ITEM 1. BUSINESS
GENERAL
Triton Energy Corporation is an independent energy company primarily engaged in international oil and gas exploration and production through wholly- owned and partly-owned subsidiaries and affiliates. The Company's principal properties and operations are located in Colombia and Malaysia-Thailand. The Company also has oil and gas interests in other Latin American and Asian countries, Europe, Australia and North America.
During fiscal year 1994, the Company had two reportable industry segments: (i) the crude oil and natural gas exploration and production industry; and (ii) about the Company's reportable industry segments, see note 20 of Notes to Consolidated Financial Statements.
Triton was incorporated in Texas in 1962. The Company's principal executive offices are located at 6688 North Central Expressway, Suite 1400, Dallas, Texas 75206, and its telephone number is 214/691-5200. The terms "Company" and "Triton" when used herein mean Triton Energy Corporation and its subsidiaries and other affiliates through which Triton conducts its business, unless the context otherwise implies.
OIL AND GAS OPERATIONS
GENERAL
Oil and gas exploration and development activities are, or have been, conducted in Colombia by the Company's wholly-owned subsidiaries, Triton Colombia, Inc. and Triton Resources Colombia, Inc. (collectively, "Triton Colombia"); in Malaysia-Thailand by the Company's wholly-owned subsidiary, Triton Oil Company of Thailand ("Triton Thailand"); in Argentina primarily by the Company's wholly-owned subsidiary, Triton Argentina, Inc. ("Triton Argentina"); in Europe by the Company's wholly-owned (but until March 31, 1994, 59.5% owned) subsidiary, Triton Europe, plc ("Triton Europe"); in Indonesia by the Company's wholly-owned subsidiary Triton Indonesia, Inc. ("Triton Indonesia") and the Company's 63.7% (at May 31, 1994, but since reduced to 33.7%) owned subsidiary, New Zealand Petroleum Company Limited ("New Zealand Petroleum"); in the United States by Triton Oil & Gas Corp. ("Triton Oil") and the Company's 49.9% owned affiliate, Crusader Limited ("Crusader"); in New Zealand by New Zealand Petroleum and Crusader; in Canada by Crusader (and Triton Canada Resources Ltd. ("Triton Canada") until August 1993); and in Australia by Crusader.
A significant portion of Triton's reserves are held through its wholly- owned subsidiaries Triton Colombia and Triton Europe. Additional reserves are held through Triton's publicly-held affiliate, Crusader. Except for Crusader, the financial data for each of these companies is consolidated with Triton's financial data. For further information relating to the Company's oil and gas business activities, see Item 2.
ITEM 2. PROPERTIES
OIL AND GAS
COLOMBIA
Through its wholly-owned subsidiary, Triton Colombia, the Company has varying participation interests in six contract areas in Colombia.
CUSIANA AND CUPIAGUA FIELDS
CONTRACT TERMS. In the Llanos Basin area of eastern Colombia, Triton Colombia holds a working interest in the Rio Chitamena, SDLA and Tauramena contract areas, covering approximately 11,600, 66,000 and 35,900 acres, respectively, where an active appraisal and development program is being carried out in the Cusiana and Cupiagua Fields. Triton's partners in these areas are Empresa Colombiana De Petroleos ("Ecopetrol"), the Colombian national oil company, with a 50% working interest, and BP Exploration Company (Colombia) Limited ("BP"), the operator, and TOTAL Exploratie en Produktie MIJ B.V. ("TOTAL"), each with a 19% working interest. In 1993, Ecopetrol declared the Cusiana and Cupiagua Fields to be commercial and exercised its right to acquire a 50% working interest. Triton's net revenue interest is approximately 9.6% after governmental royalties, reduced further by up to 0.36% pursuant to an agreement with an original co-investor, subject to Triton being reimbursed for a proportionate share of expenditures relating thereto.
The Company and its partners have secured the right to produce oil and gas from the SDLA and Tauramena contract areas through the years 2010 and 2016, respectively, and from the Rio Chitamena contract area through 2015 or 2019 depending on contract interpretation. On July 19, 1994, Triton Colombia, BP, TOTAL and Ecopetrol entered into an Integral Plan for the Unified Exploitation of the Cusiana Oil Structure in the SDLA, Tauramena and Rio Chitamena Association Contract Areas. Under the plan, the parties have agreed to develop the Cusiana oil structure in a technically efficient and cooperative manner during three consecutive periods of time. During the initial period, petroleum produced from the unified area will be owned by the parties according to their respective undivided interests in each contract area.
Within the first quarter of 2005, an independent determination of the unified area and under each association contract will be made, as a result of which a "tract factor" will be calculated for each association contract. Each tract factor will be the amount of original BOEs of petroleum in place under the particular association contract as a percentage of the total original BOEs under the unified area. Each party's unified area interest during the second period (commencing from the expiration of the SDLA association contract in 2010) and final period (commencing from the termination of the second association contract to terminate) will be the aggregate of that party's interest in each remaining association contract multiplied by the tract factor for each such contract.
RECENT DRILLING RESULTS. Triton and its working interest partners have recently tested an appraisal well in the Cupiagua Field, the Cupiagua-3. A single test in the Upper Mirador formation, at a depth of between 14,504 and 14,668 feet, flowed oil at a rate of 3,400 barrels per day and gas at
a rate of 12 million cubic feet per day. The gas-to-oil ratio was 3,500 and the oil API 42 degrees. The test was conducted through a three-quarter inch choke. The well confirmed the northern extent of the Cupiagua Field and drilling has now been suspended. The well will be completed as a production well.
A second Cupiagua appraisal well, the Cupiagua-2, has experienced mechanical failure after two unsuccessful sidetrack attempts and has been suspended with a view to resuming drilling at a later date.
The wells are expected to be followed by two new appraisal wells in the Cupiagua Field and 3D seismic is planned for late 1994. Although drilling of the Cupiagua-2 and Cupiagua-3 wells has taken over a year, and each has been among the most expensive wells drilled in the Cusiana or Cupiagua Fields, drilling of more recently spudded wells in the Cusiana Field have been considerably less expensive and time consuming.
TRANSPORTATION. Since the beginning of fiscal 1994, the first two of four production units of the Cusiana Field central processing facility have been substantially completed in anticipation of increased production by year end. In addition, a new 35 kilometer (22 mile) 20 inch pipeline connecting the central processing facilities to the El Porvenir pump station on the Central Llanos pipeline system has been completed, and pipeline looping and pump station upgrades, including 92 kilometers (57 miles) of 30 inch pipeline from La Belleza to the Oleoducto de Colombia pipeline and then to the Caribbean port of Covenas, are near completion.
Additional pipeline capacity is needed to meet the transportation needs associated with the full field development of the Cusiana and Cupiagua Fields. To that end, on July 15, 1994, Triton Colombia executed a memorandum of and IPL Energy (Colombia) Ltd., regarding the proposed formation of a joint stock company to finance and own a pipeline and port facilities to be constructed and operated for the transport of crude oil from the Cusiana and Cupiagua Fields to the port of Covenas. Triton's equity participation under this agreement would be approximately 9.6%. Formation of the joint stock company is subject to numerous conditions, including negotiation and execution of definitive agreements and board approvals.
The project covered by the memorandum of understanding consists of a 793 kilometer (495 mile) pipeline system from the Cusiana Field to the Port of Covenas. With the exception of the new 35 kilometer (22 mile) pipeline from Cusiana to El Porvenir referred to above, the system generally follows the route of, and loops two existing pipelines, the Central Llanos from El Porvenir to Vasconia and the Oleoducto de Colombia running from Vasconia to Covenas.
Construction of a part of the system (the Cusiana to El Porvenir pipeline) has been completed, and another 92 kilometer (57 mile) segment from La Belleza to Vasconia is expected to be completed by year end. These assets, together with on-going investment in pump stations at El Porvenir and Miraflores, would be contributed to the new joint stock company. Construction of the remainder of the system is currently projected to be completed by the end of 1997.
OTHER COLOMBIA AREAS
Triton also owns rights in three additional contract areas in Colombia located in the middle and upper Magdalena River valley north and southwest of Bogota, respectively. In the El Pinal contract area, covering approximately 142,250 acres, Triton owns a 100% working interest (before certain revenue interests and government participation). Seismic work has been conducted on this acreage and a field was discovered with the drilling of the La Liebre 1 discovery well. After additional seismic was shot in the area of the La Liebre 1 well, the La Liebre 2 well was drilled and tested, confirming the discovery. Testing and evaluation of the discovery, including the drilling of a third well, is planned.
In the Tolima-B and San Luis contract areas, Triton Colombia has 45% and 40% interests in 131,300 acres and 129,100 acres, respectively (before certain revenue interests and government participation). HOCOL S.A., a unit of Royal Dutch/Shell, is operator and has had commerciality of one well approved in the Tolima-B contract area. Also in the Tolima-B contract area, the operator has completed a 3D seismic program. The operator has received commerciality for one gas well in the San Luis contract area, on which a 2D seismic program has been completed.
MALAYSIA-THAILAND
Triton Thailand has an interest in a contract area located offshore in which encompasses over 700,000 acres, had been the subject of overlapping claims between Malaysia and Thailand. Triton Thailand's interest was in the form of a concession from Thailand until April 1994, when it executed a production sharing contract with the Malaysia-Thailand Joint Authority that has been established by treaty to administer the Joint Development Area, and with the Malaysian national oil company.
