Item 1. Business . . . . . . . . . . . . . . . . . . . . . . . . . Item 2.
Item 2. Properties . . . . . . . . . . . . . . . . . . . . . . . . Item 3.
Item 3. Legal Proceedings
The Company was one of the defendants in certain litigation brought in July 1984 by the Cheyenne-Arapaho Tribes of Oklahoma in the U.S. District Court for the Western District of Oklahoma, seeking to set aside two communitization agreements with respect to three leases involving tribal lands in which the Company previously owned interests and to have those leases declared expired. In June 1989, the U.S. District Court entered an interim order in favor of the plaintiffs. On appeal, the U.S. Court of Appeals for the Tenth Circuit upheld the decision of the trial court and petitions for rehearing of that decision were denied. Petitions for writs of certiorari filed by the parties with the U.S. Supreme Court were denied, and the case was remanded to the trial court for determination of damages. In June 1996, this matter was settled, and the litigation was dismissed with prejudice, without significant financial statement impact.
In November 1988, a lawsuit was filed in the U.S. District Court for the Southern District of West Virginia against Reading & Bates Coal Co., a wholly owned subsidiary of the Company, by SCW Associates, Inc. claiming breach of an alleged agreement to purchase the stock of Belva Coal Company, a wholly owned subsidiary of Reading & Bates Coal Co. with coal properties in West Virginia. When those coal properties were sold in July 1989 as part of the disposition of the Company's coal operations, the purchasing joint venture indemnified Reading & Bates Coal Co. and the Company against any liability Reading & Bates Coal Co. might incur as the result of this litigation. A judgment for the plaintiff of $32,000 entered in February 1991 was satisfied and Reading & Bates Coal Co. was indemnified by the purchasing joint venture. On October 31, 1990, SCW Associates, Inc., the plaintiff in the above-referenced action, filed a separate ancillary action in the Circuit Court, Kanawha County, West Virginia against the Company and a wholly owned subsidiary of Reading & Bates Coal Co., Caymen Coal, Inc. (former owner of the Company's West Virginia coal properties), as well as the joint venture, Mr. William B. Sturgill personally (former President of Reading & Bates Coal Co.), three other companies in which the Company believes Mr. Sturgill holds an equity interest, two employees of the joint venture, First National Bank of Chicago and First Capital Corporation. The lawsuit seeks to recover compensatory damages of $50 million and punitive damages of $50 million for alleged tortious interference with the contractual rights of the plaintiff and to impose a constructive trust on the proceeds of the use and/or sale of the assets of Caymen Coal, Inc. as they existed on October 15, 1988. Subsequently, the court entered an order dismissing the Company's indirect subsidiary. The Company intends to defend its interests vigorously and believes the damages alleged by the plaintiff in this action are highly exaggerated. In any event, the Company believes that it has valid defenses and that it will prevail in this litigation.
On March 17, 1995, an action was filed by Louis Silverman, individually and on behalf of all other shareholders of Reading & Bates Corporation similarly situated, against the Company and the individual members of its board of directors in the Court of Chancery of the State of Delaware, New Castle County. On April 7, 1995 three additional actions were filed on behalf of Congregation Beth Joseph, Harry Lewis and Mortimer Shulman against the Company and its directors in the Court of Chancery of the State of Delaware. In each of the four actions, the plaintiff alleged, inter alia, that the directors breached their fiduciary duties by rejecting the previously announced unsolicited merger proposal made by Sonat Offshore Drilling Inc. and by adopting the previously announced shareholder rights plan. Each of the named plaintiffs in the four actions purported to be an owner of the Company's common stock and sought to represent a class of shareholders of the Company who are similarly situated. Each of the plaintiffs sought injunctive relief, damages in unspecified amounts and certain other relief, including costs and expenses. In March 1996, the plaintiffs in each of the four actions voluntarily dismissed same on a without prejudice basis, and the court entered orders accordingly.
The Company is involved in these and various other legal actions arising in the normal course of business. After taking into consideration the evaluation of such actions by counsel for the Company, management is of the opinion that outcome of all known and potential claims and litigation will not have a material adverse effect on the Company's business or consolidated financial position or results of operations. See Note E of Notes to Consolidated Financial Statements.
Item 4.
Item 4. Submission of Matters to a Vote of Security Holders
No matter was submitted to a vote of security holders of the Company during the fourth quarter of fiscal year 1996.
Regulation S-K Item 401(b)
EXECUTIVE OFFICERS OF THE REGISTRANT
The following table sets forth certain information concerning each executive officer of the Company. Unless otherwise indicated, each has served in the positions set forth for more than five years. Executive officers are elected for a term of one year. There are no family relationships between any of the persons named.
Positions and Offices Name and Age Presently Held with the Registrant ------------ ---------------------------------- P. B. Loyd, Jr., 50 (1) Chairman, Director, President and Chief Executive Officer T. W. Nagle, 46 (2) Executive Vice President, Finance and Administration W. K. Hillin, 55 (3) Senior Vice President, General Counsel and Secretary C. R. Ofner, 51 (4) Vice President - Business Development D. L. McIntire, 59 (5) Vice President - Human Resources
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(1) Mr. Loyd was named President for the Company in October 1993, Chairman and Chief Executive Officer for the Company in June 1991 and has been a Director since April 1991. Mr. Loyd controls Greenwing Investments, Inc., a stockholder of the Company, and has been President of Loyd & Associates, Inc., a financial consulting firm, since 1989. Mr. Loyd was Chief Executive Officer and a Director of Chiles-Alexander International, Inc. from 1987 to 1989, President and a Director of Griffin-Alexander Drilling Company from 1984 to 1987 and prior to that, a Director and Chief Financial Officer of Houston Offshore International, all of which are companies in the offshore drilling industry.
(2) Mr. Nagle was named Director - Finance and Administration for Reading & Bates Drilling Co. ("RBDC"), a wholly owned subsidiary of the Company in June 1985. In January 1989, he was named Director - Business Development for the Company. In April 1990, he was named Director - Support Services for RBDC. In August 1991, he was named Vice President and Chief Financial Officer. He was appointed to his present position with the Company in September 1995.
(3) Mr. Hillin was named Vice President - Legal for RBDC in 1978. In March 1986 he was named Vice President - Legal with the Company, was appointed Vice President - Finance and Legal in January 1988, was appointed Senior Vice President - Finance and Administration in November 1988 and in July 1990 was also appointed General Counsel and Secretary. He was appointed to his present position with the Company in August 1991.
(4) Mr. Ofner was named Vice President and General Manager for RBDC in January 1987. In April 1988, he was appointed Vice President and Regional Manager and was appointed Senior Vice President - Sales and Marketing in April 1990. He was appointed to his present position with the Company in August 1991.
(5) Mr. McIntire was named Director - Human Resources for RBDC in April 1986, Manager - Personnel Operations in January 1989 and Director - Human Resources for the Company in January 1990. He was appointed to his present position with the Company in August 1991.
PART II
Item 5.
Item 5. Market for the Registrant's Common Stock and Related
Stockholder Matters
The Company's common stock is traded on the New York and Pacific Stock Exchanges under the symbol "RB". The following table shows for the periods indicated the high and low sales prices of the common stock as reported on the New York Stock Exchange Composite Transactions Tape.
1996 1995 ---- ---- Quarter High Low High Low ------- ---- --- ---- --- First 20 3/8 14 1/4 8 1/8 5 1/2 Second 26 1/8 19 3/4 9 3/8 7 Third 27 7/8 20 13 1/8 8 5/8 Fourth 31 1/8 25 15 3/8 10 3/4
There were approximately 4,600 holders of record of the Company's common stock as of February 28, 1997.
The Company has not paid cash dividends on the common stock since the first quarter of 1986 and management does not expect any cash dividends will be declared or paid on the common stock in the reasonably foreseeable future.
In March 1995, the Company adopted a Preferred Share Rights Agreement. See "FINANCIAL CONDITION" under Item 7.
Item 6.
Item 6. Selected Financial Data
READING & BATES CORPORATION AND SUBSIDIARIES (in thousands except per share amounts)
Years Ended December 31, ---------------------------------------------------- 1996 1995 1994 1993 1992 -------- -------- -------- -------- -------- Operating revenues $290,223 $212,795 $169,058 $183,752 $156,659 ======== ======== ======== ======== ======== Income (loss) before extraordinary gain $ 77,916 $ 18,392 $(17,146) $ 4,656 $ 3,402
Extraordinary gain (1) - 3,430 - - - -------- -------- -------- -------- -------- Net income (loss) 77,916 21,822 (17,146) 4,656 3,402
Dividends on preferred stock (2) 3,631 4,855 4,859 2,052 -
Accretion in redemption price of redeemable stocks - - - - 5,275 -------- -------- -------- -------- -------- Net income (loss) applicable to common stockholders $ 74,285 $ 16,967 $(22,005) $ 2,604 $ (1,873) ======== ======== ======== ======== ======== Primary net income (loss) per common share: Income (loss) before extraordinary gain $ 1.15 $ .22 $ (.39) $ .05 $ (.04)
Extraordinary gain - .06 - - - -------- -------- -------- -------- -------- Net income (loss) $ 1.15 $ .28 $ (.39) $ .05 $ (.04) ======== ======== ======== ======== ======== Fully diluted net income per common share $ 1.10 $ - $ - $ - $ - ======== ======== ======== ======== ======== Total assets (3) $808,190 $605,780 $586,801 $612,474 $614,628 ======== ======== ======== ======== ======== Long-term obligations (including current portion) and redeemable stocks $219,078 $113,373 $126,036 $116,796 $143,385 ======== ======== ======== ======== ======== Dividends on Common Stock $ - $ - $ - $ - $ - ======== ======== ======== ======== ======== - ------------------- (1) Extraordinary gain for 1995 is due to the extinguishment of a debt obligation.
(2) On August 5, 1996, the Company announced it would redeem all of the outstanding shares of its preferred stock on September 30, 1996 at the redemption price of $26.1375 per share. However, the majority of the preferred stock outstanding was converted into approximately 8.6 million shares of the Company's common stock on or before September 30, 1996 and on September 30, 1996 approximately 1,041 shares were redeemed by the Company.
(3) Certain amounts in 1994 have been reclassified for comparative purposes. Such reclassifications had no effect on the net loss or the overall financial condition of the Company.
Item 7.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
FINANCIAL CONDITION
Drillship Project
In October 1996, the Company and an affiliate of Conoco, Inc. formed a 50/50 joint venture to build and operate a dynamically positioned drillship capable of drilling at water depths up to 10,000 feet. Samsung Heavy Industries of Korea has been awarded the contract to construct the vessel at a current estimated cost of $220 million plus capitalized interest. Immediately following the delivery of the drillship, which is expected to be in 1998, it will commence a five year drilling program in the deep water of the U.S. Gulf of Mexico. The Company's portion of the project is expected to be funded through working capital and project financing which is expected to be provided by a third party on a limited recourse basis.
Purchase of Floating Production Vessel
In September 1996, the Company purchased the floating production storage and shuttle (FPSS) vessel, the "SEILLEAN", for approximately $42.2 million in cash. The vessel was built in 1990 for extended well testing, early production and life of field production and is currently working in the U.K. sector of the North Sea. The vessel will remain under its current operational contract on a life of field basis after which time the vessel can continue to be used in its current configuration or it can be modified to a floating production storage and offloading (FPSO) vessel or converted to a dynamically positioned drillship.
Purchase of Semisubmersibles
In September 1994, the Company purchased the second-generation semisubmersible "RIG 41" with the intent to convert the unit to a floating production vessel (FPV). However, the Company subsequently decided to retain the unit as a drilling unit and as such "RIG 41" is currently being upgraded to operate under certain conditions in 3,300 feet of water. Upon completion of the upgrade, estimated to be at the end of the third quarter of 1997, "RIG 41" will commence a one year contract with Enserch Exploration, Inc. ("Enserch") (see "Purchase of Oil & Gas Interests" below).
In September 1995, the Company purchased the support vessel "IOLAIR". The "IOLAIR" is a dynamically positioned third-generation deepwater semisubmersible support vessel built in 1982 for field support and living accommodations and is expected to be upgraded in 1998 to include a derrick floor and ancillary workover equipment. The "IOLAIR" is currently under a long-term contract with BP Exploration Operating Company Limited and has been since its purchase. Also in September 1995, the Company purchased the second-generation semisubmersible drilling unit "J.W. McLEAN". Following major upgrades in 1996 and early 1997, the "J. W. McLEAN" will commence a nineteen month drilling contract with Statoil. In connection with the purchase of the "J.W. McLEAN" the Company issued 1,232,057 shares of the Company's common stock, par value $.05 per share and filed a shelf registration statement in September 1995 registering such 1,232,057 shares (see "Shelf Registration" below).
Purchase of Oil & Gas Interests
In October 1995, the Company purchased an approximate 20% working interest in the Green Canyon 254 Allegheny oil and gas development project in the U.S. Gulf of Mexico from the operator, Enserch. Mobil Exploration & Producing Inc., an affiliate of Mobil Corporation, has a 40% working interest in the project. Enserch retained the remaining 40% working interest. As of December 31, 1996, the Company had accumulated costs related to its ownership in such project of approximately $36.8 million which are included in Property and Equipment, Other. Originally, the Company's third-generation semisubmersible, the "M.G. HULME, JR.", had been contracted to drill the development wells, however at the Company's request, Enserch released the "M.G. HULME, JR." from its contract and "RIG 41", which was originally available to be converted to an FPV for the project, has now been contracted by Enserch as a drilling unit and may be used to drill the development wells. In addition, the working interest owners have purchased a second-generation semisubmersible rig for possible use in the FPV conversion project.
In July 1996, the Company entered into an agreement with Shell Offshore Inc. to drill an appraisal well at the Company's expense in Shell's East Boomvang prospect in the U.S. Gulf of Mexico, and if the results are positive the Company will earn a working interest and proceed with the development of the field. The estimated cost to drill the appraisal well is approximately $8.6 million, and the Company currently expects to complete drilling operations in early 1997. The Company is currently assessing further development of the field.
In December 1996, the Company entered into an agreement with Santa Fe Energy Resources ("Santa Fe Energy") to explore five oil and gas prospects in the U.S. Gulf of Mexico in water depths ranging from 400 to 2,400 feet. Santa Fe Energy will operate the properties for the partners and has contracted a drilling unit not owned by the Company to begin the drilling program in the Spring of 1997. As of December 31, 1996, the Company had accumulated costs related to its ownership in such project of approximately $13.2 million which are included in Property and Equipment, Other.
Funding for the oil and gas projects mentioned above is expected to be provided through a combination of working capital and project financing.
Investments in oil and gas interests as of December 31, 1996 are not material to total assets. However, depending on prices, reserve developments and accounting policies adopted, the Company could experience a future impairment charge.
Sale of Jack-Up
In April 1996, the Company sold its mat-supported jack-up drilling unit, the "D. K. McINTOSH", for $8.5 million in cash and recognized a gain on the sale in 1996 of approximately $3.8 million. The gain appears as an offset to Operating Expenses in the Consolidated Statement of Operations.
Arcade Acquisition
In June 1994, the Company completed a transaction which increased its direct ownership in Arcade Drilling AS ("Drilling") and sold its entire ownership in Arcade Shipping AS ("Shipping"). The transaction consisted of the Company selling its entire 82.6% ownership in Shipping for approximately $27.8 million, purchasing from Shipping its entire 46.2% ownership in Drilling and equity securities in Dragon Oil for approximately $45.4 million and Shipping repaying a loan of approximately $12.9 million to the Company. This transaction resulted in a net cash outflow of $4.7 million. Also in September 1994, the Company purchased an additional 5.7% of Drilling's outstanding shares pursuant to a mandatory tender offer in Norway required by the Oslo Stock Exchange. In December 1995, the management agreement for one of Drilling's drilling units expired and in October 1996 the modified management agreement for Drilling's other drilling unit ended and a subsidiary of the Company now manages both drilling units. See "The Company's Fleet" under Items 1 and 2. As of December 31, 1996, the Company's direct ownership in Drilling was 74.4%. See Note B of Notes to Consolidated Financial Statements.
Sale/Lease-back of Drilling Units
In November 1995, the Company entered into a sale/lease-back of the "M. G. HULME, JR.". As part of this transaction the Company agreed to lease the drilling unit for ten years and could receive up to $60 million in cash, inclusive of a $10 million funding provision for upgrades. As of December 31, 1996, the Company had received $58.9 million. The lease-back is accounted for as an operating lease and a deferred gain of $7.4 million was recorded and is being amortized over the life of the lease. In addition, the lease contains a provision which allows the Company to repurchase the drilling unit at the end of the lease for a fair market price. See Note E of Notes to Consolidated Financial Statements.
In March 1992, the Company entered into a sale/lease-back of the "SONNY VOSS". Proceeds received of $27.7 million resulted in a gain of $6.3 million which was deferred and was being amortized over the lease term. In December 1994, for a fee of $.5 million, the Company negotiated an early release from all of its remaining lease obligations with respect to the "SONNY VOSS". Such lease obligations were scheduled to have expired in September 1995 and the net effect of the early release on the Company's results of operations was a gain of $.5 million recognized as a reduction of Operating Expenses in the fourth quarter of 1994. See Note E of Notes to Consolidated Financial Statements.
Purchase of Lease Debt
In the third quarter of 1994, the Company purchased certain notes and interests relating to the lease debt outstanding associated with the operating leases of the drilling units "GEORGE H. GALLOWAY" and "C.E. THORNTON", and the secured contingent obligations associated with the capital lease of the "F.G. McCLINTOCK". Total consideration for the transaction was approximately $36.5 million which consisted of the Company paying cash of approximately $12.2 million and issuing 4,230,235 shares of the Company's common stock, par value $.05 per share, totalling approximately $24.3 million at then prevailing stock prices. In October 1994, the Company filed a shelf registration registering such shares (see "Shelf Registration" below). The Company now has title to the "GEORGE H. GALLOWAY"and "F. G. McCLINTOCK" and expects to acquire title to the "C. E. THORNTON" in March 1997. See Note E of Notes to Consolidated Financial Statements.
Merger Proposals
On February 28, 1995, the Company announced that it had received an unsolicited merger proposal from Sonat Offshore Drilling Inc. ("Sonat Offshore") providing for the acquisition of 100% of the common stock of the Company for a combination of Sonat Offshore common stock and $100 million in cash. As proposed by Sonat Offshore, the Company's shareholders would have, at their election, received either (i) .357 shares of Sonat Offshore common stock or (ii) $7.50 of cash for each share of the Company. On March 16, 1995, the Company announced that its board of directors had rejected the Sonat Offshore proposal on the basis that it was not in the best interests of the Company and its shareholders. On April 18, 1995, Sonat Offshore announced that the merger discussions had broken off following the rejection by the Company of Sonat Offshore's proposal. The Company responded the same day announcing that discussions with Sonat Offshore had not to that date demonstrated a willingness on the part of Sonat Offshore to consider a transaction that would be reflective of the short-term or long-term business prospects and value of the Company. Subsequent to their announcing their intent to break off discussions in April 1995, Sonat Offshore initiated additional discussions in May 1995 with regard to potential merger transactions. However, these subsequent discussions similarly did not result in terms that recognized the Company's current or long-term value. The Company and Sonat Offshore discontinued discussions in June 1995.
On May 3, 1996, the Company announced that it had made a proposal to Transocean Offshore ASA ("Transocean") regarding a combination of the two companies in a transaction that would have entitled each of Transocean's shareholders to receive 1.245 shares of the Company's common stock for each share of Transocean common stock. Sonat Offshore had also announced that they had made a proposal to combine with Transocean. On May 7, 1996, the proposal was revised to entitle each of Transocean's shareholders to receive 1.28 shares of the Company's common stock for each share of Transocean common stock. However, on June 4, 1996, the Company announced it was suspending its efforts to pursue a business combination with Transocean unless it could be done on terms that were clearly beneficial to the Company's shareholders. In September 1996, Sonat Offshore completed a business combination transaction with Transocean. The combined entity is now called Transocean Offshore Inc.
The Company remains willing to engage in discussions regarding possible business combinations that would potentially strengthen its competitive position in the offshore drilling industry, appropriately reflect the underlying value of the Company and maximize shareholder value.
Preferred Stock
In July 1993, the Company effected a public offering (the "1993 Offering") of 2,990,000 shares of $1.625 Convertible Preferred Stock, par value $1.00 per share (the "Preferred Stock"), pursuant to which the Company raised gross proceeds of approximately $74.7 million in cash. The Preferred Stock was convertible at the option of the holder at any time into shares of the Company's common stock at a conversion rate of 2.899 shares of common stock for each share of Preferred Stock (equivalent to a conversion price of $8.625 per share of Common Stock), subject to adjustment in certain events. Annual dividends were $1.625 per share and were cumulative and payable quarterly commencing September 30, 1993. The Preferred Stock was redeemable at any time on and after September 30, 1996, at the option of the Company, in whole or in part, at a redemption price of $26.1375 per share, and thereafter at prices decreasing ratably annually to $25.00 per share on and after September 30, 2003, plus accrued and unpaid dividends. The Preferred Stock had a liquidation preference of $25.00 per share, plus accrued and unpaid dividends. On August 5, 1996, the Company announced it would redeem all of the outstanding shares of its Preferred Stock on September 30, 1996 at the redemption price of $26.1375 per share. However, the majority of the Preferred Stock outstanding was converted into approximately 8.6 million shares of the Company's common stock on or before September 30, 1996 and on September 30, 1996 approximately 1,041 shares were redeemed by the Company. The Company declared and paid all cumulative dividends accrued on the Preferred Stock through September 30, 1996.
Shelf Registration
In October 1994, the Company filed a shelf registration registering the 4,230,235 shares of the Company's common stock issued for the purchase of the leased rigs as discussed above. In September 1995, the Company filed a shelf registration registering the 1,232,057 shares of the Company's common stock issued for the purchase of the "J. W. McLEAN", as previously discussed, and the Company has been informed that all of such shares have been sold. Pursuant to the terms of the registration rights agreements among the Company and certain other holders of the Company's common stock, as currently in effect, the Company was required to maintain continuously effective shelf registration statements with respect to approximately 2.5 million shares of its common stock until the earlier to occur of (i) the sale of such shares by the holders thereof or (ii) August 1, 1996 (in the case of approximately .9 million shares) or September 14, 1996 (in the case of approximately 1.6 million shares). The Company currently maintains the effectiveness of such registration statements on a voluntary basis.
Preferred Share Rights Agreement
On March 15, 1995, the Company's board of directors declared a dividend of one preferred share purchase right (a "Right") for each outstanding share of the Company's common stock outstanding on March 31, 1995 (the "Record Date"). Each Right entitles the registered holder to purchase from the Company one one-hundredth of a share of Series B Junior Participating Preferred Stock, par value $1.00 per share (the "Preferred Shares") of the Company at a price of $30.50, subject to adjustment. The Rights will not become exercisable until 10 days after a public announcement that a person or group has acquired 10% or more of the Company's common stock (thereby becoming an "Acquiring Person") or the commencement of a tender or exchange offer upon consummation of which such person or group would own 10% or more of the Company's common stock (the earlier of such dates being called the "Distribution Date"). Rights will be issued for all shares of the Company's common stock issued and outstanding on the Record Date. Until the Distribution Date, the Rights will be evidenced by the certificates representing the Company's common stock and will be transferrable only with the Company's common stock. In the event that any person or group becomes an Acquiring Person, each Right, other than Rights beneficially owned by the Acquiring Person (which will thereafter be void), will thereafter entitle its holder to purchase shares of the Company's common stock having a market value of two times the exercise price of the Right. After any person or group has become an Acquiring Person and prior to the acquisition by such person or group of 50% or more of the outstanding shares of common stock, the Company's board of directors may exchange each Right (other than Rights of the Acquiring Person), in whole or in part, at an exchange ratio of one common share or one one-hundredth of a Preferred Share per Right. If after a person or group has become an Acquiring Person, the Company is acquired in a merger or other business combination transaction or 50% or more of its assets or earning power are sold, each Right will entitle its holder to purchase, at the Right's then current exercise price, that number of shares of common stock of the acquiring company which at the time of such transaction will have a market value of two times the exercise price of the Right. The board of directors of the Company may redeem the Rights in whole, but not in part, at a price of $.01 per Right at any time prior to such time as any person or group becomes an Acquiring Person. The Rights expire on March 31, 2005. Preferred Shares purchasable upon exercise of the Rights will not be redeemable. Each Preferred Share will be entitled to a preferential quarterly dividend payment equal to the greater of $1 per share or 100 times the dividend declared per common share. Liquidation preference will be equal to the greater of $100 per share or 100 times the payment made per common share. Each Preferred Share will have one vote, voting together with the common stock. See "LIQUIDITY AND CAPITAL RESOURCES".
Reverse Stock Split
On October 2, 1992, the Company effected a one-for-five reverse stock split of the common stock. All share and per share amounts have been restated.
Miscellaneous
In March 1995, Statement of Financial Accounting Standards No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of ("SFAS 121") was issued. SFAS 121, which became effective in 1996, requires that certain long-lived assets be reviewed for impairment whenever events indicate that the carrying amount of an asset may not be recoverable, and that an impairment loss be recognized under certain circumstances in the amount by which the carrying value exceeds the fair value of the asset. In 1995, the Company adopted SFAS 121 which had no effect on the Company's consolidated results of operations or consolidated financial position. See Note A of Notes to Consolidated Financial Statements.
