- --------------------------------------------------------------------------------
UNITED STATES
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 JUNE 30, 1997
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission file number: 0-16961
PRIDE INTERNATIONAL, INC.
FORMERLY PRIDE PETROLEUM SERVICES, INC.
(Exact name of registrant as specified in its charter)
LOUISIANA 76-0069030
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1500 CITY WEST BOULEVARD, SUITE 400
HOUSTON, TEXAS 77042
(Address of principal executive offices) (Zip Code)
(713) 789-1400
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. YES [X] NO [ ]
Indicate the number of shares outstanding of each of the issuer's
classes of common stock as of the latest practical date.
OUTSTANDING AT
CLASS OF COMMON STOCK AUGUST 1, 1997
--------------------- -----------------
no par 46,708,345 shares
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Page 1
PRIDE INTERNATIONAL, INC.
INDEX
PAGE NO.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheet
June 30, 1997 and December 31, 1996............................... 4
Consolidated Statement of Operations -
Three months ended June 30, 1997 and 1996......................... 5
Consolidated Statement of Operations -
Six months ended June 30, 1997 and 1996........................... 6
Consolidated Statement of Cash Flows -
Six months ended June 30, 1997 and 1996........................... 7
Notes to Unaudited Consolidated Financial Statements................. 8
Report of Independent Accountants.................................... 14
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.................................. 15
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders........... 23
Item 6. Exhibits and Reports on Form 8-K.............................. 23
Signatures............................................................... 24
Page 2
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Page 3
PRIDE INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEET
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
JUNE 30, DECEMBER 31,
1997 1996
----------- ---------
(UNAUDITED)
ASSETS
CURRENT ASSETS
Cash and cash equivalents ................................... $ 81,604 $ 10,310
Short-term investments ...................................... 639 460
Trade receivables, net of allowance for doubtful
accounts of $300 and $292, respectively .................. 161,436 99,531
Parts and supplies .......................................... 28,238 27,642
Deferred income taxes ....................................... 4,670 1,778
Other current assets ........................................ 32,898 16,686
----------- ---------
Total current assets ................................. 309,485 156,407
----------- ---------
PROPERTY AND EQUIPMENT, at cost ................................. 1,094,802 514,903
ACCUMULATED DEPRECIATION ........................................ (72,676) (139,654)
----------- ---------
Net property and equipment ........................... 1,022,126 375,249
----------- ---------
OTHER ASSETS
Investments in and advances to affiliates ................... 9,268 --
Goodwill and other intangibles, net ......................... 3,940 3,134
Other ....................................................... 20,531 7,272
----------- ---------
Total other assets ................................... 33,739 10,406
----------- ---------
$ 1,365,350 $ 542,062
=========== =========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable ............................................ $ 72,670 $ 31,918
Accrued expenses ............................................ 96,112 25,785
Short-term borrowings ....................................... 12,309 3,300
Current portion of long-term debt ........................... 42,652 32,682
Current portion of long-term lease obligations .............. 5,694 --
----------- ---------
Total current liabilities ............................ 229,437 93,685
----------- ---------
OTHER LONG-TERM LIABILITIES ..................................... 10,606 12,134
LONG-TERM DEBT, net of current portion .......................... 446,456 106,508
LONG-TERM LEASE OBLIGATIONS, net of current portion ............. 32,857 --
CONVERTIBLE SUBORDINATED DEBENTURES ............................. 52,500 80,500
DEFERRED INCOME TAXES ........................................... 46,912 47,438
MINORITY INTEREST ............................................... 1,125 --
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY
Common stock, no par value; 100,000,000 shares authorized;
46,707,767 and 28,571,876 shares issued and 46,653,547
and 28,517,656 shares outstanding, respectively ......... 1 1
Paid-in capital ............................................. 416,694 143,581
Treasury stock, at cost ..................................... (191) (191)
Retained earnings ........................................... 128,953 58,406
----------- ---------
Total shareholders' equity ........................... 545,457 201,797
----------- ---------
$ 1,365,350 $ 542,062
=========== =========
The accompanying notes are an integral part of the consolidated financial
statements.
Page 4
PRIDE INTERNATIONAL, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
THREE MONTHS ENDED
JUNE 30,
------------------------
1997 1996
--------- ---------
REVENUES ......................................... $ 174,537 $ 101,989
OPERATING COSTS .................................. 113,872 73,914
--------- ---------
Gross Margin ................................. 60,665 28,075
DEPRECIATION AND AMORTIZATION .................... 15,423 7,045
SELLING, GENERAL AND ADMINISTRATIVE .............. 18,342 11,669
--------- ---------
Earnings from operations .............. 26,900 9,361
OTHER INCOME (EXPENSE)
Other income ................................. 82 469
Interest income .............................. 1,414 623
Interest expense ............................. (9,918) (4,124)
--------- ---------
Total other income (expense), net ..... (8,422) (3,032)
--------- ---------
EARNINGS BEFORE MINORITY INTEREST
AND INCOME TAXES ............................... 18,478 6,329
MINORITY INTEREST ................................ 94 --
--------- ---------
EARNINGS BEFORE INCOME TAXES ..................... 18,384 6,329
INCOME TAX PROVISION ............................. 5,331 1,534
--------- ---------
NET EARNINGS ..................................... $ 13,053 $ 4,795
========= =========
NET EARNINGS PER SHARE:
Primary ...................................... $ .28 $ .18
Fully diluted ................................ $ .27 $ .17
WEIGHTED AVERAGE COMMON SHARES AND
COMMON SHARE EQUIVALENTS OUTSTANDING:
Primary ...................................... 46,679 26,583
Fully diluted ................................ 51,194 33,052
The accompanying notes are an integral part of the consolidated financial
statements.
