PRIDE INTERNATIONAL INC - 10-Q Quarterly Report

Back to GetFilings.com

================================================================================

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, 2002

OR

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

COMMISSION FILE NUMBER: 1-13289

PRIDE INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)

DELAWARE 76-0069030
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

5847 SAN FELIPE, SUITE 3300
HOUSTON, TEXAS 77057
(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 as of August 8, 2002
Common Stock, par value $.01 per share 133,220,476

================================================================================

PRIDE INTERNATIONAL, INC.

INDEX

1

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

PRIDE INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEET
(IN THOUSANDS, EXCEPT PAR VALUES)

The accompanying notes are an integral part of the consolidated
financial statements.

2

PRIDE INTERNATIONAL, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)

The accompanying notes are an integral part of the consolidated
financial statements.

3

PRIDE INTERNATIONAL, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)

The accompanying notes are an integral part of the consolidated
financial statements.

4

PRIDE INTERNATIONAL, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)

The accompanying notes are an integral part of the consolidated
financial statements.

5

PRIDE INTERNATIONAL, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1. GENERAL

Principles of Consolidation and Reporting

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 note disclosures normally
included in financial statements prepared in accordance with accounting
principles generally accepted in the United States of America have been
condensed or omitted pursuant to such rules and regulations. These unaudited
consolidated financial statements should be read in conjunction with the audited
consolidated financial statements and notes thereto of Pride International, Inc.
(the "Company" or "Pride") included in the Company's Annual Report on Form 10-K
for the year ended December 31, 2001.

In September 2001, Pride acquired Marine Drilling Companies, Inc.
("Marine") pursuant to a merger of Marine into a wholly owned subsidiary of
Pride. Approximately 58.7 million shares of Pride common stock were issued to
the former shareholders of Marine, which equaled approximately 44% of the
outstanding common shares of the combined company immediately following the
acquisition. The Marine merger was followed by a merger that changed Pride's
state of incorporation from Louisiana to Delaware. The acquisition of Marine was
accounted for as a pooling-of-interests for accounting and financial reporting
purposes. Under this method of accounting, the recorded historical carrying
amounts of the assets and liabilities of Pride and Marine are carried forward to
the financial statements of the combined company at recorded amounts, results of
operations of the combined company include the income and expenses of Pride and
Marine for the entire fiscal period in which the combination occurred, and the
historical results of operations of the separate companies for the fiscal
periods prior to the combination are combined and reported as the historical
results of operations of the combined company. The results of operations of
Pride and Marine for the three and six month periods prior to the combination
included in the combined company's recorded amounts are as follows (in
thousands):

In the opinion of management, the unaudited consolidated financial
information included herein reflects all adjustments, consisting only of normal
recurring adjustments, which are necessary 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 a full year or any other interim period.

PricewaterhouseCoopers LLP, the Company's independent accountants, have
performed a review of the unaudited consolidated financial statements included
herein in accordance with standards established by the American Institute of
Certified Public Accountants. Pursuant to Rule 436(c) under the Securities Act
of 1933, the report of PricewaterhouseCoopers LLP, included herein, should not
be considered a part of a registration statement prepared or certified by
PricewaterhouseCoopers LLP within the meanings of Sections 7 and 11 of the
Securities Act, and the liability provisions of Section 11 of such act do not
apply thereto.

6

PRIDE INTERNATIONAL, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Comprehensive Income

Comprehensive income is the change in the Company's equity from all
transactions except those resulting from investments by or distributions to
owners. Comprehensive income for the three and six months ended June 30, 2002
and 2001 was as follows (in thousands):

Long-Term Assets

The Company adopted Statement of Financial Accounting Standards ("SFAS")
No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets"
effective January 1, 2002. The Company will review long-term assets for
impairment whenever events or changes in circumstances indicate that the
carrying amounts of long-term assets may not be recoverable from their
undiscounted future cash flows and will recognize an impairment loss for the
difference between the carrying amount and the fair value of the asset. The
adoption of SFAS No. 144 did not have an impact on the Company's consolidated
financial position, results of operations or cash flows.

Recent Accounting Pronouncements

In August 2001, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 143, "Accounting for Asset Retirement Obligations." SFAS No. 143
addresses financial accounting and reporting obligations associated with the
retirement of tangible long-lived assets and the associated asset retirement
costs. SFAS No. 143 is effective for fiscal years beginning after June 15, 2002
with early adoption encouraged.

In April 2002, the FASB issued SFAS No. 145, "Rescission of FASB Statements
No. 4, 44 and 64, Amendment of SFAS No. 13 and Technical Corrections." SFAS No.
145 eliminates the requirement that gains and losses from the extinguishment of
debt be aggregated and classified as extraordinary items and requires
sale-leaseback accounting for certain lease modifications that have economic
effects that are similar to sale-leaseback transactions. SFAS No. 145 is
effective for fiscal years beginning after May 15, 2002 with early adoption
encouraged.

In July 2002, the FASB issued SFAS No. 146, "Accounting for Costs
Associated with Exit or Disposal Activities." SFAS No. 146 requires that a
liability for a cost that is associated with an exit or disposal activity be
recognized when the liability is incurred. SFAS No. 146 is effective for exit or
disposal activities that are initiated after December 31, 2002 with early
application encouraged.

SFAS Nos. 143, 145 and 146 are not expected to have a material impact on
the Company's consolidated financial position, results of operations or cash
flows when adopted.

2. GOODWILL

Effective January 1, 2002, the Company adopted SFAS No. 142, which
eliminates the amortization of goodwill and requires that goodwill be reviewed
annually for impairment. The Company ceased amortizing goodwill on January 1,
2002. The Company performed a transitional impairment test of goodwill during
the second quarter of 2002 and determined that the fair value exceeded the
recorded cost as of January 1, 2002; accordingly, no impairment has been
recorded.

