<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement / / Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
Marine Drilling Companies, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
- --------------------------------------------------------------------------------
(3) Filing Party:
- --------------------------------------------------------------------------------
(4) Date Filed:
- --------------------------------------------------------------------------------
<PAGE> 2
[LOGO]
MARINE DRILLING COMPANIES, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD AUGUST 17, 1995
To the Stockholders:
Notice is hereby given that the annual meeting of stockholders of
Marine Drilling Companies, Inc. ("the Company") will be held at the
Sweetwater Country Club, 4400 Palm Royale Blvd., in Sugar Land, Texas on
Thursday, August 17, 1995 at 9:00 a.m. for the following purposes:
1. To elect nine (9) directors.
2. To vote upon a proposal to adopt the Marine Drilling Companies,
Inc. 1995 Non-Employee Directors' Plan.
3. To ratify the Board of Directors' appointment of KPMG Peat
Marwick LLP, independent public accountants, as auditors for the
year ending December 31, 1995.
4. To transact such other business as may properly be brought
before the meeting or any adjournment(s) thereof.
Stockholders of record of the Company's Common Stock at the close of
business on July 14, 1995 will be entitled to notice of and to vote at the
meeting or any adjournment(s) thereof. A list of such stockholders will be
available at the time and place of the meeting and at the Company's offices,
One Sugar Creek Center Blvd., Suite 600, Sugar Land, Texas 77478-3556, during
the ten days preceding the meeting.
By Order of the Board of Directors,
Joan R. Smith
Secretary
Sugar Land, Texas
July 17, 1995
IT IS IMPORTANT THAT YOUR SHARES ARE REPRESENTED AT THE MEETING,
WHETHER OR NOT YOU ARE ABLE TO ATTEND PERSONALLY. ACCORDINGLY, YOU ARE
REQUESTED TO SIGN, DATE AND MAIL PROMPTLY THE ENCLOSED PROXY IN THE ENVELOPE
PROVIDED.
<PAGE> 3
PROXY STATEMENT
_______________
SOLICITATION AND REVOCABILITY OF PROXIES
This proxy statement is being furnished to the stockholders of Marine
Drilling Companies, Inc. (the "Company") in connection with the solicitation
of proxies by the Company's Board of Directors for use at the Annual Meeting of
Stockholders to be held at the Sweetwater Country Club, 4400 Palm Royale Blvd.,
in Sugar Land, Texas on Thursday, August 17, 1995 at 9:00 a.m. CDT and any
adjournment thereof. The approximate date on which this proxy statement and
the form of proxy are first being sent or given to stockholders of the Company
is July 17, 1995.
At the Annual Meeting, the holders of shares of common stock, par value
$.01 per share, of the Company (the "Common Stock") will be asked to consider
and vote upon (i) the election of nine persons to serve on the Board of
Directors of the Company, (ii) adoption of the Marine Drilling Companies, Inc.
1995 Non-Employee Directors' Plan, (iii) ratification of the Board of
Directors' appointment of KPMG Peat Marwick LLP as independent auditors for the
Company for fiscal year 1995, and (iv) to consider and take action upon such
other matters as may properly come before the Annual Meeting.
All shares of Common Stock represented at the Annual Meeting by
properly executed proxies received prior to or at the Annual Meeting, and not
revoked, will be voted at the Annual Meeting in accordance with the
instructions indicated on such proxies. If no instructions are indicated with
respect to any shares for which properly executed proxies have been received
and which are eligible to vote, such proxies will be voted FOR the Board of
Directors' nominees for directors, FOR adoption of the Marine Drilling
Companies, Inc. 1995 Non-Employee Directors' Plan, and FOR ratification of the
Board of Directors' appointment of KPMG Peat Marwick LLP as independent
auditors for fiscal year 1995. If any other matters are properly presented at
the Annual Meeting for action, the persons named in the proxies and acting
thereunder will have discretion to vote on such matters in accordance with
their best judgment as to the best interests of the Company. The Board of
Directors of the Company does not know of any other matters to be brought
before the Annual Meeting.
Any proxy given pursuant to this solicitation may be revoked by the
person giving it at any time before it is voted. Proxies may be revoked by any
of the following actions: (i) filing with the Secretary of the Company, at or
before the Annual Meeting, but in any event prior to the vote on the matter as
to which revocation is sought, a written notice of revocation bearing a later
date than the proxy; (ii) duly executing and submitting a subsequent proxy
relating to the Annual Meeting; or (iii) voting in person at the Annual Meeting
(although attendance at the Annual Meeting will not, in and of itself,
constitute a revocation of a proxy). Any written notice revoking a proxy
should be sent to the Secretary of the Company at the Company's principal
executive offices, One Sugar Creek Center Blvd., Suite 600, Sugar Land, Texas
77478-3556.
The close of business on July 14, 1995 was the date fixed by the Board
of Directors for the determination of stockholders of record entitled to notice
of and to vote at the Annual Meeting and any adjournment thereof. On July 14,
1995, the Company had 43,822,538 outstanding shares of Common Stock,
constituting the only class of stock outstanding. The holders of a majority of
the outstanding shares of Common Stock as of July 14, 1995, present in person
or represented by proxy and eligible to vote, will constitute a quorum at the
Annual Meeting. A list of such stockholders will be available at the time and
place of the meeting and at the Company's offices, One Sugar Creek Center
Blvd., Suite 600, Sugar Land, Texas 77478-3556, during the ten days preceding
the meeting.
1
<PAGE> 4
Each share of Common Stock is entitled to one vote at the Annual
Meeting with respect to each matter to be voted upon. The persons named in the
accompanying proxy will vote for the nominees named herein unless specifically
instructed to the contrary.
The Company's Annual Report for the year ended December 31, 1994, which
includes, among other things, the Company's audited consolidated balance sheets
at December 31, 1994 and 1993, respectively, and audited consolidated
statements of income and changes in financial position for each of the years
ended December 31, 1994, 1993 and 1992, respectively, will be mailed with this
Proxy Statement. Additional copies are available from the Company upon
request.
The cost of this solicitation will be borne by the Company. It is
expected that the solicitation of proxies will be primarily by mail, telephone
and telegraph. The Company has arranged for Morrow & Co., Inc., 909 Third
Avenue, 20th Floor, New York, New York 10022-4799 to solicit proxies in such
manner at a cost of $2,000, plus out-of-pocket expenses. Proxies may also be
solicited personally by directors, officers, and other regular employees of the
Company in the ordinary course of business and at nominal cost. Proxy
materials will be provided for distribution through brokers, custodians, and
other nominees or fiduciaries to beneficial holders of the Common Stock. The
Company expects to reimburse such parties for their reasonable out-of-pocket
expenses incurred in connection therewith.
2
<PAGE> 5
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information with respect to the shares
of Common Stock (the only class of securities of the Company) owned of record
and beneficially as of July 14, 1995, by (i) all persons who own of record or
are known by the Company to own beneficially more than 5% of the outstanding
shares of such class of stock, (ii) each current director of the Company, (iii)
each executive officer of the Company named in the Summary Compensation Table
included elsewhere herein and (iv) all directors and executive officers of the
Company as a group:
<TABLE>
<CAPTION>
COMMON STOCK
-------------------------------------
NUMBER PERCENTAGE
OF OF COMMON
STOCKHOLDER SHARES (1) STOCK OWNED
- ----------- ------------------ -----------
<S> <C> <C>
Warburg, Pincus Capital Company, L.P. (2) . . . . . . . . . 11,091,120 25.3%
466 Lexington Avenue
New York, NY 10017
Aeneas Venture Corporation . . . . . . . . . . . . . . . . 5,328,431 12.2%
600 Atlantic Avenue
Boston, MA 02210
FMR Corp. (3) . . . . . . . . . . . . . . . . . . . . . . . 5,132,900 11.7%
82 Devonshire Street
Boston, MA 02109
The Chase Manhattan Bank, N.A. . . . . . . . . . . . . . . 3,123,985 7.1%
One Chase Manhattan Plaza
New York, NY 10081
Capricorn Investors, L.P (4). . . . . . . . . . . . . . . . 2,537,726 5.8%
72 Cummings Point Road
Stamford, CT 06902
William O. Keyes (5) . . . . . . . . . . . . . . . . . . . 1,731,626 4.0%
William H. Flores (6) . . . . . . . . . . . . . . . . . . . 205,781 *
Howard H. Newman (7) . . . . . . . . . . . . . . . . . . . 11,091,120 25.3%
David E. Libowitz (8) . . . . . . . . . . . . . . . . . . . -- --
Christopher M. Linneman (9) . . . . . . . . . . . . . . . . -- --
Gerald T. Greak (10) . . . . . . . . . . . . . . . . . . . 144,423 *
Hugh L. Adkins (11) . . . . . . . . . . . . . . . . . . . . 116,175 *
Joan R. Smith (12) . . . . . . . . . . . . . . . . . . . . 43,382 *
Robert L. Barbanell (13) . . . . . . . . . . . . . . . . . 5,000 *
David A. B. Brown (14) . . . . . . . . . . . . . . . . . . -- *
Howard I. Bull (15) . . . . . . . . . . . . . . . . . . . . 4,620 *
Nathaniel A. Gregory (16) . . . . . . . . . . . . . . . . . 5,000 *
All executive officers and directors
as a group (12 persons) (17) . . . . . . . . . . . . . . . 13,347,127 30.5%
</TABLE>
- -----------------
* Less than one percent
(see notes on following page)
3
<PAGE> 6
Footnotes:
(1) Includes shares of Common Stock held by the Trustees of the Marine
Drilling Companies 401(k) Profit Sharing Plan for the accounts of
individuals as follows: Mr. Keyes -- 2,344 shares; Mr. Flores -- 2,235
shares; Mr. Greak -- 2,042 shares; Mr. Adkins -- 2,321 shares and Ms.