Page 5
PRIDE INTERNATIONAL, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
SIX MONTHS ENDED
JUNE 30,
------------------------
1997 1996
--------- ---------
REVENUES ......................................... $ 305,913 $ 168,224
OPERATING COSTS .................................. 204,959 121,860
--------- ---------
Gross Margin ................................. 100,954 46,364
DEPRECIATION AND AMORTIZATION .................... 25,497 11,819
SELLING, GENERAL AND ADMINISTRATIVE .............. 33,360 19,826
--------- ---------
Earnings from operations .............. 42,097 14,719
OTHER INCOME (EXPENSE)
Other income ................................. 78,833 696
Interest income .............................. 1,923 1,397
Interest expense ............................. (13,349) (6,678)
--------- ---------
Total other income (expense), net ..... 67,407 (4,585)
--------- ---------
EARNINGS BEFORE MINORITY INTEREST
AND INCOME TAXES ............................... 109,504 10,134
MINORITY INTEREST ................................ 168 --
--------- ---------
EARNINGS BEFORE INCOME TAXES ..................... 109,336 10,134
INCOME TAX PROVISION ............................. 38,789 2,559
--------- ---------
NET EARNINGS ..................................... $ 70,547 $ 7,575
========= =========
NET EARNINGS PER SHARE:
Primary ...................................... $ 1.76 $ .29
Fully diluted ................................ $ 1.58 $ .28
WEIGHTED AVERAGE COMMON SHARES AND
COMMON SHARE EQUIVALENTS OUTSTANDING:
Primary ...................................... 40,109 26,370
Fully diluted ................................ 45,374 32,056
The accompanying notes are an integral part of the consolidated financial
statements.
Page 6
PRIDE INTERNATIONAL, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
SIX MONTHS ENDED
JUNE 30,
----------------------
1997 1996
--------- ---------
OPERATING ACTIVITIES
Net earnings ................................................ $ 70,547 $ 7,575
Adjustments to reconcile net earnings to net
cash provided by operating activities -
Depreciation and amortization ........................... 25,497 11,819
Gain on sale of assets .................................. (84,387) (268)
Effect of exchange rates ................................ 346 (543)
Deferred tax provision (benefit) ........................ (5,905) 1,706
Minority interest ....................................... (168) --
Changes in assets and liabilities, net of
effects of acquisitions -
Trade receivables .................................... (4,426) (14,418)
Parts and supplies ................................... (2,577) (1,181)
Other current assets ................................. (6,871) (1,979)
Accounts payable ..................................... 7,446 2,327
Accrued expenses and other ........................... (6,197) (2,179)
--------- ---------
Net cash provided (used) by operating activities.. (6,695) 2,859
--------- ---------
INVESTING ACTIVITIES
Purchase of net assets of acquired entities,
including acquisition costs, less cash acquired .......... (371,802) (106,286)
Purchases of property and equipment ......................... (66,777) (24,424)
Proceeds from sales of property and equipment ............... 139,010 5,868
Proceeds from sales of short-term investments ............... 468 5,100
Purchases of short-term investments ......................... (647) --
Other ....................................................... 33 (12)
--------- ---------
Net cash used in investing activities ............ (299,715) (119,754)
--------- ---------
FINANCING ACTIVITIES
Proceeds from issuance of common stock ...................... 72,691 1,333
Proceeds from issuance of convertible subordinated debentures -- 77,585
Proceeds from debt borrowings ............................... 396,887 65,455
Reduction of debt and capital lease obligations ............. (90,524) (27,932)
Other ....................................................... (1,350) (113)
--------- ---------
Net cash provided by financing activities ........ 377,704 116,328
--------- ---------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS ............................................ 71,294 (567)
CASH AND CASH EQUIVALENTS, beginning of period .................. 10,310 9,295
--------- ---------
CASH AND CASH EQUIVALENTS, end of period ........................ $ 81,604 $ 8,728
========= =========
The accompanying notes are an integral part of the consolidated financial
statements.
Page 7
PRIDE INTERNATIONAL, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
1. GENERAL
The unaudited consolidated financial statements included herein have
been prepared without audit pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and footnote disclosures
normally included in financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted, pursuant to such
rules and regulations. These unaudited consolidated financial statements should
be read in conjunction with Pride International, Inc.'s (formerly Pride
Petroleum Services, Inc.) (the "Company's") audited consolidated financial
statements and notes thereto included in the Company's Annual Report on Form
10-K for the year ended December 31, 1996. Certain reclassifications have been
made to prior year amounts to conform with the current year presentation.
The unaudited consolidated financial information included herein
reflects all adjustments, consisting only of normal recurring adjustments, which
are necessary, in the opinion of management, for a fair presentation of the
Company's financial position, results of operations and cash flows for the
interim periods presented. The results of operations for the interim periods
presented herein are not necessarily indicative of the results to be expected
for full years.
2. COMMITMENTS AND CONTINGENCIES
The Company is routinely involved in litigation incidental to its
business, which often involves claims for significant monetary amounts, some of
which would not be covered by insurance. In the opinion of management, none of
the existing litigation will have any material adverse effect on the Company's
financial position or results of operations.
As of June 30, 1997 and December 31, 1996, the Company had accrued
approximately $2,857,000 and $4,853,000, respectively, for estimated claims
liabilities, of which $1,641,000 and $3,713,000, respectively, was included in
current liabilities and $1,216,000 and $1,140,000, respectively, was included in
other long-term liabilities in the accompanying unaudited consolidated balance
sheet. As of June 30, 1997, the Company had letters of credit outstanding
totaling $10,729,000. These letters of credit principally guarantee the funding
of the Company's share of insured claims.
3. ACQUISITIONS AND DISPOSITIONS
In February 1997, the Company sold substantially all of the assets used
in its U.S. land-based well servicing operations for $135,650,000 in cash. After
federal and state income taxes of approximately $42,100,000, repayment of
$3,877,000 of indebtedness collateralized by certain of the assets sold and
$65,000 of interest accrued thereon, and prepayment of $3,960,000 of lease
payments on transferred assets subject to operating leases, the net proceeds to
the Company were $85,648,000. The Company recognized a gain on the sale of
$83,553,000, which amount is included in other income on the accompanying
unaudited consolidated statement of operations.
Page 8
PRIDE INTERNATIONAL, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
In March 1997, the Company acquired the operating subsidiaries of
Forasol-Foramer N.V. (collectively, "Forasol") for aggregate consideration of
$285,644,000, consisting of $113,222,000 in cash and 11,099,191 shares of common
stock valued at $172,422,000, based on the approximate market value of the
common stock prior to the date of the agreement of $15.50 per share. The
acquisition of Forasol was recorded using the purchase method of accounting. The
operating results of Forasol have been included in the Company's consolidated
results of operations from the date of acquisition.
