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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM 8-K/A
AMENDMENT NO. 1 TO
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): MAY 7, 1997
PRIDE INTERNATIONAL, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<CAPTION>
<S> <C> <C>
LOUISIANA 0-16961 76-0069030
(STATE OR OTHER JURISDICTION (COMMISSION FILE NUMBER) (I.R.S. EMPLOYER
OF INCORPORATION) IDENTIFICATION NO.)
</TABLE>
1500 CITY WEST BLVD., SUITE 400
HOUSTON, TEXAS 77042
(ADDRESS OF PRINCIPAL EXECUTIVE (ZIP CODE)
OFFICES)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: 713/789-1400
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<PAGE>
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On May 7, 1997, Pride Petroleum Services, Inc. (subsequently renamed Pride
International, Inc.)(the "Company") consummated the transaction contemplated by
the Asset Purchase Agreement, dated as of February 19, 1997, by and between the
Company and Noble Drilling Corporation, Noble Drilling (U.S.) Inc., Noble
Offshore Corporation, Noble Drilling (Mexico) Inc. and NN-1 Limited Partnership
(collectively, "Noble"), as amended, pursuant to which the Company acquired 12
mat-supported jackup rigs and the hull of an additional jackup rig (the "Noble
Rigs") from Noble for aggregate consideration of $268.8 million in cash, which
was negotiated at arms' length. The sellers had no material relationship with
the buyer.
The acquisition of the Noble Rigs was financed through a portion of the
proceeds from the sale by the Company of $325,000,000 principal amount of its 9
3/8% Senior Notes due 2007 (the "Notes Offering") and 4,391,505 shares of its
common stock, no par value (the "Common Stock Offering" and, together with the
Notes Offering, the "Offerings"), which was concluded on May 7, 1997.
The Noble Rigs are mobile, self-elevating drilling platforms, which Noble
used for contract drilling of offshore oil and gas wells. The Company intends to
continue to use the Noble Rigs in this manner.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
The following financial statements are included as part of this Current
Report:
(a) Mat-Supported Jackup Rig Operations of Noble Drilling Corporation
Report of Independent Accountants ................................ 2
Historical Statement of Revenues and Direct/Allocated Operating
Expenses for the Year Ended December 31, 1996 and the
Three Months Ended March 31, 1997 ........................... 3
Notes to Historical Statement of Revenues and Direct/Allocated
Operating Expenses .......................................... 4
(b) Pro Forma Financial Information
Unaudited Pro Forma and Pro Forma Combined Financial Statements . 7
Unaudited Pro Forma Combined Balance Sheet as of March 31, 1997 . 8
Unaudited Pro Forma and Pro Forma Combined Statement of
Operations for the Year Ended December 31, 1996 ............ 9
Unaudited Pro Forma and Pro Forma Combined Statement of
Operations for the Three Months Ended March 31, 1997 ....... 10
Notes to Unaudited Pro Forma and Pro Forma Combined Financial
Statements ................................................. 11
(c) Exhibits.
2.1 -- Asset Purchase Agreement, dated as of February 19,
1997, by and between Pride Petroleum Services, Inc.
and Noble Drilling Corporation, Noble Drilling (U.S.)
Inc., Noble Offshore Corporation, Noble Drilling
(Mexico) Inc. and NN-1 Limited Partnership
(incorporated by reference to Exhibit 10.19 of the
Company's Annual Report on Form 10-K for the year
ended December 31, 1996 (File No. 0-16961)).
2.2* -- First Amendment to Asset Purchase Agreement, dated as
of May 7, 1997, by and among Noble Drilling
Corporation, Noble Drilling (U.S.) Inc., Noble
Offshore Corporation, Noble Drilling (Mexico) Inc.,
NN-1 Limited Partnership and Mexico Drilling Partners
Inc., and Pride Petroleum Services, Inc., Pride
Offshore, Inc. and Forasol S.A.
------------
* Previously filed.
1
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of
Noble Drilling Corporation
We have audited the accompanying Historical Statement of Revenues and
Direct/Allocated Operating Expenses of the Mat-Supported Jackup Rigs of Noble
Drilling Corporation (the Company) for the year ended December 31, 1996. This
historical statement is the responsibility of the Company's management. Our
responsibility is to express an opinion on this historical statement based on
our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the historical statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the historical statement. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall presentation of the historical
statement. We believe that our audit provides a reasonable basis for our
opinion.
The accompanying historical statement was prepared for the purpose of
complying with the rules and regulations of the Securities and Exchange
Commission (SEC) for inclusion in the Form 8-K/A dated July 21, 1997 of Pride
Petroleum Services, Inc. as described in Note 1 and is not intended to be a
complete presentation of the Noble Drilling Corporation's Mat-Supported Jackup
Rigs' revenues and expenses.
In our opinion, the historical statement referred to above presents fairly,
in all material respects, the revenues and direct/allocated operating expenses
of the Mat-Supported Jackup Rigs of Noble Drilling Corporation as described in
Note 1 for the year ended December 31, 1996 in conformity with generally
accepted accounting principles.
