<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended February 28, 1994
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: 1-7864
TRITON ENERGY CORPORATION
(Exact name of registrant as specified in its charter)
Texas 75-1151855
(State or other jurisdiction (I.R.S. Employer
of incorporation or Identification No.)
organization)
6688 N. Central Expressway, Suite 1400, Dallas, Texas 75206
(Address of principal executive offices and zip code)
Registrant's telephone number, including area code: (214)691-5200
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.
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
Title of Each Class of Common Stock Number of Shares
Outstanding at March 31, 1994
Common Stock, par value $1.00 per share 35,443,362
<PAGE>
TRITON ENERGY CORPORATION AND SUBSIDIARIES
INDEX
PART I. Financial Information Page No.
Item 1. Financial Statements
Consolidated Condensed Balance Sheets -
February 28, 1994 and May 31, 1993 2
Consolidated Condensed Statements of Operations -
Three and nine months ended February 28, 1994 and 1993 3
Consolidated Condensed Statements of Cash Flows -
Nine months ended February 28, 1994 and 1993 4
Consolidated Condensed Statement of Stockholders' Equity -
Nine months ended February 28, 1994 5
Notes to Consolidated Condensed Financial Statements 6
Review of Independent Accountants 11
Review Report of Independent Accountants 12
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 13
PART II. Other Information
Item 1. Legal Proceedings 22
Item 6. Exhibits and Reports on Form 8-K 22
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
TRITON ENERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(Thousands of dollars)
<TABLE>
ASSETS February 28,
1994 May 31,
(Unaudited) 1993
<S> <C> <C>
Current assets:
Cash and equivalents $ 106,037 $ 52,939
Short-term investments 86,396 24,253
Receivables 11,148 16,716
Inventories 4,724 5,783
Net assets of discontinued operations 4,644 21,789
Prepaid expenses and other 1,112 787
Total current assets 214,061 122,267
Property and equipment, at cost, less
accumulated depreciation and depletion of
$488,751 and $525,142, respectively 293,190 331,471
Investments and other assets 101,310 108,193
$ 608,561 $ 561,931
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term borrowings and current
installments of long-term debt $ 2,128 $ 6,720
Accounts payable and accrued liabilities 25,117 38,840
Liabilities of discontinued operations 8,459 31,360
Deferred income taxes --- 2,583
Total current liabilities 35,704 79,503
Long-term debt, excluding current installments 286,696 159,147
Convertible debentures due to employees --- ---
Deferred income taxes --- 13,178
Deferred income and other 9,921 9,100
Minority interest in subsidiaries 17,273 34,172
Redeemable preferred stock of subsidiary --- 11,399
Stockholders' equity:
Common stock, par value $1 35,484 35,231
Additional paid-in capital 504,824 502,217
Accumulated deficit (273,109) (276,965)
Foreign currency translation adjustment (7,305) (4,087)
Adjustment for minimum pension liability (246) (246)
259,648 256,150
Less cost of common stock in treasury 681 718
Total stockholders' equity 258,967 255,432
Commitments and contingencies (Note 7)
$ 608,561 $ 561,931
</TABLE>
Oil and gas properties are accounted for using the full cost method.
See accompanying notes to consolidated condensed financial statements.
<PAGE>
TRITON ENERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
Three and nine months ended February 28, 1994 and 1993
(Thousands, except per share amounts)
(Unaudited)
<TABLE>
Three months ended Nine months ended
February 28, February 28,
1994 1993 1994 1993
<S> <C> <C> <C> <C>
Revenues:
Sales and other operating revenues $ 9,599 $ 26,084 $ 45,571 $ 78,726
Gain on sale of Triton Canada
common stock --- --- 47,865 ---
Other income 2,885 3,184 13,000 4,996
12,484 29,268 106,436 83,722
Costs and expenses:
Operating including nil,
$1,968, $2,075 and $5,283
to affiliate 8,093 12,752 32,963 40,461
General and administrative 7,647 11,092 23,661 28,226
Depreciation, depletion and
amortization 4,214 17,924 17,028 37,805
Equity in loss of affiliates, net 1,205 5,664 1,235 9,746
Writedown of assets and loss
provisions 14,697 91,626 38,593 96,060
Interest 2,299 1,701 5,217 1,701
38,155 140,759 118,697 213,999
Earnings (loss) from continuing
operations before income taxes,
minority interest and cumulative
effect of accounting change (25,671) (111,491) (12,261) (130,277)
Income tax benefit (413) (26,824) (4,285) (29,643)
(25,258) (84,667) (7,976) (100,634)
Minority interest in loss of
subsidiaries 5,273 26,049 11,832 25,473
Earnings (loss) from continuing
operations before cumulative
effect of accounting change (19,985) (58,618) 3,856 (75,161)
Discontinued operations:
Loss from operations --- (6,505) --- (8,577)
Gain on public stock offering --- --- --- 13,841
Earnings (loss) before
cumulative effect of
accounting change (19,985) (65,123) 3,856 (69,897)
Cumulative effect of
accounting change --- --- --- 4,017
Net earnings (loss) $ (19,985) $ (65,123) $ 3,856 $ (65,880)
Weighted average number of
common shares outstanding 34,843 34,372 34,737 34,142
Earnings (loss) per common share:
Continuing operations $ (0.57) $ (1.71) $ 0.11 $ (2.20)
Discontinued operations --- (0.19) --- 0.15
Cumulative effect of
accounting change --- --- --- 0.12
Net earnings (loss) $ (0.57) $ (1.90) $ 0.11 $ (1.93)
</TABLE>
See accompanying notes to consolidated condensed financial statements.
<PAGE>
TRITON ENERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
Nine months ended February 28, 1994 and 1993
(Thousands of dollars)
(Unaudited)
<TABLE>
1994 1993
<S> <C> <C>
Cash flows from operating activities:
Net earnings (loss) $ 3,856 $ (65,880)
Adjustments to reconcile net earnings (loss)
to net cash used by operating activities:
Depreciation, depletion and amortization 17,028 41,194
Gain on Input/Output, Inc. public stock offering --- (13,841)
Gain on sale of Triton Canada common stock (47,865) ---
Gain on sale of domestic properties (6,945) ---
Equity in loss of affiliates 2,226 10,780
Writedown of assets 38,593 97,591
Foreign exchange gain (919) (1,047)
Amortization of debt discount 5,217 3,467
Deferred income taxes, minority interest and other (21,048) (57,198)
Changes in working capital pertaining to
operating activities (13,621) (21,356)
Net cash used by operating activities (23,478) (6,290)
Cash flows from investing activities:
Capital expenditures and investments (65,089) (85,723)
Proceeds from Input/Output, Inc. public
stock offering --- 24,144
Proceeds from sale of Triton Canada common stock 59,029 ---
Proceeds from sale of domestic properties 19,502 ---
Purchases of short-term investments (90,931) (44,910)
Proceeds from short-term investments 28,788 ---
Other 4,008 (5,099)
Net cash used by investing activities (44,693) (111,588)
Cash flows from financing activities:
Proceeds from short-term borrowings with
maturities greater than three months --- 8,617
Short-term borrowings, net (1,640) (5,605)
Proceeds from long-term debt 123,200 131,918
Payments on long-term debt (2,914) (9,501)
Issuance of common stock 2,831 4,398
Other (1,053) (1,978)
Net cash provided by financing activities 120,424 127,849
Effect of exchange rate changes on cash and equivalents 845 (424)
Net increase in cash and equivalents 53,098 9,547
Cash and equivalents at beginning of period 52,939 52,601
Cash and equivalents at end of period $ 106,037 $ 62,148
</TABLE>
See accompanying notes to consolidated condensed financial statements.
<PAGE>
TRITON ENERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENT OF STOCKHOLDERS' EQUITY
Nine months ended February 28, 1994
(Thousands of dollars)
(Unaudited)
<TABLE>
Additional Total
Common paid-in Accumulated Treasury stockholders'
stock capital deficit Other stock equity
<S> <C> <C> <C> <C> <C> <C>
Balances at
May 31, 1993 $35,231 $502,217 $ (276,965) $(4,333) $(718) $ 255,432
Net earnings --- --- 3,856 --- --- 3,856
Foreign currency
translation
adjustment --- --- --- (3,218) --- (3,218)
Exercise of
employee stock
options and
conversion of
employee
debentures 253 2,578 --- --- --- 2,831
Other --- 29 --- --- 37 66
Balances at
February 28,
1994 $ 35,484 $504,824 $ (273,109) $(7,551) $(681) $ 258,967
</TABLE>
See accompanying notes to consolidated condensed financial statements.