7

PRIDE INTERNATIONAL, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

The Company's net earnings and net earnings per share, adjusted to exclude
goodwill amortization expense, for the three and six months ended June 30, 2001,
are as follows:

3. LONG-TERM DEBT

Long-term debt as of June 30, 2002 and December 31, 2001 consisted of the
following:

8

PRIDE INTERNATIONAL, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

In June 2002, the Company entered into senior secured credit facilities
with a group of banks providing for aggregate availability of up to $450.0
million, consisting of a five-year $200.0 million term loan and a three-year
$250.0 million revolving credit facility. Proceeds from the term loan have been
used to refinance a portion of the amounts outstanding under other credit
facilities. Borrowings under the revolving credit facility are available for
general corporate purposes. The Company may issue up to $50.0 million of letters
of credit under the revolving credit facility. As of June 30, 2002, there were
$6.5 million of letters of credit issued under the facility. The facilities are
secured by two deepwater semisubmersible rigs, the Pride North America and the
Pride South Pacific, and 28 jackup rigs. Borrowings under the facilities
currently bear interest at variable rates based on LIBOR plus a spread based on
the credit rating of the facility or, if unrated, index debt, currently 2.5% for
the term loan and 2.0% for the revolving credit facility. The interest rate on
the term loan was 4.4% as of June 30, 2002. The credit facilities contain
provisions that limit the ability of the Company and its subsidiaries, with
certain exceptions, to pay dividends or make other restricted payments and
investments; incur additional debt; create liens; incur dividend or other
payment restrictions affecting subsidiaries; consolidate, merge or transfer all
or substantially all of its assets; sell assets or subsidiaries; enter into
speculative hedging arrangements outside the ordinary course of business; enter
into transactions with affiliates; make maintenance capital expenditures and
incur long-term operating leases. The credit facilities also require the Company
to comply with specified financial tests, including a ratio of net debt to
EBITDA, an interest coverage ratio, a ratio of net debt to total capitalization
and a minimum net worth.

The Company also has a senior credit facility with foreign banks that
provides aggregate availability of up to $105.0 million. The credit facility
terminates in June 2005. Borrowings under the credit facility bear interest at
variable rates based on LIBOR plus a spread ranging from 1.00% to 1.55%. As of
June 30, 2002, there were no borrowings outstanding under this credit facility.
Together with the new revolving credit facility discussed above, the Company had
$348.5 million in aggregate availability as of June 30, 2002.

The Company has a senior secured credit facility with a U.S. bank under
which up to $15.0 million of letters of credit may be issued. Outstanding
letters of credit issued under this credit facility are secured by the Company's
cash and cash equivalents maintained at such bank. The letter of credit facility
expires in March 2003. As of June 30, 2002, there were $6.6 million of letters
of credit issued under this credit facility.

In June 2002, the Company purchased on the open market and then
extinguished a total of $95.9 million principal amount at maturity of its zero
coupon convertible subordinated debentures due 2018. The total purchase price
was $45.4 million and the accreted value of the debentures, less offering costs,
was $45.2 million, resulting in an extraordinary loss after estimated income
taxes of $0.1 million. The holders of the debentures have the right to require
the Company to purchase their debentures in April 2003. These debentures are
classified as long-term debt based on the Company's ability and intent to
refinance the debentures using existing cash balances and available credit
facilities. See Note 9.

In March 2002, the Company purchased on the open market and then
extinguished a total of $227.0 million principal amount at maturity of its zero
coupon convertible senior debentures due 2021. The total purchase price was
$140.5 million and the accreted value of the debentures, less offering costs,
was $139.8 million, resulting in an extraordinary loss after estimated income
taxes of $0.5 million. The holders of the debentures have the right to require
the Company to purchase their debentures in January 2003. These debentures are
classified as long-term debt based on the Company's ability and intent to
refinance the debentures using existing cash balances and available credit
facilities.

In March 2002, the Company issued $300.0 million principal amount of 2 1/2%
convertible senior notes due March 1, 2007. The net proceeds to the Company,
after deducting underwriting discounts and offering costs, were $291.8 million.
The notes are convertible into approximately 18.2 million shares of common stock
of the Company (equal to a conversion rate of 60.5694 shares of common stock per
$1,000 principal amount or $16.51 per share). Interest on the notes is payable
semiannually with the first interest payment due September 1, 2002. On or after
March 4, 2005, the notes are redeemable at the Company's option, in whole or in
part, for cash at redemption prices starting at 101% and declining to 100% by
March 1, 2007, in each case plus accrued and unpaid interest. The Company may
redeem some or all of the notes at any time prior to March 4, 2005 at 100% of
the principal amount, plus accrued and unpaid interest and an amount equal to
7.5% of the principal amount, less the amount of any interest actually paid on
the notes on or prior to the redemption date, if the closing price of the
Company's common stock has exceeded 150% of the conversion price per share then
in effect for at least 20 trading days within a period of 30 consecutive trading
days. In connection with the issuance of the notes, a private equity fund
related to First Reserve Corporation purchased 7.9 million shares of the
Company's common stock

9

PRIDE INTERNATIONAL, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

from third parties. As a result of that purchase and other purchases of the
Company's common stock by First Reserve managed funds, First Reserve funds owned
as of June 30, 2002 a total of 19.5 million shares of common stock, or
approximately 14.7% of the total shares outstanding. First Reserve manages
private equity funds that specialize in the energy industry.

As of June 30, 2002, $51.9 million of the Company's cash balances, which
amount is included in restricted cash, consists of funds held in trust in
connection with the Company's drillship and semisubmersible loans and its
limited-recourse collateralized term loans and, accordingly, is not available
for use by the Company.