PRICE WATERHOUSE LLP
Houston, Texas
July 18, 1997
2
<PAGE>
MAT-SUPPORTED JACKUP RIG OPERATIONS OF
NOBLE DRILLING CORPORATION
HISTORICAL STATEMENT OF REVENUES AND DIRECT/
ALLOCATED OPERATING EXPENSES
(IN THOUSANDS)
THREE MONTHS
YEAR ENDED ENDED MARCH
DECEMBER 31, 31,
1996 1997
(UNAUDITED)
Revenues:
Contract drilling revenues...... $ 68,747 $ 23,970
------------ --------------
Direct/allocated operating expenses:
Contract drilling costs......... 37,268 11,096
Depreciation and amortization... 7,960 1,967
Impairment expense.............. 10,200 --
Selling, general and
administrative expenses........ 6,863 1,983
Other operating expense......... 1,782 7
Minority interest............... (441) 362
------------ --------------
63,632 15,415
------------ --------------
Revenues less direct/allocated
operating expenses................. $ 5,115 $ 8,555
============ ==============
The accompanying notes are an integral part of this statement.
3
<PAGE>
MAT-SUPPORTED JACKUP RIGS OF NOBLE DRILLING CORPORATION
NOTES TO HISTORICAL STATEMENT OF
REVENUES AND DIRECT/ALLOCATED OPERATING EXPENSES
NOTE 1 -- BASIS OF PRESENTATION:
Pursuant to an agreement dated February 19, 1997, Pride Petroleum Services,
Inc. ("Pride") acquired the Mat-Supported Jackup Rigs (the "Acquired Rigs")
of Noble Drilling Corporation (Noble or the Company) for $268.8 million in cash,
consisting of the following wholly-owned, mat-supported jackup rigs: JIM BAWCOM,
JACK CLARK, CECIL FORBES, DUKE HINDS, W.T. JOHNSON, FRANK LAMAISON, CLIFF
MATTHEWS, RED MCCARTY, MAC MCCOY, FRANK REIGER, LINN RICHARDSON (hull only) and
MARVIN WINTERS. In addition, the Acquired Rigs include Noble's share of the
NN-1, a mat-supported jackup rig owned by NN-1 Limited Partnership, of which
Noble is the General Partner and has an approximate 90% interest. Except for
NN-1's operations, which are conducted in Africa, the Acquired Rigs' operations
are conducted in the Gulf of Mexico.
The Pride acquisition has been accounted for as a purchase and the results
of operations for the Acquired Rigs are included in Pride's results of
operations effective May 7, 1997.
The accompanying statement reflects the historical revenues and
direct/allocated operating expenses attributable to the Acquired Rigs for the
year ended December 31, 1996 and for the three months ended March 31, 1997. The
revenues and direct/allocated operating expenses for the three months ended
March 31, 1997 are not necessarily indicative of results to be expected for the
remainder of the year. Complete financial statements, including a balance sheet
and statement of cash flows, are not presented, as the Acquired Rigs were not
operated as or accounted for within a separate entity for the periods presented
in the accompanying historical statement. For purposes of preparing this
historical statement under generally accepted accounting principles, allocations
from certain Noble income statement accounts were made. These allocations,
including the allocation from Noble of direct and indirect corporate
administrative costs attributable to the Acquired Rigs, are considered
reasonable by management and were based principally on proportionate variables
such as revenues.
Because the accompanying statement reflects extensive transactions and
relationships with Noble, the terms of these transactions and relationships
might have been different had they been between wholly unrelated parties.
During the year ended December 31, 1996, certain of the Acquired Rigs were
involved in drilling arrangements with Triton Engineering Services,
Inc.(Triton), a Noble affiliate. Drilling revenues and contract drilling costs
associated with these Triton arrangements were as follows:
Year ended
December 31,
Rig 1996
--- ----------------------
Revenues Costs
----------------------
(in millions)
Jack Clark ........ $ 6.6 $ 3.6
Jim Bawcom ........ $ 7.8 $ 4.3
Red McCarty ....... $ 1.6 $ 0.9
W.T. Johnson ...... $ 1.3 $ 0.7
----- -----
Total ............. $17.3 $ 9.5
===== =====
In addition, the NN-1 recognized $2.1 million in revenues and $1.0 million in
related drilling costs working for Triton during the first quarter of 1997.
NOTE 2 -- SUMMARY OF SIGNIFICANT POLICIES:
CONTRACT DRILLING REVENUES
Drilling revenues are recognized as services are performed based upon
contracted dayrates and the number of operating days during the period.
CONTRACT DRILLING COSTS
Contract drilling costs include labor, repairs and maintenance, fuel
consumed and supplies utilized to operate and maintain the Acquired Rigs.
Total repair and maintenance expenses for the year and quarter ended
December 31, 1996 and March 31, 1997 were approximately $7.9 million and $2.0
million, respectively.
4
<PAGE>
MAT-SUPPORTED JACKUP RIGS OF NOBLE DRILLING CORPORATION
NOTES TO HISTORICAL STATEMENT OF
REVENUES AND DIRECT/ALLOCATED OPERATING EXPENSES -- (CONTINUED)
DEPRECIATION AND AMORTIZATION
Depreciation and amortization of property and equipment related to the
Acquired Rigs is calculated using the straight-line method over estimated useful
lives ranging from three to twenty-five years from the date of construction or
major refurbishment.