Simultaneously with the execution of the production sharing contract, the parties executed a joint operating agreement governing Block A-18 operations. The operating agreement designates as operator a newly formed company owned equally by Triton Thailand and the Malaysian national oil company.
The Company anticipates that the first phase of Block A-18 operations, which it expects will continue through mid-1996, will include seismic surveys covering approximately 5,700 kilometers (3,542 miles) and data analysis, and the drilling of at least four wells. The wells are expected to be drilled in water depths of less than 200 feet. The nature and extent of phase two development and appraisal of the area, which is expected to include 3D seismic surveys and further drilling, will depend on the parties' assessment of phase one results.
ARGENTINA
Triton Argentina holds a working interest in six blocks in Argentina. In the oil and gas producing Neuquen Basin in west central Argentina, Triton Argentina holds a 100% working interest in the Agua Botada, Cerro Dona Juana, Loma Cortaderal, and Sierra Azul Sur Blocks of
approximately 50,000 acres each, and a 75% working interest in the 219,672 acre Malargue Sur Block. Triton Argentina has completed a workover program in the Agua Botada Block and a 548 kilometer (341 miles) seismic acquisition program in Malargue Sur. Further seismic acquisitions will commence in late 1994 with two exploration wells planned for 1995.
Triton Argentina also has a 20% working interest in the 2,122,095 acre Buen Pasto Block located in the northern portion of the oil producing San Jorge Basin in south central Argentina. Regional seismic lines along with gravity and magnetics data are being acquired in this frontier area.
EUROPE
On March 31, 1994, the Company purchased the 40.5% of Triton Europe's shares not already owned by the Company.
FRANCE. The Company's activities in France are conducted through Triton France, S.A. ("Triton France"), a wholly-owned subsidiary of Triton Europe. Triton France has an interest in the non-operated Villeperdue, Fontaine-au-Bron, Hautefeuille and La Motte Noire concessions, which provided the majority of Triton's French production during the year. The Company is assisting Coparex S.A., a French firm which became the operator of these licenses when it purchased Totalex S.A. in December 1993, in identifying further development and Paris Basin exploration permits, and one exploration permit in the Alps. These permits are currently under review as part of the Company's strategy to re- direct its exploration effort towards a more balanced European portfolio. During the 1994 fiscal year, Triton France sold its interests in four operated production licenses (Saint-Germain, Sivry, Maincy, les Bagneaux) in the Paris Basin for approximately $1.5 million.
ITALY. Triton Mediterranean Oil & Gas, N.V., a wholly-owned subsidiary of Triton Europe, holds an interest (10.91%) in the onshore Monte Caruso license on which one unsuccessful well was drilled in fiscal 1994. Triton Mediterranean Oil & Gas, N.V. has acquired an interest (40%) in DR71 and DR72 licenses operated by Enterprise Oil, plc, in the offshore Italian Adriatic Sea.
CRUSADER
Oil and gas activities in Australia are conducted through the Company's 49.9% owned affiliate, Crusader, whose shares are publicly traded in Australia. Crusader has an interest in the Cooper Basin Gas and Liquids Unit of South Australia. Crusader holds varying interests in several permits in Queensland, including an interest in oil production from the Taylor field in the Surat Basin. Within the Gippsland and Otway Basins of Victoria, Crusader has interests in two offshore and two onshore exploration licenses, respectively. Crusader has an approximate 48.9% equity interest in Australian Hydrocarbons Limited ("AHY"), a publicly-traded Australian company. Three Crusader directors are members of the five-member AHY Board of Directors and Crusader consolidates AHY in its financial and reserve disclosures. AHY owns various interests in oil and gas exploration projects both in Australia and in the United States.
In addition, Crusader is involved in oil and gas exploration and production and gas processing in Canada, through its wholly-owned subsidiary, Ausquacan Energy Limited. Crusader is also engaged in exploration in Argentina and exploration and production in the United States.
INDONESIA
Triton Indonesia is the operator of a secondary recovery/rehabilitation project on the southeastern portion of the island of Sumatra. New Zealand Petroleum has a 6% interest in this project.
UNITED STATES
In fiscal 1994, the Company sold substantially all of its working interests in oil and gas reserves in the the United States, retaining only various royalty and mineral interests.
RESERVES
The following tables set forth the estimated oil and gas reserves of the Company and the estimated discounted future net cash inflows before income taxes at May 31, 1994. The first table is a summary of separate reports of estimates of the Company's net proved reserves, estimated by the independent petroleum engineers, DeGolyer and MacNaughton, with respect to all proved undeveloped Associates Consultants Ltd., for Crusader's Canadian reserves; and by the Company's own petroleum engineers with respect to all other reserves. This table sets forth the estimated net quantities of proved developed and undeveloped oil and gas reserves and total proved oil and gas reserves owned by the Company and its consolidated subsidiaries in Colombia, France, Indonesia and the United States and its proportionate interest in reserves owned in Australia, Canada and the United States by Crusader. The second table sets forth, for the net quantities so reported, the future net cash inflows (by reserve categories and country of location) discounted to present value at an annual rate of 10%. The discounted future net cash inflows were calculated in accordance with current Securities and Exchange Commission ("Commission") guidelines concerning the use of constant oil and gas prices and operating costs in reserve evaluations. Future income tax expenses have not been taken into account in estimating the future net cash inflows. At May 31, 1994, the Company had no proved developed or proved undeveloped reserves in Malaysia-Thailand, Argentina, the United Kingdom or other areas. See note 23 of Notes to Consolidated Financial Statements.
Applicable Commission guidelines do not permit disclosure in documents filed with the Commission of oil and gas reserves other than those classified as proved developed or proved undeveloped.
The estimated reserves and future net cash inflows set forth in the tables below include information attributable to the 36.3% (at May 31, 1994) minority interest in New Zealand Petroleum and the Company's 49.9% ownership interest in Crusader (which includes the minority interests in Crusader's consolidated subsidiaries). Data as to oil reserves include natural gas liquids and condensate.
Net Proved Reserves at May 31, 1994:
Future net cash inflows before income taxes discounted at 10% per annum at May 31, 1994 (in thousands of dollars):
Future net cash inflows from reserves at May 31, 1994, were calculated on the basis of prices in effect on that date. The prices used in such calculation by country were as follows:
Revenue and costs associated with the French, Canadian and Australian reserves are reported in US dollar equivalents based on exchange values of French franc equivalent to US$0.17241; Canadian $1 equivalent to US$0.7230; and Australian $1 equivalent to US$0.7375. The Colombian and Indonesian reserves are evaluated in United States dollars.
The foregoing estimated pretax discounted future net cash inflow figures relate only to the reserves tabulated above. The estimates were prepared without consideration of income taxes and indirect costs such as interest and administrative expenses, and are not to be construed as representative of the fair market values of the properties to which they relate.
Reserve estimates are imprecise and may be expected to change as additional information becomes available. Furthermore, estimates of oil and gas reserves, of necessity, are projections based on engineering data, and there are uncertainties inherent in the interpretation of such data as well as the projection of future rates of production and the timing of development expenditures. Reserve engineering is a subjective process of estimating underground accumulations of oil and gas that cannot be measured in an exact way, and the accuracy of any reserve estimate is a function of the quality of available data and of engineering and geological interpretation and judgment. Accordingly, there can be no assurance that the reserves set forth herein will reserves will be developed within the periods anticipated. The Company emphasizes with respect to the estimates prepared by independent petroleum engineers, as well as those estimates prepared by the Company's engineers, that the discounted future net cash inflows should not be construed as representative of the fair market value of the proved oil and gas properties belonging to the Company, since discounted future net cash inflows are based upon projected cash inflows which do not provide for changes in oil and gas prices nor for escalation of expenses and capital costs. The meaningfulness of such estimates is highly dependent upon the accuracy of the assumptions upon which they were based. For further information, see note 23 of Notes to Consolidated Financial Statements.
No estimates of total proved net oil or gas reserves have been filed by the Company with, or included in any report to, any United States authority or agency pertaining to the Company's individual reserves since the beginning of the Company's last fiscal year.
ACREAGE
The following table shows the total gross and net developed and undeveloped oil and gas acreage (including acreage attributable to mineral, royalty and overriding royalty interests) held by Triton at May 31, 1994, including acreage attributable to the 36.3% (at May 31, 1994) minority interest in New Zealand Petroleum and the Company's 49.9% ownership interest in Crusader (which includes the minority interests in Crusader's consolidated subsidiaries). "Gross" refers to the total number of acres in an area in which the Company holds any interest without adjustment to reflect the actual percentage interest held therein by the Company. "Net" refers to the gross acreage as adjusted for interests owned by parties other than the Company.
"Developed" acreage is acreage spaced or assignable to productive wells. "Undeveloped" acreage is acreage on which wells have not been drilled or completed to a point that would permit the production of commercial quantities of oil and gas regardless of whether such acreage contains proved reserves.
PRODUCTIVE WELLS AND DRILLING ACTIVITY
In this section, "gross" as it relates to wells refers to the total number of wells drilled in an area in which the Company holds any interest without adjustment to reflect the actual ownership interest held. "Net" refers to the gross number of wells drilled as adjusted for interests owned by parties other minority interest in New Zealand Petroleum, and the Company's 49.9% ownership interest in Crusader (which includes the minority interests in Crusader's consolidated subsidiaries).
