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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 March 31, 2003
OR
| | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________ to ________
COMMISSION FILE NUMBER: 0-13857
NOBLE CORPORATION
(Exact name of registrant as specified in its charter)
CAYMAN ISLANDS 98-0366361
(State or other jurisdiction (I.R.S. employer
of incorporation or organization) identification number)
13135 SOUTH DAIRY ASHFORD, SUITE 800 77478
SUGAR LAND, TEXAS (Zip code)
(Address of principal executive offices)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (281) 276-6100
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 by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act). Yes |X| No | |
Number of Ordinary Shares outstanding as of May 9, 2003: 133,611,206
(Includes 1,753,411 shares held in a Rabbi Trust)
FORM 10-Q
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
NOBLE CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)
MARCH 31, DECEMBER 31,
2003 2002
----------- ------------
(Unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents ...................... $ 134,269 $ 192,509
Restricted cash ................................ 8,307 8,668
Investment in marketable securities ............ 78,159 72,957
Accounts receivable ............................ 164,390 164,613
Inventories .................................... 3,682 3,628
Prepaid expenses ............................... 17,455 6,595
Other current assets ........................... 20,571 16,673
----------- ------------
Total current assets ............................. 426,833 465,643
----------- ------------
PROPERTY AND EQUIPMENT
Drilling equipment and facilities .............. 3,229,402 3,153,509
Other .......................................... 63,428 63,296
----------- ------------
3,292,830 3,216,805
Accumulated depreciation ....................... (779,573) (745,762)
----------- ------------
2,513,257 2,471,043
----------- ------------
INVESTMENT IN AND ADVANCES TO JOINT VENTURES ..... 21,873 22,538
OTHER ASSETS ..................................... 104,841 106,490
----------- ------------
$ 3,066,804 $ 3,065,714
=========== ============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Current maturities of long-term debt ........... $ 76,008 $ 80,577
Accounts payable ............................... 55,212 64,783
Accrued payroll and related costs .............. 44,045 51,125
Taxes payable .................................. 40,165 41,997
Interest payable ............................... 3,404 10,089
Other current liabilities ...................... 30,201 32,089
----------- ------------
Total current liabilities ........................ 249,035 280,660
LONG-TERM DEBT ................................... 578,581 589,562
DEFERRED INCOME TAXES ............................ 207,552 206,351
OTHER LIABILITIES ................................ 5,538 5,635
COMMITMENTS AND CONTINGENCIES .................... -- --
MINORITY INTEREST ................................ (5,868) (5,704)
----------- ------------
1,034,838 1,076,504
----------- ------------
SHAREHOLDERS' EQUITY
Ordinary Shares-par value $0.10 per share ...... 13,358 13,353
Capital in excess of par value ................. 906,858 905,865
Retained earnings .............................. 1,179,893 1,140,472
Treasury stock, at cost ........................ (50,275) (51,317)
Restricted stock (unearned compensation) ....... (11,423) (12,871)
Accumulated other comprehensive loss ........... (6,445) (6,292)
----------- ------------
2,031,966 1,989,210
----------- ------------
$ 3,066,804 $ 3,065,714
=========== ============
See accompanying notes to the consolidated financial statements.
2
FORM 10-Q
NOBLE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
(Unaudited)
THREE MONTHS ENDED MARCH 31,
---------------------------
2003 2002
--------- ---------
OPERATING REVENUES
Contract drilling services .................... $ 216,368 $ 220,805
Reimbursables ................................. 15,856 7,311
Labor contract drilling services .............. 6,696 7,924
Engineering, consulting and other ............. 4,160 5,694
--------- ---------
243,080 241,734
--------- ---------
OPERATING COSTS AND EXPENSES
Contract drilling services .................... 123,847 114,132
Reimbursables ................................. 15,198 6,261
Labor contract drilling services .............. 5,723 6,327
Engineering, consulting and other ............. 4,890 4,904
Depreciation and amortization ................. 33,864 30,293
Selling, general and administrative ........... 6,262 9,212
--------- ---------
189,784 171,129
--------- ---------
OPERATING INCOME ................................ 53,296 70,605
OTHER INCOME (EXPENSE)
Interest expense .............................. (10,495) (10,700)
Other, net .................................... 1,492 1,738
--------- ---------
INCOME BEFORE INCOME TAXES ...................... 44,293 61,643
INCOME TAX PROVISION ............................ (4,872) (10,213)
--------- ---------
NET INCOME ...................................... $ 39,421 $ 51,430
========= =========
EARNINGS PER SHARE:
Basic ......................................... $ 0.30 $ 0.39
Diluted ....................................... $ 0.30 $ 0.39
See accompanying notes to the consolidated financial statements.
3
FORM 10-Q
NOBLE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands)
(Unaudited)
THREE MONTHS ENDED MARCH 31,
----------------------------
2003 2002
------- -------
NET INCOME ............................................... $39,421 $51,430
------- -------
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX:
Foreign currency translation adjustments ............. 255 1,061
Unrealized holding losses arising during period ...... (408) (45)
Reclassification of realized loss for impairment of
investment included in net income .................. -- 9,758
------- -------
Other comprehensive income (loss) .................... (153) 10,774
------- -------
COMPREHENSIVE INCOME ..................................... $39,268 $62,204
======= =======
See accompanying notes to the consolidated financial statements.
4
FORM 10-Q
NOBLE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
THREE MONTHS ENDED MARCH 31,
---------------------------
2003 2002
-------- ---------
CASH FLOWS FROM OPERATING ACTITIVIES
Net income ............................................................ $ 39,421 $ 51,430
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization .................................... 33,864 30,293
Deferred income tax provision .................................... 1,624 6,937
Deferred repair and maintenance amortization ..................... 7,804 6,332
Loss on sales of marketable securities ........................... 93 25
Equity in (income) loss of joint ventures ........................ 378 (391)
Compensation expense from stock-based plans ...................... 1,185 1,284
Realized loss on impairment of investment ........................ -- 9,758
Gain on sale of interest in deepwater exploration property ....... -- (5,908)
Other ............................................................ 537 1,621
Changes in current assets and liabilities, net of acquired working
capital:
Accounts receivable ........................................... 223 (4,651)
Other current assets .......................................... (14,941) (17,615)
Accounts payable .............................................. (9,573) (2,489)
Other current liabilities ..................................... (17,485) (11,935)
-------- ---------
Net cash provided by operating activities ................ 43,130 64,691
-------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisitions and related capital upgrades ............................. (60,188) (86,668)
Other capital expenditures ............................................ (15,833) (22,379)
Deferred repair and maintenance expenditures .......................... (6,226) (8,046)
Proceeds from sales of property and equipment ......................... -- 306
Proceeds from sale of interest in deepwater exploration property ...... -- 6,200
Investment in and advances to joint ventures, net ..................... 287 918
Investment in marketable securities ................................... (13,247) (11,183)
Proceeds from sales of marketable securities .......................... 7,311 6,611
-------- ---------
Net cash used for investing activities ................... (87,896) (114,241)
-------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Payment of long-term debt ............................................. (15,548) (12,434)
Proceeds from issuance of ordinary shares, net ........................ 1,713 2,642
Proceeds from sales of put options on ordinary shares ................. -- 1,039
Decrease in restricted cash ........................................... 361 2,123
-------- ---------
Net cash used for financing activities ................... (13,474) (6,630)
-------- ---------
DECREASE IN CASH AND CASH EQUIVALENTS ................................... (58,240) (56,180)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD .......................... 192,509 236,709
-------- ---------
CASH AND CASH EQUIVALENTS, END OF PERIOD ................................ $134,269 $ 180,529
======== =========
See accompanying notes to the consolidated financial statements.
5
FORM 10-Q
NOBLE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - BASIS OF ACCOUNTING
The accompanying consolidated financial statements of Noble Corporation
("Noble" or, together with its consolidated subsidiaries, unless the context
requires otherwise, the "Company", "we", "our" and words of similar import) have
been prepared in accordance with accounting principles generally accepted in the
United States of America for interim financial information and with the
instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do
not include all disclosures required by generally accepted accounting principles
for complete financial statements. All significant transactions among Noble and
its consolidated subsidiaries have been eliminated. Certain reclassifications
have been made in the prior year consolidated financial statements to conform to
the classifications used in the 2003 consolidated financial statements. These
reclassifications have no impact on net income. (See "Accounting Pronouncements"
in "Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations" for additional information on reclassifications pursuant
to Emerging Issues Task Force No. 01-14, Income Statement Characterization of
Reimbursements Received for Out-of-Pocket Expenses Incurred.) The interim
consolidated financial statements have not been audited. However, in the opinion
of management, all adjustments, consisting only of normal recurring adjustments,
necessary for a fair presentation of the consolidated financial statements have
been included. Results of operations for interim periods are not necessarily
indicative of the results of operations that may be expected for the entire
year. These interim consolidated financial statements should be read in
conjunction with the audited consolidated financial statements and notes thereto
included in the Annual Report on Form 10-K of Noble for the year ended December
31, 2002.