IMPAIRMENT
Effective January 1, 1996, the Company adopted Statement of Financial
Accounting Standards (SFAS) No. 121, ACCOUNTING FOR THE IMPAIRMENT OF LONG-LIVED
ASSETS AND FOR LONG-LIVED ASSETS TO BE DISPOSED OF. This statement requires that
long-lived assets and certain identifiable intangibles held and used by an
entity be reviewed for impairment whenever events or changes in circumstances
indicate that the carrying amount of an asset may not be recoverable. Impairment
is recorded based on an estimate of future discounted net cash flows.
In the fourth quarter of 1996, Noble reviewed the status of the NN-1. As of
December 31, 1996, the NN-1 had not been under contract since March 1993. Given
the strength of the international markets in 1996 and the expected continued
strength in 1997, coupled with the Parent's unsuccessful marketing efforts with
respect to the NN-1, full recoverability of the NN-1's carrying value was
considered doubtful. The Company considered expected future cash flows over the
remaining life of the rig and determined that the NN-1 was impaired.
Accordingly, an impairment charge of approximately $10.2 million (excluding a
$289,000 reduction for minority interest) was recorded in the fourth quarter of
1996.
An impairment write-down was not required on any of the other Acquired
Rigs.
OTHER OPERATING EXPENSES
Other operating expenses consist primarily of stacked costs, representing
labor, storage and other costs incurred to maintain rigs not under contract.
CAPITAL EXPENDITURES
The Company incurred capital expenditures on the Acquired Rigs totaling
approximately $5.0 million and $6.2 million during 1996 and the three months
ended March 31, 1997, respectively.
INCOME TAXES
Noble accounts for income taxes under SFAS No. 109, ACCOUNTING FOR INCOME
TAXES. The taxable income or loss attributable to the Acquired Rigs is included
in Noble's consolidated federal income tax return. No income tax provision has
been provided in the accompanying historical statement, as management considers
it impracticable to identify amounts attributable to the Acquired Rigs, which
were operated as individual assets during the periods presented herein.
EARNINGS PER SHARE
As described above, the Acquired Rigs were not operated as or accounted for
within a separate entity with its own capital structure but rather were
individual assets of Noble throughout the periods presented in the accompanying
historical statement. Therefore, earnings per share are not meaningful and,
accordingly, are not presented.
ESTIMATES, RISKS AND UNCERTAINTIES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of revenues and expenses during the
reporting period. While management believes its estimates are reasonable, actual
results could differ from those estimates.
5
<PAGE>
MAT-SUPPORTED JACKUP RIGS OF NOBLE DRILLING CORPORATION
NOTES TO HISTORICAL STATEMENT OF
REVENUES AND DIRECT/ALLOCATED OPERATING EXPENSES -- (CONTINUED)
Results of operations for the Acquired Rigs should be considered in light
of the potentially significant fluctuations in demand for services as rapid
changes in oil and gas producers' expectations, budgets and drilling plans
occur. These fluctuations can rapidly impact results of operations, as supply
and demand factors directly affect utilization and dayrates.
The Acquired Rigs' operations are subject to the many hazards inherent in
the drilling business, such as blowouts, cratering, fires and collisions, as
well as damage or loss from adverse weather and seas. The NN-1 is based in
Nigeria and is therefore subject to certain political, economic and other
uncertainties, including risk of war and civil disturbance, expropriation,
nationalization and other hazards arising from its area of operation.
Furthermore, industry-wide shortages of supplies, services, skilled personnel
and equipment necessary to conduct rig operations have occurred from time to
time in the past and may occur in future periods.
6
<PAGE>
UNAUDITED PRO FORMA AND PRO FORMA COMBINED FINANCIAL STATEMENTS
The following unaudited pro forma and pro forma combined financial
statements as of March 31, 1997 and for the three months ended March 31, 1997
and the year ended December 31, 1996 illustrate the effect of: (i) the
acquisition of Quitral-Co S.A.I.C. ("Quitral-Co") in April 1996 and the related
financing transactions, (ii) the divestiture of the Company's domestic
land-based well servicing operations in February 1997, (iii) the acquisition of
the operating subsidiaries of Forasol-Foramer N.V. (collectively, "Forasol") in
March 1997 and the related financing transactions and (iv) the conversion in the
first quarter of 1997 of $28.0 million aggregate principal amount of the
Company's convertible subordinated debentures into 2.3 million shares of Common
Stock and of the Offerings and the application of the net proceeds therefrom,
including the purchase of the Noble Rigs (collectively, the "Recent
Transactions"). The unaudited pro forma combined balance sheet has been prepared
assuming that such transactions were completed as of March 31, 1997. The
unaudited pro forma and pro forma combined statements of operations have been
prepared assuming that such transactions were completed as of January 1, 1996.
Of the Recent Transactions, the acquisition of Quitral-Co was completed on April
30, 1996, the sale of the Company's U.S. land-based well servicing operations
was completed on February 20, 1997, the acquisition of Forasol was completed on
March 10, 1997 and the conversion of $28.0 million principal amount of the
Company's convertible subordinated debentures occurred in several transactions
during the first quarter of 1997. The purchase of the Noble Rigs by the Company
was completed concurrently with the closing of the Offerings on May 7, 1997.