<PAGE>
TRITON ENERGY CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
(1) General
In the opinion of management, the accompanying unaudited consolidated
condensed financial statements of Triton Energy Corporation and
subsidiaries (collectively, the "Company") contain all adjustments of
a normal recurring nature necessary to present fairly the Company's
financial position as of February 28, 1994, and the results of its
operations for the three and nine month periods ended February 28,
1994 and 1993, its cash flows for the nine months ended February 28,
1994 and 1993, and stockholders' equity for the nine months ended
February 28, 1994. The results of operations for the three and nine
month periods ended February 28, 1994 and 1993, are not necessarily
indicative of the final results to be expected for the full year.
The consolidated condensed financial statements should be read in
conjunction with the Notes to Consolidated Financial Statements, which
are included as part of the Company's Annual Report on Form 10-K for
the year ended May 31, 1993.
The consolidated condensed financial statements for the three and nine
month periods ended February 28, 1993 have been restated for the
adoption of FAS 109, "Accounting for Income Taxes" effective June 1,
1992. The consolidated condensed statements of operations for the
three and nine month periods ended February 28, 1993, have been restated
to present the wholesale fuel products segment as a discontinued
operation. Certain other previously reported financial information has
been reclassified to conform to the current year's presentation.
(2) Earnings (loss) per Common Share
Earnings (loss) per common share for the three and nine month periods
ended February 28, 1994 and 1993 were based on the earnings (loss)
applicable to common stock divided by the weighted average number of
common shares outstanding, which excluded the Company's share of its
common stock owned by Crusader Limited ("Crusader"). Fully diluted
earnings (loss) per common share has not been presented due to the
antidilutive effect of including all potentially dilutive securities.
(3) Divestitures and Discontinued Operations
As a result of selling its 76% interest in the common stock of Triton
Canada Resources Ltd. ("Triton Canada"), the Company recorded a pretax
gain of $47,865,000 during the first quarter. Net proceeds of
$59,029,000 were received in the second quarter.
In August and October 1993, the Company sold its U.S. working interest
properties for net proceeds of $19,502,000, resulting in a pretax gain
of $6,945,000. The properties that were sold accounted for
approximately 55.7% ($21,570,000) of discounted future net revenues
associated with U.S. proved reserves at May 31, 1993.
In fiscal 1993, the Company initiated a plan to discontinue its
remaining operations in the wholesale fuel products segment. On
September 16, 1993, the Company completed the sale of the aviation
fuels component of this segment for approximately $15,000,000. The sale
<PAGE>
TRITON ENERGY CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
proceeds were used principally to retire existing obligations of this
operation. The remaining assets and liabilities consist principally of
various wholesale fuel products operations. For the nine months ended
February 28, 1994, both the loss from operations of $2,798,000 and the
loss from sale of assets of $8,756,000 were included in the estimated
loss on disposal of discontinued operations recorded in fiscal 1993.
Operating revenues were $79,562,000 for the nine months ended
February 28, 1994.
The operating results of Input/Output, Inc. ("Input/Output") have been
presented as discontinued operations in the Company's consolidated
condensed statements of operations because of the Company's sale of its
remaining 26.9% interest in Input/Output through a secondary public
offering on August 12, 1992. Net cash proceeds from the offering of
$24,144,000 resulted in a net gain of $13,841,000.
(4) Writedown of Assets
During the three and nine month periods ended February 28, 1994, the
carrying amounts of the Company's evaluated oil properties in France
were written down by $14,545,000 and $38,441,000, respectively,
principally as a result of lower oil prices used in the calculation of
the ceiling limitation prescribed by the Securities and Exchange
Commission (the "Commission").
During the three and nine month periods ended February 28, 1993, as a
result of Triton Europe p.l.c.'s ("Triton Europe") decision to curtail
certain exploration activities in both France and the United Kingdom,
$19,205,000 of cost related to unproved properties was considered to be
impaired and written down. Additionally, in connection with Triton
Europe's decision to eliminate certain of its future development
activities in the Villeperdue Field, the Company recorded a significant
decrease in its proved undeveloped reserves, resulting in a $55,740,000
writedown of French proved property costs. Also for the nine months
ended February 28, 1993, the Company wrote down its proved properties
in the United States ($831,000) and Indonesia ($7,179,000) and its
unproved properties in Indonesia ($2,055,000), New Zealand ($3,878,000),
and other areas ($1,627,000). Other writedowns and loss provisions
aggregating $5,545,000 related primarily to litigation.
For the three months ended February 28, 1993, in addition to the above
mentioned writedowns, writedowns were taken in Indonesia ($7,179,000),
New Zealand ($3,878,000) and in other areas ($1,627,000). Other
writedowns and loss provisions related to aviation assets of $1,739,000
and litigation and other of $2,258,000.
<PAGE>
TRITON ENERGY CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
(5) Statements of Cash Flows
The Company considers all highly liquid investments purchased with an
original maturity of three months or less to be cash equivalents.
Supplemental disclosures of cash flow information for the nine months
ended February 28, 1994 and 1993 follow (thousands of dollars):
<TABLE>
1994 1993
<S> <C> <C>
Cash paid during the periods for:
Interest (net of amount capitalized) $ --- $ ---
Income taxes 222 1,266
Noncash investing and financial activities:
Liabilities resulting from acquisition --- 1,265
Sale of the Company's shares by Crusader Limited --- 3,920
</TABLE>
(6) Issuance of Debt
In December 1993, the Company completed the sale of $170,000,000 in
principal amount of 9 3/4% Senior Subordinated Discount Note ("9 3/4%
Notes") due December 15, 2000, providing net proceeds to the Company
of approximately $124,000,000. The original issue price was 75.17% of
par representing a yield to maturity of 9 3/4%. No interest is payable
on the 9 3/4 % Notes during the first three years of issue. Commencing
December 15, 1996, interest on the 9 3/4% Notes will accrue at the rate
of 9 3/4% per annum and will be payable semiannually on each June 15
and December 15, beginning on June 15, 1997. The proceeds are being
used to fund capital expenditure requirements relating to the Company's
exploration and development program, primarily in Colombia, and for
general corporate purposes.
The Indenture for the 9 3/4% Notes contains financial covenants which
include limitations on indebtedness, dividends, certain investments,
transactions with affiliates, and engaging in mergers and
consolidations. Additional provisions include optional and mandatory
redemptions, and requirements associated with changes in control.
The balance of the 9 3/4% Notes at February 28, 1994 was $130,393,000.
<PAGE>
TRITON ENERGY CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
(7) Commitments and Contingencies
(a) Commitments
During the normal course of business, the Company is subject to
the terms of various operating agreements and capital commitments
associated with the exploration and development of its oil and
gas properties. Many of these commitments are discretionary on
the part of the Company. It is management's belief that such
commitments, including the capital requirements in Colombia,
discussed below, will be met without any material adverse effect
on the Company's consolidated financial condition.
Tests of the first eight wells in the Company's Cusiana and
Cupiagua fields in Colombia indicate significant oil discover on
which the Company expects to incur significant capital
expenditures in fiscal 1994 for exploratory and development
drilling, pipeline and production facilities and related
activities. The Company's capital budget for fiscal 1994, adopted
in June 1993, is approximately $140 million, excluding capitalized
interest, of which approximately $100 million relates to Colombia.
The Company believes that current working capital plus anticipated
cash flows will be sufficient to finance this commitment into at
least 1995.
(b) Guarantees
The Company has guaranteed $9,360,000 of loans related to its
ownership in a Colombian pipeline and $2,016,000 of loans from
financial institutions related to aviation property.
Additionally, in December 1993, the Company guaranteed
$1,300,000 in indebtedness that may be incurred by the chief
executive officer of the Company to finance the construction of
his primary residence.
(c) Regulatory Matters
On July 28, 1992, the Commission requested that the Company
provide to the Commission, on a voluntary basis, information
and documents regarding certain of the Company's employees and
former employees, the Company's operations in Indonesia, the
Company's dealings with Indonesian officials and the Company's
internal accounting controls. The staff of the Commission has
advised the Company that the Company should not construe this
inquiry as an indication that any violation of law has occurred
or as an adverse reflection upon any person, entity or
security. Subsequently, the Company has been advised that the
Justice Department is conducting a similar inquiry. The
Company is voluntarily cooperating with both agencies and has
made available various documents. Based upon the Company's
review of the inquiries and the information available to the
Company to date, the Company believes that it will be able to
resolve any questions that either agency might have in a
manner that would not have a material adverse effect on the
Company's consolidated financial condition.
<PAGE>
TRITON ENERGY CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
(d) Litigation
The Company is subject to ordinary litigation that is
incidental to its business, none of which is expected to
have a material adverse effect on the Company's consolidated
financial condition.
(8) Subsequent Events
On March 8, 1994, the minority shareholders of Triton Europe approved
the Company's offer to purchase the shares of Triton Europe not owned
by the Company. The acquisition became effective on March 31, 1994
following approval by the High Court in the United Kingdom. Total
consideration amounted to approximately $20,000,000 consisting of
Convertible Preferred Stock - $18,000,000, and cash - $2,000,000.
The value attributed to each share of Convertible Preferred Stock was
120% of the average closing price for one share of the Company's
Common Stock for the five trading days prior to the High Court approval
or $34.41.