Noble Drilling (Paul Romano) Inc. was formed on April 3, 1998 for the
purpose of owning the Noble Paul Romano and financing its conversion to a Noble
EVA-4000TM semisubmersible. Noble Drilling (Paul Romano) Inc. is an indirect,
wholly-owned subsidiary of Noble and is operated in a fashion that is intended
to ensure that its assets and liabilities are distinct and separate from those
of the Company and its affiliates and that the creditors of Noble Drilling (Paul
Romano) Inc. would be entitled to satisfy their claims from the assets of Noble
Drilling (Paul Romano) Inc. prior to any distribution to the Company or its
affiliates.
NOTE 2 - STOCK-BASED COMPENSATION PLANS
We have several stock-based compensation plans. As permitted by Statement
of Financial Accounting Standards ("SFAS") No. 123, Accounting for Stock-Based
Compensation ("SFAS 123") and as amended by SFAS No. 148, Accounting for
Stock-Based Compensation-Transistion and Disclosure ("SFAS 148"), we have chosen
to continue using the intrinsic value method of accounting for stock-based
compensation awards in accordance with APB Opinion 25. Accordingly, no
compensation expense was recognized in the three month periods ended March 31,
2003 and 2002 related to stock option awards.
The following table reflects pro forma net income and earnings per share
had we elected to adopt the fair value approach of SFAS 123:
THREE MONTHS ENDED
MARCH 31,
------------------
2003 2002
------- -------
Net income - as reported ................................. $39,421 $51,430
Compensation expense, net of tax - pro forma ............. (3,952) (3,984)
------- -------
Net income - pro forma ................................... $35,469 $47,446
======= =======
Earnings per share:
Basic - as reported .................................... $ 0.30 $ 0.39
Basic - pro forma ...................................... $ 0.27 $ 0.36
Diluted - as reported .................................. $ 0.30 $ 0.39
Diluted - pro forma .................................... $ 0.27 $ 0.36
6
FORM 10-Q
NOTE 3 - EARNINGS PER SHARE
The following table reconciles the basic and diluted earnings per share
computations for the three month periods ended March 31, 2003 and 2002 (in
thousands, except per share amounts):
NET BASIC BASIC DILUTED DILUTED
INCOME SHARES EPS SHARES EPS
------- ------- ----- ------- -------
MARCH 31, 2003 ................... $39,421 131,785 $0.30 132,978 $ 0.30
MARCH 31, 2002 ................... $51,430 132,071 $0.39 133,291 $ 0.39
Included in diluted shares are ordinary share equivalents relating to
outstanding stock options of 1,193,000 shares and 1,220,000 shares for the
three-month periods ended March 31, 2003 and 2002, respectively.
NOTE 4 - MARKETABLE SECURITIES
As of March 31, 2003, we owned marketable equity securities with a fair
market value of $6,591,000, of which $6,504,000 was included in a Rabbi Trust
for the Noble Drilling Corporation 401(k) Savings Restoration Plan. The
marketable securities included in the Rabbi Trust are classified as trading
securities and are included in "Investment in marketable securities" in the
Consolidated Balance Sheet at March 31, 2003 at their fair value. During the
three months ended March 31, 2003, we recognized a net unrealized holding gain
of $396,000 and a net realized loss of $1,012,000 related to these assets, which
are included in "Other, net" in the Consolidated Statement of Income for the
three months ended March 31, 2003. The remaining investment in marketable equity
securities, with a fair market value of $87,000 at March 31, 2003, is classified
as available for sale and is included in "Other assets" in the Consolidated
Balance Sheets at its fair market value. We recognized an unrealized holding
loss on this investment of $89,000 during the three months ended March 31, 2003,
which is included in "Accumulated other comprehensive loss" in the Consolidated
Balance Sheet at March 31, 2003.
As of March 31, 2003, we also owned marketable debt securities with a fair
market value of $71,655,000. These investments are classified as available for
sale and are included in "Investment in marketable securities" in the
Consolidated Balance Sheet at March 31, 2003 at their fair market value. During
the three months ended March 31, 2003, we recognized a net unrealized holding
loss of $319,000, which is included in "Accumulated other comprehensive loss" in
the Consolidated Balance Sheet at March 31, 2003, and a net realized loss of
$93,000, which is included in "Other, net" in the Consolidated Statement of
Income for the three months ended March 31, 2003, related to these assets.
NOTE 5 - CREDIT FACILITIES
Noble Drilling Corporation ("Noble Drilling"), an indirect, wholly-owned
subsidiary of Noble, has an unsecured revolving bank credit facility totaling
$200,000,000 (the "Credit Agreement"), including a letter of credit facility
totaling $50,000,000, through May 30, 2006. Noble and one of its wholly-owned
subsidiaries, Noble Holding (U.S.) Corporation ("Noble Holding"),
unconditionally guarantee the performance of Noble Drilling under the Credit
Agreement. We are required to maintain various affirmative and negative
covenants, including two financial covenants relating to interest coverage and
debt to capital ratios. The Credit Agreement contains restrictive covenants,
including restrictions on incurring additional indebtedness, and restrictions on
permitting additional liens, payment of dividends, transactions with affiliates,
and mergers or consolidations. As of March 31, 2003, we had outstanding
borrowings and outstanding letters of credit of $125,000,000 and $27,434,000,
respectively, under the Credit Agreement, with $47,566,000 remaining available
thereunder. Additionally, as of March 31, 2003, we had other letters of credit
and third-party corporate guarantees totaling $15,700,000, of which $3,300,000
is supported by a restricted cash deposit. We also had $31,057,000 of
performance and customs bonds supported by surety bonds.
NOTE 6 - COMMITMENTS AND CONTINGENCIES
In connection with several projects, we have entered into agreements with
various vendors to purchase or construct property and equipment that generally
have long lead times for delivery. If we do not proceed with any particular
project, we may either seek to cancel outstanding purchase commitments related
to that project or complete the purchase of the property
7
FORM 10-Q
and equipment. Any equipment purchased for a project on which we do not proceed
would be used, where applicable, as capital spares for other units in our fleet.
If we cancel any of the purchase commitments, the amounts ultimately paid by us,
if any, would be subject to negotiation. As of March 31, 2003, we had
approximately $50,000,000 of outstanding purchase commitments related to these
projects.
NOTE 7 - PARENT GUARANTEE OF REGISTERED SECURITIES ISSUED BY SUBSIDIARY
Noble and Noble Holding are guarantors for certain debt securities issued
by Noble Drilling. These debt securities include Noble Drilling's 6.95% Senior
Notes due 2009 and its 7.50% Senior Notes due 2019. The outstanding principal
balances of the 6.95% Senior Notes and the 7.50% Senior Notes at March 31, 2003
were $149,936,000 and $201,695,000, respectively. Noble Drilling is an indirect,
wholly-owned subsidiary of Noble and a direct, wholly-owned subsidiary of Noble
Holding. Noble's and Noble Holding's guarantee of these securities is full and
unconditional.
The following consolidating financial statements of Noble, Noble Holding,
Noble Drilling and all other subsidiaries are included so that separate
financial statements of Noble Drilling are not required to be filed with the
Securities and Exchange Commission. These consolidating financial statements
present Noble's and Noble Holding's investment in their subsidiaries using the
equity method of accounting.