The following table summarizes the approximate total gross and net interests held by Triton in productive wells at May 31, 1994:
The following tables set forth the results of the oil and gas well drilling activity on a gross basis for wells in which the Company held an interest for each of the three fiscal years ended May 31, 1994:
GROSS EXPLORATORY WELLS
GROSS DEVELOPMENT WELLS
The following tables set forth the results of drilling activity on a net basis for wells in which the Company held an interest for each of the three fiscal years ended May 31, 1994 (those wells acquired or disposed of since May 31, 1991 are reflected in the following tables only since or up to the effective dates of their respective acquisitions or sales, as the case may be):
NET EXPLORATORY WELLS
NET DEVELOPMENT WELLS
OTHER
In connection with its aviation related services, the Company's aviation service facilities are predominantly leased under multi-year agreements with the City of Dallas where the aviation service operations are located. The unexpired terms of the Company's aviation service leases extend up to more than 30 years.
The Company owns or has interests in numerous oil and gas production facilities relating to its oil and gas production operations throughout the world. In addition, the Company leases or owns office space, manufacturing and other properties for its various operations throughout the world.
For additional information on the Company's leases, including its office leases, see note 18 of Notes to Consolidated Financial Statements.
ITEM 3.
ITEM 3. LEGAL PROCEEDINGS
VERONEX LITIGATION
On January 30, 1990, Nordell International Resources, Ltd. ("Nordell"), c/o Veronex Resources, Ltd. ("Veronex"), its parent, filed a Demand for Arbitration against the Company and Triton Indonesia. An arbitration was held before an American Arbitration Association panel ("AAA Panel") during October 1990 in Singapore. The arbitration concerned disputes between Nordell and Veronex, on the one hand, and the Company and Triton Indonesia, on the other, arising from a farm-out agreement regarding secondary recovery/rehabilitation operations in Indonesia (the "Project").
On December 13, 1990, the AAA Panel issued an award granting to the Company Nordell's 40% participating interest in the Project, converting Nordell's Nordell and Veronex. In addition, the AAA Panel awarded the Company damages in an amount exceeding $900,000, enforceable against both Nordell and Veronex.
The award has been upheld on appeal and is final insofar as it pertains to Nordell and its interest in the Project. The damage award against Veronex, however, has been reversed by the United States District Court for the Central District of California, which found that Veronex was not Nordell's "alter ego", and that Veronex did not consent to the jurisdiction of the AAA Panel over it. The Company has appealed the District Court's "alter ego" and consent ruling to the United States Court of Appeals for the Ninth Circuit.
In other efforts to collect the damages awarded by the AAA Panel, the Company has obtained a default judgment from a state district court in Dallas against Joseph Laferty, an executive officer of Veronex and Nordell, and has a motion for summary judgment pending in the United States District Court for the Northern District of Texas against David Hite, chief executive officer of Veronex and Nordell, based on their ratifications of Nordell's obligations to the Company; has filed an action in state district court in Dallas (since removed to federal district court) against Veronex to enforce its ratification of Nordell's obligation; has seized approximately $100,000 in payments on Nordell's 5% net profit interest; and has initiated foreclosure proceedings with respect to the balance of Nordell's interest.
Meanwhile, Veronex, speaking through Mr. Hite, has repeatedly threatened to bring a fraud or racketeering action against the Company seeking "very, very large" damages, and has asserted that Veronex's ability to do so is at issue in an appeal pending before the Ninth Circuit concerning a ruling by the United States District Court for the Central District of California in 1991 dismissing a third party action for fraud filed against the Company by Veronex in a securities fraud claim filed against Veronex by a purchaser of its securities. The securities fraud claim to which Veronex alleges its third party claim was settled by Veronex for $10,000. The Company believes that any such action asserted by Veronex against the Company would be without factual merit and subject to several legal defenses.
REGULATORY MATTER
The Company continues to cooperate with inquiries by the Securities and Exchange Commission and the Department of Justice regarding possible violations of the Foreign Corrupt Practices Act in connection with the Company's operations in Indonesia. Based upon the information available to the Company to date, the Company believes that it will be able to resolve any issues that either agency ultimately might raise concerning these matters in a manner that would not have
OTHER LITIGATION
On or about June 22, 1994, the Company and numerous other defendants were served by the State of Nevada, Division of Environmental Protection (the "NDEP") in a state court proceeding in Clark County, Nevada. The action seeks to hold the defendants responsible for remediation of certain underground water contamination at the McCarran International Airport and seeks civil penalties of up to $25,000 per day. The Company has been advised by the NDEP that the action was filed to toll the running of the statute of limitations on certain potential causes of action. The Company denies responsibility for the contamination at issue and does not believe that the action will have a material adverse affect on its consolidated financial condition.
The Company is also subject to ordinary litigation that is incidental to its business, none of which is expected to have a material adverse effect on the Company's consolidated financial condition.
ITEM 4.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matter was submitted by the Company during the fourth quarter of the fiscal year covered by this report to security holders, through the solicitation of proxies or otherwise.
PART II
ITEM 5.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Triton's Common Stock is listed on the New York Stock Exchange and traded under the symbol OIL. Triton's Common Stock is also listed on the Toronto Stock Exchange. The high and low closing sales prices as reported on the New York Stock Exchange Composite Tape for a period including the two fiscal years ended May 31, 1994, are:
since fiscal 1990. The Company's current intent is to retain earnings for use in the Company's business and the financing of its capital requirements. The payment of any future cash dividends is necessarily dependent upon the earnings and financial needs of the Company, along with applicable legal and contractual restrictions.
The payment of dividends on the Company's capital stock is restricted pursuant to the indentures under which its publicly traded notes were issued.
Under applicable corporate law, the Company may pay dividends or make other distributions to its shareholders if (i) it would be solvent after giving effect to the distribution and (ii) the distribution would not exceed the Company's surplus. "Surplus" is defined as the excess of the net assets of the Company over its stated capital (stated capital being the total par value of the Company's outstanding capital stock plus all amounts transferred to stated capital, minus legal reductions from such sum).
In connection with the acquisition in March 1994 of the common shares of Triton Europe not owned by Triton, the Company issued 522,460 shares of its 5% Convertible Preferred Stock ("5% preferred stock") to the former holders of the Triton Europe common shares. Each share of the 5% preferred stock may be converted into one share of Triton Common Stock at any time on or after October 1, 1994. Each share of 5% preferred stock bears a cash dividend, which has priority over dividends on Triton's Common Stock, equal to 5% per annum on the redemption price of $34.41 per share, payable semi-annually on March 30 and September 30, commencing on September 30, 1994. The 5% preferred stock has priority over Triton Common Stock upon liquidation, and may be redeemed at Triton's option at any time on or after March 30, 1998 (or such earlier date as at least 75% of the shares originally issued have been converted into Common Stock) for cash equal to the redemption price. Any shares of 5% preferred stock that remain outstanding on March 30, 2004 must be redeemed at the redemption price either for cash or, at the Company's option, for shares of Triton Common Stock. See note 14 of Notes to Consolidated Financial Statements.
In June 1990, the Board of Directors of the Company adopted a Shareholder Rights Plan under which preferred stock rights were issued to holders of its Common Stock at the rate of one right for each share of Common Stock held as of the close of business on June 26, 1990.
Generally, the rights become exercisable only if a person acquires beneficial ownership of 15% or more of Triton's Common Stock or announces a tender offer for 15% or more of the Common Stock. If, among other events, any person becomes the beneficial owner of 15% or more of Triton's Common Stock, number of shares of Common Stock of the Company, which is equal to the amount obtained by dividing the right's exercise price (currently $40) by 50% of the market price of the Common Stock on the date of the first occurrence. In addition, if the Company is subsequently merged or certain other extraordinary business transactions are consummated, each right generally becomes a right to purchase such number of shares of common stock of the acquiring person which is equal to the amount obtained by dividing the right's exercise price by 50% of the market price of the Common Stock on the date of the first occurrence. Under certain circumstances, the Company's directors may determine that a tender offer or merger is fair to all shareholders and prevent the rights from being exercised. The Company will be entitled to redeem the rights at $0.01 per right at any time until the 10th day following the public announcement that a 15% position has been acquired. The rights will expire on June 26, 2000.
At August 18, 1994, there were 7,070 record holders of the Company's Common Stock.
ITEM 6.
ITEM 6. SELECTED FINANCIAL DATA
ITEM 7.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
Beginning in fiscal 1993, the Company initiated several strategic changes with respect to its exploration and development programs and non-oil and gas businesses. As a result, the Company is focusing its resources on what it regards as high potential exploration and development opportunities such as those in Colombia, Malaysia-Thailand and other areas. Producing properties, publicly owned subsidiaries and affiliates and non-oil and gas assets have been re-evaluated, and in some cases sold or restructured, in order to sharpen this focus.
LIQUIDITY AND CAPITAL RESOURCES
Net working capital was $116.8 million, $42.8 million and $14.7 million at May 31, 1994, 1993 and 1992, respectively, while the Company's debt as a percentage of total capital was 53% at May 31, 1994 and 41% at May 31, 1993. The Company has substantially reduced its cost of borrowing as evidenced by the lower interest rate of 9 3/4% realized on the Company's debt offering in December 1993.