In October 1995, Statement of Financial Accounting Standards No. 123, Accounting for Stock Based Compensation ("SFAS 123") was issued. SFAS 123 requires either recognition of compensation expense in the financial statements for those companies that adopt the fair value based accounting method or expanded disclosure of pro forma net income and earnings per share information for those companies that retain the current accounting method set forth in Accounting Principles Board (APB) Opinion 25, Accounting for Stock Issued to Employees. The Company follows the accounting method set forth in APB 25 and in 1996 included the expanded disclosure requirements. See Note A and I of Notes to Consolidated Financial Statements.
In February 1997, the fourth-generation semisubmersible drilling unit "JACK BATES" sustained substantial damage when it struck an uncharted underwater obstruction while under tow into the port of Brindisi, Italy, resulting in the loss of the forward port thruster and damages to the aft starboard thruster and underside of the pontoons. The unit had recently completed a drilling contract offshore Albania and was being towed to Brindisi to discharge equipment in preparation for continuing its mobilization to a North Sea shipyard for planned upgrades to the unit prior to commencing a fifteen month contract in the North Sea area. Preparations are underway to complete temporary repairs to enable the unit to be towed to a North Sea shipyard for the planned upgrade and completion of permanent repairs. The Company believes the physical damage and any business interruption sustained as a result of this incident are adequately covered by insurance.
For a discussion of certain legal proceedings see Part I, Item 3.
LIQUIDITY AND CAPITAL RESOURCES
Liquidity
At December 31, 1996, the Company had working capital of $85 million compared to $41.3 million at December 31, 1995. The $43.7 million increase is primarily due to improved cash flow from operating activities.
Cash provided by operating activities during 1996 amounted to $102.9 million, an increase of $68.4 million from 1995. Cash provided by operating activities during 1995 amounted to approximately $34.5 million, an increase of $3.7 million from 1994.
Cash used in investing activities was $169.2 million in 1996 compared to $3.5 million in 1995 and $48.8 million in 1994. During 1996, the Company purchased $177.1 million in property and equipment which consisted primarily of the purchase of the "SEILLEAN" for $42.2 million, major upgrades to the "JIM CUNNINGHAM", "J.W. McLEAN" and the "M.G. HULME, JR." totalling approximately $79.8 million and approximately $27 million for oil and gas interests. Also during 1996, the Company sold the "D.K. McINTOSH" and received $8.5 million in cash. During 1995, the Company entered into a sale/lease-back transaction of the "M.G. HULME, JR." drilling unit that provided approximately $50 million of cash and used $51.9 million to purchase property and equipment, such as the oil and gas interest in the U.S. Gulf of Mexico as previously discussed. During 1994, the Company used $10.7 million to purchase additional shares in Drilling and $38.4 million to purchase property and equipment, such as the purchase of certain notes and interests relating to the lease debt outstanding associated with the operating leases of the drilling units "GEORGE H. GALLOWAY" and "C. E. THORNTON" and the secured contingent obligations associated with the capital lease of the drilling unit "F. G. McCLINTOCK", and the purchase of the second-generation semisubmersible drilling unit "RIG 41".
Cash provided by financing activities was $89.2 million in 1996 compared to cash used in financing activities of $37.1 million in 1995 and $20 million in 1994. During 1996, the Company received net proceeds of $146 million from its revolving credit facility and $6.4 million from the exercise of employee stock options, made principal payments of $54.5 million, made distributions of $5.1 million to the minority shareholders of consolidated subsidiaries, primarily Drilling, and paid Preferred Stock dividends of $3.6 million. During 1995, the Company made principal payments of $85.3 million which was primarily the repayment of the ING Facility and the 8% Convertible Subordinated Debentures which matured in 1995, paid Preferred Stock dividends of $4.9 million and received $50 million from two new financing sources and $3 million from the exercise of employee stock options. During 1994, the Company made principal payments of $24.6 million, paid Preferred Stock dividends of $4.9 million and received $9.5 million from the ING Facility.
Liquidity of the Company should be considered in light of the fluctuations in demand experienced by drilling contractors as changes in oil and gas producers' expectations and budgets occur. These fluctuations can impact the Company's liquidity as supply and demand factors directly affect utilization and dayrates, which are the primary determinants of cash flow from the Company's operations. The Company's management currently expects that its cash flow from operations, in combination with cash on hand, funds available under its existing credit facility (see "CBK Facility" below), and other sources, including new debt, new equity, asset disposals and/or by proper scheduling of its planned capital or other expenditures, will be sufficient to satisfy the Company's short-term and long-term working capital needs, planned investments, capital expenditures, debt and other payment obligations.
At December 31, 1996, approximately $20.1 million of total consolidated cash and cash equivalents of $59.1 million were restricted from the Company's use outside of Drilling's activities. See "Drilling" below regarding such restrictions.
Based on current estimates, management believes that the Company will possibly fully utilize its existing net operating loss carryforwards by early 1998. If so, at such time the Company will begin recording income taxes at the applicable statutory rate.
Capital Expenditures and Deferred Charges
Planned capital expenditures and deferred charges (including mobilization, demobilization and contract preparation costs not recoverable from the Company's customers or claim proceeds from insurance underwriters) for 1997 are expected to aggregate in excess of $151 million principally for upgrades or replacement of equipment either to fulfill obligations under existing contracts or to improve the marketability of certain of the Company's drilling units and for mobilization of the Company's drilling units between drilling sites. Additionally, the Company has capital funding obligations for its participation in the previously discussed oil and gas development projects estimated to be in excess of $69 million for 1997. The Company anticipates that such capital expenditures will be funded through cash provided by operations, its existing credit facility and/or new financing. Certain additional projects currently being considered by the Company would require, if they materialize, capital expenditures or other cash requirements not included in the above estimate. In addition to planned capital expenditures referred to above, the Company will also continue to review acquisitions of drilling units from time to time and will also consider further investments in floating production equipment. See "Item 1. Business - Business Strategy".
CBK Facility
In November 1995, the Company entered into a credit facility agreement with Christiania Bank og Kreditkasse (the "CBK Facility") as agent for a syndicate of banks (including itself). During 1996, the CBK Facility was renegotiated with an expanded bank group and currently consists of a $300 million reducing revolving credit facility to be utilized for revolving loans and/or issuance of standby letters of credit (subject to a maximum of $30 million). The CBK Facility shall be reduced/repaid by five semi-annual installments of $25 million commencing in May 1999 and one final reduction/repayment of $175 million in November 2001 and bears interest at the London Interbank Offered Rate ("LIBOR") (5.625% at December 31, 1996) plus .85%. In addition, a fee of .85% per annum is paid on outstanding letters of credit and a commitment fee of .35% per annum is paid on the unused portion of the CBK Facility. At December 31, 1996, there were no letters of credit outstanding under the CBK Facility, leaving $134 million available for revolving loans and/or issuance of standby letters of credit (maximum of $30 million). The CBK Facility contains covenants which require the Company to meet certain ratios and working capital conditions, and is collateralized by vessel mortgages on thirteen of the drilling units owned by the Company, related assignments of insurance and earnings, and a pledge of the Company's shares of stock of Drilling. In addition, in December 1996 the Company entered into a separate $20 million letter of credit agreement with Christiania Bank og Kreditkasse. Under the agreement, a fee of 1.25% and .375% per annum is paid on the outstanding and unused amounts, respectively. At December 31, 1996, $1.7 million was available under such agreement. See Notes C and E of Notes to Consolidated Financial Statements.
Drilling
As of December 31, 1996, Drilling had a $32.5 million term loan payable to The Chase Manhattan Bank, N.A. as agent for a syndicate of banks (including itself). The adjusted payment terms of this bank obligation currently provide for repayment of principal in 17 semiannual installments which commenced in August 1991 and bears interest at LIBOR (5.625% at December 31, 1996) plus .45%. The Company has not guaranteed repayment of such obligation. Drilling had also entered into an interest rate swap agreement which ended in August 1996. The loan is collateralized by the drilling units "HENRY GOODRICH" and "PAUL B. LOYD, JR.". The loan agreement was amended in October 1996 which resulted in less restrictive financial condition requirements. The amended loan agreement requires Drilling to maintain liquid assets of at least $1.5 million ($10 million if Drilling can not annually provide to the lenders satisfactory contractual commitments for the employment of both drilling units for the next twelve months) and imposes the following covenants: (i) prohibits Drilling from making loans, granting credit, giving any guarantee or indemnity to or for the benefit of any other person or assuming any liability with respect to any obligation of any other person, (ii) prohibits Drilling from engaging in any merger or consolidation and (iii) prohibits the encumbrance of Drilling's assets or the sale of such assets other than at fair market value, in each case without the prior written consent of the banks party to the loan agreement holding a majority of the outstanding balance. In addition, the amended loan agreement allows Drilling to declare dividends or distributions to stockholders provided that at least one of the drilling units is employed pursuant to its current contract with no notice of cancellation received and $1.5 million of liquid assets remain after payment of such distribution. With the consent of the banks, Drilling declared a distribution of approximately $14.3 million in the first quarter of 1996, of which the Company received approximately $10.6 million. It is also an event of default should circumstances arise which give reasonable grounds in the opinion of the bank syndicate for the belief that Drilling may not (or may be unable to) perform or comply with its obligation. Drilling expects to meet its repayment obligations under the facility through cash flow generated from operations and current working capital. At December 31, 1996, Drilling held $20.1 million in cash and cash equivalents available to satisfy such obligations, but otherwise subject to the restrictions on use of such cash and cash equivalents set out in such amended loan agreement. See Note C of Notes to Consolidated Financial Statements.
NIC Financing
In December 1996, a wholly owned subsidiary of the Company entered into a five year $38 million loan agreement with Nissho Iwai Europe PLC ("NIC"). The Company expects to receive the funds in the first quarter of 1997, subject to the finalization of the agreement. The loan will be collateralized by a vessel mortgage on the "SEILLEAN" without recourse to the Company and shall bear interest at LIBOR plus 2%. Principal repayments will be monthly based on the greater of the excess cash flow of the "SEILLEAN" or the outstanding principal balance divided by the remaining period of the loan. In addition, NIC has the option to purchase up to 10% of the ownership in the "SEILLEAN", any time prior to three years after the Company has received the funds from NIC, at a minimum price of $4.2 million. See Note E of Notes to Consolidated Financial Statements.
ING Facility
The Company's previous principal credit facility agreement with ING Bank (the "ING Facility") was fully repaid in November 1995 from funds provided by the CBK Facility and the sale/lease-back of the "M. G. HULME, JR.".
CIT Financing
In May 1995, the Company entered into a $25 million loan agreement with The CIT Group/Equipment Financing, Inc. In December 1995, the Company borrowed an additional $5 million under such loan agreement. In November 1996, the loan was repaid in full from proceeds of the CBK Facility. The loan bore interest at the one month LIBOR plus 2.5%. Principal repayments were $5,416,667 in November 1996, 34 monthly installments of $416,667 to have commenced in December 1996 and one payment of $10,416,655 in October 1999. The loan agreement contained covenants which required the Company to meet certain financial conditions, including, among others, a cash flow coverage ratio and a long-term debt to total assets ratio, and was collateralized by vessel mortgages on two of the drilling units owned by the Company and related assignments of insurance and earnings.
RESULTS OF OPERATIONS
The Company reported net income for 1996 of $77.9 million ($1.15 net income per share after preferred stock dividends of $3.6 million) compared to net income of $21.8 million ($.28 earnings per share after preferred stock dividends of $4.9 million) for 1995 and a net loss of $17.1 million ($.39 loss per share after preferred stock dividends of $4.9 million) for 1994. Included in the 1995 results is an extraordinary gain of $3.4 million related to the extinguishment of a debt obligation.
Years Ended December 31, --------------------------------- 1996 1995 1994 --------- --------- --------- Operating Revenues (in thousands) . . . $ 290,223 $ 212,795 $ 169,058 ========= ========= =========
Operating revenues are primarily a function of dayrates and utilization. The $77.4 million increase in 1996 as compared to 1995 is primarily due to increased dayrates for the fourth-generation and third-generation semisubmersible fleets and the jack-up fleet and the addition of the "IOLAIR", the "J. W. McLEAN" and the "SEILLEAN" to the fleet. The $43.7 million increase in 1995 over 1994 is primarily due to increased dayrates and utilization of the fourth-generation semisubmersible and jack-up fleets.
The Company's unit utilization measured in terms of the number of days the units were earning revenues to the total days the units were available for service (the operating method) for the years ended December 31, 1996, 1995 and 1994 is shown below by class: Years Ended Unit Utilization December 31, ---------------- -------------------- 1996 1995 1994 ---- ---- ---- Fourth-Generation Semisubmersibles . 100% 97% 76% Third-Generation Semisubmersibles . . 85% 85% 85% Other Semisubmersibles . . . . . . . 80% - - Jack-Ups . . . . . . . . . . . . . . 93% 84% 69% Drilling Tenders . . . . . . . . . . 86% 76% 100% Floating Production Vessel . . . . . 100% - - Total Fleet . . . . . . . . . . . . . 92% 85% 75%
The utilization trends experienced by the Company are generally consistent with those experienced by the industry.
Average dayrates for the Company's units for the years ended December 31, 1996, 1995 and 1994 are shown below by class (in thousands):
Years Ended Average Dayrates December 31, ---------------- ---------------------- 1996 1995 1994 ------ ------ ------ Fourth-Generation Semisubmersibles . $ 91.3 $ 64.9 $ 59.2 Third-Generation Semisubmersibles . . 58.4 39.6 32.7 Other Semisubmersibles . . . . . . . 67.4 - - Jack-Ups . . . . . . . . . . . . . . 30.3 27.8 24.4 Drilling Tenders . . . . . . . . . . 22.2 28.1 29.4 Floating Production Vessel . . . . . 76.4 - - Total Fleet . . . . . . . . . . . . . 47.0 36.7 32.0
Year Ended December 31, ------------------------------- 1996 1995 1994 --------- --------- --------- Operating Expenses (in thousands) . $ 126,708 $ 127,070 $ 122,981 ========= ========= ========= Operating Expenses as Percentage of Revenues . . . . . . . . . . . 43.7% 59.7% 72.7% ========= ========= =========
Operating expenses do not necessarily fluctuate in proportion to changes in operating revenues due to the continuation of personnel on board and equipment maintenance when the Company's units are stacked. It is only during prolonged stacked periods that the Company is significantly able to reduce labor costs and equipment maintenance expense. Additionally, labor costs fluctuate due to the geographic diversification of the Company's units and the mix of labor between expatriates and nationals as stipulated in the contracts. In general, labor costs increase primarily due to higher salary levels and inflation. Equipment maintenance expenses fluctuate depending upon the type of activity the unit is performing and the age and condition of the equipment. Scheduled maintenance of equipment and overhauls are performed on a basis of number of hours operated in accordance with the Company's preventive maintenance program. Operating expenses for an offshore unit are typically deferred or capitalized as appropriate during periods of mobilization, contract preparation, major upgrades or conversions unless corresponding mobilization revenue is recognized, in which case such operating expenses are expensed as incurred.
Operating expenses decreased by $.4 million in 1996 as compared to 1995 despite increases in operating expenses in 1996 due to the addition of the "IOLAIR", the "J. W. McLEAN" and the "SEILLEAN" to the fleet and increased lease expense associated with the sale/lease-back of the "M. G. HULME, JR.". The decrease is primarily due to reduced expenses associated with several drilling units. In particular, operating expenses for the "D. K. McINTOSH" decreased as a result of the recognition of a $3.8 million gain on the sale of the rig. The "HARVEY H. WARD" incurred reduced operating expenses due to operations in India for the majority of 1996 as compared with 1995 operations primarily occurring in Australia, a relatively more expensive operating area. The "M. G. HULME, JR." incurred reduced operating expenses due to the 1996 capitalization of expenses during a major upgrade period and the "PAUL B. LOYD, JR." incurred reduced operating expenses primarily due to the December 1995 expiration of the management contract previously held by Transocean Offshore Inc. (as successor to Sonat Offshore) that is now held by a subsidiary of the Company.
Operating expenses as a percentage of revenues decreased by 16.0% in 1996 compared to 1995 due mainly to increased revenues in 1996. Currently, management expects operating expenses as a percentage of revenue to continue to decrease over the next two years. Although management currently expects operating expenses to rise during this period due to higher operating costs and the addition of mobile offshore units to the fleet, operating revenues are currently expected to rise at a faster rate due to contracts with higher dayrates, some of which are already in place.
Operating expenses increased in 1995 as compared to 1994 due to higher operating costs for several rigs and the addition of the "IOLAIR" to the fleet. This increase was offset somewhat by lease expense which decreased between the two years due to the 1994 termination of the lease for the "SONNY VOSS" and the elimination of the "GEORGE H. GALLOWAY" and "C. E. THORNTON" leases due to a 1994 purchase of the lease obligations by the Company. Included in operating expenses for 1994 is a credit of approximately $3.1 million due to the recognition of the remaining deferred gain on the sale/lease-back of the "SONNY VOSS" as the Company was prematurely released from its lease obligation.
Years Ended December 31, ---------------------------- 1996 1995 1994 -------- -------- -------- Depreciation (in thousands) . . . . $ 33,584 $ 30,369 $ 28,909 ======== ======== ========
Depreciation expense increased $3.2 million in 1996 compared to 1995 primarily due to the addition of the "IOLAIR", the "J. W. McLEAN" and the "SEILLEAN" to the fleet and a significant increase in gross property and equipment on the "JIM CUNNINGHAM" related to major upgrades. This was partially offset by a decrease in depreciation on the "M. G. HULME, JR." due to the sale/lease-back of the drilling unit in 1996.
Depreciation expense increased $1.5 million in 1995 compared to 1994 due to increased utilization of the fleet.
Years Ended December 31, ---------------------------- 1996 1995 1994 -------- -------- -------- General and Administrative Expenses (in thousands) . . . . $ 22,579 $ 17,139 $ 17,993 ======== ======== ========
General and administrative expenses increased $5.4 million in 1996 compared to 1995 primarily due to increases in payroll and related expenses associated with employee incentive plans and a $2.2 million charge related to severance benefits for two executives whose employment was terminated during 1996. See Note E of Notes to Consolidated Financial Statements.
General and administrative expenses decreased $.9 million in 1995 compared to 1994 primarily related to the reduction of expenses for Arcade Drilling's office located in Oslo.
Years Ended December 31, ---------------------------- 1996 1995 1994 -------- -------- -------- Interest Expense, net of interest capitalized (in thousands) . . . $ 14,781 $ 15,303 $ 13,694 ======== ======== ========
The decrease in interest expense in 1996 as compared to 1995 is primarily attributable to the 1996 capitalization of interest related to oil and gas development properties, offset by a $1.9 million write-off of unamortized financing expenses due to the renegotiation of the Company's revolving credit facility during 1996. Noncash interest expense also includes amortization of discount and deferrals associated with the 8% Senior Subordinated Convertible Debentures due 1998 which for the year ended December 31, 1996 was $2.2 million.
Despite a decrease in the average principal debt balance outstanding during 1995 as compared to 1994 due to the refinancing of the Company's previous principal credit facility with ING Bank in the fourth quarter of 1995 as well as the repayment of scheduled principal payments on the Company's long-term obligations, interest expense increased by $1.6 million. This increase is primarily attributable to the purchase of certain notes and interest relating to the lease debt outstanding for the previously leased rigs, "C.E. THORNTON" and "GEORGE H. GALLOWAY" in the latter part of 1994. Noncash interest expense attributable to amortization of discount and deferrals associated with the 8% Senior Subordinated Convertible Debentures due 1998 and the 8% Convertible Subordinated Debentures which were repaid in the fourth quarter of 1995 for the year ended December 31, 1995 was $4 million.
Years Ended December 31, ---------------------------- 1996 1995 1994 -------- -------- -------- Interest Income (in thousands) . . . $ 2,185 $ 1,832 $ 3,263 ======== ======== ========
Interest income increased $.4 million in 1996 as compared to 1995 primarily due to interest earned on an increased average cash and cash equivalents balance. Conversely, interest income decreased $1.4 million in 1995 as compared to 1994 due to interest earned on a decreased average cash and cash equivalents balance.
Years Ended December 31, --------------------------- 1996 1995 1994 -------- -------- -------- Other Income (Expenses), Net (in thousands) . . . . . . . $ (2,272) $ (2,008) $ (2,647) ======== ======== ========
For 1996, other, net included $1.2 million of expenses associated with the business combination discussions with Transocean and a $1 million expense for the change in the estimate of the reserve for prior workers compensation claims.
For 1995, other, net included $1.2 million of expenses associated with the business combination discussions with Sonat Offshore.
For 1994, other, net included the recognition of a $1.2 million loss associated with interests in the exploration and production of oil and gas, a $.8 million expense for the change in the estimate of the reserve for prior workers compensation claims and a $.7 million loss on the sale of a cash investment due to the decline in the market value.
Years Ended December 31, ---------------------------- 1996 1995 1994 -------- -------- -------- Income Tax Expense (in thousands) . $ 7,884 $ 2,824 $ 4,093 ======== ======== ========
Income tax expense for 1996 increased as compared to 1995 primarily due to the increase in the Company's pretax income.
Income tax expense for 1995 decreased as compared to 1994 despite increases in revenues and income before income taxes. Such decrease is primarily due to a change in the Company's foreign geographic areas of operations coupled with the resolution, in the third quarter of 1995, of a foreign tax assessment at less than expected cost.
Income tax expense was recognized for the year ended December 31, 1994 despite losses before income taxes of $13.9 million. This represents income tax expense incurred with respect to certain foreign operations.
Years Ended December 31, ---------------------------- 1996 1995 1994 -------- -------- -------- Minority Interest (in thousands) . $ (6,684) $ (1,522) $ 850 ======== ======== ========
Minority interest relates primarily to the results of Arcade Drilling and the percentage attributable to stockholders other than the Company. Arcade Drilling reported income in 1996 and 1995 of $26.3 and $5.6 million, respectively and a loss of $3 million in 1994. The ownership percentage attributable to stockholders other than the Company was 25.6%, 25.7% and 26.1% for the years ending December 31, 1996, 1995 and 1994, respectively.
The impact of inflation on the Company's operations for the three years ended December 31, 1996 has not been material.
FORWARD LOOKING STATEMENTS AND ASSUMPTIONS
This Annual Report on Form 10-K may contain or incorporate by reference certain forward-looking statements, including by way of illustration and not of limitation, statements relating to liquidity, revenues, expenses, margins and contract rates and terms. The Company strongly encourages readers to note that some or all of the assumptions, upon which such forward-looking statements are based, are beyond the Company's ability to control or estimate precisely, and may in some cases be subject to rapid and material changes. Such assumptions include the contract status of the Company's offshore units, general market conditions prevailing in the offshore drilling industry (including daily rates and utilization) and various other trends affecting the offshore drilling industry, including world oil prices, the exploration and development programs of the Company's customers, the actions of the Company's competitors and economic conditions generally.
Item 8.
Item 8. Financial Statements and Supplementary Data
READING & BATES CORPORATION AND SUBSIDIARIES
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors and Stockholders Reading & Bates Corporation
We have audited the accompanying consolidated balance sheets of Reading & Bates Corporation (a Delaware corporation) and Subsidiaries as of December 31, 1996 and 1995, and the related consolidated statements of operations, cash flows and stockholders' equity for each of the three years in the period ended December 31, 1996. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Reading & Bates Corporation and Subsidiaries as of December 31, 1996 and 1995, and the consolidated results of their operations and their cash flows for each of the three years in the period ended December 31, 1996 in conformity with generally accepted accounting principles.
Arthur Andersen LLP
Houston, Texas January 27, 1997
READING & BATES CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET December 31, 1996 and 1995 (in thousands)
1996 1995 --------- --------- ASSETS
CURRENT ASSETS: Cash and cash equivalents $ 59,089 $ 36,171 Accounts receivable: Trade, net 57,277 41,324 Other 6,452 4,815 Materials and supplies inventory 13,369 8,911 Other current assets 3,903 4,567 --------- --------- Total current assets 140,090 95,788 --------- --------- PROPERTY AND EQUIPMENT: Drilling 896,609 756,147 Other 57,640 29,898 --------- --------- Total property and equipment 954,249 786,045 Accumulated depreciation (296,620) (280,440) --------- --------- Net property and equipment 657,629 505,605 --------- --------- DEFERRED CHARGES AND OTHER ASSETS 10,471 4,387 --------- --------- TOTAL ASSETS $ 808,190 $ 605,780 ========= =========
The accompanying notes are an integral part of the consolidated financial statements.
READING & BATES CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET December 31, 1996 and 1995 (in thousands except share amounts)
1996 1995 --------- --------- LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES: Short-term obligations $ - $ 12,000 Long-term obligations due within one year 11,500 18,333 Accounts payable - trade 21,961 3,639 Accrued liabilities 21,671 20,518 --------- --------- Total current liabilities 55,132 54,490
LONG-TERM OBLIGATIONS 207,578 95,040
OTHER NONCURRENT LIABILITIES 52,091 51,718
DEFERRED INCOME TAXES 635 2,977 --------- --------- Total liabilities 315,436 204,225 --------- --------- COMMITMENTS AND CONTINGENCIES
MINORITY INTEREST 46,147 44,504 --------- --------- STOCKHOLDERS' EQUITY: $1.625 convertible preferred stock, $1.00 par value, 2,990,000 shares authorized, 2,985,000 shares issued and outstanding at December 31, 1995 - 2,985 Common stock, $.05 par value, 425,000,000 shares authorized, 71,887,896 shares and 61,900,408 shares issued and outstanding at December 31, 1996 and 1995, respectively 3,594 3,095 Capital in excess of par value 389,907 362,910 Retained earnings (deficit) from March 31, 1991 71,268 (3,017) Other (18,162) (8,922) --------- --------- Total stockholders' equity 446,607 357,051 --------- --------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 808,190 $ 605,780 ========= =========
The accompanying notes are an integral part of the consolidated financial statements.
