<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-Q
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934.
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934.
FOR THE TRANSITION PERIOD FROM __________ TO ____________
COMMISSION FILE NUMBER: 1-14389
-------------------------------
MARINE DRILLING COMPANIES, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
TEXAS 74-2558926
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification Number)
</TABLE>
ONE SUGAR CREEK CENTER BLVD., SUITE 600, SUGAR LAND, TEXAS 77478-3556
(Address of principal executive offices and zip code)
(281) 243-3000
(Registrant's telephone number, including area code)
--------------------------------------------------------------------------------
(Former name, former address and former
fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X . No .
--- ---
NUMBER OF SHARES OF COMMON STOCK OUTSTANDING AT AUGUST 1, 1999--58,504,754
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MARINE DRILLING COMPANIES, INC.
FORM 10-Q
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
PART I -- FINANCIAL INFORMATION
Item 1. Index to Financial Statements
Independent Auditors' Review Report..................................................... 1
Consolidated Balance Sheets --
June 30, 2000 (unaudited) and December 31, 1999......................................... 2
Consolidated Statements of Operations (unaudited) --
Three and Six Months Ended June 30, 2000 and 1999....................................... 3
Consolidated Statements of Cash Flows (unaudited) --
Six Months Ended June 30, 2000 and 1999................................................. 4
Notes to Consolidated Financial Statements.............................................. 5
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations................................................. 9
Item 3. Quantitative and Qualitative Disclosures about Market Risk.................................... 15
PART II -- OTHER INFORMATION
Item 1. Legal Proceedings............................................................................. 16
Item 4. Submission of Matters to a Vote of Security Holders........................................... 16
Item 6. Exhibits and Reports on Form 8-K.............................................................. 17
SIGNATURES................................................................................................... 18
</TABLE>
(i)
<PAGE> 3
INDEPENDENT AUDITORS' REVIEW REPORT
The Board of Directors and Shareholders
Marine Drilling Companies, Inc.:
We have reviewed the accompanying consolidated balance sheet of Marine
Drilling Companies, Inc. and subsidiaries as of June 30, 2000, the related
consolidated statements of operations for the three-month and six-month periods
ended June 30, 2000 and 1999, and the related consolidated statements of cash
flows for the six-month periods ended June 30, 2000 and 1999. These consolidated
financial statements are the responsibility of the Company's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted in
accordance with generally accepted auditing standards, the objective of which is
the expression of an opinion regarding the financial statements taken as a
whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications
that should be made to the consolidated financial statements referred to above
for them to be in conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted
auditing standards, the consolidated balance sheet of Marine Drilling Companies,
Inc. and subsidiaries as of December 31, 1999, and the related consolidated
statements of operations, shareholders' equity and cash flows for the year then
ended (not presented herein); and in our report dated January 25, 2000, we
expressed an unqualified opinion on those consolidated financial statements. In
our opinion, the information set forth in the accompanying consolidated balance
sheet as of December 31, 1999 is fairly stated, in all material respects, in
relation to the consolidated balance sheet from which it has been derived.
KPMG LLP
Houston, Texas
July 26, 2000
1
<PAGE> 4
MARINE DRILLING COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
2000 1999
------------ ------------
(Unaudited)
ASSETS
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 6,602 $ 4,664
Accounts receivable -- trade and other, net 33,277 29,332
Income tax receivable -- 18,904
Prepaid expenses and other 3,050 2,091
Inventory 425 402
------------ ------------
Total current assets 43,354 55,393
Property and equipment 735,433 705,351
Less accumulated depreciation 118,619 97,511
------------ ------------
Property and equipment, net 616,814 607,840
Other 2,498 2,909
------------ ------------
$ 662,666 $ 666,142
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 13,165 $ 13,919
Accrued expenses 10,618 9,998
Employer's liability claims, current 863 660
------------ ------------
Total current liabilities 24,646 24,577
Long-term debt 135,000 180,000
Other non-current liabilities 2,958 4,406
Deferred income taxes 50,696 44,414
Shareholders' equity:
Common stock, par value $.01. Authorized 200,000,000 shares;
issued and outstanding 58,501,031 and 57,199,489 shares,
as of June 30, 2000 and December 31, 1999, respectively 585 572
Common stock restricted (871) (1,073)
Additional paid-in capital 287,034 263,319
Retained earnings from January 1, 1993 162,618 149,927
------------ ------------
Total shareholders' equity 449,366 412,745
------------ ------------
Commitments and contingencies -- --
------------ ------------
$ 662,666 $ 666,142
============ ============
</TABLE>
See notes to consolidated financial statements
and accompanying auditors' review report.
2
<PAGE> 5
MARINE DRILLING COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------------ ------------------------
2000 1999 2000 1999
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Revenues $ 58,962 $ 15,503 $ 111,442 $ 35,330
Costs and Expenses:
Contract drilling 29,567 15,722 57,187 33,294
Depreciation and amortization 10,897 4,763 21,700 9,491
General and administrative 3,560 3,422 7,012 6,897
--------- --------- --------- ---------
44,024 23,907 85,899 49,682
--------- --------- --------- ---------
Operating income (loss) 14,938 (8,404) 25,543 (14,352)
--------- --------- --------- ---------
Other Income (Expense):
Interest expense (2,963) (308) (6,396) (421)
Interest income 95 282 291 425
Other income (expense) 677 4 1,032 (41)
--------- --------- --------- ---------
(2,191) (22) (5,073) (37)
--------- --------- --------- ---------
Income (loss) before income taxes 12,747 (8,426) 20,470 (14,389)
Income tax expense (benefit) 4,834 (1,683) 7,779 (2,878)
--------- --------- --------- ---------
Net income (loss) $ 7,913 $ (6,743) $ 12,691 $ (11,511)
========= ========= ========= =========
Earnings (loss) per share:
Basic $ 0.14 $ (0.12) $ 0.22 $ (0.22)
Diluted $ 0.13 $ (0.12) $ 0.21 $ (0.22)
Average common shares outstanding:
Basic 58,399 54,313 58,268 53,363
Diluted 59,318 54,313 59,105 53,363
</TABLE>
See notes to consolidated financial statements
and accompanying auditors' review report.