Smith -- 1,874 shares.
(2) The sole general partner of Warburg, Pincus Capital Company, L.P.
("Warburg") is Warburg, Pincus & Co., a New York general partnership
("WP"). Lionel I. Pincus is the managing partner of WP and may be
deemed to control it. E.M. Warburg, Pincus & Co., Inc. ("EMW"),
through a wholly-owned subsidiary, manages Warburg. WP owns all of the
outstanding stock of EMW and, as the sole general partner of Warburg,
has a 20% interest in the profits of Warburg. EMW owns 0.9% of the
limited partnership interests in Warburg. Howard H. Newman, a Director
of the Company nominated by Warburg, is a Managing Director of EMW and
is a general partner of WP. As such, Mr. Newman may be deemed to have
an indirect pecuniary interest (within the meaning of Rule 16a-1 under
the Securities and Exchange Act of 1934) in an indeterminate portion of
the shares beneficially owned by Warburg, WP and EMW. David E.
Libowitz, a Director of the Company, is an officer of a wholly-owned
subsidiary of EMW. He serves on the Company's Board of Directors as a
nominee of Warburg, and disclaims beneficial ownership of the stock of
the Company owned by Warburg. See Notes (7) and (8) below. See
"Shareholders' Agreement" included as part of this Item 1.
(3) Based on a Schedule 13G filed by FMR Corp. on February 13, 1995. Such
Schedule 13G indicates that Fidelity Management & Research Company, a
wholly-owned subsidiary of FMR Corp., is the beneficial owner of
611,300 shares as a result of acting as advisor to several investment
companies and that Fidelity Management Trust Company, a wholly-owned
subsidiary of FMR Corp., is the beneficial owner of 611,300 shares as a
result of its serving as investment manager of institutional accounts.
Edward C. Johnson 3rd, Chairman of FMR Corp., and Abigail P. Johnson
each own 24.9% of the outstanding voting common stock of FMR Corp.
(4) The general partner of Capricorn Investors, L.P. ("Capricorn") is
Capricorn Holdings, G.P., the general partner of which is Winokur
Holdings, Inc. Mr. Herbert S. Winokur, Jr. is the President and sole
shareholder of Winokur Holdings, Inc.
(5) Mr. Keyes is Chairman of the Board, Chief Executive Officer, President
and Director of the Company. Mr. Keyes holds options to purchase
300,000 shares of Common Stock under the Company's 1992 Long Term
Incentive Plan, and as of July 14, 1995, no shares were exercisable
within sixty (60) days.
(6) Mr. Flores is a Director, Senior Vice President and Chief Financial
Officer of the Company. Mr. Flores holds options to purchase 400,000
shares of Common Stock under the Company's 1992 Long Term Incentive
Plan, and as of July 14, 1995, 100,000 shares were exercisable within
sixty (60) days.
(7) Mr. Newman is a Director of the Company. All of the shares indicated
as owned by Mr. Newman are owned directly by Warburg and are included
because of Mr. Newman's affiliation with Warburg. Mr. Newman disclaims
"beneficial ownership" of these shares within the meaning of Rule
13d-3 under the Securities Exchange Act of 1934. See Note (2) above.
(8) Mr. Libowitz is a Director of the Company. Mr. Libowitz is an officer
of a wholly-owned subsidiary of EMW. He serves on the Company's Board
of Directors as a nominee of Warburg, and disclaims beneficial
ownership of the stock of the Company owned by Warburg. See Note (2)
above.
(notes continued on following page)
4
<PAGE> 7
Footnotes (continued) --
(9) Mr. Linneman, a Managing Director of Chemical Securities Inc., is a
Director of the Company. Mr. Linneman served as Warburg's
representative to the Company's Board of Directors until July 20, 1994
pursuant to a shareholders' agreement. See "Shareholders' Agreement"
included as part of this Item 1. Mr. Linneman was an officer of a
wholly-owned subsidiary of EMW until April 1994. See Note (2) above.
(10) Mr. Greak is Senior Vice President--Engineering of the Company. Mr.
Greak holds options to purchase 301,800 shares of Common Stock under
the Company's 1992 Long Term Incentive Plan, and as of July 14, 1995,
139,300 shares were exercisable within sixty (60) days which are
included in such amount.
(11) Mr. Adkins is Senior Vice President and Operations Manager of the
Company. Mr. Adkins holds options to purchase 300,520 shares of Common
Stock under the Company's 1992 Long Term Incentive Plan, and as of July
14, 1995, 113,020 shares were exercisable within sixty (60) days which
are included in such amount.
(12) Ms. Smith is Vice President, Controller and Secretary of the Company.
Ms. Smith holds options to purchase 121,250 shares of Common Stock
under the Company's 1992 Long Term Incentive Plan, and as of July 14,
1995, 38,750 shares were exercisable within sixty (60) days.
(13) Robert L. Barbanell has been a Director of the Company since June 23,
1995.
(14) David A. B. Brown has been a Director of the Company since June 23,
1995.
(15) Howard I. Bull has been a Director of the Company since June 23, 1995.
(16) Mr. Gregory has been a Director of the Company since June 23, 1995.
All of the shares indicated as owned by Mr. Gregory are owned directly
by The Gregory Family Foundation, a tax-exempt charitable foundation,
of which Mr. Gregory is President.
(17) Included are the shares owned by Warburg with which Messrs. Newman and
Libowitz are associated and 391,070 option shares owned by the
executive officers which are exercisable within sixty (60) days of the
date of July 14, 1995.
5
<PAGE> 8
ITEM 1 - ELECTION OF DIRECTORS
The Company's Board of Directors currently consists of nine directors.
Nine directors will be elected at the 1995 Annual Meeting of Stockholders to
serve until the next Annual Meeting of Stockholders or until the election and
qualification of their respective successors.
It is intended that the proxies received from holders of the Company's
Common Stock, in the absence of contrary instructions, will be voted at the
1995 Annual Meeting for the election of the nominees for director whose names
are set forth below. Although the Company does not contemplate that any of the
nominees will be unable to serve, decline to serve, or otherwise be unavailable
as a nominee at the time of the Annual Meeting, in such event the proxies will
be voted in accordance with the authority granted in the proxies for such other
candidate or candidates as may be nominated by the Board of Directors. Each of
the nominees named below has consented to being named in this proxy statement
and to serve if elected.
The affirmative vote of the holders of a majority of the shares of
Common Stock represented in person or by proxy and entitled to vote at the
Annual Meeting is required for the election of directors. Under Texas law, an
abstention would have the same legal effect as a vote against a director, but a
broker non-vote would not be counted for purposes of determining whether a
majority had been achieved. Shareholders may not cumulate their votes in the
election of directors.
Pursuant to the Shareholders' Agreement discussed below, Warburg has
nominated for election as directors Howard H. Newman and David E. Libowitz.
SHAREHOLDERS' AGREEMENT
Under a shareholders' agreement ("the Shareholders' Agreement")
entered into in connection with the Company's reorganization and
recapitalization in 1992 and early 1993 (the "Recapitalization"), Warburg has
the right to designate one director nominee so long as the shares owned by it
equal or exceed 5% of the outstanding Common Stock, and the right to designate
an additional nominee (for a total of two) so long as the shares then owned by
it equals or exceeds 15% of the Company's outstanding Common Stock.
NOMINEES FOR DIRECTOR
The following table sets forth certain information as of July 17, 1995
for each nominee for director, including his name, age, position with the
Company, and the year he became a director of the Company.
<TABLE>
<CAPTION>
Director
Name Age Position with the Company Since
------------------------------- --- ----------------------------------------- -------
<S> <C> <C> <C>
Robert L. Barbanell . . . . . . 65 Director 1995
David A. B. Brown . . . . . . . 51 Director 1995
Howard I. Bull . . . . . . . . 55 Director 1995
William H. Flores . . . . . . . 41 Senior Vice President, Chief Financial
Officer, Assistant Secretary and Director 1990
Nathaniel A. Gregory . . . . . 46 Director 1995
William O. Keyes . . . . . . . 66 Chairman of the Board, President,
Chief Executive Officer and Director 1990
David E. Libowitz . . . . . . . 32 Director 1994
Christopher M. Linneman . . . . 35 Director 1994
Howard H. Newman . . . . . . . 48 Director 1987
</TABLE>
6
<PAGE> 9
Robert L. Barbanell has been a Director of the Company since June 1995.