8
FORM 10-Q
NOBLE CORPORATION AND OTHER SUBSIDIARIES
CONSOLIDATING BALANCE SHEET
MARCH 31, 2003
(In thousands)
(Unaudited)
NOBLE NOBLE OTHER CONSOLIDATING
NOBLE HOLDING DRILLING SUBSIDIARIES ADJUSTMENTS TOTAL
---------- ---------- ---------- ------------ ------------- ----------
ASSETS
CURRENT ASSETS
Cash and cash equivalents ............... $ 18,266 $ -- $ -- $ 116,003 $ -- $ 134,269
Restricted cash ......................... -- -- -- 8,307 -- 8,307
Investment in marketable securities ..... 6,504 -- -- 71,655 78,159
Accounts receivable ..................... -- -- 1,791 162,599 164,390
Inventories ............................. -- -- -- 3,682 3,682
Prepaid expenses ........................ -- -- 1,544 15,911 17,455
Accounts receivable from affiliates ..... -- -- 644,117 -- (644,117) --
Other current assets .................... 24,760 -- 2 20,569 (24,760) 20,571
---------- ---------- ---------- ------------ ------------- ----------
Total current assets ...................... 49,530 -- 647,454 398,726 (668,877) 426,833
---------- ---------- ---------- ------------ ------------- ----------
PROPERTY AND EQUIPMENT
Drilling equipment and facilities ....... -- -- 89,042 3,140,360 -- 3,229,402
Other ................................... -- -- -- 63,428 -- 63,428
---------- ---------- ---------- ------------ ------------- ----------
-- -- 89,042 3,203,788 -- 3,292,830
Accumulated depreciation ................. -- -- (44,770) (734,803) -- (779,573)
---------- ---------- ---------- ------------ ------------- ----------
-- -- 44,272 2,468,985 -- 2,513,257
---------- ---------- ---------- ------------ ------------- ----------
NOTES RECEIVABLE FROM AFFILIATES .......... 525,458 -- 44,159 -- (569,617) --
INVESTMENTS IN AFFILIATES ................. 1,470,303 1,744,183 1,513,787 -- (4,728,273) --
INVESTMENT IN AND ADVANCES
TO JOINT VENTURES ...................... -- -- -- 21,873 -- 21,873
OTHER ASSETS .............................. -- -- 6,169 98,672 -- 104,841
---------- ---------- ---------- ------------ ------------- ----------
$2,045,291 $1,744,183 $2,255,841 $ 2,988,256 $ (5,966,767) $3,066,804
========== ========== ========== ============ ============= ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Current maturities of long-term debt .... $ -- $ 16,773 $ -- $ 76,008 $ (16,773) $ 76,008
Accounts payable ........................ -- -- 787 54,425 -- 55,212
Accrued payroll and related costs ....... -- -- 8,237 35,808 -- 44,045
Taxes payable ........................... (165) (316) -- 40,646 -- 40,165
Interest payable ........................ -- 7,986 1,298 2,106 (7,986) 3,404
Accounts payable to affiliates .......... 13,490 33,186 -- 597,441 (644,117) --
Other current liabilities ............... -- -- 1,253 28,948 -- 30,201
---------- ---------- ---------- ------------ ------------- ----------
Total current liabilities ................. 13,325 57,629 11,575 835,382 (668,876) 249,035
LONG-TERM DEBT ............................ -- -- 476,631 101,950 -- 578,581
NOTES PAYABLE TO AFFILIATES ............... -- 525,458 -- 44,159 (569,617) --
DEFERRED INCOME TAXES ..................... -- -- 18,060 189,492 -- 207,552
OTHER LIABILITIES ......................... -- -- 5,392 146 -- 5,538
COMMITMENTS AND CONTINGENCIES ............. -- -- -- -- -- --
MINORITY INTEREST ......................... -- -- -- (5,868) -- (5,868)
---------- ---------- ---------- ------------ ------------- ----------
13,325 583,087 511,658 1,165,261 (1,238,493) 1,034,838
---------- ---------- ---------- ------------ ------------- ----------
SHAREHOLDERS' EQUITY
Ordinary Shares-par value $0.10 per share 13,358 -- -- -- -- 13,358
Capital in excess of par value .......... 906,858 870,744 870,744 693,687 (2,435,175) 906,858
Retained earnings ....................... 1,179,893 290,352 873,439 1,135,753 (2,299,544) 1,179,893
Treasury stock, at cost ................. (50,275) -- -- -- -- (50,275)
Restricted stock (unearned compensation) (11,423) -- -- -- -- (11,423)
Accumulated other comprehensive loss .... (6,445) -- -- (6,445) 6,445 (6,445)
---------- ---------- ---------- ------------ ------------- ----------
2,031,966 1,161,096 1,744,183 1,822,995 (4,728,274) 2,031,966
---------- ---------- ---------- ------------ ------------- ----------
$2,045,291 $1,744,183 $2,255,841 $ 2,988,256 $ (5,966,767) $3,066,804
========== ========== ========== ============ ============= ==========
9
FORM 10-Q
NOBLE CORPORATION AND OTHER SUBSIDIARIES
CONSOLIDATING BALANCE SHEET
DECEMBER 31, 2002
(In thousands)
NOBLE NOBLE OTHER CONSOLIDATING
NOBLE HOLDING DRILLING SUBSIDIARIES ADJUSTMENTS TOTAL
---------- ---------- ---------- ------------ ------------- ----------
ASSETS
CURRENT ASSETS
Cash and cash equivalents ............... $ 9,317 $ -- $ -- $ 183,192 $ -- $ 192,509
Restricted cash ......................... -- -- -- 8,668 -- 8,668
Investment in marketable securities ..... 6,827 -- -- 66,130 -- 72,957
Accounts receivable ..................... -- -- 1,373 163,240 -- 164,613
Inventories ............................. -- -- -- 3,628 -- 3,628
Prepaid expenses ........................ -- -- 259 6,336 -- 6,595
Accounts receivable from affiliates ..... -- -- 644,412 -- (644,412) --
Other current assets .................... 16,417 -- -- 16,645 (16,389) 16,673
---------- ---------- ---------- ------------ ------------- ----------
Total current assets ...................... 32,561 -- 646,044 447,839 (660,801) 465,643
---------- ---------- ---------- ------------ ------------- ----------
PROPERTY AND EQUIPMENT
Drilling equipment and facilities ....... -- -- 118,684 3,034,825 -- 3,153,509
Other ................................... -- -- -- 63,296 -- 63,296
---------- ---------- ---------- ------------ ------------- ----------
-- -- 118,684 3,098,121 -- 3,216,805
Accumulated depreciation ................ -- -- (61,028) (684,734) -- (745,762)
---------- ---------- ---------- ------------ ------------- ----------
-- -- 57,656 2,413,387 -- 2,471,043
---------- ---------- ---------- ------------ ------------- ----------
NOTES RECEIVABLE FROM AFFILIATES .......... 529,772 -- 44,159 -- (573,931) --
INVESTMENTS IN AFFILIATES ................. 1,443,034 1,700,021 1,462,263 -- (4,605,318) --
INVESTMENT IN AND ADVANCES
TO JOINT VENTURES ........................ -- -- -- 22,538 -- 22,538
OTHER ASSETS .............................. -- -- 5,312 101,178 -- 106,490
---------- ---------- ---------- ------------ ------------- ----------
$2,005,367 $1,700,021 $2,215,434 $ 2,984,942 $ (5,840,050) $3,065,714
========== ========== ========== ============ ============= ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Current maturities of long-term debt .... $ -- $ 16,389 $ -- $ 80,577 $ (16,389) $ 80,577
Accounts payable ........................ -- -- 1,019 63,764 -- 64,783
Accrued payroll and related costs ....... -- -- 8,475 42,650 -- 51,125
Taxes payable ........................... 48 -- -- 41,949 -- 41,997
Interest payable ........................ -- -- 7,708 2,381 -- 10,089
Accounts payable to affiliates .......... 16,109 24,713 -- 603,590 (644,412) --
Other current liabilities ............... -- -- 18 32,071 -- 32,089
---------- ---------- ---------- ------------ ------------- ----------
Total current liabilities ................. 16,157 41,102 17,220 866,982 (660,801) 280,660
LONG-TERM DEBT ............................ -- -- 476,629 112,933 -- 589,562
NOTES PAYABLE TO AFFILIATES ............... -- 529,772 -- 44,159 (573,931) --
DEFERRED INCOME TAXES ..................... -- -- 16,070 190,281 -- 206,351
OTHER LIABILITIES ......................... -- -- 5,494 141 -- 5,635
COMMITMENTS AND CONTINGENCIES ............. -- -- -- -- -- --
MINORITY INTEREST ......................... -- -- -- (5,704) -- (5,704)
---------- ---------- ---------- ------------ ------------- ----------
16,157 570,874 515,413 1,208,792 (1,234,732) 1,076,504
---------- ---------- ---------- ------------ ------------- ----------
SHAREHOLDERS' EQUITY
Ordinary Shares-par value $0.10 per share 13,353 -- -- -- -- 13,353
Capital in excess of par value .......... 905,865 870,744 870,744 693,687 (2,435,175) 905,865
Retained earnings ....................... 1,140,472 258,403 829,277 1,088,755 (2,176,435) 1,140,472
Treasury stock, at cost ................. (51,317) -- -- -- -- (51,317)
Restricted stock (unearned compensation) (12,871) -- -- -- -- (12,871)
Accumulated other comprehensive loss .... (6,292) -- -- (6,292) 6,292 (6,292)
---------- ---------- ---------- ------------ ------------- ----------
1,989,210 1,129,147 1,700,021 1,776,150 (4,605,318) 1,989,210
---------- ---------- ---------- ------------ ------------- ----------
$2,005,367 $1,700,021 $2,215,434 $ 2,984,942 $ (5,840,050) $3,065,714
========== ========== ========== ============ ============= ==========
10
FORM 10-Q
NOBLE CORPORATION AND OTHER SUBSIDIARIES
CONSOLIDATING STATEMENT OF INCOME
THREE MONTHS ENDED MARCH 31, 2003
(In thousands)
(Unaudited)
NOBLE NOBLE OTHER CONSOLIDATING
NOBLE HOLDING DRILLING SUBSIDIARIES ADJUSTMENTS TOTAL