3
<PAGE> 6
MARINE DRILLING COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands, except share data)
(Unaudited)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
------------------------------
2000 1999
------------ ------------
<S> <C> <C>
Cash Flows From Operating Activities:
Net income (loss) $ 12,691 $ (11,511)
Adjustments to reconcile net income (loss) to net cash provided
by operating activities:
Deferred income taxes 6,282 (3,572)
Tax benefits related to common stock issued pursuant to
long-term incentive plan 1,786 87
Depreciation and amortization 21,700 9,491
Changes in operating assets and liabilities:
Receivables (3,945) 9,806
Income tax receivable 18,904 --
Other current assets (982) (308)
Payables, accrued expenses and employer's liability claims (1,379) 26,896
Other 275 3,436
------------ ------------
Net cash provided by operating activities 55,332 34,325
------------ ------------
Cash Flows From Investing Activities:
Purchase of equipment (30,739) (165,870)
Proceeds from disposition of equipment 939 9
------------ ------------
Net cash used in investing activities (29,800) (165,861)
------------ ------------
Cash Flows From Financing Activities:
Proceeds from long-term debt 2,000 100,000
Payments on long-term debt (47,000) --
Proceeds from sale of common stock 18,461 54,396
Proceeds from exercise of stock options 2,945 377
------------ ------------
Net cash provided by (used in) financing activities (23,594) 154,773
------------ ------------
Net increase in cash and cash equivalents 1,938 23,237
Cash and cash equivalents at beginning of period 4,664 12,576
------------ ------------
Cash and cash equivalents at end of period $ 6,602 $ 35,813
============ ============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest paid $ 7,214 $ 2,378
Income taxes paid 124 3,165
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING
AND FINANCING ACTIVITIES:
Issuance of 5,000 and 10,500 shares in 2000 and 1999 respectively, of
restricted common stock $ 137 $ 133
Forfeitures of 1,200 and 4,175 shares in 2000 and 1999 respectively, of
restricted common stock (19) (39)
</TABLE>
See notes to consolidated financial statements
and accompanying auditors' review report.
4
<PAGE> 7
MARINE DRILLING COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(1) INTERIM FINANCIAL INFORMATION
The consolidated interim financial statements of Marine Drilling
Companies, Inc. (the "Company" or the "Registrant") presented herein have been
prepared without audit pursuant to the rules and regulations of the Securities
and Exchange Commission. Accordingly, certain information and notes required by
generally accepted accounting principles for complete financial statements have
been condensed or omitted. In the opinion of management, these statements
include all adjustments (all of which consist of normal recurring adjustments
except as otherwise noted herein) necessary to present fairly the Company's
financial position and results of operations for the interim periods presented.
The financial data for the six months ended June 30, 2000 included herein has
been subjected to a limited review by KPMG LLP, the Registrants' independent
auditors, whose report is included herein. These statements should be read in
conjunction with the audited financial statements and notes thereto included in
the Company's Annual Report on Form 10-K for the year ended December 31, 1999.
The results of operations for the six months ended June 30, 2000 are not
necessarily indicative of the results of operations that may be expected for the
year.
(2) EARNINGS PER SHARE
The Company's basic earnings (loss) per share, which is based upon the
weighted average common shares outstanding - without the dilutive effects of
common stock equivalents (options, warrants, etc.), for the quarters ended June
30, 2000 and 1999 is $0.14 and $(0.12), respectively. Common stock equivalents
with a weighted average of 918,374 and 836,887 are reflected in the calculation
of diluted earnings per share for the three and six-month periods ended June 30,
2000, respectively. For the three and six-month periods ended June 30, 2000,
there were 40,000 and 115,000 stock options outstanding, respectively, which
were not included in the computation of diluted earnings per share. For the
three and six-month periods ended June 30, 1999, there were 2,644,725 stock
options outstanding that were not included in the computation of diluted
earnings per share because the exercise price of these options was greater than
the average market price of the common shares. No adjustment to net income was
made in calculating diluted earnings per share for the three and six-month
periods ended June 30, 2000 and 1999.
(3) CREDIT FACILITY
On August 12, 1998, the Company entered into a credit agreement (the
"Credit Facility") with a consortium of domestic and international banks
providing financing of up to $200 million to be used for rig acquisitions and
upgrades as well as for general corporate purposes. The Credit Facility is a
five-year revolving credit facility and is secured by substantially all of the
Company's assets, including its rig fleet. The Company and its subsidiaries are
required to comply with various covenants and restrictions, including, but not
limited to, the maintenance of financial ratios and the restriction on payments
of dividends. Interest accrues at a rate of (i) London Interbank Offered Rate
("LIBOR") plus a margin determined pursuant to a debt to EBITDA calculation or
(ii) prime if a Base Rate Loan.
On September 21, 1999, the Company amended the Credit Facility. The
significant elements of the amendment include (i) an increase in the maximum
permitted ratio of debt to EBITDA to 4 to 1 compared to the original 3 to 1,
(ii) a modification to the definition of EBITDA to give pro forma effect to
certain newly acquired assets or long-term contracts, and (iii) a change to the
definition of working capital to include any available commitments under the
Credit Facility for purposes of satisfying the positive working capital
requirement. Also, the margin over LIBOR that the Company pays under the Credit
Facility was increased from a range of 75 to 125 basis points to 100 to 250
basis points.
As of June 30, 2000, $135 million was outstanding under the Credit
Facility. Subsequent to June 30, 2000, the Company has made $10 million in
principal payments, reducing the outstanding debt balance under the Credit
Facility to $125 million as of August 1, 2000.
5
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MARINE DRILLING COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
During the six months ended June 30, 2000, the Company incurred $6.4
million of interest expense, including amortization of deferred financing costs
related to the Credit Facility. Interest expense for the construction and
refurbishment of qualifying assets is capitalized. Accordingly, there was no
capitalized interest expense for the six months ended June 30, 2000 and $2.7
million of interest expense was capitalized in the same period ended June 30,
1999.