The assets acquired and liabilities assumed in the Forasol acquisition,
based on the Company's preliminary purchase price allocation, were as follows:
ASSETS (LIABILITIES)
(IN THOUSANDS)
Cash and cash equivalents....................... $ 13,438
Trade receivables............................... 57,479
Deferred income taxes........................... 1,083
Other current assets............................ 14,924
Property and equipment.......................... 377,819
Investments in affiliates....................... 9,586
Other assets.................................... 4,919
Accounts payable................................ (33,214)
Accrued expenses................................ (60,468)
Short-term borrowings........................... (15,354)
Long-term debt.................................. (31,361)
Long-term lease obligations..................... (35,514)
Deferred income taxes......................... (15,569)
Minority interest............................... (2,124)
---------
$ 285,644
=========
In May 1997, the Company acquired 13 mat-supported jackup drilling rigs
(the "Noble Rigs") from Noble Drilling Corporation and certain subsidiaries for
approximately $269,000,000 in cash. The acquisition was financed through the
sale of Senior Notes and common stock, which was concluded concurrently with the
acquisition. The acquisition was recorded using the purchase method of
accounting. The operating results of the Noble Rigs have been included in the
Company's consolidated results of operations from the date of acquisition.
Unaudited pro forma results of operations assuming the sale of the
Company's U.S. land-based well servicing operations and the acquisitions of
Forasol and the Noble Rigs had occurred on January 1, 1996, are as follows:
SIX MONTHS ENDED
JUNE 30,
---------------------
1997 1996
--------- ---------
(IN THOUSANDS, EXCEPT
PER SHARE AMOUNTS)
Revenues...................................... $ 362,077 $ 234,333
Net earnings.................................. $ 18,602 $ (1,967)
Earnings per share -
Primary.................................... $ .42 $ (.05)
Fully diluted.............................. $ .40
The pro forma results of operations presented above do not purport to be
indicative of the results of operations of the Company that might have occurred
if such transactions had occurred as of January 1, 1996 nor are they indicative
of future results.
Page 9
PRIDE INTERNATIONAL, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
4. DEBT
SHORT-TERM BORROWINGS
The Company has agreements with several banks for short-term lines of
credit denominated in U.S. dollars, French francs and Argentine pesos. The
facilities are renewable annually and bear interest at variable rates based on
LIBOR for the U.S. dollar and Argentine peso denominated facilities, and PIBOR
for the French franc denominated facilities. The interest rates on such
borrowings at June 30, 1997 range from 4.2% to 12.0%.
LONG-TERM DEBT
Long-term debt at June 30, 1997 and December 31, 1996 consists of the
following:
JUNE 30, DECEMBER 31,
1997 1996
-------- --------
(IN THOUSANDS)
Senior Notes .................................... $325,000 $ --
Collateralized term loans ....................... 86,486 46,169
Limited-recourse collateralized term loans ...... 37,117 38,935
Note payable to sellers ......................... 17,000 23,000
Eximbank notes payable .......................... 7,716 8,900
Notes payable ................................... 8,318 4,033
Acquisition note payable ........................ -- 3,877
Secured bank facility ........................... -- 14,276
Revolving credit facility ....................... -- --
Loan obligations to customers ................... 7,471 --
-------- --------
489,108 139,190
Less: current portion ........................... 42,652 32,682
-------- --------
$446,456 $106,508
======== ========
In May 1997, the Company issued $325,000,000 of 9 3/8% Senior Notes due
May 1, 2007 (the "Senior Notes"). Interest on the Senior Notes is payable
semiannually on May 1 and November 1 of each year, commencing November 1, 1997.
The Senior Notes are not redeemable prior to May 1, 2002, after which they will
be redeemable, in whole or in part, at the option of the Company at redemption
prices starting at 104.688% and declining to 100% by May 1, 2005. In the event
the Company consummates a public equity offering (other than the common stock
offering completed concurrently with the Senior Notes offering) on or prior to
May 1, 2000, the Company at its option may use all or a portion of the proceeds
from such public equity offering to redeem up to $108,333,000 principal amount
of the Senior Notes at a redemption price equal to 109.375% of the aggregate
principal amount thereof, together with accrued and unpaid interest to the date
of redemption.
Page 10
PRIDE INTERNATIONAL, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
The Indenture governing the Senior Notes, as amended and supplemented
(the "Indenture"), contains provisions which limit the ability of the Company
and its subsidiaries to incur additional indebtedness, create liens, enter into
mergers and consolidations, pay cash dividends on its capital stock, make
acquisitions, sell assets or change its business.
Net proceeds from the issuance of Senior Notes totaled approximately
$316,600,000, after deducting underwriting discounts and estimated offering
expenses. Of such net proceeds, approximately $270,000,000 was used to finance
the purchase of the Noble Rigs, including acquisition costs, and approximately
$25,000,000 was used to repay certain outstanding indebtedness.
During 1994, the Company entered into long-term financing arrangements
with two Japanese trading companies in connection with the construction and
operation of two drilling/workover barge rigs. The term loans are collateralized
by the barge rigs and related charter contracts. The loans are being repaid from
the proceeds of the related charter contracts in equal monthly installments of
principal and interest through July 2004. In addition, a portion of contract
proceeds is being held in trust to assure that timely payment of future debt
service obligations is made. At June 30, 1997, $2,435,000 of such contract
proceeds, which amount is included in cash and cash equivalents on the
accompanying unaudited consolidated balance sheet, are being held in trust as
security for the lenders, and are not presently available for use by the
Company.
In March 1997, the Company entered into a senior secured revolving
credit facility with a group of banks (the "Credit Facility") under which up to
$100 million (including $25 million for letters of credit) is available.