4. INCOME TAXES

The Company's consolidated effective income tax rate for the six months
ended June 30, 2002 and 2001 was 30.0%. The Company's consolidated effective
income tax rate for the three months ended June 30, 2002 was 69.3%, as compared
to 29.6% for the corresponding period in 2001. The increase resulted from
reduced income in foreign jurisdictions with zero to low effective tax rates and
revision of the year-to-date estimated effective income tax rate.

5. NET EARNINGS PER SHARE

Basic net earnings per share has been computed based on the weighted
average number of shares of common stock outstanding during the applicable
period. 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 stock options, convertible debentures and
other convertible debt were converted into common stock, after giving
retroactive effect to the elimination of interest expense, net of income tax
effect, applicable to the convertible debentures and other convertible debt.

The following table presents information necessary to calculate basic and
diluted net earnings per share:

The calculation of diluted weighted average shares outstanding excludes
37.1 million and 8.8 million common shares for the three months ended June 30,
2002 and 2001, respectively, and 32.5 million and 12.0 million common shares for
the six months ended June 30, 2002 and 2001, respectively, issuable pursuant to
convertible debt and outstanding options. These shares were excluded as their
effect was antidilutive or the exercise price of stock options exceeded the
average price of the Company's common stock for the period.

6. COMMITMENTS AND CONTINGENCIES

The Company and a number of other offshore drilling contractors with
operations in the Gulf of Mexico were defendants in a lawsuit in the U.S.
District Court of the Southern District of Texas entitled Verdin v. R&B Falcon
Drilling USA, Inc. The plaintiff, who purported to be an "offshore worker"
previously employed by R&B Falcon Drilling USA, Inc., alleged that the
defendants engaged in a conspiracy to depress wages and benefits paid to the
defendants' offshore employees in violation of federal and state antitrust laws.
The Company vigorously denied these allegations; however, to avoid the cost and
uncertainties of continued litigation, it agreed to participate in a settlement.
In April 2002, the court

10

PRIDE INTERNATIONAL, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

certified the settlement class and entered a final judgment approving the
settlement. The Company's portion of the settlement amount was $14.1 million.
The judgment is now final and non-appealable and fully discharges the Company
from any and all past or future liability specifically related to this matter.
In June 2001, the Company recognized a $5.1 million charge for the portion of
its share of the settlement amount that is not within the policy limits of its
insurance. The Company's insurance carrier has not yet agreed to pay the
remaining amount and the Company has commenced litigation against this insurer.

The Company is routinely involved in other litigation incidental to its
business, which at times 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 a material adverse effect on the Company's
financial position, results of operations or cash flows.

7. INVESTMENT IN AMETHYST JOINT VENTURE

The Company has a 26.4% equity interest in a joint venture company that is
constructing two dynamically-positioned, deepwater semisubmersible drilling
rigs, yet to be named and currently referred to as the Amethyst 4 and Amethyst
5. The rigs have been transferred to the Cianbro Corporation shipyard in Maine
in order to complete construction after Friede Goldman Halter, Inc. ("FGH"), the
original builder of the rigs, filed for bankruptcy. FGH had posted performance
bonds to ensure completion of the construction and the surety has funded into
escrow approximately $160.0 million towards the cost of completing the rigs. The
Company anticipates that the construction of the rigs will be completed in late
2003. The joint venture company has financed 87.5% of the cost of construction
of these rigs through credit facilities, with repayment of the borrowings under
those facilities guaranteed by the United States Maritime Administration
("MARAD"). Advances under the credit facilities are being provided without
recourse to any of the joint venture owners. The remaining 12.5% of the cost of
construction is being provided by the joint venture company from equity
contributions that have been made by the joint venture partners. Through June
30, 2002, the Company's equity contributions to the joint venture totaled $27.1
million, including capitalized interest of $5.5 million. In the opinion of
management, the performance and payment bonds issued by the surety on behalf of
FGH, together with additional draws under the MARAD-guaranteed credit
facilities, will provide sufficient funds to complete the Amethyst 4 and
Amethyst 5 without requiring additional contributions by the joint venture
partners.

Based on current demand for deepwater drilling rigs, the Company believes
the Amethyst 4 and Amethyst 5 will be contracted to Petroleo Brasilerio S.A.
("Petrobras"), which currently employs four of the Company's semisubmersible
drilling rigs, including the recently constructed Amethyst class rigs Pride
Carlos Walter and Pride Brazil, or to another customer. There can be no
assurance, however, that either the Amethyst 4 or Amethyst 5 will be chartered
to Petrobras or to any other customer.

11

PRIDE INTERNATIONAL, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

8. SEGMENT INFORMATION

The following table sets forth selected consolidated financial information
of the Company by operating segment:

Significant Customers

Two customers accounted for approximately $68.4 million and $141.5 million,
or 24.1% and 25.0%, respectively, of consolidated revenues for the three and six
months ended June 30, 2002. Two customers accounted for approximately $108.6
million and $181.2 million, or 27.9% and 24.4%, respectively, of consolidated
revenues for the three and six months ended June 30, 2001.

9. SUBSEQUENT EVENTS

In July 2002, the Company purchased on the open market and then
extinguished a total of $57.5 million principal amount at maturity of its zero
coupon convertible subordinated debentures due 2018. The total purchase price
was $27.2 million and the accreted value of the debentures, less offering costs,
was $27.1 million, resulting in an extraordinary loss after estimated income
taxes of $0.1 million.

12

REPORT OF INDEPENDENT ACCOUNTANTS

To the Stockholders and Board of Directors of Pride International, Inc.:

We have reviewed the accompanying consolidated balance sheet of Pride
International, Inc. as of June 30, 2002, and the related consolidated statements
of operations for each of the three month and six month periods ended June 30,
2002 and 2001, and the related consolidated statement of cash flows for the six
month periods ended June 30, 2002 and 2001. These financial statements are the
responsibility of the Company's management.