Mr. Barbanell has served as President of Robert L. Barbanell Associates, Inc.,
a financial consultant firm since July 1994. Mr. Barbanell was employed by
Bankers Trust New York Corporation from June 1986 to June 1994 as Managing
Director and from December 1981 to June 1986 as Senior Vice President. He is
also a Director of Cantel Industries, Inc.
David A. B. Brown has been a Director of the Company since June 1995.
Mr. Brown has served as President of The Windsor Group, Inc., a strategy
consulting firm, since 1984. Prior thereto, Mr. Brown was a partner of the
Braxton Group, a strategy consulting firm. He also served as Chairman of the
Board of the Comstock Group from 1988 to 1990. Mr. Brown is a Director of B.
J. Services, Inc., BTU International and EMCOR Corp.
Howard I. Bull has been a Director of the Company since June 1995. Mr.
Bull has served as President, Director and Chief Executive Officer of Dal-Tile,
a manufacturer and distributor of ceramic tile, since February 1994. Prior
thereto, Mr. Bull served as President of the Air Conditioning Business Group of
York International Corporation ("York") from May 1992 to February 1993 and as
the President of the York Applied Systems Division of York from January 1990 to
May 1992. From February 1979 to November 1990, Mr. Bull was employed by Baker
Hughes, Inc. in several executive positions.
William H. Flores has been Senior Vice President, Chief Financial
Officer, Assistant Secretary and Director since March 1990. Prior thereto, Mr.
Flores served as Vice President--Finance for Keyes Offshore, Inc. since
December 1986.
Nathaniel A. Gregory has been a Director of the Company since June
1995. Mr. Gregory has served as Chairman and Chief Executive Officer of
National Tank Company (Natco) since April 1993. Prior thereto, Mr. Gregory
served as a Managing Director of Smith Barney from September 1991 to April
1993. Prior thereto, he served as Chief Executive Officer of WillBros. Company
from January to May 1990.
William O. Keyes, a Director since March 1990, has been Chairman of the
Board, President and Chief Executive Officer of the Company since December
1991. He served as Vice Chairman of the Board and Senior Vice President of the
Company from March 1990 to December 1991. Prior thereto, Mr. Keyes served as
sole director, sole shareholder and President of Keyes Offshore, Inc. since its
organization in October 1977.
David E. Libowitz has been a Director of the Company since 1994. Mr.
Libowitz has served as a Vice President of Warburg, Pincus Ventures, Inc., the
venture banking subsidiary of E.M. Warburg, Pincus & Co., Inc., since January
1995 and has been associated with E. M. Warburg, Pincus & Co., Inc. since 1991.
Prior thereto, he served as Investment Manager for Equitable Capital Management
Corporation from July 1989 to June 1991.
Christopher M. Linneman has been a Director of the Company since 1994.
Mr. Linneman has served as Managing Director of Chemical Securities Inc. since
May 1994. Prior thereto, he served as a Vice President of E. M. Warburg,
Pincus & Co., Inc. from January 1992 to April 1994, and as an Associate thereof
from April 1990 to December 1991.
Howard H. Newman has been a Director of the Company since 1987. Mr.
Newman has served as Managing Director of E.M. Warburg, Pincus & Co., Inc.
since 1987. He is also a Director of ADVO, Inc., Comcast UK Cable Partners
Limited, Newfield Exploration Company and RenaissanceRe Holdings Ltd.
7
<PAGE> 10
BOARD OF DIRECTORS AND COMMITTEES
The Company's Board of Directors currently has nine members. During
1994, the Board of Directors held thirty-two meetings. No decisions made by
the Board of Directors were formalized during 1994 through the execution of a
unanimous written consent. The Board has two standing committees which are
discussed below: (i) the Personnel and Compensation Committee and (ii) the
Audit Committee; however, the Board does not have a nominating committee.
PERSONNEL AND COMPENSATION COMMITTEE--The Personnel and Compensation
Committee of the Board of Directors of the Company (the "Compensation
Committee") currently consists of one member, Christopher M. Linneman.
Herbert S. Winokur, Jr. was also a member of this committee until his
resignation from the Board of Directors in June 1995. The Company expects to
appoint additional members to this committee at the first Board of Directors
meeting to be held following the 1995 Annual Shareholders Meeting. The purpose
of the Compensation Committee is to ensure that the Company has a broad plan of
executive compensation that is competitive and motivating to the degree that it
will attract, hold and inspire performance of managerial and other key
personnel thereby enhancing the growth and profitability of the Company.
During 1994, the Compensation Committee held five meetings.
AUDIT COMMITTEE--The Company's Audit Committee currently consists of
two members: Christopher M. Linneman and David E. Libowitz. The functions of
the Audit Committee include reviewing and examining monthly detailed reports
submitted by the Chief Financial Officer of the Company, evaluating internal
controls and recommending the engagement and continuation of independent
auditors. During 1994, the Audit Committee held four meetings.
DIRECTOR COMPENSATION AND EXPENSES
During 1994, no fees were paid to directors who were not employees of
the Company or its subsidiaries, other than reimbursement of reasonable travel
and other expenses incurred while attending any meeting of the Board of
Directors.
Effective June 23, 1995, the Company's non-employee directors are paid
a $12,000 annual cash retainer plus a cash payment of $500 per board meeting
attended (whether by teleconference or otherwise) and a payment of $250 per
committee meeting attended (whether by teleconference or otherwise). In
addition, on June 23, 1995 the Board of Directors approved the 1995
Non-Employee Directors' Plan (the "Directors' Plan"), subject to approval by
the Company's stockholders at the Annual Meeting. The Directors' Plan
generally provides that each non-employee director will be entitled to an
initial option to purchase 10,000 shares of the Company's Common Stock upon a
non-employee director's initial election to the Board of Directors (or
effectiveness of the Directors' Plan), and an option to purchase 2,500 shares
of the Company's Common Stock upon each successive election to the board of
directors. In addition, the Directors' Plan provides semi-annual awards to
each non-employee director of a number of shares of the Company's Common Stock
having a market value of $6,000. See Item 2 - Adoption of Proposed 1995
Non-Employee Directors' Plan for a more complete description of the Directors'
Plan.
From May 4, 1994 through June 22, 1995, Mr. Christopher M. Linneman was
the only director of the Company who was neither a member of management nor
affiliated with a major stockholder of the Company. The Board of Directors has
approved a special payment to Mr. Linneman in consideration of his services as
a director of the Company from May 4, 1994 through the Annual Meeting. This
payment shall be made in cash and will be calculated based on the meetings
attended and teleconferences in which he participated as if the compensation
arrangements for directors described herein had been in effect as of May 4,
1994 and by converting all amounts which would have been payable through the
issuance of Common Stock into a cash equivalent. At the present time, the
expected amount of this payment is approximately $36,000 and will be payable at
the Annual Meeting.
8
<PAGE> 11
EXECUTIVE COMPENSATION AND RELATED MATTERS
The following table sets forth information with respect to the five
executive officers of the Company:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
------------------------------------- ----------------------
AWARDS
-----------
OTHER SECURITIES ALL OTHER
ANNUAL UNDERLYING COMPEN-
NAME AND COMPEN- STOCK LTIP SATION
PRINCIPAL POSITION YEAR SALARY BONUS SATION OPTIONS PAYOUTS (1)
- -------------------- ---- ---------- ----------- ---------- ------------ ------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
William O. Keyes 1994 $180,000 $ 65,000 $ -- -- $ -- $20,340
Director, Chairman 1993 165,000 2,000,000 -- -- -- 16,186
of the Board, 1992 165,000 100,000 -- 400,000 -- 7,166
President & CEO
William H. Flores 1994 140,016 44,500 -- -- -- 7,756
Director, SVP, 1993 130,008 2,000,000 -- -- -- 9,751
CFO & Asst. Secr. 1992 130,008 100,000 -- 402,400 -- 731
Gerald T. Greak 1994 126,432 15,000 -- -- -- 9,722
SVP--Engineering 1993 120,400 169,199 -- 75,000 -- 11,317
1992 120,400 20,000 -- 201,800 -- 2,233
Hugh L. Adkins 1994 115,032 17,250 -- -- -- 9,179
SVP/Operations Mgr. 1993 100,000 199,499 -- 75,000 -- 8,404
1992 95,833 15,000 -- 150,520 -- 1,073
Joan R. Smith (2) 1994 85,224 14,000 -- -- -- 5,363
VP/Controller/Secr. 1993 80,640 197,352 -- 40,000 -- 6,780
</TABLE>
- ---------------
Footnotes:
(1) "All Other Compensation" includes the value of group life insurance
benefits provided on behalf of each respective executive officer, and
benefits related to the Marine Drilling Companies 401(k) Profit Sharing
Plan including (i) the value of the Company's matching contributions up
to 5% of qualified compensation and (ii) the value of forfeitures
allocated to each individual's account. The amounts reported are set
forth in detail below:
<TABLE>
<CAPTION>
Life 401(k)
Name Year Insurance Plan
------------------ ---- --------- ----------
<S> <C> <C> <C>
William O. Keyes 1994 $ 11,340 $ 9,000
1993 6,950 9,236
1992 6,950 216
William H. Flores 1994 755 7,001
1993 515 9,236
1992 515 216
Gerald T. Greak 1994 1,895 7,827
1993 2,081 9,236
1992 2,081 152
Hugh L. Adkins 1994 1,027 8,152
1993 1,044 7,360
1992 935 138
Joan R. Smith 1994 272 5,091
1993 319 6,461
</TABLE>
(notes continued on following page)
9
<PAGE> 12
Footnotes (continued) --
(2) In accordance with the rules on executive compensation disclosure
adopted by the SEC, Ms. Smith's compensation is not shown for years
prior to 1993, which was the year during which she first became an
executive officer.