READING & BATES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS (in thousands except per share amounts)
Years Ended December 31, --------------------------------- 1996 1995 1994 --------- --------- --------- OPERATING REVENUES $ 290,223 $ 212,795 $ 169,058 --------- --------- --------- COSTS AND EXPENSES: Operating expenses 126,708 127,070 122,981 Depreciation 33,584 30,369 28,909 General and administrative 22,579 17,139 17,993 --------- --------- --------- Total costs and expenses 182,871 174,578 169,883 --------- --------- --------- OPERATING INCOME (LOSS) 107,352 38,217 (825) --------- --------- --------- OTHER INCOME (EXPENSE): Interest expense, net of interest capitalized (14,781) (15,303) (13,694) Interest income 2,185 1,832 3,263 Other, net (2,272) (2,008) (2,647) --------- --------- --------- Total other income (expense) (14,868) (15,479) (13,078) --------- --------- --------- INCOME (LOSS) BEFORE INCOME TAX EXPENSE, MINORITY INTEREST AND EXTRAORDINARY GAIN 92,484 22,738 (13,903)
INCOME TAX EXPENSE 7,884 2,824 4,093
MINORITY INTEREST (6,684) (1,522) 850 --------- --------- --------- INCOME (LOSS) BEFORE EXTRAORDINARY GAIN 77,916 18,392 (17,146)
EXTRAORDINARY GAIN - 3,430 - --------- --------- --------- NET INCOME (LOSS) 77,916 21,822 (17,146)
DIVIDENDS ON PREFERRED STOCK 3,631 4,855 4,859 --------- --------- --------- NET INCOME (LOSS) APPLICABLE TO COMMON STOCKHOLDERS $ 74,285 $ 16,967 $ (22,005) ========= ========= ========= PRIMARY NET INCOME (LOSS) PER COMMON SHARE: INCOME (LOSS) BEFORE EXTRAORDINARY GAIN $ 1.15 $ .22 $ (.39) EXTRAORDINARY GAIN - .06 - --------- --------- --------- NET INCOME (LOSS) $ 1.15 $ .28 $ (.39) ========= ========= ========= FULLY DILUTED NET INCOME PER COMMON SHARE $ 1.10 $ - $ - ========= ========= ========= WEIGHTED AVERAGE COMMON SHARES OUTSTANDING: PRIMARY 64,620 60,208 56,900 ========= ========= ========= FULLY DILUTED 71,027 - - ========= ========= =========
The accompanying notes are an integral part of the consolidated financial statements.
READING & BATES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS (in thousands)
Years Ended December 31, --------------------------------- 1996 1995 1994 --------- --------- --------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) $ 77,916 $ 21,822 $ (17,146) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation 33,584 30,369 28,909 Loss (gain) on dispositions of property and equipment (5,185) 650 (1,982) Recognition of deferred expenses 5,123 7,051 4,640 Deferred compensation 3,230 167 265 Extraordinary gain from extinguishment of debt - (3,430) - Minority interest in income (loss) of consolidated subsidiaries 6,684 1,522 (850) Changes in assets and liabilities: Accounts receivable, net (17,058) (8,685) 2,973 Materials and supplies inventory (2,319) (490) 288 Deferred charges and other assets (9,559) (7,880) (3,678) Accounts payable - trade 2,456 (8,759) 4,742 Accrued interest 3,154 4,472 4,000 Accrued lease expense - - 3,344 Accrued liabilities (72) 1,367 4,692 Income taxes 1,075 462 1,649 Other, net 3,897 (4,153) (1,074) --------- --------- --------- Net cash provided by operating activities 102,926 34,485 30,772 --------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES: Dispositions of property and equipment 9,169 49,946 141 Purchases of property and equipment, net of noncash items (177,130) (51,906) (38,424) Decrease (increase) in investments in and advances to unconsolidated investees (1,243) (310) 209 Business acquisitions - (1,229) (10,738) --------- --------- --------- Net cash used in investing activities (169,204) (3,499) (48,812) --------- --------- --------- CASH FLOWS FROM FINANCING ACTIVITIES: Net proceeds (payments) from short- term obligations (12,000) (12,222) 9,487 Net proceeds from revolving credit facility 146,000 20,000 - Proceeds from long-term obligations - 30,000 - Principal payments on long-term obligations (42,500) (73,057) (24,654) Exercise of stock options 6,446 3,000 - Dividends paid on preferred stock (3,631) (4,855) (4,859) Distribution to minority shareholders of consolidated subsidiaries (5,119) - - --------- --------- --------- Net cash provided by (used in) financing activities 89,196 (37,134) (20,026) --------- --------- --------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 22,918 (6,148) (38,066)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 36,171 42,319 80,385 --------- --------- --------- CASH AND CASH EQUIVALENTS AT END OF YEAR $ 59,089 $ 36,171 $ 42,319 ========= ========= ========= Supplemental Cash Flow Disclosures: Interest paid, net of capitalized interest $ 9,391 $ 11,874 $ 9,368 Income taxes paid $ 4,609 $ 2,975 $ 3,877 Noncash investing activities: Purchase of property and equipment in exchange for equity or debt $ 15,866 $ 36,708 $ 24,324
The accompanying notes are an integral part of the consolidated financial statements.
READING & BATES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
For the Three Years Ended December 31, 1996 (in thousands)
Convertible Preferred Stock Common Stock ---------------- ----------------- Shares Amount Shares Amount ------ -------- ------ -------- Balances at December 31, 1993 2,990 $ 2,990 55,489 $ 2,774
Net loss Dividends paid on preferred stock Purchase of leased drilling units 4,230 212 Activity in Company stock plans Additional minimum liability Other (8) ----- -------- ------ -------- Balances at December 31, 1994 2,990 2,990 59,711 2,986
Net income Dividends paid on preferred stock Conversion of preferred stock (5) (5) 14 1 Purchase of drilling unit 1,232 62 Activity in Company stock plans 407 20 Restricted stock grant 544 27 Additional minimum liability Other (8) (1) ----- -------- ------ -------- Balances at December 31, 1995 2,985 2,985 61,900 3,095
Net income Dividends paid on preferred stock Conversion of preferred stock (2,985) (2,985) 8,650 433 Activity in Company stock plans 848 42 Restricted stock grant 489 24 Additional minimum liability Other 1 ----- -------- ------ -------- Balances at December 31, 1996 - $ - 71,888 $ 3,594 ===== ======== ====== ========
READING & BATES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
For the Three Years Ended December 31, 1996 (in thousands)
Capital in Retained Excess of Earnings Par Value (Deficit) Other --------- -------- --------- Balances at December 31, 1993 $ 312,916 $ 2,021 $ (1,158)
Net loss (17,146) Dividends paid on preferred stock (4,859) Purchase of leased drilling units 24,112 Activity in Company stock plans 507 265 Additional minimum liability (342) Other (129) (3) --------- -------- --------- Balances at December 31, 1994 337,406 (19,984) (1,238)
Net income 21,822 Dividends paid on preferred stock (4,855) Conversion of preferred stock 4 Purchase of drilling unit 14,643 Activity in Company stock plans 3,107 168 Restricted stock grant 7,524 (7,551) Additional minimum liability (307) Other 226 6 --------- -------- --------- Balances at December 31, 1995 362,910 (3,017) (8,922)
Net income 77,916 Dividends paid on preferred stock (3,631) Conversion of preferred stock 2,525 Activity in Company stock plans 10,710 115 Restricted stock grant 13,756 (10,588) Additional minimum liability 1,233 Other 6 --------- -------- --------- Balances at December 31, 1996 $ 389,907 $ 71,268 $ (18,162) ========= ======== =========
The accompanying notes are an integral part of the consolidated financial statements.
READING & BATES CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(A) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
CONSOLIDATION - The consolidated financial statements include the accounts of Reading & Bates Corporation ("Reading & Bates") and its subsidiaries, including its majority-owned subsidiary Arcade Drilling AS ("Drilling") (collectively, the "Company"). As of December 31, 1996, Reading & Bates owned approximately 74.4% of the outstanding stock of Drilling (see Note B). Investments in unconsolidated investees are accounted for on the equity method. All significant intercompany accounts and transactions have been eliminated.
CASH AND CASH EQUIVALENTS - The Company considers all highly liquid investments purchased with a maturity of three months or less to be cash equivalents. At December 31, 1996, $20.1 million of the cash and cash equivalents balance related to Drilling. Such cash and cash equivalents balance is available to Drilling for all purposes subject to certain debt covenants under an amended credit facility provided by The Chase Manhattan Bank, N.A. ("Chase Manhattan") which requires the maintenance of a minimum of $1.5 million in liquid assets ($10 million if Drilling can not annually provide to the lenders satisfactory contractual commitments for the employment of both its drilling units for the next twelve months) and allows Drilling to declare dividends or distributions to stockholders provided that at least one of its drilling units is employed pursuant to its current contract with no notice of cancellation received and $1.5 million of liquid assets remain after payment of such distribution. Drilling declared a distribution of approximately $14.3 million in the first quarter of 1996, of which the Company received approximately $10.6 million.
MATERIALS AND SUPPLIES INVENTORY - Materials and supplies are stated at the lower of average cost or market.
PROPERTY AND EQUIPMENT - Property and equipment are recorded at historical cost as adjusted in the Company's quasi-reorganization in 1989. Reading & Bates' mobile offshore units are depreciated under either the units-of-production method or the straight-line method. Drilling's drilling units are depreciated under the straight-line method. Estimated useful lives for mobile offshore equipment range from three to twenty-five years. Gain (loss) on disposal of properties is credited (charged) to income. In 1995, the Company purchased an approximate 20% working interest in the Green Canyon 254 Allegheny oil and gas development project in the U.S. Gulf of Mexico from the operator, Enserch Exploration, Inc. (see Note D). In 1996, the Company entered into an agreement with Santa Fe Energy Resources to explore five oil and gas prospects also in the U. S. Gulf of Mexico. As of December 31, 1996, none of such oil and gas interests had entered the production stage and the Company had accumulated costs related to the interests of approximately $50.3 million which are included in Property and Equipment, Other. Depending on prices, reserve developments and accounting policies adopted, the Company could experience a future impairment charge.
STOCKHOLDERS' EQUITY - The Company's accumulated deficit at March 31, 1991 was eliminated as a result of the Company's recapitalization in 1991.
INCOME TAXES - Deferred income taxes are recognized for revenues and expenses reported in different years for financial statement purposes and income tax purposes.
REVENUE RECOGNITION - Revenues are recognized as they are earned. Proceeds associated with the early termination of a contract for a mobile offshore unit are recorded as deferred income and recognized as contract revenues over the remaining term of the contract or until such time as the mobile offshore unit begins a new contract. There were no such amounts deferred at December 31, 1996 or 1995. In addition, when a unit's mobilization revenue exceeds the cost of the mobilization by a significant amount, the Company recognizes the excess as contract revenue during the contract preparation and mobilization period on a dayrate basis. If there is revenue that has not been recognized by the time the unit has arrived on location the remaining amount is recognized over the primary term of the contract.
In 1993, the Company secured a contract to convert a semisubmersible drilling unit into a floating production system. Under this contract the Company, for a fixed fee and certain incentives, functioned as an agent for its customer and accordingly, disbursements made on behalf of the customer were netted against receipts from the customer in the accompanying financial statements. The contract was completed in the third quarter of 1995 and the disbursements and receipts associated with the contract through that date amounted to approximately $123 million.
CAPITALIZED INTEREST - The Company capitalizes interest applicable to the acquisition, exploration and development of offshore oil and gas properties as a cost of such assets. Interest capitalized for the years ended December 31, 1996 and 1995 was $2.7 million and $.5 million, respectively and is shown net of interest expense in the Consolidated Statement of Operations.
FOREIGN CURRENCY TRANSACTIONS - The net gains and losses resulting from foreign currency transactions included in determining net income amounted to a net gain of $.8 million in 1996, a net loss of $.8 million in 1995, and a net loss of $.6 million in 1994. The Company may enter into forward exchange contracts to hedge specific commitments and anticipated transactions but not for speculative or trading purposes. In the third quarter of 1996, the Company entered into a short-term foreign exchange forward contract to hedge a firm commitment relating to the purchase of equipment. This contract is intended to reduce currency risk from exchange rate movements. Gains and losses are deferred and accounted for as part of the underlying transaction. At December 31, 1996, the Company had outstanding forward exchange contracts to purchase Danish kroner totalling approximately $8.2 million. During 1995 and 1994 the Company did not enter into any forward exchange contracts.
EXTRAORDINARY GAIN - In December 1995, the Company recorded an extraordinary gain of $3,430,000 for the extinguishment of a debt obligation.
NET INCOME (LOSS) PER COMMON SHARE - Primary net income (loss) per common share is computed by dividing net income (loss), after deducting the preferred stock dividend, by the weighted average number of common shares outstanding during the period. Fully diluted net income per common share assumes the conversion of the preferred stock at the beginning of the period and is computed by dividing net income by the weighted average number of common shares outstanding during the period and the additional shares from the assumption of the conversion of the preferred stock. The effects of common equivalent shares were antidilutive or immaterial for all periods presented and, accordingly, no adjustment was made for these common equivalent shares. The computation of fully diluted net income (loss) per share in 1995 and 1994 is not presented as the results are antidilutive.
CONCENTRATION OF CREDIT RISK - The Company maintains cash balances with commercial banks throughout the world. The Company's cash equivalents generally consist of commercial paper, money-market mutual funds and interest-bearing deposits with strong credit rated financial institutions and generally mature within three months, therefore, bearing minimal risk. However, in 1994 the Company incurred a $.7 million loss on the sale of a cash investment due to the decline in the market value. No losses were incurred during 1995 and 1996.
The Company's revenues were generated primarily from its mobile offshore units. Revenues can be generated from a small number of customers which are primarily major U.S. oil and gas companies or their subsidiaries and foreign government-owned oil and gas companies. The Company performs ongoing credit evaluations of its customers' financial conditions and generally requires no collateral from its customers. The Company's allowance for doubtful accounts at December 31, 1996 and 1995 was $1,891,000 and $1,123,000, respectively.
INDUSTRY CONDITIONS - Results of operations and financial condition of the Company should be considered in light of the fluctuations in demand experienced by drilling contractors as changes in oil and gas producers' expectations and budgets occur. These fluctuations can impact the Company's results of operations and financial condition as supply and demand factors directly affect utilization and dayrates, which are the primary determinants of cash flow from the Company's operations.
LIQUIDITY - As of December 31, 1996, the Company's total consolidated cash and cash equivalents were $59.1 million. Of this amount, approximately $20.1 million is restricted from the Company's use outside of Drilling (see CASH AND CASH EQUIVALENTS above). The Company's management currently expects that its cash flow from operations, in combination with cash on hand, funds available under its existing credit facility and other sources, including new debt, new equity, asset disposals and/or by proper scheduling of its planned capital or other expenditures, will be sufficient to satisfy the Company's short-term and long-term working capital needs, planned investments, capital expenditures, debt and other payment obligations.
NEWLY ISSUED ACCOUNTING STANDARDS - In March 1995, Statement of Financial Accounting Standards No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of ("SFAS 121") was issued. SFAS 121, which became effective in 1996, requires that certain long-lived assets be reviewed for impairment whenever events indicate that the carrying amount of an asset may not be recoverable, and that an impairment loss be recognized under certain circumstances in the amount by which the carrying value exceeds the fair value of the asset. In 1995, the Company adopted SFAS 121 which had no effect on the Company's consolidated results of operations or financial position.
In October 1995, Statement of Financial Accounting Standards No. 123, Accounting for Stock Based Compensation ("SFAS 123") was issued. SFAS 123 requires either recognition of compensation expense in the financial statements for those companies that adopt the fair value based accounting method or expanded disclosure of pro forma net income and earnings per share information for those companies that retain the current accounting method set forth in Accounting Principles Board (APB) Opinion 25, Accounting for Stock Issued to Employees. The Company follows the accounting method set forth in APB 25 and in 1996 included the expanded disclosure requirements (See Note I).
ESTIMATES - The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
RECLASSIFICATION - Certain prior period amounts in the consolidated financial statements have been reclassified for comparative purposes. Such reclassifications had no effect on the net income (loss) or the overall financial condition of the Company.
(B) INVESTMENT IN ARCADE
ARCADE ACQUISITION - In June 1991, as part of its strategy of emphasizing geographic diversification and "fourth-generation" semisubmersible drilling technology, the Company began acquiring the stock of Arcade Shipping AS ("Shipping") and Drilling, both of which are Norwegian companies (the "Arcade Acquisition"). Beginning with the first quarter of 1992, the Company began to consolidate the accounts of Drilling and Shipping into the consolidated financial statements of the Company. Drilling owns the "HENRY GOODRICH" and the "PAUL B. LOYD, JR.", two fourth- generation semisubmersible drilling units. Shipping, which the Company sold its ownership interest in June 1994, had two principal lines of operations, the shipping operations which included owning and chartering vessels and the drilling operations which principally consisted of the ownership of approximately 46.2% of the outstanding stock of Drilling. The shipping operations of Shipping had been accounted for as discontinued operations until June 1994, when the Company completed a transaction which consisted of the Company selling its entire 82.6% ownership in Shipping for approximately $27.8 million, purchasing from Shipping its entire 46.2% ownership in Drilling and equity securities in Dragon Oil for approximately $45.4 million and Shipping repaying a loan of approximately $12.9 million to the Company. This transaction resulted in a net cash outflow of $4.7 million.
The Arcade Acquisition has been funded through short-term financing, a private placement of both preferred and common stocks and the Company's working capital. As of December 31, 1996, the Company had acquired approximately 74.4% of the outstanding stock of Drilling, at an accumulated cost of approximately $102.9 million net of a $10.6 million distribution to the Company declared by Drilling in the first quarter of 1996.
DISCONTINUED OPERATIONS OF SHIPPING - On June 22, 1994, the Company sold its entire ownership in Shipping (see above). Shipping's operating revenues and net loss from January 1, 1994 to the date of sale were approximately $6.5 million and $2 million, respectively.
(C) LONG-TERM OBLIGATIONS
Long-term obligations at December 31, 1996 and 1995 consisted of the following (in thousands):
1996 1995 --------- -------- Christiania Bank (1) $ 166,000 $ 20,000 Chase Manhattan (2) 32,500 42,500 8% Senior Subordinated Convertible Debentures due December 1998 ("New Debentures") (3) 13,078 10,873 Deferred payment obligation (4) 7,500 10,000 The CIT Group (5) - 30,000 --------- -------- Total 219,078 113,373
Less long-term obligations due within one year (11,500) (18,333) --------- -------- Long-term obligations $ 207,578 $ 95,040 ========= ======== - --------------------------
(1) In November 1995, the Company entered into a credit facility agreement with Christiania Bank og Kreditkasse (the "CBK Facility") as agent for a syndicate of banks (including itself). During 1996, the CBK Facility was renegotiated with an expanded bank group and currently consists of a $300 million reducing revolving credit facility to be utilized for revolving loans and/or issuance of standby letters of credit (subject to a maximum of $30 million) (see Note E). The CBK Facility shall be reduced/repaid by five semi-annual installments of $25 million commencing in May 1999 and one final reduction/repayment of $175 million in November 2001 and bears interest at the London Interbank Offered Rate ("LIBOR") (5.625% at December 31, 1996) plus .85%. In addition, a fee of .85% per annum is paid on outstanding letters of credit and a commitment fee of .35% per annum is paid on the unused portion of the CBK Facility. At December 31, 1996, there were no letters of credit outstanding under the CBK Facility, leaving $134 million available for revolving loans and/or issuance of standby letters of credit (maximum of $30 million). The CBK Facility contains covenants which require the Company to meet certain ratios and working capital conditions, and is collateralized by vessel mortgages on thirteen of the drilling units owned by the Company, related assignments of insurance and earnings, and a pledge of the Company's shares of stock of Drilling.
(2) The adjusted payment terms of this bank obligation of Drilling provide for repayment of principal in seventeen semiannual installments which commenced in August 1991 and bears interest at LIBOR (5.625% at December 31, 1996) plus .45%. Drilling had also entered into an interest rate swap agreement which ended in August 1996. The bank obligation is collateralized by the drilling units "HENRY GOODRICH" and "PAUL B. LOYD, JR.", related assignments of insurance and drilling contracts, and receivables. The amended loan agreement requires Drilling to maintain liquid assets of at least $1.5 million ($10 million if Drilling can not annually provide to the lenders satisfactory contractual commitments for the employment of both its drilling units for the next twelve months). It is also an event of default should circumstances arise which give reasonable grounds in the opinion of the bank syndicate for the belief that Drilling may not (or may be unable to) perform or comply with its obligation.
(3) The New Debentures are convertible into the Company's common stock at $37.035 per share. Accrued interest associated with the New Debentures at December 31, 1996 and 1995, was $11,904,000 and $11,907,000, respectively. The New Debentures were recorded at amounts equal to the net present value of their respective future cash payments required, discounted at 15%, which is the interest rate the Company believes it would have been required to pay to obtain financing of a similar nature from other sources during 1991. Based on limited information available to the Company, the recorded amounts of the New Debentures at December 31, 1996 approximate their fair market value. The face amount of the New Debentures and the related unamortized discount at December 31, 1996 totalled $18,599,000 and $5,521,000, respectively. The face amount of the New Debentures and the related unamortized discount at December 31, 1995 totalled $18,605,000 and $7,732,000 respectively. During 1996, $5,500 (face amount) of New Debentures plus accrued interest through December 31, 1995 were converted into 243 shares of the Company's common stock. During 1995, there were no conversions of New Debentures to common stock.
(4) In September 1995, the Company entered into a $10 million deferred payment obligation in connection with the purchase of the support vessel "IOLAIR". The deferred payment obligation bears interest at a fixed rate of 8%. A principal repayment of $2.5 million was paid in September 1996 and payments of $7 million and $.5 million are due in September 1998 and September 2000, respectively. The obligation is collateralized by a vessel mortgage on the support vessel "IOLAIR".
(5) In May 1995, the Company entered into a $25 million loan agreement with The CIT Group/Equipment Financing, Inc. In December 1995, the Company borrowed an additional $5 million under such loan agreement. In November 1996, the loan was repaid in full from proceeds of the CBK Facility (see above). The loan bore interest at the one month LIBOR plus 2.5%. Principal repayments were $5,416,667 in November 1996, 34 monthly installments of $416,667 to have commenced in December 1996 and one payment of $10,416,655 in October 1999. The loan agreement contained covenants which required the Company to meet certain financial conditions, including, among others, a cash flow coverage ratio and a long-term debt to total assets ratio, and was collateralized by vessel mortgages on two of the drilling units owned by the Company and related assignments of insurance and earnings.
Aggregate annual maturities of long-term obligations, (including the current portion) for the next five years are as follows (in thousands):
1997 $ 11,500 1998 38,599 1999 8,000 2000 500 2001 166,000 --------- 224,599 Less the unamortized discount on the New Debentures (5,521) --------- Total long-term obligations and long- term obligations due within one year at December 31, 1996 $ 219,078 =========
(D) SHORT-TERM OBLIGATIONS
In October 1995, the Company entered into a $12 million short-term obligation with Enserch Exploration, Inc. for the purchase of an approximate 20% working interest in an oil and gas development project (see PROPERTY AND EQUIPMENT of Note A). The obligation bore interest at 8.56% and two principal repayments of $6 million were made in March 1996 and September 1996.
(E) COMMITMENTS AND CONTINGENCIES
CAPITAL EXPENDITURES - At December 31, 1996, the Company had purchase commitments of $21.9 million for equipment on its mobile offshore units.
OPERATING LEASES - The Company has operating leases covering premises and equipment. Certain operating leases contain renewal options and have options to purchase the asset at fair market value at the end of the lease term. Net rent expense amounted to $9.5 million (1996), $2.3 million (1995) and $11.2 million (1994). As of December 31, 1996, future minimum rental payments relating to operating leases were as follows (in thousands):
1997 1998 1999 2000 2001 Thereafter -------- ------- ------- ------- ------- -------- Drilling Unit $ 8,337 $ 8,337 $ 8,337 $ 8,337 $ 8,337 $ 32,655 Other 1,735 1,286 147 57 9 - -------- ------- ------- ------- ------- -------- Total $ 10,072 $ 9,623 $ 8,484 $ 8,394 $ 8,346 $ 32,655 ======== ======= ======= ======= ======= ========
In November 1995, the Company entered into a sale/lease-back of the "M. G. HULME, JR.". As part of this transaction the Company agreed to lease the drilling unit for ten years and could receive up to $60 million in cash, inclusive of a $10 million funding provision for upgrades. As of December 31, 1996, the Company had received $58.9 million. The lease-back is accounted for as an operating lease and a deferred gain of $7.4 million was recorded and is being amortized over the life of the lease (see Note F).
In the third quarter of 1994, the Company purchased certain notes and interests relating to the lease debt outstanding associated with the operating leases of the drilling units "GEORGE H. GALLOWAY" and "C.E. THORNTON", and the secured contingent obligations associated with the capital lease of the "F.G. McCLINTOCK". Total consideration for the transaction was approximately $36.5 million which consisted of the Company paying cash of approximately $12.2 million and issuing 4,230,235 shares of the Company's common stock, par value $.05 per share, totalling approximately $24.3 million at then prevailing stock prices. Since, through such purchases, the Company now controls and has effective ownership of the three rigs, it recorded the purchase of the notes and interests as purchases of the rigs. The Company now has title to the "GEORGE H. GALLOWAY" and "F. G. McCLINTOCK" and expects to acquire title to the "C. E. THORNTON" in March 1997.