(4) COMMITMENTS AND CONTINGENCIES
India Lawsuit -- Jagson International Limited ("Jagson"), an Indian
entity, has brought suit against Marine Drilling Companies, Inc. and one of its
subsidiaries, Marine 300 Series, Inc. The plaintiff has alleged that the Company
agreed to charter two jack-up rigs to the plaintiff during 1992 and that it
breached the agreement by failing to charter the rigs resulting in damages in
excess of $14.5 million. In August 1995, Jagson filed a suit against the Company
in New Delhi, India that was subsequently withdrawn and filed a second suit in
New Delhi against the Company in October 1995 that was dismissed by the court.
In May 1996, Jagson filed a third suit against the Company in Bombay, India for
the same claim and attempted to attach the MARINE 201, located in India at the
time, to the claim. In March 1998, the court dismissed the motion for
attachment. Although the third suit is still on file with the court, the MARINE
201 is no longer in India and there have been no further proceedings in the
lawsuit. The Company disputes the existence of the agreement and intends to
vigorously defend the suit. The Company does not believe this dispute will have
a material adverse effect on its results of operations or financial condition.
Other Legal Proceedings -- The Company is involved in various other
claims and legal actions arising in the ordinary course of business. In the
opinion of management, the ultimate disposition of these matters will not have a
material adverse effect on the Company's consolidated financial position,
results of operations or liquidity.
Marketing Agreement for NANHAI VI. In August 1998, the Company entered
into an agreement effective through October 1, 1999, with the Peoples Republic
of China's Southern Drilling Company to market the 1,500-foot water depth rated
semi-submersible NANHAI VI outside China. The agreement has been extended
through December 31, 2000. The NANHAI VI is a self-propelled, semi-submersible
drilling rig, which was built in 1982 and modified and refurbished in 1995.
Under the agreement, the Company is to receive $3,000 per day in management fees
while the rig is operating and 50% of all rig-level profits after management
fees and amortization over a 36-month period of the costs of any upgrades to the
vessel. The rig is technically suitable to be upgraded to 5,000-foot water depth
capability. Pursuant to the marketing agreement, if the rig is required to be
upgraded, the cost of the upgrade will be funded by the owner. The Company is
actively marketing the rig, which will be made available by Southern Drilling
Company upon consummation of a mutually agreeable drilling contract.
(5) RIG ACQUISITION
In January 2000, the Company acquired a jack-up rig, the Baruna V, for
$13.5 million. The rig is a Bethlehem mat cantilever capable of working in up to
200 feet of water. The rig was built in 1980 and was previously located in
Southeast Asia. The rig was renamed the MARINE 202 and was mobilized to the Gulf
of Mexico during the second quarter, along with the MARINE 201, previously
located in the United Arab Emirates.
To fund the acquisition, upgrade and mobilization of the MARINE 202
drilling rig, the Company completed an offering of one million shares of its
common stock in January 2000. The offering was an underwritten offering at a net
price of $18.50 per share, or $18.5 million.
(6) SEGMENT REPORTING
For reporting purposes the Company defines its segments as shallow
water drilling (jack-up rigs) and deepwater drilling (semi-submersibles). The
accounting policies of the reportable segments are the same as those described
in Note 1 of Notes to Consolidated Financial Statements included in the
Company's annual report on
6
<PAGE> 9
MARINE DRILLING COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Form 10-K. The Company evaluates the performance of its operating segments based
on income before taxes and non-recurring items. Operating income consists of
revenues less the related operating costs and expenses, including depreciation
and allocated operation support, excluding interest and unallocated corporate
expenses. Identifiable assets by operating segment include assets directly
identified with those operations.
The following table sets forth consolidated financial information with
respect to the Company and its subsidiaries by operating segment (in thousands):
<TABLE>
<CAPTION>
JACK-UP SEMI CORPORATE &
OPERATIONS OPERATIONS OTHER TOTAL
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
THREE MONTHS ENDED:
JUNE 30, 2000
Revenues $ 28,964 $ 29,998 $ -- $ 58,962
Operating Income (Loss) 2,272 17,010 (4,344) 14,938
Identifiable Assets 173,780 471,295 17,591 662,666
Capital Expenditures 8,805 3,508 276 12,589
Depreciation & Amortization 4,170 5,943 784 10,897
JUNE 30, 1999
Revenues $ 15,472 $ 31 $ -- $ 15,503
Operating Loss (3,383) (791) (4,230) (8,404)
Identifiable Assets 151,018 440,821 51,731 643,570
Capital Expenditures 343 94,859 261 95,463
Depreciation & Amortization 3,954 1 808 4,763
SIX MONTHS ENDED:
JUNE 30, 2000
Revenues $ 53,868 $ 57,574 $ -- $ 111,442
Operating Income (Loss) 3,672 30,448 (8,577) 25,543
Identifiable Assets 173,780 471,295 17,591 662,666
Capital Expenditures 25,142 4,453 1,144 30,739
Depreciation & Amortization 8,267 11,868 1,565 21,700
JUNE 30, 1999
Revenues $ 35,299 $ 31 $ -- $ 35,330
Operating Loss (4,171) (1,678) (8,503) (14,352)
Identifiable Assets 151,018 440,821 51,731 643,570
Capital Expenditures 937 164,441 492 165,870
Depreciation & Amortization 7,883 2 1,606 9,491
</TABLE>
7
<PAGE> 10
MARINE DRILLING COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The Company also provides services in both domestic and foreign
locations. The following table sets forth financial information with respect to
the Company and its subsidiaries by geographic area (in thousands):
<TABLE>
<CAPTION>
AS OF AND FOR THE THREE AS OF AND FOR THE SIX
MONTHS ENDED JUNE 30, MONTHS ENDED JUNE 30,
---------------------------- ---------------------------
2000 1999 2000 1999
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Revenues:
United States $ 43,223 $ 12,970 $ 77,401 $ 32,797
Australia 15,732 -- 29,921 --
Southeast Asia 91 2,533 3,197 2,533
Other Foreign (84) -- 923 --
Long-Lived Assets: -- --
United States 388,966 344,533 388,966 344,533
Australia 164,978 -- 164,978 --
Southeast Asia 43,366 209,837 43,366 209,837
Other Foreign 19,504 33,619 19,504 33,619
</TABLE>
The Company negotiates drilling contracts with a number of customers
for varying terms, and management believes it is not dependent upon any single
customer. For the six months ended June 30, 2000 and 1999, sales to customers
that represented 10% or more of consolidated drilling revenues were as follows
(in thousands):
<TABLE>
<CAPTION>
2000 1999
------------------------- ------------------------
% OF TOTAL % OF TOTAL
REVENUE REVENUE REVENUE REVENUE
--------- ---------- --------- ----------
<S> <C> <C> <C> <C>
Semi Operations:
Western Australian Petroleum Pty., Ltd $ 31,483 28% $ -- --
Esso Exploration, Inc. 26,112 23% -- --
Jack-up Operations:
Applied Drilling Technology, Inc. 20,167 18% 14,036 40%
Walter Oil and Gas * * 3,615 10%
</TABLE>
* less than 10%
As is typical in the industry, the Company does business with a
relatively small number of customers at any given time. The loss of any one of
such customers could have a material adverse effect on the Company's
profitability.