Each share of Convertible Preferred Stock is convertible into one share
of the Company's Common Stock any time on or after October 1, 1994 and
bears a fixed cash dividend of 5% per annum payable semi-annually on
March 30 and September 30, commencing on September 30, 1994. If not
converted earlier, each Convertible Preferred Share will be redeemed on
March 30, 2004, either for $34.41 in cash or, at the option of the
Company, for the Company's Common Stock.
On March 15, 1994, the Company announced the finalization of agreements
for commencement of joint petroleum operations in Block A-18, located
in the Malaysia-Thailand Joint Development Area. The Production
Sharing Contract between the Malaysian-Thailand Joint Authority,
Petronas Carigali and the Company must be submitted to the Government
of Malaysia and the Government of the Kingdom of Thailand for approval.
Petronas Carigali and the Company will each hold a 50% interest in
Block A-18, which encompasses approximately 700,000 acres. The
Company's net revenue interest after royalties will be approximately
34% and 24% before and after cost recovery, respectively.
<PAGE>
REVIEW OF INDEPENDENT ACCOUNTANTS
Price Waterhouse, independent accountants, have reviewed the consolidated
condensed financial information as of February 28, 1994, and for the three
and nine month periods then ended, included in this report. Such review was
made in accordance with standards established by the American Institute of
Certified Public Accountants. See accompanying independent accountant's
review report.
<PAGE>
REVIEW REPORT OF INDEPENDENT ACCOUNTANTS
To The Board of Directors and Shareholders of Triton Energy Corporation
We have reviewed the accompanying consolidated condensed balance sheet of
Triton Energy Corporation and subsidiaries as of February 28, 1994, the
related consolidated condensed statements of operations for the three and
nine month periods ended February 28, 1994 and 1993, the consolidated
condensed statements of cash flows for the nine month periods ended
February 28, 1994 and 1993 and the consolidated condensed statement of
stockholders' equity for the nine month period ended February 28, 1994.
This financial information is 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 accompanying interim financial information for it to
be in conformity with generally accepted accounting principles.
We previously audited in accordance with generally accepted auditing
standards, the consolidated balance sheet as of May 31, 1993, and the
related consolidated statements of operations, stockholders' equity and cash
flows for the year then ended (not presented herein), and in our report
dated August 18, 1993 we expressed an unqualified opinion on those
consolidated financial statements. In our opinion, the information set
forth in the accompanying consolidated condensed balance sheet as of
May 31, 1993, is fairly stated in all material respects in relation to
the consolidated balance sheet from which it has been derived.
PRICE WATERHOUSE
Dallas, Texas
April 4, 1994 <PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Liquidity and Capital Resources
General
Beginning in fiscal 1993, the Company initiated several strategic changes
with respect to its exploration and development programs and non-oil and gas
businesses. The Company is focusing its resources in high potential
exploration and development opportunities in Colombia, Malaysia/Thailand,
Argentina and in new ventures. Existing production, publicly owned
subsidiaries and affiliates and non-oil and gas assets have been re-evaluated
in order to sharpen this focus. This review led to the strategic decisions
to divest in fiscal 1994 the Company's working interests in oil and gas
reserves in the U.S., to sell the Company's common equity interest in Triton
Canada, to reassess development prospects in France, to discontinue
operations in the wholesale fuel products segment and to acquire the minority
interest in Triton Europe.
Financing Activities
Asset Sales
On September 10, 1993, the Company completed the sale of its 30.5 million
shares of common stock in Triton Canada. The Company received net proceeds
of $59 million and recognized a pretax gain of $47.9 million.
In August and October 1993, the Company sold its working interest reserves
in the United States for approximately $19.5 million and recognized a pretax
gain of $6.9 million.
On September 16, 1993, the Company sold for approximately $15 million the
aviation fuels component of its wholesale fuel products segment, which was
classified as a discontinued operation at May 31, 1993. The proceeds were
principally used to retire existing obligations of this operation.
On August 12, 1992, the Company sold its remaining holdings of 1,955,000
shares of common stock of the Company's former affiliate, Input/Output.
Net proceeds to the Company were approximately $24 million. The Company
recognized a net gain of $13.8 million from this sale.
Securities Sale
On September 22, 1993, the Company filed a shelf registration statement on
Form S-3 with the Commission for up to $300 million face amount of debt
securities. Under this shelf registration, in December 1993, the Company
completed the sale of the 9 3/4% Notes. Net proceeds to the Company of
approximately $124 million will be used to fund capital expenditure
requirements relating to the Company's exploration and development program,
primarily in Colombia, and for general corporate purposes. The indenture
to the 9 3/4% Notes contains certain covenants that are no more restrictive
than the covenants under the indenture for the outstanding 12 1/2% Senior
Subordinated Discount Notes due 1997. <PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Liquidity and Capital Resources - (Continued)
Net working capital increased to $178.4 million at February 28, 1994 from
$42.8 million at May 31, 1993 due to the financing activities described
above. The Company has engaged two investment managers to invest the
proceeds from the 9 3/4% Notes offering and other short term investments in
highly liquid debt securities to provide an acceptable rate of return while
maintaining liquidity for funding development projects.
Capital Requirements and Funding Alternatives
Continued funding for development of the oil fields in Colombia, including
drilling, production and transportation infrastructure will require
significant capital. At February 28, 1994, the Company had approximately
$192.4 million in cash and short-term investments on hand, which the Company
believes will be sufficient to fund currently anticipated capital
expenditures into 1995. The Company's capital budget for fiscal 1994 is
approximately $140 million, excluding capitalized interest, of which
approximately $100 million relates to Colombia. Substantially all of these
budgeted expenditures will be dedicated to oil and gas exploration and
development activities.
Total capital requirements for the full field development in Colombia have
not been determined, although they are expected to continue at substantial
levels into 1997. The Company's capital expenditures in fiscal 1995 and
subsequent years would be substantial, but materially reduced, if necessary
pipeline infrastructure is financed and owned, in whole or in part, by
third parties. The Company expects to meet its direct capital needs in
fiscal 1995 and later years with cash on hand, short term investments, cash
flow from operations, proceeds from asset sales and the issuance of debt or
equity securities.
Acquisitions
On March 31, 1994, the Company received final approval from the High Court
in the United Kingdom to purchase the shares of Triton Europe not owned by
the Company. As a 100% owned subsidiary, Triton Europe will give the
Company a European base of operations to explore new ventures and improve
the Company's access to cash flow, cash on-hand and borrowing capacity.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Consolidated Results of Operations
Overview
The Company reported net earnings from continuing operations of $3.9 million
for the nine months ended February 28, 1994 compared to a net loss of $75.2
million for the same period in 1993. This improvement resulted principally
from the gain realized on the sale of Triton Canada common stock and lower
writedowns in the carrying amounts of oil and gas properties.
Divestitures
During the first and second quarter of fiscal 1994, the Company sold its
investment in Triton Canada and the U.S. working interest properties, which
resulted in an aggregate pretax gain of $54.8 million. The summary financial
information provided below represents the operating results and other
operating data for both Triton Canada and the U.S. working interest properties
for the three month and nine month periods ended February 28, 1994 and 1993.
Explanations provided in the remainder of this discussion focus on variances
caused by the Company's remaining operations.
<TABLE>
Triton Canada and U. S. Working Interest
Properties
Three Months Ended Nine Months Ended
February 28, February 28,
1994 1993 1994 1993
(In thousands of dollars, except
where indicated)
<S> <C> <C> <C> <C>
Sales and other operating
revenues $ --- $ 9,382 $ 7,682 $ 25,862
Costs and expenses --- 8,496 7,584 25,682
Net earnings (loss) --- 708 44 (401)
Oil production (Mbbls) --- 148 122 435
Gas production (Mmcf) --- 4,323 3,644 12,358
Weighted average price per bbl --- 15.42 16.39 16.80
Weighted average price per Mcf --- 1.22 1.15 1.10
</TABLE>
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Consolidated Results of Operations
Quarter Ended February 28, 1994 and 1993
Overall Financial Review
Revenues
As discussed under "Segment Review", the decrease in sales and other
operating revenues resulted from lower sales in the oil and gas and
aviation sales and services segments. Also affecting the current quarter
was an increase in interest income of $1.2 million due to investing the
proceeds from the 9 3/4% Notes offering which were received in December
1993.
Costs and Expenses
General and administrative expenses decreased $3.4 million as decreases in
the oil and gas segment (see "Segment Review") were partially offset by
the effect of increases in personnel at the corporate office.
Interest expense before capitalization increased $2.4 million primarily
because of the amortization of debt discount associated with the 9 3/4%
Notes issued in December 1993.