Availability under the Credit Facility is limited to a borrowing base based on
the value of collateral. Unless the Company collateralizes its obligations with
additional offshore or domestic assets with a value of at least $40 million
("Additional Collateral"), the amount available under the Credit Facility would
be reduced to $75 million. The Credit Facility is collateralized by the accounts
receivable, inventory and intangibles of the Company and its domestic
subsidiaries, two-thirds of the stock of the Company's foreign subsidiaries and
the stock of the Company's domestic subsidiaries. The Company's domestic
subsidiaries also initially provided guarantees. The Credit Facility terminates
on March 6, 2002 if the Additional Collateral is timely provided; otherwise it
terminates on March 6, 2000. The credit line will be reduced by $12.5 million in
each of 2000 and 2001. Borrowings under the Credit Facility bear interest at a
variable rate, initially 7.44%, based on either the prime rate or LIBOR.
The Credit Facility limits the ability of the Company and its
subsidiaries to incur additional indebtedness, create liens, enter into mergers
and consolidations, pay cash dividends on its capital stock, make acquisitions,
sell assets or change its business without prior consent of the lenders. Under
the Credit Facility, the Company must maintain certain financial ratios,
including (i) funded debt to pro forma EBITDA, (ii) funded debt to
capitalization, (iii) adjusted EBITDA to debt service and (iv) minimum tangible
net worth. In order to complete the public offering of Senior Notes and the
acquisition of the Noble Rigs, the Company obtained a waiver from the lenders of
certain of these convenants as well as a release of the guarantees provided by
the Company's domestic subsidiaries. In connection with such waiver and release,
borrowing availability was reduced to $15.0 million until such time as the
Credit Facility is amended or replaced. The Company is currently engaged in
negotiations with the lenders for the purpose of amending the Credit facility in
order to provide for full restoration of the borrowing
Page 11
PRIDE INTERNATIONAL, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
capacity thereunder.
Collateralized term loans at June 30, 1997 includes a loan with a
principal balance of $16,526,000 which was assumed in connection with the
acquisition of Forasol. The loan is payable in semiannual installments through
August 2002 and bears interest at 7.55%.
Notes payable at June 30, 1997 include financed insurance premiums, a
note payable collateralized by certain support assets and other notes payable
assumed in connection with the acquisition of Forasol.
CONVERTIBLE SUBORDINATED DEBENTURES
During the first quarter of 1997, an aggregate of $28,000,000 principal
amount of the Company's 6 1/4% convertible subordinated debentures were
converted into 2,285,712 shares of common stock. In connection therewith, the
Company paid an aggregate of $3,732,000 in cash to induce such conversions. Such
amount has been included in other expense in the accompanying unaudited
consolidated statement of operations. In addition, $917,000 of deferred offering
costs associated with the debentures converted has been charged against
additional paid-in capital in the accompanying unaudited consolidated balance
sheet.
5. CAPITAL LEASES
In connection with the acquisition of Forasol, the Company assumed
capital lease obligations pursuant to a sale leaseback agreement for three
tender assisted rigs. The obligation is payable in semiannual installments
through October 2002, and bears interest at 7.67%.
JUNE 30, DECEMBER 31,
1997 1996
--------- ------
(IN THOUSANDS)
Total capital lease obligations............... $ 38,551 $ --
Less: current portion......................... 5,694 --
--------- ------
$ 32,857 $ --
========= ======
6. COMMON STOCK OFFERING
In May 1997, concurrently with the issuance of the Senior Notes, the
Company also sold 4,391,505 shares of common stock to the public at $17.00 per
share. Net proceeds from the public sale of common stock totaled approximately
$70,881,000, after deducting underwriting discounts and estimated offering
expenses. Of such net proceeds, approximately $45,000,000 was used to repay the
balance outstanding under the Credit Facility and approximately $5,000,000 was
used to repay certain other indebtedness. The Company intends to use excess
proceeds from the offerings for general corporate purposes, including
acquisitions and capital projects.
7. INCOME TAXES
Page 12
PRIDE INTERNATIONAL, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
The Company's consolidated effective income tax rate for the six months
ended June 30, 1997 was approximately 35%, as compared to approximately 25% for
the corresponding period in 1996. The increase in the effective tax rate for the
first six months of 1997 resulted from the effects of (i) certain non-deductible
amounts, primarily $3.7 million of costs related to induced conversion of
convertible subordinated debentures, (ii) an estimated effective combined U.S.
federal and state income tax rate of 36% on the gain from the sale of the
Company's U.S. land-based well servicing operations, and (iii) an estimated
effective income tax rate of 29% on ongoing operations.
8. NET EARNINGS PER SHARE
Primary net earnings per share has been computed based on the weighted
average number of common shares outstanding during the applicable period. Common
share equivalents have been included in periods in which their effect is
dilutive. Common share equivalents include the number of shares issuable upon
the exercise of stock options and warrants, less the number of shares that could
have been repurchased with the exercise proceeds, using the treasury stock
method. Fully diluted net earnings per share has been computed based on the
weighted average number of shares of common stock and common stock equivalents
outstanding during the period, as if the convertible subordinated debentures
were converted into common stock at the beginning of the applicable period,
after giving retroactive effect to the elimination of interest expense, net of
income tax effect, applicable to the convertible subordinated debentures.
The following table presents information necessary to calculate fully
diluted net earnings per share:
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------------- -------------------------
1997 1996 1997 1996
-------- -------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
Net earnings ................................................... $ 13,053 $ 4,795 $ 70,547 $ 7,575
Interest on convertible subordinated debentures ................ 860 1,331 1,956 2,293
Income tax effect .............................................. (309) (479) (704) (825)
-------- -------- -------- --------
Net earnings applicable
to common stock ..................................... $ 13,604 $ 5,647 $ 71,799 $ 9,043
======== ======== ======== ========
Weighted average number of
common shares outstanding .................................. 44,884 25,038 38,063 24,942
Additional shares assuming conversion of:
Convertible subordinated debentures ........................ 4,286 6,571 5,270 5,636
Stock options and warrants ................................. 2,024 1,443 2,041 1,478
-------- -------- -------- --------
Weighted average common shares
and equivalents outstanding ......................... 51,194 33,052 45,374 32,056
======== ======== ======== ========
Fully diluted net earnings per share .................... $ .27 $ .17 $ 1.58 $ .28
======== ======== ======== ========
Page 13
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Board of Directors of Pride International, Inc.:
We have reviewed the accompanying consolidated balance sheet of Pride
International, Inc. as of June 30, 1997, and the related consolidated statements
of operations for the three-month and six-month periods ended June 30, 1997 and
1996 and the related consolidated statement of cash flows for the six-month
periods ended June 30, 1997 and 1996. These financial statements are the
responsibility of the Company's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted in
accordance with generally accepted auditing standards, the objective of which is
the expression of an opinion regarding the financial statements taken as a
whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that
should be made to the accompanying financial statements for them to be in
conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted
auditing standards, the consolidated balance sheet of Pride International, Inc.