8
<PAGE> 11
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
INDUSTRY OVERVIEW
Demand for the Company's offshore drilling services is primarily driven
by the worldwide expenditures for oil and gas drilling which is closely linked
to the underlying economics of oil and gas exploration, development and
production. The economics of oil and gas business activities is impacted by
current and projected oil and gas prices. Oil and gas prices are volatile and
somewhat unpredictable, which results in significant fluctuations in oil and gas
drilling expenditures. Many factors influence oil and gas prices, including
world economic conditions, worldwide oil and gas production and the activities
of the Organization of Petroleum Exporting Countries ("OPEC").
The rates that the industry can charge for drilling services is a
function of not only demand for services but the supply of drilling rigs
available in the market to provide service. During the early 1980's when oil and
gas prices were high and significant demand for drilling services existed, the
industry built a significant number of offshore drilling rigs. In the mid-1980's
when oil and gas prices declined significantly and the corresponding demand for
drilling services declined, the supply of drilling rigs was significantly
greater than the industry needed. This resulted in an imbalance of supply and
demand causing low utilization with dayrates declining to virtually cash
operating costs.
During 1996 and early 1997, oil and gas prices rose to a level that
stimulated significant oil and gas drilling activity resulting in improved
utilization and dayrates for the drilling industry. However, oil and gas prices
declined significantly beginning in October 1997, and reached multi-year lows in
various markets in early 1999. As a result of oil price declines in 1998 and
early 1999, oil and gas companies made significant cutbacks in their drilling
programs. This reduced industry-wide rig utilization including the U.S. Gulf of
Mexico, where the Company operates most of its rigs, which not only sharply
reduced dayrates, but also shortened the average length of drilling contracts
primarily to a well-by-well basis. Oil and gas prices improved during 1999 and
have continued to improve during the first six months of 2000, resulting in
increases in rig utilization and dayrates, particularly in the Gulf of Mexico
jack-up market.
The following table sets forth rig utilization rates, according to
Offshore Data Services:
<TABLE>
<CAPTION>
AVERAGE FOR THE
SIX MONTHS ENDED JUNE 30,
AS OF ------------------------------
AUGUST 1, 2000 2000 1999
-------------- ------------- -----------
<S> <C> <C> <C>
Gulf of Mexico jack-up rigs 86% 83% 61%
Gulf of Mexico semi-submersible rigs 63% 55% 62%
Worldwide jack-up rigs 79% 73% 66%
Worldwide semi-submersible rigs 71% 62% 65%
</TABLE>
As of August 1, 2000, thirteen of the Company's 16 jack-up rigs were
working under short-term contracts that expire during the third or fourth
quarter of 2000, one jack-up rig is under contract until the fourth quarter of
2001, and the remaining two rigs are currently idle. One idle rig, the MARINE
202, is contracted to start work in the Gulf in August 2000 and the other idle
rig is located outside the U.S. Gulf of Mexico and is currently configured as an
accommodation unit. The Company's two semi-submersible rigs, the MARINE 500 and
MARINE 700 are currently operating under long-term contracts.
CONTRACTS AND CUSTOMERS
The Company obtains most of its drilling contracts through competitive
bidding against other contractors in response to oil and gas companies'
solicitations of bids. The Company's current drilling contracts, both foreign
and domestic, provide for payment in U.S. dollars.
9
<PAGE> 12
The Company provides drilling services to a customer base that includes
independent and major foreign and domestic oil and gas companies. As is typical
in the industry, the Company does business with a relatively small number of
customers at any given time. During the first six months of 2000, the Company
performed services for approximately 33 different customers. For the period
ended June 30, 2000, Western Australian Petroleum Pty., Ltd. accounted for
approximately 28% of revenues, Esso Exploration, Inc. accounted for
approximately 23% of revenues and Applied Drilling Technology, Inc., a
subsidiary of Global Marine Inc., accounted for approximately 18% of the
Company's total consolidated revenues. The loss of any one of the Company's
customers could have a material adverse effect on the Company's profitability.
See Note 6 of Notes to Consolidated Financial Statements for further information
regarding the Company's major customers.
MARINE 305 Drilling Contract. On July 8, 2000, the MARINE 305 began
operating in Malaysia at a dayrate of approximately $36,400 per day for Sarawak
Shell Berhad/Sabah Shell Petroleum Company. The contract is for a term of
486-days with termination provisions after the first nine months that includes
the payment of certain unrecovered contract costs. The contract allows for a
contract extension for up to eight wells or up to two platforms with multi-wells
on each platform at mutually agreed rates.
MARINE 700 Drilling Contract. On August 5, 1999, the Company began
operating the MARINE 700 under a five-year contract with Esso Exploration, Inc.