The historical results of operations for the Company have been derived from
the Company's consolidated financial statements, the historical results of
operations for Quitral-Co have been derived from Quitral-Co's consolidated
financial statements as adjusted for generally accepted accounting principles in
the United States ("U.S. GAAP") and have been translated into U.S. dollars in
accordance with U.S. GAAP, and the historical results of operations for Forasol
have been derived from Forasol's historical consolidated financial statements.
The historical results of operations attributable to the Noble Rigs have been
derived from Noble's historical financial statements and exclude the historical
minority interest provision (benefit), since the Company acquired 100% interest
in each of the Noble Rigs.
The pro forma adjustments and the resulting unaudited pro forma and pro
forma combined financial statements are based upon available information and
certain assumptions and estimates described in the Notes to Unaudited Pro Forma
and Pro Forma Combined Financial Statements. A final determination of required
purchase accounting adjustments, including the allocation of the purchase price
to the assets acquired and liabilities assumed based on their respective fair
values, has not yet been made. Accordingly, the purchase accounting adjustments
reflected in the pro forma information are preliminary and have been made solely
for purposes of developing such information. The Company's management believes,
however, that the pro forma adjustments and the underlying assumptions and
estimates reasonably present the significant effects of the transactions
reflected thereby and that any subsequent changes in the underlying assumptions
and estimates (other than changes after closing of the relevant transactions to
reflect cost savings resulting from the termination of redundant personnel)
will not materially affect the pro forma and pro forma combined financial
statements presented herein. The pro forma and pro forma combined financial
statements do not purport to represent what the Company's financial position or
results of operations actually would have been had the Recent Transactions
occurred on the dates indicated or to project the Company's financial position
or results of operations for any future date or period. Furthermore, the
unaudited pro forma and pro forma combined financial statements do not reflect
changes that may occur as the result of post-combination activities and other
matters.
The unaudited pro forma and pro forma combined financial statements and the
notes thereto should be read in conjunction with the historical financial
statements of the Company, including the notes thereto, the historical financial
statements of Forasol, including the notes thereto, and the historical financial
statements of Quitral-Co, including the notes thereto, all of which have been
included in previous filings made by the Company under the Securities Exchange
Act of 1934, as amended, and the historical financial statements for the Noble
Rigs, including the notes thereto, which are included elsewhere in this filing.
7
<PAGE>
UNAUDITED PRO FORMA COMBINED
BALANCE SHEET
AS OF MARCH 31, 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
PRO
PRIDE FORMA
HISTORICAL ADJUSTMENTS COMBINED
<S> <C> <C> <C>
CURRENT ASSETS
Cash and cash equivalents........ $ 35,442 $ 291,600 (V) $ 77,923
20,881 (X)
(270,000)(Z)
Short-term investments........... 247 247
Trade receivables, net........... 145,299 145,299
Parts and supplies............... 25,569 25,569
Deferred income taxes............ 2,414 2,414
Other current assets............. 31,489 31,489
---------- ----------
Total current assets.... 240,460 282,941
---------- ----------
PROPERTY AND EQUIPMENT, NET.......... 743,517 270,000(Z) 1,013,517
OTHER ASSETS
Investments in and advances to
affiliates..................... 9,586 9,586
Goodwill and other intangibles,
net............................ 2,689 2,689
Other............................ 12,689 8,400(V) 21,089
---------- ----------
Total other assets...... 24,964 33,364
---------- ----------
$1,008,941 $1,329,822
========== ==========
CURRENT LIABILITIES
Accounts payable................. $ 63,534 $ 63,534
Accrued expenses................. 109,330 109,330
Short-term borrowings............ 20,968 20,968
Current portion of long-term
debt........................... 40,257 $ (25,000)(V) 5,257
(10,000)(X)
Current portion of long-term
lease obligations.............. 4,851 4,851
---------- ----------
Total current
liabilities........... 238,940 203,563
---------- ----------
OTHER LONG-TERM LIABILITIES.......... 22,595 22,595
LONG-TERM DEBT, NET OF CURRENT
PORTION............................ 150,933 325,000(V) 435,933
(40,000)(X)
LONG-TERM LEASE OBLIGATIONS, NET OF
CURRENT PORTION.................... 30,663 30,663
CONVERTIBLE SUBORDINATED
DEBENTURES......................... 52,500 52,500
DEFERRED INCOME TAXES................ 52,173 52,173
MINORITY INTEREST.................... 1,761 1,761
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY
Common stock..................... 1 1
Paid-in capital.................. 343,666 70,881(X) 414,547
Treasury stock, at cost.......... (191) (191)
Retained earnings................ 115,900 115,900
---------- ----------
Total shareholders'
equity................ 459,376 530,257
---------- ----------
$1,008,941 $1,329,822
========== ==========
</TABLE>
The accompanying notes are an integral part of the pro forma and pro forma
combined financial statements.