------------- ------------- ------------- ------------- ------------- -------------
OPERATING REVENUES
Contract drilling services ........ $ -- $ -- $ 81 $ 216,287 $ -- $ 216,368
Reimbursables ..................... -- -- 218 15,638 -- 15,856
Labor contract drilling services .. -- -- -- 6,696 -- 6,696
Engineering, consulting and other . -- -- -- 4,160 -- 4,160
------------- ------------- ------------- ------------- ------------- -------------
-- -- 299 242,781 -- 243,080
------------- ------------- ------------- ------------- ------------- -------------
OPERATING COSTS AND EXPENSES
Contract drilling services ........ (6) -- 2,597 121,256 -- 123,847
Reimbursables ..................... -- -- 218 14,980 -- 15,198
Labor contract drilling services .. -- -- -- 5,723 -- 5,723
Engineering, consulting and other . -- -- -- 4,890 -- 4,890
Depreciation and amortization ..... -- -- 1,017 32,847 -- 33,864
Selling, general and
administrative .................. 91 -- 189 5,982 -- 6,262
------------- ------------- ------------- ------------- ------------- -------------
85 -- 4,021 185,678 -- 189,784
------------- ------------- ------------- ------------- ------------- -------------
OPERATING (LOSS) INCOME ............. (85) -- (3,722) 57,103 -- 53,296
OTHER INCOME (EXPENSE)
Equity earnings in affiliates
(net of tax)..................... 27,269 44,162 51,524 -- (122,955) --
Interest expense .................. -- (12,213) (6,988) (3,507) 12,213 (10,495)
Other, net ........................ 12,237 -- (616) 2,084 (12,213) 1,492
------------- ------------- ------------- ------------- ------------- -------------
INCOME BEFORE INCOME TAXES .......... 39,421 31,949 40,198 55,680 (122,955) 44,293
INCOME TAX BENEFIT (PROVISION) ...... -- -- 3,964 (8,836) -- (4,872)
------------- ------------- ------------- ------------- ------------- -------------
NET INCOME .......................... $ 39,421 $ 31,949 $ 44,162 $ 46,844 $ (122,955) $ 39,421
============= ============= ============= ============= ============= =============
11
FORM 10-Q
NOBLE CORPORATION AND OTHER SUBSIDIARIES
CONSOLIDATING STATEMENT OF INCOME
THREE MONTHS ENDED MARCH 31, 2002
(In thousands)
(Unaudited)
NOBLE NOBLE OTHER CONSOLIDATING
NOBLE HOLDING DRILLING SUBSIDIARIES ADJUSTMENTS TOTAL
------------ ------------ ------------ ------------- ----------- -------------
OPERATING REVENUES
Contract drilling services ......... $ -- $ -- $ 2,993 $ 217,812 $ -- $ 220,805
Reimbursables ...................... -- -- -- 7,311 -- 7,311
Labor contract drilling services ... -- -- -- 7,924 -- 7,924
Engineering, consulting and other .. -- -- 69 5,694 (69) 5,694
------------ ------------ ------------ ------------- ----------- -------------
-- -- 3,062 238,741 (69) 241,734
------------ ------------ ------------ ------------- ----------- -------------
OPERATING COSTS AND EXPENSES
Contract drilling services ......... -- -- 2,404 111,797 (69) 114,132
Reimbursables ...................... -- -- -- 6,261 -- 6,261
Labor contract drilling services ... -- -- -- 6,327 -- 6,327
Engineering, consulting and other .. -- -- -- 4,904 -- 4,904
Depreciation and amortization ...... -- -- 1,416 28,877 -- 30,293
Selling, general and
administrative ................... -- -- 58 9,154 -- 9,212
------------ ------------ ------------ ------------- ----------- -------------
-- -- 3,878 167,320 (69) 171,129
------------ ------------ ------------ ------------- ----------- -------------
OPERATING (LOSS) INCOME .............. -- -- (816) 71,421 -- 70,605
OTHER INCOME (EXPENSE)
Equity earnings in affiliates
(net of tax) ..................... -- -- 53,299 -- (53,299) --
Interest expense ................... -- -- (6,482) (4,218) -- (10,700)
Other, net ......................... -- -- 4,423 (2,685) -- 1,738
------------ ------------ ------------ ------------- ----------- -------------
INCOME BEFORE INCOME TAXES ........... -- -- 50,424 64,518 (53,299) 61,643
INCOME TAX BENEFIT (PROVISION) ....... -- -- 1,006 (11,219) -- (10,213)
------------ ------------ ------------ ------------- ----------- -------------
NET INCOME ........................... $ -- $ -- $ 51,430 $ 53,299 $ (53,299) $ 51,430
============ ============ ============ ============= =========== =============
12
FORM 10-Q
NOBLE CORPORATION AND OTHER SUBSIDIARIES
CONSOLIDATING STATEMENT OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 2003
(In thousands)
(Unaudited)
NOBLE NOBLE OTHER CONSOLIDATING
NOBLE HOLDING DRILLING SUBSIDIARIES ADJUSTMENTS TOTAL
-------- -------- -------- ------------ ------------- --------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income .......................................... $ 39,421 $ 31,949 $ 44,162 $ 46,844 $ (122,955) $ 39,421
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization ................... -- -- 1,017 32,847 -- 33,864
Deferred income tax provision ................... -- -- 1,990 (366) -- 1,624
Deferred repair and maintenance amortization .... -- -- 132 7,672 -- 7,804
Loss on sales of marketable securities .......... -- -- -- 93 -- 93
Equity in income of joint ventures .............. -- -- -- 378 -- 378
Compensation expense from stock-based plans ..... 1,185 -- -- -- -- 1,185
Equity earnings in affiliates ................... (27,269) (44,162) (51,524) -- 122,955 --
Other ........................................... -- -- (959) 1,496 -- 537
Changes in current assets and liabilities,
net of acquired working capital:
Accounts receivable ........................... -- -- (418) 641 -- 223
Accounts receivable from affiliates ........... -- -- 18,248 -- (18,248) --
Other current assets .......................... (8,343) -- (1,287) (5,311) -- (14,941)
Accounts payable .............................. -- -- (232) (9,341) -- (9,573)
Accounts payable to affiliates ................ 2,455 4,543 -- (25,246) 18,248 --
Other current liabilities ..................... (213) 7,670 (5,413) (19,529) -- (17,485)
-------- -------- -------- ------------ ------------- --------
Net cash provided by operating activities .. 7,236 -- 5,716 30,178 -- 43,130
-------- -------- -------- ------------ ------------- --------
CASH FLOWS USED FOR INVESTING ACTIVITIES
Acquisitions and related capital upgrades ........... -- -- -- (60,188) -- (60,188)
Other capital expenditures .......................... -- -- (4,643) (11,190) -- (15,833)
Deferred repair and maintenance expenditures ........ -- -- (1,073) (5,153) -- (6,226)
Investment in and advances to joint venture, net .... -- -- -- 287 -- 287
Investment in marketable securities ................. -- -- -- (13,247) -- (13,247)
Proceeds from sales of marketable securities ........ -- -- -- 7,311 -- 7,311
-------- -------- -------- ------------ ------------- --------
Net cash used for investing activities ..... -- -- (5,716) (82,180) -- (87,896)
-------- -------- -------- ------------ ------------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Payment of long-term debt ........................... -- -- -- (15,548) -- (15,548)
Proceeds from issuance of ordinary shares, net ...... 1,713 -- -- -- -- 1,713
Decrease in restricted cash ......................... -- -- -- 361 -- 361
-------- -------- -------- ------------ ------------- --------
Net cash provided by (used for)
financing activities ................... 1,713 -- -- (15,187) -- (13,474)
-------- -------- -------- ------------ ------------- --------
INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS .............................. 8,949 -- -- (67,189) -- (58,240)
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD ............................... 9,317 -- -- 183,192 -- 192,509
-------- -------- -------- ------------ ------------- --------
CASH AND CASH EQUIVALENTS,
END OF PERIOD ..................................... $ 18,266 $ -- $ -- $ 116,003 $ -- $134,269
======== ======== ======== ============ ============= ========
13
FORM 10-Q
NOBLE CORPORATION AND OTHER SUBSIDIARIES
CONSOLIDATING STATEMENT OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 2002
(In thousands)
(Unaudited)
NOBLE NOBLE OTHER CONSOLIDATING
NOBLE HOLDING DRILLING SUBSIDIARIES ADJUSTMENTS TOTAL
--------- --------- -------- ------------ ----------- ---------
CASH FLOWS FROM OPERATING ACTITIVIES
Net income ................................... $ -- $ -- $ 51,430 $ 53,299 $ (53,299) $ 51,430
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization ............ -- -- 1,416 28,877 -- 30,293
Deferred income tax provision ............ -- -- 876 6,061 -- 6,937
Deferred repair and maintenance
amortization ........................... -- -- 195 6,137 -- 6,332
Loss on sales of marketable securities ... -- -- -- 25 -- 25
Equity in income of joint ventures ....... -- -- -- (391) -- (391)
Compensation expense from
stock-based plans ...................... -- -- 1,284 -- -- 1,284
Realized loss on impairment
of investment .......................... -- -- -- 9,758 -- 9,758
Gain on sale of interest in deepwater
exploration property ................... -- -- -- (5,908) -- (5,908)
