Exhibit 99.1
UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
On August 1, 2014, Noble Corporation plc, a public limited company organized under the laws of England and Wales (“Noble” or “the Company”), completed its previously announced plan to reorganize by means of a spin-off of Paragon Offshore plc, a public limited company organized under the laws of England and Wales (“Paragon Offshore”), to Noble shareholders (the “Spin-Off”). On August 1, 2014 (the “Distribution Date”), shareholders of record as of 5:00 p.m., New York City time, on July 23, 2014 (the “Record Date”) received one ordinary share of Paragon Offshore for every three ordinary shares of Noble owned as of the Record Date. Since the Distribution Date, Noble has not owned any equity interest in Paragon Offshore and no longer includes the financial results of Paragon Offshore for the purpose of its own financial reporting.
Prior to the completion of the Spin-Off, Noble and Paragon Offshore entered into a series of agreements (“separation agreements”) that provide the terms and conditions of the Spin-Off and related transactions and govern the relationship between Noble and Paragon Offshore after the Spin-Off. In connection with the Spin-Off, Paragon Offshore repaid approximately $1.7 billion in intercompany promissory notes, which were issued to Noble as consideration for the business contributed to Paragon Offshore. Noble used these funds to repay certain amounts outstanding under its commercial paper program.
In July 2013, Noble sold theNoble Lewis Dugger to an unrelated third party for approximately $61 million, and in January 2014, Noble sold its submersible fleet to an unrelated third party for approximately $7 million. Together these standard specification rigs are referred to as the “Disposed rigs” and are included in the “Historical” column in the combined financial statements for periods before their sales.
The unaudited pro forma combined financial information includes pro forma adjustments that are based on the best information available and assumptions that management believes are reasonable, factually supportable and are expected to have a continuing impact to Noble. The unaudited pro forma combined financial information is provided for illustrative and informational purposes only and is not intended to reflect Noble’s financial position and results of operations had the Spin-Off and related transactions occurred as of the dates indicated, and is not necessarily indicative of Noble’s future financial position and results of operations.
The unaudited pro forma combined financial information was derived from Noble’s historical consolidated financial statements and gives effect to the Spin-Off and related transactions listed below. The unaudited pro forma combined balance sheet as of June 30, 2014 is presented as if the Spin-Off and related transactions had occurred on June 30, 2014. The unaudited pro forma combined statements of income for the six months ended June 30, 2014 and 2013 and each of the three years in the period ended December 31, 2013 give effect to the Spin-Off, the sale of the Disposed rigs and related transactions as if all transactions had occurred on January 1, 2011. The following unaudited pro forma combined financial information should be read in conjunction with the historical financial statements and accompanying notes included in Noble’s Annual Report on Form 10-K for the year ended December 31, 2013 and Noble’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2014.
The “Historical” columns of the unaudited pro forma combined financial information reflect Noble’s historical unaudited consolidated statements of income for the six months ended June 30, 2014 and 2013, Noble’s unaudited consolidated balance sheet as of June 30, 2014 and Noble’s audited consolidated statements of income for each of the three years in the period ended December 31, 2013. The Spin-Off of Paragon Offshore, the Disposed rigs, the Financing adjustments and Other adjustments columns remove all of the assets, liabilities, and results of operations comprising Paragon Offshore and the Disposed rigs and also give effect to the Spin-Off and the following items:
| • | the reversal of the allocation of debt outstanding under Noble’s commercial paper program to Paragon Offshore’s balance sheet; |
| • | the distribution of Noble’s net investment in Paragon Offshore as a reduction in the Company’s historical consolidated retained earnings; |
| • | the removal of certain general corporate overhead expenses previously allocated to Paragon Offshore and the Disposed rigs; |
| • | the allocation of interest expense relating to the debt outstanding under Noble’s commercial paper program to Paragon Offshore on a basis deemed reasonable by Noble; |
| • | the allocation of assets and liabilities pursuant to the separation agreements that will govern the post-spin relationship; and |
| • | the removal of non-recurring Spin-Off transaction costs incurred by Noble. |
Transaction costs incurred by Noble to effect the Spin-Off were $19 million and $8 million for the six months ended June 30, 2014 and 2013, respectively, and $18 million and $7 million for the years ended December 31, 2013 and 2012, respectively. These costs are reflected as a pro forma adjustment in the unaudited pro forma combined statements of income in the “Other adjustments” column. There are no Spin-Off transaction costs included in the combined statements of income for the year ended December 31, 2011.