("Esso"), an affiliate of Exxon Mobil Corporation, at an initial dayrate of
$130,000 per day plus certain dayrate adjustments as allowed by the contract for
additional labor costs and construction and equipment changes requested by Esso
during the construction process. Currently, these adjustments total
approximately $12,000 per day. The initial dayrate is subject to a potential
increase in years two through five of the contract to the market dayrate for
comparable rigs such that total revenue from the contract could range from $237
million to $302 million depending on drilling market conditions. In years two
and three of the contract, the dayrate cannot be greater than $165,000, plus
adjustments, and in years four and five, the dayrate cannot be greater than the
amount that would make the cumulative revenue greater than $302 million.
Dayrates are subject to adjustments for changes in indexed operating cost
elements, changes in cost arising from moving the rig outside the U.S. Gulf of
Mexico, or changes in personnel requirements.
MARINE 500 Drilling Contract. In July 1997, the Company entered into a
drilling contract with a drilling consortium led by West Australian Petroleum
Pty., Ltd. ("WAPET") for the MARINE 500. The consortium consists of WAPET,
Indonesia Petroleum, Ltd. ("INPEX") and Mobil Exploration and Producing
Australia ("MEPA"). Certain other oil companies have an option to participate in
the consortium. The contract expires on December 31, 2001. The contract provides
that the consortium can terminate the contract at any time after January 1, 2001
in exchange for a termination payment of $95,890 for each day remaining in the
term of the contract, subject to offset if the rig is otherwise employed. During
the term of this contract, the MARINE 500 will work predominately in Western
Australia, although the consortium members may use the rig in Southeast Asia,
the Pacific Rim, and/or New Zealand.
The consortium drilling contract is a master agreement that
contemplates separate drilling contracts with the individual consortium members
at a base dayrate of $127,500, which is adjusted for each contract based on
operating costs in the area in which the rig is to be used. Two of the
consortium members, WAPET and INPEX, have committed to drilling contracts under
the consortium agreement and have agreed under the consortium agreement to be
liable for the contract minimum payments to the Company for the initial contract
term ending December 31, 2001. The optional consortium members have made no
commitments under the agreement, and are not liable for any payments under the
consortium contract until they commit to a drilling contract. The INPEX drilling
contract was a two-well contract with up to three option wells to be drilled at
an operating dayrate of $150,000 per day and was completed on January 5, 2000.
The WAPET drilling contract provides for a dayrate of $168,600 for an
unspecified number of wells.
When the rig departed the shipyard in Singapore on July 5, 1999, the
Company, in accordance with the consortium drilling contract, received a fee of
$6 million for performing the upgrade to enable the rig to work in water depths
up to 5,000 feet with 15,000 psi drilling equipment. This $6 million fee is
being recognized as revenue over the term of the drilling contract.
Marketing Agreement for NANHAI VI. In August 1998, the Company entered
into an agreement effective through October 1, 1999, with the Peoples Republic
of China's Southern Drilling Company to market the 1,500-foot
10
<PAGE> 13
water depth rated semi-submersible NANHAI VI outside China. The agreement has
been extended through December 31, 2000. The NANHAI VI is a self-propelled,
semi-submersible drilling rig, which was built in 1982 and modified and
refurbished in 1995. Under the agreement, the Company is to receive $3,000 per
day in management fees while the rig is operating and 50% of all rig-level
profits after management fees and amortization over a 36-month period of the
costs of any upgrades to the vessel. The rig is technically suitable to be
upgraded to 5,000-foot water depth capability. Pursuant to the marketing
agreement, if the rig is required to be upgraded, the cost of the upgrade will
be funded by the owner. The Company is actively marketing the rig, which will be
made available by Southern Drilling Company upon consummation of a mutually
agreeable drilling contract.
RESULTS OF OPERATIONS
The number of rigs the Company has available for service and the
utilization rates and dayrates of the Company's active rigs are the most
significant factors affecting the Company's level of revenues. Operating costs
include all direct costs and expenditures associated with operating the
Company's rigs. These costs include rig labor, repair, maintenance and supply
expenditures, insurance costs, mobilization costs and other costs related to
operations. Operating expenses do not necessarily fluctuate in proportion to
changes in operating revenues due to the cost of maintaining personnel on board
the rigs and equipment maintenance when the rigs are idle. Labor costs increase
primarily due to higher salary levels, rig staffing requirements and inflation.
Equipment maintenance expenses fluctuate depending upon the type of activity the
rig is performing and the age and condition of the equipment. Inflation is
another contributing factor in the fluctuation of operating expenses.
The changes in operating income are more directly affected by revenue
factors than expense factors since changes in dayrates directly impact revenues
but not expenses. Utilization rate changes have a significant impact on
revenues, but in the short-term do not impact expenses. Over a long period,
significant changes in utilization may cause the Company to adjust the level of
its actively marketed rig fleet and labor force to match anticipated levels of
demand, thus changing the level of operating expenses. General and
administrative expenses do not vary significantly unless the Company materially
expands or contracts its asset base. Depreciation, which is affected by the
Company's level of capital expenditures and depreciation practices is another
major determinant of operating income, and is not affected by changes in
dayrates or utilization.
11
<PAGE> 14
The following table sets forth the average rig utilization rates,
operating days, average day rates, revenues and operating expenses of the
Company by operating segments for the periods indicated:
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED FOR THE SIX MONTHS ENDED
JUNE 30, JUNE 30,
--------------------------- ---------------------------
2000 1999 2000 1999
------------ ----------- ---------- ----------
(dollars in thousands except per day data)
<S> <C> <C> <C> <C> <C>
Jack-ups
Operating days 1,076 836 2,210 1,646
Utilization (1) 79% 61% 81% 61%
Average revenue per day $ 26,931 $ 18,507 $ 24,378 $ 21,445
Revenue 28,964 15,472 53,868 35,299
Contract drilling expense (2) 22,522 14,901 41,929 31,587
Depreciation 4,170 3,954 8,267 7,883
Operating income (loss) 2,272 (3,383) 3,672 (4,171)
Semi-submersibles
Operating days 182 -- 364 --
Utilization (1) 100% 0% 100% 0%
Average revenue per day $ 164,823 $ -- $ 158,171 $ --
Revenue 29,998 31 57,574 31
Contract drilling expense (2) 7,045 821 15,258 1,707
Depreciation 5,943 1 11,868 2
Operating income (loss) 17,010 (791) 30,448 (1,678)
Total Company:
Operating days 1,258 836 2,574 1,646
Utilization (1) 81% 57% 83% 57%
Average revenue per day $ 46,870 $ 18,544 $ 43,295 $ 21,464
Revenue 58,962 15,503 111,442 35,330
Contract drilling expense (2) 29,567 15,722 57,187 33,294
Depreciation and amortization 10,897 4,763 21,700 9,491
General and administrative expense 3,560 3,422 7,012 6,897
Operating income (loss) 14,938 (8,404) 25,543 (14,352)
</TABLE>
----------
(1) Based on the number of actively marketed rigs. Excluding rigs under
construction or in the process of substantial upgrading.