OTHER MATTERS
The Company has adopted an executive severance policy covering six of
its officers, including each of the named executive officers, providing for
severance consideration of one year's base pay and continuation of certain
employee benefits. These amounts and benefits are payable upon termination of
employment of such executive other than (i) a termination by the Company for
cause (as defined in the policy), (ii) a termination by the executive without
cause (as provided in the policy) or (iii) the death or disability of the
executive. The covered executive is entitled to such amount and benefit if he
resigns within 30 days of the discontinuance of this policy or a reduction in
the economic benefits provided therein within one year after occurrence of a
change of control of the Company as defined in the Marine Drilling 1992
Long-Term Incentive Plan.
STOCK OPTIONS
No stock options were granted to any named executive officer in 1994.
The following table sets forth information with respect to each named executive
officer concerning the exercise of options during the last fiscal year and the
number of shares covered by all exercisable and non-exercisable stock options
held by the named executive officers at the end of the fiscal year.
AGGREGATED 1994 OPTION EXERCISES
AND YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
OPTIONS EXERCISED
--------------------------- VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY OPTIONS
SHARES OPTIONS AT 12/31/94 AT 12/31/94 (1)
ACQUIRED VALUE -------------------------- ---------------------------
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
William O. Keyes . . . -- -- 100,000 200,000 $ 175,000 $ 350,000
William H. Flores . . . -- -- 100,000 200,000 175,000 350,000
Gerald T. Greak . . . . -- -- 120,550 156,250 178,150 175,000
Hugh L. Adkins . . . . -- -- 94,270 131,250 132,160 131,250
Joan R. Smith . . . . . -- -- 28,750 67,500 32,813 65,625
</TABLE>
(1) This valuation represents the difference between $3.00, the closing price
of the Common Stock on the Nasdaq Stock Market on December 30, 1994 and the
exercise prices of the stock options.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The directors and officers of the Company have no interlocking
relationships with the compensation committees (or their equivalent) of any
other entity.
10
<PAGE> 13
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange
Act") requires the Company's directors and executive officers, and persons who
own more than ten percent of a registered class of the Company's equity
securities, to file by specific dates with the Securities and Exchange
Commission ("SEC") initial reports of ownership and reports of changes in
ownership of Common Stock and other equity securities of the Company.
Officers, directors and greater than ten percent stockholders are required by
SEC regulation to furnish the Company with copies of all Section 16(a) forms
they file. The Company is required to report in this proxy statement any
failure to file by the relevant due date any of these reports during the
preceding fiscal year.
To the Company's knowledge, based solely on review of the copies of
such reports furnished to the Company and written representations that no other
reports were required, during the fiscal year ended December 31, 1994, all
Section 16(a) filing requirements applicable to the Company's officers,
directors and greater than ten percent beneficial owners were timely satisfied
except as follows:
. W. Thomas Adams, a former Vice President of the Company, failed to
timely report his election as an officer of the Company on October
10, 1994. His election was later reported on Form 3 filed February
10, 1995.
11
<PAGE> 14
PERSONNEL AND COMPENSATION COMMITTEE REPORT
REGARDING EXECUTIVE COMPENSATION
COMPENSATION POLICY REGARDING EXECUTIVE OFFICERS
The Compensation Committee is responsible for the design of the
Company's compensation and incentive programs. The Compensation Committee is
composed of the undersigned individual who is a non-officer director. The
Compensation Committee's goal is to develop and implement compensation and
incentive programs which cause the Company's officers and employees to focus on
increasing shareholder value as well as retaining and motivating employees who
are capable of furthering that goal.
The Compensation Committee has established a three-part program with
respect to employee compensation. The first component involves providing base
salaries which approximate the average for companies comprising the offshore
contract drilling industry. The Compensation Committee did not conduct a
formal review in this regard in establishing base salaries for 1994; however,
it believes that the Company's base salaries generally fell within this range.
The second and third components were developed through the design of the Marine
Drilling 1992 Long Term Incentive Plan (the "Plan"). The second component
provides for the payment of performance bonuses which are based upon (i) the
Company's achievement of certain goals with respect to its safety record, its
financial performance and its operational performance, (ii) each individual
employee's performance in furtherance of those goals, and (iii) each employee's
achievement of individual objectives (as applicable). With respect to the
establishment of compensation for each executive officer, the Compensation
Committee considers an individual's past performance and skills, as well as the
individual's ability to enhance shareholder value.
During 1994, the Company's executives received bonuses which reflected
their individual attainment of goals as described in (ii) and (iii) above, as
well as the Company's attainment of its operational and safety goals. The
Company did not fully achieve its financial goals in 1994, therefore, the
bonuses awarded were reduced. The third component provides for the grant of
long term equity-based incentives through the utilization of stock options,
restricted stock and stock appreciation rights. From time to time, the Company
awards stock options to its executives to maintain a continuing emphasis on
increasing shareholder value. No stock options were awarded in 1994, however,
in early 1995, the Company awarded options for 325,000 shares of Common Stock
to the executives named herein.
At the Compensation Committee's recommendation, the Company modified
the base salary and bonus components of its compensation program for 1995.
Base salaries were set at levels which approximate the average for energy
service companies of similar size based upon a formal outside review conducted
in late 1994. In addition, the Company has modified its bonus program for
1995. Bonuses are now based upon the Company's financial performance as
compared to a peer group of publicly traded offshore drilling companies. For
this purpose, the financial performance of each company will be determined by
calculating the amount of each company's earnings before interest,
depreciation, amortization and taxes ("EBITDA") as a percentage of revenues.
The respective percentages of each company will then be ranked and converted to
a percentile format. The Company must achieve a percentile ranking of 50% for
bonuses to be awarded. At that level, bonuses equal to twelve percent (12%) of
base salary would be awarded. The maximum bonus amount awarded under this
program is equal to 50% of base salary and is payable if the Company's
financial performance is in the 90th percentile or better. Additional bonus
amounts may be payable for extraordinary individual performance.
12
<PAGE> 15
The Omnibus Budget Reconciliation Act of 1993 (the "Act") imposes a
limit of $1 million on the amount that a publicly held corporation may deduct
in any year for the compensation paid or accrued with respect to each of its
five most highly compensated officers, subject to certain exceptions. None of
the Company's executive officers currently receives compensation exceeding the
limits imposed by the Act. While the Compensation Committee cannot predict
with certainty how the Company's executive compensation might be affected in
the future by the Act or regulations issued thereunder, the Compensation
Committee intends to try to preserve the tax deductibility of all executive
compensation while maintaining the Company's executive compensation program as
described in this report.
DISCUSSION REGARDING COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
The Compensation Committee has established the 1995 base salary of the
Company's Chief Executive Officer, $200,016, at a level which it believes is
approximately average for companies of comparable size in the offshore drilling
industry. In 1992, the Company granted Mr. Keyes a stock option of significant
size, 400,000 shares, which its believes will maintain a close alignment
between Mr. Keyes' performance and the shareholder value of the Company. Mr.
Keyes will be eligible for a performance bonus in 1995 pursuant to the Plan in
an amount up to 50% of his base salary as determined by the Company's
attainment of certain financial objectives. The Compensation Committee
believes that Mr. Keyes' experience, reputation, performance and impact on the
Company's performance justify and reaffirm his compensation and incentive
package.
July 17, 1995 The Personnel and Compensation Committee
Christopher M. Linneman
13
<PAGE> 16
CUMULATIVE TOTAL SHAREHOLDER RETURN OR
COMPARATIVE STOCK PERFORMANCE
The line graphs on the following page compare the changes in the
cumulative total shareholder returns from the beginning of January 1990 through
the end of 1994 of (i) the Company, (ii) the CRSP Total Return Index for the
NASDAQ Stock Market (the "NASDAQ Index") and (iii) the Simmons & Company
International Offshore Drillers Index (the "SCI Index"). Due to the
significant change in the Company's capital structure pursuant to the
Recapitalization and its financial results since that time, the Company has
also included a graph illustrating its performance since December 31, 1992 as
compared to the NASDAQ Index and the SCI Index.