For the year ended May 31, 1994, funding requirements for operating expenses, capital expenditures and debt retirement were provided by proceeds from the sale of assets ($100 million) and approximately $124 million from the issuance of $170 million in principal amount of 9 3/4% Senior Subordinated Discount Notes ("9 3/4% Notes") due December 2000. Net cash used by operating activities in fiscal 1994 was $25 million, including $7.6 million used in discontinued operations.
On March 31, 1994, the Company acquired all of the outstanding shares of Triton Europe, not owned by the Company, representing the minority shareholders' 5% preferred stock, which added approximately $18 million to shareholders' equity.
Proceeds of approximately $126 million from the issuance of $240 million in principal amount of 12 1/2% Senior Subordinated Discount Notes ("1997 Notes") due November 1997 and asset sales ($29.4 million) were the primary sources of funds required during 1993 for the Company's capital expenditures, operating expenses and debt retirement. Funding requirements for the year ended May 31, 1992 were met from cash flow provided by operating activities ($22.5 million) and the issuance of common stock in 1991 ($120.5 million).
The Company incurred capital expenditures and other capital investments of $86.8 million, $124.9 million and $98.4 million during the years ended May 31, 1994, 1993, and 1992, respectively, primarily resulting from exploration and development of the Cusiana and Cupiagua Fields in Colombia.
CAPITAL REQUIREMENTS AND FUNDING ALTERNATIVES
Continued funding for development of the oil fields in Colombia, including drilling and production facilities, as well as commitments for seismic, drilling and other exploration expenditures under various license, production sharing and other agreements, will require significant capital. At May 31, 1994, the Company had approximately $161.3 million in cash and marketable securities on hand, which the Company believes will be sufficient to fund currently anticipated capital expenditures into 1995. In addition, the Company has received a commitment from the Export-Import Bank of the United States (Eximbank) for a guarantee of up to $35 million of borrowings to purchase United States-sourced capital equipment under credit facilities to be negotiated. The Company's capital budget for the seven months ending December 31, 1994 (the Company's new fiscal year end) is approximately $110 million, excluding capitalized interest, of which approximately $85 million relates to Colombia.
Total capital requirements for full field development of the Cusiana and Cupiagua Fields in Colombia have not been finally determined, although they are expected to continue at substantial levels into 1997. A substantial portion of the Company's capital expenditures in Colombia have been, and for the foreseeable future are expected to be, for exploration and development activities relating to the Cusiana and Cupiagua Fields pursuant to contracts under which the Company is not the operator. For this reason, and because the geological characteristics of the fields are relatively complex and unpredictable, the Company's capital requirements, while substantial, are relatively difficult to predict.
In addition to drilling expenditures, significant capital will be necessary to finance the construction of needed additional Colombian transportation by many factors, including the partners' assessment of the fields' production potential and the participation of third party investors.
A memorandum of understanding relating to the formation of a jointly owned and financed pipeline company has been entered into among the Company and the other working interest owners, and TransCanada PipeLines Colombia Limited and IPL Energy (Colombia) Ltd., but the memorandum is not binding on the parties unless and until definitive agreements relating to financing, throughput and other matters are negotiated. Moreover, the level and terms of the Company's capital contributions to the pipeline company would be affected by the capital structure of the pipeline company. The Company currently expects that approximately 70% of the pipeline company's capital structure will be debt.
The remaining additional indebtedness that may be incurred under debt limitation covenants relating to the Company's senior subordinated notes is expected to be substantially utilized by borrowings incurred in connection with the Eximbank guaranteed borrowings described above and similar export credit agency borrowings under facilities to be negotiated. The Company expects to meet the balance of its direct capital needs in 1995 and later years with cash on hand, marketable securities, increasing cash flow from Colombian operations, proceeds from asset sales, and possibly the issuance of equity securities.
RESULTS OF OPERATIONS
The Company reported a net loss from continuing operations of $8.7 million in 1994, $81.8 million in 1993 and $91.6 million in 1992. The improvement, from 1993 to 1994, resulted principally from gains realized on the sale of Triton Canada common stock and other assets and lower writedowns of oil and gas properties, depreciation and depletion and equity losses from affiliates. The 1993 results improved compared to 1992 despite higher writedowns of oil and gas properties and other assets and lower oil and gas volumes, primarily due to lower losses in the aviation segment and income tax benefits resulting from the writedown of oil and gas properties in France and recognition of a deferred tax asset in the United States.
The Company has elected to change its fiscal year end from May 31 to December 31, commencing December 31, 1994. Management expects that the Company's results of operations for the seven month transition period ending December 31, 1994, will be less favorable than for the fiscal year May 31, 1994 or than would have been expected for a twelve month period ending May 31, 1995, primarily because the Company does not expect a material improvement in results of operations until the anticipated significant increase in Colombian production occurs.
REVENUES
Sales and other operating revenues were $56.1 million in 1994, $104.3 $37.8 million from 1993 to 1994 while aviation sales and services decreased $7 million due to the divestiture of Triton Canada and non-core assets. Total revenues in 1994 include a $47.9 million gain on the sale of the Company's investment in Triton Canada. Other income increased during 1994 due to a $7 million gain on the sale of United States oil and gas properties, a $1.5 million gain on the sale of Aero Services International, Inc. ("Aero") and higher interest income of $2.4 million. The decrease in sales and operating revenues in 1993 compared to 1992 resulted from declines in oil and gas revenues ($5.1 million ) and aviation sales and services ($8.8 million).
COSTS AND EXPENSES
Operating expenses of $41.6 million for the year ended May 31, 1994 decreased $14.4 million from the previous year, primarily due to oil and gas operations ($8.3 million), aviation operations ($2.1 million) and gas gathering and pipeline operations ($3.8 million) which have been sold. Operating expenses decreased $10.1 million from 1992 to 1993 principally due to lower aviation operating expenses of $10.6 million.
General and administrative expenses decreased $5.9 million from 1993 to 1994 as lower expenses in the oil and gas and aviation segments were partially offset by increases in personnel at the corporate office. General and administrative expenses during 1993 increased compared to 1992 due to severance costs and corporate staff increases, offset by staff reductions in the United States, Indonesia, France and Canada and lower directors' compensation. The decrease in directors' compensation resulted from a decline in both the shares and market value of outstanding stock appreciation rights.
Depreciation, depletion and amortization of $20.5 million in 1994 decreased $25.9 million from 1993 due to lower depletion related to oil and gas operations. The increase from 1992 to 1993 was also related to oil and gas operations.
Writedown of assets and loss provisions were $45.8 million, $103.4 million and $55.4 million for 1994, 1993 and 1992, respectively. Writedowns of oil and gas properties totaled $44.4 million in 1994, $91.2 million in 1993 and $35.8 million in 1992. Writedowns of aviation assets were $3.5 million and $6.3 million in 1993 and 1992, respectively. The Company also recorded loss provisions of $5.5 million in 1993 and $10 million in 1992 relating to the cost of actual or contemplated settlements and legal costs associated with pending litigation during those years.
The increase in interest expense since 1992 was due to higher outstanding debt resulting from the issuance of the 1997 Notes in November 1992 and the 9 3/4% Notes in December 1993, offset by capitalized interest.
Equity in earnings (loss) of affiliates was comprised of the following (in thousands):
Crusader's 1994 earnings improvement resulted from a decrease in losses from the smokeless fuel operation in Ireland of $3.4 million and lower writedowns of $4.4 million. The 1993 Crusader loss was primarily a result of pre-operating costs associated with the smokeless fuel operation in Ireland ($8.4 million) and writedowns of its United States oil and gas properties ($5.3 million). The 1992 loss at Crusader resulted from writedowns of $9.8 million, of which $6.3 million pertained to coal properties and $3.5 million related to other property and equipment.
For the years ended May 31, 1993 and 1992, the Company's equity in the losses of Aero reflected loss provisions of $7.3 million and $11.8 million, respectively. These loss provisions reduced the carrying amounts of preferred stock, common stock, outstanding loans from the Company and receivables. The Company's investment in Aero was carried at zero cost during 1994.
INCOME TAXES
The Company adopted Statement of Financial Accounting Standards ("SFAS") No. 109, "Accounting for Income Taxes", effective June 1, 1992. The cumulative benefit of the change to the liability based method under SFAS No. 109 in 1993 was $4 million, or $.12 per share.
The income tax benefit of $6.5 million in 1994 was due to a foreign tax benefit of $10.7 million resulting from the ceiling test writedown of oil and gas properties in France, a gain of $1 million relating to a refund collected for taxes paid in connection with the 1991 sale of the North Sea properties and a $2 million refund due in France for the usage of net operating losses. These benefits were partially offset by $6.7 million of Canadian taxes due following the sale of the Company's investment in Triton Canada. Also included in the 1994 tax provision is deferred tax expense of $10 million related to Colombia and Argentina and a deferred tax benefit of $9.4 million related to the United States. The Company will continue to incur deferred taxes in foreign jurisdictions as capital investments are made without the continuing benefit from United States net operating losses.
to a foreign tax benefit resulting from the writedown of oil properties in France and recognition of a $25 million net deferred tax asset in the United States.
At May 31, 1994, the Company had net operating loss and depletion loss carryforwards for United States tax purposes of approximately $212.3 million and $6.8 million, respectively. The net operating losses expire from 1996 through 2008 but the depletion carryforwards are available indefinitely. Corresponding net operating losses and depletion loss carryforwards at May 31, 1993 were $186.5 million and $6.8 million, respectively. The Company recorded a deferred tax asset of $34.4 million and $25 million at May 31, 1994 and 1993, respectively. The minimum amount of future taxable income necessary to realize the deferred tax asset is approximately $98 million. It is anticipated that future taxable income from Colombian operations and tax planning strategies involving the Company's corporate structure will be sufficient to realize the deferred tax asset.