(2) Excludes depreciation and amortization and general and administrative
expenses.
Revenues. The Company's drilling revenues increased $43,459,000 or
280%, and $76,112,000 or 215% during the three and six-month periods ended June
30, 2000, respectively, as compared to the same period in 1999. The increase in
revenues was primarily due to higher average daily revenue and rig utilization.
Average daily revenue and rig utilization increased to $46,870 and 81%,
respectively, for the quarter ended June 30, 2000 as compared to $18,544 and
57%, respectively, for the same period in 1999. For the six months ended June
30, 2000 the average daily revenue and rig utilization increased to $43,295 and
83%, respectively, from average daily revenue of $21,464 and rig utilization of
57%, respectively, for the same period in 1999. The higher average daily revenue
and increased utilization were due to the MARINE 500 and MARINE 700
semi-submersible rigs that began operating in the third quarter of 1999, coupled
with improved market conditions in the Gulf of Mexico jack-up market.
Contract Drilling Expense. Contract drilling expenses for the three and
six months ended June 30, 2000 increased $13,845,000 or 88% and $23,893,000 or
72%, respectively, as compared to the same periods in 1999. The increase was
primarily a result of the MARINE 500 and MARINE 700 that began operating in the
third quarter of 1999 and higher utilization rates in the Gulf of Mexico jack-up
market.
12
<PAGE> 15
Depreciation and Amortization. Depreciation and amortization expense
for the three month and six months ended June 30, 2000 increased $6,134,000 and
$12,209,000, respectively, compared to the same periods in 1999. The increase
was principally due to depreciation associated with the upgrade of the MARINE
500 which was placed back in service in July 1999 and the construction of the
MARINE 700, which was placed in service in August 1999.
General and Administrative. General and administrative expenses for the
three and six-month periods ended June 30, 2000 were consistent with the same
periods in 1999.
Interest Expense. Interest expense for the three and six months ended
June 30, has increased compared to the same periods in 1999. The increases are
primarily the result of increased borrowings under the Credit Facility, coupled
with $1,700,000 and $2,700,000 in capitalized interest associated with upgrade
of the MARINE 500 and construction of the MARINE 700 for the three and six-month
periods ended June 30, 1999.
Interest Income. Interest income decreased $187,000 or 66% and $134,000
or 32% for the three and six months ended June 30, 2000, respectively, from the
comparable prior-year period. The decrease was related primarily to decreased
cash balances.
Other Income. Other income of $677,000 and $1,032,000 for the three and
six months ended June 30, 2000, respectively, was generated primarily from the
sale of drill pipe.
Income Taxes. Income tax expense increased for the three and six-month
periods ended June 30, 2000 compared to the same period in 1999, primarily due
to an increase in the Company's pretax income.
FINANCIAL CONDITION -- LIQUIDITY AND CAPITAL RESOURCES
Liquidity. At June 30, 2000, the Company had working capital of
$18,708,000 compared to working capital of $30,816,000 at December 31, 1999. The
decrease in working capital resulted from collection of an income tax receivable
and the subsequent debt repayments.
Net cash provided by operating activities for the six months ended June
30, 2000 increased by $21,007,000 to $55,332,000 compared to $34,325,000 for the
same period in the prior year. The increase is primarily attributable to the
increased dayrates and rig operating activity coupled with the collection of a
$19,297,000 income tax refund. Cash used in investing activities decreased
$136,061,000 during the first six months of 2000 to $29,800,000 from
$165,861,000 during the same period in 1999 due to completion of the MARINE 500
upgrade and construction of the MARINE 700 partially offset by the purchase of
the MARINE 202 in January 2000. Net cash used in financing activities during the
first six months ended June 30, 2000 of $23,594,000 resulted primarily from
$47,000,000 in debt repayments, partially offset by $18,461,000 in net proceeds
from the sale of 1,000,000 shares of common stock in January 2000. The proceeds
of the stock offering were used to purchase the MARINE 202.
On August 12, 1998, the Company entered into a credit agreement (the
"Credit Facility") with a consortium of domestic and international banks
providing financing of up to $200,000,000 to be used for rig acquisitions and
upgrades, as well as for general corporate purposes. The Credit Facility is a
five-year revolving credit facility and is secured by substantially all of the
Company's assets, including its rig fleet. The Company and its subsidiaries are
required to comply with various covenants and restrictions, including, but not
limited to, the maintenance of financial ratios and the restriction on payments
of dividends. Interest accrues at a rate of (i) London Interbank Offered Rate
("LIBOR") plus a margin determined pursuant to a debt to EBITDA calculation or
(ii) prime if a Base Rate Loan.
On September 21, 1999, the Company amended the Credit Facility. The
significant elements of the amendment include (i) an increase in the maximum
permitted ratio of debt to EBITDA to 4 to 1 compared to the original 3 to 1,
(ii) a modification to the definition of EBITDA to give pro forma effect to
certain newly acquired assets or long-term contracts, and (iii) a change to the
definition of working capital to include any available commitments under the
Credit Facility for purposes of satisfying the positive working capital
requirement. Also, the margin over LIBOR that the Company pays under the Credit
Facility was increased from a range of 75 to 125 basis points to 100 to 250
basis points.