See the notes to the unaudited pro forma combined financial information for a more detailed discussion of these transactions.
2
Noble Corporation plc and Subsidiaries
Unaudited Pro Forma Combined Statement of Income
For the six months ended June 30, 2014
(In thousands)
| Historical | Spin-Off of Paragon Offshore | Other adjustments | Noble pro forma | |||||||||||||
| Note 1 | Note 5 | |||||||||||||||
Operating revenues | ||||||||||||||||
Contract drilling services | $ | 2,406,710 | $ | (856,706 | ) | $ | — | $ | 1,550,004 | |||||||
Reimbursables | 68,464 | (19,502 | ) | — | 48,962 | |||||||||||
Labor contract drilling services | 16,358 | (16,358 | ) | — | — | |||||||||||
Other | 1 | — | — | 1 | ||||||||||||
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| 2,491,533 | (892,566 | ) | — | 1,598,967 | ||||||||||||
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Operating costs and expenses | ||||||||||||||||
Contract drilling services | 1,138,265 | (414,393 | ) | — | 723,872 | |||||||||||
Reimbursables | 53,066 | (13,830 | ) | — | 39,236 | |||||||||||
Labor contract drilling services | 12,487 | (12,487 | ) | — | — | |||||||||||
Depreciation and amortization | 500,299 | (200,838 | ) | — | 299,461 | |||||||||||
General and administrative | 52,717 | (23,506 | ) | 23,506 | 52,717 | |||||||||||
Non-recurring spin-off related costs | 18,863 | — | (18,863 | ) | — | |||||||||||
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| 1,775,697 | (665,054 | ) | 4,643 | 1,115,286 | ||||||||||||
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Operating income | 715,836 | (227,512 | ) | (4,643 | ) | 483,681 | ||||||||||
Other income (expense) | ||||||||||||||||
Interest expense, net of amount capitalized | (76,743 | ) | 6,272 | — | (70,471 | ) | ||||||||||
Interest income and other, net | (1,518 | ) | (525 | ) | — | (2,043 | ) | |||||||||
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Income before income taxes | 637,575 | (221,765 | ) | (4,643 | ) | 411,167 | ||||||||||
Income tax provision | (106,871 | ) | 38,871 | — | (68,000 | ) | ||||||||||
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Net income | 530,704 | (182,894 | ) | (4,643 | ) | 343,167 | ||||||||||
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Net income attributable to noncontrolling interests | (39,819 | ) | — | — | (39,819 | ) | ||||||||||
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Net income attributable to Noble | $ | 490,885 | $ | (182,894 | ) | $ | (4,643 | ) | $ | 303,348 | ||||||
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Net income per share attributable to Noble | ||||||||||||||||
Basic | $ | 1.90 | N/A | N/A | $ | 1.17 | ||||||||||
Diluted | $ | 1.90 | N/A | N/A | $ | 1.17 | ||||||||||
Weighted average shares outstanding | ||||||||||||||||
Basic | 254,090 | N/A | N/A | 254,090 | ||||||||||||
Diluted | 254,206 | N/A | N/A | 254,206 | ||||||||||||
(See accompanying notes to the unaudited pro forma combined financial statements)
3
Noble Corporation plc and Subsidiaries
Unaudited Pro Forma Combined Statement of Income
For the six months ended June 30, 2013
(In thousands)
| Historical | Spin-off of Paragon Offshore | Disposed rigs | Other adjustments | Noble pro forma | ||||||||||||||||
| Note 1 | Note 2 | Note 5 | ||||||||||||||||||
Operating revenues | ||||||||||||||||||||
Contract drilling services | $ | 1,904,192 | $ | (776,734 | ) | $ | (14,626 | ) | $ | — | $ | 1,112,832 | ||||||||
Reimbursables | 49,434 | (21,336 | ) | — | — | 28,098 | ||||||||||||||
Labor contract drilling services | 34,657 | (17,684 | ) | — | — | 16,973 | ||||||||||||||
Other | 77 | (66 | ) | — | — | 11 | ||||||||||||||
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| 1,988,360 | (815,820 | ) | (14,626 | ) | — | 1,157,914 | ||||||||||||||
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Operating costs and expenses | ||||||||||||||||||||