The unaudited consolidated financial statements give retroactive effect to
the merger of Marine Drilling Companies, Inc. on September 13, 2001 in a
transaction accounted for as a pooling-of-interests, as described in Note 1 to
the unaudited consolidated financial statements. We did not review the financial
statements of Marine Drilling Companies, Inc., whose revenues for the three and
six month periods ended June 30, 2001 constituted 25% of the consolidated
totals. Those statements were reviewed by other auditors whose report thereon
has been furnished to us, and our opinion expressed herein, insofar as it
relates to the amounts included for Marine Drilling Companies, Inc., is based
solely on the report of the other auditors.

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 auditing standards generally accepted in the United States of
America, 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 and the report of the other accountants, we are not
aware of any material modifications that should be made to the accompanying
consolidated interim financial statements for them to be in conformity with
accounting principles generally accepted in the United States of America.

We have previously audited in accordance with auditing standards generally
accepted in the United States of America, the consolidated balance sheet as of
December 31, 2001, and the related consolidated statements of operations,
stockholder's equity, and cash flows for the year then ended (not presented
herein) and in our report dated March 27, 2002, we expressed an unqualified
opinion on those consolidated financial statements. In our opinion, the
information set forth in the accompanying consolidated balance sheet as of
December 31, 2001 is fairly stated in all material respects in relation to the
consolidated balance sheet from which it has been derived.

PricewaterhouseCoopers LLP

Houston, Texas
August 12, 2002

13

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

You should read the following discussion and analysis in conjunction with
the accompanying unaudited consolidated financial statements as of June 30, 2002
and for the three and six months ended June 30, 2002 and 2001 included elsewhere
herein, and with our Annual Report on Form 10-K for the year ended December 31,
2001. The following information contains forward-looking statements. Please read
"Forward-Looking Statements" for a discussion of limitations inherent in such
statements.

GENERAL

Pride is a leading international provider of contract drilling and related
services, operating both offshore and on land. As of August 8, 2002, we operated
a global fleet of 328 rigs, including two ultra-deepwater drillships, 12
semisubmersible rigs, 35 jackup rigs, 29 tender-assisted, barge and platform
rigs and 250 land-based drilling and workover rigs. We operate in more than 30
countries and marine provinces. We have four principal operating segments: Gulf
of Mexico, International Offshore, International Land and E&P Services.

BUSINESS ENVIRONMENT

The demand for our drilling and E&P services is driven by the capital
spending programs of our customers. Our customers' capital spending is affected
by their expectations about oil and natural gas prices, anticipated production
levels, demand for crude oil and natural gas products, government regulations
and many other factors. Due to the volatility of commodity prices, it is
difficult to predict with any certainty whether conditions for a particular
sector of our business will improve or deteriorate.

Prices for oil and natural gas increased during 2000 and early 2001, which
had a favorable impact on utilization, day rates and demand for our services.
From mid-2001, however, activity in the Gulf of Mexico began to weaken, and in
the fourth quarter of 2001 and the first half of 2002, we experienced
particularly weak conditions in the Gulf of Mexico jackup market as high natural
gas inventory storage levels resulted in reduced demand for rig services.
Average utilization of our Gulf of Mexico jackup fleet during the second quarter
of 2002 decreased to 41% from 98% during the second quarter of 2001, but
increased from 34% during the first quarter of 2002 due to the commencement of
new contracts in Mexico. Average day rates for our Gulf of Mexico rigs decreased
to $24,700 in the second quarter of 2002 from $44,400 in the prior year second
quarter and from $26,100 in the first quarter of 2002. As of August 8, 2002, 17
of our total fleet of 27 jackups located in the Gulf of Mexico were either
available, mobilizing or undergoing upgrades, and the average day rate for the
10 jackup rigs that were working was $25,900.

In March 2002, we were awarded contracts for three mat-supported jackup
rigs from our Gulf of Mexico fleet by Petroleos Mexicanos S.A. ("Pemex") for
work offshore Mexico. The contracts are for approximately four years each. The
first two rigs commenced operations in April 2002 and the third rig commenced
operations in early July 2002. We were also awarded a two-year contract by Pemex
for an additional 1,000 horsepower platform rig. In July 2002, we were awarded
contracts for two additional jackup rigs by Pemex with terms of approximately
one and three years, respectively, that are expected to commence operations in
August 2002.

During the first half of 2002, our international land and E&P services
segments were adversely affected by the economic and political instability in
Argentina and Venezuela. The Argentine peso has continued to decline in value
against the U.S. dollar following the Argentine government's decision to abandon
the country's fixed dollar-to-peso exchange rate at the end of 2001. The
devaluation, coupled with the government's mandated conversion of all
dollar-based contracts to pesos, severely pressured our dollar cash margins.
During the first quarter, we engaged in discussions with all of our Argentine
customers regarding recovery of losses sustained from the devaluation of
accounts receivable and the basis on which new business would be contracted. We
have been successful in restructuring most of our contracts on a basis that
limits our exposure to further devaluations. Worldwide demand for our land
drilling and workover services has declined and the average utilization rates
for our international land drilling and workover rig fleets fell from 79% in the
second quarter of 2001 to 62% in the second quarter of 2002.

14

Our international offshore segment has continued to experience high levels
of activity and we have maintained essentially full utilization of six of our
seven high-specification deepwater rigs during the first six months of 2002. The
seventh deepwater rig, the Pride South Pacific, completed its contract in April
2002 and is currently undergoing an upgrade while being marketed. Our
intermediate water-depth semisubmersibles experienced 71% utilization during the
second quarter of 2002, with most idle time attributable to scheduled
inspections and maintenance. All six of our international jackup rigs are
currently working under long-term contracts, one of which expires in the second
quarter of 2003. We have also been awarded a two-year contract for one of our
Gulf of Mexico independent leg jackup rigs to work offshore India commencing in
October 2002 and a two-year contract for a second Gulf of Mexico independent leg
jackup rig to commence operations offshore Nigeria in September 2002.