MINORITY INTEREST IN LOSS OF SUBSIDIARIES
The changes in minority interest corresponded with movements in operating losses realized by Triton Europe in 1992, 1993 and up until March 31, 1994, the date on which the Company acquired the minority interest shares in Triton Europe.
DISCONTINUED OPERATIONS
The results of operations for the wholesale fuel products segment have been reported as discontinued operations due to the Company's decision to sell these businesses. The 1994 losses were offset against a loss provision recorded of $16.1 million, net of tax, at May 31, 1993. An additional accrual of $.7 million, net of tax, was recorded at May 31, 1994 to cover estimated operating losses associated with the final disposition of this segment. Also reported as a discontinued operation during fiscal 1992 were the results of operations for the Company's seismic equipment sales and services segment. The Company realized a net gain of $13.8 million during its first quarter of 1993 as a result of this sale. The Company's equity in the earnings of Input/Output, Inc. was $2.1 million in 1992.
The following table and related discussion summarize the results of discontinued operations for the wholesale fuel products segment:
For the wholesale fuel products segment, both sales and expenses increased substantially during 1993 and 1992. This was due to the acquisition of three wholesale products distributors during those years. Also contributing was the establishment of gas and diesel operations in Texas and the Southeast. A resulting change in product mix led to lower margins during those years as non- aviation related sales increased in relation to total sales. The writedown of assets during 1993 related primarily to goodwill. The 1994 results have been affected by the divestitures that have taken place.
INVESTMENTS IN MARKETABLE SECURITIES
Effective May 31, 1994, the Company adopted SFAS No. 115, "Accounting for Certain Investments in Debt and Equity Securities", which requires that investments in certain marketable debt securities be reported at fair value except for those investments in debt securities which management has the positive intent and ability to hold to maturity. Unrealized gains or losses related to trading investments are recorded in the income statement while unrealized gains or losses related to investments available-for-sale are recorded as a separate component of shareholders' equity. At May 31, 1994, the Company recorded a valuation reserve of $1 million in shareholders' equity representing the cumulative effect of adopting this standard.
ENVIRONMENTAL MATTERS
The Company is subject to extensive environmental laws and regulations. These laws regulate the discharge of materials into the environment and may require the Company to remove or mitigate
the environmental effects of the disposal or release of petroleum substances at various sites. Also, the Company remains liable for certain environmental in the storage, handling and sale of hazardous materials, including fuel storage in underground tanks. The Company believes that the level of future expenditures for environmental matters, including clean-up obligations, is impractical to determine with any reliable degree of accuracy. Management believes that such costs, when finally determined, will not have a material adverse effect on the Company's consolidated financial position. During the years ended May 31, 1994, 1993 and 1992, the Company accrued $4.4 million, nil and $1.2 million, respectively, for environmental costs. See Item 1. "Business - - - - Oil and Gas Operations", "Business - Litigation" and note 18 of Notes to Consolidated Financial Statements.
SEGMENT REVIEW
The following table and related discussion summarize the contributions to operating loss by the Company's industry segments for the three years ended May 31, 1994. Operating loss represents sales and other operating revenues, less total costs and expenses (including writedowns of operating assets) and excludes, among other items, interest and other income/expense and general corporate expenses.
OIL AND GAS ACTIVITIES
Oil and gas sales decreased by $37.8 million in 1994 compared to 1993 primarily due to the sale of the Company's investment in Triton Canada ($14.5 million), sale of United States working interests ($8.6 million) and lower revenues in France resulting from a drop in production. The lower production reflects a continuing natural decline in the Villeperdue field. Average oil prices per barrel dropped by $3.88 between 1993 and 1994, resulting in an $8.1 million decrease in revenues during 1994, principally from price decreases in France ($4.46 per barrel or a $4.7 million effect). Price decreases in Indonesia, the United States and Colombia had a lesser impact, representing in the aggregate a $3.3 million effect in 1994. Colombian production increased to 467,000 barrels in 1994 from 219,000 barrels in 1993.
Oil and gas production costs were $26.6 million in 1994, $34.9 million in 1993, and $34.3 million in 1992. The decrease in 1994 was principally due to the sale of Triton Canada and United States properties ($9 million effect) and lower production in France ($3.1 million effect) partially offset by increased production in Colombia ($1.8 million effect) and an accrual for environmental 1992 was principally due to startup costs in Colombia and additional workover costs in Indonesia and France. These cost increases were partially offset by the lower production volumes during 1993. Average production costs per equivalent barrel of oil and gas production were $8.83 in 1994, $5.95 in 1993 and $5.35 in 1992. The increase per barrel in 1994 was primarily due to the United States environmental cleanup costs and lower United States production from the sale of working interest properties. Average production costs per equivalent barrel are expected to decrease once production increases in Colombia.
General and administrative expenses in this segment have decreased from $18 million in 1992 and 1993 to $11 million in 1994. Lower expenses in 1994 were primarily due to the restructuring in Europe ($4.6 million effect), the sale of Canada ($1.4 million effect), and higher capitalization ($2 million effect) caused by increased activity in Malaysia-Thailand. Affecting 1993 and 1992 were severance costs and other restructuring related expenses in Europe in 1993 and Canada in 1992 and growth in activity and personnel in Colombia. These were offset partially by the effect of staff reductions in the United States, Canada and Indonesia.
Operating profits for this segment were significantly affected by writedowns of $43.2 million and $74.9 million in Europe during 1994 and 1993, respectively. During 1994, the writedowns related to SEC ceiling limitation requirements for the French cost pool. The 1993 writedowns reflected a decision to eliminate certain future development activities in the Villeperdue field, for which the Company recorded a significant decrease in its proved undeveloped reserves. A resulting drop in the Securities and Exchange Commission ("SEC") ceiling limitation for these properties led to a $55.7 million writedown of costs associated with the Company's proved oil properties. Additionally, in connection with Triton Europe's decision to eliminate certain exploration activities in both France and the United Kingdom, approximately $19.2 million of unevaluated properties were considered to be impaired. These costs were associated with various license areas that were relinquished or allowed to expire. Further, writedowns occurred in the United Kingdom, New Zealand and Indonesia during both 1992 and 1993 because of lower prices, downward adjustments
of reserves or impairment. The 1992 writedown in Gabon resulted from the Company's relinquishment of its license area due to a lack of exploration success.
AVIATION SALES AND SERVICES
Sales and operating expenses in this segment continued to decrease principally from the divestiture of three fixed based operations and a reduction in charter and maintenance revenues in 1994. The decreases in 1993 compared to and 1991 divestitures. Writedowns were recorded during 1993 and 1992 in order to reflect the permanent impairment of value or contemplation of various asset sales, pursuant to a restructuring plan initiated during 1990.
ITEM 8.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements required by this item begin at page hereof.
ITEM 9.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
Not applicable.
PART III
ITEM 10.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information relating to the Company's directors and nominees for election as directors of the Company is incorporated herein by reference from the Company's Proxy Statement (herein so called) for its 1994 Annual Meeting of Shareholders, specifically the discussion under the heading "Election of Directors". It is currently anticipated that the Proxy Statement will be publicly available and mailed to shareholders in September 1994. Certain information as to executive officers is included herein under Item 1. "Business - - - - Executive Officers".
ITEM 11.
ITEM 11. EXECUTIVE COMPENSATION
The discussion under "Management Compensation" in the Company's Proxy Statement is incorporated herein by reference.
ITEM 12.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The discussion under "Voting and Principal Shareholders" in the Company's Proxy Statement is incorporated herein by reference.
ITEM 13.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The discussion under "Management Compensation" in the Company's Proxy Statement is incorporated herein by reference.
PART IV
ITEM 14.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) The following documents are filed as part of this Annual Report on Form 10-K:
1. Financial Statements: The financial statements filed as part of this report are listed in the "Index to Financial Statements and Schedules" on page hereof.
2. Financial Statement Schedules: The financial statement schedules filed as part of this report are listed in the "Index to Financial Statements and Schedules" on page hereof.
3. Exhibits required to be filed by Item 601 of Regulation S-K. (Where the amount of securities authorized to be issued under any of Crusader's long- term debt agreements does not exceed 10% of the Company's assets, pursuant to paragraph (b)(4) of Item 601 of Regulation S-K, in lieu of filing such as an exhibits, the Company hereby agrees to furnish to the Commission upon request a copy of any agreement with respect to such long-term debt.)