Contract drilling services | 968,097 | (409,245 | ) | (8,502 | ) | — | 550,350 | |||||||||||||
Reimbursables | 37,623 | (15,749 | ) | — | — | 21,874 | ||||||||||||||
Labor contract drilling services | 21,598 | (11,746 | ) | — | — | 9,852 | ||||||||||||||
Depreciation and amortization | 418,745 | (177,878 | ) | (1,313 | ) | — | 239,554 | |||||||||||||
General and administrative | 52,419 | (27,743 | ) | (461 | ) | 28,204 | 52,419 | |||||||||||||
Non-recurring spin-off related costs | 8,027 | — | — | (8,027 | ) | — | ||||||||||||||
Gain on contract extinguishment | (1,800 | ) | 1,800 | — | — | — | ||||||||||||||
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| 1,504,709 | (640,561 | ) | (10,276 | ) | 20,177 | 874,049 | ||||||||||||||
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Operating income | 483,651 | (175,259 | ) | (4,350 | ) | (20,177 | ) | 283,865 | ||||||||||||
Other income (expense) | ||||||||||||||||||||
Interest expense, net of amount capitalized | (51,966 | ) | 2,235 | — | — | (49,731 | ) | |||||||||||||
Interest income and other, net | 530 | (103 | ) | (23 | ) | — | 404 | |||||||||||||
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Income before income taxes | 432,215 | (173,127 | ) | (4,373 | ) | (20,177 | ) | 234,538 | ||||||||||||
Income tax provision | (71,176 | ) | 38,898 | 369 | — | (31,909 | ) | |||||||||||||
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Net income | 361,039 | (134,229 | ) | (4,004 | ) | (20,177 | ) | 202,629 | ||||||||||||
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Net income attributable to noncontrolling interests | (34,359 | ) | — | — | — | (34,359 | ) | |||||||||||||
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Net income attributable to Noble | $ | 326,680 | $ | (134,229 | ) | $ | (4,004 | ) | $ | (20,177 | ) | $ | 168,270 | |||||||
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Net income per share attributable to Noble | ||||||||||||||||||||
Basic | $ | 1.28 | N/A | N/A | N/A | $ | 0.66 | |||||||||||||
Diluted | $ | 1.27 | N/A | N/A | N/A | $ | 0.66 | |||||||||||||
Weighted average shares outstanding | ||||||||||||||||||||
Basic | 253,184 | N/A | N/A | N/A | 253,184 | |||||||||||||||
Diluted | 253,449 | N/A | N/A | N/A | 253,449 | |||||||||||||||
(See accompanying notes to the unaudited pro forma combined financial statements)
4
Noble Corporation plc and Subsidiaries
Unaudited Pro Forma Combined Statement of Income
For the year ended December 31, 2013
(In thousands)
| Historical | Spin-off of Paragon Offshore | Disposed rigs | Other adjustments | Noble pro forma | ||||||||||||||||
| Note 1 | Note 2 | Note 5 | ||||||||||||||||||
Operating revenues | ||||||||||||||||||||
Contract drilling services | $ | 4,070,070 | $ | (1,615,326 | ) | $ | (14,528 | ) | $ | — | $ | 2,440,216 | ||||||||
Reimbursables | 111,874 | (45,583 | ) | — | — | 66,291 | ||||||||||||||
Labor contract drilling services | 52,241 | (35,146 | ) | — | — | 17,095 | ||||||||||||||
Other | 105 | (94 | ) | — | — | 11 | ||||||||||||||
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| 4,234,290 | (1,696,149 | ) | (14,528 | ) | — | 2,523,613 | ||||||||||||||
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Operating costs and expenses | ||||||||||||||||||||
Contract drilling services | 2,014,217 | (835,444 | ) | (9,440 | ) | — | 1,169,333 | |||||||||||||
Reimbursables | 85,548 | (35,140 | ) | — | — | 50,408 | ||||||||||||||
Labor contract drilling services | 36,604 | (24,333 | ) | — | — | 12,271 | ||||||||||||||
Depreciation and amortization | 879,422 | (367,304 | ) | (2,385 | ) | — | 509,733 | |||||||||||||
General and administrative | 117,997 | (58,430 | ) | (512 | ) | 58,942 | 117,997 | |||||||||||||
Non-recurring spin-off related costs | 17,702 | — | — | (17,702 | ) | — | ||||||||||||||
Loss on impairment | 43,688 | (40,103 | ) | (3,585 | ) | — | — | |||||||||||||
Gain on disposal of assets, net | (35,646 | ) | — | 35,646 | — | — | ||||||||||||||