The companies that comprise the SCI Index include the Company; Arethusa
(Off-shore) Ltd; Atwood Oceanics, Inc.; Cliffs Drilling Company; Dual Drilling
Company; Energy Service Company, Inc.; Global Marine, Inc.; Noble Drilling
Corporation; Reading & Bates Corporation; Rowan Companies, Inc.; and Sonat
Offshore Drilling, Inc. The graphs on the following page assume that $100 was
invested in each of these categories on December 31, 1989 or December 31, 1992,
and that all dividends were re-invested. The Company has not paid any cash
dividends during the periods covered by the graphs.
14
<PAGE> 17
COMPARISON OF TOTAL RETURNS AMONG THE COMPANY,
THE NASDAQ INDEX AND THE SCI INDEX
DECEMBER 31, 1989 TO DECEMBER 31, 1994
[CHART]
<TABLE>
<CAPTION>
Dec 89 Dec 90 Dec 91 Dec 92 Dec 93 Dec 94
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
The Company $100.0 $ 57.4 $ 1.8 $ 0.6 $ 2.7 $ 1.4
NASDAQ Index 100.0 84.9 136.3 158.6 180.9 176.9
SCI Index 100.0 83.6 47.7 49.4 83.0 68.1
</TABLE>
DECEMBER 31, 1992 TO DECEMBER 31, 1994
[CHART]
<TABLE>
<CAPTION>
Dec 92 Jun 93 Dec 93 Jun 94 Dec 94
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
The Company $100.0 $533.3 $450.0 $450.0 $233.3
NASDAQ Index 100.0 103.8 114.1 104.3 111.6
SCI Index 100.0 181.0 168.0 177.5 137.9
</TABLE>
15
<PAGE> 18
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
Warburg, Aeneas, Capricorn, Mr. Keyes and Chase obtained significant
registration rights pursuant to a registration rights agreement (the
"Registration Rights Agreement") entered into in connection with the
consummation of the Recapitalization. Pursuant to the Registration Rights
Agreement, the Company has agreed, among other things, to keep a registration
statement in effect for three years from October 29, 1992 covering the resale
of all shares of Common Stock acquired by those parties.
In connection with the Recapitalization, the Company and Warburg
entered into the Shareholders' Agreement. See Item 1 - Election of
Directors--Shareholders' Agreement.
16
<PAGE> 19
ITEM 2 - ADOPTION OF PROPOSED
1995 NON-EMPLOYEE DIRECTORS' PLAN
There will be presented at the Annual Meeting a proposal to approve the
Company's 1995 Non-Employee Directors' Plan (the "Directors' Plan"), a copy of
which is attached hereto as Annex A.
The Board of Directors adopted the Directors' Plan on June 23, 1995,
and directed that it be submitted for stockholder approval. The purposes of
the proposed Directors' Plan are to attract and retain the service of
experienced and knowledgeable outside directors of the Company and to provide
an incentive for such outside directors to increase their proprietary interest
in the Company's long-term success and progress. Options to purchase an
aggregate of 70,000 shares of Common Stock at an exercise price of $4.00 per
share have been granted pursuant to the Directors' Plan effective as of June
23, 1995, subject to approval of the Directors' Plan by the stockholders of the
Company at the Annual Meeting.
GENERAL
The Directors' Plan provides for the grant of shares of the Company's
Common Stock ("Stock Awards") and options to acquire Common Stock, in each case
to each director who is not an employee of the Company (an "Eligible
Director"). The Directors' Plan provides that a maximum of 350,000 shares of
Common Stock may be issued pursuant to Stock Awards or options (subject to
adjustments in the event of stock dividends, stock splits and certain other
events).
Subject to approval of the Directors' Plan by the stockholders at the
Annual Meeting, each Eligible Director has been granted an option to purchase
10,000 shares of Common Stock at an exercise price equal to the fair market
value of the Common Stock on the date of grant. Each Eligible Director who is
elected or appointed to the Board of Directors for the first time after the
Annual Meeting will receive, on the date of such director's election or
appointment, an option to purchase 10,000 shares of Common Stock (subject to
certain adjustments) at an exercise price equal to the fair market value of the
Common Stock on the date of the grant. Commencing with the Company's annual
meeting of stockholders in 1996, on the date of any annual meeting of
stockholders prior to the termination of the Directors' Plan, each Eligible
Director who is continuing in office (and who is not entitled to receive an
initial option grant in accordance with the foregoing) will automatically
receive an option to purchase an additional 2,500 shares of Common Stock
(subject to certain adjustments) at an exercise price equal to the fair market
value of the Common Stock on the date of grant. In addition, on the date of
any annual meeting of the stockholders prior to termination of the Directors'
Plan, each Eligible Director who is continuing in office shall receive a Stock
Award of a number of shares of Common Stock having an aggregate fair market
value on the date of such grant equal to $6,000 (rounded up to the nearest
whole share), and as of the date of the sixth month anniversary of each such
annual meeting, each Eligible Director who is then in office shall receive a
Stock Award of a number of shares of Common Stock having an aggregate fair
market value on the date of such grant equal to $6,000 (rounded up to the
nearest whole share).
EXERCISABILITY OF OPTIONS
Each option granted under the Directors' Plan will vest and become
exercisable one year after its grant and will expire in all cases ten years
from the date the option is granted. Except as described below and except in
certain circumstances including the sale of substantially all of the Company's
assets, no option will be exercisable prior to expiration of the one year
vesting period.
If an option holder is removed from the Board for cause, his options
shall cease to be exercisable immediately upon such removal. If an option
holder voluntarily resigns from the Board, his option may be exercised (but
only to the extent that the option has vested) within the three month period
following the
17
<PAGE> 20
date of resignation or by the option holder's estate during a period of one
year following the holder's death if the holder dies during such three-month
period. If an option holder becomes disabled or dies while a director of the
Company, such option may be exercised in full within 12 months after the date
the option holder becomes disabled or dies (if otherwise within the option
period). If an option holder ceases to be a director of the Company for any
reason other than the foregoing reasons, the option may be exercised in full
within three months after the date of cessation, or by the option holder's
estate during a period of one year following the holder's death if the holder
dies during such three-month period.
ASSIGNMENT
Each option will be assignable or transferable only by will or by the
laws of descent and distribution, and will be exercisable during the optionee's
lifetime only by the optionee or the optionee's guardian or legal
representative.
PRICE
No consideration is payable to the Company upon the grant of any option
or Stock Award. The exercise price of any option will be the fair market value
of the Common Stock on the date of the grant of the option. On July 14, 1995,
the closing sale price of the Common Stock as reported by The Nasdaq Stock
Market was $3.50 per share.
AMENDMENT AND TERMINATION
The Board of Directors may amend the Directors' Plan as it deems
advisable, except that it may not, without further approval of the stockholders
of the Company, materially increase the benefits accruing to the participants,
increase the number of shares subject to the Directors' Plan, increase the
number of shares subject to each option, change the schedule of the grants,
extend the maximum period during which the options may be granted or exercised
or modify the requirements as to the eligibility for participation in the
Directors' Plan. In addition, the Directors' Plan may not be amended more than
once every six months, other than to comport with changes in the Internal
Revenue Code of 1986, as amended (the "Code"), the Employee Retirement Income
Security Act of 1974, or the rules thereunder. The Board may terminate the
Directors' Plan at any time. Termination of the Directors' Plan will not
affect the rights of the optionees or their successors under any options
outstanding and not exercised in full on the date of termination. Unless
earlier terminated by the Board of Directors, the Directors' Plan will
terminate when the remaining number of shares of Common Stock that may be
issued under the Directors' Plan is not sufficient to cover the options
otherwise required to be granted under the Directors' Plan.
FEDERAL INCOME TAX ASPECTS
Each of the options granted under the Directors' Plan will be stock
options that are not incentive options within the meaning of Section 422(b) of
the Code (non-qualified stock options). Generally, no federal income tax is
imposed on the optionee upon the grant of a non-qualified stock option such as
those under the Directors' Plan and the Company is not entitled to a tax
deduction by reason of such a grant. Generally, upon the exercise of a
non-qualified stock option, the optionee will be treated as receiving
compensation taxable as ordinary income in the year of exercise, which is an
amount equal to the excess of the fair market value of the shares on the date
of exercise over the option price. Upon the exercise of a non-qualified stock
option, the Company may claim a deduction for compensation paid at the same
time and in the same amount as compensation income is recognized to the
optionee, assuming any federal income tax withholding requirements are
satisfied. Upon a subsequent disposition of the shares received upon exercise
of a non-qualified stock option, the difference between the amount realized on
the disposition and the basis of the stock (exercise price plus any ordinary
income recognized) should qualify as long-term or short-term capital gain,
depending on the holding period.
18
<PAGE> 21
OPTIONS GRANTED UNDER THE DIRECTORS' PLAN
The following options have been granted under the Directors' Plan,
subject to shareholder approval at the Annual Meeting. As indicated above,
employees and executive officers of the Company are not entitled to receive
options under the Directors' Plan.