OUTLOOK

Results for our Gulf of Mexico segment should improve throughout the rest
of the year due to our increasing activity offshore Mexico. Industry-wide
utilization of jackup rigs and day rates in the U.S. Gulf of Mexico have
recently improved. Continuation of this trend, along with our success in
obtaining additional contracts in Mexico, will determine the extent of
improvement in this segment in the near term.

Results from our international land and E&P services segments are expected
to show modest improvement in the second half of the year due to a full period's
activity in Chad, where all five of our newly built land-based rigs are now
working. The economic and political conditions in Argentina and Venezuela remain
unstable and continue to negatively affect activity in these countries.

Our international offshore segment is expected to benefit in the final
quarter of the year as a result of the commencement of operations in India and
Nigeria for two jackup rigs that had been operating in the Gulf of Mexico. Two
of our semisubmersible rigs and one of our tender-assisted barges will, however,
be undergoing their scheduled periodic surveys during the fourth quarter of the
year and will not be available during most of the quarter. In addition, the
timing and the terms under which the Pride South Pacific is recontracted could
have a significant impact on our results for the second half of 2002 and for
2003.

15

RESULTS OF OPERATIONS

We have presented in the following table selected consolidated financial
and operational information by operating segment:

16

Three Months Ended June 30, 2002 Compared to Three Months Ended June 30,
2001.

Revenues. Revenues for the three months ended June 30, 2002 were $105.4
million, or 27.1%, lower than in the three months ended June 30, 2001, primarily
due to reduced activity and day rates for our jackup and platform rigs in the
U.S. Gulf of Mexico and a reduction in activity for our land drilling and E&P
services operations in Argentina and Venezuela. This decrease was partially
offset by the start-up of operations in June and July 2001 of the Pride Carlos
Walter and Pride Brazil, two newly-built semisubmersible rigs, increased
activity in Mexico and the commencement of new, higher day rate contracts for
two additional semisubmersible rigs, as well as the commencement of land
drilling operations in Chad.

Operating Costs. Operating costs for the quarter ended June 30, 2002 were
$45.8 million, or 21.3%, lower than in the corresponding quarter of 2001 due to
decreased costs associated with rigs that were stacked or being upgraded during
the 2002 quarter that operated during the 2001 quarter and a reduction in
operating costs in Argentina and Venezuela due to reduced activity levels in
these countries and the devaluation of their local currencies. This reduction in
costs was partially offset by operating costs on two newly constructed
semisubmersible rigs, costs related to the increased activity in Mexico and the
commencement of operations in Chad.

Depreciation and Amortization. Depreciation expense increased by $6.9
million, or 14.1%, to $56.4 million in the quarter ended June 30, 2002, from
$49.4 million in the corresponding period in 2001, due to incremental
depreciation on newly acquired and constructed rigs and other rig refurbishments
and upgrades. This increase was partially offset by the impact of a reassessment
of residual values and estimated remaining useful lives of certain rigs during
the third quarter of 2001 and the elimination of amortization of goodwill
beginning in January 2002.

Selling, General and Administrative. Selling, general and administrative
expenses decreased by $2.0 million, or 8.2%, to $22.3 million for the three
months ended June 30, 2002, from $24.3 million for the three months ended June
30, 2001, primarily due to cost savings associated with the closure of duplicate
facilities and staffing reductions following our September 2001 acquisition of
Marine Drilling Companies, Inc. Additionally, the devaluation of the currencies
in Argentina and Venezuela favorably impacted expenses denominated in their
local currencies.

Other Income (Expense). Other expense for the three months ended June 30,
2002 increased by $5.5 million, or 19.4%, as compared to the corresponding
period in 2001. Interest expense increased by $8.7 million principally due to
increased interest payments and reduced capitalized interest associated with the
construction financing of the Pride Carlos Walter and Pride Brazil. The increase
in interest expense was partially offset by the impact of a reduction in
interest rates on floating rate debt. Interest income declined $1.4 million due
to a reduction in interest rates. Other, net in the three-month period ended
June 30, 2002 principally comprised net foreign exchange losses in Argentina and
Venezuela. Other, net in the corresponding period in 2001 principally comprised
a $5.1 million charge for the settlement of a wage related antitrust lawsuit and
net unrealized foreign exchange losses.

Income Tax Provision. Our consolidated effective income tax rate for the
three months ended June 30, 2002 was 69.3%, as compared to 29.6% for the
corresponding period in 2001. The increase resulted from reduced income in
foreign jurisdictions with zero to low effective tax rates and revision of the
year-to-date estimated effective income tax rate.

Extraordinary Item. The extraordinary loss of $155,000, net of estimated
income taxes, for the three months ended June 30, 2002 related to the early
extinguishment of approximately $45.2 million accreted value, net of offering
costs, of our zero coupon convertible subordinated debentures due 2018.

17

Six Months Ended June 30, 2002 Compared to Six Months Ended June 30, 2001.

Revenues. Revenues for the six months ended June 30, 2002 were $177.7
million, or 23.9%, lower than in the six months ended June 30, 2001, primarily
due to reduced activity and day rates for our jackup and platform rigs in the
U.S. Gulf of Mexico and a reduction in activity for our land drilling and E&P
services operations in Argentina and Venezuela. This decrease was partially
offset by the start-up of operations in June and July 2001 of the Pride Carlos
Walter and Pride Brazil, two newly-built semisubmersible rigs, increased
activity in Mexico and the commencement of new, higher day rate contracts for
two additional semisubmersible rigs, as well as the commencement of land
drilling operations in Chad.