Equity in losses of affiliates for the three months ended February 28, 1994
and 1993 consisted of the following
<TABLE>
1994 1993
(In thousands)
<S> <C> <C>
Crusader - 49.9% owned $ 1,124 $ 857
Aero - 28% owned --- 4,986
Other 81 (179)
$ 1,205 $ 5,664
</TABLE>
The Company's equity in Crusader decreased primarily because of a writedown
related to unproved properties in New Zealand ($.5 million net to the
Company). The Company's investment in Aero was carried at cost during the
current period.
Minority Interest in Losses of Subsidiaries
The change in minority interest resulted from a reduction in operating
losses for Triton Europe due to lower writedowns and the effect of the
restructuring in 1993.
Income Taxes
The income tax benefit reported for the three months ended February 28,
1993 was principally due to a foreign tax benefit from the writedown of
oil and gas properties in France ($18.8 million) and a net deferred tax
asset in the United States ($8 million). <PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Consolidated Results of Operations
<TABLE>
Segment Review
Three Months Ended
February 28,
1994 1993
Oil and gas exploration and production (In thousands of dollars,
activities excluding equity investees: except where indicated)
<S> <C> <C>
Sales and other operating revenues $ 6,653 $ 20,484
Operating, G&A and DD&A expenses 11,034 31,564
Writedowns 14,697 87,629
Oil production (Mbbls) 439 776
Gas production (Mmcf) 234 4,576
Weighted average price per bbl 14.09 18.42
Weighted average price per Mcf 1.97 1.27
Aviation sales and services:
Sales and other operating revenues 2,637 3,810
Operating, G&A and DD&A expenses 2,853 4,773
Writedowns --- 1,739
</TABLE>
Oil and gas activities
Oil sales decreased principally due to lower sales volumes in France
(103,000 barrels or a $2 million effect) caused by the natural decline in
the Villeperdue field. Sales volumes also decreased in Colombia
(76,000 barrels or a $1.1 million effect) due to fewer liftings in 1994
compared to 1993. Also affecting sales was a decline in oil prices in
Indonesia ($10.67 per barrel or a $1.2 million effect) and to a lesser extent
in France ($4.19 per barrel or a $1 million effect).
Operating expenses, excluding operations sold during fiscal 1994, remained
level even though production was lower, due to an accrual for environmental
costs in the U.S. of $1.1 million.
General and administrative expenses decreased $4.1 million primarily due to
the effect of the restructuring of Triton Europe ($2.1 million) and higher
capitalization due to increased exploration activity in Colombia.
Depreciation, depletion and amortization decreased $13.7 million due to
lower sales volumes and lower depletable bases in France and Indonesia
caused by writedowns taken in fiscal 1993.
In the quarter ended February 28, 1994, lower oil prices caused writedowns
of $14.5 million related to proved properties in France. In the quarter
ended February 28, 1993, writedowns in Triton Europe totaled $74.9 million
of which $55.7 million related to proved reserves in France and $19.2
million related to unproved properties in Europe and France. In addition,
during the 1993 quarter, writedowns were taken in Indonesia ($7.2 million),
New Zealand ($3.9 million) and in other areas ($1.6 million). <PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Consolidated Results of Operations
Aviation Sales and Services
Sales in the aviation segment decreased $1.2 million principally from the
divestiture of three fixed based operations and a reduction in charter and
maintenance services. The near-term outlook for operations currently
remaining in this segment has diminished due to a continuing decline in
demand for general aviation goods and services.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Consolidated Results of Operations
Nine Months Ended February 28, 1994 and 1993
Overall Financial Review
Revenues
As discussed under "Segment Review," the decrease in revenues resulted
from lower sales in the oil and gas and aviation segments, offset by a
$47.9 million pretax gain from the sale of the Company's investment in
Triton Canada. Other income increased due to a $6.9 million pretax gain
recorded on the sale of oil and gas properties in the U.S. during fiscal
1994 and higher interest income of $1.6 million due to investment of the
proceeds from the 9 3/4% Notes issued in December 1993.
Costs and Expenses
General and administrative expenses decreased $4.6 million primarily due
to decreases in costs resulting from the 1993 Triton Europe restructuring,
offset somewhat by the effect of staff additions and other costs in the
corporate office.
Interest expense increased during the period because of the amortization
of debt discount ($9.6 million effect before capitalization) associated
with the 9 3/4% Notes issued in December 1993 and the 12 1/2% Senior
Subordinated Discount Notes due 1997 issued in November 1992.
Equity in losses of affiliates during the nine months ended February 28,
1994 and 1993 consisted of the following:
<TABLE>
1994 1993
(In thousands)
<S> <C> <C>
Crusader - 49.9% owned $ 1,326 $ 2,700
Aero - 28% owned --- 7,256
Other (91) (210)
$ 1,235 $ 9,746
</TABLE>
Crusader's results of operations improved primarily because of decreases
in losses from its smokeless fuel operation in Ireland and increased
profitability by its U.S. and Canadian subsidiaries. The Company's
investment in Aero was carried at cost during the current period.
Discontinued Operations
Discontinued operations in fiscal 1993 consisted of a $13.8 million gain
on the sale of Input/Output, partially offset by losses from operations of
$8.6 million in the wholesale fuel products segment. Current year losses
for the wholesale fuel products segment are being offset against a loss
provision of $16.1 million recorded at May 31, 1993. <PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Consolidated Results of Operations
Income Taxes
The income tax benefit reported for the nine months ended February 28,
1994 represents the reversal of deferred tax liabilities in France of
$10.6 million (recorded as a result of the writedowns) and a gain of
$1 million from a refund of taxes paid on the 1991 sale of the North Sea
properties. The income tax benefit and the cumulative effect of accounting
changes in fiscal 1993 were the result of the adoption of SFAS 109,
"Accounting for Income Taxes".
Minority Interest in (Earnings) Loss of Subsidiaries
The change in minority interest between 1994 and 1993 was due to reduced
operating losses in Triton Europe principally due to lower writedowns and
general and administrative expenses due to the restructuring in 1993.
Environmental Matters
The Company's U.S. oil and gas exploration and fuels businesses involve
the storage, handling and sale of hazardous materials, including fuel
storage in underground tanks. Although the Company has sold a substantial
portion of these businesses, it remains liable for certain environmental
matters that may arise from its and its predecessors' past operations.
The Company believes that the level of future expenditures for environmental
matters, including cleanup obligations, is impracticable to determine with
any reasonable degree of accuracy. Management believes that such costs,
when finally determined, will not have a material adverse effect on the
Company's consolidated financial position. During the nine months ended
February 28, 1994, the Company accrued $3.4 million for environmental
costs.
Segment Review <TABLE>
Nine Months Ended
February 28,
1994 1993
Oil and gas exploration and production (In thousands of dollars
activities, excluding equity investees: except where indicated)
<S> <C> <C>
Sales and other operating revenues $ 33,804 $ 59,561
Operating, G&A and DD&A expenses 44,401 73,361
Writedowns 38,593 90,515
Oil production (Mbbls) 1,747 2,232
Gas production (Mmcf) 4,376 13,156
Weighted average price per bbl 15.85 19.31
Weighted average price per Mcf 1.33 1.14
Aviation sales and services:
Sales and other operating revenues 10,006 14,703
Operating, G&A and DD&A expenses 12,858 16,337
Writedowns --- 1,787
</TABLE>
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Consolidated Results of Operations
Oil and Gas Activities
Oil sales decreased during the current period due to lower sales volumes
(485,000 barrels or a $10.1 million effect on revenue) and lower oil prices
($3.46 per barrel or a $5.3 million effect on revenue). Sales in France
decreased 309,000 barrels during the current nine months, representing a
$6.4 million decrease in revenue. Lower sales volumes of 106,000 barrels
also occurred in Indonesia which caused a decline of $2.1 million. These
decreases were partially offset by the impact of Colombian revenues
(202,000 barrels or a $3 million effect) as sales commenced during the third
quarter of fiscal 1993. Oil prices also decreased, principally in France
($4.28 per barrel for an effect of $3.5 million).
The increase of $2.9 million in production costs was primarily due to new
production during the current period in Colombia ($2 million effect) and an
environmental accrual of $1.5 million in the U.S.
General and administrative expenses decreased $5 million principally due to
lower expenses in France and Europe ($3.3 million) resulting from the 1993
restructuring.
Depletion decreased $20.9 million (from $35 million in fiscal 1993) because
of property sales, declining sales volumes and a lower depletable base due
to current and prior period writedowns.
A writedown of $38.4 million was recorded in France for the nine months
ended February 28, 1994, principally due to the effect of lower prices.
The prior year writedown related to proved properties in France
($55.7 million) and Indonesia ($7.1 million), and unproved properties in
France and Europe ($19.2 million), Indonesia ($2.1 million), New Zealand
($3.9 million) and in other areas ($1.6 million).
Aviation Sales and Services
Sales in the aviation segment decreased $4.7 million principally due to the
cessation of aircraft unit sales, the divestiture of three fixed based
operations and a reduction in charter services and wholesale parts sales.