Gain on contract settlements/extinguishments, net | (46,800 | ) | 16,182 | — | — | (30,618 | ) | |||||||||||||
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| 3,112,732 | (1,344,572 | ) | 19,724 | 41,240 | 1,829,124 | |||||||||||||||
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Operating income | 1,121,558 | (351,577 | ) | (34,252 | ) | (41,240 | ) | 694,489 | ||||||||||||
Other income (expense) | ||||||||||||||||||||
Interest expense, net of amount capitalized | (106,300 | ) | 5,938 | — | — | (100,362 | ) | |||||||||||||
Interest income and other, net | 2,754 | 2,306 | (311 | ) | — | 4,749 | ||||||||||||||
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Income before income taxes | 1,018,012 | (343,333 | ) | (34,563 | ) | (41,240 | ) | 598,876 | ||||||||||||
Income tax provision | (167,606 | ) | 71,243 | 11,149 | — | (85,214 | ) | |||||||||||||
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Net income | 850,406 | (272,090 | ) | (23,414 | ) | (41,240 | ) | 513,662 | ||||||||||||
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Net income attributable to noncontrolling interests | (67,709 | ) | — | — | — | (67,709 | ) | |||||||||||||
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Net income attributable to Noble | $ | 782,697 | $ | (272,090 | ) | $ | (23,414 | ) | $ | (41,240 | ) | $ | 445,953 | |||||||
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Net income per share attributable to Noble | ||||||||||||||||||||
Basic | $ | 3.05 | N/A | N/A | N/A | $ | 1.74 | |||||||||||||
Diluted | $ | 3.05 | N/A | N/A | N/A | $ | 1.74 | |||||||||||||
Weighted average shares outstanding | ||||||||||||||||||||
Basic | 253,288 | N/A | N/A | N/A | 253,288 | |||||||||||||||
Diluted | 253,547 | N/A | N/A | N/A | 253,547 | |||||||||||||||
(See accompanying notes to the unaudited pro forma combined financial statements)
5
Noble Corporation plc and Subsidiaries
Unaudited Pro Forma Combined Statement of Income
For the year ended December 31, 2012
(In thousands)
| Spin-off of | Noble | |||||||||||||||||||
| Paragon | Disposed | Other | pro | |||||||||||||||||
| Historical | Offshore | rigs | adjustments | forma | ||||||||||||||||
| Note 1 | Note 2 | Note 5 | ||||||||||||||||||
Operating revenues | ||||||||||||||||||||
Contract drilling services | $ | 3,349,362 | $ | (1,259,741 | ) | $ | (30,755 | ) | $ | — | $ | 2,058,866 | ||||||||
Reimbursables | 115,495 | (49,727 | ) | — | — | 65,768 | ||||||||||||||
Labor contract drilling services | 81,890 | (36,591 | ) | — | — | 45,299 | ||||||||||||||
Other | 265 | (253 | ) | — | — | 12 | ||||||||||||||
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| 3,547,012 | (1,346,312 | ) | (30,755 | ) | — | 2,169,945 | ||||||||||||||
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Operating costs and expenses | ||||||||||||||||||||
Contract drilling services | 1,769,428 | (793,548 | ) | (15,564 | ) | — | 960,316 | |||||||||||||
Reimbursables | 94,096 | (38,672 | ) | — | — | 55,424 | ||||||||||||||
Labor contract drilling services | 46,752 | (22,006 | ) | — | — | 24,746 | ||||||||||||||
Depreciation and amortization | 758,621 | (317,742 | ) | (7,938 | ) | — | 432,941 | |||||||||||||
General and administrative | 99,990 | (54,187 | ) | (1,059 | ) | 55,246 | 99,990 | |||||||||||||
Non-recurring spin-off related costs | 7,196 | — | — | (7,196 | ) | — | ||||||||||||||
Loss on impairment | 20,384 | — | (12,719 | ) | — | 7,665 | ||||||||||||||
Gain on contract settlements/extinguishment, net | (33,255 | ) | — | — | — | (33,255 | ) | |||||||||||||
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| 2,763,212 | (1,226,155 | ) | (37,280 | ) | 48,050 | 1,547,827 | ||||||||||||||
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Operating income | 783,800 | (120,157 | ) | 6,525 | (48,050 | ) | 622,118 | |||||||||||||
Other income (expense) | ||||||||||||||||||||