8
<PAGE>
UNAUDITED PRO FORMA AND PRO FORMA COMBINED
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
NOBLE
PRIDE FORASOL PRO RIGS
HISTORICAL HISTORICAL ADJUSTMENTS FORMA HISTORICAL ADJUSTMENTS
<S> <C> <C> <C> <C> <C> <C>
REVENUES............................. $407,174 $199,471 $ 63,210 (A) $552,713 $ 68,747
(117,142)(P)
---------- ---------- -------- ----------
COSTS AND EXPENSES
Operating costs.................. 292,599 161,897 49,341 (A) 414,882 39,050
(88,955)(P)
Depreciation and amortization.... 29,065 23,945 3,797 (A) 54,220 18,160 $ (1,960)(AA)
80 (B)
2,800 (J)
(5,467)(P)
Selling, general and
administrative................. 45,368 18,490 3,831 (A) 54,048 6,863 (5,363)(BB)
(13,641)(P)
---------- ---------- -------- ----------
Total costs and
expenses............... 367,032 204,332 523,150 64,073
---------- ---------- -------- ----------
EARNINGS (LOSS) FROM OPERATIONS...... 40,142 (4,861) 29,563 4,674
==========
OTHER INCOME (EXPENSE)
Other income (expense)........... 1,902 1,148 (519)(A) 2,227
(304)(P)
Interest income.................. 2,410 2,310 322 (A) 4,167
(875)(C)
Interest expense................. (13,635) (10,048) (394)(A) (24,802) (25,534)(W)
(450)(D)
(1,920)(E)
(2,010)(K)
1,425 (L)
380 (P)
1,850 (S)
---------- ---------- --------
Total other expense,
net.................... (9,323) (6,590) (18,408)
---------- ---------- --------
EARNINGS (LOSS) BEFORE MINORITY
INTEREST AND INCOME TAXES.......... 30,819 (11,451) 11,155
MINORITY INTEREST.................... -- (825) (825)
---------- ---------- --------
EARNINGS (LOSS) BEFORE INCOME
TAXES.............................. 30,819 (10,626) 11,980
INCOME TAX PROVISION................. 8,091 354 360 (F) 4,356 (4,875)(CC)
(1,700)(M)
(3,415)(R)
666 (T)
---------- ---------- --------
NET EARNINGS (LOSS).................. $ 22,728 $(10,980) $ 7,624
========== ========== ========
NET EARNINGS (LOSS) PER SHARE
Primary.......................... $ .81 $ .18
========== ========
Fully diluted.................... $ .75
==========
WEIGHTED AVERAGE COMMON SHARES AND
EQUIVALENTS OUTSTANDING
Primary.......................... 28,198 11,099(N) 41,582 3,088(Y)
2,285(U)
========== ========
Fully diluted.................... 34,719 465(G) 46,283
11,099(N)
========== ========
</TABLE>
PRO
FORMA
COMBINED
REVENUES............................. $621,460
--------
COSTS AND EXPENSES
Operating costs.................. 453,932
Depreciation and amortization.... 70,420
Selling, general and
administrative................. 55,548
--------
Total costs and
expenses............... 579,900
--------
EARNINGS (LOSS) FROM OPERATIONS...... 41,560
OTHER INCOME (EXPENSE)
Other income (expense)........... 2,227
Interest income.................. 4,167
Interest expense................. (50,336)
--------
Total other expense,
net.................... (43,942)
--------
EARNINGS (LOSS) BEFORE MINORITY
INTEREST AND INCOME TAXES.......... (2,382)
MINORITY INTEREST.................... (825)
--------
EARNINGS (LOSS) BEFORE INCOME
TAXES.............................. (1,557)
INCOME TAX PROVISION................. (519)
--------
NET EARNINGS (LOSS).................. $(1,038)
========
NET EARNINGS (LOSS) PER SHARE
Primary.......................... $ (.02)
========
Fully diluted....................
WEIGHTED AVERAGE COMMON SHARES AND
EQUIVALENTS OUTSTANDING
Primary.......................... 44,670
========
Fully diluted....................
The accompanying notes are an integral part of the pro forma and pro forma
combined financial statements.
9
<PAGE>
UNAUDITED PRO FORMA AND PRO FORMA COMBINED
STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1997
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
NOBLE
PRIDE FORASOL PRO RIGS
HISTORICAL HISTORICAL ADJUSTMENTS FORMA HISTORICAL ADJUSTMENTS
<S> <C> <C> <C> <C> <C> <C>
REVENUES............................. $131,376 $ 40,689 $ (16,485)(P) $155,580 $ 23,970
---------- ---------- -------- ----------
COSTS AND EXPENSES
Operating costs.................. 91,087 28,584 (12,776)(P) 106,895 11,103
Depreciation and amortization.... 10,074 4,111 1,420 (J) 14,828 1,967 $ 2,083 (AA)
(777)(P)
Selling, general and
administrative................. 15,018 5,213 (2,274)(P) 17,957 1,983 (1,608)(BB)
---------- ---------- -------- ----------
Total costs and
expenses............... 116,179 37,908 139,680 15,053
---------- ---------- -------- ----------
EARNINGS (LOSS) FROM OPERATIONS...... 15,197 2,781 15,900 8,917
==========
OTHER INCOME (EXPENSE)
Other income (expense)........... 78,751 (765) (83,553)(Q) (4,302)
1,265 (P)
Interest income.................. 509 85 594
Interest expense................. (3,431) (1,060) (375)(K) (4,376) (6,383)(W)
90 (P)
400 (S)
---------- ---------- --------
Total other expense,
net.................... 75,829 (1,740) (8,084)
---------- ---------- --------
EARNINGS (LOSS) BEFORE MINORITY
INTEREST AND INCOME TAXES.......... 91,026 1,041 7,816
MINORITY INTEREST.................... 74 (148) (74)
---------- ---------- --------
EARNINGS (LOSS) BEFORE INCOME
TAXES.............................. 90,952 893 7,890
INCOME TAX PROVISION................. 33,458 121 (207)(M) 2,893 740(CC)