Equity earnings in affiliates ............ -- -- (53,299) -- 53,299 --
Other .................................... -- -- 226 1,395 -- 1,621
Changes in current assets and
liabilities, net of acquired
working capital:
Accounts receivable .................... -- -- 63 (4,714) -- (4,651)
Accounts receivable from affiliates .... -- -- 48,960 -- (48,960) --
Other current assets ................... -- -- (4,594) (13,021) -- (17,615)
Accounts payable ....................... -- -- 2,710 (5,199) -- (2,489)
Accounts payable to affiliates ......... -- -- -- (48,960) 48,960 --
Other current liabilities .............. -- -- (6,150) (5,785) -- (11,935)
-------- -------- --------- ---------- ---------- ----------
Net cash provided by operating
activities ........................ -- -- 43,117 21,574 -- 64,691
-------- -------- --------- ---------- ---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisitions and related capital upgrades .... -- -- (45,000) (41,668) -- (86,668)
Other capital expenditures ................... -- -- (1,212) (21,167) -- (22,379)
Deferred repair and maintenance
expenditures ............................... -- -- (179) (7,867) -- (8,046)
Proceeds from sales of property
and equipment .............................. -- -- -- 306 -- 306
Proceeds from sale of interest in deepwater
exploration property ....................... -- -- -- 6,200 -- 6,200
Investments in and advances to joint
ventures, net .............................. -- -- -- 918 -- 918
Investment in marketable securities .......... -- -- -- (11,183) -- (11,183)
Proceeds from sales of marketable
securities ................................. -- -- -- 6,611 -- 6,611
-------- -------- --------- ---------- ---------- ----------
Net cash used for investing
activities ........................ -- -- (46,391) (67,850) -- (114,241)
-------- -------- --------- ---------- ---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Payment of long-term debt .................... -- -- -- (12,434) -- (12,434)
Proceeds from issuance of common
stock, net ................................. -- -- 2,642 -- -- 2,642
Proceeds from sales of put options on
common stock ............................... -- -- 1,039 -- -- 1,039
Decrease in restricted cash .................. -- -- -- 2,123 -- 2,123
-------- -------- --------- ---------- ---------- ----------
Net cash provided by (used for)
financing activities............... -- -- 3,681 (10,311) -- (6,630)
-------- -------- --------- ---------- ---------- ----------
INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS ....................... -- -- 407 (56,587) -- (56,180)
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD ........................ -- -- -- 236,709 -- 236,709
-------- -------- --------- ---------- ---------- ----------
CASH AND CASH EQUIVALENTS,
END OF PERIOD .............................. $ -- $ -- $ 407 $ 180,122 $ -- $ 180,529
======== ======== ========= ========== ========== ==========
14
FORM 10-Q
NOTE 8 - SEGMENT AND RELATED INFORMATION
We provide diversified services for the oil and gas industry. Our
reportable segments consist of the primary services we provide, which include
offshore contract drilling and engineering and consulting services. Although
both of these segments are generally influenced by the same economic factors,
each represents a distinct service to the oil and gas industry. Offshore
contract drilling services is then separated into international and domestic
contract drilling segments since there are different economic and political
risks associated with each of these geographic markets and our management makes
decisions based on these markets accordingly.
Our international contract drilling segment conducts contract drilling
services in the North Sea, Brazil, West Africa, the Middle East, Mexico and
India. Our domestic contract drilling is conducted in the U.S. Gulf of Mexico.
Our engineering and consulting segment, as represented by our Noble Technology
Services Division, provides drilling products and drilling related software
programs, well site management, project management, technical services and
operations support for our downhole technology tools.
All intersegment sales pricing is based on current market conditions. We
evaluate the performance of our operating segments based on operating revenues
and net income. Summarized financial information of our reportable segments for
the three months ended March 31, 2003 and 2002 is shown in the following table
(in thousands). The "Other" column includes results of labor contract drilling
services, other insignificant operations and corporate related items.
INTERNATIONAL DOMESTIC
THREE MONTHS ENDED: CONTRACT CONTRACT ENGINEERING
- ------------------- DRILLING DRILLING & CONSULTING
MARCH 31, 2003: SERVICES SERVICES SERVICES OTHER TOTAL
- --------------- ------------- ---------- ------------ -------- ----------
Revenues from external customers $ 164,618 $ 58,477 $ 11,512 $ 8,473 $ 243,080
Intersegment revenues .......... -- -- -- -- --
Segment profit (loss) .......... 32,554 5,319 (1,315) 2,863 39,421
Total assets ................... 1,508,610 1,316,772 10,562 230,860 3,066,804
MARCH 31, 2002:
- ---------------
Revenues from external customers $ 152,447 $ 76,297 $ 3,362 $ 9,628 $ 241,734
Intersegment revenues .......... -- -- 21 -- 21
Segment profit (loss) .......... 43,145 10,187 (269) (1,632) 51,431
Total assets ................... 1,279,552 1,388,412 11,383 118,469 2,797,816
The following table is a reconciliation of reportable segment profit to
our consolidated totals for the three months ended March 31, 2003 and 2002 (in
thousands).
THREE MONTHS ENDED
MARCH 31,
------------------
2003 2002
------- -------
Total profit for reportable segments $36,558 $53,063
Elimination of intersegment profits -- (1)
Other profit (loss) ................ 2,863 (1,632)
------- -------
Total consolidated net income .... $39,421 $51,430
======= =======
15
FORM 10-Q
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
FORWARD-LOOKING STATEMENTS
This report on Form 10-Q includes "forward-looking statements" within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended. All statements other
than statements of historical facts included in this Form 10-Q, including,
without limitation, statements contained in this "Management's Discussion and
Analysis of Financial Condition and Results of Operations", regarding our
financial position, business strategy, plans and objectives of management for
future operations, industry conditions, and indebtedness covenant compliance,
are forward-looking statements. Although we believe that the expectations
reflected in such forward-looking statements are reasonable, we cannot assure
you that such expectations will prove to have been correct. Important factors
that could cause actual results to differ materially from our expectations
include, but are not limited to, changes in United States tax laws, or the
enactment of new United States tax laws, that may result in Noble being subject
to taxation in the United States on its worldwide earnings, other material
changes in the tax laws of the United States or other countries in which we
operate which could increase our effective tax rate, volatility in crude oil and
natural gas prices, the discovery of significant additional oil and/or gas
reserves or the construction of significant oil and/or gas delivery or storage
systems that impact regional or worldwide energy markets, potential
deterioration in the demand for our drilling services and resulting declining
dayrates, changes in our customers' drilling programs or budgets due to factors
discussed herein or due to their own internal corporate events, the cancellation
by our customers of drilling contracts or letter agreements or letters of intent
for drilling contracts or their exercise of early termination provisions
generally found in our drilling contracts, intense competition in the drilling
industry, changes in oil and gas drilling technology or in our competitors'
drilling fleets that could make our drilling rigs less competitive or require
major capital investment to keep them competitive, political and economic
conditions in the United States and in international markets where we operate,
acts of war or terrorism and the aftermath of the September 11, 2001 terrorist
attacks on the United States, cost overruns or delays on shipyard repair,
maintenance, conversion or upgrade projects, adverse weather (such as hurricanes
or monsoons) and seas, operational risks (such as blowouts and fires),
limitations on (and increased deductible amounts under) our insurance coverages,
and requirements and potential liability imposed by governmental regulation of
the drilling industry (including environmental regulation). All of the foregoing
risks and uncertainties are beyond our ability to control, and in many cases, we
cannot predict the risks and uncertainties that could cause our actual results
to differ materially from those indicated by the forward-looking statements.