Operating expenses increased due to an accrual of $1.9 million for
environmental cleanup matters and higher fuel costs. <PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
As reflected in a Form 8-K filed by the Company on March 10, 1994, court
orders have been entered approving the previously announced settlement of
all pending security and derivative action law suits against the Company
and its officers and directors. These orders became final on April 8, 1994.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
The following exhibits are filed as part of this Quarterly Report on
Form 10-Q:
1. Exhibits required to be filed by Item 601 of Regulation S-K. (Where the
amount of securities authorized to be issued under or the amount of any of
Triton Energy Corporation's and any of its subsidiaries' or its affiliate
Crusader's, long-term debt agreements does not exceed 10% of the Company's
assets, pursuant to paragraph (b) (4) of Item 601 of Regulation S-K, in lieu
of filing such an exhibit, the Company hereby agrees to furnish to the
Commission upon request a copy of any agreement with respect to such
long-term debt.)
4.1 Specimen Stock Certificate of Common Stock, $1.00 par value, of the
Company. (1)
4.2 The Company's Restated Articles of Incorporation, and Amended and
Restated Bylaws.(3)
4.3 Amendments to Bylaws. (11)
4.4 Rights Agreement dated as of June 26, 1990, between Triton and
NationsBank of Texas, N.A. (f/k/a NCNB Texas National Bank), as Rights
Agent.(1)
4.5 Statement of Cancellation of Redeemable shares, dated October 1, 1991.
(6)
4.6 Form of Debt Securities.(10)
4.7 Proposed Form of Senior Indenture.(10)
4.8 Proposed Form of Senior Subordinated Indenture.(10).
4.9 Senior Subordinated Indenture by and between the Company and United
States Trust Company of New York, dated as of December 15, 1993. (11)
4.10 First Supplemental Indenture by and between the Company and United
States Trust Company of New York, dated as of December 15, 1993. (11)
4.11*Statement of Resolution Establishing and Designating a Series of
Shares of the Company, 5% Convertible Preferred Stock, no par value,
dated as of March 30, 1994.
10.1 Triton Energy Corporation Amended and Restated Retirement Income Plan.
(11)
10.2 Triton Energy Corporation Amended and Restated Supplemental Executive
Retirement Income Plan. (11)
10.3 1981 Employee Non-Qualified Stock Option Plan of Triton Energy
Corporation.(3) <PAGE>
PART II. OTHER INFORMATION
10.4 Amendment No.1 to the 1981 Employee Non-Qualified Stock Option Plan of
Triton Energy Corporation.(5)
10.5 Amendment No.2 to the 1981 Employee Non-Qualified Stock Option Plan of
Triton Energy Corporation.(3)
10.6 Amendment No. 3 to the 1981 Employee Non-Qualified Stock Option Plan of
Triton Energy Corporation. (11)
10.7 1985 Stock Option Plan of Triton Energy Corporation.(1)
10.8 Amendment No.1 to the 1985 Stock Option Plan of Triton Energy
Corporation.(3)
10.9 Amendment No. 2 to the 1985 Stock Option Plan of Triton Energy
Corporation. (11)
10.10 Triton Energy Amended and Restated 1986 Convertible Debenture Plan. (11)
10.11 1988 Stock Appreciation Rights Plan of Triton Energy Corporation.(4)
10.12 Triton Energy Corporation 1989 Stock Option Plan.(7)
10.13 Amendment No.1 to the Triton Energy Corporation 1989 Stock Option
Plan.(3)
10.14 Amendment No. 2 to the Triton Energy Corporation 1989 Stock Option
Plan. (11)
10.15 Triton Energy Amended and Restated 1992 Stock Option Plan. (11)
10.16 Form of Amended and Restated Employment Agreement by and among Triton
Energy Corporation and certain officers of Triton Energy Corporation.
(11)
10.17 Triton Energy Amended and Restated Restricted Stock Plan. (11)
10.18 Deed of Trust Note dated April 11, 1988, executed by Triton Aviation
Services, Inc. and API Terminal, Inc. and related documents, including
Guaranty of Triton Energy Corporation .(4)
10.19 Triton Energy Corporation Executive Life Insurance Plan.(2)
10.20 Triton Energy Corporation Long Term Disability Income Plan.(2)
10.21 Triton Energy Corporation Amended and Restated Retirement Plan for
Directors.(1)
10.22 Indenture dated as of November 13, 1992 between Triton and Chemical
Bank, with respect to the issuance of Senior Subordinated Discount
Notes due 1997.(8)
10.23 Supplemental Indenture dated as of July 1, 1993 between Triton Energy
Corporation and Chemical Bank.(4)
10.24 Supplemental Indenture dated as of August 16, 1993 between Triton
Energy Corporation and Chemical Bank.(4) <PAGE>
PART II. OTHER INFORMATION
10.25 Underwriting Agreement dated June 18, 1993 among Triton Canada
Resources Ltd., Triton Energy Corporation and the underwriters named
herein.(9)
10.26 Purchase and Sale Agreement among Triton Oil and Gas Corp., Triton
Energy Corporation and Torch Energy Advisors Incorporated dated
effective as of January 1, 1993.(4)
10.27 Agreement for Purchase and Sale of Assets Among Triton Fuel Group, Inc.
and AVFUEL Corporation dated August 25, 1993.(4)
10.28 Contract for Exploration and Exploitation for SDLA with an effective
date of July 1, 1982, between Triton Colombia, Inc. , and Empresa
Colombiana De Petroleos.(4)
10.29 Contract for Exploration and Exploitation for Tauramena with an
effective date of July 4, 1988, between Triton Colombia, Inc., and
Empresa Colombiana De Petroleos.(4)
10.30 Summary of Assignment legalized by Public Instrument No. 1255 dated
September 15, 1987 (Assignment is in Spanish language).(4)
10.31 Summary of Assignment legalized by Public Instrument No. 1602 dated
June 11, 1990 (Assignment is in Spanish language).1(4)
10.32 Summary of Assignment legalized by Public Instrument No. 2586 dated
September 9, 1992 (Assignment is in Spanish language). (4)
10.33 Guaranty between the Company and Comerica Bank-Texas.(11)
10.34 Triton Energy Corporation 401(K) Savings Plan. (11)
15.1* Letter of Price Waterhouse, acknowledging awareness of the use of
their report dated April 4, 1994, relating to the review of interim
financial information.
______________________________
* Filed herewith
(1) Previously filed as an exhibit to the Company's Annual Report on
Form 10-K for the fiscal year ended May 31, 1990 and incorporated
herein by reference.
(2) Previously filed as an exhibit to the Company's Annual Report on
Form 10-K for the fiscal year ended May 31, 1991 and incorporated
herein by reference.
(3) Previously filed as an exhibit to the Company's Annual Report on
Form 10-K for the fiscal year ended May 31, 1992 and incorporated
herein by reference.
(4) Previously filed as an exhibit to the Company's Annual Report on
Form 10-K for the fiscal year ended May 31, 1993 and incorporated
herein by reference.
(5) Previously filed as an exhibit to the Company's Annual Report on
Form 10-K for the fiscal year ended May 31, 1989 and incorporated
herein by reference.
<PAGE>
PART II. OTHER INFORMATION
(6) Previously filed as an exhibit to the Company's Registration Statement
on Form S-3 (No. 33-42430) and incorporated herein by reference.
(7) Previously filed as an exhibit to the Company's Quarterly Report on
Form 10-Q for the quarter ended November 30, 1988 and incorporated
herein by reference.
(8) Previously filed as an exhibit to the Company's Quarterly Report on
Form 10-Q for the quarter ended November 30, 1992 and incorporated
herein by reference.
(9) Previously filed as an exhibit to the Company's Current Report on
Form 8-K dated as of July 14, 1993 and incorporated herein by reference.
(10) Previously filed as an exhibit to the Company's Registration Statement
on Form S-3 (No.33-69230) and incorporated herein by reference.
(11) Previously filed as an exhibit to the Company's Quarterly Report on
Form 10-Q for the quarter ended November 30, 1993 and incorporated
herein by reference.
<PAGE>
PART II. OTHER INFORMATION
(b) Reports on Form 8-K
On January 17, 1994, the Company filed Form 8-K under Item 5 on the
offer to purchase the minority interest in Triton Europe plc. <PAGE>
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.
TRITON ENERGY CORPORATION
/s/Peter Rugg
Peter Rugg
Senior Vice President and
Chief Financial Officer
Date: April 13, 1994
STATEMENT OF RESOLUTION
ESTABLISHING AND DESIGNATING A SERIES OF SHARES
OF
TRITON ENERGY CORPORATION
5% Convertible
Preferred Stock, no par value
To the Secretary of State
of the State of Texas:
Pursuant to the provisions of Article 2.13 of the Texas
Business Corporation Act, and pursuant to Article IV of its
Restated Articles of Incorporation, the undersigned, Triton
Energy Corporation (the "Company"), hereby submits the following
statement for the purpose of establishing and designating a
series of shares and fixing and determining the relative rights
and preferences thereof:
I. The name of the corporation is Triton Energy
Corporation.