(30,623)(R)
144 (T)
---------- ---------- --------
NET EARNINGS (LOSS).................. $ 57,494 $ 772 $ 4,997
========== ========== ========
NET EARNINGS (LOSS) PER SHARE
Primary.......................... $ 1.72 $ .11
========== ========
Fully diluted.................... $ 1.46
==========
WEIGHTED AVERAGE COMMON SHARES AND
EQUIVALENTS OUTSTANDING
Primary.......................... 33,464 8,386(N) 43,841 3,088(Y)
1,991(U)
========== ========
Fully diluted.................... 39,745 8,386(N) 48,131
========== ========
</TABLE>
PRO
FORMA
COMBINED
--------
REVENUES............................. $179,550
--------
COSTS AND EXPENSES
Operating costs.................. 118,137
Depreciation and amortization.... 18,878
Selling, general and
administrative................. 18,332
--------
Total costs and
expenses............... 155,347
--------
EARNINGS (LOSS) FROM OPERATIONS...... 24,203
OTHER INCOME (EXPENSE)
Other income (expense)........... (4,302)
Interest income.................. 594
Interest expense................. (10,759)
--------
Total other expense,
net.................... (14,467)
--------
EARNINGS (LOSS) BEFORE MINORITY
INTEREST AND INCOME TAXES.......... 9,736
MINORITY INTEREST.................... (74)
--------
EARNINGS (LOSS) BEFORE INCOME
TAXES.............................. 9,810
INCOME TAX PROVISION................. 3,633
--------
NET EARNINGS (LOSS).................. $ 6,177
========
NET EARNINGS (LOSS) PER SHARE
Primary.......................... $ .13
========
Fully diluted....................
WEIGHTED AVERAGE COMMON SHARES AND
EQUIVALENTS OUTSTANDING
Primary.......................... 46,929
========
Fully diluted....................
The accompanying notes are an integral part of the pro forma and pro forma
combined financial statements.
10
<PAGE>
NOTES TO UNAUDITED PRO FORMA AND PRO FORMA
COMBINED FINANCIAL STATEMENTS
1. BACKGROUND
In April 1996, the Company acquired all of the outstanding capital stock of
Quitral-Co for aggregate consideration of $140.0 million, consisting of $110.0
million in cash and a note payable to the sellers for $30.0 million. The note
payable bears interest at a variable rate of LIBOR plus 2% per annum payable
quarterly. Payments of principal are being made in 30 monthly installments. Of
the cash portion of the purchase price, $70.0 million was funded from the
Company's working capital and $40.0 million from the net proceeds from two
long-term financing arrangements with three lending institutions. Borrowings
under these arrangements, which are collateralized by substantially all of the
Company's domestic offshore platform rig fleet and ancillary equipment, bear
interest at annual rates ranging from 7.95% to 8.50% and are repayable in
monthly installments of principal and interest over a period of five to six
years.
In January 1996, the Company completed the public sale of $80.5 million
principal amount of its convertible subordinated debentures, which resulted in
net proceeds to the Company of approximately $77.6 million. Such net proceeds
were used to fund various capital projects, including the acquisition of
Quitral-Co. During the first quarter of 1997, $28.0 million principal amount of
the convertible subordinated debentures was converted into 2.3 million shares of
Common Stock.
In February 1997, the Company sold substantially all of the assets used in
its U.S. land-based well servicing operations for $135.7 million in cash. After
federal and state income taxes of approximately $44.3 million, repayment of
approximately $3.9 million of indebtedness collateralized by certain of the
assets sold and prepayment of approximately $3.7 million of lease payments on
transferred assets subject to operating leases, the net proceeds to the Company
were approximately $83.8 million.
In March 1997, the Company completed the acquisition of Forasol for $113.2
million in cash and 11.1 million shares of Common Stock with a value of $172.4
million. Of the cash portion of the purchase price, $87.5 million was funded out
of working capital, including the net proceeds from the sale of the Company's
U.S. land-based well servicing operations, and $25.7 million was funded out of
net borrowings under the Company's senior credit facility (the "Credit
Facility"), which mature in March 2002 and bear interest at a variable rate,
currently 7.44%, based on either the prime rate or LIBOR.
In May 1997, the Company completed the public sale of $325.0 million
aggregate principal amount of its senior notes and 4.4 million shares of Common
Stock, which resulted in net proceeds to the Company of approximately $387.5
million. Approximately $75.0 million of such net proceeds were used to repay
certain indebtedness, and approximately $268.8 million were used to purchase the
Noble Rigs.
2. BASIS OF PRESENTATION
The accompanying unaudited pro forma combined balance sheet has been
prepared assuming that the Recent Transactions were consummated as of March 31,
1997. The accompanying unaudited pro forma and pro forma combined statements of
operations have been prepared assuming that such transactions were consummated
as of January 1, 1996.