Interest expense, net of amount capitalized | (85,763 | ) | 3,746 | — | — | (82,017 | ) | |||||||||||||
Interest income and other, net | 5,188 | (1,721 | ) | (238 | ) | — | 3,229 | |||||||||||||
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Income before income taxes | 703,225 | (118,132 | ) | 6,287 | (48,050 | ) | 543,330 | |||||||||||||
Income tax provision | (147,088 | ) | 45,650 | (3,822 | ) | — | (105,260 | ) | ||||||||||||
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Net income | 556,137 | (72,482 | ) | 2,465 | (48,050 | ) | 438,070 | |||||||||||||
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Net income attributable to noncontrolling interests | (33,793 | ) | — | — | — | (33,793 | ) | |||||||||||||
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Net income attributable to Noble | $ | 522,344 | $ | (72,482 | ) | $ | 2,465 | $ | (48,050 | ) | $ | 404,277 | ||||||||
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Net income per share attributable to Noble | ||||||||||||||||||||
Basic | $ | 2.05 | N/A | N/A | N/A | $ | 1.59 | |||||||||||||
Diluted | $ | 2.05 | N/A | N/A | N/A | $ | 1.58 | |||||||||||||
Weighted average shares outstanding | ||||||||||||||||||||
Basic | 252,435 | N/A | N/A | N/A | 252,435 | |||||||||||||||
Diluted | 252,791 | N/A | N/A | N/A | 252,791 | |||||||||||||||
(See accompanying notes to the unaudited pro forma combined financial statements)
6
Noble Corporation plc and Subsidiaries
Unaudited Pro Forma Combined Statement of Income
For the year ended December 31, 2011
(In thousands)
| Spin-off of | Noble | |||||||||||||||||||
| Paragon | Disposed | Other | pro | |||||||||||||||||
| Historical | Offshore | rigs | adjustments | forma | ||||||||||||||||
| Note 1 | Note 2 | Note 5 | ||||||||||||||||||
Operating revenues | ||||||||||||||||||||
Contract drilling services | $ | 2,556,758 | $ | (1,193,635 | ) | $ | (18,899 | ) | $ | — | $ | 1,344,224 | ||||||||
Reimbursables | 79,195 | (34,987 | ) | — | — | 44,208 | ||||||||||||||
Labor contract drilling services | 59,004 | (37,269 | ) | — | — | 21,735 | ||||||||||||||
Other | 875 | (496 | ) | — | — | 379 | ||||||||||||||
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| 2,695,832 | (1,266,387 | ) | (18,899 | ) | — | 1,410,546 | ||||||||||||||
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Operating costs and expenses | ||||||||||||||||||||
Contract drilling services | 1,384,200 | (716,503 | ) | (11,820 | ) | — | 655,877 | |||||||||||||
Reimbursables | 58,439 | (24,781 | ) | — | — | 33,658 | ||||||||||||||
Labor contract drilling services | 33,885 | (24,801 | ) | — | — | 9,084 | ||||||||||||||
Depreciation and amortization | 658,640 | (299,781 | ) | (9,303 | ) | — | 349,556 | |||||||||||||
General and administrative | 91,377 | (55,030 | ) | (856 | ) | 55,886 | 91,377 | |||||||||||||
Gain on contract extinguishment, net | (21,202 | ) | 19,846 | — | — | (1,356 | ) | |||||||||||||
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| 2,205,339 | (1,101,050 | ) | (21,979 | ) | 55,886 | 1,138,196 | ||||||||||||||
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Operating income | 490,493 | (165,337 | ) | 3,080 | (55,886 | ) | 272,350 | |||||||||||||
Other income (expense) | ||||||||||||||||||||
Interest expense, net of amount capitalized | (55,727 | ) | 1,986 | — | — | (53,741 | ) | |||||||||||||
Interest income and other, net | 1,484 | (124 | ) | 218 | — | 1,578 | ||||||||||||||
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Income before income taxes | 436,250 | (163,475 | ) | 3,298 | (55,886 | ) | 220,187 | |||||||||||||
Income tax provision | (72,625 | ) | 34,801 | (1,283 | ) | — | (39,107 | ) | ||||||||||||
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Net income | 363,625 | (128,674 | ) | 2,015 | (55,886 | ) | 181,080 | |||||||||||||
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Net loss attributable to noncontrolling interests | 7,273 | — | — | — | 7,273 | |||||||||||||||