In March 1992, the Company entered into a sale/lease-back of the "SONNY VOSS". Proceeds received of $27.7 million resulted in a gain of $6.3 million which was deferred and was being amortized over the lease term. In December 1994, for a fee of $.5 million, the Company negotiated an early release from all of its remaining lease obligations with respect to the "SONNY VOSS". Such lease obligations were scheduled to have expired in September 1995 and the net effect of the early release on the Company's statement of operations was a gain of $.5 million recognized as a reduction of operating expenses in the fourth quarter of 1994.
DRILLSHIP PROJECT - In October 1996, the Company and an affiliate of Conoco Inc. formed a 50/50 joint venture to build and operate a dynamically positioned drillship capable of drilling at water depths up to 10,000 feet. Samsung Heavy Industries of Korea has been awarded the contract to construct the vessel at a current estimated cost of $220 million plus capitalized interest. Immediately following the delivery of the drillship, which is expected to be in 1998, it will commence a five year drilling program in the deep water of the U.S. Gulf of Mexico.
NIC FINANCING - In December 1996, a wholly owned subsidiary of the Company entered into a five year $38 million loan agreement with Nissho Iwai Europe PLC ("NIC"). The Company expects to receive the funds in the first quarter of 1997, subject to the finalization of the agreement. The loan will be collateralized by a vessel mortgage on the "SEILLEAN" without recourse to the Company and shall bear interest at LIBOR plus 2%. Principal repayments will be monthly based on the greater of the excess cash flow of the "SEILLEAN" or the outstanding principal balance divided by the remaining period of the loan. In addition, NIC has the option to purchase up to 10% of the ownership in the "SEILLEAN", any time prior to three years after the Company has received the funds from NIC, at a minimum price of $4.2 million.
LITIGATION - In November 1988, a lawsuit was filed in the U.S. District Court for the Southern District of West Virginia against Reading & Bates Coal Co., a wholly owned subsidiary of the Company, by SCW Associates, Inc. claiming breach of an alleged agreement to purchase the stock of Belva Coal Company, a wholly owned subsidiary of Reading & Bates Coal Co. with coal properties in West Virginia. When those coal properties were sold in July 1989 as part of the disposition of the Company's coal operations, the purchasing joint venture indemnified Reading & Bates Coal Co. and the Company against any liability Reading & Bates Coal Co. might incur as the result of this litigation. A judgment for the plaintiff of $32,000 entered in February 1991 was satisfied and Reading & Bates Coal Co. was indemnified by the purchasing joint venture. On October 31, 1990, SCW Associates, Inc., the plaintiff in the above-referenced action, filed a separate ancillary action in the Circuit Court, Kanawha County, West Virginia against the Company and a wholly owned subsidiary of Reading & Bates Coal Co., Caymen Coal, Inc. (former owner of the Company's West Virginia coal properties), as well as the joint venture, Mr. William B. Sturgill personally (former President of Reading & Bates Coal Co.), three other companies in which the Company believes Mr. Sturgill holds an equity interest, two employees of the joint venture, First National Bank of Chicago and First Capital Corporation. The lawsuit seeks to recover compensatory damages of $50 million and punitive damages of $50 million for alleged tortious interference with the contractual rights of the plaintiff and to impose a constructive trust on the proceeds of the use and/or sale of the assets of Caymen Coal, Inc. as they existed on October 15, 1988. Subsequently, the court entered an order dismissing the Company's indirect subsidiary. The Company intends to defend its interests vigorously and believes the damages alleged by the plaintiff in this action are highly exaggerated. In any event, the Company believes that it has valid defenses and that it will prevail in this litigation.
The Company was one of the defendants in certain litigation brought in July 1984 by the Cheyenne-Arapaho Tribes of Oklahoma in the U.S. District Court for the Western District of Oklahoma, seeking to set aside two communitization agreements with respect to three leases involving tribal lands in which the Company previously owned interests and to have those leases declared expired. In June 1989, the U.S. District Court entered an interim order in favor of the plaintiffs. On appeal, the U.S. Court of Appeals for the Tenth Circuit upheld the decision of the trial court and petitions for rehearing of that decision were denied. Petitions for writs of certiorari filed by the parties with the U.S. Supreme Court were denied, and the case was remanded to the trial court for determination of damages. In June 1996, this matter was settled, and the litigation was dismissed with prejudice, without significant financial statement impact.
On March 17, 1995, an action was filed by Louis Silverman, individually and on behalf of all other shareholders of Reading & Bates Corporation similarly situated, against the Company and the individual members of its board of directors in the Court of Chancery of the State of Delaware, New Castle County. On April 7, 1995 three additional actions were filed on behalf of Congregation Beth Joseph, Harry Lewis and Mortimer Shulman against the Company and its directors in the Court of Chancery of the State of Delaware. In each of the four actions, the plaintiff alleged, inter alia, that the directors breached their fiduciary duties by rejecting the previously announced unsolicited merger proposal made by Sonat Offshore Drilling Inc. and by adopting the previously announced shareholder rights plan. Each of the named plaintiffs in the four actions purported to be an owner of the Company's common stock and sought to represent a class of shareholders of the Company who are similarly situated. Each of the plaintiffs sought injunctive relief, damages in unspecified amounts and certain other relief, including costs and expenses. In March 1996, the plaintiffs in each of the four actions voluntarily dismissed same on a without prejudice basis, and the court entered orders accordingly.
The Company is involved in these and various other legal actions arising in the normal course of business. After taking into consideration the evaluation of such actions by counsel for the Company, management is of the opinion that the outcome of all known and potential claims and litigation will not have a material adverse effect on the Company's business or consolidated financial position or results of operations.
EMPLOYMENT CONTRACTS - The Company has committed under employment contracts to provide each of two key executives with severance benefits (the aggregate of such benefits to both executives amounting to approximately $3.7 million) which vest in September 2003 or earlier if an entity in which each such executive has an interest reduces its ownership of the Company's common stock below a specified level and such executive gives notice of termination of his employment in accordance with the terms of his employment contract. The Company amortizes the cost of the severance benefits over the ten year period from September 1993 to September 2003, unless the relevant reduction of stock ownership and termination of employment occurs prior to September 2003 in which case the unamortized severance cost would be expensed. In the second quarter of 1996, one of the two key executives gave such notice of termination following the relevant reduction of stock ownership by the entity in which he had an interest. In the same period, the Company paid the key executive severance benefits in accordance with his employment contract and expensed the related unamortized severance cost of approximately $.6 million. The unaccrued severance benefits for the remaining key executive at December 31, 1996 was approximately $2 million.
LETTERS OF CREDIT - At December 31, 1996, the Company had letters of credit outstanding and unused totalling $18.3 million and $31.7 million, respectively (see Note C). At December 31, 1995, the Company had letters of credit outstanding and unused totalling $13.3 million and $21.7 million, respectively.
(F) ACCRUED LIABILITIES AND OTHER NONCURRENT LIABILITIES
The components of "Accrued liabilities" at December 31, 1996 and 1995 were as follows (in thousands):
1996 1995 -------- -------- Accrued expenses - general $ 13,759 $ 11,051 Accrued interest expense 2,807 2,657 Other 5,105 6,810 -------- -------- Total $ 21,671 $ 20,518 ======== ========
The components of "OTHER NONCURRENT LIABILITIES" at December 31, 1996 and 1995 were as follows (in thousands):
1996 1995 -------- -------- Postretirement benefit obligations $ 15,697 $ 15,993 Accrued interest expense related to the New Debentures 10,416 10,410 Deferred gain on sale of drilling unit 6,465 7,229 Net liabilities associated with discontinued operations 6,236 5,818 Foreign income taxes 5,954 5,893 Pension obligations 3,982 5,090 Other 3,341 1,285 -------- -------- Total $ 52,091 $ 51,718 ======== ========
(G) INCOME TAXES
Income tax expense for the years ended December 31, 1996, 1995 and 1994 consisted of the following (in thousands):
1996 1995 1994 -------- -------- -------- Current: Foreign $ 5,079 $ 2,395 $ 3,825 Federal 441 527 - -------- -------- -------- Total current 5,520 2,922 3,825 Deferred 2,364 (98) 268 -------- -------- -------- Total $ 7,884 $ 2,824 $ 4,093 ======== ======== ========
The domestic and foreign components of income (loss) before income taxes for the years ended December 31, 1996, 1995 and 1994 were as follows (in thousands): 1996 1995 1994 -------- -------- -------- Domestic $(29,441) $(22,028) $(27,211) Foreign 121,925 44,766 13,308 -------- -------- -------- Total $ 92,484 $ 22,738 $(13,903) ======== ======== ========
The effective tax rate, as computed on income before income taxes, differs from the statutory U.S. income tax rate for the years ended December 31, 1996, 1995 and 1994 due to the following:
1996 1995 1994 ---- ---- ---- Statutory rate 35 % 35 % 35 % Limitation on recognition of tax benefits - - (35) Use of previously reserved tax benefits (31) (33) - Foreign tax settlement - (6) - Foreign tax expense 5 16 28 Other - - 1 ---- ---- ---- Effective rate 9 % 12 % 29 % ==== ==== ====
Income taxes of $4,093,000 were recognized in 1994 despite losses before income taxes. The expense resulted primarily from income tax expense incurred with respect to certain foreign operations. The Company was limited in utilization of tax benefits from investment tax credits prior to 1986 and operating losses in 1994.
Deferred income taxes result from those transactions which affect financial and taxable income in different years. The nature of these transactions (all of which were long-term) and the income tax effect of each as of December 31, 1996 and 1995 was as follows (in thousands):
1996 1995 --------- --------- Deferred tax liabilities: Depreciation $ 124,059 $ 99,513 Intangible drilling costs 5,419 3,064 --------- --------- Total deferred tax liabilities 129,478 102,577 --------- --------- Deferred tax assets: Rig leases (6,255) (15,342) Postretirement benefits (5,633) (8,183) Tax benefit carryforwards (170,622) (153,016) Valuation allowance 53,667 76,989 Other - (48) --------- --------- Total deferred tax assets (128,843) (99,600) --------- --------- Net deferred tax liability $ 635 $ 2,977 ========= =========
Valuation allowance reflects the possible expiration of tax benefits (primarily net operating loss carryforwards) prior to their utilization. The reduction of the valuation allowance reflects the use of tax benefit loss carryforwards.
Recapitalizations of the Company in 1989 and 1991 resulted in ownership changes for federal income tax purposes. As a result of these ownership changes, the amount of tax benefit carryforwards generated prior to the ownership changes which may be utilized to offset federal taxable income is limited by the Internal Revenue Code to approximately $3.8 million annually plus certain built-in gains that existed as of the date of such changes. Net tax operating losses of $37,981,000 arising since the 1991 ownership change are not subject to this limitation.
(H) CAPITAL SHARES
On March 15, 1995, the Company's board of directors declared a dividend of one preferred share purchase right (a "Right") for each outstanding share of the Company's common stock outstanding on March 31, 1995 (the"Record Date"). Each Right entitles the registered holder to purchase from the Company one one-hundredth of a share of Series B Junior Participating Preferred Stock, par value $1.00 per share (the "Preferred Shares") of the Company at a price of $30.50, subject to adjustment. The Rights will not become exercisable until 10 days after a public announcement that a person or group has acquired 10% or more of the Company's common stock (thereby becoming an "Acquiring Person") or the commencement of a tender or exchange offer upon consummation of which such person or group would own 10% or more of the Company's common stock (the earlier of such dates being called the "Distribution Date"). Rights will be issued for all shares of the Company's common stock issued and outstanding on the Record Date. Until the Distribution Date, the Rights will be evidenced by the certificates representing the Company's common stock and will be transferrable only with the Company's common stock. In the event that any person or group becomes an Acquiring Person, each Right, other than Rights beneficially owned by the Acquiring Person (which will thereafter be void), will thereafter entitle its holder to purchase shares of the Company's common stock having a market value of two times the exercise price of the Right. After any person or group has become an Acquiring Person and prior to the acquisition by such person or group of 50% or more of the outstanding shares of common stock, the Company's board of directors may exchange each Right (other than Rights of the Acquiring Person), in whole or in part, at an exchange ratio of one common share or one one-hundredth of a Preferred Share per Right. If after a person or group has become an Acquiring Person, the Company is acquired in a merger or other business combination transaction or 50% or more of its assets or earning power are sold, each Right will entitle its holder to purchase, at the Right's then current exercise price, that number of shares of common stock of the acquiring company which at the time of such transaction will have a market value of two times the exercise price of the Right. The board of directors of the Company may redeem the Rights in whole, but not in part, at a price of $.01 per Right at any time prior to such time as any person or group becomes an Acquiring Person. The Rights expire on March 31, 2005. Preferred Shares purchasable upon exercise of the Rights will not be redeemable. Each Preferred Share will be entitled to a preferential quarterly dividend payment equal to the greater of $1 per share or 100 times the dividend declared per common share. Liquidation preference will be equal to the greater of $100 per share or 100 times the payment made per common share. Each Preferred Share will have one vote, voting together with the common stock.
CONVERTIBLE PREFERRED STOCK - In July 1993, the Company effected a public offering of 2,990,000 shares of $1.625 Convertible Preferred Stock, par value $1.00 per share (the "Preferred Stock"), pursuant to which the Company raised gross proceeds of approximately $74.7 million in cash. The Preferred Stock was convertible at the option of the holder at any time into shares of the Company's common stock at a conversion rate of 2.899 shares of common stock for each share of Preferred Stock (equivalent to a conversion price of $8.625 per share of common stock), subject to adjustment in certain events. Annual dividends were $1.625 per share and were cumulative and payable quarterly commencing September 30, 1993. The Preferred Stock was redeemable at any time on or after September 30, 1996, at the option of the Company, in whole or in part, at a redemption price of $26.1375 per share, and thereafter at prices decreasing ratably annually to $25.00 per share on or after September 30, 2003, plus accrued and unpaid dividends. The Preferred Stock had a liquidation preference of $25.00 per share, plus accrued and unpaid dividends. During 1995, 5,000 shares of the Preferred Stock were converted into 14,495 shares of the Company's common stock. On August 5, 1996, the Company announced it would redeem all of the outstanding shares of its Preferred Stock on September 30, 1996 at the redemption price of $26.1375 per share. However, the majority of the Preferred Stock outstanding was converted into approximately 8.6 million shares of the Company's common stock on or before September 30, 1996 and on September 30, 1996 approximately 1,041 shares were redeemed by the Company.
COMMON STOCK - In September 1995, the Company issued 1,232,057 shares of the Company's common stock in association with the purchase of the "J. W. McLEAN" and filed a shelf registration statement in September 1995 registering such 1,232,057 shares. The Company has been informed that all of such shares have been sold. Pursuant to the terms of registration rights agreements among the Company and certain other holders of the Company's common stock, as currently in effect, the Company was required to maintain continuously effective shelf registration statements with respect to approximately 2.5 million shares of its common stock until the earlier to occur of (i) the sale of such shares by the holders thereof or (ii) August 1, 1996 (in the case of approximately .9 million shares) or September 14, 1996 (in the case of approximately 1.6 million shares). The Company currently maintains the effectiveness of such registration statements on a voluntary basis.
As of December 31, 1996, authorized, unissued shares of common stock were reserved for issuance as follows:
Issuance under the Company's stock plans (net of forfeitures) 2,917,387 Conversion of 8% Senior Subordinated Convertible Debentures 944,112 Conversion of Class A Stock 81 ---------- Total 3,861,580 ==========
Class A (Cumulative Convertible) Capital Stock (the "Class A Stock") has been included with "Capital in excess of par value" due to the insignificance of the $880 outstanding at December 31, 1996 and 1995.
(I) EMPLOYEE BENEFIT PLANS
PENSION PLANS - The Company has three noncontributory pension plans. Substantially all of its employees are covered by one or more of these plans. Plan benefits are primarily based on years of service and average high thirty-six month compensation.
The Reading & Bates Pension Plan (the "Domestic Plan") is qualified under the Employee Retirement Income Security Act (ERISA). It is the Company's policy to fund this plan not less than the minimum required by ERISA. It is the Company's policy to contribute to the Reading & Bates Offshore Pension Plan (the "Offshore Plan") an amount equal to the normal cost plus amounts sufficient to amortize the initial unfunded actuarial liability and subsequent unfunded liability caused by plan or assumption changes over thirty years. The unfunded liability arising from actuarial gains and losses is funded over fifteen years. The Offshore Plan is a nonqualified plan and is not subject to ERISA funding requirements. The Domestic and Offshore Plans invest in cash equivalents, fixed income and equity securities.
The Reading & Bates Retirement Benefit Replacement Plan (the "Replacement Plan") is a self-administered unfunded excess benefit plan. All members of the Domestic Plan or the Reading & Bates Savings Plan are potential participants in the Replacement Plan.
Net Pension costs for the years ended December 31, 1996, 1995 and 1994 included the following components (in thousands):
1996 1995 1994 ------- ------- ------- Service cost - benefits earned during the year $ 1,754 $ 1,355 $ 1,412 Interest cost on projected benefit obligation 4,651 4,504 4,284 Actual (gain) loss on plan assets (5,221) (10,000) 1,004 Net amortization and deferral (199) 5,186 (5,953) ------- ------- -------- Net pension costs $ 985 $ 1,045 $ 747 ======= ======= =======
The funded status of the plans at December 31, 1996 was as follows (in thousands):
Domestic Offshore Replacement Plan Plan Plan -------- -------- -------- Actuarial present value of benefit obligations: Vested benefit obligation $ 43,486 $ 12,484 $ 2,324 Nonvested benefit obligation 1,905 653 88 -------- -------- -------- Accumulated benefit obligation 45,391 13,137 2,412 Effect of projected future compensation levels 5,010 1,782 221 -------- -------- -------- Projected benefit obligation 50,401 14,919 2,633 Plan assets at fair value 45,485 13,542 - -------- -------- -------- Projected benefit obligation in excess of plan assets 4,916 1,377 2,633 Unrecognized cumulative net (loss) gain (10,262) (1,273) 3,491 Prior service cost unrecognized in pension cost 1,929 190 225 Unrecognized net implementation asset (obligation) 1,722 - (2,412) -------- -------- -------- Accrued (prepaid) pension cost $ (1,695) $ 294 $ 3,937 ======== ======== ========
The weighted average discount rate and rate of increase in future compensation levels used in determining the actuarial present value of the projected benefit obligations was 7.4% and 4.5%, respectively. The weighted average expected long-term rate of return on assets was 10%.
POSTRETIREMENT BENEFITS - In addition to providing pension benefits, the Company provides certain health care and life insurance benefits for retired employees. The Company's employees may become eligible for these benefits if they reach normal or early retirement age while working for the Company and if they have accumulated 15 years (25 years effective January 1, 1996) of service. Health care costs are paid as they are incurred. Life insurance benefits are provided through an insurance company whose premiums are based on benefits paid during the year.
Postretirement benefit costs for the years ended December 31, 1996, 1995 and 1994 included the following (in thousands):
1996 1995 1994 ------- ------- ------- Service cost - benefits earned during the year $ 126 $ 223 $ 350 Interest cost on projected benefit obligations 794 986 1,241 Amortization (benefit) cost - Accumulated Projected Benefit Obligation (877) (768) (539) ------- ------- ------- Total postretirement benefit costs $ 43 $ 441 $ 1,052 ======= ======= =======
The health care cost trend rates used to measure the expected cost in 1997 for medical, dental and vision benefits were 8%, 5.5% and 5.5%, respectively, each graded down to an ultimate trend rate of 5%, 4.5% and 4.5%, respectively, to be achieved in the year 2021. The weighted average discount rate and rate of increase in future compensation levels used in determining the actuarial present value of the projected benefit obligation was 7.4% and 4.5%, respectively. The effect of a one-percentage-point increase in health care cost trend rates for future periods would increase the service cost and interest cost portion of net periodic postretirement benefit cost approximately 15.8%. The accumulated postretirement benefit obligation would increase by approximately 13.6%.
The amounts recognized in the Company's Consolidated Balance Sheet at December 31, 1996 and 1995 were as follows (in thousands):
1996 1995 -------- -------- Plan assets at fair value $ - $ - Accumulated postretirement benefit obligation: Retirees 8,081 8,808 Fully eligible active plan participants 567 640 Other active plan participants 1,664 1,687 Unrecognized prior service cost 2,685 3,679 Unrecognized cumulative net gain 3,477 2,210 Other (394) (591) -------- -------- Postretirement benefit liability recognized in the Consolidated Balance Sheet $ 16,080 $ 16,433 ======== ========
SAVINGS PLANS - The Company has two savings plans, the Reading & Bates Savings Plan and the Reading & Bates Offshore Savings Plan. Under the plans, an employee may contribute up to 10% of their base salary (15% effective January 1, 1997) (subject to certain limitations) and the Company may make matching contributions at a rate of up to $1.00 for each dollar contributed by the employee up to 6% of the employee's base salary. Since January 1, 1992, the Company has made matching contributions at a rate of $.50 for each dollar contributed by the employee. Effective January 1, 1997, the Company increased its matching contributions to a rate of $.75 for each dollar contributed by the employee. Employees may direct the investment of their contributions and the contributions of the Company in various plan investment options.
Twenty-five percent of the Company's contribution vests after two years of an employee's service with the Company, 50% after three years, 75% after four years and 100% after five years. Compensation costs under the plans amounted to $582,000 in 1996, $518,000 in 1995, and $531,000 in 1994.
STOCK OPTION PLAN - The Company's 1990 Stock Option Plan (the "1990 Plan") is intended to provide an incentive that will allow the Company to retain in its employ, persons of the training, experience and ability necessary for the development and financial success of the Company. The 1990 Plan authorized options with respect to 1,966,000 shares of common stock to be granted to certain employees of the Company at an adjusted option price of $7.375 per share. On September 25, 1991, options with respect to all 1,966,000 shares were granted. Total adjusted compensation under the 1990 Plan of approximately $1,550,000 represents the excess of market price at the measurement date over the option price multiplied by the number of options granted. This amount was recognized as expense over the four year vesting period which commenced in March 1991. Compensation recognized under the plan for the years ending December 31, 1995 and 1994 totalled approximately $126,000 and $507,000, respectively. The plan will terminate on March 29, 2001.
STOCK INCENTIVE PLANS - The Company has two stock incentive plans, the 1992 Long-Term Incentive Plan (the "1992 Plan") and the 1995 Long-Term Incentive Plan (the "1995 Plan"). Both plans provide for grants of stock options, stock appreciation rights, stock awards and cash awards, which may be granted singly, in combination or in tandem. An aggregate of 1,000,000 and 2,500,000 shares of common stock is available for awards granted wholly or partly in common stock under the 1992 Plan and 1995 Plan, respectively. In 1992, the Company granted Restricted Stock Awards under the 1992 Plan totalling 300,000 shares of common stock. Such shares awarded are restricted as to transfer until vested pursuant to a schedule whereby 1/24th of the total number of shares is vested per calendar quarter from June 30, 1992 through March 31, 1998 (subject to certain conditions). The market value at the date of grant of the common stock granted was recorded as unearned compensation and is amortized to expense over the periods during which the restrictions lapse or shares vest. In 1995, the Company granted Stock Options under the 1992 Plan and 1995 Plan with respect to 700,000 and 600,000 shares of common stock, respectively, at option prices ranging from $9.00 to $13.875 per share (the market price on the date of grants). Such options become exercisable either over a one or four year period from the date of grant and no options are exercisable within six months or later than ten years from the date of grant. Also in 1995, the Company granted Restricted Stock Awards under the 1995 Plan totalling 544,200 shares of common stock. Such shares awarded are restricted as to transfer until fully vested three years from the date of grant. The market value at the date of grant of the common stock granted was recorded as unearned compensation and is amortized to expense over the period during which the shares vest. In 1996, the Company granted Stock Options under the 1995 Plan with respect to 150,000 shares of common stock at an option price of $28.00 per share (the market price on the date of the grant). Such options become exercisable over a three year period from the date of grant and are not exercisable within six months or later than ten years from the date of grant. Also in 1996, the Company granted Restricted Stock Awards under the 1995 Plan totalling 414,600 shares of common stock. Such shares awarded are restricted as to transfer until fully vested three years from the date of grant. The market value at the date of grant of the common stock granted was recorded as unearned compensation and is amortized to expense over the period during which the shares vest. Unearned compensation is shown as a reduction of stockholders' equity. Compensation recognized under the stock incentive plans for the years ending December 31, 1996 and 1995 totalled approximately $3,230,000 and $167,000, respectively.
DIRECTOR STOCK OPTION PLAN - The Company's 1995 Director Stock Option Plan (the "1995 Director Plan") is intended to obtain and retain non-employee members of the board of directors by rewarding them for making major contributions to the success of the Company. The 1995 Director Plan authorized options with respect to 200,000 shares of common stock to be granted at an option price of $7.375 per share. In 1995, the Company granted 120,000 options. The market value of the Company's common stock at the date of grant was less than the option price, and no compensation expense was recorded.