Operating Costs. Operating costs for the six months ended June 30, 2002
were $79.5 million, or 18.9%, lower than in the corresponding period of 2001 due
to decreased costs associated with rigs that were stacked or being upgraded
during 2002 that operated during the corresponding period of the 2001 and a
reduction in operating costs in Argentina and Venezuela due to reduced activity
levels in these countries and the devaluation of their local currencies. This
reduction in costs was partially offset by operating costs on two newly
constructed semisubmersible rigs, costs related to the increased activity in
Mexico and the commencement of operations in Chad.

Depreciation and Amortization. Depreciation expense increased by $13.4
million, or 13.7%, to $111.1 million in the six months ended June 30, 2002, from
$97.7 million in the corresponding period in 2001, due to incremental
depreciation on newly acquired and constructed rigs and other rig refurbishments
and upgrades. This increase was partially offset by the impact of a reassessment
of residual values and estimated remaining useful lives of certain rigs during
the third quarter of 2001 and the elimination of amortization of goodwill
beginning in January 2002.

Selling, General and Administrative. Selling, general and administrative
expenses decreased by $3.9 million, or 7.9%, to $45.7 million for the six months
ended June 30, 2002, from $49.6 million for the six months ended June 30, 2001,
primarily due to cost savings associated with the closure of duplicate
facilities and staffing reductions following our September 2001 acquisition of
Marine. Additionally, the devaluation of the currencies in Argentina and
Venezuela favorably impacted expenses denominated in their local currencies.

Other Income (Expense). Other expense for the six months ended June 30,
2002 increased by $13.5 million, or 29.0%, as compared to the corresponding
period in 2001. Interest expense increased by $15.5 million principally due to
interest on indebtedness added in the March 2001 acquisition of the interests
that we did not previously own in the joint venture that constructed the Pride
Carlos Walter and Pride Brazil and interest on construction financing for the
rigs that had been capitalized during their construction. These increases in
interest expense were partially offset by the impact of a reduction in interest
rates on floating rate debt. Interest income declined $4.0 million due to lower
cash balances available for investment and to a reduction in interest rates.
Other, net in the six month period ended June 30, 2002 principally comprised net
foreign exchange losses in Argentina and Venezuela. Other, net in the
corresponding period in 2001 principally comprised a $5.1 million charge for the
settlement of a wage related antitrust lawsuit, net unrealized foreign exchange
losses and a gain from the sale of drill pipe.

Income Tax Provision. Our consolidated effective income tax rate was 30.0%
for both six month periods ended June 30, 2002 and 2001.

Extraordinary Item. The extraordinary loss of $609,000, net of estimated
income taxes, for the six months ended June 30, 2002 related to the early
extinguishment of approximately $139.8 million accreted value, net of offering
costs, of our zero coupon convertible senior debentures due 2021 and of
approximately $45.2 million accreted value, net of offering costs of our zero
coupon convertible subordinated debentures due 2018.

LIQUIDITY AND CAPITAL RESOURCES

We had net working capital of $234.1 million and $95.1 million as of June
30, 2002 and December 31, 2001, respectively. Our current ratio, the ratio of
current assets to current liabilities, was 1.5 as of June 30, 2002 and 1.2 as of
December 31, 2001. The increase in net working capital was attributable
primarily to the cash received from our issuance of $300 million principal
amount of 2 1/2 % convertible senior notes in March 2002 and from borrowings of
$200 million under our new senior secured bank term loan, net of amounts used to
retire other bank debt and repurchase our zero coupon convertible debentures.

18

Additions to property and equipment during the six months ended June 30,
2002 totaled $111.5 million, including $10.7 million for the completion of five
mobile land rigs which have commenced operations in Chad, $32.2 million for
upgrades to five jackup rigs for work offshore Mexico, $31.4 million for rig
upgrades, refurbishments and reactivations, and approximately $33.7 million for
sustaining capital projects. We expect to spend approximately $30 million during
the remainder of 2002 for sustaining capital projects and an additional $15
million for upgrade expenditures.

In June 2002, we entered into senior secured credit facilities with a group
of banks providing for aggregate availability of up to $450.0 million,
consisting of a five-year $200.0 million term loan and a three-year $250.0
million revolving credit facility. Proceeds from the term loan have been used to
refinance a portion of the amounts outstanding under other credit facilities.
Borrowings under the revolving credit facility are available for general
corporate purposes. The facilities are secured by two deepwater semisubmersible
rigs, the Pride North America and the Pride South Pacific, and 28 jackup rigs.
Borrowings under the facilities currently bear interest at variable rates based
on LIBOR plus a spread based on the credit rating of the facility or, if
unrated, index debt, currently 2.5% for the term loan and 2.0% for the revolving
credit facility. The interest rate on the term loan was 4.4% as of June 30,
2002. The credit facilities contain provisions that limit our ability and the
ability of our subsidiaries, with certain exceptions, to pay dividends or make
other restricted payments and investments; incur additional debt; create liens;
incur dividend or other payment restrictions affecting subsidiaries;
consolidate, merge or transfer all or substantially all of our assets; sell
assets or subsidiaries; enter into speculative hedging arrangements outside the
ordinary course of business; enter into transactions with affiliates; make
maintenance capital expenditures and incur long-term operating leases. The
credit facilities also require us to comply with specified financial tests,
including a ratio of net debt to EBITDA, an interest coverage ratio, a ratio of
net debt to total capitalization and a minimum net worth.

We also have a senior credit facility with foreign banks that provide
aggregate availability of up to $105.0 million. The credit facility terminates
in June 2005. Borrowings under the credit facility bear interest at variable
rates based on LIBOR plus a spread ranging from 1.00% to 1.55%. As of June 30,
2002, there were no borrowings under this credit facility.