When used in this Form 10-Q, the words "believes", "anticipates", "expects",
"plans" and similar expressions as they relate to the Company or its management
are intended to identify forward-looking statements.
As used herein, unless otherwise required by the context, the term "Noble"
refers to Noble Corporation and the terms "Company", "we", "our", and words of
similar import refer to Noble and its consolidated subsidiaries. The use herein
of such terms as group, organization, we, us, our and its, or references to
specific entities, is not intended to be a precise description of corporate
relationships.
THE COMPANY
We are a leading provider of diversified services for the oil and gas
industry. We perform contract drilling services with our fleet of 55 offshore
drilling units located in key markets worldwide. Our fleet of floating deepwater
units consists of 13 semisubmersibles and three dynamically positioned
drillships, seven of which are designed to operate in water depths greater than
5,000 feet. Our premium fleet of 36 independent leg, cantilever jackup rigs
includes 22 units that operate in water depths of 300 feet or greater, four of
which operate in water depths of 360 feet or greater, and 11 units that operate
in water depths up to 250 feet. In addition, our fleet includes three
submersible drilling units. We also have options to purchase two additional
premium, independent leg, cantilever jackup rigs capable of operating in 300
feet of water. Nine of our drilling units are capable of operating in harsh
environments. Over 70 percent of the fleet is currently deployed in
international markets, principally including the North Sea, Brazil, West Africa,
the Middle East, Mexico and India. We provide technologically advanced
drilling-related products and services designed to create value for our
customers. We also provide labor contract drilling services, well site and
project management services, and engineering services.
Demand for drilling services depends on a variety of economic and
political factors, including worldwide demand for oil and gas, the ability of
the Organization of Petroleum Exporting Countries ("OPEC") to set and maintain
production levels and pricing, the level of production of non-OPEC countries and
the policies of the various governments regarding exploration and development of
their oil and gas reserves.
Our results of operations depend on the levels of activity in offshore oil
and gas exploration, development and production in markets worldwide.
Historically, oil and gas prices and market expectations of potential changes in
these prices
16
FORM 10-Q
have significantly affected that level of activity. These prices are extremely
volatile. Despite higher oil prices in the first quarter of 2003 as compared to
the first quarter of 2002, drilling activity in many international markets,
which are influenced more by oil prices than natural gas prices, were generally
weaker in the recent quarter. We believe that operators in international markets
were reluctant to increase drilling activity in the latter part of 2002 and
first quarter of 2003, despite higher oil prices, due to the uncertainty
surrounding the worldwide economy and the political unrest in the Middle East
(including the prospect of and subsequent actual military action in Iraq),
Nigeria and Venezuela, which contributed to the higher oil prices.
Natural gas prices in the U.S. were also significantly higher during the
first quarter of 2003 as compared to the first quarter of 2002 as inventory
storage has fallen below average historical levels. The decline in natural gas
inventory storage is attributable to reduced North American natural gas
production and increased demand for natural gas this past winter due to
temperatures that were colder than the previous winter. Despite the higher
natural gas prices, operators on average have not increased offshore drilling
activities. We believe this is due principally to the uncertainty surrounding
the world economy. Drilling activity in the U.S. Gulf of Mexico has remained
flat, which has resulted in continued depressed utilization rates and dayrates
for drilling rigs in that region.
Oil companies continue to work through the effects of industry
consolidation, which has inhibited capital spending on exploration and
development. We expect that further consolidation among our customer base would
dampen drilling activity levels near-term. We cannot predict the future level of
demand for our drilling services or future conditions in the offshore contract
drilling industry.
In recent years, we have focused on increasing the number of rigs in our
fleet capable of deepwater offshore drilling. We have incorporated this focus
into our broader, long-standing business strategy to actively expand our
international and deepwater capabilities through acquisitions, rig upgrades and
modifications and to deploy assets in important geological areas.
RESULTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2003 AND 2002
GENERAL
Net income for the first quarter of 2003 (the "Current Quarter") was
$39,421,000, or $0.30 per diluted share, on operating revenues of $243,080,000,
compared to net income for the first quarter of 2002 (the "Comparable Quarter")
of $51,430,000, or $0.39 per diluted share, on operating revenues of
$241,734,000.
RIG UTILIZATION, OPERATING DAYS AND AVERAGE DAYRATES
The following table sets forth the average rig utilization, operating days
and average dayrates for our rig fleet for the three months ended March 31, 2003
and 2002:
AVERAGE RIG
UTILIZATION (1) OPERATING DAYS AVERAGE DAYRATE
-------------------- ------------------- -------------------
THREE MONTHS ENDED THREE MONTHS ENDED THREE MONTHS ENDED
MARCH 31, MARCH 31, MARCH 31,
-------------------- ------------------- -------------------
2003 2002 2003 2002 2003 2002
-------- -------- -------- -------- -------- --------
International 90% 93% 2,833 2,356 $ 56,444 $ 62,820
Domestic (2) 76% 74% 833 1,168 $ 67,780 $ 62,329
- ----------
(1) Information reflects our policy of reporting on the basis of the number of
actively marketed rigs in our fleet. Percentages reflect the results of
rigs only during the period in which they are owned or operated by us.
(2) "Domestic" encompasses the U.S. Gulf of Mexico.
17
FORM 10-Q
INTERNATIONAL OPERATIONS
The following table sets forth the operating revenues and gross margin
(operating revenues less direct operating expenses) for our international
operations for the three months ended March 31, 2003 and 2002:
REVENUES GROSS MARGIN
------------------- -------------------
THREE MONTHS ENDED THREE MONTHS ENDED
MARCH 31, MARCH 31,
------------------- -------------------
2003 2002 2003 2002
-------- -------- -------- --------
(In thousands)
Contract drilling services ...... $159,907 $148,005 $ 67,417 $ 71,580
Reimbursables ................... 5,750 3,868 330 254
Labor contract drilling services 6,696 7,924 973 1,597
Engineering, consulting and other 2,100 2,773 274 994
-------- -------- -------- --------
Total .................. $174,453 $162,570 $ 68,994 $ 74,425
======== ======== ======== ========
OPERATING REVENUES. International contract drilling services revenues
increased $11,902,000 due to additional operating days in Mexico and the Middle
East, partially offset by lower utilization rates in West Africa and lower
average dayrates in West Africa and the North Sea. The additional operating days
in Mexico were attributable to the mobilization of four of our premium jackup
units to Mexico from the U.S. Gulf of Mexico in the latter part of 2002. The
additional operating days in the Middle East were attributable to the operations
of the Trident III and Dhabi II jackups, which we purchased in December 2002.
Labor contract drilling services revenues decreased $1,228,000 due to lower
utilization on one of our North Sea labor contracts. International engineering,
consulting and other revenues decreased $673,000 due to reduced activity on an
engineering services engagement in the North Sea.
GROSS MARGIN. International contract drilling services gross margin
decreased $4,163,000 despite the higher revenue as the gross margin impact of
the lower average dayrates in West Africa and the North Sea more than offset the
impact of the additional operating days in Mexico and the Middle East.
International labor contract drilling services gross margin decreased $624,000
due to lower utilization on one of our North Sea labor contracts. International
engineering, consulting and other gross margin decreased $720,000 due to reduced
activity on an engineering services engagement in the North Sea.
DOMESTIC OPERATIONS
The following table sets forth the operating revenues and gross margin
(operating revenues less direct operating expenses) for our domestic operations
for the three months ended March 31, 2003 and 2002:
REVENUES GROSS MARGIN
------------------- --------------------
THREE MONTHS ENDED THREE MONTHS ENDED
MARCH 31, MARCH 31,
------------------- --------------------
2003 2002 2003 2002
-------- -------- -------- --------
(In thousands)
Contract drilling services ...... $ 56,461 $ 72,800 $ 25,104 $ 35,093
Reimbursables ................... 10,106 3,443 328 796
Engineering, consulting and other 2,060 2,921 (1,004) (204)
-------- -------- -------- --------
Total .................. $ 68,627 $ 79,164 $ 24,428 $ 35,685
======== ======== ======== ========
OPERATING REVENUES. Domestic contract drilling services revenues decreased
$16,339,000 due to lower average dayrates and utilization rates on our domestic
deepwater semisubmersibles and fewer operating days on our domestic jackup rigs.
