in favor of the plaintiffs. On appeal, the U.S.
Court of Appeals for the Tenth Circuit upheld the decision of the trial
court and petitions for rehearing of that decision were denied. Petitions
for writs of certiorari filed by the parties with the U.S. Supreme Court
have been denied, and the case has been remanded to the trial court for
determination of damages.
In November 1988, a lawsuit was filed in the U.S. District Court for the
Southern District of West Virginia against Reading & Bates Coal Co., a
wholly owned subsidiary of the Company, by SCW Associates, Inc. claiming
breach of an alleged agreement to purchase the stock of Belva Coal Company,
a wholly owned subsidiary of Reading & Bates Coal Co. with coal properties
in West Virginia. When those coal properties were sold in July 1989 as
part of the disposition of the Company's coal operations, the purchasing
joint venture indemnified Reading & Bates Coal Co. and the Company against
any liability Reading & Bates Coal Co. might incur as the result of this
litigation. A judgment for the plaintiff of $32,000 entered in February
1991 was satisfied and Reading & Bates Coal Co. was indemnified by the
purchasing joint venture. On October 31, 1990, SCW Associates, Inc., the
plaintiff in the above-referenced action, filed a separate ancillary action
in the Circuit Court, Kanawha County, West Virginia against the Company and
a wholly owned subsidiary of Reading & Bates Coal Co., Caymen Coal, Inc.
(former owner of the Company's West Virginia coal properties), as well as
the joint venture, Mr. William B. Sturgill personally (former President of
Reading & Bates Coal Co.), three other companies in which the Company
believes Mr. Sturgill holds an equity interest, two employees of the joint
venture, First National Bank of Chicago and First Capital Corporation. The
lawsuit seeks to recover compensatory damages of $50 million and punitive
damages of $50 million for alleged tortious interference with the
contractual rights of the plaintiff and to impose a constructive trust on
the proceeds of the use and/or sale of the assets of Caymen Coal, Inc. as
they existed on October 15, 1988. Subsequently, the court entered an
order dismissing the Company's indirect subsidiary. The Company intends to
defend its interests vigorously and believes the damages alleged by the
plaintiff in this action are highly exaggerated. In any event, the Company
believes that it has valid defenses and that it will prevail in this
litigation.
On March 17, 1995, an action was filed by Louis Silverman, individually
and on behalf of all other shareholders of Reading & Bates Corporation
similarly situated, against the Company and the individual members of its
board of directors in the Court of Chancery of the State of Delaware, New
Castle County. On April 7, 1995 three additional actions were filed on
behalf of Congregation Beth Joseph, Harry Lewis and Mortimer Shulman
against the Company and its directors in the Court of Chancery of the State
of Delaware. In each of the four actions, the plaintiff alleged, inter
alia, that the directors breached their fiduciary duties by rejecting the
previously announced unsolicited merger proposal made by Sonat Offshore
Drilling Inc. and by adopting the previously announced shareholder rights
plan. Each of the named plaintiffs in the four actions purported to be an
owner of the Company's Common Stock and sought to represent a class of
shareholders of the Company who are similarly situated. Each of the
plaintiffs sought injunctive relief, damages in unspecified amounts and
certain other relief, including costs and expenses. In March 1996, the
plaintiffs in each of the four actions voluntarily dismissed same on a
without prejudice basis, and the court entered orders accordingly.
The Company is involved in these and various other legal actions arising
in the normal course of business. After taking into consideration the
evaluation of such actions by counsel for the Company, management is of the
opinion that the outcome of all known and potential claims and litigation
will not have a material adverse effect on the Company's business or
consolidated financial position or results of operations.
Item 6(a). Exhibits
Exhibit 11 - Computation of Earnings Per Common Share, Primary and
Fully Diluted.
Exhibit 15 - Letter regarding unaudited interim financial information.
Exhibit 27 - Financial Data Schedule. (Exhibit 27 is being submitted as
an exhibit only in the electronic format of this Quarterly Report on
Form 10-Q being submitted to the Securities and Exchange Commission.)
