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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K/A
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): September 19, 1997
CLIFFS DRILLING COMPANY
(Exact Name of Registrant as Specified in Its Charter)
DELAWARE
(State or Other Jurisdiction of Incorporation)
0-16703 76-0248934
(Commission File Number) (IRS Employer Identification No.)
1200 SMITH STREET, SUITE 300
HOUSTON, TEXAS 77002
(Address of Principal Executive Offices) (Zip Code)
(713) 651-9426
(Registrant's Telephone Number, Including Area Code)
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ITEM 5. OTHER EVENTS
On May 23, 1996, the Company completed the acquisition of 9 jack-up drilling
rigs and a 50% interest in a joint venture which owns an additional drilling
rig. In this report on Form 8-K, the Company is updating its unaudited pro
forma financial information with respect to this acquisition.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
On May 23, 1996, the Company completed the acquisition of 9 jack-up drilling
rigs and a 50% interest in the West Indies Drilling Joint Venture (the
"WINDJV"), a joint venture between Cliffs Drilling Trinidad Limited and Well
Services (Marine) Limited, which owns an additional jack-up drilling rig, and
their related assets (collectively referred to as the "Southwestern Rigs")
operated by Southwestern Offshore Corporation, a Delaware corporation
("Southwestern"). The purchase price of the Southwestern Rigs was (a) $103.8
million in cash (after reductions of $6.2 million for required refurbishments
of certain Southwestern Rigs not made prior to closing) plus (b) issuance of
1.2 million shares of the Company's Common Stock, before effects of the
Company's two-for-one stock split effected on June 9, 1997 ("Stock Split"), and
(c) assumption of certain contractual liabilities, including the Company's
guarantee of $4.25 million in indebtedness of the WINDJV to Citibank N.A.
related to the refurbishment of the jack-up drilling rig owned by it (together
with accrued but unpaid interest thereon and costs of collection).
The following unaudited pro forma financial information gives effect to the
acquisition of the Southwestern Rigs using the purchase method of accounting
given the related assumptions and adjustments, the offering of $150.0 million
of senior unsecured notes (the "Senior Notes") and the issuance of 1.2 million
shares of the Company's Common Stock, before effects of the Stock Split, valued
at an average price of $18.51 per share in connection with the acquisition of
the Southwestern Rigs.
The pro forma financial information for the twelve months ended December 31,
1996 was prepared assuming that the transactions described above were
consummated as of January 1, 1996. The pro forma financial information has been
prepared based upon assumptions deemed appropriate by the Company and may not
be indicative of actual results. The historical results of Southwestern include
the results of operations of the rigs that were available for service during
the period and are included with the Company's results beginning May 23, 1996.
<TABLE>
<CAPTION>
Historical Pro Forma
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Cliffs Southwestern Adjustments Combined
------------ -------------- ------------- ----------
(In thousands, except per share amounts)
<S> <C> <C> <C> <C> <C>
REVENUES . . . . . . . . . . . . . . . . $ 133,109 $ 14,723 $ (160) (a) $ 147,672
COSTS AND EXPENSES:
Operating Expenses . . . . . . . . . . . 91,984 14,717 (3,311) (b) 103,390
Depreciation, Depletion and Amortization 10,388 96 (96) (c) 12,853
2,465 (c)
General and Administrative . . . . . . . 6,300 799 0 7,099
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108,672 15,612 (942) 123,342
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OPERATING INCOME (LOSS) . . . . . . . . . 24,437 (889) 782 24,330
OTHER INCOME (EXPENSE):
Gain on Disposition of Assets . . . . . . 3,694 0 0 3,694
Interest Income . . . . . . . . . . . . . 2,725 0 0 2,725
Interest Expense . . . . . . . . . . . . (9,265) (233) (5,529) (d) (15,319)
(292) (e)
Other, net . . . . . . . . . . . . . . . (173) 0 0 (173)
------------ -------------- ------------- ----------
INCOME (LOSS) BEFORE INCOME TAXES . . . . 21,418 (1,122) (5,039) 15,257
INCOME TAX EXPENSE (BENEFIT) . . . . . . 6,996 0 (2,012) (f) 4,984
------------ -------------- ------------- ----------
NET INCOME (LOSS) . . . . . . . . . . . . 14,422 (1,122) (3,027) 10,273
DIVIDENDS APPLICABLE TO
PREFERRED STOCK . . . . . . . . . . . . . (31) 0 0 (31)
------------ -------------- ------------- ----------
NET INCOME (LOSS) APPLICABLE TO COMMON
AND COMMON EQUIVALENT SHARES . . . . . . $ 14,391 $ (1,122) $ (3,027) $ 10,242
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<TABLE>
<S> <C> <C> <C>
NET INCOME PER SHARE . . . . . . . . . . $ 1.04 $ 0.69 (g)
WEIGHTED AVERAGE NUMBER OF COMMON AND
COMMON EQUIVALENT SHARES OUTSTANDING . . 13,852 14,840 (g)
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</TABLE>
The unaudited Pro Forma Consolidated Financial Statements reflect
the following adjustments:
(a) To reverse management fee revenue applicable to activities of
Southwestern which were not part of the acquisition.
(b) To reverse charter hire expense applicable to activities of
Southwestern which were not part of the acquisition.
(c) To adjust depreciation expense for the Southwestern Rigs using the
purchase price allocated to each rig. Depreciation is calculated
over a 15 year life with an estimated salvage value of 10%. To
provide for any deterioration that may occur while the rigs are
not operating for an extended period of time, a minimum
depreciation charge is provided at a reduced rate of 25% of the
normal depreciation rate. Depreciation is suspended during
refurbishment periods.
(d) To record interest expense related to the $150 million Senior
Notes, at a rate of 10.25% per annum.
(e) To record the non-cash amortization of debt issue costs.
(f) To adjust income taxes as a result of pre-tax pro forma
adjustments to reflect a 35% effective tax rate.
(g) Earnings per share has been calculated based on the Company's
weighted average number of common and common equivalent shares
outstanding plus the number of shares of Common Stock issued in
connection with the acquisition of the Southwestern Rigs.
References to the weighted average number of common and common
equivalent shares outstanding and per share amounts have been
restated to reflect the Stock Split.
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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 hereunto duly authorized.
CLIFFS DRILLING COMPANY
Date September 19, 1997 By /s/ Edward A. Guthrie
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Edward A. Guthrie
Vice President - Finance
Date September 19, 1997 By /s/ Cindy B. Taylor
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Cindy B. Taylor
Vice President - Controller