3.2 Amended and Restated Bylaws of Triton Energy Corporation.(1)
4.1 Specimen Stock Certificate of Common Stock, $1.00 par value, of the Company.(3)
4.4 Rights Agreement dated as of June 26, 1990, between Triton and NationsBank of Texas, N.A. (f/k/a NCNB Texas National Bank), as Rights Agent.(3)
4.5 Statement of Cancellation of Redeemable Shares, dated October 1, 1991. (7) 4.6 Form of Debt Securities.(12)
4.7 Proposed Form of Senior Indenture.(12)
4.8 Proposed Form of Senior Subordinated Indenture.(12)
4.9 Senior Subordinated Indenture by and between the Company and United States Trust Company of New York, dated as of December 15, 1993.(11)
4.10 First Supplemental Indenture by and between the Company and United States Trust Company of New York, dated as of December 15, 1993.(11)
4.11 Statement of Resolution Establishing and Designating a Series of Shares of the Company, 5 % Convertible Preferred Stock, no par value, dated as of March 30, 1994.(13)
10.1 Triton Energy Corporation Amended and Restated Retirement Income Plan.(11)
10.2 Triton Energy Corporation Amended and Restated Supplemental Executive Retirement Income Plan.(11)
10.3 1981 Employee Non-Qualified Stock Option Plan of Triton Energy Corporation.(2)
10.4 Amendment No. 1 to the 1981 Employee Non-Qualified Stock Option Plan of Triton Energy Corporation.(6)
10.5 Amendment No. 2 to the 1981 Employee Non-Qualified Stock Option Plan of Triton Energy Corporation.(2)
10.6 Amendment No. 3 to the 1981 Employee Non-Qualified Stock Option Plan of Triton Energy Corporation.(11)
10.7 1985 Stock Option Plan of Triton Energy Corporation.(3)
10.8 Amendment No. 1 to the 1985 Stock Option Plan of Triton Energy Corporation.(2)
10.9 Amendment No. 2 to the 1985 Stock Option Plan of Triton Energy Corporation.(11)
10.10 Triton Energy Corporation Amended and Restated 1986 Convertible Debenture Plan.(11)
10.11 1988 Stock Appreciation Rights Plan of Triton Energy Corporation.(5)
10.12 Triton Energy Corporation 1989 Stock Option Plan.(8)
10.13 Amendment No. 1 to the Triton Energy Corporation 1989 Stock Option Plan.(2)
10.14 Amendment No. 2 to the Triton Energy Corporation 1989 Stock Option Plan.(11)
10.15 Triton Energy Amended and Restated 1992 Stock Option Plan .(11)
10.16 Form of Amended and Restated Employment Agreement by and among Triton Energy Corporation and certain officers of
10.17 Triton Energy Amended and Restated Restricted Stock Plan.(11)
10.18 Deed of Trust Note dated April 11, 1988, executed by Triton Aviation Services, Inc. and API Terminal, Inc. and related documents, including Guaranty of Triton Energy Corporation.(5)
10.19 Triton Energy Corporation Executive Life Insurance Plan.(4)
10.20 Triton Energy Corporation Long Term Disability Income Plan.(4)
10.21 Triton Energy Corporation Amended and Restated Retirement Plan for Directors.(3)
10.22 Indenture dated as of November 13, 1992 between Triton and Chemical Bank, with respect to the issuance of Senior Subordinated Discount Notes due 1997.(9)
10.23 Supplemental Indenture dated as of July 1, 1993 between Triton Energy Corporation and Chemical Bank.(5)
10.24 Supplemental Indenture dated as of August 16, 1993 between Triton Energy Corporation and Chemical Bank.(5)
10.25 Underwriting Agreement dated June 18, 1993 among Triton Canada Resources Ltd., Triton Energy Corporation and the underwriters named therein.(10)
10.26 Purchase and Sale Agreement among Triton Oil and Gas Corp., Triton Energy Corporation and Torch Energy Advisors Incorporated dated effective as of January 1, 1993.(5)
10.27 Agreement for Purchase and Sale of Assets Among Triton Fuel Group, Inc. and AVFUEL Corporation dated August 25, 1993.(5)
10.28 Contract for Exploration and Exploitation for Santiago de Atalayas I with an effective date of July 1, 1982, between Triton Colombia, Inc., and Empresa Colombiana De Petroleos.(5)
10.29 Contract for Exploration and Exploitation for Tauramena with an effective date of July 4, 1988, between Triton Colombia, Inc., and Empresa Colombiana De Petroleos.(5)
10.30 Summary of Assignment legalized by Public Instrument No. 1255 dated September 15, 1987 (Assignment is in Spanish language).(5)
10.31 Summary of Assignment legalized by Public Instrument No. 1602 dated June 11, 1990 (Assignment is in Spanish language).(5)
10.32 Summary of Assignment legalized by Public Instrument No. 2586 dated September 9, 1992 (Assignment is in Spanish language).(5)
10.33 Guaranty between the company and Comerica Bank Texas.(11)
10.34 Triton Energy Corporation 401(K) Savings Plan.(11)
10.36 Contract between Malaysia-Thailand and Joint Authority and Petronas Carigali SDN.BHD. and Triton Oil Company of Thailand relating to Exploration and Production of Block A-18.(15)
21.1 Subsidiaries of the Company.(1)
23.1 Consent of Price Waterhouse, L.L.P.(1)
23.2 Consent of KPMG Peat Marwick, L.L.P., Dallas, Texas.(1)
23.3 Consent of KPMG Peat Marwick, Brisbane, Australia.(1)
23.4 Consent of DeGolyer and MacNaughton.(1)
23.5 Consents of McDaniel & Associates Consultants, Ltd.(1)
24.1 The power of attorney of officers and directors of the Company as set forth on the signature page hereof.(1)
99.1 Rio Chitamena Association Contract.(15)
99.2 Rio Chitamena Purchase and Sale Agreement.(15)
99.3 Integral Plan - Cusiana Oil Structure.(15)
99.4 Letter Agreements with co-investor in Colombia.(15)
99.5 Colombia Pipeline Memorandum of Understanding.(15)
(1) Filed herewith. (2) Previously filed as an exhibit to the Company's Annual Report on Form 10-K for the fiscal year ended May 31, 1992 and incorporated herein by reference. (3) Previously filed as an exhibit to the Company's Annual Report on Form 10-K for the fiscal year ended May 31, 1990 and incorporated herein by reference. (4) Previously filed as an exhibit to the Company's Annual Report on Form 10-K for the fiscal year ended May 31, 1991 and incorporated herein by reference. (5) Previously filed as an exhibit to the Company's Annual Report on Form 10-K for the fiscal year ended May 31, 1993 and incorporated by reference herein. (6) Previously filed as an exhibit to the Company's Annual Report on Form 10-K for the fiscal year ended May 31, 1989 and incorporated by reference herein. (7) Previously filed as an exhibit to the Company's Registration Statement on Form S-3 (No. 33-42430) and incorporated herein by reference. (8) Previously filed as an exhibit to the Company's Quarterly Report on Form 10-Q for the quarter ended November 30, 1988 and incorporated herein by reference. (9) Previously filed as an exhibit to the Company's Quarterly Report on Form 10-Q for the quarter ended November 30, 1992 and incorporated herein by reference. (10) Previously filed as an exhibit to the Company's Current Report on Form 8-K dated as of July 14, 1993 and incorporated herein by reference. (11) Previously filed as an exhibit to the Company's Quarterly Report on Form 10-Q for the quarter ended November 30, 1993 and incorporated by reference herein. (12) Previously filed as an exhibit to the Company's Registration Statement on Form S-3 (No. 33-69230) and incorporated herein by reference. (13) Previously filed as an exhibit to the Company's Quarterly Report on Form 10-Q for the quarter ended February 28, 1994 and incorporated by reference herein. (14) Previously filed as an exhibit to the Company's current report on Form 8-K (15) Previously filed as an exhibit to the Company's current report on Form 8 -K/A dated July 15, 1994 and incorporated by reference herein.
(b) Reports on Form 8-K. On March 3, 1994, the Company filed a Current Report on Form 8-K, with respect to Item 5 of said Form, relating to the approval by state and federal district courts in Dallas of the settlement of all pending shareholder lawsuits against the Company and the approval of the minority shareholders of Triton Europe plc to the Company's purchase of their shares in Triton Europe plc. On March 15, 1994, the Company filed a Current Report on Form 8-K, with respect to Item 5 of said Form, relating to the finalization of agreements for commencement of joint petroleum operations in Block 18, located in the Malaysia-Thailand Joint Development Area. On April 14, 1994, the Company filed a Current Report on Form 8-K, with respect to Item 5 of said Form, relating to the approval of the Company's Board of Directors of the sale to a group of senior officers of $6.3 million aggregate principal amount of convertible subordinated debentures. On April 21, 1994, the Company filed a Current Report on Form 8-K, with respect to Item 5 of said Form, relating to the execution of a production sharing contract with the Malaysia-Thailand Joint Authority and the Malaysian National Oil Company. On April 28, 1994, the Company filed a current Report on Form 8-K, with respect to Item 5 of said Form, relating to the completion of a private placement of $41 million principal amount of ten year exchangeable notes by Crusader Limited, a 49.9% owned affiliate of the Company. On
May 25, 1994, the Company filed a Current Report on Form 8-K, with respect to Item 8 of said Form, relating to the change in fiscal year end of the Company.
(c) See subitem (a) above.
(d) See subitem (a) above.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Annual Report to be signed by the undersigned thereunto duly authorized on the 29th day of August, 1994.
TRITON ENERGY CORPORATION
By: /s/ Thomas G. Finck -------------------------- Thomas G. Finck President and Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned officers and directors of Triton Energy Corporation (the "Company") hereby constitutes and appoints Thomas G. Finck, Robert B. Holland, III, and Peter Rugg, or any of them fact and agent, with full power of substitution, for him and on his behalf and in his name, place and stead, in any and all capacities, to sign, execute, and file any and all documents relating to the Company's Form 10-K for the fiscal year ended May 31, 1994, including any and all amendments and supplements thereto, with any regulatory authority, granting unto said attorneys, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises in order to effectuate the same as fully to all intents and purposes as he himself might or could do if personally present, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their or his substitute or substitutes, may lawfully do or cause to be done.