In March 2002, we purchased on the open market and then extinguished $227.0
million principal amount at maturity of our zero coupon convertible senior
debentures due 2021. The aggregate purchase price was $140.5 million and the
accreted value of the debentures, less offering costs, was $139.8 million. In
June and July 2002, we purchased on the open market and then extinguished a
total of $153.4 million principal amount at maturity of our zero coupon
convertible subordinated debentures due 2018. The total purchase price was $72.6
million and the accreted value of the debentures, less offering costs, was $72.3
million. Holders have the right to require us to purchase their zero coupon
convertible senior debentures in January 2003 and zero coupon convertible
subordinated debentures in April 2003. If we become obligated to repurchase the
debentures, we intend to use existing cash balances and available credit
facilities to make the purchases.

In March 2002, we issued $300.0 million principal amount of 2 1/2%
convertible senior notes due 2007. Net proceeds, after deducting underwriting
discounts and offering costs, were $291.8 million. The notes are convertible
into approximately 18.2 million shares of our common stock (equal to a
conversion rate of 60.5694 shares of common stock per $1,000 principal amount or
$16.51 per share). Interest on the notes will be paid semiannually beginning in
September 2002. The net proceeds have been and will be used to repay debt,
including the repurchase of both series of outstanding zero coupon debentures.
In connection with the issuance of the notes, a private equity fund related to
First Reserve Corporation purchased 7.9 million shares of our common stock from
third parties. As a result of that purchase and other purchases of our common
stock by First Reserve managed funds, First Reserve funds owned as of June 30,
2002 a total of 19.5 million shares of our common stock, or approximately 14.7%
of the total shares outstanding.

We have a 26.4% equity interest in a joint venture company that is
constructing two dynamically-positioned, deepwater semisubmersible drilling
rigs, yet to be named and currently referred to as the Amethyst 4 and Amethyst
5. The rigs have been transferred to the Cianbro Corporation shipyard in Maine
in order to complete construction after Friede Goldman Halter, Inc. ("FGH"), the
original builder of the rigs, filed for bankruptcy. FGH had posted performance
bonds to ensure completion of the construction and the surety has funded into
escrow approximately $160.0 million towards the cost of completing the rigs. We
anticipate that the construction of the rigs will be completed in late 2003. The
joint venture company has financed 87.5% of the cost of construction of those
rigs through credit facilities, with repayment of the borrowings under those
facilities guaranteed by the United States Maritime Administration ("MARAD").
Advances under the credit facilities are being provided without recourse to any
of the joint venture owners. The remaining 12.5% of the cost of construction is
being provided by the joint venture company from equity contributions that have
been made by the

19

joint venture partners. Through June 30, 2002, our equity contributions to the
joint venture totaled $27.1 million, including capitalized interest of $5.5
million. In the opinion of management, the performance and payment bonds issued
by the surety on behalf of FGH, together with additional draws under the
MARAD-guaranteed credit facilities, will provide sufficient funds to complete
the Amethyst 4 and Amethyst 5 without requiring additional contributions by the
joint venture partners.

Based on current demand for deepwater drilling rigs, we believe that the
Amethyst 4 and the Amethyst 5 will be contracted to Petroleo Brasilerio S.A.,
which currently employs four of our semisubmersible drilling rigs, including the
recently constructed Amethyst class rigs Pride Carlos Walter and Pride Brazil,
or to another customer. There can be no assurance, however, that either the
Amethyst 4 or Amethyst 5 will be chartered to Petrobras or to any other
customer.

As of June 30, 2002, we had approximately $4.3 billion in total assets and
$1.9 billion of long-term debt and capital lease obligations. We also had
aggregate availability under our credit facilities of $348.5 million. We do not
expect that our level of total indebtedness will have a material adverse impact
on our financial position, results of operations or liquidity in future periods.

As of June 30, 2002, $51.9 million of our cash balances, which amount is
included in restricted cash, consists of funds held in trust in connection with
our drillship and semisubmersible loans and our limited-recourse collateralized
term loans and, accordingly, is not available for our use.

Management believes that the cash and cash equivalents on hand, together
with the cash generated from our operations and borrowings under our credit
facilities, will be adequate to fund normal ongoing capital expenditures,
working capital and debt service requirements for the foreseeable future.

RECENT ACCOUNTING PRONOUNCEMENTS

In August 2001, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 143, "Accounting for
Asset Retirement Obligations." SFAS No. 143 addresses financial accounting and
reporting obligations associated with the retirement of tangible long-lived
assets and the associated asset retirement costs. SFAS No. 143 is effective for
fiscal years beginning after June 15, 2002 with early adoption encouraged.

In April 2002, the FASB issued SFAS No. 145, "Rescission of FASB Statements
No. 4, 44 and 64, Amendment of SFAS No. 13 and Technical Corrections." SFAS No.
145 eliminates the requirement that gains and losses from the extinguishment of
debt be aggregated and classified as extraordinary items and requires
sale-leaseback accounting for certain lease modifications that have economic
effects that are similar to sale-leaseback transactions. SFAS No. 145 is
effective for fiscal years beginning after May 15, 2002 with early adoption
encouraged.

In July 2002, the FASB issued SFAS No. 146, "Accounting for Costs
Associated with Exit or Disposal Activities." SFAS No. 146 requires that a
liability for a cost that is associated with an exit or disposal activity be
recognized when the liability is incurred. SFAS No. 146 is effective for exit or
disposal activities that are initiated after December 31, 2002 with early
application encouraged.

SFAS Nos. 143, 145 and 146 are not expected to have a material impact on
our consolidated financial position, results of operations or cash flows when
adopted.

FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q includes "forward-looking statements"
within the meaning of Section 27A of the Securities Act of 1933 and Section 21E
of the Securities Exchange Act of 1934. All statements, other than statements of
historical facts, included in this Quarterly Report on Form 10-Q that address
activities, events or developments that we expect, project, believe or
anticipate will or may occur in the future are forward-looking statements. These
include such matters as:

o future capital expenditures and investments in the construction,
acquisition and refurbishment of rigs (including the amount and nature
thereof and the timing of completion thereof)

o repayment of debt

o market conditions, expansion and other development trends in the
contract drilling industry

20

o business strategies

o expansion and growth of operations

o utilization rates and contract rates for rigs

o completion and employment of rigs under construction and

o future operating results and financial condition

We have based these statements on our assumptions and analyses in light of
our experience and perception of historical trends, current conditions, expected
future developments and other factors we believe are appropriate in the
circumstances. These statements are subject to a number of assumptions, risks
and uncertainties, including:

o general economic and business conditions

o prices of oil and gas and industry expectations about future prices

o foreign exchange controls and currency fluctuations

o political stability in the countries in which we operate

o the business opportunities (or lack thereof) that may be presented to
and pursued by us and

o changes in laws or regulations

Most of these factors are beyond our control. We caution you that forward
looking-statements are not guarantees of future performance and that actual
results or developments may differ materially from those projected in these
statements. We will not update these statements unless the securities laws
require us to do so.

ITEM 3A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

For information regarding our exposure to certain market risks, see
"Quantitative and Qualitative Disclosures about Market Risk" in Item 7A of our
Annual Report on Form 10-K for the year ended December 31, 2001. There have been
no material changes to the disclosure regarding our exposure to certain market
risks made in the annual report. For additional information regarding our
long-term debt, see Note 3 of the Notes to Unaudited Consolidated Financial
Statements in Item 1 of Part I of this Quarterly Report on Form 10-Q.

21

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

The information set forth in Note 6 of the Notes to Unaudited Consolidated
Financial Statements in Item 1 of Part I of this Quarterly Report on Form 10-Q
regarding the lawsuit entitled Verdin v. R&B Falcon Drilling USA, Inc. is
incorporated by reference in response to this item.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

Our annual meeting of stockholders was held in Houston, Texas on May 16,
2002 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. There were 8,903,301 shares of common stock not voted at the
meeting.

Stockholders approved the election of eight directors, each to serve for a
one-year term, by the following votes:

Stockholders ratified the appointment of PricewaterhouseCoopers LLP as our
independent accountants for 2002 by the following vote:

For.................................................. 120,402,854
Against.............................................. 3,490,543
Abstain.............................................. 66,858

22

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits

4.1 -- Revolving Credit Agreement, dated as of June 20, 2002 (the "Revolving Credit Agreement"), among
Pride Offshore, Inc., Pride International, Inc., certain subsidiaries of Pride International, Inc.,
Credit Lyonnais New York Branch (as Administrative Agent, Collateral Agent, Issuing Bank and
Swingline Lender), the revolving lenders and the issuing banks thereunder, Credit Mutuel - Credit
Industriel Et Commercial (as Mandated Lead Arranger and Bookrunner), Natexis Banques Populaires (as
Mandated Lead Arranger, Bookrunner and Issuing Bank), Nordea (as Lead Arranger, Bookrunner and
Issuing Bank), and Nedship Bank (as Co-Underwriter) (incorporated by reference to Exhibit 4.1 of
the Current Report of Pride on Form 8-K filed with the SEC on June 26, 2002, File No. 1-13289).

4.2 -- Letter Agreement, dated as of June 20, 2002, among Pride Offshore, Inc., Pride International, Inc.,
certain subsidiaries of Pride International, Inc. and Credit Lyonnais New York Branch, as
Administrative Agent for itself and on behalf of the lenders under the Revolving Credit Agreement.

4.3 -- Term Loan Agreement, dated as of June 20, 2002 (the "Term Loan Agreement"), among Pride Offshore,
Inc., Pride International, Inc., certain subsidiaries of Pride International, Inc., the term
lenders thereunder, and Credit Lyonnais New York Branch, as Administrative Agent (incorporated by
reference to Exhibit 4.2 of the Current Report of Pride on Form 8-K filed with the SEC on June 26,
2002, File No. 1-13289).

4.4 -- Letter Agreement, dated as of June 20, 2002, among Pride Offshore, Inc., Pride International, Inc.,
certain subsidiaries of Pride International, Inc. and Credit Lyonnais New York Branch, as
Administrative Agent for itself and on behalf of the lenders under the Term Loan Agreement.

15.1 -- Awareness letter of PricewaterhouseCoopers LLP.

(b) Reports on Form 8-K

In a Current Report on Form 8-K furnished to the SEC on April 26, 2002, we
(i) furnished pursuant to Item 9 of Form 8-K information regarding the contract
status of our rigs and supplemental financial and operating statistics posted to
our website on April 26, 2002 and (ii) furnished pursuant to Item 7 of Form 8-K
the related website posting.

In a Current Report on Form 8-K filed with the SEC on May 31, 2002, we (i)
reported pursuant to Item 5 of Form 8-K that we had adopted SFAS No. 142
"Goodwill and Other Intangible Assets" effective January 1, 2002 and (ii) filed
pursuant to Item 7 of Form 8-K the related financial information showing our net
income and earnings per share, adjusted to exclude goodwill amortization
expense, for the years ended December 31, 2001, 2000 and 1999.

In a Current Report on Form 8-K furnished to the SEC on June 13, 2002, we
(i) furnished pursuant to Item 9 of Form 8-K information regarding the contract
status of our rigs posted to our website on June 13, 2002 and (ii) furnished
pursuant to Item 7 of Form 8-K the related website posting.

In a Current Report on Form 8-K filed with the SEC on June 26, 2002, we (i)
reported pursuant to Item 5 of Form 8-K that we had entered into $450.0 million
of senior secured credit facilities with a group of banks and (ii) filed the
related bank agreements pursuant to Item 7 of Form 8-K.

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: EARL W. MCNIEL
-------------------------
(EARL W. MCNIEL)
VICE PRESIDENT AND CHIEF
FINANCIAL OFFICER

Date: August 14, 2002

24

EXHIBIT INDEX