II. The following resolution establishing and
designating a series of shares and fixing and determining the
relative rights and preferences thereof was duly adopted by the
Board of Directors of the Company on or about March 30, 1994.
III. RESOLVED, that, pursuant to the authority granted
to the Board of Directors of this Company by the Articles of
Incorporation, as amended, and subject to the provisions of such
Articles of Incorporation, as amended, a series of preferred
stock consisting of 550,000 shares with no par value be, and the
same hereby is, created, established and designated for issuance
with the following rights, terms, preferences and voting powers:
1. Designation of Series, Number of Shares and Stated
Value. The series of preferred stock created herein shall be
designated as the 5% Convertible Preferred Stock, no par value
(hereinafter the "5% Preferred Stock"), and the number of shares
initially constituting the 5% Preferred Stock shall be 550,000
shares. The stated value shall be $34.41 per share (the "Stated
Value").
2. Voting Rights. The holders of 5% Preferred Stock
shall not, by virtue of their ownership thereof, be entitled to
vote upon any matter except as provided in Section 7 herein or as
required by law. Whenever the holders of the 5% Preferred Stock
shall be entitled to exercise voting rights, each holder of
record thereof shall have one vote for each share so held.
<PAGE>
3. Liquidation Rights. In the event of any
liquidation, dissolution or winding up of the Company, whether
voluntary or involuntary, the holders of shares of 5% Preferred
Stock shall be entitled to receive out of assets of the Company
available for distribution to shareholders, before any
distribution of assets is made to holders of Common Stock or any
stock ranking junior to the 5% Preferred Stock as to liquidation,
liquidating distributions (including, without limitation, any
outstanding shares of the preferred stock issuable under the
Company's Shareholder Rights Plan) an amount per share equal to
the Stated Value plus accumulated and unpaid dividends thereon
including any Penalty Dividend as defined in Section 4 hereof;
provided, however, that such rights shall accrue to the holders
of the 5% Preferred Stock only in the event that the Company's
payments with respect to the liquidation preferences of the
holders of capital stock of the Company ranking senior as to
liquidation rights to the 5% Preferred Stock are fully met.
If upon any voluntary or involuntary liquidation,
dissolution or winding up of the Company, the amounts payable
with respect to the 5% Preferred Stock and any other shares of
stock of the Company ranking as to any such distribution on a
parity with the 5% Preferred Stock are not paid in full, the
holders of the 5% Preferred Stock and of such other shares shall
share ratably in any such distribution of assets of the Company
in proportion to the full respective preferential amounts to
which they are entitled. After payment of the full amount of the
liquidating distribution to which they are entitled, the holders
of shares of 5% Preferred Stock shall not be entitled to any
further participation in and distribution of assets by the
Company.
Neither the consolidation of nor merging of the Company
with or into any other corporation or corporations, nor the sale
or lease of all or substantially all of the assets of the Company
shall be deemed to be a liquidation, dissolution or a winding up
of the Company within the meaning of any of the provisions of
this Section 3.
4. Dividends. Holders of shares of 5% Preferred Stock
shall be entitled to receive, when and as declared by the Board
of Directors of the Company out of assets of the Company legally
available for payment, (i) a fixed cumulative cash dividend of 5%
per annum on the Stated Value, plus (ii) Penalty Dividends, if
any, as set forth below, and no more, payable in semi-annual
installments on September 30 and March 30 (unless such day is a
non-business day, in which event on the next business day),
commencing September 30, 1994. Dividends on each share of 5%
Preferred Stock shall be cumulative from the date of original
issue of such share (the "Issue Date") and shall be payable to
holders of such share on the record date fixed for such payment
by the Board of Directors of the Company or a committee of such
Board duly authorized to fix such date. Dividends (including any
Penalty Dividend) on account of arrears for any past dividend
periods may be declared and paid at any time without reference to
any regular dividend payment date to holders of record on a
record date fixed for such payment by the Board of Directors of
the Company or by a committee of such Board fully authorized to
fix such date.
Dividends payable as of September 30, 1994 and on the
date of any redemption of the 5% Preferred Stock not occurring on
a regular dividend payment date shall be calculated on the basis
of a 360 day year consisting of twelve 30 day months. If the
dividends on the 5% Preferred Stock shall not have been declared
and paid in full, or funds set aside for payment, by a date 15
days after each March 30 or September 30 dividend payment date,
as the case may be (the "Calculation Date"), dividends payable on
the shares of 5% Preferred Stock shall be increased by an amount
equal to the Penalty Dividend Rate applied against the amount of
dividends so due and unpaid on the shares of 5% Preferred Stock,
to accrue on a daily basis for the period from the Calculation
Date to the date the dividends in respect of such dividend
payment date shall be paid (the "Penalty Dividend"). The
"Penalty Dividend Rate" on any date shall be the Prime Rate on
such date plus 1% per annum. "Prime Rate" on any day means the
prime rate of Morgan Guaranty Trust Company of New York in effect
on such day. If for any reason such bank shall not have a
published prime rate on the date of determination thereof, then
"Prime Rate" shall be the rate set forth on such date in
"Statistical Release H.15(519), Selected Interest Rates,"
published by the Board of Governors of the Federal Reserve
System, under the heading "Bank Prime Loan." The Penalty
Dividend Rate shall be fixed on and as of the Calculation Date
with respect to any Penalty Dividend and shall continue at such
rate for the following six months and shall be adjusted each six
months thereafter for the succeeding six-month period.
No dividends shall be declared or paid or set apart for
payment on any stock ranking, as to dividends, junior to the 5%
Preferred Stock for any period unless full cumulative dividends
have been or contemporaneously are declared and paid (or declared
and a sum sufficient for the payment thereof set apart for such
payment) on the 5% Preferred Stock for all dividend payment
periods terminating on or prior to the date of payment of
dividends on such junior stock. When dividends are not paid in
full upon the 5% Preferred Stock and upon any other stock ranking
on a parity as to dividends with the 5% Preferred Stock, all
dividends declared upon shares of 5% Preferred Stock and any
other stock ranking on a parity as to dividends shall be declared
pro rata so that in all cases the amount of dividends declared
per share on the 5% Preferred Stock and such other stock shall
bear to each other the series ratio that accumulated and unpaid
dividends per share on the shares of 5% Preferred Stock and such
other stock bear to each other. Except as provided in the
preceding sentence, unless full cumulative dividends on the 5%
Preferred Stock have been paid, no dividends shall be declared or
paid or set aside for payment or other distribution made upon any
other stock of the Company ranking junior to or on a parity with
the 5% Preferred Stock as to dividends, including the Common
Stock of the Company and no repurchase or redemption of such
Common Stock shall be permitted. As used in this paragraph, the
term "dividend" includes any Penalty Dividend.
5. Mandatory Redemption. Shares of 5% Preferred Stock
shall be subject to mandatory redemption by the Company on March
30, 2004 (the "Mandatory Redemption Date") at a redemption price
(the "Redemption Price") equal to the Stated Value plus any
accumulated and unpaid dividends thereon including any Penalty
Dividend. At the option of the Company, the Redemption Price may
be paid in cash or by issuing for each share of 5% Preferred
Stock being redeemed such number of shares of Common Stock as are
equal to the Redemption Price divided by the Mandatory Redemption
Date Market Price. "Mandatory Redemption Date Market Price"
shall mean the average of the Closing Prices of the Common Stock,
as defined in Section 8(G), for the five consecutive trading days
commencing with the twenty-fifth day immediately preceding the
Mandatory Redemption Date. Fractional entitlements shall be
satisfied in cash as provided in Section 8(H).
6. Optional Redemption. (A) Except as set forth in
this paragraph, the shares of 5% Preferred Stock are not
redeemable prior to March 30, 1998. The Company, at its option,
may at any time on or after March 30, 1998 redeem for cash all or
part of the 5% Preferred Stock on any date set by the Board of
Directors of the Company at the Redemption Price to the date
fixed for redemption. Notwithstanding the foregoing, the Company
may redeem for cash all outstanding shares of the 5% Preferred
Stock on or after such time as 75% of the aggregate amount of
initially issued shares of the 5% Preferred Stock have been
converted pursuant to Section 8.
(B) If less than all of the outstanding shares of 5%
Preferred Stock are to be redeemed, the Company will select those
to be redeemed pro rata or by lot or in such other manner as the
Board of Directors of the Company may determine.