(formerly Pride Petroleum Services, Inc.) as of December 31, 1996, and the
related consolidated statements of operations, changes in shareholders' equity,
and cash flows for the year then ended (not presented herein); and in our report
dated March 30, 1997, we expressed an unqualified opinion on those financial
statements. In our opinion, the information set forth in the accompanying
balance sheet as of December 31, 1996 is fairly stated, in all material
respects, in relation to the consolidated balance sheet from which it has been
derived.
COOPERS & LYBRAND L.L.P.
Houston, Texas
August 14, 1997
Page 14
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion and analysis should be read in conjunction with
the unaudited consolidated financial statements of Pride International, Inc.
(the "Company") as of June 30, 1997 and for the three and six month periods
ended June 30, 1997 and 1996 included elsewhere herein, and with the Company's
Annual Report on Form 10-K for the year ended December 31, 1996.
GENERAL
The Company's operations and future results have been and will be
significantly affected by a series of strategic transactions that have
transformed the Company from the second largest provider of land-based workover
and related well services in the United States into a diversified drilling
contractor operating both offshore and onshore in international markets and
offshore in the U.S. Gulf of Mexico. With the sale of its domestic land-based
well servicing operations in February 1997, the Company has ceased to provide
rig services onshore in the United States. Nevertheless, as a result of its
recent acquisition activity, the Company expects to continue to experience
revenue growth.
Domestic drilling and well servicing activity historically has had a
significant correlation with changes in oil and natural gas prices.
International drilling and well servicing activity is also affected by
fluctuations in oil and natural gas prices, but historically to a lesser extent
than domestic activity. International rig services contracts are typically for
terms of one year or more, while domestic contracts are typically for one or
multiple wells. Accordingly, international rig services activities generally are
not as sensitive to short-term changes in oil and gas prices as domestic
operations.
Since 1993, the Company has entered into a number of transactions that
have significantly expanded its international and domestic offshore operations,
including the following:
O In mid-1993, the Company commenced operations in Latin America with the
acquisition of businesses operating 23 land-based rigs in Argentina and
13 land-based rigs in Venezuela.
O In June 1994, the Company acquired the largest fleet of modular platform
rigs, consisting of 22 units, in the Gulf of Mexico. Four additional
platform rigs have since been constructed and added to the fleet,
replacing four rigs which were retired. Three additional rigs are
currently under construction.
O In January 1995, the Company commenced operating two floating barge rigs
on Lake Maracaibo, Venezuela. The barge rigs were constructed during
1994 pursuant to ten-year operating contracts entered into with Lagoven,
S.A., a subsidiary of the Venezuelan national oil company.
O In October 1995, the Company acquired six land-based drilling rigs in
Colombia through the acquisition of Marlin Colombia Drilling Co. Inc.
O In April 1996, the Company acquired Quitral-Co S.A.I.C. ("Quitral-Co")
from Perez Companc S.A. and other shareholders. Quitral-Co operated 23
land-based drilling and 57 land-based workover rigs in Argentina and
seven land-based drilling and 23 land-based workover rigs in
Venezuela.
O In October 1996, the Company acquired Ingeser de Colombia, S.A., which
operated seven land-based drilling rigs and six land-based workover rigs
in Colombia.
Page 15
O In November 1996, the Company added three land-based drilling rigs and
support assets to its operations in Argentina through the acquisition of
the assets of another contractor.
O In February 1997, the Company completed the divestiture of its domestic
land-based well servicing operations, which included 407 workover rigs
operating in Texas, California, New Mexico and Louisiana, to Dawson
Production Services, Inc. for approximately $135.7 million in cash.
O In March 1997, the Company completed the Forasol acquisition, adding two
semisubmersible rigs, three jackup rigs, seven tender-assisted rigs,
four barge rigs and 29 land-based rigs operating in various locations in
Latin America, Europe, the Middle East, West Africa and Asia. The
Company recently acquired an additional tender-assisted rig, which has
been contracted in Asia beginning in 1998.
O In May 1997, the Company acquired 13 mat-supported jackup drilling rigs
from Noble. Nine of the rigs are currently operating in the Gulf of
Mexico, one rig is operating offshore West Africa, one is completing
refurbishment and is expected to be placed in service in September 1997
and two are in the initial stages of refurbishment.