Pursuant to the requirements of the Securities Exchange Act of 1934, this Annual Report on Form 10-K has been signed below by the following persons on behalf of the Registrant and in the capacities indicated on the 29th day of August, 1994.
Signature Title --------- -----
/s/ Thomas G. Finck President, Chief Executive Officer and Director ----------------------- Thomas G. Finck
/s/ Peter Rugg Senior Vice President and Chief Financial --------------------- Officer Peter Rugg
________________________________ Director Herbert L. Brewer
/s/ Ernest E. Cook Director ------------------ Ernest E. Cook
/s/ Ray H. Eubank Director ------------------ Ray H. Eubank
/s/ Jesse E. Hendricks Director ---------------------- Jesse E. Hendricks
/s/ William I. Lee Director ---------------------- William I. Lee
/s/ John P. Lewis Director ---------------------- John P. Lewis
- - - -------------------------------- Director Michael E. McMahon
- - - -------------------------------- Director Graeme O. Morris
- - - --------------------------------- Director Wellslake D. Morse, Jr.
- - - --------------------------------- Director J.G.A. Tucker
/s/ Fitzgerald S. Hudson ------------------------ Director Fitzgerald S. Hudson
/s/ J. Otis Winters ------------------------- Director J. Otis Winters
TRITON ENERGY CORPORATION AND SUBSIDIARIES INDEX TO FINANCIAL STATEMENTS AND SCHEDULES
All other schedules are omitted as the required information is inapplicable or
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of Triton Energy Corporation
In our opinion, the consolidated financial statements as of and for the years ended May 31, 1994 and 1993 listed in the accompanying index present fairly, in all material respects, the financial position of Triton Energy Corporation and its subsidiaries at May 31, 1994 and 1993, and the results of their operations and their cash flows for the years then ended in conformity with generally accepted accounting principles. 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 of these statements in accordance with generally accepted auditing standards which 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, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above.
As discussed in notes 1 and 3, the Company decided to discontinue its wholesale fuel products segment in 1993. We have audited the adjustments that were applied to restate the 1992 financial statements. In our opinion, such adjustments are appropriate and have been properly applied to the 1992 financial statements.
As discussed in note 1, the Company changed its method of accounting for investments in marketable securities at May 31, 1994 and its accounting for income taxes in 1993.
PRICE WATERHOUSE LLP
Dallas, Texas July 19, 1994
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of Triton Energy Corporation
We have audited the consolidated statements of operations, shareholders' equity and cash flows of Triton Energy Corporation and subsidiaries for the year ended May 31, 1992 (before restatement for discontinued wholesale fuel products operations). In connection with our audit of the consolidated financial statements, we also have audited the financial statement schedules as listed in the accompanying index for the year ended May 31, 1992. These consolidated financial statements and financial statement schedules are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and financial statement schedules based on our audit.
We conducted our audit in accordance with generally accepted auditing standards. 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 audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the results of operations and cash flows of Triton Energy Corporation and subsidiaries for the year ended May 31, 1992, in conformity with generally accepted accounting principles. Also, in our opinion, the related financial statement schedules, when considered in relation to the basic consolidated financial statements taken as a whole, present fairly, in all material respects, the information set forth therein.
KPMG PEAT MARWICK LLP
Dallas, Texas August 14, 1992
TRITON ENERGY CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS THREE YEARS ENDED MAY 31, 1994 (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
See accompanying notes to consolidated financial statements.
TRITON ENERGY CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS MAY 31, 1994 and 1993 (IN THOUSANDS, EXCEPT SHARE DATA )
The Company uses the full cost method to account for its oil and gas producing activities. See accompanying notes to consolidated financial statements.
TRITON ENERGY CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS THREE YEARS ENDED MAY 31, 1994 (IN THOUSANDS)
See accompanying notes to consolidated financial statements.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY THREE YEARS ENDED MAY 31, 1994 (IN THOUSANDS, EXCEPT SHARE DATA)
See accompanying notes to consolidated financial statements.
TRITON ENERGY CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (AMOUNTS IN TABLES IN THOUSANDS)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BUSINESS ACTIVITIES AND PRINCIPLES OF CONSOLIDATION
Triton Energy Corporation (together with its majority-owned subsidiaries, the "Company") is an international energy company primarily engaged in oil and gas exploration activities. The Company's principal producing properties and development operations are located in Colombia, Argentina, France, Malaysia-Thailand and Australia, with a significant portion of its proved reserves located in Colombia.
The consolidated financial statements include the accounts of the Company. All significant intercompany balances and transactions have been in which the Company exercises significant influence over operating and financial policies are accounted for using the equity method. Investments in less than 20% owned affiliates are accounted for using the cost method.
CASH EQUIVALENTS
Cash equivalents are highly liquid investments purchased with an original maturity of three months or less.
INVESTMENTS IN MARKETABLE SECURITIES
Effective May 31, 1994, the Company adopted Statement of Financial Accounting Standards ("SFAS") No. 115, "Accounting for Certain Investments in Debt and Equity Securities", which requires that all investments in debt securities and certain investments in equity securities be reported at fair value except for those investments which management has the positive intent and the ability to hold to maturity. Investments available-for-sale are classified based on the stated maturity of the securities and changes in fair value are reported as a separate component of shareholders' equity. Trading investments are classified as current regardless of the stated maturity of the underlying securities and changes in fair value are reported in other income. Investments that will be held-to-maturity are classified based on the stated maturity of the securities. The cumulative effect of adopting this standard of $955,000 has been recorded as a valuation reserve in shareholders' equity. Prior to the adoption of SFAS No. 115, the Company accounted for its investments in debt securities at amortized cost and classified such investments according to the stated maturity of the underlying securities.
TRITON ENERGY CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (AMOUNTS IN TABLES IN THOUSANDS)
INVENTORIES
Inventories are stated at the lower of cost (principally average cost) or market and primarily consist of equipment and supplies.
PROPERTY AND EQUIPMENT
The Company follows the full cost method of accounting for exploration and development of oil and gas reserves, whereby all productive and nonproductive costs are capitalized. Individual countries are designated as separate cost centers. All capitalized costs plus the undiscounted future development costs of proved reserves are depleted using the unit of production method based on total proved reserves applicable to each country. A gain or loss is recognized on sales of oil and gas properties only when the sale involves significant reserves.
Costs related to acquisition, holding and initial exploration of concessions in countries with no proved reserves are initially capitalized internal costs directly identified with acquisition, exploration and development activities and does not include costs related to production, general overhead or similar activities.
The net capitalized costs of oil and gas properties for each cost center, less related deferred income taxes, cannot exceed the sum of (i) the estimated future net revenues from the properties, discounted at 10%; (ii) unevaluated costs not being amortized; and (iii) the lower of cost or estimated fair value of unproved properties being amortized; less (iv) income tax effects related to differences between the financial statement basis and tax basis of oil and gas properties.
The estimated costs, net of salvage value, of dismantling facilities or projects with limited lives or facilities that are required to be dismantled by contract, regulation or law, and the estimated costs of restoration and reclamation associated with oil and gas operations are accrued during production and classified as a long-term liability.
Support equipment and facilities are depreciated using the unit of production method based on total reserves of the field related to the support equipment and facilities. Other property and equipment, which includes furniture and fixtures, vehicles, aircraft and leasehold improvements, are depreciated principally on a straight-line basis over estimated useful lives ranging from 3 to 30 years.
Repairs and maintenance are expensed as incurred and renewals and improvements are capitalized.
TRITON ENERGY CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (AMOUNTS IN TABLES IN THOUSANDS)
ENVIRONMENTAL MATTERS
Environmental costs are expensed or capitalized depending on their future economic benefit. Costs that relate to an existing condition caused by past operations and have no future economic benefit are expensed. Liabilities for future expenditures of a noncapital nature are recorded when future environmental expenditures and/or remediation is deemed probable, and the costs can be reasonably estimated.
INCOME TAXES
Effective June 1, 1992, the Company adopted SFAS No. 109, "Accounting for Income Taxes", which requires deferred tax liabilities or assets be recognized for the anticipated future tax effects of temporary differences between the financial statement basis and the tax basis of the Company's assets and liabilities using the enacted tax rates in effect at year-end. This standard also requires a valuation allowance for deferred tax assets in certain circumstances. The cumulative benefit of the change to the June 1, 1992, the Company deferred the tax effects of timing differences between financial reporting and taxable income.
FOREIGN CURRENCY TRANSLATION
The accounts of the Company's foreign operations are translated into United States dollars in accordance with SFAS No. 52. The United States dollar is the designated functional currency for all of the Company's foreign operations, except for those in Australia, Canada and New Zealand, where the local currencies are used as the functional currency. The cumulative translation effects from translating balance sheet accounts from the functional currency into United States dollars at current exchange rates are included as a separate component of shareholders' equity.
DISCONTINUED OPERATIONS AND RECLASSIFICATIONS
During 1993, the Company decided to discontinue its wholesale fuel products segment. The results of operations for this segment have been reported separately as discontinued operations in the Consolidated Statements of Operations.
Certain other previously reported financial information has been reclassified to conform to the current year's presentation.