However, the average dayrate for our overall domestic operations increased due
to a greater proportion of this region's units being deepwater units, which had
a higher average dayrate than the region's other units. The fewer operating days
on our jackup rigs were attributable to the mobilization of four rigs from the
U.S. Gulf of Mexico to Mexico in the latter part of 2002. Domestic engineering,
consulting and other revenues decreased $861,000 due to fewer third-party
engagements by our Maurer Technology Incorporated ("Maurer") subsidiary.
GROSS MARGIN. Domestic contract drilling services gross margin decreased
$9,989,000 due to lower average dayrates and utilization rates on our domestic
deepwater semisubmersible rigs and fewer operating days on our domestic jackup
rigs.
18
FORM 10-Q
Domestic engineering, consulting and other gross margin decreased $800,000 due
to fewer third-party engagements by Maurer and additional research and
development expenditures by our Noble Engineering & Development Limited
subsidiary.
OTHER ITEMS
DEPRECIATION AND AMORTIZATION EXPENSE. Depreciation and amortization
expense increased $3,571,000 due to various capital upgrades to our rig fleet
and depreciation on the Dhabi II and Trident III jackups, which were purchased
in December 2002 and operated the entire Current Quarter.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses decreased $2,950,000 due to costs incurred in the
Comparable Quarter related to our corporate restructuring in 2002.
INTEREST EXPENSE. Interest expense decreased $205,000 due to lower average
balances of higher interest rate debt in the Current Quarter.
OTHER, NET. Other, net decreased $246,000 due to lower interest income,
which was attributable to a lower average yield earned on our cash balances and
investments in marketable securities, and lower equity earnings from joint
ventures in the Current Quarter. These were partially offset by additional
income from working interests in producing deepwater exploration properties. The
Comparable Quarter included a realized loss of $9,758,000 on an investment in
marketable equity securities resulting from a decline in value considered by
management to be permanent. This loss was partially offset by a gain during the
Comparable Quarter of $5,908,000 on the sale of our five percent working
interest in one of Mariner Energy, Inc.'s deepwater exploration properties to
Pioneer Natural Resources USA, Inc. for $6,200,000 in cash and the assumption of
liabilities related to our share of drilling and development costs on this
property.
INCOME TAX PROVISION. Income tax provision decreased $5,341,000 due to a
lower effective tax rate and lower pretax earnings. The effective tax rate was
11 percent in the Current Quarter compared to 17 percent in the Comparable
Quarter. The lower effective tax rate in the Current Quarter was a result of our
corporate restructuring, which became effective in April 2002, and a higher
percentage of our pretax earnings being derived from international operations,
which generally have lower effective tax rates than our domestic operations.
LIQUIDITY AND CAPITAL RESOURCES
OVERVIEW
Our principal capital resource in the Current Quarter was net cash
provided by operating activities of $43,130,000. At March 31, 2003, we had cash
and cash equivalents of $134,269,000, $71,655,000 of marketable debt securities
and $47,566,000 of funds available under our bank credit facility. We had
working capital, including cash, of $177,798,000 and $184,983,000 at March 31,
2003 and December 31, 2002, respectively. Total debt as a percentage of total
debt plus shareholders' equity decreased to 24 percent at March 31, 2003 from 25
percent at December 31, 2002.
During the Current Quarter, the remaining 600,000 put options on our
ordinary shares that we previously sold expired unexercised so that we no longer
have any purchase requirement with regard to the shares represented by those
options.
CAPITAL EXPENDITURES
Capital expenditures for the Current Quarter totaled $76,021,000,
including capital upgrades to several acquired semisubmersibles of $60,188,000.
Specifically, capital upgrade costs for the Noble Clyde Boudreaux, Noble Lorris
Bouzigard and Noble Therald Martin were $17,065,000, $14,833,000 and
$28,290,000, respectively, during the Current Quarter. As previously disclosed,
the majority of the steel work has been carried out on the Noble Clyde
Boudreaux's hull. A lay-up plan for suspension of the project has been
initiated, with further structural work and installation of drilling equipment
to be carried out pending a commitment from an operator. The upgrade to the
Noble Lorris Bouzigard was completed and the unit commenced operations in the
U.S. Gulf of Mexico during the Current Quarter. We expect to complete the
upgrade project on the Noble Therald Martin during the second quarter of 2003.
Deferred repair and maintenance expenditures totaled $6,226,000 for the Current
Quarter. We expect our capital expenditures and deferred repair and maintenance
expenditures for the remainder of 2003 will aggregate approximately $210,000,000
and $45,000,000, respectively, including $125,000,000 for
19
FORM 10-Q
acquisitions and related capital upgrades, which includes the exercise of
options to purchase two additional jackup drilling rigs.
In connection with several projects, we have entered into agreements with
various vendors to purchase or construct property and equipment that generally
have long lead times for delivery. If we do not proceed with any particular
project, we may either seek to cancel outstanding purchase commitments related
to that project or complete the purchase of the property and equipment. Any
equipment purchased for a project on which we do not proceed would be used,
where applicable, as capital spares for other units in our fleet. If we cancel
any of the purchase commitments, the amounts ultimately paid by us, if any,
would be subject to negotiation. As of March 31, 2003, we had approximately
$50,000,000 of outstanding purchase commitments related to these projects, which
are included in the projected 2003 capital expenditure and deferred repair and
maintenance amounts above.
Certain projects currently under consideration could require, if they
materialize, capital expenditures or other cash requirements not included in the
above estimates. In addition, we will continue to evaluate acquisitions of
drilling units from time to time. Other factors that could cause actual capital
expenditures to materially exceed the planned capital expenditures include
delays and cost overruns in shipyards, shortages of equipment, latent damage or
deterioration to hull, equipment and machinery in excess of engineering
estimates and assumptions, and changes in design criteria or specifications
during repair or construction.
CREDIT FACILITIES AND LONG-TERM DEBT
Noble Drilling Corporation ("Noble Drilling"), an indirect, wholly-owned
subsidiary of Noble, has in place a $200,000,000 bank credit agreement (the
"Credit Agreement"), which extends through May 30, 2006. Noble and one of its
wholly-owned subsidiaries, Noble Holding (U.S.) Corporation, unconditionally
guarantee the performance of Noble Drilling under the Credit Agreement. As of
March 31, 2003, we had outstanding borrowings and outstanding letters of credit
of $125,000,000 and $27,434,000, respectively, under the Credit Agreement, with
$47,566,000 remaining available thereunder. Additionally, as of March 31, 2003,
we had other letters of credit and third-party corporate guarantees totaling
$15,700,000, of which $3,300,000 is supported by a restricted cash deposit. We
also had $31,057,000 of performance and customs bonds supported by surety bonds.
At March 31, 2003, total long-term debt was $654,589,000, including
current maturities of $76,008,000, compared to total long-term debt of
$670,139,000, including current maturities of $80,577,000, at December 31, 2002.
We believe that our cash and cash equivalents, net cash provided by
operating activities, available borrowings under lines of credit, and access to
other financing sources will be adequate to meet our anticipated short-term and
long-term liquidity requirements, including capital expenditures and scheduled
debt repayments.
ACCOUNTING PRONOUNCEMENTS
In November 2002, the Financial Accounting Standards Board ("FASB") issued
Interpretation No. 45, Guarantor's Accounting and Disclosure Requirements for
Guarantees, Including Indirect Guarantees of Indebtedness of Others ("FIN 45").
FIN 45 expands existing accounting guidance and disclosures to be made by a
guarantor in its interim and annual financial statements about its obligations
under certain guarantees that it has issued. FIN 45 also clarifies that a
guarantor is required to recognize, at the inception of a guarantee, a liability
for the fair value of the obligation undertaken in issuing the guarantee. The
disclosure requirements of FIN 45 are effective for financial statements ending
after December 15, 2002. The remaining provisions of FIN 45 are effective for
guarantees issued or modified after December 31, 2002. Our adoption of these
remaining provisions of FIN 45 on January 1, 2003 did not have a material impact
on our consolidated results of operations, cash flows or financial position.