RESULTS OF OPERATIONS
The following tables set forth selected consolidated financial
information of the Company by operating segment for the periods indicated:
THREE MONTHS ENDED JUNE 30,
1997 1996
---------------------------------------
(IN THOUSANDS, EXCEPT PERCENTAGES)
Revenues
Domestic land................................ $ -- -- % $ 30,084 29.5%
Domestic offshore............................ 29,413 16.9 14,698 14.4
International land........................... 103,201 59.1 53,649 52.6
International offshore....................... 41,923 24.0 3,558 3.5
--------- ------ --------- -----
Total revenues........................... 174,537 100.0 101,989 100.0
--------- ------ --------- -----
Operating Costs
Domestic land................................ -- -- 23,881 32.3
Domestic offshore............................ 14,633 12.8 10,590 14.3
International land........................... 76,139 66.9 37,914 51.3
International offshore....................... 23,100 20.3 1,529 2.1
--------- ------ --------- -----
Total operating costs.................... 113,872 100.0 73,914 100.0
--------- ------ --------- -----
Gross Margin
Domestic land................................ -- -- 6,203 22.1
Domestic offshore............................ 14,780 24.4 4,108 14.6
International land........................... 27,062 44.6 15,735 56.1
International offshore....................... 18,823 31.0 2,029 7.2
--------- ------ --------- -----
Total gross margin....................... $ 60,665 100.0% $ 28,075 100.0%
========= ====== ========= =====
Page 16
SIX MONTHS ENDED JUNE 30,
1997 1996
-------------------------------------
(IN THOUSANDS, EXCEPT PERCENTAGES)
Revenues
Domestic land................................ $ 16,485 5.4% $ 57,945 34.4%
Domestic offshore............................ 45,363 14.8 27,074 16.1
International land........................... 183,197 59.9 76,488 45.5
International offshore....................... 60,868 19.9 6,717 4.0
--------- ------ --------- -----
Total revenues........................... 305,913 100.0 168,224 100.0
--------- ------ --------- -----
Operating Costs
Domestic land................................ 12,776 6.2 45,708 37.5
Domestic offshore............................ 26,075 12.7 19,480 16.0
International land........................... 132,412 64.6 54,055 44.4
International offshore....................... 33,696 16.5 2,617 2.1
--------- ------ --------- -----
Total operating costs.................... 204,959 100.0 121,860 100.0
--------- ------ --------- -----
Gross Margin
Domestic land................................ 3,709 3.7 12,237 26.4
Domestic offshore............................ 19,288 19.1 7,594 16.4
International land........................... 50,785 50.3 22,433 48.4
International offshore....................... 27,172 26.9 4,100 8.8
--------- ------ --------- -----
Total gross margin....................... $ 100,954 100.0% $ 46,364 100.0%
========= ====== ========= =====
THREE MONTHS ENDED JUNE 30, 1997 COMPARED TO THREE MONTHS ENDED JUNE 30,
1996.
REVENUES. Revenues for the three months ended June 30, 1997 increased
$72.5 million, or 71%, as compared to the corresponding period in 1996. Of this
increase, $49.5 million was a result of expansion of the Company's international
land-based operations, due primarily to the acquisition of Forasol in March
1997, the acquisition of Ingeser in October 1996 and the acquisition of
Quitral-Co in April 1996. Revenues from international offshore operations
increased $38.4 million, due principally to the addition of the Forasol offshore
assets. Revenues attributable to domestic offshore operations increased $14.7
million due primarily to the acquisition of the Noble Rigs in May 1997. These
increases were partially offset by a decrease in revenues of $30.1 million due
to the sale of the Company's U.S. land-based well servicing operations in
February 1997.
OPERATING COSTS. Operating costs for the three months ended June 30,
1997 increased $40.0 million, or 54%, as compared to the corresponding period in
1996. Of this increase, $38.2 million was a result of expansion of the Company's
international land-based operations, due principally to the acquisitions of
Forasol, Ingeser and Quitral-Co, as discussed above. Operating costs for
international offshore operations increased $21.6 million, due principally to
the addition of the Forasol offshore assets. Operating costs attributable to
domestic offshore operations increased $4.1 million due primarily to the
acquisition of the Noble Rigs, as discussed above. Operating costs decreased by
$23.9 million due to the sale of the Company's U.S. land-based well servicing
operations, as discussed above.
DEPRECIATION AND AMORTIZATION. Depreciation and amortization for the
three months ended June 30, 1997 increased $8.4 million, or 119%, as compared to
the corresponding period in 1996, primarily as a result of the acquisitions of
Forasol, Ingeser, Quitral-Co and the Noble Rigs, partially offset by the sale of
the Company's domestic land-based assets.
Page 17
SELLING, GENERAL AND ADMINISTRATIVE. Selling, general and administrative
expenses for the three months ended June 30, 1997 increased $6.7 million, or
57%, as compared to the corresponding period in 1996, primarily due to inclusion
of such costs for Forasol, Ingeser and Quitral-Co. As a percentage of revenues,
total selling, general and administrative costs were 10.5% for the second
quarter of 1997, as compared to 11.4% for the second quarter of 1996.
OTHER INCOME (EXPENSE). Other income (expense) for the second quarter of
1997 included net gains from asset sales, foreign exchange transactions and
other sources. Interest income for the three months ended June 30, 1997
increased by $791,000 as compared to the corresponding period in 1996, due to an
increase in cash available for investment. Interest expense for the three months
ended June 30, 1997 increased by $5.8 million over the corresponding 1996
period, as a result of interest accrued on the Senior Notes, borrowings assumed
in connection with the acquisition of Forasol and other additions to property
and equipment. During the three months ended June 30, 1997, the Company
capitalized $800,000 of interest expense in connection with construction
projects.
INCOME TAX PROVISION. The Company's consolidated effective income tax
rate for the three months ended June 30, 1997 was approximately 29%, as compared
to approximately 24% for the corresponding period in 1996.
SIX MONTHS ENDED JUNE 30, 1997 COMPARED TO SIX MONTHS ENDED JUNE 30, 1996
REVENUES. Revenues for the six months ended June 30, 1997 increased
$137.7 million, or 82%, as compared to the corresponding period in 1996. Of this
increase, $106.7 million was a result of expansion of the Company's
international land-based operations, due primarily to the acquisition of Forasol
in March 1997, the acquisition of Ingeser in October 1996 and the acquisition of
Quitral-Co in April 1996. Revenues from international offshore operations
increased $54.2 million, due principally to the addition of the Forasol offshore
assets. Revenues attributable to domestic offshore operations increased $18.3
million due primarily to the acquisition of the Noble Rigs in May 1997. These
increases were partially offset by a decrease in revenues of $41.5 million due
to the sale of the Company's U.S. land-based well servicing operations in
February 1997.
OPERATING COSTS. Operating costs for the six months ended June 30, 1997
increased $83.1 million, or 68%, as compared to the corresponding period in
1996. Of this increase, $78.3 million was a result of expansion of the Company's
international land-based operations, due principally to the acquisitions of
Forasol, Ingeser and Quitral-Co, as discussed above. Operating costs for
international offshore operations increased $31.1 million, due principally to
the addition of the Forasol offshore assets. Operating costs attributable to
domestic offshore operations increased $6.6 million due primarily to the
acquisition of the Noble Rigs. Operating costs decreased by $32.9 million due to
the sale of the Company's U.S. land-based well servicing operations, as
discussed above.