Stock option transactions under the plans were as follows:
1995 Weighted 1990 1992 1995 Director Average Plan Plan Plan Plan Price --------- ------- ------- ------- -------- Outstanding at December 31, 1993 1,770,300 - - - 7.38 Forfeited (2,000) - - - 7.38 --------- ------- ------- ------- Outstanding at December 31, 1994 1,768,300 - - - 7.38 Granted - 700,000 600,000 120,000 11.95 Exercised (406,833) - - - 7.38 Forfeited (2,000) (5,000) - - 8.54 --------- ------- ------- ------- Outstanding at December 31, 1995 1,359,467 695,000 600,000 120,000 9.71 Granted - - 150,000 - 28.00 Exercised (754,000) (47,580) - (62,000) 7.46 Forfeited (2,000) (4,800) - - 8.52 --------- ------- ------- ------- Outstanding at December 31, 1996 603,467 642,620 750,000 58,000 12.00 ========= ======= ======== ======= Exercisable at December 31, 1994 1,461,100 - - - 7.38 1995 1,359,467 - - 105,000 7.38 1996 603,467 410,180 600,000 48,000 11.00 Available for grant at December 31, 1994 - 700,000 - - 1995 - 5,000 1,355,800 80,000 1996 - 11,600 771,700 80,000
Weighted average fair value of options granted - 5.83 9.07 3.21
The fair value of each grant since January 1, 1995 is estimated on the date of the grant using the Black-Scholes option pricing model using the following weighted-average assumptions for the 1992 Plan, the 1995 Plan, and the 1995 Director Plan, respectively: risk-free interest rates of 5.8%, 5.4%, and 7.4%; expected lives of 5.3, 3.4, and 4.0 years; and expected volatility of 59%, 65%, and 43%.
The Company accounts for these plans under APB Opinion No. 25, under which no compensation cost has been recognized. Had compensation cost for these plans been determined consistent with SFAS 123, the Company's net income and earnings per share would have been reduced to the following proforma amounts (in thousands except per share amounts):
1996 1995 1994 -------- -------- -------- Net income (loss): As Reported $ 77,916 $ 21,822 $(17,146) Pro Forma $ 72,913 $ 20,655 $(17,146) Primary EPS: As Reported $ 1.15 $ .28 $ (.39) Pro Forma $ 1.07 $ .26 $ (.39) Fully diluted EPS: As Reported $ 1.10 - - Pro Forma $ .98 - -
Because the SFAS 123 method of accounting has not been applied to options granted prior to January 1, 1995, the resulting proforma compensation cost may not be representative of that to be expected in future years.
(J) RELATED PARTY TRANSACTIONS In 1994, as a part of the purchase of certain notes and interests relating to two of the leased drilling units "C.E. THORNTON" and "F.G. McCLINTOCK" (see Note E), the Company paid cash of $93,500 and issued 44,000 shares of common stock to BCL Investment Partners, L.P. ("BCL"), a major shareholder of the Company during 1994. Such cash and common stock represented payment for BCL's proportionate holdings of such notes and interests and was paid pro rata to all sellers of such notes and interests.
Drilling had rig management agreements with Transocean Offshore Inc. (as successor to Sonat Offshore Drilling Inc.), a major shareholder of Drilling, for the operation and marketing of both of its drilling units. The management agreement for one of Drilling's drilling units expired in December 1995 and the other expired in October 1996, and a subsidiary of the Company now manages both drilling units. For each of the years ending December 31, 1996, 1995 and 1994, Drilling paid to Transocean Offshore Inc. approximately $1.2 million, $2.6 million and $2.5 million, respectively, for such management services. In addition, Drilling had a bareboat charter agreement with Transocean Offshore Inc. for the other drilling unit. For the years ended December 31, 1996, 1995 and 1994, Drilling received from Transocean Offshore Inc. approximately $15.1 million, $11.8 million, and $13.9 million, respectively, for such bareboat charter. At December 31, 1996 and 1995, Drilling had a net receivable from Transocean Offshore Inc. of $.8 million and $5.4 million, respectively.
(K) MAJOR CUSTOMERS AND GEOGRAPHIC INFORMATION
The Company, together with its 50% or less owned unconsolidated investees, operates principally in international offshore contract drilling of oil and gas wells. For the year ended December 31, 1996, revenues from two customers of $58 million and $35.6 million accounted for 20% and 12%, respectively, of the Company's total operating revenues. For the year ended December 31, 1995, revenues from two customers of $29.4 million and $28.9 million each accounted for 14% of the Company's total operating revenues. For the year ended December 31, 1994, revenues from one customer of $35.2 million accounted for 21% of the Company's total operating revenues.
Geographic information about the Company's operations for the three years ended December 31, 1996 is as follows (in thousands):
1996 1995 1994 ---------- ---------- ---------- Operating revenues: United States $ 28,323 $ 24,451 $ 20,151 Southeast Asia 59,028 63,562 69,751 Mediterranean- Middle East 8,662 31,406 19,344 Europe 146,899 63,639 43,646 Australia 23,686 20,940 11,516 West Africa 23,625 8,490 4,608 Other Foreign - 307 42 Corporate - - - ---------- ---------- ---------- Total $ 290,223 $ 212,795 $ 169,058 ========== ========== ==========
Operating profit (loss):(1) United States $ 7,743 $ 3,541 $ (3,691) Southeast Asia 27,411 22,358 18,413 Mediterranean- Middle East 2,427 10,661 463 Europe 73,897 16,230 1,874 Australia 11,370 (283) 1,500 West Africa 8,853 2,663 (3,362) Other Foreign (27) 115 (33) Corporate (26,594) (19,076) (18,636) ---------- ---------- ---------- Total $ 105,080 $ 36,209 $ (3,472) ========== ========== ========== Identifiable assets: United States $ 117,991 $ 52,564 $ 82,639 Southeast Asia 137,001 163,119 166,896 Mediterranean- Middle East 14,021 61,022 37,892 Europe 402,248 258,934 218,755 Australia 47,855 3,947 17,175 West Africa 47,016 14,373 13,072 Other Foreign 45 45 - Corporate 42,013 51,776 50,372 ---------- ---------- ---------- Total $ 808,190 $ 605,780 $ 586,801 ========== ========== ==========
(1) Operating profit (loss) represents operating revenues less operating expenses, depreciation, general and administrative and other, net.
READING & BATES CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL CONSOLIDATED FINANCIAL INFORMATION
QUARTERLY FINANCIAL DATA (UNAUDITED)
Summarized quarterly financial data for the two years ended December 31, 1996, are as follows (in thousands except for per share amounts):
Quarter -------------------------------------------------- First Second Third Fourth Total -------- -------- -------- -------- -------- 1996: - ---- Operating revenues $ 61,190 $ 61,700 $ 76,413 $ 90,920 $ 290,223 Gross income (1) $ 22,695 $ 26,772 $ 33,143 $ 45,049 $ 127,659 Net income $ 13,472 $ 15,835 $ 22,645 $ 25,964 $ 77,916 Net income per common share: Primary $ .20 $ .23 $ .34 $ .36 $ 1.15 Fully diluted $ - $ .22 $ .32 $ - $ 1.10
1995: - ---- Operating revenues $ 47,975 $ 50,382 $ 54,661 $ 59,777 $ 212,795 Gross income (1) $ 8,421 $ 11,296 $ 16,100 $ 17,531 $ 53,348 Income (loss) before extraordinary gain $ (369) $ 2,432 $ 9,100 $ 7,229 $ 18,392 Extraordinary gain $ - $ - $ - $ 3,430 $ 3,430 Net income (loss) $ (369) $ 2,432 $ 9,100 $ 10,659 $ 21,822 Earnings (loss) per share: Income (loss) before extraordinary gain $ (.03) $ .02 $ .13 $ .10 $ .22 Extraordinary gain $ - $ - $ - $ .05 $ .06 Net income (loss) per share applicable to common stockholders $ (.03) $ .02 $ .13 $ .15 $ .28
- ----------------------
(1) Gross income represents operating revenues less operating expenses, depreciation, and other, net.
Item 9.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Not applicable.
PART III
The information called for by Part III of Form 10-K is incorporated by reference from the Registrant's Proxy Statement relating to its annual meeting of Stockholders to be held May 13, 1997, which will be filed by the Registrant with the Securities and Exchange Commission no later than 120 days after the close of the fiscal year. Also reference is made to the information contained under the captioned "Executive Officers of Registrant" contained in Part I hereof.
PART IV
Item 14. Exhibits, Financial Statements and Reports on Form 8-K (a)Financial Statements and Exhibits
1. Financial Statements: Report of Independent Public Accountants Consolidated Balance Sheet as of December 31, 1996 and 1995 Consolidated Statement of Operations for the years ended December 31, 1996, 1995 and 1994 Consolidated Statement of Cash Flows for the years ended December 31, 1996, 1995 and 1994 Consolidated Statement of Stockholders' Equity for the years ended December 31, 1996, 1995 and 1994 Notes to Consolidated Financial Statements Supplemental Consolidated Financial Information (unaudited)
2. Exhibits:
Exhibit 3.1 - The Registrant's Restated Certificate of Incorporation. (Filed as Exhibit 3.1 to Post-Effective Amendment No. 2 to the Company's Registration Statement on Form 8-A/A dated May 27, 1994 and incorporated herein by reference.)
Exhibit 3.2 - Certificate of Designations of Series B Junior Partici- pating Preferred Stock of the Registrant. (Filed as Exhibit 3.2 to the Company's Annual Report on Form 10-K for 1995 and incorporated herein by reference.)
Exhibit 3.3 - The Registrant's Bylaws, as amended and restated effective March 2, 1995. (Filed as Exhibit 3.1 to the Registrant's Form 8-K dated March 3, 1995 and incorporated herein by reference.)
Exhibit 4.1 - Indenture relating to the Registrant's 8% Senior Subordinated Convertible Debentures due 1998 dated as of August 29, 1989, between the Registrant and IBJ Schroder Bank & Trust Company, as Trustee. (Filed as Exhibit 4.1 to the Company's Annual Report on Form 10-K for 1989 and incorporated herein by reference.)
Exhibit 4.2 - Form of the Registrant's registered 8% Senior Sub- ordinated Convertible Debentures due 1998. (Filed as Exhibit 4.2 to Registration No. 33-28580 and incor- porated herein by reference.)
Exhibit 4.3 - Form of the Registrant's bearer 8% Senior Subordinated Convertible Debentures due 1998. (Filed as Exhibit 4.3 to Registration No. 33-28580 and incorporated herein by reference.)
Exhibit 4.4 - Form of the Registrant's Common Stock Certificate. (Filed as Exhibit 4.6 to Registration No. 33-51120 and incorporated herein by reference.)
Exhibit 4.5 - Registration Rights Agreement dated as of March 29, 1991 among the Registrant, Holders as referred therein and members of Offering Committee as referred therein. (Filed as Exhibit 4.22 to the Company's Annual Report on Form 10-K for 1990 and incorporated herein by reference.)
Exhibit 4.6 - Amendment No. 1, dated as of September 1, 1992, to the Registration Rights Agreement filed as Exhibit 4.7 hereto. (Filed as Exhibit 4.18 to Registration No. 33-51120 and incorporated herein by reference.)
Exhibit 4.7 - Amendment No. 2, dated as of June 1, 1993, to the Registration Rights Agreement. (Filed as Exhibit 4.8 to Registration No. 33-65476 and incorporated herein by reference.)
Exhibit 4.8 - Amendment No. 3, dated as of August 1, 1994, to the Registration Rights Agreement. (Filed as Exhibit 4.5 to the Registration No. 33-56029 and Incorporated herein by reference.)
Exhibit 4.9 - Common Stock Issuance Agreement dated as of August 24, 1994 between the Company and BCL Investment Partners L.P. (Filed as Exhibit 4.24 to the Company's Annual Report on Form 10-K for 1994 and incorporated herein by reference.)
Exhibit 4.10 - Common Stock Issuance Agreement dated August 31, 1995 between the Company and DeepFlex Production Partners L.P. (Filed as Exhibit 4.7 to Registration No. 33-62727 and incorporated herein by reference.)
Exhibit 4.11 - Rights Agreement dated as of March 15, 1995, including Exhibit A, "Form of Certificate of Designations"; Exhibit B, "Form of Rights Certificate"; Exhibit C, "Summary of Rights to Purchase Preferred Shares". (Filed as Exhibit 4 to the Company's Registration Statement on Form 8-A dated March 22, 1995 and incorporated herein by reference.)
Exhibit 10.1* - Reading & Bates 1990 Stock Option Plan. (Filed as Appendix A to the Company's Proxy Statement dated April 26, 1993 and incorporated herein by reference.)
Exhibit 10.2* - 1992 Long-Term Incentive Plan of Reading & Bates Corporation. (Filed as Exhibit B to the Registrant's Proxy Statement dated April 27, 1992 and incorporated herein by reference.)
Exhibit 10.3* - 1995 Long-Term Incentive Plan of Reading & Bates Corporation (Filed as Exhibit 99.A to the Company's Proxy Statement dated March 29, 1995 and incorporated herein by reference.)
Exhibit 10.4* - 1995 Director Stock Option Plan of Reading & Bates Corporation (Filed as Exhibit 99.B to the Company's Proxy Statement dated March 29, 1995 and incorporated herein by reference.)
Exhibit 10.5* - Director Stock Option Agreement dated as of September 14, 1993 between the Registrant and C. A. Donabedian. (Filed as Exhibit 10.15 to the Company's Annual Report on Form 10-K for 1993 and incorporated herein by reference.)
Exhibit 10.6* - Surrender Letter dated as of February 7, 1995 by C. A. Donabedian. (Filed as Exhibit 10.33 to the Company's Annual Report on Form 10-K for 1995 and incorporated herein by reference.)
Exhibit 10.7* - Director Stock Option Agreement dated as of September 14, 1993 between the Registrant and J. W. McLean. (Filed as Exhibit 10.16 to the Company's Annual Report on Form 10-K for 1993 and incorporated herein by reference.)
Exhibit 10.8* - Surrender Letter dated as of February 7, 1995 by J. W. McLean. (Filed as Exhibit 10.35 to the Company's Annual Report on Form 10-K for 1995 and incorporated herein by reference.)
Exhibit 10.9* - Director Stock Option Agreement dated as of September 14, 1993 between the Registrant and R. L. Sandmeyer. (Filed as Exhibit 10.17 to the Company's Annual Report on Form 10-K for 1993 and incorporated herein by reference.)
Exhibit 10.10*- Surrender Letter dated as of February 7, 1995 by R. L. Sandmeyer. (Filed as Exhibit 10.37 to the Company's Annual Report on Form 10-K for 1995 and incorporated herein by reference.)
Exhibit 10.11*- Director Stock Option Agreement dated as of September 14, 1993 between the Registrant and S. A. Webster. (Filed as Exhibit 10.18 to the Company's Annual Report on Form 10-K for 1993 and incorporated herein by reference.)
Exhibit 10.12*- Surrender Letter dated as of February 7, 1995 by S. A. Webster. (Filed as Exhibit 10.39 to the Company's Annual Report on Form 10-K for 1995 and incorporated herein by reference.)
Exhibit 10.13*- Stock Option Agreement dated as of February 7, 1995 between A.L. Chavkin and the Registrant. (Filed as Exhibit 10.40 to the Company's Annual Report on Form 10-K for 1995 and incorporated herein by reference.)
Exhibit 10.14*- Stock Option Agreement dated as of February 7, 1995 between Willem Cordia and the Registrant. (Filed as Exhibit 10.41 to the Company's Annual Report on Form 10-K for 1995 and incorporated herein by reference.)
Exhibit 10.15*- Stock Option Agreement dated as of February 7, 1995 between C.A. Donabedian and the Registrant. (Filed as Exhibit 10.42 to the Company's Annual Report on Form 10-K for 1995 and incorporated herein by reference.)
Exhibit 10.16*- Stock Option Agreement dated as of February 7, 1995 between Ted Kalborg and the Registrant. (Filed as Exhibit 10.43 to the Company's Annual Report on Form 10-K for 1995 and incorporated herein by reference.)
Exhibit 10.17*- Stock Option Agreement dated as of February 7, 1995 between J.W. McLean and the Registrant. (Filed as Exhibit 10.44 to the Company's Annual Report on Form 10-K for 1995 and incorporated herein by reference.)
Exhibit 10.18*- Stock Option Agreement dated as of February 7, 1995 between R.L. Sandmeyer and the Registrant. (Filed as Exhibit 10.45 to the Company's Annual Report on Form 10-K for 1995 and incorporated herein by reference.)
Exhibit 10.19*- Stock Option Agreement dated as of February 7, 1995 between S.A. Webster and the Registrant. (Filed as Exhibit 10.46 to the Company's Annual Report on Form 10-K for 1995 and incorporated herein by reference.)
Exhibit 10.20*- Stock Option Agreement dated as of April 19, 1995 between M.A.E. Lacqueur and the Registrant. (Filed as Exhibit 10.47 to the Company's Annual Report on Form 10-K for 1995 and incorporated herein by reference.)
Exhibit 10.21*- Stock Option Agreement with respect to the 1995 Long- Term Incentive Plan dated February 6, 1996 between the Registrant and Paul B. Loyd, Jr. (Filed as Exhibit 10.48 to the Company's Annual Report on Form 10-K for 1995 and incorporated herein by reference.)
Exhibit 10.22*- Amendment No. 1, dated as of December 3, 1996 to Stock Option Agreement with respect to the 1995 Long-Term Incentive Plan between the Registrant and Paul B. Loyd, Jr.
Exhibit 10.23*- Stock Option Agreement with respect to the 1992 Long- Term Incentive Plan dated February 6, 1996 between the Registrant and Paul B. Loyd, Jr. (Filed as Exhibit 10.49 to the Company's Annual Report on Form 10-K for 1995 and incorporated herein by reference.)
Exhibit 10.24*- Amendment No. 1, dated as of December 3, 1996 to Stock Option Agreement with respect to the 1992 Long-Term Incentive Plan between the Registrant and Paul B. Loyd, Jr.
Exhibit 10.25*- Employment Agreement dated as of November 1, 1991 between the Registrant and L. E. Voss, Jr. (Filed as Exhibit 10.34 to the Company's Annual Report on Form 10-K for 1991 and incorporated herein by reference.)
Exhibit 10.26*- Amendment No. 1, dated as of October 1, 1993, to the Employment Agreement dated as of November 1, 1991 between the Registrant and L. E. Voss, Jr. (Filed as Exhibit 10.22 to the Company's Annual Report on Form 10-K for 1993 and incorporated herein by reference.)
Exhibit 10.27*- Employment Agreement dated as of November 1, 1991 between the Registrant and T. W. Nagle. (Filed as Exhibit 10.35 to the Company's Annual Report on Form 10-K for 1991 and incorporated herein by reference.)
Exhibit 10.28*- Amendment No. 1, dated as of October 1, 1993, to the Employment Agreement dated as of November 1, 1991 between the Registrant and T. W. Nagle. (Filed as Exhibit 10.24 to the Company's Annual Report on Form 10-K for 1993 and incorporated herein by reference.)
Exhibit 10.29*- Employment Agreement dated as of November 1, 1991 between the Registrant and C. R. Ofner. (Filed as Exhibit 10.36 to the Company's Annual Report on Form 10-K for 1991 and incorporated herein by reference.)
Exhibit 10.30*- Amendment No. 1, dated as of October 1, 1993, to the Employment Agreement dated as of November 1, 1991 between the Registrant and C. R. Ofner. (Filed as Exhibit 10.26 to the Company's Annual Report on Form 10-K for 1993 and incorporated herein by reference.)
Exhibit 10.31*- Employment Agreement dated as of November 1, 1991 between the Registrant and D. L. McIntire. (Filed as Exhibit 10.37 to the Company's Annual Report on Form 10-K for 1991 and incorporated herein by reference.)
Exhibit 10.32*- Amendment No. 1, dated as of October 1, 1993, to the Employment Agreement dated as of November 1, 1991 between the Registrant and D. L. McIntire. (Filed as Exhibit 10.28 to the Company's Annual Report on Form 10-K for 1993 and incorporated herein by reference.)
Exhibit 10.33*- Employment Agreement dated as of November 1, 1991 between the Registrant and W. K. Hillin. (Filed as Exhibit 10.38 to the Company's Annual Report on Form 10-K for 1991 and incorporated herein by reference.)
Exhibit 10.34*- Amendment No. 1, dated as of October 1, 1993, to the Employment Agreement dated as of November 1, 1991 between the Registrant and W. K. Hillin. (Filed as Exhibit 10.30 to the Company's Annual Report on Form 10-K for 1993 and incorporated herein by reference.)
Exhibit 10.35*- Employment Agreement dated as of January 1, 1992 between the Registrant and Paul B. Loyd, Jr. (Filed as Exhibit 10.42 to Registration No. 33-51120 and incorporated herein by reference.)
Exhibit 10.36*- Amendment No. 1, dated as of October 1, 1993, to the Employment Agreement dated as of January 1, 1992 between the Registrant and Paul B. Loyd, Jr. (Filed as Exhibit 10.32 to the Company's Annual Report on Form 10-K for 1993 and incorporated herein by reference.)
Exhibit 10.37*- Employment Agreement dated as of January 1, 1992 between the Registrant and C. Kirk Rhein, Jr. (Filed as Exhibit 10.43 to Registration No. 33-51120 and incorporated herein by reference.)
Exhibit 10.38*- Amendment No. 1, dated as of October 1, 1993, to the Employment Agreement dated as of January 1, 1992 between the Registrant and C. Kirk Rhein, Jr. (Filed as Exhibit 10.34 to the Company's Annual Report on Form 10-K for 1993 and incorporated herein by reference.)
Exhibit 10.39*- Employment Agreement dated as of January 1, 1992 between the Registrant and J. T. Angel. (Filed as Exhibit 10.44 to Registration No. 33-51120 and incorporated herein by reference.)
Exhibit 10.40*- Agreement amending Employment Agreement dated October 7, 1993 between the Registrant and J. T. Angel. (Filed as Exhibit 10.36 to the Company's Annual Report on Form 10-K for 1993 and incorporated herein by reference.)
Exhibit 10.41*- Restricted Stock Award Agreement dated December 5, 1995 under the 1995 Long-Term Incentive Plan between L. E. Voss, Jr. and the Registrant.
Exhibit 10.42*- Restricted Stock Award Agreement dated December 5, 1995 under the 1995 Long-Term Incentive Plan between T. W. Nagle and the Registrant.
Exhibit 10.43*- Restricted Stock Award Agreement dated December 5, 1995 under the 1995 Long-Term Incentive Plan between C. R. Ofner and the Registrant.
Exhibit 10.44*- Restricted Stock Award Agreement dated December 5, 1995 under the 1995 Long-Term Incentive Plan between D. L. McIntire and the Registrant.
Exhibit 10.45*- Restricted Stock Award Agreement dated December 5, 1995 under the 1995 Long-Term Incentive Plan between W. K. Hillin and the Registrant.
Exhibit 10.46*- Restricted Stock Award Agreement dated December 3, 1996 under the 1996 Director Restricted Stock Award Plan between A. L. Chavkin and the Registrant.
Exhibit 10.47*- Restricted Stock Award Agreement dated December 3, 1996 under the 1996 Director Restricted Stock Award Plan between C. A. Donabedian and the Registrant.
Exhibit 10.48*- Restricted Stock Award Agreement dated December 3, 1996 under the 1996 Director Restricted Stock Award Plan between Ted Kalborg and the Registrant.
Exhibit 10.49*- Restricted Stock Award Agreement dated December 3, 1996 under the 1996 Director Restricted Stock Award Plan between M. A. E. Laqueur and the Registrant.
Exhibit 10.50*- Restricted Stock Award Agreement dated December 3, 1996 under the 1996 Director Restricted Stock Award Plan between J. W. McLean and the Registrant.
Exhibit 10.51*- Restricted Stock Award Agreement dated December 3, 1996 under the 1996 Director Restricted Stock Award Plan between R. L. Sandmeyer and the Registrant.
Exhibit 10.52*- Restricted Stock Award Agreement dated December 3, 1996 under the 1995 Long-Term Incentive Plan between Paul B. Loyd, Jr. and the Registrant.
Exhibit 10.53*- Stock Option Agreement dated December 3, 1996 under the 1995 Long-Term Incentive Plan between T. W. Nagle and the Registrant.
Exhibit 10.54*- Restricted Stock Award Agreement dated December 3, 1996 under the 1995 Long-Term Incentive Plan between C. R. Ofner and the Registrant.
Exhibit 10.55*- Restricted Stock Award Agreement dated December 3, 1996 under the 1995 Long-Term Incentive Plan between D. L. McIntire and the Registrant.
Exhibit 10.56*- Restricted Stock Award Agreement dated December 3, 1996 under the 1995 Long-Term Incentive Plan between W. K. Hillin and the Registrant.
Exhibit 10.57 - Agreement dated as of August 31, 1991 among Registrant, Arcade Shipping AS and Sonat Offshore Drilling Inc. (Filed as Exhibit 10.40 to the Company's Annual Report on Form 10-K for 1991 and incorporated herein by reference.)
Exhibit 10.58 - Facility Agreement dated February 21, 1991 between Arcade Drilling AS, Chase Investment Bank Limited, The Chase Manhattan Bank, N.A. and others. (Filed as Exhibit 10.51 to Registration No. 33-51120 and incorporated herein by reference.)
Exhibit 10.59 - Amendment Agreement dated November 30, 1995 to Facility Agreement dated February 21, 1991 between Arcade Drilling AS, Chase Investment Bank Limited, The Chase Manhattan Bank, N.A. and others. (Filed as Exhibit 10.71 to the Company's Annual Report on Form 10-K for 1995 and incorporated herein by reference.)
Exhibit 10.60 - Second Amendment Agreement dated October, 1996 between Arcade Drilling AS, Chase Investment Bank Limited, The Chase Manhattan Bank, N.A. and others.
Exhibit 10.61 - Assignment Agreement "F. G. McClintock" dated as of August 24, 1994 between the Company and BCL Investment Partners L.P. (Filed as Exhibit 10.55 to the Company's Annual Report on Form 10-K for 1994 and incorporated herein by reference.)
Exhibit 10.62 - Assignment Agreement "F. G. McClintock" dated as of September 27, 1994 between the Company and BT Advisors, Inc. (Filed as Exhibit 10.56 to the Company's Annual Report on Form 10-K for 1994 and incorporated herein by reference.)