(C) Notices of any redemption shall be mailed not less
than thirty (30) nor more than sixty (60) days prior to the date
fixed for redemption to the holders of record of shares of 5%
Preferred Stock to be redeemed at their respective addresses as
the same appear upon the books of the Company; provided, however,
that no defect in the publication of such notice shall affect the
validity of the proceedings for the redemption of any shares of
5% Preferred Stock. Payment of the Redemption Price of the
shares redeemed shall be made at the office of the Transfer
Agent, as specified in Section 12 hereof, or at such other place
or places of redemption as shall be determined by the Board of
Directors of the Company and shall be specified in the notice of
redemption and shall be made against the surrender for
cancellation of the certificates for the shares redeemed. Any
shares of 5% Preferred Stock so noticed for redemption may be
converted into shares of Common Stock, as hereinafter provided,
at any time prior to the close of business on the fifth business
day prior to the date fixed for the redemption.
If notice of redemption shall have been mailed as
hereinbefore provided and if on or before the redemption date
specified in such notice all funds necessary for such redemption
shall have been set aside by the Company so as to be available
for the benefit of the holders of the shares so called for
redemption, then from and after the date fixed for redemption the
shares of 5% Preferred Stock so called for redemption,
notwithstanding that any certificate therefor shall not have been
surrendered or cancelled, shall no longer be deemed outstanding
and all rights with respect to such shares (including the right
to accumulate dividends) shall forthwith on the redemption date
cease and terminate, except only the right of the holders thereof
to receive upon surrender of certificates thereof the amount
payable upon redemption thereof, but without interest.
(D) All shares of 5% Preferred Stock so redeemed
pursuant to this Section 6 or Section 5 shall have the status of
authorized but unissued Preferred Stock, but such shares so
redeemed shall not be reissued as shares of the series of 5%
Preferred Stock created hereby. Except as otherwise provided
herein, the Board of Directors of the Company shall have the full
power and authority to prescribe the manner in which, and terms
and conditions upon which, the 5% Preferred Stock may be
redeemed.
7. Special Voting Rights. Without the vote or consent
of the holders of at least two-thirds of the number of shares of
5% Preferred Stock then outstanding, voting or consenting, as a
class, together with the holders of any other outstanding shares
of Preferred Stock similarly affected, the Company shall not
amend, alter or repeal the Articles of Incorporation of the
Company so as adversely to affect the preferences and rights of
the holders of the 5% Preferred Stock, nor shall the Company
issue for consideration other than wholly for cash any shares of
a class of stock ranking prior to the 5% Preferred Stock with
respect to dividends or to the distribution of assets in
liquidation.
8. Conversion Rights.
(A) Conversion Provisions. At any time subsequent to
October 1, 1994, the holders of any one or more shares of the 5%
Preferred Stock may, at their option, convert such share or
shares, on the terms and conditions set forth in this Section 8,
into fully paid and non-assessable shares of Common Stock except
that, with respect to any shares of the 5% Preferred Stock called
for redemption, the conversion right shall terminate at the close
of business on the fifth business day prior to the redemption
date, unless default is made in the payment of the Redemption
Price. Each share of the 5% Preferred Stock shall be convertible
into one share of Common Stock (equivalent to a conversion price
equal to the Stated Value per share of 5% Preferred Stock);
provided, however, that the number of shares of Common Stock
issuable on conversion of each share of the 5% Preferred Stock
(the "Conversion Rate") shall be subject to adjustment as
hereinafter provided in this Section 8:
(B) Adjustment for Unpaid Dividends. If at the time
of any conversion there shall be any unpaid Penalty Dividends,
then the Conversion Rate shall be adjusted so that upon
conversion the holder of a share of 5% Preferred Stock then
converted shall receive for each share of 5% Preferred Stock a
number of shares of Common Stock equal to the Conversion Rate in
effect immediately before such adjustment multiplied by the
quotient of (x) the sum of (1) the conversion price in effect
immediately prior to such adjustment plus (2) the amount of such
unpaid Penalty Dividends plus (3) the cumulative amount of any
unpaid dividends to the most recent dividend payment date divided
by (y) the conversion price in effect immediately prior to such
adjustment.
(C) Adjustment for Change in Capital Stock. If the
Company
(i) pays a dividend or makes a distribution on its
Common Stock, in shares of its Common Stock;
(ii) divides its outstanding shares of Common Stock
into a greater number of shares;
(iii) combines its outstanding shares of Common Stock
into a smaller number of shares;
(iv) makes a distribution on its Common Stock in shares
of its capital stock other than Common Stock; or
(v) issues by reclassification of its Common Stock any
shares of its capital stock;
then the conversion right and the conversion price in effect
immediately before such action shall be adjusted so that the
holder of the 5% Preferred Stock thereafter converted may receive
the number of shares of capital stock of the Company which he
would have owned immediately following such action if he had
converted the 5% Preferred Stock immediately before the record
date (or, if no record date, the effective date) for such action.
The adjustment shall become effective immediately after
the record date in the case of a dividend or distribution and
immediately after the effective date in the case of a
subdivision, combination or reclassification.
If after an adjustment a holder of the 5% Preferred
Stock upon conversion of it may receive shares of two or more
classes of capital stock of the Company, the Company shall
determine the allocation of the adjusted conversion price between
the classes of capital stock. After such allocation, the
conversion privilege and conversion price of each class of
capital stock shall thereafter be subject to adjustment on terms
comparable to those applicable to Common Stock contained in this
Section 8.
(D) Adjustment for Rights Issue. If the Company
distributes any rights or warrants to all holders of its Common
Stock entitling them for a period expiring within sixty (60) days
after the record date mentioned below to purchase shares of
Common Stock at a price per share less than the current market
price per share on that record date, the conversion price shall
be adjusted in accordance with the formula:
(N x P)
C1 = C x O + M
O + N
where
C1 = the adjusted conversion price.
C = the current conversion price.
O = the number of shares of Common Stock outstanding
on the record date.
N = the number of additional shares of Common Stock
offered.
P = the offering price per share of the additional
shares.
M = the current market price per share of Common Stock
on the record date.
The adjustment shall become effective immediately after
the record date for the determination of shareholders entitled to
receive the rights or warrants.
(E) Adjustment for Other Distributions. If the
Company distributes to all holders of its Common Stock any of its
assets or debt securities or any rights or warrants to purchase
securities of the Company, the conversion price shall be adjusted
in accordance with the formula:
C1 = C x M - F
M
where
C1 = the adjusted conversion price.
C = the current conversion price.
M = the current market price per share of Common Stock
on the record date mentioned below.
F = the fair market value on the record date of the
assets, securities, rights of warrants applicable
to one share of Common Stock. The Board of
Directors of the Company shall determine the fair
market value.
The adjustment shall become effective immediately after
the record date for the determination of shareholders entitled to
receive the distribution.
This paragraph (E) does not apply to cash dividends or
cash distributions paid out of consolidated current or retained
earnings as shown on the books of the Company. Also, this
paragraph (E) does not apply to rights or warrants referred to in
paragraph (D) above.
(F) Adjustment for Reorganization. In case of any
consolidation or merger of the Company into another corporation,
or in the case of any merger of another corporation into the
Company (other than a merger with a corporation in which merger
the Company is the continuing corporation and which does not
result in any reclassification, conversion, exchange or
cancellation of outstanding shares of Common Stock), or in case
of any sale or conveyance to another corporation of all or
substantially all of the assets of the Company, the holder of
each share of the 5% Preferred Stock then outstanding shall have
the right thereafter, subject to the terms and conditions of this
Section 8, to convert such share only into the kind and amount of
shares of stock and other securities and property receivable upon
such consolidation, merger, sale or conveyance by a holder of the
number of shares of Common Stock into which such share of 5%
Preferred Stock might have been converted immediately prior to
such consolidation, merger, sale or conveyance; and effective
provision shall be made in the Articles of Incorporation of the
resulting or surviving corporation or otherwise so that the
provisions set forth in this Section 8 shall thereafter be
applicable, as nearly as practicable, to any such other shares of
stock and other securities and property deliverable upon
conversion of the 5% Preferred Stock remaining outstanding or
other convertible preferred stock received by the holders in
place thereof; and any such resulting or surviving corporation
shall expressly assume the obligation to deliver, upon the
exercise of the conversion privilege, such shares, securities or
property as the holders of the 5% Preferred Stock remaining
outstanding, or other convertible preferred stock received by the
holders in place thereof, may be entitled to and to make
provisions for the protection of the conversion right as herein
provided. In case securities or property other than shares of
Common Stock shall be issuable or deliverable upon conversion as
aforesaid, then all reference in this paragraph (F) shall be
deemed to apply, so far as appropriate and as nearly as
practicable, to such other securities or property.
(G) Current Market Price. For the purpose of any
computation under this Section 8, the current market price per
share of Common Stock at any date shall be deemed to be the
average of the daily closing prices for the five (5) consecutive
business days commencing ten (10) business days before the date
in question. The "Closing Price" for each day shall be the last
reported sale of Common Stock on the principal national
securities exchange on which the Common Stock may be listed or if
such stock is not then so listed, the closing price of the Common
Stock as shown by the National Association of Securities Dealers,
Inc. National Market or, if no such closing price is available,
at the average of the representative last bid and asked prices of
such Common Stock in the over-the-counter market, as shown by the
National Association of Securities Dealers, Inc. Automated
Quotation System Level I (or comparable system) or in the absence
of any of the foregoing, the fair market value as determined by
the Board of Directors (whose determination shall be conclusive).