DEPRECIATION AND AMORTIZATION. Depreciation and amortization for the six
months ended June 30, 1997 increased $13.7 million, or 116%, as compared to the
corresponding period in 1996, primarily as a result of the acquisitions of
Forasol, Ingeser, Quitral-Co and the Noble Rigs, partially offset by the sale of
the Company's domestic land-based assets.
SELLING, GENERAL AND ADMINISTRATIVE. Selling, general and administrative
expenses for the six months ended June 30, 1997 increased $13.5 million, or 68%,
as compared to the corresponding period
Page 18
in 1996, primarily due to inclusion of such costs for Forasol, Ingeser and
Quitral-Co. As a percentage of revenues, total selling, general and
administrative costs were 10.9% for the first six months of 1997, as compared to
11.8% for the first six months of 1996.
OTHER INCOME (EXPENSE). Other income (expense) for the six months ended
June 30, 1997 includes a gain of $83.6 million from the sale of the Company's
U.S. land-based well servicing operations. The gain was partially offset by a
charge of $3.7 million relating to the induced conversion of $28.0 million
principal amount of the Company's 6 1/4% convertible subordinated debentures and
other miscellaneous net charges. Other income (expense) for the six months ended
June 30, 1996 included net gains from asset sales, foreign exchange transactions
and other sources. Interest income for the six months ended June 30, 1997
increased by $526,000 as compared to the corresponding period in 1996 due to an
increase in cash available for investment. Interest expense for the six months
ended June 30, 1997 increased by $6.7 million over the corresponding 1996
period, as a result of interest accrued on the Senior Notes, borrowings assumed
in connection with the acquisition of Forasol and borrowings related to the
Quitral-Co acquisition and other additions to property and equipment. During the
six months ended June 30, 1997, the Company capitalized $2.0 million of interest
expense in connection with construction projects.
INCOME TAX PROVISION. The Company's consolidated effective income tax
rate for the six months ended June 30, 1997 was approximately 35%, as compared
to approximately 25% for the corresponding period in 1996. The increase in the
effective tax rate for the first six months of 1997 resulted from the effects of
(i) certain non-deductible amounts, primarily $3.7 million of costs related to
induced conversion of convertible subordinated debentures, (ii) an estimated
effective combined U.S. federal and state income tax rate of 36% on the gain
from the sale of the Company's U.S. land-based well servicing operations, and
(iii) an estimated effective income tax rate of 29% on ongoing operations.
LIQUIDITY AND CAPITAL RESOURCES
The Company had net working capital of $80.0 million and $62.7 million
at June 30, 1997 and December 31, 1996, respectively. The Company's current
ratio was 1.3 to 1.0 at June 30, 1997 and 1.7 to 1.0 at December 31, 1996.
Since the end of 1996, the following transactions have had a material
impact on the Company's cash requirements:
o In February 1997, the Company sold substantially all of the assets used
in its domestic land-based well servicing operations for approximately
$135.7 million in cash. The Company's net proceeds from the sale, after
taxes, repayment of indebtedness collateralized by certain of the assets
sold and prepayment of terminated operating leases, were approximately
$85.6 million. At June 30, 1997, the remaining estimated income tax
liability of $22.7 million is included in accrued liabilities in the
accompanying unaudited consolidated balance sheet.
o In March 1997, the Company completed the acquisition of Forasol for
$113.2 million in cash and 11.1 million shares of common stock. The cash
portion of the purchase price was funded out of working capital,
including the net proceeds from the sale of the Company's domestic
land-based well servicing operations and borrowings of $25.7 million
under the Credit Facility described below.
Page 19
o In May 1997, the Company completed the acquisition of the Noble Rigs for
$269.0 million in cash. The acquisition was financed through the sale of
Senior Notes and common stock, discussed below, which was concluded
concurrently with the acquisition.
In March 1997, the Company entered into a revolving credit facility with
a group of banks (the "Credit Facility") which provides for availability of up
to $100.0 million (including $25.0 million for letters of credit). Availability
under the Credit Facility is limited to a borrowing base based on the value of
collateral. Unless the Company secures its obligations with additional offshore
or domestic assets with a value of at least $40.0 million ("Additional
Collateral"), the credit line will be reduced to $75.0 million. The Credit
Facility is collateralized by the accounts receivable, inventory and intangibles
of the Company and its domestic subsidiaries, two-thirds of the stock of the
Company's foreign subsidiaries, the stock of the Company's domestic subsidiaries
and certain other assets. The Credit Facility terminates on March 6, 2002 if the
Additional Collateral is timely provided; otherwise it terminates on March 6,
2000. The credit line, unless extended, will be reduced by $12.5 million in each
of 2000 and 2001.
The Credit Facility limits the ability of the Company and its
subsidiaries to incur additional indebtedness, create liens, enter into mergers
and consolidations, pay cash dividends on its capital stock, make acquisitions,
sell assets or change its business without prior consent of the lenders. Under
the Credit Facility, the Company must maintain certain financial ratios,
including (i) funded debt to pro forma EBITDA, (ii) funded debt to
capitalization, (iii) adjusted EBITDA to debt service and (iv) minimum tangible
net worth. In order to complete the public offering of Senior Notes and the
acquisition of the Noble Rigs, the Company obtained a waiver from the lenders of
certain of these covenants as well as a release of the guarantees provided by
the Company's domestic subsidiaries. In connection with such waiver and release,
borrowing availability was reduced to $15.0 million until such time as the
Credit Facility is amended or replaced. The Company is currently engaged in
negotiations with the lenders for the purpose of amending the Credit Facility in
order to provide for full restoration of the borrowing capacity thereunder.
During the first quarter of 1997, the Company borrowed an aggregate of
$45.0 million pursuant to the Credit Facility, of which $14.3 million was used
to repay amounts outstanding under the Company's previous credit facility and
$25.7 million was used to partially fund the acquisition of Forasol. Borrowings
under the Credit Facility bear interest at a variable rate, initially 7.44%,
based on either the prime rate or LIBOR. These borrowings were repaid in May
1997, as discussed below.