Exhibit 10.63 - Assignment Agreement "C. E. Thornton" dated as of August 24, 1994 between the Company and BCL Investment Partners L.P. (Filed as Exhibit 10.57 to the Company's Annual Report on Form 10-K for 1994 and incorporated herein by reference.)
Exhibit 10.64 - Assignment Agreement "C. E. Thornton" dated as of September 27, 1994 between the Company and BT Advisors, Inc. (Filed as Exhibit 10.58 to the Company's Annual Report on Form 10-K for 1994 and incorporated herein by reference.)
Exhibit 10.65 - Assignment Agreement "George H. Galloway" dated as of August 24, 1994 between the Company and Elliott Associates L.P. (Filed as Exhibit 10.59 to the Company's Annual Report on Form 10-K for 1994 and incorporated herein by reference.)
Exhibit 10.66 - Memorandum of Agreement dated August 31, 1995 between FPS II, Inc., as holder of legal title for the benefit of DeepFlex Production Partners, L.P. and Reading & Bates (U.K.) Limited, a subsidiary of the Registrant. (Filed as Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q for the Third Quarter of 1995 and incorporated herein by reference.)
Exhibit 10.67 - Agreement for the sale and purchase of Semi-Submersible Emergency Support Vessel Iolair dated September 8, 1995 between BP Exploration Operating Company Limited and Reading & Bates (Caledonia) Limited, a subsidiary of the Registrant. (Filed as Exhibit 10.3 to the Company's Quarterly Report on Form 10-Q for the Third Quarter of 1995 and incorporated herein by reference.)
Exhibit 10.68 - Mortgage of a Ship dated September 8, 1995 between Reading & Bates (Caledonia) Limited, a subsidiary of the Registrant, and BP Exploration Operating Company Limited. (Filed as Exhibit 10.4 to the Company's Quarterly Report on Form 10-Q for the Third Quarter of 1995 and incorporated herein by reference.)
Exhibit 10.69 - Mortgage of a Ship dated September 8, 1995 between Reading & Bates (Caledonia) Limited, a subsidiary of the Registrant, and Britoil plc. (Filed as Exhibit 10.5 to the Company's Quarterly Report on Form 10-Q for the Third Quarter of 1995 and incorporated herein by reference.)
Exhibit 10.70 - Deed of Covenant dated September 8, 1995 between Reading & Bates (Caledonia) Limited, a subsidiary of the Registrant, and BP Exploration Operating Company Limited. (Filed as Exhibit 10.6 to the Company's Quarterly Report on Form 10-Q for the Third Quarter of 1995 and incorporated herein by reference.)
Exhibit 10.71 - Deed of Covenant dated September 8, 1995 between Reading & Bates (Caledonia) Limited, a subsidiary of the Registrant, and Britoil Public Limited Company. (Filed as Exhibit 10.7 to the Company's Quarterly Report on Form 10-Q for the Third Quarter of 1995 and incorporated herein by reference.)
Exhibit 10.72 - Performance Guarantee dated September 8, 1995 by the Registrant in favour of BP Exploration Operating Company Limited. (Filed as Exhibit 10.8 to the Company's Quarterly Report on Form 10-Q for the Third Quarter of 1995 and incorporated herein by reference.)
Exhibit 10.73 - Performance Guarantee dated September 8, 1995 by the Registrant in favour of Britoil plc. (Filed as Exhibit 10.9 to the Company's Quarterly Report on Form 10-Q for the Third Quarter of 1995 and incorporated herein by reference.)
Exhibit 10.74 - Initial Services Agreement dated September 8, 1995 between Britoil Public Limited Company and Reading & Bates (Caledonia) Limited, a subsidiary of the Registrant. (Filed as Exhibit 10.10 to the Company's Quarterly Report on Form 10-Q for the Third Quarter of 1995 and incorporated herein by reference.)
Exhibit 10.75 - Heads of Agreement for the provision of Vessel Services dated September 8, 1995 between Britoil Public Limited Company, Reading & Bates (Caledonia) Limited, a subsidiary of the Registrant, and the Registrant. (Filed as Exhibit 10.11 to the Company's Quarterly Report on Form 10-Q for the Third Quarter of 1995 and incorporated herein by reference.)
Exhibit 10.76 - Credit Facility Agreement dated November 16, 1995 among the Registrant, Reading & Bates Drilling Co. and Reading & Bates Exploration Co., subsidiaries of the Registrant, and Christiania Bank Og Kreditkasse, as agent. (Filed as Exhibit 10.101 to the Company's Annual Report on Form 10-K for 1995 and incorporated herein by reference.)
Exhibit 10.77 - Guarantee dated November 28, 1995 by the Registrant in favor of Christiania Bank Og Kreditkasse. (Filed as Exhibit 10.102 to the Company's Annual Report on Form 10-K for 1995 and incorporated herein by reference.)
Exhibit 10.78 - First Preferred Mortgage on the "Jack Bates" dated November 28, 1995 between Reading & Bates Drilling Co., a subsidiary of the Registrant, and Wilmington Trust Company, as Indenture Trustee. (Filed as Exhibit 10.103 to the Company's Annual Report on Form 10-K for 1995 and incorporated herein by reference.)
Exhibit 10.79 - First Preferred Mortgage on the "D.R. Stewart" dated November 28, 1995 between Reading & Bates Exploration Co., a subsidiary of the Registrant, and Wilmington Trust Company, as Indenture Trustee. (Filed as Exhibit 10.104 to the Company's Annual Report on Form 10-K for 1995 and incorporated herein by reference.)
Exhibit 10.80 - Indenture of Trust dated November 16, 1995 among Reading & Bates Drilling Co. and Reading & Bates Exploration Co., subsidiaries of the Registrant, and Wilmington Trust Company, as Indenture Trustee. (Filed as Exhibit 10.105 to the Company's Annual Report on Form 10-K for 1995 and incorporated herein by reference.)
Exhibit 10.81 - General Assignment with respect to the "Jack Bates" dated November 28, 1995 by Reading & Bates Drilling Co., a subsidiary of the Registrant, in favor of Christiania Bank Og Kreditkasse, as agent. (Filed as Exhibit 10.106 to the Company's Annual Report on Form 10-K for 1995 and incorporated herein by reference.)
Exhibit 10.82 - General Assignment with respect to the "D.R. Stewart" dated November 28, 1995 by Reading & Bates Exploration Co., a subsidiary of the Registrant, in favor of Christiania Bank Og Kreditkasse, as agent. (Filed as Exhibit 10.107 to the Company's Annual Report on Form 10-K for 1995 and incorporated herein by reference.)
Exhibit 10.83 - Assignment of Insurances with respect to the "Jack Bates" dated November 28, 1995 by Reading & Bates Drilling Co., a subsidiary of the Registrant, in favor of Christiania Bank Og Kreditkasse, as agent. (Filed as Exhibit 10.108 to the Company's Annual Report on Form 10-K for 1995 and incorporated herein by reference.)
Exhibit 10.84 - Assignment of Insurances with respect to the "D.R. Stewart" dated November 28, 1995 by Reading & Bates Exploration Co., a subsidiary of the Registrant, in favor of Christiania Bank Og Kreditkasse, as agent. (Filed as Exhibit 10.109 to the Company's Annual Report on Form 10-K for 1995 and incorporated herein by reference.)
Exhibit 10.85 - Credit Agreement dated as of April 30, 1996 among Registrant, Reading & Bates Drilling Co., certain lending institutions named therein, Credit Lyonnais New York Branch, as co-agent, and Christiana Bank og Kreditkasse, New York Branch, as agent.
Exhibit 10.86 - Security Agreement dated as of April 30, 1996 among Reading & Bates Drilling Co., Reading & Bates Exploration Co., Reading & Bates (A) Pty. Ltd., Reading and Bates Borneo Drilling Co., Ltd, and Christiana Bank og Kreditkasse, New York Branch, as collateral agent.
Exhibit 10.87 - Subsidiary Guaranty dated as of April 30, 1996 by Reading & Bates Exploration Co., Reading & Bates (A) Pty. Ltd., and Reading and Bates Borneo Drilling Co., Ltd.
Exhibit 10.88 - First Preferred Mortgage on the "D. R. STEWART" dated April 30, 1996 between Reading & Bates Exploration Co. in favor of Wilmington Trust Company, as trustee.
Exhibit 10.89 - First Preferred Mortgage on the "JACK BATES" dated April 30, 1996 between Reading & Bates Drilling Co. in favor of Wilmington Trust Company, as trustee.
Exhibit 10.90 - First Preferred Mortgage on the "W. D. KENT" dated April 30, 1996 between Reading & Bates Exploration Co. in favor of Wilmington Trust Company, as trustee.
Exhibit 10.91- Indenture of First Naval Mortgage on the "CHARLEY GRAVES" dated April 30, 1996 between Reading and Bates Borneo Drilling Co. Ltd. and Christiana Bank og Kreditkasse, New York Branch, as mortgagee.
Exhibit 10.92- First Priority Mortgage on the "RON TAPPMEYER" dated April 30, 1996 between Reading & Bates (A) Pty. Ltd. and Christiana Bank og Kreditkasse, New York Branch, as mortgagee.
Exhibit 10.93- Deed of Covenant on the "J. W. MCLEAN" dated April 30, 1996 between Reading & Bates Drilling Co. and Christiana Bank og Kreditkasse, New York Branch, as mortgagee.
Exhibit 10.94- Indenture of Trust dated as of April 30, 1996 among Reading & Bates Drilling Co., Reading & Bates Exploration Co., and Wilmington Trust Company, as trustee.
Exhibit 10.95 - Collateral Assignment of Insurance dated April 30, 1996 with respect to the "JACK BATES" between Reading & Bates Drilling Co.and Wilmington Trust Company, as trustee.
Exhibit 10.96 - Collateral Assignment of Insurance dated April 30, 1996 with respect to the "D. R. STEWART" between Reading & Bates Exploration Co. and Wilmington Trust Company, as trustee.
Exhibit 10.97 - Collateral Assignment of Insurance dated April 30, 1996 with respect to the "W. D. KENT" between Reading & Bates Exploration Co. and Wilmington Trust Company, as trustee.
Exhibit 10.98 - Collateral Assignment of Insurance dated April 30, 1996 with respect to the "CHARLEY GRAVES" between Reading and Bates Borneo Drilling Co., Ltd. and Christiana Bank og Kreditkasse, New York Branch, as agent.
Exhibit 10.99 - Collateral Assignment of Insurance dated April 30, 1996 with respect to the "RON TAPPMEYER" between Reading and Bates (A) Pty. Ltd. and Christiana Bank og Kreditkasse, New York Branch, as agent.
Exhibit 10.100- Collateral Assignment of Insurance dated April 30, 1996 with respect to the "J. W. MCLEAN" between Reading and Bates Borneo Drilling Co., Ltd. and Christiana Bank og Kreditkasse, New York Branch, as agent.
Exhibit 10.101- First Amendment dated as of July 9, 1996 to Credit Agreement dated as of April 30, 1996 among Registrant, Reading & Bates Drilling Co., certain lending institutions named therein, Credit Lyonnais New York Branch, as co-agent, and Christiana Bank og Kreditkasse, New York Branch, as agent.
Exhibit 10.102- Subsidiary Assumption Agreement dated as of July 9, 1996 by RB Drilling Co. and HRB Rig Corporation.
Exhibit 10.103- Indenture of First Naval Mortgage on the "J. W. MCLEAN" dated July 9, 1996 by Reading & Bates Drilling Co. in favor of Christiana Bank og Kreditkasse, New York Branch, as mortgagee.
Exhibit 10.104- First Preferred Mortgage on the "HARVEY H. WARD" dated July 9, 1996 by HRB Rig Corporation in favor of Wilmington Trust Company, as trustee.
Exhibit 10.105- Amendment No. 1 to Indenture of First Naval Mortgage on the "CHARLIE GRAVES" dated July 9, 1996 by Reading and Bates Borneo Drilling Co., Ltd. in favor of Christiana Bank og Kreditkasse, New York Branch, as mortgagee.
Exhibit 10.106- Amendment to First Preferred Mortgage on the "JACK BATES" dated July 9, 1996 by Reading & Bates Drilling Co. in favor of Wilmington Trust Company, as trustee.
Exhibit 10.107- Amendment to First Preferred Mortgage on the "D. R. STEWART" dated July 9, 1996 by Reading & Bates Exploration Co. in favor of Wilmington Trust Company, as trustee.
Exhibit 10.108- Amendment to First Preferred Mortgage on the "W. D. KENT" dated July 9, 1996 by Reading & Bates Exploration Co. in favor of Wilmington Trust Company, as trustee.
Exhibit 10.109- Collateral Assignment of Insurance dated July 9, 1996 with respect to the "HARVEY H. WARD" between HRB Rig Corporation and Wilmington Trust Company, as trustee.
Exhibit 10.110- Collateral Assignment of Insurance dated July 9, 1996 with respect to the "RIG 41" between RB Drilling Co. and Christiana Bank og Kreditkasse, New York Branch, as agent.
Exhibit 10.111- Amended and Restated Indenture of Trust dated as of July 9, 1996 among Reading & Bates Drilling Co., Reading & Bates Exploration Co., HRB Rig Corporation and Wilmington Trust Company, as trustee.
Exhibit 10.112- Second Amendment dated as of August 30, 1996 to Credit Agreement dated as of April 30, 1996 among Registrant, Reading & Bates Drilling Co., certain lending institutions named therein, Credit Lyonnais New York Branch, as co-agent, and Christiana Bank og Kreditkasse, New York Branch, as agent.
Exhibit 10.113- Subsidiary Assumption Agreement dated as of August 30, 1996 by Reading & Bates Development Co.
Exhibit 10.114- Subsidiary Guaranty dated as of August 30, 1996 by Reading & Bates Development Co.
Exhibit 10.115- Indenture of First Naval Mortgage on "SEILLEAN" dated August 30, 1996 by Reading & Bates Development Co. in favor of Christiana Bank og Kreditkasse, New York Branch, as mortgagee.
Exhibit 10.116- Collateral Assignment of Insurance dated August 30, 1996 with respect to the "SEILLEAN" between Reading & Bates Development Co. and Christiana Bank og Kreditkasee, New York Branch, as agent.
Exhibit 10.117- Credit Agreement dated as of November 13, 1996 among Registrant, Reading & Bates Drilling Co., certain lending institutions named therein, Banque Indosuez, as documentation agent, Credit Lyonnais New York Branch, as documentation agent, and Christiana Bank og Kreditkasse, New York Branch, as administrative agent, arranger and security trustee.
Exhibit 10.118- Security Agreement dated as of November 13, 1996 among Reading & Bates Drilling Co., Reading & Bates Exploration Co., Reading & Bates Offshore, Limited, HRB Rig Corporation, Reading & Bates (A) Pty. Ltd., Reading and Bates Borneo Drilling Co., Ltd, and Christiana Bank og Kreditkasse, New York Branch, as collateral agent.
Exhibit 10.119- Subsidiary Guaranty dated as of November 13, 1996 by Reading & Bates Exploration Co., Reading & Bates (A) Pty. Ltd., Reading and Bates Borneo Drilling Co., Ltd., Reading & Bates Offshore, Limited and HRB Rig Corporation.
Exhibit 10.120- First Preferred Mortgage on the "D. R. STEWART" dated November 13, 1996 between Reading & Bates Exploration Co. in favor of Christiana Bank og Kreditkasse, New York Branch, as security trustee.
Exhibit 10.121- First Preferred Mortgage on the "JACK BATES" dated November 13, 1996 between Reading & Bates Drilling Co. in favor of Christiana Bank og Kreditkasse, New York Branch, as security trustee.
Exhibit 10.122- First Preferred Mortgage on the "W. D. KENT" dated November 13, 1996 between Reading & Bates Exploration Co. in favor of Christiana Bank og Kreditkasse, as security trustee.
Exhibit 10.123- First Preferred Mortgage on the "RANDOLPH YOST" dated November 13, 1996 between Reading & Bates Drilling Co. in favor of Christiana Bank og Kreditkasse, as security trustee.
Exhibit 10.124- First Preferred Mortgage on the "GEORGE H. GALLOWAY" dated November 13, 1996 between Reading & Bates Offshore, Limited in favor of Christiana Bank og Kreditkasse, as security trustee.
Exhibit 10.125- First Preferred Mortgage on the "F. G. MCCLINTOCK" dated November 13, 1996 between Reading & Bates Offshore, Limited in favor of Christiana Bank og Kreditkasse, as security trustee.
Exhibit 10.126- First Preferred Mortgage on the "J. T. ANGEL" dated November 13, 1996 between Reading & Bates Drilling Co. in favor of Christiana Bank og Kreditkasse, as security trustee.
Exhibit 10.127- First Preferred Mortgage on the "ROGER W. MOWELL" dated November 13, 1996 between Reading & Bates Drilling Co. in favor of Christiana Bank og Kreditkasse, as security trustee.
Exhibit 10.128- First Preferred Mortgage on the "HARVEY H. WARD" dated November 13, 1996 between HRB Rig Corporation in favor of Christiana Bank og Kreditkasse, as security trustee.
Exhibit 10.129- Indenture of First Naval Mortgage on the "CHARLEY GRAVES" dated November 13, 1996 between Reading and Bates Borneo Drilling Co. Ltd. and Christiana Bank og Kreditkasse, New York Branch, as mortgagee.
Exhibit 10.130- Indenture of First Naval Mortgage on the "J. W. MCLEAN" dated November 13, 1996 between Reading & Bates Drilling Co. and Christiana Bank og Kreditkasse, New York Branch, as mortgagee.
Exhibit 10.131- Indenture of First Naval Mortgage on the "RIG 41" dated November 13, 1996 between Reading and Bates Borneo Drilling Co. Ltd. and Christiana Bank og Kreditkasse, New York Branch, as mortgagee.
Exhibit 10.132- First Priority Mortgage on the "RON TAPPMEYER" dated November 13, 1996 between Reading & Bates (A) Pty. Ltd. and Christiana Bank og Kreditkasse, New York Branch, as mortgagee.
Exhibit 10.133- Pledge Agreement dated as of November 13, 1996 between Registrant and Christiana Bank og Kreditkasse, New York Branch, as collateral agent.
Exhibit 10.134- Letter of Credit Agreement dated as of December 30, 1996 between Registrant, Reading & Bates Drilling Co., and Christiana Ban og Kreditkasse, New York Branch.
Exhibit 10.135- Memorandum of Agreement dated November 28, 1995 between Reading and Bates, Inc., a subsidiary of the Registrant, and Deep Sea Investors, L.L.C. (Filed as Exhibit 10.110 to the Company's Annual Report on Form 10-K for 1995 and incorporated herein by reference.)
Exhibit 10.136- Bareboat Charter "M.G. Hulme, Jr." dated November 28, 1995 between Deep Sea Investors, L.L.C. and Reading & Bates Drilling Co., a subsidiary of the Registrant. (Filed as Exhibit 10.111 to the Company's Annual Report on Form 10-K for 1995 and incorporated herein by reference.)
Exhibit 10.137- Purchase and Sale Agreement dated October 18, 1995 between Enserch Exploration, Inc. and Reading & Bates Development Co., a subsidiary of the Registrant. (Filed as Exhibit 10.112 to the Company's Annual Report on Form 10-K for 1995 and incorporated herein by reference.)
Exhibit 10.138- Assignment and Bill of Sale (OCS-G-8504) effective as of May 1, 1995 between Enserch Exploration, Inc. and Reading & Bates Development Co., a subsidiary of the Registrant. (Filed as Exhibit 10.113 to the Company's Annual Report on Form 10-K for 1995 and incorporated herein by reference.)
Exhibit 10.139- Assignment and Bill of Sale (OCS-G-8012 effective as of May 1, 1995 between Enserch Exploration, Inc. and Reading & Bates Development Co., a subsidiary of the Registrant. (Filed as Exhibit 10.114 to the Company's Annual Report on Form 10-K for 1995 and incorporated herein by reference.)
Exhibit 10.140- Assignment and Bill of Sale (OCS-G- 7049) effective as of May 1, 1995 between Enserch Exploration, Inc. and Reading & Bates Development Co., a subsidiary of the Registrant. (Filed as Exhibit 10.115 to the Company's Annual Report on Form 10-K for 1995 and incorporated herein by reference.)
Exhibit 10.141- Assignment and Bill of Sale (OCS-G-8010) effective as of May 1, 1995 between Enserch Exploration, Inc. and Reading & Bates Development Co., a subsidiary of the Registrant. (Filed as Exhibit 10.116 to the Company's Annual Report on Form 10-K for 1995 and incorporated herein by reference.)
Exhibit 10.142- Assignment and Bill of Sale (OCS-G-13696) effective as of May 1, 1995 between Enserch Exploration, Inc. and Reading & Bates Development Co., a subsidiary of the Registrant. (Filed as Exhibit 10.117 to the Company's Annual Report on Form 10-K for 1995 and incorporated herein by reference.)
Exhibit 10.143- Assignment and Bill of Sale (OCS-G-13171) effective as of May 1, 1995 between Enserch Exploration, Inc. and Reading & Bates Development Co., a subsidiary of the Registrant. (Filed as Exhibit 10.118 to the Company's Annual Report on Form 10-K for 1995 and incorporated herein by reference.)
Exhibit 10.144- Assignment and Bill of Sale (OCS-G-8005) effective as of May 1, 1995 between Enserch Exploration, Inc. and Reading & Bates Development Co., a subsidiary of the Registrant. (Filed as Exhibit 10.119 to the Company's Annual Report on Form 10-K for 1995 and incorporated herein by reference.)
Exhibit 10.145- Assignment and Bill of Sale (OCS-G-8000) effective as of May 1, 1995 between Enserch Exploration, Inc. and Reading & Bates Development Co., a subsidiary of the Registrant. (Filed as Exhibit 10.120 to the Company's Annual Report on Form 10-K for 1995 and incorporated herein by reference.)
Exhibit 10.146- Assignment and Bill of Sale (OCS-G-8006) effective as of May 1, 1995 between Enserch Exploration, Inc. and Reading & Bates Development Co., a subsidiary of the Registrant. (Filed as Exhibit 10.121 to the Company's Annual Report on Form 10-K for 1995 and incorporated herein by reference.)
Exhibit 10.147- Assignment and Bill of Sale (OCS-G-8876) effective as of May 1, 1995 between Enserch Exploration, Inc. and Reading & Bates Development Co., a subsidiary of the Registrant. (Filed as Exhibit 10.122 to the Company's Annual Report on Form 10-K for 1995 and incorporated herein by reference.)
Exhibit 10.148- Payment Agreement dated October 18, 1995 between Enserch Exploration, Inc. and Reading & Bates Development Co., a subsidiary of the Registrant. (Filed as Exhibit 10.123 to the Company's Annual Report on Form 10-K for 1995 and incorporated herein by reference.)
Exhibit 10.149- Mortgage and Security Agreement dated October 18, 1995 between Enserch Exploration, Inc. and Reading & Bates Development Co., a subsidiary of the Registrant. (Filed as Exhibit 10.124 to the Company's Annual Report on Form 10-K for 1995 and incorporated herein by reference.)
Exhibit 10.150- Operating Agreement made effective as of May 1, 1995 among Enserch Exploration, Inc., Mobil Oil Corporation, Mobil Oil exploration & Producing Southeast Inc. and Reading & Bates Development Co., a subsidiary of the Registrant. (Filed as Exhibit 10.125 to the Company's Annual Report on Form 10-K for 1995 and incorporated herein by reference.)
Exhibit 10.151- Option Agreement made effective as of May 1, 1995 between Enserch Exploration, Inc. and Reading & Bates Development Co., a subsidiary of the Registrant. (Filed as Exhibit 10.126 to the Company's Annual Report on Form 10-K for 1995 and incorporated herein by reference.)
Exhibit 10.152- Participation Agreement dated December 4, 1996 between Santa Fe Energy Resources, Inc. and Reading & Bates Development Co.
Exhibit 10.153- Assignment of Record Title Interest effective December 11, 1996 between Santa Fe Energy Resources, Inc. and Reading & Bates Development Co. with respect to OCS-G 16404.
Exhibit 10.154- Assignment of Record Title Interest effective December 11, 1996 between Santa Fe Energy Resources, Inc. and Reading & Bates Development Co. with respect to OCS-G 16405.
Exhibit 10.155- Assignment of Record Title Interest effective December 11, 1996 between Santa Fe Energy Resources, Inc. and Reading & Bates Development Co. with respect to OCS-G 16567.
Exhibit 10.156- Assignment of Record Title Interest effective December 11, 1996 between Santa Fe Energy Resources, Inc. and Reading & Bates Development Co. with respect to OCS-G 16568.
Exhibit 10.157- Assignment of Record Title Interest effective December 11, 1996 between Santa Fe Energy Resources, Inc. and Reading & Bates Development Co. with respect to OCS-G 16578.
Exhibit 10.158- Assignment of Record Title Interest effective December 11, 1996 between Santa Fe Energy Resources, Inc. and Reading & Bates Development Co. with respect to OCS-G 16579.
Exhibit 10.159- Assignment of Record Title Interest effective December 11, 1996 between Santa Fe Energy Resources, Inc. and Reading & Bates Development Co. with respect to OCS-G 17251.
Exhibit 10.160- Assignment of Record Title Interest effective January 2, 1997 between Santa Fe Energy Resources, Inc. and Reading & Bates Development Co. with respect to OCS-G 17355.
Exhibit 10.161- Joint Venture Agreement dated December 16, 1996 among Shell Deepwater Development Inc., SOI Finance Inc. and Reading & Bates Development Co.