13
<PAGE> 16
As of June 30, 2000, $135,000,000 was outstanding under the Credit
Facility. Subsequent to June 30, 2000, the Company made $10,000,000 in principal
payments, reducing the outstanding debt balance under the Credit Facility to
$125,000,000 as of August 1, 2000.
During 1997, and again recently in 2000, the improvement in the
offshore drilling market allowed the Company to place some of its offshore rigs
under longer-term contracts. The MARINE 305, MARINE 500 and MARINE 700 are
operating under long-term contracts that will generate contract revenues in
excess of $290,000,000 over the remaining life of the contracts. The MARINE 305
contract expires on November 5, 2001, the MARINE 500 contract expires on
December 31, 2001 and the MARINE 700 is under contract until August 5, 2004.
Capital Resources. During the six months ended June 30, 2000 the
Company spent $30,739,000 in capital expenditures consisting primarily of
disbursements for the acquisition, upgrade and mobilization of the MARINE 202
and the purchase of other rig machinery. On January 10, 2000, the Company
completed an offering of 1,000,000 shares of its Common Stock in an underwritten
offering at a net price of $18.50 per share, or $18,500,000. The proceeds of the
offering were used to acquire, upgrade and mobilize the Baruna V drilling rig.
The Company will continue to pursue acquisitions of additional drilling
rigs and related equipment and/or businesses. Future acquisitions, if any, would
likely be funded from the Company's working capital, the Credit Facility, or
through the issuance of debt and/or equity securities. The Company cannot
predict whether it will be successful in acquiring additional rigs, and
obtaining financing therefore, on acceptable terms. In addition, it is currently
anticipated that the Company will continue the upgrading of rigs to enhance
their capability to obtain longer-term contracts. The timing and actual amounts
expended by the Company in connection with its plans to upgrade and refurbish
selected rigs, as well as the type of rig modification comprising each program,
is subject to the discretion of the Company and will depend on the Company's
view of market conditions, the Company's cash flow, whether other acquisitions
are made, and other factors.
The Company anticipates that its available funds, together with cash
generated from operations and amounts that may be borrowed under the Credit
Facility and other potential funding sources, such as increased credit
facilities and private or public debt or equity offerings, will be sufficient to
fund its required capital expenditures, working capital and debt service
requirements for the foreseeable future. Future cash flows and the availability
of other funding sources, however, are subject to a number of uncertainties,
especially the condition of the oil and gas industry. Accordingly, there can be
no assurance that these resources will be sufficient to fund the Company's cash
requirements.
STATEMENT OF FINANCIAL ACCOUNTING STANDARDS
In June 1998, the Financial Accounting Standards Board issued Statement
of Accounting Standards (SFAS) No. 133, "Accounting for Derivative Instruments
and Hedging Activities," which establishes standards for accounting for and
disclosure of derivative instruments and hedging activities. SFAS No. 133, as
amended by SFAS No. 137 and SFAS No. 138, is effective for fiscal years
beginning after June 15, 2000. The Company does not expect SFAS No. 133 to have
a material effect on its reported results.
In March 2000, the FASB issued Interpretation No. 44, Accounting for
Certain Transactions Involving Stock Compensation: an Interpretation of APB
Opinion No. 25. Among other issues, Interpretation No. 44 clarifies the
application of Accounting Principles Board Opinion No. 25 (APB No. 25) regarding
(a) the definition of employee for purposes of applying APB No. 25, (b) the
criteria for determining whether a plan qualifies as a non-compensatory plan,
(c) the accounting consequence of various modifications to the terms of a
previously fixed stock option or award, and (d) the accounting for an exchange
of stock options in a business combination. The provisions of Interpretation No.
44 affecting the Company are to be applied on a prospective basis effective
July 1, 2000.
14
<PAGE> 17
101 no later than the quarter beginning March 1, 2001, with any cumulative
effect adjustment computed as of June 1, 2000. We cannot determine the potential
impact that SAB No. 101 may have on our consolidated financial position or
results of operations at this time.
FORWARD-LOOKING STATEMENTS
This Form 10-Q, particularly the section entitled "Management's
Discussion and Analysis of Financial Condition and Results of Operations",
contains certain forward-looking statements within the meaning of Section 27A of
the Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended, that are not historical facts concerning,
among other things, market conditions, the demand for offshore drilling
services, future acquisitions and fleet expansion, future financings, future rig
contracts, future capital expenditures including rig construction, upgrades and
refurbishments, and future results of operations. Actual results may differ
materially from those included in the forward-looking statements, and no
assurance can be given that the Company's expectations will be realized or
achieved. Important factors and risks that could cause actual results to differ
materially from those referred to in the forward-looking statements include (i)
a prolonged period of low oil or gas prices; (ii) the inadequacy of insurance
and indemnification to protect the Company against liability from all
consequences of well disasters, fire damage or environmental damage; (iii) the
inability of the Company to obtain insurance at reasonable rates; (iv) a
decrease in the demand for offshore drilling rigs especially in the U.S. Gulf of
Mexico; (v) the risks attendant with operations in foreign countries including
actions that may be taken by foreign countries and actions that may be taken by
the United States against foreign countries; (vi) the failure of the Company to
successfully compete with the Company's competitors that are larger and have a
greater diversity of rigs and greater financial resources than the Company;
(vii) a decrease in rig utilization resulting from reactivation of currently
inactive non-marketed rigs or new construction of rigs; (viii) the continuation
of market and other conditions similar to those in which the Company incurred
net losses for the six months ended June 30, 1999; (ix) the loss of key
management personnel or the inability of the Company to attract and retain
sufficient qualified personnel to operate its rigs; (x) the re-negotiation or
cancellation of the long-term contracts for the MARINE 700 or the MARINE 500,
whether as a result of rig performance or because of some other reason; (xi) the
adoption of additional laws or regulations that limit or reduce drilling
opportunities or that increase the cost of drilling or increase the potential
liability of the Company; (xii) the occurrence of risks attendant to contract
drilling operations including blowouts, cratering, fires and explosions,
capsizing, grounding or collision involving rigs while in operation,
mobilization or otherwise or damage to rigs from weather, sea conditions or
unsound location; (xiii) adverse uninsured litigation results; (xiv) adverse tax
consequences with respect to operations; and (xv) adequacy of the Company's cash
resources in the future. These forward-looking statements speak only as of the
date of this Report. The Company expressly disclaims any obligation or
undertaking to release publicly any updates or revisions to any forward-looking
statement contained herein to reflect any change in the Company's expectations
with regard thereto or any change in events, conditions or circumstances on
which any statement is based.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Interest Rate Risk. The Company is subject to market risk exposure
related to changes in interest rates on its Credit Facility. Interest on
borrowings under the Credit Facility is at either the prime interest rate or
LIBOR plus a margin ranging from 1% to 2.5% determined pursuant to a debt to
EBITDA calculation. The Company may, at its option, fix the LIBOR interest rate
for certain borrowings for 30 days to 6 months, with longer periods requiring
bank approval. As of June 30, 2000, the margin for all LIBOR borrowings was
1.75% and the Company had $135 million outstanding under its Credit Facility.