During 2002, we adopted Emerging Issues Task Force No. 01-14, Income
Statement Characterization of Reimbursements Received for Out-of-Pocket Expenses
Incurred ("EITF 01-14"). EITF 01-14 requires that "out-of-pocket" expenses
incurred be included in direct costs and the reimbursements received from
customers related to such expenses be included in operating revenues. Prior to
EITF 01-14, we recorded reimbursements received from customers for
"out-of-pocket" expenses as a reduction to the related direct cost to the extent
of the amount of the expense. Any amount received in addition to the related
expense was included in operating revenues. Pursuant to EITF 01-14, we have
reclassified the reimbursements from customers that were recorded as a reduction
to direct costs to operating revenues for all periods presented. The impact of
adopting EITF 01-14 on operating revenues and direct costs was an increase of
$6,261,000 for the Comparable Quarter. This adoption had no impact on operating
income or net income.
20
FORM 10-Q
In January 2003, the FASB issued Interpretation No. 46, Consolidation of
Variable Interest Entities, an Interpretation of ARB No. 51 ("FIN 46"). FIN 46
clarifies the application of Accounting Research Bulletin No. 51, Consolidated
Financial Statements, to certain entities in which equity investors do not have
the characteristics of a controlling financial interest or do not have
sufficient equity at risk for the entity to finance its activities without
additional subordinated financial support from other parties. FIN 46 requires a
company to consolidate a variable interest entity, as defined, when the company
will absorb a majority of the variable interest entity's expected losses or
receive a majority of the variable interest entity's expected residual returns.
FIN 46 also requires certain disclosures relating to consolidated variable
interest entities and unconsolidated variable interest entities in which a
company has a significant variable interest. The disclosure provisions of FIN 46
are effective for financial statements issued after January 31, 2003. The
consolidation provisions of FIN 46 apply immediately to variable interest
entities created after January 31, 2003 and to variable interest entities in
which a company obtains an interest after January 31, 2003. With respect to
variable interest entities in which a company holds a variable interest that it
acquired before February 1, 2003, the consolidation provisions are required to
be applied no later than the first fiscal or interim period beginning after June
15, 2003. We do not expect the adoption of FIN 46 to have a material impact on
our consolidated results of operations, cash flows or financial position.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Market risk is the potential for loss due to a change in the value of a
financial instrument as a result of fluctuations in interest rates, currency
exchange rates or equity prices. We own investments in both marketable equity
and debt securities. To mitigate the risk of losses, these investments are
marked to market periodically and are monitored by management to assure
compliance with policies established by the Company. A portion of the marketable
equity securities we own, consisting primarily of interests in mutual funds, are
held by a Rabbi Trust established and maintained by us in connection with the
Noble Drilling Corporation 401(k) Savings Restoration Plan. Any decrease in the
fair value of these investments would result in a comparable decrease in the
deferred compensation plan obligation and would not materially affect our
consolidated results of operations, cash flows or financial position.
We are subject to market risk exposure related to changes in interest
rates on our Credit Agreement. Interest on our Credit Agreement is at an agreed
upon percentage point spread from LIBOR. At March 31, 2003, there were
$125,000,000 of outstanding borrowings under our Credit Agreement. An immediate
change of one percent in the interest rate would cause a $1,250,000 change in
interest expense on an annual basis.
We conduct business internationally; however, a substantial majority of
the value of our foreign transactions are denominated in U.S. Dollars. With
minor exceptions, we structure our drilling contracts in U.S. Dollars to
mitigate our exposure to fluctuations in foreign currencies. Other than trade
accounts receivable and trade accounts payable, which mostly offset each other,
we do not currently have any other significant assets, liabilities or financial
instruments that are sensitive to foreign currency exchange rates.
21
FORM 10-Q
ITEM 4. CONTROLS AND PROCEDURES
(a) Noble's Chairman and Chief Executive Officer, James C. Day, and
Noble's Senior Vice President - Finance and Chief Financial Officer, Mark A.
Jackson, have overseen and participated in an evaluation of the Company's
disclosure controls and procedures within 90 days of the filing of this report.
On the basis of this evaluation, Mr. Day and Mr. Jackson have concluded that the
Company's disclosure controls and procedures are functioning effectively. The
Company's disclosure controls and procedures are designed to ensure that
information required to be disclosed by the Company in the reports that it files
with or submits to the Securities and Exchange Commission is recorded,
processed, summarized and reported within the time periods specified in the
Commission's rules and forms.
(b) Since the most recent evaluation of the Company's internal controls,
there have been no significant changes in internal controls or in other factors
that could significantly affect these controls.
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) The annual general meeting of members of Noble was held in Houston,
Texas, at 10:00 a.m., local time, on April 24, 2003.
(b) Proxies were solicited by the Board of Directors of Noble pursuant
to Regulation 14A under the Securities Exchange Act of 1934. There
was no solicitation in opposition to the Board of Directors'
nominees for election as directors as listed in the proxy statement
and all of such nominees were duly elected. The terms of Michael A.
Cawley, Lawrence J. Chazen, Luke R. Corbett, Jack E. Little and
William A. Sears, each an incumbent director, continued following
the annual general meeting.
(c) Out of a total of 133,578,905 ordinary shares of Noble outstanding
and entitled to vote at the annual general meeting, 117,626,856
shares were present in person or by proxy, representing
approximately 88 percent of the outstanding shares. The only matter
voted on by members, as fully described in the proxy statement for
the annual general meeting, was the election of directors to serve
three-year terms on the Board of Directors of Noble. The results of
voting were as follows:
Number of Shares
Nominee Number of Shares WITHHOLDING AUTHORITY
for Re-election Voting FOR Re-election to Vote for Re-election as
as Director as Director Director
---------------- ---------------------- --------------------------
James C. Day 114,628,339 2,998,517
Mark E. Leland 114,626,189 3,000,667
(d) Inapplicable.
22
FORM 10-Q
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
The information required by this Item 6(a) is set forth in the Index
to Exhibits accompanying this quarterly report and is incorporated
herein by reference.
(b) Reports on Form 8-K
We filed a Form 8-K on March 14, 2003, which included the First
Amendment to Rights Agreement between Noble Corporation and UMB
Bank, N.A., as Rights Agent, dated as of March 12, 2003 as Exhibit
4.2.
We furnished a Form 8-K on March 13, 2003, which included our Fleet
Status Update as of March 13, 2003 as Exhibit 99.1.
We furnished a Form 8-K on January 30, 2003, which included our
press release dated January 30, 2003 as Exhibit 99.1, announcing
financial results for the quarter ended and year ended December 31,
2002.
We furnished a Form 8-K on January 23, 2003, which included our
Fleet Status Update as of January 23, 2003 as Exhibit 99.1.
23
FORM 10-Q
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.
NOBLE CORPORATION
DATE: May 15, 2003 By: /s/ MARK A. JACKSON
--------------------------------------------
Mark A. Jackson,
Senior Vice President - Finance,
Chief Financial Officer,
Treasurer, Controller and
Assistant Secretary
(Principal Financial and Accounting Officer)
24
FORM 10-Q
CERTIFICATIONS
I, James C. Day, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Noble Corporation;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others within those entities, particularly during the
period in which this quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the effectiveness of
the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;
5. The registrant's other certifying officer and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent function):
a) all significant deficiencies in the design or operation of internal controls
which could adversely affect the registrant's ability to record, process,
summarize and report financial data and have identified for the registrant's
auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls; and
6. The registrant's other certifying officer and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
Date: May 15, 2003
/s/ JAMES C. DAY
- ----------------
James C. Day
Chairman and Chief Executive Officer of Noble Corporation
25
FORM 10-Q
I, Mark A. Jackson, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Noble Corporation;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others within those entities, particularly during the
period in which this quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the effectiveness of
the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;
5. The registrant's other certifying officer and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent function):
a) all significant deficiencies in the design or operation of internal controls
which could adversely affect the registrant's ability to record, process,
summarize and report financial data and have identified for the registrant's
auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls; and
6. The registrant's other certifying officer and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
Date: May 15, 2003
/s/ MARK A. JACKSON
- -------------------
Mark A. Jackson
Senior Vice President - Finance and Chief Financial Officer of Noble Corporation
26
FORM 10-Q
INDEX TO EXHIBITS
EXHIBIT
NUMBER EXHIBIT
- ------- -------
10.1 Amendment No. 4 to the Noble Corporation 1992 Nonqualified Stock
Option Plan for Non-Employee Directors dated as of April 24, 2003,
and composite copy of the Plan through such Amendment.
10.2 Amendment to the Noble Corporation 1991 Stock Option and Restricted
Stock Plan dated as of April 24, 2003, and composite copy of the
Plan through such Amendment.
99.1 Statement of James C. Day Pursuant to 18 U.S.C. Section 1350, as
Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
99.2 Statement of Mark A. Jackson Pursuant to 18 U.S.C. Section 1350, as
Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
27