Exhibit 10.162- Limited Liability Company Agreement between Conoco Development Company and RB Deepwater Exploration Inc.
Exhibit 10.163- Joint Venture Agreement dated February 22, 1996 between INTEC Engineering, Inc. and Reading & Bates Development Co.
Exhibit 10.164- Loan Agreement dated as of December 14, 1996 among TRB Holding Corporation, Reading & Bates (U.K.) Limited and Nissho Iwai Europe PLC.
Exhibit 10.165- First Naval Mortgage on the "SEILLEAN" dated December 14, 1996 between TRB Holding Corporation in favor of Nissho Iwai Europe PLC.
Exhibit 10.166- Collateral Assignment of Deposit Account, Pledge and Security Agreement dated December 14, 1996 with respect to the "SEILLEAN" between TRB Holding Corporation and Nissho Iwai Europe PLC.
Exhibit 10.167- Assignment of Insurances dated December 14, 1996 with respect to the "SEILLEAN" between TRB Holding Corporation and Reading & Bates (U.K.) Limited and Nissho Iwai Europe PLC.
Exhibit 11 - Computation of Earnings Per Common Share
Exhibit 21 - Schedule of Subsidiaries of the Company
Exhibit 23 - Consent of Arthur Andersen LLP
Exhibit 27 - Financial Data Schedule. (Exhibit 27 is being submitted as an exhibit only in the electronic format of this Annual Report on Form 10-K being submitted to the Securities and Exchange Commission.)
Exhibit 99 - Annual Report on Form 11-K with respect to Reading & Bates Savings Plan. (To be filed by amendment to the Annual Report on Form 10-K.)
Instruments with respect to certain long-term obligations of the Company are not being filed as exhibits hereto as the securities authorized thereunder do not exceed 10% of the Company's total assets. The Company agrees to furnish a copy of each such instrument to the Securities and Exchange Commission upon its request.
* Management contract or compensatory plan or arrangement required to be filed as an exhibit pursuant to the requirements of Item 14(c) of Form 10-K.
(b) Reports on Form 8-K
There were six Current Reports on Form 8-K filed during the three months ended December 31, 1996. A Current Report on Form 8-K was: filed October 7, 1996 announcing a voluntary commission-free oddlot selling program for shareholders who owned fewer than 100 shares of the Company's common stock; filed October 15, 1996 disclosing the Company's 3rd quarter 1996 earnings; filed October 31, 1996 announcing the formation of a joint venture between the Company and Conoco to build a DP Class 3 Drillship; filed November 8, 1996 announcing the extension of the commission-free oddlot selling program; filed November 14, 1996 disclosing the closing of a new $300 million credit facility with Christiania Bank og Kreditkasse; and filed November 25, 1996 announcing the retirement of L.E. (Sonny) Voss, Jr. as President of Reading & Bates Drilling Co. and the appointment of Andrew Bakonyi as its new President.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed by the undersigned, thereunto duly authorized on March 21, 1997.
READING & BATES CORPORATION
By Paul B. Loyd, Jr. -------------------------- Paul B. Loyd, Jr. President, Chief Executive Officer, Chairman and Director
Pursuant to the requirements of the Securities Exchange Act of l934, this report has been signed below by the following persons on behalf of the Registrant in the capacities indicated on March 21, 1997.
By Paul B. Loyd Jr. By Tim W. Nagle -------------------------- ------------------------- Paul B. Loyd, Jr. Tim W. Nagle President, Chief Executive Executive Vice President, Officer, Finance and Administration Chairman and Director Principal Accounting Officer
By Charles A. Donabedian By Macko A. E. Laqueur -------------------------- -------------------------- Charles A. Donabedian Macko A. E. Laqueur Director Director
By By Ted Kalborg -------------------------- -------------------------- J. W. McLean Ted Kalborg Director Director
By Arnold L. Chavkin By Robert L. Sandmeyer -------------------------- -------------------------- Arnold L. Chavkin Robert L. Sandmeyer Director Director
Item 14. Exhibits, Financial Statements and Reports on Form 8-K (a)Financial Statements and Exhibits
1. Financial Statements: Report of Independent Public Accountants Consolidated Balance Sheet as of December 31, 1996 and 1995 Consolidated Statement of Operations for the years ended December 31, 1996, 1995 and 1994 Consolidated Statement of Cash Flows for the years ended December 31, 1996, 1995 and 1994 Consolidated Statement of Stockholders' Equity for the years ended December 31, 1996, 1995 and 1994 Notes to Consolidated Financial Statements Supplemental Consolidated Financial Information (unaudited)
2. Exhibits:
Exhibit 3.1 - The Registrant's Restated Certificate of Incorporation. (Filed as Exhibit 3.1 to Post-Effective Amendment No. 2 to the Company's Registration Statement on Form 8-A/A dated May 27, 1994 and incorporated herein by reference.)
Exhibit 3.2 - Certificate of Designations of Series B Junior Partici- pating Preferred Stock of the Registrant. (Filed as Exhibit 3.2 to the Company's Annual Report on Form 10-K for 1995 and incorporated herein by reference.)
Exhibit 3.3 - The Registrant's Bylaws, as amended and restated effective March 2, 1995. (Filed as Exhibit 3.1 to the Registrant's Form 8-K dated March 3, 1995 and incorporated herein by reference.)
Exhibit 4.1 - Indenture relating to the Registrant's 8% Senior Subordinated Convertible Debentures due 1998 dated as of August 29, 1989, between the Registrant and IBJ Schroder Bank & Trust Company, as Trustee. (Filed as Exhibit 4.1 to the Company's Annual Report on Form 10-K for 1989 and incorporated herein by reference.)
Exhibit 4.2 - Form of the Registrant's registered 8% Senior Sub- ordinated Convertible Debentures due 1998. (Filed as Exhibit 4.2 to Registration No. 33-28580 and incor- porated herein by reference.)
Exhibit 4.3 - Form of the Registrant's bearer 8% Senior Subordinated Convertible Debentures due 1998. (Filed as Exhibit 4.3 to Registration No. 33-28580 and incorporated herein by reference.)
Exhibit 4.4 - Form of the Registrant's Common Stock Certificate. (Filed as Exhibit 4.6 to Registration No. 33-51120 and incorporated herein by reference.)
Exhibit 4.5 - Registration Rights Agreement dated as of March 29, 1991 among the Registrant, Holders as referred therein and members of Offering Committee as referred therein. (Filed as Exhibit 4.22 to the Company's Annual Report on Form 10-K for 1990 and incorporated herein by reference.)
Exhibit 4.6 - Amendment No. 1, dated as of September 1, 1992, to the Registration Rights Agreement filed as Exhibit 4.7 hereto. (Filed as Exhibit 4.18 to Registration No. 33-51120 and incorporated herein by reference.)
Exhibit 4.7 - Amendment No. 2, dated as of June 1, 1993, to the Registration Rights Agreement. (Filed as Exhibit 4.8 to Registration No. 33-65476 and incorporated herein by reference.)
Exhibit 4.8 - Amendment No. 3, dated as of August 1, 1994, to the Registration Rights Agreement. (Filed as Exhibit 4.5 to the Registration No. 33-56029 and Incorporated herein by reference.)
Exhibit 4.9 - Common Stock Issuance Agreement dated as of August 24, 1994 between the Company and BCL Investment Partners L.P. (Filed as Exhibit 4.24 to the Company's Annual Report on Form 10-K for 1994 and incorporated herein by reference.)
Exhibit 4.10 - Common Stock Issuance Agreement dated August 31, 1995 between the Company and DeepFlex Production Partners L.P. (Filed as Exhibit 4.7 to Registration No. 33-62727 and incorporated herein by reference.)
Exhibit 4.11 - Rights Agreement dated as of March 15, 1995, including Exhibit A, "Form of Certificate of Designations"; Exhibit B, "Form of Rights Certificate"; Exhibit C, "Summary of Rights to Purchase Preferred Shares". (Filed as Exhibit 4 to the Company's Registration Statement on Form 8-A dated March 22, 1995 and incorporated herein by reference.)
Exhibit 10.1* - Reading & Bates 1990 Stock Option Plan. (Filed as Appendix A to the Company's Proxy Statement dated April 26, 1993 and incorporated herein by reference.)
Exhibit 10.2* - 1992 Long-Term Incentive Plan of Reading & Bates Corporation. (Filed as Exhibit B to the Registrant's Proxy Statement dated April 27, 1992 and incorporated herein by reference.)
Exhibit 10.3* - 1995 Long-Term Incentive Plan of Reading & Bates Corporation (Filed as Exhibit 99.A to the Company's Proxy Statement dated March 29, 1995 and incorporated herein by reference.)
Exhibit 10.4* - 1995 Director Stock Option Plan of Reading & Bates Corporation (Filed as Exhibit 99.B to the Company's Proxy Statement dated March 29, 1995 and incorporated herein by reference.)
Exhibit 10.5* - Director Stock Option Agreement dated as of September 14, 1993 between the Registrant and C. A. Donabedian. (Filed as Exhibit 10.15 to the Company's Annual Report on Form 10-K for 1993 and incorporated herein by reference.)
Exhibit 10.6* - Surrender Letter dated as of February 7, 1995 by C. A. Donabedian. (Filed as Exhibit 10.33 to the Company's Annual Report on Form 10-K for 1995 and incorporated herein by reference.)
Exhibit 10.7* - Director Stock Option Agreement dated as of September 14, 1993 between the Registrant and J. W. McLean. (Filed as Exhibit 10.16 to the Company's Annual Report on Form 10-K for 1993 and incorporated herein by reference.)
Exhibit 10.8* - Surrender Letter dated as of February 7, 1995 by J. W. McLean. (Filed as Exhibit 10.35 to the Company's Annual Report on Form 10-K for 1995 and incorporated herein by reference.)
Exhibit 10.9* - Director Stock Option Agreement dated as of September 14, 1993 between the Registrant and R. L. Sandmeyer. (Filed as Exhibit 10.17 to the Company's Annual Report on Form 10-K for 1993 and incorporated herein by reference.)
Exhibit 10.10*- Surrender Letter dated as of February 7, 1995 by R. L. Sandmeyer. (Filed as Exhibit 10.37 to the Company's Annual Report on Form 10-K for 1995 and incorporated herein by reference.)
Exhibit 10.11*- Director Stock Option Agreement dated as of September 14, 1993 between the Registrant and S. A. Webster. (Filed as Exhibit 10.18 to the Company's Annual Report on Form 10-K for 1993 and incorporated herein by reference.)
Exhibit 10.12*- Surrender Letter dated as of February 7, 1995 by S. A. Webster. (Filed as Exhibit 10.39 to the Company's Annual Report on Form 10-K for 1995 and incorporated herein by reference.)
Exhibit 10.13*- Stock Option Agreement dated as of February 7, 1995 between A.L. Chavkin and the Registrant. (Filed as Exhibit 10.40 to the Company's Annual Report on Form 10-K for 1995 and incorporated herein by reference.)
Exhibit 10.14*- Stock Option Agreement dated as of February 7, 1995 between Willem Cordia and the Registrant. (Filed as Exhibit 10.41 to the Company's Annual Report on Form 10-K for 1995 and incorporated herein by reference.)
Exhibit 10.15*- Stock Option Agreement dated as of February 7, 1995 between C.A. Donabedian and the Registrant. (Filed as Exhibit 10.42 to the Company's Annual Report on Form 10-K for 1995 and incorporated herein by reference.)
Exhibit 10.16*- Stock Option Agreement dated as of February 7, 1995 between Ted Kalborg and the Registrant. (Filed as Exhibit 10.43 to the Company's Annual Report on Form 10-K for 1995 and incorporated herein by reference.)
Exhibit 10.17*- Stock Option Agreement dated as of February 7, 1995 between J.W. McLean and the Registrant. (Filed as Exhibit 10.44 to the Company's Annual Report on Form 10-K for 1995 and incorporated herein by reference.)
Exhibit 10.18*- Stock Option Agreement dated as of February 7, 1995 between R.L. Sandmeyer and the Registrant. (Filed as Exhibit 10.45 to the Company's Annual Report on Form 10-K for 1995 and incorporated herein by reference.)
Exhibit 10.19*- Stock Option Agreement dated as of February 7, 1995 between S.A. Webster and the Registrant. (Filed as Exhibit 10.46 to the Company's Annual Report on Form 10-K for 1995 and incorporated herein by reference.)
Exhibit 10.20*- Stock Option Agreement dated as of April 19, 1995 between M.A.E. Lacqueur and the Registrant. (Filed as Exhibit 10.47 to the Company's Annual Report on Form 10-K for 1995 and incorporated herein by reference.)
Exhibit 10.21*- Stock Option Agreement with respect to the 1995 Long- Term Incentive Plan dated February 6, 1996 between the Registrant and Paul B. Loyd, Jr. (Filed as Exhibit 10.48 to the Company's Annual Report on Form 10-K for 1995 and incorporated herein by reference.)
Exhibit 10.22*- Amendment No. 1, dated as of December 3, 1996 to Stock Option Agreement with respect to the 1995 Long-Term Incentive Plan between the Registrant and Paul B. Loyd, Jr.
Exhibit 10.23*- Stock Option Agreement with respect to the 1992 Long- Term Incentive Plan dated February 6, 1996 between the Registrant and Paul B. Loyd, Jr. (Filed as Exhibit 10.49 to the Company's Annual Report on Form 10-K for 1995 and incorporated herein by reference.)
Exhibit 10.24*- Amendment No. 1, dated as of December 3, 1996 to Stock Option Agreement with respect to the 1992 Long-Term Incentive Plan between the Registrant and Paul B. Loyd, Jr.
Exhibit 10.25*- Employment Agreement dated as of November 1, 1991 between the Registrant and L. E. Voss, Jr. (Filed as Exhibit 10.34 to the Company's Annual Report on Form 10-K for 1991 and incorporated herein by reference.)
Exhibit 10.26*- Amendment No. 1, dated as of October 1, 1993, to the Employment Agreement dated as of November 1, 1991 between the Registrant and L. E. Voss, Jr. (Filed as Exhibit 10.22 to the Company's Annual Report on Form 10-K for 1993 and incorporated herein by reference.)
Exhibit 10.27*- Employment Agreement dated as of November 1, 1991 between the Registrant and T. W. Nagle. (Filed as Exhibit 10.35 to the Company's Annual Report on Form 10-K for 1991 and incorporated herein by reference.)
Exhibit 10.28*- Amendment No. 1, dated as of October 1, 1993, to the Employment Agreement dated as of November 1, 1991 between the Registrant and T. W. Nagle. (Filed as Exhibit 10.24 to the Company's Annual Report on Form 10-K for 1993 and incorporated herein by reference.)
Exhibit 10.29*- Employment Agreement dated as of November 1, 1991 between the Registrant and C. R. Ofner. (Filed as Exhibit 10.36 to the Company's Annual Report on Form 10-K for 1991 and incorporated herein by reference.)
Exhibit 10.30*- Amendment No. 1, dated as of October 1, 1993, to the Employment Agreement dated as of November 1, 1991 between the Registrant and C. R. Ofner. (Filed as Exhibit 10.26 to the Company's Annual Report on Form 10-K for 1993 and incorporated herein by reference.)
Exhibit 10.31*- Employment Agreement dated as of November 1, 1991 between the Registrant and D. L. McIntire. (Filed as Exhibit 10.37 to the Company's Annual Report on Form 10-K for 1991 and incorporated herein by reference.)
Exhibit 10.32*- Amendment No. 1, dated as of October 1, 1993, to the Employment Agreement dated as of November 1, 1991 between the Registrant and D. L. McIntire. (Filed as Exhibit 10.28 to the Company's Annual Report on Form 10-K for 1993 and incorporated herein by reference.)
Exhibit 10.33*- Employment Agreement dated as of November 1, 1991 between the Registrant and W. K. Hillin. (Filed as Exhibit 10.38 to the Company's Annual Report on Form 10-K for 1991 and incorporated herein by reference.)
Exhibit 10.34*- Amendment No. 1, dated as of October 1, 1993, to the Employment Agreement dated as of November 1, 1991 between the Registrant and W. K. Hillin. (Filed as Exhibit 10.30 to the Company's Annual Report on Form 10-K for 1993 and incorporated herein by reference.)
Exhibit 10.35*- Employment Agreement dated as of January 1, 1992 between the Registrant and Paul B. Loyd, Jr. (Filed as Exhibit 10.42 to Registration No. 33-51120 and incorporated herein by reference.)
Exhibit 10.36*- Amendment No. 1, dated as of October 1, 1993, to the Employment Agreement dated as of January 1, 1992 between the Registrant and Paul B. Loyd, Jr. (Filed as Exhibit 10.32 to the Company's Annual Report on Form 10-K for 1993 and incorporated herein by reference.)
Exhibit 10.37*- Employment Agreement dated as of January 1, 1992 between the Registrant and C. Kirk Rhein, Jr. (Filed as Exhibit 10.43 to Registration No. 33-51120 and incorporated herein by reference.)
Exhibit 10.38*- Amendment No. 1, dated as of October 1, 1993, to the Employment Agreement dated as of January 1, 1992 between the Registrant and C. Kirk Rhein, Jr. (Filed as Exhibit 10.34 to the Company's Annual Report on Form 10-K for 1993 and incorporated herein by reference.)
Exhibit 10.39*- Employment Agreement dated as of January 1, 1992 between the Registrant and J. T. Angel. (Filed as Exhibit 10.44 to Registration No. 33-51120 and incorporated herein by reference.)
Exhibit 10.40*- Agreement amending Employment Agreement dated October 7, 1993 between the Registrant and J. T. Angel. (Filed as Exhibit 10.36 to the Company's Annual Report on Form 10-K for 1993 and incorporated herein by reference.)
Exhibit 10.41*- Restricted Stock Award Agreement dated December 5, 1995 under the 1995 Long-Term Incentive Plan between L. E. Voss, Jr. and the Registrant.
Exhibit 10.42*- Restricted Stock Award Agreement dated December 5, 1995 under the 1995 Long-Term Incentive Plan between T. W. Nagle and the Registrant.
Exhibit 10.43*- Restricted Stock Award Agreement dated December 5, 1995 under the 1995 Long-Term Incentive Plan between C. R. Ofner and the Registrant.
Exhibit 10.44*- Restricted Stock Award Agreement dated December 5, 1995 under the 1995 Long-Term Incentive Plan between D. L. McIntire and the Registrant.
Exhibit 10.45*- Restricted Stock Award Agreement dated December 5, 1995 under the 1995 Long-Term Incentive Plan between W. K. Hillin and the Registrant.
Exhibit 10.46*- Restricted Stock Award Agreement dated December 3, 1996 under the 1996 Director Restricted Stock Award Plan between A. L. Chavkin and the Registrant.
Exhibit 10.47*- Restricted Stock Award Agreement dated December 3, 1996 under the 1996 Director Restricted Stock Award Plan between C. A. Donabedian and the Registrant.
Exhibit 10.48*- Restricted Stock Award Agreement dated December 3, 1996 under the 1996 Director Restricted Stock Award Plan between Ted Kalborg and the Registrant.
Exhibit 10.49*- Restricted Stock Award Agreement dated December 3, 1996 under the 1996 Director Restricted Stock Award Plan between M. A. E. Laqueur and the Registrant.
Exhibit 10.50*- Restricted Stock Award Agreement dated December 3, 1996 under the 1996 Director Restricted Stock Award Plan between J. W. McLean and the Registrant.
Exhibit 10.51*- Restricted Stock Award Agreement dated December 3, 1996 under the 1996 Director Restricted Stock Award Plan between R. L. Sandmeyer and the Registrant.
Exhibit 10.52*- Restricted Stock Award Agreement dated December 3, 1996 under the 1995 Long-Term Incentive Plan between Paul B. Loyd, Jr. and the Registrant.
Exhibit 10.53*- Stock Option Agreement dated December 3, 1996 under the 1995 Long-Term Incentive Plan between T. W. Nagle and the Registrant.
Exhibit 10.54*- Restricted Stock Award Agreement dated December 3, 1996 under the 1995 Long-Term Incentive Plan between C. R. Ofner and the Registrant.
Exhibit 10.55*- Restricted Stock Award Agreement dated December 3, 1996 under the 1995 Long-Term Incentive Plan between D. L. McIntire and the Registrant.
Exhibit 10.56*- Restricted Stock Award Agreement dated December 3, 1996 under the 1995 Long-Term Incentive Plan between W. K. Hillin and the Registrant.
Exhibit 10.57 - Agreement dated as of August 31, 1991 among Registrant, Arcade Shipping AS and Sonat Offshore Drilling Inc. (Filed as Exhibit 10.40 to the Company's Annual Report on Form 10-K for 1991 and incorporated herein by reference.)
Exhibit 10.58 - Facility Agreement dated February 21, 1991 between Arcade Drilling AS, Chase Investment Bank Limited, The Chase Manhattan Bank, N.A. and others. (Filed as Exhibit 10.51 to Registration No. 33-51120 and incorporated herein by reference.)
Exhibit 10.59 - Amendment Agreement dated November 30, 1995 to Facility Agreement dated February 21, 1991 between Arcade Drilling AS, Chase Investment Bank Limited, The Chase Manhattan Bank, N.A. and others. (Filed as Exhibit 10.71 to the Company's Annual Report on Form 10-K for 1995 and incorporated herein by reference.)
Exhibit 10.60 - Second Amendment Agreement dated October, 1996 between Arcade Drilling AS, Chase Investment Bank Limited, The Chase Manhattan Bank, N.A. and others.
Exhibit 10.61 - Assignment Agreement "F. G. McClintock" dated as of August 24, 1994 between the Company and BCL Investment Partners L.P. (Filed as Exhibit 10.55 to the Company's Annual Report on Form 10-K for 1994 and incorporated herein by reference.)
Exhibit 10.62 - Assignment Agreement "F. G. McClintock" dated as of September 27, 1994 between the Company and BT Advisors, Inc. (Filed as Exhibit 10.56 to the Company's Annual Report on Form 10-K for 1994 and incorporated herein by reference.)
Exhibit 10.63 - Assignment Agreement "C. E. Thornton" dated as of August 24, 1994 between the Company and BCL Investment Partners L.P. (Filed as Exhibit 10.57 to the Company's Annual Report on Form 10-K for 1994 and incorporated herein by reference.)
Exhibit 10.64 - Assignment Agreement "C. E. Thornton" dated as of September 27, 1994 between the Company and BT Advisors, Inc. (Filed as Exhibit 10.58 to the Company's Annual Report on Form 10-K for 1994 and incorporated herein by reference.)
Exhibit 10.65 - Assignment Agreement "George H. Galloway" dated as of August 24, 1994 between the Company and Elliott Associates L.P. (Filed as Exhibit 10.59 to the Company's Annual Report on Form 10-K for 1994 and incorporated herein by reference.)
Exhibit 10.66 - Memorandum of Agreement dated August 31, 1995 between FPS II, Inc., as holder of legal title for the benefit of DeepFlex Production Partners, L.P. and Reading & Bates (U.K.) Limited, a subsidiary of the Registrant. (Filed as Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q for the Third Quarter of 1995 and incorporated herein by reference.)
Exhibit 10.67 - Agreement for the sale and purchase of Semi-Submersible Emergency Support Vessel Iolair dated September 8, 1995 between BP Exploration Operating Company Limited and Reading & Bates (Caledonia) Limited, a subsidiary of the Registrant. (Filed as Exhibit 10.3 to the Company's Quarterly Report on Form 10-Q for the Third Quarter of 1995 and incorporated herein by reference.)
Exhibit 10.68 - Mortgage of a Ship dated September 8, 1995 between Reading & Bates (Caledonia) Limited, a subsidiary of the Registrant, and BP Exploration Operating Company Limited. (Filed as Exhibit 10.4 to the Company's Quarterly Report on Form 10-Q for the Third Quarter of 1995 and incorporated herein by reference.)
Exhibit 10.69 - Mortgage of a Ship dated September 8, 1995 between Reading & Bates (Caledonia) Limited, a subsidiary of the Registrant, and Britoil plc. (Filed as Exhibit 10.5 to the Company's Quarterly Report on Form 10-Q for the Third Quarter of 1995 and incorporated herein by reference.)
Exhibit 10.70 - Deed of Covenant dated September 8, 1995 between Reading & Bates (Caledonia) Limited, a subsidiary of the Registrant, and BP Exploration Operating Company Limited. (Filed as Exhibit 10.6 to the Company's Quarterly Report on Form 10-Q for the Third Quarter of 1995 and incorporated herein by reference.)
Exhibit 10.71 - Deed of Covenant dated September 8, 1995 between Reading & Bates (Caledonia) Limited, a subsidiary of the Registrant, and Britoil Public Limited Company. (Filed as Exhibit 10.7 to the Company's Quarterly Report on Form 10-Q for the Third Quarter of 1995 and incorporated herein by reference.)
Exhibit 10.72 - Performance Guarantee dated September 8, 1995 by the Registrant in favour of BP Exploration Operating Company Limited. (Filed as Exhibit 10.8 to the Company's Quarterly Report on Form 10-Q for the Third Quarter of 1995 and incorporated herein by reference.)
Exhibit 10.73 - Performance Guarantee dated September 8, 1995 by the Registrant in favour of Britoil plc. (Filed as Exhibit 10.9 to the Company's Quarterly Report on Form 10-Q for the Third Quarter of 1995 and incorporated herein by reference.)
Exhibit 10.74 - Initial Services Agreement dated September 8, 1995 between Britoil Public Limited Company and Reading & Bates (Caledonia) Limited, a subsidiary of the Registrant. (Filed as Exhibit 10.10 to the Company's Quarterly Report on Form 10-Q for the Third Quarter of 1995 and incorporated herein by reference.)