Effective July 17, 2000, the margin for all LIBOR borrowings was 1.50%. On the
$135 million balance, an immediate change of one percent in the interest rate
would cause a change in interest expense of approximately $1.35 million on an
annual basis.
Foreign Currency Exchange Rate Risk. The Company conducts business in
several foreign countries. Predominately all of its foreign operations are
denominated in U.S. dollars. The Company structures its drilling contracts in
U.S. dollars to mitigate its exposure to fluctuations in foreign currencies.
Other than some limited trade payables the Company does not currently have
financial instruments that are sensitive to foreign currency exchange rates.
15
<PAGE> 18
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Jagson International Limited ("Jagson"), an Indian entity, has brought
suit against Marine Drilling Companies, Inc. and one of its subsidiaries, Marine
300 Series, Inc. The plaintiff has alleged that the Company agreed to charter
two jack-up rigs to the plaintiff during 1992 and that the Company breached the
agreement by failing to charter the rigs resulting in damages in excess of
$14,500,000. In August 1995, Jagson filed a suit against the Company in New
Delhi, India that was subsequently withdrawn and filed a second suit in New
Delhi against the Company in October 1995 that was dismissed by the court. In
May 1996, Jagson filed a third suit against the Company in Bombay, India for the
same claim and attempted to attach the MARINE 201, located in India at the time,
to the claim. In March 1998, the court dismissed the motion for attachment.
Although the third suit is still on file with the court, the MARINE 201 is no
longer in India and there have been no further proceedings in the lawsuit. The
Company disputes the existence of the agreement and intends to vigorously defend
the suit. The Company does not believe this dispute will have a material adverse
effect on its results of operations or financial condition.
Various other claims have been filed against the Company and its
subsidiaries in the ordinary course of business, particularly claims alleging
personal injuries. Management believes that the Company has adequate insurance
coverage and has established adequate reserves for any liabilities that may
reasonably be expected to result from these claims. In the opinion of
management, no pending claims, actions or proceedings against the Company or its
subsidiaries are expected to have a material adverse effect on its financial
position or results of operations.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Annual Meeting of Stockholders of the Company was held on May 11,
2000. At the meeting, seven directors were elected by a vote of holders of
Common Stock, as outlined in the company's Proxy Statement related to the
meeting. With respect to the election of directors, (i) proxies were solicited
pursuant to Regulation 14A under the Securities Exchange Act of 1934, as
amended, (ii) there was no solicitation in opposition to the management's
nominees as listed in the Proxy Statement, and (iii) all of such nominees were
elected. The following numbers of votes were cast as to the director nominees:
<TABLE>
<CAPTION>
VOTES CAST
-----------------------------------------------------------------------
BROKER
NOMINEE TOTAL IN FAVOR WITHHELD NON-VOTES ABSTAINING
------------- ---------- ---------- --------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Mr. Barbanell 49,841,662 49,646,774 194,888 -- --
Mr. Brown 49,841,662 49,646,774 194,888 -- --
Mr. Bull 49,841,662 49,646,774 194,888 -- --
Mr. Burton 49,841,662 49,646,774 194,888 -- --
Mr. Rask 49,841,662 49,646,774 194,888 -- --
Mr. Robson 49,841,662 49,646,774 194,888 -- --
Mr. Thomas 49,841,662 49,646,774 194,888 -- --
--------------------------------------------------------------------------------------------
</TABLE>
The second item voted upon at the meeting was to approve the Marine
Drilling 2000 Stock Incentive Plan with votes cast as follows:
<TABLE>
<CAPTION>
IN FAVOR AGAINST BROKER NON-VOTES ABSTAINING
VOTES CAST VOTES VOTES VOTES VOTES
<S> <C> <C> <C> <C>
44,116,923 18,817,316 24,508,695 5,724,739 790,912
---------------------------------------------------------------------------------------------------------
</TABLE>
16
<PAGE> 19
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
Exhibits No. Description
------------ -----------
15 Letter regarding unaudited interim financial
information
27 Financial Data Schedule. (Exhibit 27 is being
submitted as an exhibit only in the electronic
format of this Quarterly Report on Form 10-Q being
submitted to the U.S. Securities and Exchange
Commission.)
(b) Reports on Form 8-K:
No reports on Form 8-K were filed during the second quarter of 2000.
17
<PAGE> 20
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
MARINE DRILLING COMPANIES, INC.
(Registrant)
Date: August 7, 2000 By /s/ T. Scott O'Keefe
------------------------------------
T. Scott O'Keefe
Senior Vice President and
Chief Financial Officer
(Principal Financial Officer)
Date: August 7, 2000 By /s/ Dale W. Wilhelm
------------------------------------
Dale W. Wilhelm
Vice President and Controller
(Principal Accounting Officer)
18
<PAGE> 21
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<S> <C>
15 Letter regarding unaudited interim financial information
27 Financial Data Schedule. (Exhibit 27 is being submitted as an
exhibit only in the electronic format of this Quarterly Report on
Form 10-Q being submitted to the U.S. Securities and Exchange
Commission.)
</TABLE>