(H) Fractional Shares. No fractional shares of Common
Stock shall be issued on any conversion or redemption, but in
lieu thereof, the Company shall pay therefor in cash an amount
equal to the current market value of such fractional interest
computed on the basis of the average closing price as determined
in accordance with the provision of paragraph (G) above, on the
five (5) business days prior to the date upon which conversion is
deemed to have been effected. Any determination that the Company
or the Board of Directors makes regarding fractional shares is
conclusive.
(I) When No Adjustment Required. Notwithstanding the
provisions of paragraphs (C), (D), (E) and (F) above, no
adjustment of the Conversion Rate shall be required upon the
occurrence of any of the events described in paragraphs (C), (D),
(E) and (F), unless such adjustment would require an increase or
decrease of at least 1% in the Conversion Rate, but in such case
any adjustment that would otherwise be required then to be made
shall be carried forward and shall be made at the time of and
together with the next subsequent adjustment. All calculations
under this Section 8 shall be made and rounded to the nearest
one-hundredth of a share.
No payment or adjustment on account of dividends
accumulated or in arrears upon shares of the 5% Preferred Stock,
any other series of Preferred Stock, or Common Stock, shall be
made in connection with any conversion, except as provided in
paragraph 8(B) above or at the discretion of the Board of
Directors. Preferred Stock surrendered for conversion between
the record date for payment of dividends and the dividend payment
date (except for 5% Preferred Stock called for redemption during
such period) must be accompanied by a payment of an amount equal
to the dividend thereon which the holder is to receive.
No adjustment need be made for sales of Common Stock
pursuant to a plan for reinvestment of dividends or interest and
no adjustment need be made for a change in the par value of the
Common Stock.
The Board of Directors may make such adjustments in the
Conversion Rate, in addition to those required by this Section 8,
as shall be determined by the Board, as evidenced by a Board
resolution, to be advisable in order to avoid taxation, so far as
practicable, of any dividend of stock or stock rights or any
event treated as such for Federal income tax purposes to the
recipients. The Board shall have the power to resolve any
ambiguity or correct any error in this Section 8 and its action
in so doing, as evidenced by a Board resolution, shall be final
and conclusive, provided that such action shall not adversely
affect the holders of the 5% Preferred Stock in any material
respect.
The certificate of any independent firm of public
accountants of recognized standing selected by the Board of
Directors shall be satisfactory evidence of the correctness of
any computation made in this Section 8.
(J) Notice of Adjustment. Whenever there is an
adjustment requiring a change in the Conversion Rate, the Company
shall file with the transfer agent, or transfer agents, for the
Common Stock, a statement signed by the President or a Vice
President and by the Treasurer or the Secretary of the Company,
describing specifically the event giving rise to such adjustment
and stating the adjustment which shall be made to the Conversion
Rate. The statement so filed shall be open to inspection by any
holder of record of shares of the 5% Preferred Stock. The
Company shall at the time of filing any such statement mail
notice to the same effect to holders of shares of the 5%
Preferred Stock at their addresses appearing on the books of the
Company or supplied by them to the Company for the purpose of
notice. In addition, the Company shall include a notice of the
Conversion Rate with each dividend payment on the 5% Preferred
Stock or otherwise give notice thereof promptly after the due
date for each such dividend, whenever there has been a change in
the Conversion Rate since the last previous dividend due date.
(K) Conversion Procedure. Upon surrender to the
Company at the office of the transfer agent, or transfer agents,
for the Common Stock, or at such other place or places, if any,
as the Board of Directors of the Company may determine, of
certificates, duly endorsed to the Company or in blank, for
shares of 5% Preferred Stock to be converted, together with
appropriate evidence of the payment of any transfer or similar
tax, if required, and instructions in writing to the Company to
convert such shares and specifying the name and address of the
person, corporation, firm or other entity to whom such shares are
to be issued, the Company will issue (i) the number of full
shares of Common Stock issuable on conversion thereof as of the
time of such surrender and as promptly as practicable thereafter
will deliver certificates for such shares of Common Stock, and
(ii) cash for any remaining fraction of a share, as provided in
paragraph (H) above. The Company shall pay any documentary,
stamp or similar issue or transfer tax due on the issue of shares
of Common Stock upon conversion; provided, however, that the
holder shall pay any such tax which is due because such shares
are to be issued in a name other than that of such holder.
The Company shall at all times after the Issue Date
reserve for issuance upon conversion of the 5% Preferred Stock a
sufficient number of full shares of Common Stock for the
conversion of each outstanding share of 5% Preferred Stock at the
current Conversion Rate. The Common Stock issuable upon such
conversion shall have one vote per share.
(L) Voluntary Increase in Conversion Rate. The
Company from time to time may increase the Conversion Rate by any
amount for any period of time if the period is at least twenty
(20) days and if the increase is irrevocable during the period.
Whenever the Conversion Rate is increased, the Company shall give
notice of the increase of least fifteen (15) days prior to the
date the increased Conversion Rate takes effect, in the manner
set forth in paragraph (E) of this Section 8, which notice shall
state the increased Conversion Rate and the period it will be in
effect. An increase in the Conversion Rate pursuant to this
paragraph (L) shall not change or adjust the Conversion Rate
otherwise in effect for purposes of this Section 8.
(a) Notice of Certain Transactions. If
(1) the Company takes any action that would require an
adjustment in the Conversion Rate pursuant to paragraphs
(C), (D), (E) or (F) of this Section 8; or
(2) there is a liquidation or dissolution of the
Company;
the Company shall provide notice in the manner set forth in
paragraph (J) of this Section 8 of such action, stating therein
the proposed record date for a distribution or the effective date
of a reclassification, consolidation; merger, sale, conveyance,
liquidation or dissolution, at least fifteen (15) days in advance
of such date. Failure to mail the notice or any defect therein
shall not affect the validity of the transaction.
9. Subdivision of Shares. The Board of Directors may
at any time subdivide the shares of 5% Preferred Stock as of an
effective date fixed by the Board of Directors. Notice of the
proposed subdivision and the effective date shall be mailed to
each holder of record of 5% Preferred Stock not less than fifteen
(15) days before the effective date. The Stated Value,
Conversion Rate and liquidation rights of the 5% Preferred Stock
in effect immediately prior to the close of business on the
effective date of such subdivision shall be proportionately
reduced as of the close of business on the effective date of such
division.
10. "Common Stock" Defined. Whenever reference is
made in this resolution to "Common Stock," "Common Stock" shall
mean all shares now or hereafter authorized of the class of the
capital stock of the Company authorized at the Issue Date and
designated as Common Stock, $1.00 par value, and stock of any
other class into which such shares may hereafter be changed.
11. No Preemptive Rights. The holders of the 5%
Preferred Stock shall not have any preemptive rights.
12. Agent. Chemical Bank is hereby appointed Transfer
Agent, Registrar, Conversion Agent and Dividend Disbursing Agent
for the 5% Preferred Stock.
AND BE IT FURTHER RESOLVED, that the appropriate
officers of the Company be, and they are hereby, authorized and
directed from time to time to execute such certificates,
instruments or other documents and do all such things as may be
necessary or advisable in their discretion in order to carry out
the terms, including the filing with the Secretary of State for
the State of Texas of a copy of the foregoing Resolution executed
by the President or any Vice President and the Secretary or
Assistant Secretary and verified by one of the officers so
executing such document.
<PAGE>
Dated: March 30, 1994
TRITON ENERGY CORPORATION
By: /s/ Robert B. Holland III
Its: Senior Vice President
THE STATE OF TEXAS
COUNTY OF DALLAS
I, Carmen E. Melton, a notary public, do hereby certify
that this 30th day of March, 1994, personally appeared before me
Robert B. Holland III who being by me first duly sworn, declared
that he is the Senior Vice President of Triton Energy
Corporation, that he signed the foregoing document as Senior Vice
President of the corporation, and that the statements therein
contained are true.
/s/ Carmen E. Melton
Notary Public in and for
Dallas County, Texas
My Commission Expires
February 3, 1998
EXHIBIT 15.1
April 4, 1994
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Dear Sirs:
We are aware that Triton Energy Corporation has included our report dated
April 4, 1994 (issued pursuant to the provisions of Statement on Auditing
Standards No. 71) in the Registration Statements on Form S-3 (Nos. 33-11920,
33-15793, 33-17614, 33-21984, 33-23058, 33-25634, 33-31319, 33-45847, 33-46292)
and Form S-8 (Nos. 2-80978, 33-4042, 33-27203, 33-29498, 33-46968, 33-51691 and
33-69230). We are also aware of our responsibilities under the Securities Act
of 1933.
Yours very truly,
/s/ Price Waterhouse
PRICE WATERHOUSE