Exhibit 10.75 - Heads of Agreement for the provision of Vessel Services dated September 8, 1995 between Britoil Public Limited Company, Reading & Bates (Caledonia) Limited, a subsidiary of the Registrant, and the Registrant. (Filed as Exhibit 10.11 to the Company's Quarterly Report on Form 10-Q for the Third Quarter of 1995 and incorporated herein by reference.)
Exhibit 10.76 - Credit Facility Agreement dated November 16, 1995 among the Registrant, Reading & Bates Drilling Co. and Reading & Bates Exploration Co., subsidiaries of the Registrant, and Christiania Bank Og Kreditkasse, as agent. (Filed as Exhibit 10.101 to the Company's Annual Report on Form 10-K for 1995 and incorporated herein by reference.)
Exhibit 10.77 - Guarantee dated November 28, 1995 by the Registrant in favor of Christiania Bank Og Kreditkasse. (Filed as Exhibit 10.102 to the Company's Annual Report on Form 10-K for 1995 and incorporated herein by reference.)
Exhibit 10.78 - First Preferred Mortgage on the "Jack Bates" dated November 28, 1995 between Reading & Bates Drilling Co., a subsidiary of the Registrant, and Wilmington Trust Company, as Indenture Trustee. (Filed as Exhibit 10.103 to the Company's Annual Report on Form 10-K for 1995 and incorporated herein by reference.)
Exhibit 10.79 - First Preferred Mortgage on the "D.R. Stewart" dated November 28, 1995 between Reading & Bates Exploration Co., a subsidiary of the Registrant, and Wilmington Trust Company, as Indenture Trustee. (Filed as Exhibit 10.104 to the Company's Annual Report on Form 10-K for 1995 and incorporated herein by reference.)
Exhibit 10.80 - Indenture of Trust dated November 16, 1995 among Reading & Bates Drilling Co. and Reading & Bates Exploration Co., subsidiaries of the Registrant, and Wilmington Trust Company, as Indenture Trustee. (Filed as Exhibit 10.105 to the Company's Annual Report on Form 10-K for 1995 and incorporated herein by reference.)
Exhibit 10.81 - General Assignment with respect to the "Jack Bates" dated November 28, 1995 by Reading & Bates Drilling Co., a subsidiary of the Registrant, in favor of Christiania Bank Og Kreditkasse, as agent. (Filed as Exhibit 10.106 to the Company's Annual Report on Form 10-K for 1995 and incorporated herein by reference.)
Exhibit 10.82 - General Assignment with respect to the "D.R. Stewart" dated November 28, 1995 by Reading & Bates Exploration Co., a subsidiary of the Registrant, in favor of Christiania Bank Og Kreditkasse, as agent. (Filed as Exhibit 10.107 to the Company's Annual Report on Form 10-K for 1995 and incorporated herein by reference.)
Exhibit 10.83 - Assignment of Insurances with respect to the "Jack Bates" dated November 28, 1995 by Reading & Bates Drilling Co., a subsidiary of the Registrant, in favor of Christiania Bank Og Kreditkasse, as agent. (Filed as Exhibit 10.108 to the Company's Annual Report on Form 10-K for 1995 and incorporated herein by reference.)
Exhibit 10.84 - Assignment of Insurances with respect to the "D.R. Stewart" dated November 28, 1995 by Reading & Bates Exploration Co., a subsidiary of the Registrant, in favor of Christiania Bank Og Kreditkasse, as agent. (Filed as Exhibit 10.109 to the Company's Annual Report on Form 10-K for 1995 and incorporated herein by reference.)
Exhibit 10.85 - Credit Agreement dated as of April 30, 1996 among Registrant, Reading & Bates Drilling Co., certain lending institutions named therein, Credit Lyonnais New York Branch, as co-agent, and Christiana Bank og Kreditkasse, New York Branch, as agent.
Exhibit 10.86 - Security Agreement dated as of April 30, 1996 among Reading & Bates Drilling Co., Reading & Bates Exploration Co., Reading & Bates (A) Pty. Ltd., Reading and Bates Borneo Drilling Co., Ltd, and Christiana Bank og Kreditkasse, New York Branch, as collateral agent.
Exhibit 10.87 - Subsidiary Guaranty dated as of April 30, 1996 by Reading & Bates Exploration Co., Reading & Bates (A) Pty. Ltd., and Reading and Bates Borneo Drilling Co., Ltd.
Exhibit 10.88 - First Preferred Mortgage on the "D. R. STEWART" dated April 30, 1996 between Reading & Bates Exploration Co. in favor of Wilmington Trust Company, as trustee.
Exhibit 10.89 - First Preferred Mortgage on the "JACK BATES" dated April 30, 1996 between Reading & Bates Drilling Co. in favor of Wilmington Trust Company, as trustee.
Exhibit 10.90 - First Preferred Mortgage on the "W. D. KENT" dated April 30, 1996 between Reading & Bates Exploration Co. in favor of Wilmington Trust Company, as trustee.
Exhibit 10.91- Indenture of First Naval Mortgage on the "CHARLEY GRAVES" dated April 30, 1996 between Reading and Bates Borneo Drilling Co. Ltd. and Christiana Bank og Kreditkasse, New York Branch, as mortgagee.
Exhibit 10.92- First Priority Mortgage on the "RON TAPPMEYER" dated April 30, 1996 between Reading & Bates (A) Pty. Ltd. and Christiana Bank og Kreditkasse, New York Branch, as mortgagee.
Exhibit 10.93- Deed of Covenant on the "J. W. MCLEAN" dated April 30, 1996 between Reading & Bates Drilling Co. and Christiana Bank og Kreditkasse, New York Branch, as mortgagee.
Exhibit 10.94- Indenture of Trust dated as of April 30, 1996 among Reading & Bates Drilling Co., Reading & Bates Exploration Co., and Wilmington Trust Company, as trustee.
Exhibit 10.95 - Collateral Assignment of Insurance dated April 30, 1996 with respect to the "JACK BATES" between Reading & Bates Drilling Co.and Wilmington Trust Company, as trustee.
Exhibit 10.96 - Collateral Assignment of Insurance dated April 30, 1996 with respect to the "D. R. STEWART" between Reading & Bates Exploration Co. and Wilmington Trust Company, as trustee.
Exhibit 10.97 - Collateral Assignment of Insurance dated April 30, 1996 with respect to the "W. D. KENT" between Reading & Bates Exploration Co. and Wilmington Trust Company, as trustee.
Exhibit 10.98 - Collateral Assignment of Insurance dated April 30, 1996 with respect to the "CHARLEY GRAVES" between Reading and Bates Borneo Drilling Co., Ltd. and Christiana Bank og Kreditkasse, New York Branch, as agent.
Exhibit 10.99 - Collateral Assignment of Insurance dated April 30, 1996 with respect to the "RON TAPPMEYER" between Reading and Bates (A) Pty. Ltd. and Christiana Bank og Kreditkasse, New York Branch, as agent.
Exhibit 10.100- Collateral Assignment of Insurance dated April 30, 1996 with respect to the "J. W. MCLEAN" between Reading and Bates Borneo Drilling Co., Ltd. and Christiana Bank og Kreditkasse, New York Branch, as agent.
Exhibit 10.101- First Amendment dated as of July 9, 1996 to Credit Agreement dated as of April 30, 1996 among Registrant, Reading & Bates Drilling Co., certain lending institutions named therein, Credit Lyonnais New York Branch, as co-agent, and Christiana Bank og Kreditkasse, New York Branch, as agent.
Exhibit 10.102- Subsidiary Assumption Agreement dated as of July 9, 1996 by RB Drilling Co. and HRB Rig Corporation.
Exhibit 10.103- Indenture of First Naval Mortgage on the "J. W. MCLEAN" dated July 9, 1996 by Reading & Bates Drilling Co. in favor of Christiana Bank og Kreditkasse, New York Branch, as mortgagee.
Exhibit 10.104- First Preferred Mortgage on the "HARVEY H. WARD" dated July 9, 1996 by HRB Rig Corporation in favor of Wilmington Trust Company, as trustee.
Exhibit 10.105- Amendment No. 1 to Indenture of First Naval Mortgage on the "CHARLIE GRAVES" dated July 9, 1996 by Reading and Bates Borneo Drilling Co., Ltd. in favor of Christiana Bank og Kreditkasse, New York Branch, as mortgagee.
Exhibit 10.106- Amendment to First Preferred Mortgage on the "JACK BATES" dated July 9, 1996 by Reading & Bates Drilling Co. in favor of Wilmington Trust Company, as trustee.
Exhibit 10.107- Amendment to First Preferred Mortgage on the "D. R. STEWART" dated July 9, 1996 by Reading & Bates Exploration Co. in favor of Wilmington Trust Company, as trustee.
Exhibit 10.108- Amendment to First Preferred Mortgage on the "W. D. KENT" dated July 9, 1996 by Reading & Bates Exploration Co. in favor of Wilmington Trust Company, as trustee.
Exhibit 10.109- Collateral Assignment of Insurance dated July 9, 1996 with respect to the "HARVEY H. WARD" between HRB Rig Corporation and Wilmington Trust Company, as trustee.
Exhibit 10.110- Collateral Assignment of Insurance dated July 9, 1996 with respect to the "RIG 41" between RB Drilling Co. and Christiana Bank og Kreditkasse, New York Branch, as agent.
Exhibit 10.111- Amended and Restated Indenture of Trust dated as of July 9, 1996 among Reading & Bates Drilling Co., Reading & Bates Exploration Co., HRB Rig Corporation and Wilmington Trust Company, as trustee.
Exhibit 10.112- Second Amendment dated as of August 30, 1996 to Credit Agreement dated as of April 30, 1996 among Registrant, Reading & Bates Drilling Co., certain lending institutions named therein, Credit Lyonnais New York Branch, as co-agent, and Christiana Bank og Kreditkasse, New York Branch, as agent.
Exhibit 10.113- Subsidiary Assumption Agreement dated as of August 30, 1996 by Reading & Bates Development Co.
Exhibit 10.114- Subsidiary Guaranty dated as of August 30, 1996 by Reading & Bates Development Co.
Exhibit 10.115- Indenture of First Naval Mortgage on "SEILLEAN" dated August 30, 1996 by Reading & Bates Development Co. in favor of Christiana Bank og Kreditkasse, New York Branch, as mortgagee.
Exhibit 10.116- Collateral Assignment of Insurance dated August 30, 1996 with respect to the "SEILLEAN" between Reading & Bates Development Co. and Christiana Bank og Kreditkasee, New York Branch, as agent.
Exhibit 10.117- Credit Agreement dated as of November 13, 1996 among Registrant, Reading & Bates Drilling Co., certain lending institutions named therein, Banque Indosuez, as documentation agent, Credit Lyonnais New York Branch, as documentation agent, and Christiana Bank og Kreditkasse, New York Branch, as administrative agent, arranger and security trustee.
Exhibit 10.118- Security Agreement dated as of November 13, 1996 among Reading & Bates Drilling Co., Reading & Bates Exploration Co., Reading & Bates Offshore, Limited, HRB Rig Corporation, Reading & Bates (A) Pty. Ltd., Reading and Bates Borneo Drilling Co., Ltd, and Christiana Bank og Kreditkasse, New York Branch, as collateral agent.
Exhibit 10.119- Subsidiary Guaranty dated as of November 13, 1996 by Reading & Bates Exploration Co., Reading & Bates (A) Pty. Ltd., Reading and Bates Borneo Drilling Co., Ltd., Reading & Bates Offshore, Limited and HRB Rig Corporation.
Exhibit 10.120- First Preferred Mortgage on the "D. R. STEWART" dated November 13, 1996 between Reading & Bates Exploration Co. in favor of Christiana Bank og Kreditkasse, New York Branch, as security trustee.
Exhibit 10.121- First Preferred Mortgage on the "JACK BATES" dated November 13, 1996 between Reading & Bates Drilling Co. in favor of Christiana Bank og Kreditkasse, New York Branch, as security trustee.
Exhibit 10.122- First Preferred Mortgage on the "W. D. KENT" dated November 13, 1996 between Reading & Bates Exploration Co. in favor of Christiana Bank og Kreditkasse, as security trustee.
Exhibit 10.123- First Preferred Mortgage on the "RANDOLPH YOST" dated November 13, 1996 between Reading & Bates Drilling Co. in favor of Christiana Bank og Kreditkasse, as security trustee.
Exhibit 10.124- First Preferred Mortgage on the "GEORGE H. GALLOWAY" dated November 13, 1996 between Reading & Bates Offshore, Limited in favor of Christiana Bank og Kreditkasse, as security trustee.
Exhibit 10.125- First Preferred Mortgage on the "F. G. MCCLINTOCK" dated November 13, 1996 between Reading & Bates Offshore, Limited in favor of Christiana Bank og Kreditkasse, as security trustee.
Exhibit 10.126- First Preferred Mortgage on the "J. T. ANGEL" dated November 13, 1996 between Reading & Bates Drilling Co. in favor of Christiana Bank og Kreditkasse, as security trustee.
Exhibit 10.127- First Preferred Mortgage on the "ROGER W. MOWELL" dated November 13, 1996 between Reading & Bates Drilling Co. in favor of Christiana Bank og Kreditkasse, as security trustee.
Exhibit 10.128- First Preferred Mortgage on the "HARVEY H. WARD" dated November 13, 1996 between HRB Rig Corporation in favor of Christiana Bank og Kreditkasse, as security trustee.
Exhibit 10.129- Indenture of First Naval Mortgage on the "CHARLEY GRAVES" dated November 13, 1996 between Reading and Bates Borneo Drilling Co. Ltd. and Christiana Bank og Kreditkasse, New York Branch, as mortgagee.
Exhibit 10.130- Indenture of First Naval Mortgage on the "J. W. MCLEAN" dated November 13, 1996 between Reading & Bates Drilling Co. and Christiana Bank og Kreditkasse, New York Branch, as mortgagee.
Exhibit 10.131- Indenture of First Naval Mortgage on the "RIG 41" dated November 13, 1996 between Reading and Bates Borneo Drilling Co. Ltd. and Christiana Bank og Kreditkasse, New York Branch, as mortgagee.
Exhibit 10.132- First Priority Mortgage on the "RON TAPPMEYER" dated November 13, 1996 between Reading & Bates (A) Pty. Ltd. and Christiana Bank og Kreditkasse, New York Branch, as mortgagee.
Exhibit 10.133- Pledge Agreement dated as of November 13, 1996 between Registrant and Christiana Bank og Kreditkasse, New York Branch, as collateral agent.
Exhibit 10.134- Letter of Credit Agreement dated as of December 30, 1996 between Registrant, Reading & Bates Drilling Co., and Christiana Ban og Kreditkasse, New York Branch.
Exhibit 10.135- Memorandum of Agreement dated November 28, 1995 between Reading and Bates, Inc., a subsidiary of the Registrant, and Deep Sea Investors, L.L.C. (Filed as Exhibit 10.110 to the Company's Annual Report on Form 10-K for 1995 and incorporated herein by reference.)
Exhibit 10.136- Bareboat Charter "M.G. Hulme, Jr." dated November 28, 1995 between Deep Sea Investors, L.L.C. and Reading & Bates Drilling Co., a subsidiary of the Registrant. (Filed as Exhibit 10.111 to the Company's Annual Report on Form 10-K for 1995 and incorporated herein by reference.)
Exhibit 10.137- Purchase and Sale Agreement dated October 18, 1995 between Enserch Exploration, Inc. and Reading & Bates Development Co., a subsidiary of the Registrant. (Filed as Exhibit 10.112 to the Company's Annual Report on Form 10-K for 1995 and incorporated herein by reference.)
Exhibit 10.138- Assignment and Bill of Sale (OCS-G-8504) effective as of May 1, 1995 between Enserch Exploration, Inc. and Reading & Bates Development Co., a subsidiary of the Registrant. (Filed as Exhibit 10.113 to the Company's Annual Report on Form 10-K for 1995 and incorporated herein by reference.)
Exhibit 10.139- Assignment and Bill of Sale (OCS-G-8012 effective as of May 1, 1995 between Enserch Exploration, Inc. and Reading & Bates Development Co., a subsidiary of the Registrant. (Filed as Exhibit 10.114 to the Company's Annual Report on Form 10-K for 1995 and incorporated herein by reference.)
Exhibit 10.140- Assignment and Bill of Sale (OCS-G- 7049) effective as of May 1, 1995 between Enserch Exploration, Inc. and Reading & Bates Development Co., a subsidiary of the Registrant. (Filed as Exhibit 10.115 to the Company's Annual Report on Form 10-K for 1995 and incorporated herein by reference.)
Exhibit 10.141- Assignment and Bill of Sale (OCS-G-8010) effective as of May 1, 1995 between Enserch Exploration, Inc. and Reading & Bates Development Co., a subsidiary of the Registrant. (Filed as Exhibit 10.116 to the Company's Annual Report on Form 10-K for 1995 and incorporated herein by reference.)
Exhibit 10.142- Assignment and Bill of Sale (OCS-G-13696) effective as of May 1, 1995 between Enserch Exploration, Inc. and Reading & Bates Development Co., a subsidiary of the Registrant. (Filed as Exhibit 10.117 to the Company's Annual Report on Form 10-K for 1995 and incorporated herein by reference.)
Exhibit 10.143- Assignment and Bill of Sale (OCS-G-13171) effective as of May 1, 1995 between Enserch Exploration, Inc. and Reading & Bates Development Co., a subsidiary of the Registrant. (Filed as Exhibit 10.118 to the Company's Annual Report on Form 10-K for 1995 and incorporated herein by reference.)
Exhibit 10.144- Assignment and Bill of Sale (OCS-G-8005) effective as of May 1, 1995 between Enserch Exploration, Inc. and Reading & Bates Development Co., a subsidiary of the Registrant. (Filed as Exhibit 10.119 to the Company's Annual Report on Form 10-K for 1995 and incorporated herein by reference.)
Exhibit 10.145- Assignment and Bill of Sale (OCS-G-8000) effective as of May 1, 1995 between Enserch Exploration, Inc. and Reading & Bates Development Co., a subsidiary of the Registrant. (Filed as Exhibit 10.120 to the Company's Annual Report on Form 10-K for 1995 and incorporated herein by reference.)
Exhibit 10.146- Assignment and Bill of Sale (OCS-G-8006) effective as of May 1, 1995 between Enserch Exploration, Inc. and Reading & Bates Development Co., a subsidiary of the Registrant. (Filed as Exhibit 10.121 to the Company's Annual Report on Form 10-K for 1995 and incorporated herein by reference.)
Exhibit 10.147- Assignment and Bill of Sale (OCS-G-8876) effective as of May 1, 1995 between Enserch Exploration, Inc. and Reading & Bates Development Co., a subsidiary of the Registrant. (Filed as Exhibit 10.122 to the Company's Annual Report on Form 10-K for 1995 and incorporated herein by reference.)
Exhibit 10.148- Payment Agreement dated October 18, 1995 between Enserch Exploration, Inc. and Reading & Bates Development Co., a subsidiary of the Registrant. (Filed as Exhibit 10.123 to the Company's Annual Report on Form 10-K for 1995 and incorporated herein by reference.)
Exhibit 10.149- Mortgage and Security Agreement dated October 18, 1995 between Enserch Exploration, Inc. and Reading & Bates Development Co., a subsidiary of the Registrant. (Filed as Exhibit 10.124 to the Company's Annual Report on Form 10-K for 1995 and incorporated herein by reference.)
Exhibit 10.150- Operating Agreement made effective as of May 1, 1995 among Enserch Exploration, Inc., Mobil Oil Corporation, Mobil Oil exploration & Producing Southeast Inc. and Reading & Bates Development Co., a subsidiary of the Registrant. (Filed as Exhibit 10.125 to the Company's Annual Report on Form 10-K for 1995 and incorporated herein by reference.)
Exhibit 10.151- Option Agreement made effective as of May 1, 1995 between Enserch Exploration, Inc. and Reading & Bates Development Co., a subsidiary of the Registrant. (Filed as Exhibit 10.126 to the Company's Annual Report on Form 10-K for 1995 and incorporated herein by reference.)
Exhibit 10.152- Participation Agreement dated December 4, 1996 between Santa Fe Energy Resources, Inc. and Reading & Bates Development Co.
Exhibit 10.153- Assignment of Record Title Interest effective December 11, 1996 between Santa Fe Energy Resources, Inc. and Reading & Bates Development Co. with respect to OCS-G 16404.
Exhibit 10.154- Assignment of Record Title Interest effective December 11, 1996 between Santa Fe Energy Resources, Inc. and Reading & Bates Development Co. with respect to OCS-G 16405.
Exhibit 10.155- Assignment of Record Title Interest effective December 11, 1996 between Santa Fe Energy Resources, Inc. and Reading & Bates Development Co. with respect to OCS-G 16567.
Exhibit 10.156- Assignment of Record Title Interest effective December 11, 1996 between Santa Fe Energy Resources, Inc. and Reading & Bates Development Co. with respect to OCS-G 16568.
Exhibit 10.157- Assignment of Record Title Interest effective December 11, 1996 between Santa Fe Energy Resources, Inc. and Reading & Bates Development Co. with respect to OCS-G 16578.
Exhibit 10.158- Assignment of Record Title Interest effective December 11, 1996 between Santa Fe Energy Resources, Inc. and Reading & Bates Development Co. with respect to OCS-G 16579.
Exhibit 10.159- Assignment of Record Title Interest effective December 11, 1996 between Santa Fe Energy Resources, Inc. and Reading & Bates Development Co. with respect to OCS-G 17251.
Exhibit 10.160- Assignment of Record Title Interest effective January 2, 1997 between Santa Fe Energy Resources, Inc. and Reading & Bates Development Co. with respect to OCS-G 17355.
Exhibit 10.161- Joint Venture Agreement dated December 16, 1996 among Shell Deepwater Development Inc., SOI Finance Inc. and Reading & Bates Development Co.
Exhibit 10.162- Limited Liability Company Agreement between Conoco Development Company and RB Deepwater Exploration Inc.
Exhibit 10.163- Joint Venture Agreement dated February 22, 1996 between INTEC Engineering, Inc. and Reading & Bates Development Co.
Exhibit 10.164- Loan Agreement dated as of December 14, 1996 among TRB Holding Corporation, Reading & Bates (U.K.) Limited and Nissho Iwai Europe PLC.
Exhibit 10.165- First Naval Mortgage on the "SEILLEAN" dated December 14, 1996 between TRB Holding Corporation in favor of Nissho Iwai Europe PLC.
Exhibit 10.166- Collateral Assignment of Deposit Account, Pledge and Security Agreement dated December 14, 1996 with respect to the "SEILLEAN" between TRB Holding Corporation and Nissho Iwai Europe PLC.
Exhibit 10.167- Assignment of Insurances dated December 14, 1996 with respect to the "SEILLEAN" between TRB Holding Corporation and Reading & Bates (U.K.) Limited and Nissho Iwai Europe PLC.
Exhibit 11 - Computation of Earnings Per Common Share
Exhibit 21 - Schedule of Subsidiaries of the Company
Exhibit 23 - Consent of Arthur Andersen LLP
Exhibit 27 - Financial Data Schedule. (Exhibit 27 is being submitted as an exhibit only in the electronic format of this Annual Report on Form 10-K being submitted to the Securities and Exchange Commission.)
Exhibit 99 - Annual Report on Form 11-K with respect to Reading & Bates Savings Plan. (To be filed by amendment to the Annual Report on Form 10-K.)
Instruments with respect to certain long-term obligations of the Company are not being filed as exhibits hereto as the securities authorized thereunder do not exceed 10% of the Company's total assets. The Company agrees to furnish a copy of each such instrument to the Securities and Exchange Commission upon its request.
* Management contract or compensatory plan or arrangement required to be filed as an exhibit pursuant to the requirements of Item 14(c) of Form 10-K.
(b) Reports on Form 8-K
There were six Current Reports on Form 8-K filed during the three months ended December 31, 1996. A Current Report on Form 8-K was: filed October 7, 1996 announcing a voluntary commission-free oddlot selling program for shareholders who owned fewer than 100 shares of the Company's common stock; filed October 15, 1996 disclosing the Company's 3rd quarter 1996 earnings; filed October 31, 1996 announcing the formation of a joint venture between the Company and Conoco to build a DP Class 3 Drillship; filed November 8, 1996 announcing the extension of the commission-free oddlot selling program; filed November 14, 1996 disclosing the closing of a new $300 million credit facility with Christiania Bank og Kreditkasse; and filed November 25, 1996 announcing the retirement of L.E. (Sonny) Voss, Jr. as President of Reading & Bates Drilling Co. and the appointment of Andrew Bakonyi as its new President.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed by the undersigned, thereunto duly authorized on March 21, 1997.
READING & BATES CORPORATION
By Paul B. Loyd, Jr. -------------------------- Paul B. Loyd, Jr. President, Chief Executive Officer, Chairman and Director
Pursuant to the requirements of the Securities Exchange Act of l934, this report has been signed below by the following persons on behalf of the Registrant in the capacities indicated on March 21, 1997.
By Paul B. Loyd Jr. By Tim W. Nagle -------------------------- ------------------------- Paul B. Loyd, Jr. Tim W. Nagle President, Chief Executive Executive Vice President, Officer, Finance and Administration Chairman and Director Principal Accounting Officer
By Charles A. Donabedian By Macko A. E. Laqueur -------------------------- -------------------------- Charles A. Donabedian Macko A. E. Laqueur Director Director
By By Ted Kalborg -------------------------- -------------------------- J. W. McLean Ted Kalborg Director Director
By Arnold L. Chavkin By Robert L. Sandmeyer -------------------------- -------------------------- Arnold L. Chavkin Robert L. Sandmeyer Director Director