<TABLE>
<CAPTION>
NAME OR CATEGORY OPTIONS GRANTED*
---------------- ---------------
<S> <C>
Robert L. Barbanell . . . . . . . . . . . . . . 10,000
David A.B. Brown . . . . . . . . . . . . . . . 10,000
Howard I. Bull . . . . . . . . . . . . . . . . 10,000
Nathaniel A. Gregory . . . . . . . . . . . . . 10,000
Howard H. Newman . . . . . . . . . . . . . . . 10,000
David E. Libowitz . . . . . . . . . . . . . . 10,000
Christopher M. Linneman . . . . . . . . . . . . 10,000
Current Directors who are
not Executive Officers (As a Group) . . . . . 70,000
</TABLE>
- ------------
* In addition to the stock options described above, if the Directors'
Plan is approved by the stockholders at the annual meeting and each of the
above individuals is elected as a director, each such individual will receive a
Stock Award of a number of shares of Common Stock having a fair market value of
$6,000 on the date of such annual meeting, and on the six month anniversary of
such annual meeting, will receive an additional Stock Award having a fair
market value of $6,000 on the date of such grant.
REQUIRED VOTE AND RECOMMENDATION
The affirmative vote of the holders of a majority of the shares of
Common Stock represented in person or by proxy and entitled to vote at the
Annual Meeting is required for approval of the Directors' Plan, which approval
is required as a condition to the effectiveness of the Directors' Plan. Under
Texas law, an abstention would have the same legal effect as a vote against
this proposal, but a broker non-vote would not be counted for purposes of
determining whether a majority had been achieved. The persons named in the
proxy intend to vote for the adoption of the Directors' Plan, unless otherwise
instructed.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" APPROVAL AND
ADOPTION OF THE DIRECTORS' PLAN.
19
<PAGE> 22
ITEM 3 - RATIFICATION OF
APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The Board of Directors has appointed KPMG Peat Marwick LLP as
independent certified public accountants for the Company and its subsidiaries
for fiscal year 1995. It is intended that such appointment be submitted to the
stockholders for ratification at the 1995 Annual Meeting of Stockholders. KPMG
Peat Marwick LLP has served as the Company's auditors since the formation of
the Company's predecessor and has no investment in the Company or its
subsidiaries.
Although the submission of this matter to the stockholders is not
required by law, the Board of Directors will reconsider its selection of
independent accountants if this appointment is not ratified by the
stockholders. Ratification will require the affirmative vote of the majority
of the shares of Common Stock represented at the meeting and eligible to vote
thereon, in person or by proxy. An abstention would have the same legal effect
as a vote against ratification, but a broker non-vote would not be counted for
purposes of determining whether majority approval has been obtained.
A representative of KPMG Peat Marwick LLP will be in attendance at the
Annual Meeting with the opportunity to make a statement and to be available to
respond to appropriate questions.
20
<PAGE> 23
STOCKHOLDERS' PROPOSALS
Pursuant to the Securities Exchange Act of 1934, as amended, and
regulations thereunder, individual stockholders have a limited right to propose
for inclusion in the proxy statement a single proposal for action to be taken
at the Annual Meeting of Stockholders. Proposals intended to be presented at
the Annual Meeting to be held in 1996 must be received by the Company's
principal executive offices no later than December 30, 1995. They may be
addressed to the Secretary of the Company at One Sugar Creek Center Blvd.,
Suite 600, Sugar Land, Texas 77478-3556.
OTHER MATTERS
While management has no reason to believe that any other business will
be presented, if any other matters should properly come before the Annual
Meeting, the proxies will be voted as to such matters in accordance with the
best judgment of the proxy holders. The approval of such other matters will
require the affirmative vote of the majority of the shares of Common Stock
represented at the meeting and eligible to vote thereon, in person or by proxy.
MARINE DRILLING COMPANIES, INC.
By Joan R. Smith
Secretary
Sugar Land, Texas
July 17, 1995
21
<PAGE> 24
ANNEX A
MARINE DRILLING COMPANIES, INC.
1995 NON-EMPLOYEE DIRECTORS' PLAN
I. PURPOSE OF THE PLAN
The MARINE DRILLING COMPANIES, INC. NON-EMPLOYEE DIRECTORS' PLAN (the
"Plan") is intended to promote the interests of Marine Drilling Companies,
Inc., a Texas corporation (the "Company"), and its shareholders by helping to
award and retain highly-qualified independent directors, and allowing them to
develop a sense of proprietorship and personal involvement in the development
and financial success of the Company. Accordingly, the Company wishes to grant
to directors of the Company who are not employees of the Company or any of its
subsidiaries ("Non-Employee Directors") certain options (each, an "Option") to
purchase shares of the common stock, par value $.01 per share, of the Company
("Stock"), and further to provide for the grant to Non-Employee Directors of
certain shares of Stock (a "Stock Award"), in each case on the terms and
conditions hereinafter set forth. Options granted under the Plan shall be
options that do not constitute incentive stock options, within the meaning of
section 422(b) of the Internal Revenue Code of 1986, as amended (the "Code").
II. OPTION AGREEMENTS
Each Option shall be evidenced by a written agreement in the form
attached to the Plan.
III. GRANTS OF OPTIONS AND STOCK AWARDS
Options and Stock Awards may be granted only to individuals who are
Non-Employee Directors of the Company. Subject to approval of the Plan by the
Company's shareholders as provided in Paragraph VI, each Non-Employee Director
who serves in such capacity on the date on which the Plan is adopted by the
Board of Directors shall receive, as of such date and without the exercise of
the discretion of any person or persons, an Option exercisable for 10,000
shares of Stock. Each Non-Employee Director who is elected or appointed to the
Board of Directors of the Company (the "Board") for the first time after the
effective date of the Plan shall receive, as of the date of his or her election
or appointment and without the exercise of the discretion of any person or
persons, an Option exercisable for 10,000 shares of Stock (subject to
adjustment in the same manner as provided in Paragraph VII with respect to
shares of Stock subject to Options then outstanding). Commencing with the
Company's annual meeting of shareholders in 1996, as of the date of the annual
meeting of the shareholders of the Company in each year that the Plan is in
effect as provided in Paragraph VI hereof, each Non-Employee Director who is in
office immediately after such meeting and who is not then entitled to receive
an Option pursuant to the preceding provisions of this Paragraph III shall
receive, without the exercise of the discretion of any person or persons, an
Option exercisable for 2,500 shares of Stock (subject to adjustment in the same
manner as provided in Paragraph VII with respect to shares of Stock subject to
Options then outstanding).
<PAGE> 25
As of the date of the annual meeting of the shareholders of the Company
in each year that the Plan is in effect as provided in Paragraph VI hereof,
each Non-Employee Director who is in office immediately after such meeting
shall receive, without the exercise of the discretion of any person or persons,
a Stock Award of the number of shares of Stock having an aggregate fair market
value (determined in accordance with Paragraph V) of $6,000 (rounded up to the
nearest whole share). As of the date of the six month anniversary of each such
annual meeting of the shareholders of the Company if the Plan is then in effect
as provided in Paragraph VI hereof, each Non-Employee Director who is then in
office shall receive, without the exercise of the discretion of any person or
persons, a Stock Award of the number of shares of Stock having an aggregate
fair market value (determined in accordance with Paragraph V) of $6,000
(rounded up to the nearest whole share).
If, as of any date that the Plan is in effect, there are not sufficient
shares of Stock available under the Plan to allow for the grant to each
Non-Employee Director of an Option or Stock Award for the number of shares
provided herein, the Plan shall terminate as provided in Paragraph VI hereof.
The exercise price for each share of Stock subject to an Option shall
be equal to the fair market value (determined in accordance with Paragraph V)
of the Stock on the date the Option is granted. All Options granted under the
Plan shall be subject to adjustment as provided in Paragraph VII hereof.
IV. SHARES SUBJECT TO THE PLAN
The aggregate number of shares which may be issued as Stock Awards or
pursuant to Options granted under the Plan shall not exceed 350,000 shares of
Stock. Such shares may consist of authorized but unissued shares of Stock or
previously issued shares of Stock reacquired by the Company. Any of such
shares that remain unissued and that are not subject to outstanding Options at
the termination of the Plan shall cease to be subject to the Plan, but, until
termination of the Plan, the Company shall at all times make available a
sufficient number of shares to meet the requirements of the Plan. Should any
Option hereunder expire or terminate prior to its exercise in full, the shares
theretofore subject to such Option may again be subject to an Option or Stock
Award granted under the Plan. The aggregate number of shares of Stock which
may be issued under the Plan shall be subject to adjustment in the same manner
as provided in Paragraph VII hereof with respect to shares of Stock subject to
Options then outstanding.
V. DETERMINATION OF FAIR MARKET VALUE
For all purposes under the Plan, the fair market value of a share of
Stock on any date shall mean the final closing sales price per share of Stock
on such date, or, if no prices are reported on such date, on the last preceding
date on which prices are so reported. The closing sales price for each such
trading day shall be the last sales price, regular way, or in the case no such
sale takes place on such day, the average of the closing bid and asked prices,
regular way, in either case, as reported in the principal
2
<PAGE> 26
consolidated transaction reporting system with respect to securities listed or
admitted to trading on the New York Stock Exchange, or, if the Stock is not
listed or admitted to trading on the New York Stock Exchange, as reported in
the principal consolidated transaction reporting system with respect to
securities listed on the principal national securities exchange on which the
Stock is listed or admitted to trading or, if the Stock is not listed or
admitted to trading on a national securities exchange, the last quoted sales
price or, if not so quoted, the average of the high bid and low asked prices in
the over-the-counter market, as reported by the National Association of
Securities Dealers, Inc. automated quotations system. If the Stock is not
publicly held or so listed or publicly traded, fair market value shall be the
fair market value per share as determined in good faith by the Board.