Net earnings per share have been computed based on the weighted average
number of common shares and common share equivalents outstanding on a pro forma
and pro forma combined basis during the applicable period. Common share
equivalents include the number of shares issuable upon the exercise of stock
options and warrants, less the number of shares that could have been repurchased
with the exercise proceeds, using the treasury stock method. Fully diluted net
earnings per share have not been presented on a pro forma or pro forma combined
basis as the calculation is anti-dilutive.
3. MANAGEMENT ASSUMPTIONS
The unaudited pro forma and pro forma combined financial statements reflect
the following pro forma adjustments related to the acquisitions of Quitral-Co
and Forasol and the related financing transactions, the sale of the Company's
U.S. land-based well servicing operations, the conversion of $28.0 million
principal amount of the Company's convertible subordinated debentures, the
Offerings and the purchase of the Noble Rigs:
11
<PAGE>
NOTES TO UNAUDITED PRO FORMA AND PRO FORMA
COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
QUITRAL-CO ACQUISITION
(A) Operating results for Quitral-Co for the period in 1996 prior to the
acquisition by the Company, based on actual results for the period from January
1, 1996 through March 31, 1996 and estimated results for the month of April
1996. Prior to the acquisition by the Company in April 1996, the books and
records of Quitral-Co were maintained in constant Argentine pesos in accordance
with Argentine GAAP, which differs in certain respects from U.S. GAAP. Financial
information in U.S. dollars prepared in accordance with U.S. GAAP has been
prepared through March 31, 1996. However, such information is not available for
the period from March 31, 1996 through April 30, 1996, the date the acquisition
by the Company was consummated. Accordingly, management has estimated such
results for purposes of preparing the accompanying pro forma financial
information and believes that actual results would not be materially different.
(B) Increase in depreciation and amortization expense resulting from the
preliminary allocation of the purchase cost to the Quitral-Co assets acquired
and application of the Company's depreciation policies to such assets. Based on
a preliminary determination of the fair values of the assets and liabilities
acquired, approximately $161.4 million was allocated to property and equipment.
The pro forma adjustment to depreciation expense was based upon an estimated
salvage value of 10% and an estimated average remaining useful life of 12.5
years for the Quitral-Co assets.
(C) Reduction in historical interest income as a result of utilization of
$70.0 million in cash for the acquisition of Quitral-Co. Such cash amount
constituted a portion of the net proceeds from the issuance by the Company in
January 1996 of $80.5 million principal amount of the Company's convertible
subordinated debentures. Therefore, historical interest income on such cash
amount for the three months prior to the acquisition of Quitral-Co has been
reduced, based upon an approximate annual interest rate on investments during
the period of 5.0%.
(D) Increase in interest expense due to issuance and sale of $80.5 million
principal amount of the Company's convertible subordinated debentures. The pro
forma adjustment to interest expense relating to these financing transactions is
composed of the following:
YEAR ENDED
DECEMBER 31, 1996
(IN THOUSANDS)
Interest on convertible subordinated
debentures......................... $ 425
Amortization of deferred financing
costs.............................. 25
------
$ 450
======
(E) Increase in interest expense resulting from $40.0 million of net
borrowings pursuant to collateralized term loans entered into in connection with
the acquisition of Quitral-Co and the addition of a $30.0 million note payable
to the sellers. The pro forma adjustment to interest expense relating to these
financing transactions is composed of the following:
YEAR ENDED
DECEMBER 31, 1996
(IN THOUSANDS)
Collateralized term loans............ $ 1,170
Note payable to sellers.............. 750
--------
$ 1,920
========
The pro forma adjustment to interest expense relating to these financing
transactions is based upon interest rates of 8.75% per annum for the
collateralized term loans and 7.50% per annum for the note payable to sellers,
which were the approximate actual rates in effect during 1996 for each of these
loans. For each .25% change in the actual interest rates incurred on the
collateralized term loans and the note payable
12
<PAGE>
NOTES TO UNAUDITED PRO FORMA AND PRO FORMA
COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
to sellers, pro forma net earnings for the year ended December 31, 1996 would
change by approximately $64,000 and $48,000, respectively.
(F) Income tax effects of the pro forma adjustments included herein, based
on a combined U.S. federal and state income tax rate of 36%, an Argentine income
tax rate of 33% and a Venezuelan tax rate of 34%. Such rates approximate the
statutory rates in effect for the period.
(G) Increase in weighted average common shares and equivalents outstanding
for fully diluted earnings per share calculation purposes, due to issuance by
the Company of $80.5 million principal amount of its convertible subordinated
debentures, which are convertible at a price of $12.25 per share.
(H) Not used.
(I) Not used.
FORASOL ACQUISITION
(J) Increase in depreciation and amortization expense resulting from the
preliminary allocation of the purchase cost to the assets acquired and adoption
by Forasol of the Company's depreciation policies, based upon an estimated
salvage value of 10% and an estimated average remaining useful life of 12.5
years for the Forasol property and equipment.
(K) Increase in interest expense resulting from $25.7 million of net
borrowings under the Credit Facility. The pro forma adjustment to interest
expense is based on the variable rate of the Credit Facility, currently 7.44%.
For each .25% change in the current variable rate, pro forma net earnings for
the year ended December 31, 1996 would change by approximately $41,000.