Item 6(b). Reports on Form 8-K
There were five Current Reports on Form 8-K filed during the three
months ended March 31, 1996. A Current Report on Form 8-K was filed
January 16, 1996 disclosing the Company's receipt from Elf Exploration
Angola of an approximately 270 day contract for the "JIM CUNNINGHAM";
filed February 5, 1996 disclosing the Company's receipt of an 18 month
contract from Enron Oil & Gas India Ltd. for each of the jackup drilling
units "J.T. ANGEL" and "HARVEY H. WARD"; filed February 14, 1996
disclosing the Company's renaming of the "SONAT ARCADE FRONTIER" to the
"PAUL B. LOYD, JR." and the Company's fourth quarter and yearend 1995
earnings; filed February 20, 1996 disclosing the extension of the
previously announced contract with Elf Exploration Angola for the "JIM
CUNNINGHAM" to 360 days and filed February 29, 1996 disclosing the
formation of a joint venture, Total Offshore Production Systems (TOPS),
between Reading & Bates Development Co., a wholly owned subsidiary of
the Company, and INTEC Engineering, Inc.
SIGNATURE
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.
READING & BATES CORPORATION
Date: April 22, 1996 By /s/T. W. Nagle
-----------------------
T. W. Nagle
Executive Vice President,
Finance and Administration
(Principal Financial and
Accounting Officer)
EXHIBIT INDEX
Exhibit
Number Description
11 Computation of Earnings Per Common Share, Primary and Fully Diluted.
15 Letter re: unaudited interim financial information.
27 Financial Data Schedule. (Exhibit 27 is being submitted as an
exhibit only in the electronic format of this Quarterly Report on
Form 10-Q being submitted to the Securities and Exchange Commission.)
Exhibit 11
READING & BATES CORPORATION
AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER COMMON SHARE, PRIMARY AND FULLY DILUTED
(in thousands except share and per share amounts)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
-----------------------
1996 1995
---------- ----------
<S> <C> <C>
PRIMARY EARNINGS PER SHARE:
Weighted average number of common shares outstanding 61,966,020 59,713,311
========== ==========
Net income (loss) $ 13,472 $ (369)
Less dividends paid on $1.625 Convertible
Preferred Stock (1,213) (1,215)
---------- ----------
Adjusted net income (loss) applicable to common
shares outstanding - assuming no dilution $ 12,259 $ (1,584)
========== ==========
Net income (loss) per common share - assuming
no dilution $ .20 $ (.03)
========== ==========
FULLY DILUTED EARNINGS PER SHARE:*
Weighted average number of common shares outstanding 61,966,020 59,713,311
Assume conversion of securities:
$1.625 Convertible Preferred Stock 8,647,485 8,668,010
8% Senior Subordinated Convertible Debentures 823,631 783,686
8% Convertible Subordinated Debentures - 16,661
---------- ----------
Adjusted common shares outstanding - fully diluted 71,437,136 69,181,668
========== ==========
Adjusted net income (loss) applicable to common
shares outstanding - assuming no dilution $ 12,259 $ (1,584)
Adjustments:
Interest on 8% Senior Subordinated Convertible
Debentures 868 739
Interest on 8% Convertible Subordinated Debentures - 536
Dividends paid on $1.625 Convertible Preferred Stock 1,213 1,215
---------- ----------
Adjusted net income (loss) applicable to common
shares outstanding - assuming full dilution $ 14,340 $ 906
========== ==========
Net income (loss) per common share - assuming
full dilution (antidiluive) $ .20 $ .01
========== ==========
</TABLE>
* This calculation is submitted in accordance with Regulation S-K item
601(b)(11) although it is contrary to paragraph 40 of APB Opinion No. 15.
Exhibit 15
Reading & Bates Corporation
We are aware that Reading & Bates Corporation has incorporated by
reference in its Registration Statements No. 33-44237, No. 33-50828,
No. 33- 50565, 33-56029 and 33-62727 its Form 10-Q for the quarter ended
March 31, 1996, which includes our report dated April 12, 1996 covering
the unaudited interim financial information contained therein. Pursuant
to Regulation C of the Securities Act of 1933, that report is not
considered a part of the registration statement prepared or certified by
our firm or a report prepared or certified by our firm within the meaning
of Sections 7 and 11 of the Act.
Arthur Andersen LLP
Houston, Texas
April 22, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
financial statements of Reading & Bates Corporation for the 1st quarter ended
March 31, 1996 and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 30,166
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2,983
0
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<EPS-PRIMARY> .20
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</TABLE>