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Net income attributable to Noble | $ | 370,898 | $ | (128,674 | ) | $ | 2,015 | $ | (55,886 | ) | $ | 188,353 | ||||||||
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| |||||||||||
Net income per share attributable to Noble | ||||||||||||||||||||
Basic | $ | 1.46 | N/A | N/A | N/A | $ | 0.74 | |||||||||||||
Diluted | $ | 1.46 | N/A | N/A | N/A | $ | 0.74 | |||||||||||||
Weighted average shares outstanding | ||||||||||||||||||||
Basic | 251,405 | N/A | N/A | N/A | 251,405 | |||||||||||||||
Diluted | 251,989 | N/A | N/A | N/A | 251,989 | |||||||||||||||
(See accompanying notes to the unaudited pro forma combined financial statements)
7
Noble Corporation plc and Subsidiaries
Unaudited Pro Forma Combined Balance Sheet
As of June 30, 2014
(In thousands)
| Spin-off of | ||||||||||||||||||||||||||||
| Paragon | Commercial paper | Other | Noble | |||||||||||||||||||||||||
| Historical | Offshore | program | Financing adjustments | adjustments | pro forma | |||||||||||||||||||||||
| Note 1 | Note 3 | Note 4 | Note 5 | |||||||||||||||||||||||||
ASSETS | ||||||||||||||||||||||||||||
Current assets | ||||||||||||||||||||||||||||
Cash and cash equivalents | $ | 140,537 | $ | (32,688 | ) | $ | — | $ | 1,710,736 | $ | (1,710,736 | ) | $ | (40,000 | ) | $ | 67,849 | |||||||||||
Accounts receivable | 889,942 | (323,279 | ) | — | — | — | — | 566,663 | ||||||||||||||||||||
Prepaid and other current assets | 381,597 | (54,206 | ) | — | — | — | 1,572 | 328,963 | ||||||||||||||||||||
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| |||||||||||||||
Total current assets | 1,412,076 | (410,173 | ) | — | 1,710,736 | (1,710,736 | ) | (38,428 | ) | 963,475 | ||||||||||||||||||
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Property and equipment, at cost | 20,391,892 | (5,484,950 | ) | — | — | — | — | 14,906,942 | ||||||||||||||||||||
Accumulated depreciation | (5,118,363 | ) | 2,601,221 | — | — | — | — | (2,517,142 | ) | |||||||||||||||||||
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Property and equipment, net | 15,273,529 | (2,883,729 | ) | — | — | — | — | 12,389,800 | ||||||||||||||||||||
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Other assets | 304,295 | (57,432 | ) | — | — | — | 33,032 | 279,895 | ||||||||||||||||||||
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| |||||||||||||||
Total assets | 16,989,900 | (3,351,334 | ) | — | 1,710,736 | (1,710,736 | ) | (5,396 | ) | 13,633,170 | ||||||||||||||||||
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LIABILITIES AND EQUITY | ||||||||||||||||||||||||||||
Current liabilities | ||||||||||||||||||||||||||||
Accounts payable | $ | 365,961 | $ | (116,338 | ) | $ | — | $ | — | $ | — | $ | (6,400 | ) | $ | 243,223 | ||||||||||||
Accrued payroll and related costs | 148,447 | (49,239 | ) | — | — | — | — | 99,208 | ||||||||||||||||||||
Other current liabilities | 386,406 | (35,547 | ) | — | — | — | (23,339 | ) | 327,520 | |||||||||||||||||||
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| |||||||||||||||
Total current liabilities | 900,814 | (201,124 | ) | — | — | — | (29,739 | ) | 669,951 | |||||||||||||||||||
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Long-term debt | 6,013,946 | (2,268,613 | ) | 2,268,613 | — | (1,710,736 | ) | — | 4,303,210 | |||||||||||||||||||
Other liabilities | 572,307 | (179,855 | ) | — | — | — | 23,386 | 415,838 | ||||||||||||||||||||
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| |||||||||||||||
Total liabilities | 7,487,067 | (2,649,592 | ) | 2,268,613 | — | (1,710,736 | ) | (6,353 | ) | 5,388,999 | ||||||||||||||||||
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Commitments and contingencies | ||||||||||||||||||||||||||||
Shareholders’ equity | ||||||||||||||||||||||||||||
Shares | 2,543 | — | — | — | — | — | 2,543 | |||||||||||||||||||||