VI. TERM OF PLAN
The Plan shall be effective on the date the Plan is approved by the
shareholders of the Company, notwithstanding any grants of Options that may be
made prior to and subject to such approval. Except with respect to Options
then outstanding, if not sooner terminated under the provisions of Paragraph
VIII, the Plan shall terminate upon and no further Options or Stock Awards
shall be granted as of the date that the remaining number of shares of Stock
which may be issued under the Plan pursuant to Paragraph IV is not sufficient
to cover the Options or Stock Awards required to be granted under Paragraph
III.
VII. RECAPITALIZATION OR REORGANIZATION
(a) The existence of the Plan and the Options granted hereunder
shall not affect in any way the right or power of the Board or the shareholders
of the Company to make or authorize any adjustment, recapitalization,
reorganization or other change in the Company's capital structure or its
business, any merger or consolidation of the Company, any issue of debt or
equity securities, the dissolution or liquidation of the Company or any sale,
lease, exchange or other disposition of all or any part of its assets or
business or any other corporate act or proceeding.
(b) The shares with respect to which Options may be granted are
shares of Stock as presently constituted, but if, and whenever, prior to the
expiration of an Option theretofore granted, the Company shall effect a
subdivision or consolidation of shares of Stock or the payment of a stock
dividend on Stock without receipt of consideration by the Company, the number
of shares of Stock with respect to which such Option may thereafter be
exercised (i) in the event of an increase in the number of outstanding shares
shall be proportionately increased, and the purchase price per share shall be
proportionately reduced, and (ii) in the event of a reduction in the number of
outstanding shares shall be proportionately reduced, and the purchase price per
share shall be proportionately increased.
(c) If the Company recapitalizes or otherwise changes its capital
structure, thereafter upon any exercise of an Option theretofore granted the
optionee shall be entitled to purchase under such Option, in lieu of the number
and class of shares of Stock then covered by such Option, the number and class
of shares of stock and securities to which the optionee would have been
entitled pursuant to the terms of the recapitalization if, immediately prior to
such recapitalization, the optionee had been the holder of record of the number
of shares of Stock then covered by such Option. If (i) the Company shall be
party to a merger or consolidation in which (A) the Company is not the
surviving entity, or (B) the Company survives only as a
3
<PAGE> 27
subsidiary of an entity other than a previously wholly-owned subsidiary of the
Company, or (C) the Company survives but the Stock is exchanged or converted
into any securities or property, (ii) the Company sells, leases or exchanges or
agrees to sell, lease or exchange all or substantially all of its assets to any
person or entity (other than a wholly-owned subsidiary of the Company) or (iii)
the Company is to be dissolved and liquidated (each such event is referred to
herein as a "Corporate Change"), then effective as of the earlier of (1) the
date of approval by the shareholders of the Company of such Corporate Change or
(2) the date of such Corporate Change, (A) in the event of any such merger or
consolidation and upon any exercise of any outstanding Option, the optionee
shall be entitled to purchase, in lieu of the number of shares of Stock as to
which such Option shall then be exercisable, the number and class of shares of
stock or other securities or property to which the optionee would have been
entitled pursuant to the terms of the agreement of merger or consolidation if,
immediately prior to such merger or consolidation the optionee had been the
holder of record of the number of shares of Stock as to which such Option is
then exercisable, and (B) in the event of any such sale, lease or exchange of
assets or dissolution, all outstanding Options shall be fully vested and each
optionee shall surrender his or her Options to the Company and the Company
shall cancel such Options and pay to each optionee an amount of cash per share
equal to the excess of the per share price offered to shareholders of the
Company in any such sale, lease or exchange of assets or dissolution
transaction for the shares subject to such Options over the exercise price(s)
under such Options for such shares.
(d) Any adjustment provided for in Subparagraphs (b) or (c) above
shall be subject to any required shareholder action.
(e) Except as hereinbefore expressly provided, the issuance by the
Company of shares of stock of any class or securities convertible into shares
of stock of any class, for cash, property, labor or services, upon direct sale,
upon the exercise of rights or warrants to subscribe therefor, or upon
conversion of shares or obligations of the Company convertible into such shares
or other securities, and in any case whether or not for fair value, shall not
affect, and no adjustment by reason thereof shall be made with respect to, the
number of shares of Stock subject to Options theretofore granted or the
purchase price per share.
VIII. AMENDMENT OR TERMINATION OF THE PLAN
The Board in its discretion may terminate the Plan at any time with
respect to any shares for which Stock Awards or Options have not theretofore
been granted. The Board shall have the right to alter or amend the Plan or any
part thereof from time to time; provided, that the Plan shall not be amended
more than once every six months, other than to comport with changes in the
Code, the Employee Retirement Income Security Act of 1974, as amended, or the
rules thereunder; and provided, further, that no change in any Option
theretofore granted may be made which would impair the rights of the optionee
without the consent of such optionee; and provided, further, that the Board may
not make any alteration or amendment which would materially increase the
benefits accruing to participants under the Plan, increase the aggregate number
of shares which may be issued pursuant to the provisions of the Plan, increase
the number of shares subject to each Option or Stock Award, change the schedule
of the grants, extend the term of the Options, change the class of individuals
eligible to receive
4
<PAGE> 28
Options or Stock Awards under the Plan or extend the term of the Plan, without
the approval of the shareholders of the Company.
IX. SECURITIES LAWS
(a) The Company shall not be obligated to issue any Stock pursuant
to any Option or Stock Award granted under the Plan at any time when the
offering of the shares covered by such Option or Stock Award have not been
registered under the Securities Act of 1933, as amended, and such other state
and federal laws, rules or regulations as the Company deems applicable and, in
the opinion of legal counsel for the Company, there is no exemption from the
registration requirements of such laws, rules or regulations available for the
offering and sale of such shares.
(b) It is intended that the Plan and any grant of an Option or
Stock Award made to a person subject to Section 16 of the Securities Exchange
Act of 1934, as amended (the "1934 Act") meet all of the requirements of Rule
16b-3, as currently in effect or as hereinafter modified or amended ("Rule
16b-3"), promulgated under the 1934 Act. If any provision of the Plan or any
such Option or Stock Award would disqualify the Plan or such Option or Stock
Award under, or would otherwise not comply with, Rule 16b-3, such provision or
Option or Stock Award shall be construed or deemed amended to conform to Rule
16b-3.
X. WITHHOLDING
The Company shall have the right to withhold from any Stock issuance
under the Plan or to collect as a condition of such issuance, any taxes
required by law to be withheld.
5
<PAGE> 29
EXHIBIT TO ANNEX A
[ FORM OF ]
NON-EMPLOYEE DIRECTOR'S
STOCK OPTION AGREEMENT
THIS AGREEMENT is made as of the ______ day of ________________, 19___,
between MARINE DRILLING COMPANIES, INC., a Texas corporation (the "Company")
and ________________________________ ("Director").
To carry out the purposes of the MARINE DRILLING COMPANIES, INC. 1995
NON-EMPLOYEE DIRECTORS' PLAN (the "Plan"), a copy of which is attached hereto as
Exhibit A, by affording Director the opportunity to purchase shares of common
stock of the Company ("Stock"), and in consideration of the mutual agreements
and other matters set forth herein and in the Plan, the Company and Director
hereby agree as follows:
1. GRANT OF OPTION. [SUBJECT TO APPROVAL OF THE PLAN BY THE
SHAREHOLDERS OF THE COMPANY AT THE COMPANY'S 1995 ANNUAL MEETING OF
SHAREHOLDERS,] The Company hereby irrevocably grants to Director the right and
option ("Option") to purchase all or any part of an aggregate of ______ shares
of Stock, on the terms and conditions set forth herein and in the Plan, which
Plan is incorporated herein by reference as a part of this Agreement. This
Option shall not be treated as an incentive stock option within the meaning of
section 422(b) of the Internal Revenue Code of 1986, as amended.
2. PURCHASE PRICE. The purchase price of Stock purchased
pursuant to the exercise of this Option shall be $_______ per share, which has
been determined to be not less than the fair market value of the Stock on the
date of grant of this Option. For all purposes of this Agreement, fair market
value of Stock shall be determined in accordance with the provisions of the
Plan.
3. EXERCISE OF OPTION. This Option may be exercised by written
notice to the Company at its principal executive office addressed to the
attention of its President at any time and from time to time following the
expiration of one year after the date of grant hereof, except as otherwise set
forth below.