In May 1997, the Company issued $325,000,000 of 9 3/8% Senior Notes due
May 1, 2007 (the "Senior Notes"). Interest on the Senior Notes is payable
semiannually on May 1 and November 1 of each year, commencing November 1, 1997.
The Senior Notes are not redeemable prior to May 1, 2002, after which they will
be redeemable, in whole or in part, at the option of the Company at redemption
prices starting at 104.688% and declining to 100% by May 1, 2005. In the event
the Company consummates a public equity offering (other than the common stock
offering completed concurrently with the Senior Notes offering) on or prior to
May 1, 2000, the Company at its option may use all or a portion of the proceeds
from such public equity offering to redeem up to $108,333,000 principal amount
of the Senior Notes at a redemption price equal to 109.375% of the aggregate
principal amount thereof, together with accrued and unpaid interest to the date
of redemption.
The Indenture governing the Senior Notes, as amended and supplemented
(the "Indenture"), contains provisions which limit the ability of the Company
and its subsidiaries to incur additional
Page 20
indebtedness, create liens, enter into mergers and consolidations, pay cash
dividends on its capital stock, make acquisitions, sell assets or change its
business.
In May 1997, the Company also sold 4,391,505 shares of common stock to
the public at $17.00 per share. Net proceeds from the combined offerings of
Senior Notes and common stock totaled approximately $387.5 million, after
deducting underwriting discounts and estimated offering expenses. Of such net
proceeds, approximately $270,000,000 was used to finance the purchase of the
Noble Rigs, including acquisition costs, approximately $45,000,000 was used to
repay the balance outstanding under the Revolving Credit Facility and
approximately $30,000,000 was used to repay certain other indebtedness. The
Company intends to use excess proceeds from the offerings for general corporate
purposes, including acquisitions and capital projects.
Management believes that the cash generated from the Company's
operations, together with the net proceeds from the offerings and borrowings
under the Credit Facility as amended or replaced, will be adequate to fund its
normal ongoing capital expenditure, working capital and debt service
requirements.
The Company is active in reviewing possible expansion and acquisition
opportunities relating to all of its business segments. While the Company has no
definitive agreements to acquire additional equipment, suitable opportunities
may arise in the future. The timing, size or success of any acquisition effort
and the associated potential capital commitments are unpredictable. From time to
time, the Company has one or more bids outstanding for contracts that could
require significant capital expenditures and mobilization costs. The Company
expects to fund acquisitions and project opportunities primarily through a
combination of working capital, cash flow from operations and full or limited
recourse debt or equity financing.
FORWARD-LOOKING INFORMATION
This Quarterly Report on Form 10-Q includes certain statements that may
be deemed to be "forward-looking statements" within the meaning of Section 27A
of the Securities Act of 1933, as amended (the "Securities Act"), and Section
21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). All
statements, other than statements of historical facts, included in this
Quarterly Report on Form 10-Q that address activities, events or developments
that the Company expects, projects, believes or anticipates will or may occur in
the future, including such matters as future operating results, future capital
expenditures and investments in the acquisition and refurbishment of rigs
(including the amount and nature thereof), repayment of debt, expansion and
other development trends of the contract drilling industry, business strategies,
expansion and growth of operations and other such matters are forward-looking
statements. These statements are based on certain assumptions and analyses made
by management of the Company in light of its experience and its perception of
historical trends, current conditions, expected future developments and other
factors it believes are appropriate in the circumstances. Such statements are
subject to a number of assumptions, risks and uncertainties, including those
discussed herein, general economic and business conditions, prices of crude oil
and natural gas, foreign exchange and currency fluctuations, the business
opportunities (or lack thereof) that may be presented to and pursued by the
Company, changes in laws or regulations or other factors, many of which are
beyond the control of the Company. Prospective investors are cautioned that any
such statements are not guarantees of future performance and that actual results
or developments may differ materially from those projected in the
forward-looking statements.
Page 21
ACCOUNTING MATTERS
In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 128, "Earnings per Share" ("SFAS
No. 128"). SFAS No. 128, which is effective for periods ending after December
15, 1997, including interim periods, simplifies the standards for computing
earnings per share and replaces the presentation of primary earnings per share
with a presentation of basic earnings per share. Initial adoption of this
standard is not expected to have a material impact on the Company's financial
position or results of operations. Early adoption is not permitted.
Page 22
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The annual meeting of shareholders of the Company was held in Houston,
Texas on May 22, 1997 for the purpose of voting on the proposals described
below. Proxies for the meeting were solicited pursuant to Section 14(a) of the
Securities Exchange Act of 1934 and there was no solicitation in opposition to
management's solicitation.
Shareholders approved the change in the Company's name to Pride
International, Inc. by the following vote:
Shares voted "For"....................... 29,484,955
Shares voted "Against"................... 15,640
Shares "Abstaining"...................... 38,697
Shares not voted......................... 12,536,550
Shareholders ratified the selection of Coopers & Lybrand L.L.P. as the
Company's independent accountants for 1997 by the following vote:
Shares voted "For"....................... 29,460,978
Shares voted "Against"................... 29,475
Shares "Abstaining"...................... 48,839
Shares not voted......................... 12,536,550
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
EXHIBIT NO.
15 - Awareness Letter of Independent Accountants
(b) Reports on Form 8-K
In a Current Report on Form 8-K filed May 22, 1997, the Company
announced that it had completed the acquisition of thirteen mat-supported jackup
drilling rigs from Noble Drilling Corporation.
On July 21, 1997, the Company filed an amendment on Form 8-K/A to its
Current Report relating to the Noble Rigs. Included in the Form 8-K/A were the
required financial statements of the Noble Rigs and pro forma financial
statements of the Company.
Page 23
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.
PRIDE INTERNATIONAL, INC.
By: RAY H. TOLSON
(RAY H. TOLSON)
Chairman of the Board and
Chief Executive Officer
By:PAUL A. BRAGG
(PAUL A. BRAGG)
President and Chief
Operating Officer
By:EARL W. MCNIEL
(EARL W. MCNIEL)
Vice President and Chief
Financial Officer
Date: August 14, 1997
Page 24