Additional paid-in capital | 828,879 | — | — | — | — | — | 828,879 | |||||||||||||||||||||
Retained earnings | 8,017,321 | (701,721 | ) | (2,268,613 | ) | 1,710,736 | — | (39,027 | ) | 6,718,696 | ||||||||||||||||||
Accumulated other comprehensive loss | (71,264 | ) | (21 | ) | — | — | — | 39,984 | (31,301 | ) | ||||||||||||||||||
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Total shareholders’ equity | 8,777,479 | (701,742 | ) | (2,268,613 | ) | 1,710,736 | — | 957 | 7,518,817 | |||||||||||||||||||
Non controlling interests | 725,354 | — | — | — | — | — | 725,354 | |||||||||||||||||||||
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| |||||||||||||||
Total equity | 9,502,833 | (701,742 | ) | (2,268,613 | ) | 1,710,736 | — | 957 | 8,244,171 | |||||||||||||||||||
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Total liabilities and equity | $ | 16,989,900 | $ | (3,351,334 | ) | $ | — | $ | 1,710,736 | $ | (1,710,736 | ) | $ | (5,396 | ) | $ | 13,633,170 | |||||||||||
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(See accompanying notes to the unaudited pro forma combined financial statements)
8
Note 1. Removal of Paragon Offshore as a Pro forma adjustment
The pro forma adjustments included in the accompanying unaudited pro forma combined financial statements include adjustments to assets, liabilities, revenues and costs that are specifically identifiable or have been allocated directly to Paragon Offshore. The reduction of Shareholders’ equity represents Noble’s interest in Paragon Offshore, which was ultimately distributed to Noble shareholders on the Distribution Date.
Note 2. Removal of Disposed rigs as a Pro forma adjustment
The pro forma adjustments included in the accompanying unaudited pro forma combined financial statements include adjustments to revenues and costs that are specifically identifiable or have been allocated directly to the Disposed rigs, which were sold in July 2013 and January 2014, respectively.
Note 3. Removal of Commercial paper program as a Pro forma adjustment
In connection with the preparation of Paragon Offshore’s pro forma combined financial statements, certain debt of Noble was allocated to Paragon Offshore because it was to be repaid with proceeds received from Paragon Offshore. Such debt is shown as “Long-term debt” in the “Spin-off of Paragon Offshore” column in the unaudited pro forma combined balance sheet. The pro forma adjustment included under “Commercial paper program” in the accompanying unaudited pro forma combined balance sheet adds back the debt previously allocated to Paragon Offshore and reduces the equity of Noble in Paragon Offshore’s business by a corresponding amount.
Note 4. Financing adjustments
In connection with the Spin-Off, Paragon Offshore repaid approximately $1.7 billion in an intercompany promissory note issued to Noble as consideration for the business contributed to Paragon Offshore. Noble, in turn, used the proceeds received from these notes to repay a portion of the outstanding amounts under its commercial paper program. For purposes of the unaudited pro forma combined balance sheet, an adjustment has been made to reduce the total long-term debt outstanding to the amount outstanding following such repayment. No adjustments have been made to interest expense in the unaudited pro forma combined statements of income because the interest on Noble’s commercial paper program has been allocated to the “Spin-off of Paragon Offshore” column discussed in Note 1 “Removal of Paragon Offshore as a Pro forma adjustment” above.
Note 5. Other adjustments
General and administrative expenses
The “Other adjustments” column reflects the removal of certain general corporate overhead expenses previously allocated to Paragon Offshore and the Disposed rigs.
Non-recurring Spin-Off related costs
The “Other adjustments” column reflects the removal of costs incurred by Noble that are specifically related to the Spin-Off transaction.