This Option is not transferable by Director otherwise than by will or
the laws of descent and distribution, and may be exercised only by Director (or
Director's guardian or legal representative) during Director's lifetime. If
Director's membership on the Board of Directors of the Company (the "Board")
terminates, this Option may be exercised as follows:
(a) If Director's membership on the Board terminates as a
result of the removal of the Director for cause, this Option may not be
exercised by Director at any time after such termination. For purposes
of this Agreement, "cause" shall mean Director's gross negligence or
willful misconduct in performance of his duties as a director, or
Director's final conviction of a felony or of a misdemeanor involving
moral turpitude.
<PAGE> 30
(b) If Director's membership on the Board terminates as a
result of a voluntary resignation by Director, this Option may be
exercised by Director at any time during the period of three months
following such termination, or by Director's estate (or the person who
acquires this Option by will or the laws of descent and distribution or
otherwise by reason of the death of Director) during a period of one
year following Director's death if Director dies during such
three-month period, but only as to the number of shares Director was
entitled to purchase hereunder upon exercise of this Option as of the
date Director's membership on the Board so terminates.
(c) If Director's membership on the Board terminates by
reason of disability, this Option may be exercised in full by Director
(or Director's guardian or legal representative or Director's estate or
the person who acquires this Option by will or the laws of descent and
distribution or otherwise by reason of the death of Director) at any
time during the period of one year following such termination.
(d) If Director dies while a member of the Board,
Director's estate, or the person who acquires this Option by will or
the laws of descent and distribution or otherwise by reason of the
death of Director, may exercise this Option in full at any time during
the period of one year following the date of Director's death.
(e) If Director's membership on the Board terminates for
any reason other than as described in (a), (b), (c) or (d) above, this
Option may be exercised in full by Director at any time during the
period of three months following such termination, or by Director's
estate (or the person who acquires this Option by will or the laws of
descent and distribution or otherwise by reason of the death of
Director) during a period of one year following Director's death if
Director dies during such three-month period.
Notwithstanding any of the foregoing, this Option shall not be
exercisable in any event after the expiration of ten years from the date of
grant hereof.
The purchase price of shares as to which this Option is exercised shall
be paid in full at the time of exercise (A) in cash (including check, bank
draft or money order payable to the order of the Company), (B) by delivering to
the Company shares of Stock having a fair market value equal to the purchase
price, or (C) any combination of cash or Stock. No fraction of a share of
Stock shall be issued by the Company upon exercise of an Option or accepted by
the Company in payment of the purchase price thereof.
4. WITHHOLDING OF TAX. To the extent that the exercise of this
Option or the disposition of shares of Stock acquired by exercise of this
Option results in compensation income to Director for federal or state income
tax purposes, Director shall deliver to the Company at the time of such
exercise or disposition such amount of money or shares of Stock as the Company
may require to meet its obligation under applicable tax laws or regulations,
and, if
-2-
<PAGE> 31
Director fails to do so, the Company is authorized to withhold from any cash or
Stock remuneration then or thereafter payable to Director any tax required to
be withheld by reason of such resulting compensation income. Upon an exercise
of this Option, the Company is further authorized in its discretion to satisfy
any such withholding requirement out of any cash or shares of Stock
distributable to Director upon such exercise.
5. STATUS OF STOCK. The Company intends to register for issuance
under the Securities Act of 1933, as amended (the "Act"), the shares of Stock
acquirable upon exercise of this Option, and to keep such registration
effective throughout the period this Option is exercisable. In the absence of
such effective registration or an available exemption from registration under
the Act, issuance of shares of Stock acquirable upon exercise of this Option
will be delayed until registration of such shares is effective or an exemption
from registration under the Act is available. The Company intends to use all
reasonable efforts to ensure that no such delay will occur. In the event
exemption from registration under the Act is available upon an exercise of this
Option, Director (or the person permitted to exercise this Option in the event
of Director's death or incapacity), if requested by the Company to do so, will
execute and deliver to the Company in writing an agreement containing such
provisions as the Company may require to assure compliance with applicable
securities laws.
Director agrees that the shares of Stock which Director may acquire by
exercising this Option will not be sold or otherwise disposed of in any manner
which would constitute a violation of any applicable federal or state
securities laws. Director also agrees (i) that the certificates representing
the shares of Stock purchased under this Option may bear such legend or legends
as the Company deems appropriate in order to assure compliance with applicable
securities laws, (ii) that the Company may refuse to register the transfer of
the shares of Stock purchased under this Option on the stock transfer records
of the Company if such proposed transfer would in the opinion of counsel
satisfactory to the Company constitute a violation of any applicable securities
law and (iii) that the Company may give related instructions to its transfer
agent, if any, to stop registration of the transfer of the shares of Stock
purchased under this Option.
6. BINDING EFFECT. This Agreement shall be binding upon and
inure to the benefit of any successors to the Company and all persons lawfully
claiming under Director.
7. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS.
-3-
<PAGE> 32
IN WITNESS WHEREOF, the Company has caused this Agreement to be duly
executed by its officer thereunto duly authorized, and Director has executed
this Agreement, all as of the day and year first above written.
MARINE DRILLING COMPANIES, INC.
By:__________________________________
[Name, Title]
____________________________________
Director
-4-
<PAGE> 33
/X/ PLEASE MARK YOUR
VOTES AS IN THIS
EXAMPLE
WITHHOLD
FOR all AUTHORITY
nominees to vote for all
listed nominees listed
1. Election of / / / /
Directors
/ / FOR, all nominees listed except vote withheld for the following
nominees(s):
NOMINEES: Robert L. Barbanell
David A.B. Brown
Howard I. Bull
William H. Flores
Nathaniel A. Gregory
William O. Keyes
David E. Libowitz
Christopher M. Linneman
Howard H. Newman
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FOR AGAINST ABSTAIN
2. Adoption of the Marine Drilling Companies, Inc. / / / / / /
1995 Non-Employee Directors' Plan.
3. Ratification of KPMG Peat Marwick LLP as / / / / / /
independent Auditors.
4. In their discretion, upon any other matter which may properly come before
the meeting or at any adjournment or postponement thereof.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED. IF NO DIRECTION
IS MADE, THE PERSONS NAMED HEREIN INTEND TO VOTE FOR THE ELECTION OF THE NAMED
NOMINEES FOR DIRECTOR AND FOR PROPOSALS 2 AND 3.
PLEASE DATE AND SIGN THIS PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED POSTAGE
PAID RETURN ENVELOPE.
SIGNATURE(S)_______________________________________________ DATE_______________
Note: Please sign exactly as name appears hereon. Joint owners should each
sign. When signing as attorney, executor, administrator, trustee or guardian,
please give full title as such.
<PAGE> 34
MARINE DRILLING COMPANIES, INC.
PROXY SOLICITED ON BEHALF OF BOARD OF DIRECTORS
The undersigned hereby appoints Joan R. Smith and William H. Flores, or
either of them with full power of substitution, proxies to vote at the Annual
Meeting of Stockholders of Marine Drilling Companies, Inc. (the "Company") to
be held at the Sweetwater Country Club located at 4400 Palm Royale Blvd., in
Sugar Land, Texas on Thursday, August 17, 1995 at 9:00 a.m., central daylight
time, and at all adjournments or postponements thereof, hereby revoking any
proxies heretofore given, all shares of common stock of the Company held or
owned by the undersigned as directed hereon.
(TO BE SIGNED ON REVERSE SIDE)
<PAGE> 35
DESCRIPTIONS FOR COMPARATIVE GRAPHS IN
1995 PROXY TO BE USED FOR EDGARIZED DOCUMENT
Graph 1 (page 15, upper left)
The value of $100.00 invested in the Company at December 31, 1989 was $57.40,
$1.80, $0.60, $2.70 and $1.40 as of December 31, 1990, 1991, 1992, 1993 and
1994, respectively.
The value of $100.00 invested in the stocks represented by the NASDAQ Index
(including reinvestment of dividends) as of December 31, 1989 was $84.90,
$136.30, $158.60, $180.90 and $176.90 as of December 31, 1990, 1991, 1992, 1993
and 1994, respectively.
The value of $100.00 invested in the stocks represented by the SCI Index
(including reinvestment of dividends) as of December 31, 1989 was $83.60,
$47.70, $49.40, $83.00 and $68.10 as of December 31, 1990, 1991, 1992, 1993 and
1994, respectively.
Graph 2 (page 15, lower right)
The value of $100.00 invested in the Company at December 31, 1992 was $533.30,
$450.00, $450.00 and $233.30 as of June 30, 1993, December 31, 1993, June 30,
1994 and December 31, 1994, respectively.
The value of $100.00 invested in the stocks represented by the NASDAQ Index
(including reinvestment of dividends) as of December 31, 1992 was $103.80,
$114.10, $104.30 and $111.60 as of June 30, 1993, December 31, 1993, June 30,
1994 and December 31, 1994, respectively.
The value of $100.00 invested in the stocks represented by the SCI Index
(including reinvestment of dividends) as of December 31, 1992 was $181.10,
$168.00, $177.50 and $137.90 as of June 30, 1993, December 31, 1993, June 30,
1994 and December 31, 1994, respectively.