(L) Reduction in interest expense resulting from use of a portion of the
net proceeds from Forasol's public offering of common shares in May 1996 to
repay indebtedness and liquidate capital lease obligations of Forasol. The
principal amounts extinguished and the related interest savings are as follows:
AMOUNT INTEREST
EXTINGUISHED SAVINGS RATE RANGE
(IN THOUSANDS)
Credit Facility...................... $20,840 $ 585 7.5%
Current portion of long-term debt.... 8,650 240 7.1% - 7.7%
Current portion of long-term lease
obligations........................ 3,210 100 6.4% - 8.6%
Long-term debt....................... 8,860 250 7.1% - 7.7%
Long-term lease obligations.......... 8,040 250 6.4% - 8.6%
------------- -------
Total........................... $49,600 $ 1,425
============= =======
Forasol operates in tax free jurisdictions (primarily Angola) and
approximately $1.3 million of the $1.4 million in pro forma annual savings
result from such tax jurisdictions.
(M) Income tax effects of the pro forma adjustments included herein, based
on a combined U.S. federal and state income tax rate of 36% and a French income
tax rate of 37%. Such rates approximate the statutory rates in effect for the
period.
(N) Estimated increase in weighted average common shares and equivalents
outstanding due to issuance of 11.1 million shares of Common Stock in connection
with the acquisition of Forasol.
SALE OF U.S. LAND-BASED WELL SERVICING OPERATIONS
(O) Not used.
(P) Elimination of the results of operations related to the assets of the
Company's U.S. land-based well servicing business which were sold.
(Q) Elimination of $83.5 million gain recognized during the first quarter
of 1997 on the sale of the Company's U.S. land-based well servicing operations.
13
<PAGE>
NOTES TO UNAUDITED PRO FORMA AND PRO FORMA
COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(R) Adjustment of income tax expense as follows:
THREE MONTHS
YEAR ENDED ENDED
DECEMBER 31, 1996 MARCH 31, 1997
(IN THOUSANDS)
Elimination of actual income tax
expense incurred by U.S. land-based
operations......................... $ (371) $ (102)
Income tax effects of pro forma
adjustments based on a combined
U.S. federal and state income tax
rate of 36%, which rate
approximates the combined statutory
rate in effect for the period...... (3,044) (30,521)
----------------- ------------
$(3,415) $(30,623)
================= ============
CONVERSION OF CONVERTIBLE SUBORDINATED DEBENTURES
(S) Decrease in interest expense due to the conversion of $28.0 million of
convertible subordinated debentures for 2,285,712 shares of Common Stock.
(T) Increase in federal and state income taxes as a result of the
conversion and based on a combined U.S. federal and state income tax rate of
36%.
(U) Increase of 2,285,712 primary shares of Common Stock outstanding as a
result of the conversion.
THE OFFERINGS
(V) Receipt of the assumed proceeds from the Notes Offering, net of
estimated issuance costs of $8.4 million, and application of a portion of the
proceeds to repay $25.0 million of indebtedness.
(W) Increased interest expense on the Notes, including amortization of
issuance costs, based on an assumed interest rate of 9 3/8%, less interest
expense on debt to be retired out of the net proceeds from the Offerings, as
follows:
THREE MONTHS
YEAR ENDED ENDED
DECEMBER 31, 1996 MARCH 31, 1997
(IN THOUSANDS)
Interest on the Notes................ $30,469 $7,617
Amortization of issuance costs....... 840 210
Interest on debt to be retired
Credit Facility................. (2,975) (744)
Other short-term debt........... (2,800) (700)
----------------- --------------
$25,534 $6,383
================= ==============
(X) Receipt of the assumed proceeds from the Common Stock Offering of
$74.7 million, net of estimated issuance costs of $3.8 million, and application
of a portion of the proceeds to repay $50.0 million of indebtedness.
(Y) Increased shares outstanding as a result of the Common Stock Offering.
For purposes of the pro forma combined statement of operations, shares are
assumed to be outstanding only to the extent that proceeds are applied to reduce
debt as follows:
AMOUNT
(IN THOUSANDS, EXCEPT
PER SHARE AMOUNT)
Debt repaid.......................... $50,000
Assumed offering price per share, net
of estimated issuance costs.......... $ 16.19
Assumed shares issued................ 3,088
14
<PAGE>
NOTES TO UNAUDITED PRO FORMA AND PRO FORMA
COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
NOBLE RIG PURCHASE
(Z) Purchase of the Noble Rigs for $268.8 million plus estimated
acquisition costs of $1.2 million.
(AA) Adjustment to depreciation expense resulting from the preliminary
allocation of purchase cost to the rigs acquired and application of the
Company's depreciation policies for such rigs. The pro forma combined adjustment
to depreciation expense was based on an estimated average salvage value of 10%
and an estimated average remaining useful life of 15 years.
(BB) To reduce selling, general and administrative expenses for corporate
allocations from the seller of the Noble Rigs, which costs will not be incurred
by the Company.
(CC) Net income tax benefit as a result of inclusion of the operating
results attributable to the Noble Rigs and the pro forma combined adjustments,
based on a combined U.S. federal and state income tax rate of 36%.
15
<PAGE>
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 HEREUNTO DULY AUTHORIZED.
PRIDE INTERNATIONAL, INC.
By: /s/ EARL McNIEL
EARL MCNIEL
VICE PRESIDENT AND CHIEF FINANCIAL
OFFICER
Date: July 21, 1997
16