9
Income tax provision
No adjustments to the income tax provision have been made to give effect to the changes to the unaudited pro forma combined income statements noted above as no tax provision or benefit is associated with these costs. Noble’s effective tax rate may be greater than the historical tax rate due to a change in the geographic mix of revenues, discrete one-time events or changes in tax regulation.
Cash and cash equivalents
Prior to the Spin-Off, Noble paid Paragon Offshore $40 million in cash as an adjustment to working capital. The “Other adjustments” column in the unaudited pro forma combined balance sheet reflects a corresponding reduction in cash.
Other assets and liabilities (current and long-term) and Accumulated other comprehensive loss
The “Other adjustments” column in the unaudited pro forma combined balance sheet primarily consists of adjustments for income taxes and pension assets and liabilities undertaken by Paragon Offshore pursuant to the separation agreements.
Income taxes included in the “Spin-off of Paragon Offshore” column were prepared on a separate return basis as if Paragon Offshore had been a standalone company. For purposes of the unaudited pro forma combined financial statements, adjustments have been made to Noble’s balance sheet to reflect the assets, liabilities and related indemnities which Noble ultimately received from Paragon Offshore pursuant to the Tax Sharing Agreement.
Cumulative currency translation adjustments of $18 million were transferred to Paragon Offshore at the Spin-Off, and are shown as a reduction in Noble’s “Accumulated other comprehensive loss.” Actuarial losses and prior service costs of $22 million related to Noble-sponsored pension plans and other employee benefit arrangements located in certain countries outside of the United States were transferred to Paragon Offshore at the Spin-Off, and are shown as a reduction in Noble’s “Accumulated other comprehensive loss.” The assets and liabilities related to these pension plans and other employee benefit arrangements assumed by Paragon Offshore are shown as an adjustment to “Other assets” and “Other liabilities.”
10
Note 6. Earnings per share for Noble pro forma
The following details the unaudited pro forma earnings per share for Noble pro forma:
| Six months ended | Twelve months ended | |||||||||||||||||||
| June 30, | December 31, | |||||||||||||||||||
| 2014 | 2013 | 2013 | 2012 | 2011 | ||||||||||||||||
Allocation of net income from continuing operations | ||||||||||||||||||||
Basic | ||||||||||||||||||||
Net income attributable to Noble | $ | 303,348 | $ | 168,270 | $ | 445,953 | $ | 404,277 | $ | 188,353 | ||||||||||
Earnings allocated to unvested share-based payment awards | (5,019 | ) | (1,968 | ) | (5,282 | ) | (4,109 | ) | (1,893 | ) | ||||||||||
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Net income to common shareholders—basic | $ | 298,329 | $ | 166,302 | $ | 440,671 | $ | 400,168 | $ | 186,460 | ||||||||||
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Diluted | ||||||||||||||||||||
Net income attributable to Noble | $ | 303,348 | $ | 168,270 | $ | 445,953 | $ | 404,277 | $ | 188,353 | ||||||||||
Earnings allocated to unvested share-based payment awards | (5,018 | ) | (1,967 | ) | (5,277 | ) | (4,103 | ) | (1,888 | ) | ||||||||||
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Net income to common shareholders—diluted | $ | 298,330 | $ | 166,303 | $ | 440,676 | $ | 400,174 | $ | 186,465 | ||||||||||
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Weighted average shares outstanding—basic | 254,090 | 253,184 | 253,288 | 252,435 | 251,405 | |||||||||||||||
Incremental shares issuable from assumed exercise of stock options | 116 | 265 | 259 | 356 | 584 | |||||||||||||||
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Weighted average shares outstanding—diluted | 254,206 | 253,449 | 253,547 | 252,791 | 251,989 | |||||||||||||||
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Weighted average unvested share-based payment awards | 4,172 | 2,998 | 3,036 | 2,592 | 2,552 | |||||||||||||||
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Net Income per share attributable to Noble | ||||||||||||||||||||
Basic | $ | 1.17 | $ | 0.66 | $ | 1.74 | $ | 1.59 | $ | 0.74 | ||||||||||
Diluted | $ | 1.17 | $ | 0.66 | $ | 1.74 | $ | 1.58 | $ | 0.74 | ||||||||||
11