TRITON ENERGY CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (AMOUNTS IN TABLES IN THOUSANDS)
ISSUANCE OF STOCK
The Company recognizes gain or loss on issuances of common stock by subsidiaries and equity affiliates in the Consolidated Statements of Operations. Gain recognition is subject to the transaction not being part of a broader corporate reorganization and an objective determination of the value of the proceeds.
EARNINGS (LOSS) PER COMMON SHARE
Earnings (loss) applicable to common stock is based on the weighted average number of shares of common stock and common stock equivalents outstanding, unless the inclusion of common stock equivalents has an antidilutive effect. The Company's proportionate shares owned by Crusader Limited ("Crusader") are not considered outstanding for purposes of determining weighted average number of shares outstanding. Fully diluted earnings (loss) per common share is not presented due to the antidilutive effect of including all potentially dilutive securities.
2. PURCHASE OF THE TRITON EUROPE MINORITY INTEREST
On March 31, 1994, the Company acquired all of the outstanding shares not owned by the Company, representing the minority shareholders' 40.5% interest in Triton Europe plc ("Triton Europe"), in exchange for 522,460 shares of the Company's 5% Convertible Preferred Stock ("5% preferred stock"), with a value of $17,978,000, and $2,551,000 in cash, including Company's common stock on a one for one basis and has a stated value of $34.41. The transaction was recorded as a purchase and accordingly, 100% of Triton Europe's operating results have been included in the Company's results of operations since March 31, 1994. The excess of the purchase price over the carrying value of the minority interest in Triton Europe of $3,485,000 has been allocated to the full cost pools within Triton Europe.
3. DIVESTITURES AND DISCONTINUED OPERATIONS
On May 20, 1994, the Company sold all of its interest in Aero Services International, Inc. ("Aero") except for 134,592 shares of Series A preferred stock. The Company received proceeds of $1,500,000 and recorded a gain for the same amount.
In the first quarter, the Company completed the sale of its 76% interest in the common stock of Triton Canada Resources Ltd. ("Triton Canada"). The Company received net proceeds of $59,029,000 on September 10, 1993 and recorded a gain of $47,865,000.
TRITON ENERGY CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (AMOUNTS IN TABLES IN THOUSANDS)
In August and October 1993, the Company sold its United States working interest properties for net proceeds of $19,502,000, resulting in a gain of $7,028,000. The properties that were sold accounted for approximately 55.7% of discounted future net revenues associated with United States proved properties at May 31, 1993.
In fiscal 1993, the Company initiated a plan to discontinue its remaining operations in the wholesale fuel products segment. An accrual for $16,077,000 was recorded at May 31, 1993 as an estimate of the results of operations for discontinued operations during fiscal 1994 and the anticipated loss on disposal of the segment. Substantially all operations of the wholesale fuel products segment have been sold as of May 31, 1994 for proceeds totalling approximately $18,450,000. An additional accrual of $650,000 was recorded at May 31, 1994 to cover estimated operating losses caused by closing the sale of several operating divisions later than originally anticipated. The final sale of the remaining operations is imminent.
Summarized information for the wholesale fuel products segment portion of discontinued operations follows:
On August 12, 1992, the Company sold its remaining 26.9% interest in Input/Output, Inc. through a secondary public offering. The net proceeds from the offering were $24,144,000 and resulted in a net gain on the disposition of $13,841,000. The Company's equity in the earnings of Input/Output, Inc. of $25,000 and $2,105,000 for fiscal 1993 and 1992, respectively, has been included in discontinued operations.
TRITON ENERGY CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (AMOUNTS IN TABLES IN THOUSANDS)
4. WRITEDOWN OF ASSETS AND LOSS PROVISIONS
Writedown of assets and loss provisions are summarized as follows:
properties in France were written down by $43,201,000 through application of the ceiling limitation prescribed by the Securities and Exchange Commission (the "Commission" or "SEC") principally as a result of a temporary drop in oil prices and a downward revision in estimated reserves.
Included in the writedowns of evaluated and unevaluated properties during 1993 were $55,741,000 and $11,024,000, respectively, of costs associated with operations in France and an $8,185,000 writedown of unevaluated costs associated with onshore properties in the United Kingdom. These writedowns resulted from Triton Europe's decision to curtail certain exploration and development activities in Europe. As such, proved undeveloped reserves in Europe were reduced, thereby triggering a writedown of evaluated costs under the SEC ceiling limitation for these properties. The writedowns of unevaluated costs in both France and the United Kingdom were associated with various license areas that were relinquished or allowed to expire.
Similar cutbacks in Indonesia resulted in writedowns of costs associated with evaluated properties of $8,734,000 in 1993 and $13,672,000 in 1992. Also, during 1992 writedowns were recorded in Gabon (unevaluated, $7,021,000), the United States (evaluated, $2,169,000) and Canada (evaluated, $6,824,000).
In fiscal 1993, the Company settled or reached agreement to settle a number of lawsuits for which a loss provision of $5,500,000 was recorded.
In August 1992, the Company's share of a lawsuit settlement with the Company's former controller was $9,500,000. A loss provision of $9,950,000, including an estimate of outstanding legal fees and other expenses, was recorded in fiscal 1992.
TRITON ENERGY CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (AMOUNTS IN TABLES IN THOUSANDS)
5. INVESTMENTS IN MARKETABLE SECURITIES
The amortized cost and estimated fair value of marketable securities are as follows:
At May 31, 1994, all securities categorized as held-to-maturity are classified as short-term investments. The maturities for the securities available-for-sale range from one to four years with the exception of one floating rate investment totalling $2,023,000 which matures after ten years. Investments categorized as trading at May 31, 1994 total $24,903,000 and are reported at fair value.
6. INVESTMENTS IN UNCONSOLIDATED AFFILIATES
A summary of investments in unconsolidated affiliates accounted for by the equity method follows:
CRUSADER
Crusader is an Australian public company engaged in oil and gas exploration and production, coal processing and mining, and gas processing in Australia, Canada, Ireland, the United States and other areas. The Company's investment in Crusader's common stock was $29,272,000 and $29,882,000 at May 31, 1994 and 1993, respectively. At May 31, 1994 and
TRITON ENERGY CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (AMOUNTS IN TABLES IN THOUSANDS)
1993, the Company's investment in Crusader also included $7,537,000 and $7,055,000, respectively, of convertible subordinated debentures issued by The quoted market value of the Company's investment in Crusader's common stock and convertible subordinated debentures at May 31, 1994 was $35,795,000 and $7,780,000, respectively.
At May 31, 1994 and 1993, Crusader owned approximately 3% of the Company's common stock. Crusader's investment in the Company, using the cost method of accounting, was $11,583,000 and $10,832,000 at May 31, 1994 and 1993, respectively. The Company's investment in Crusader and additional paid-in capital have each been reduced in order to eliminate the Company's proportionate share of its common stock owned by Crusader. During 1993 and 1992, Crusader recognized gains of $4,629,000 and $8,698,000, respectively, on the sale of 245,000 and 400,647 shares, respectively, of the Company's common stock. The Company's share of the sale proceeds has been credited to additional paid-in capital.
On April 28, 1994, Crusader issued $40,941,000 aggregate principal amount of 6% Exchangeable Senior Notes due February 14, 2004 (the "6% Notes"). The 6% Notes are exchangeable at the option of the holder after July 27, 1994 into the shares of the Company's common stock held by Crusader at a price of $36.75 per share upon certain terms.
Summarized financial information for Crusader follows:
TRITON ENERGY CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Summarized financial information for Crusader, continued:
The Company's equity in undistributed earnings of Crusader accounted for by the equity method was approximately $25,000,000 at May 31, 1994.
AERO
Aero is a public company that provides aviation related services. The Company sold all of its common stock interest in Aero as of May 20, 1994. The Company loaned to Aero $420,000 in 1994, $2,700,000 in 1993 and $2,000,000 in 1992 and during 1994 retired a $6,910,000 loan of Aero's which the Company had previously guaranteed and collateralized. No loans were outstanding at May 31, 1994. The Company's equity in Aero's loss (based on Aero's results for each of the three years in the period ended March 31, 1994) was nil in 1994, $9,481,000 in 1993 and $14,088,000 in 1992. The Company's equity in Aero's loss included loss provisions of investment in Aero's common and preferred stock and receivables from Aero.
TRITON ENERGY CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (AMOUNTS IN TABLES IN THOUSANDS)
7. PROPERTY AND EQUIPMENT
Property and equipment at cost, are summarized as follows:
The Company capitalizes interest on qualifying assets, principally unevaluated oil and gas properties. Capitalized interest amounted to $16,863,000 in 1994, $6,407,000 in 1993 and $6,529,000 in 1992. The Company capitalized general and administrative expenses of $11,186,000 in 1994, $8,985,000 in 1993 and $10,410,000 in 1992.
8. OTHER ASSETS
Other assets consist of the following:
TRITON ENERGY CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (AMOUNTS IN TABLES IN THOUSANDS)
In 1994 and 1993, Triton Colombia, Inc., ("Triton Colombia") a wholly-owned subsidiary of the Company, purchased interests totaling approximately 6.6% in Oleoducto de Colombia S.A. ("ODC"), a pipeline company in Colombia, for total consideration of $11,108,000. The purchases were made to secure the transport capacity for the Company's oil production in Colombia.
As part of the purchase, the Company has agreed to assume by counter guarantee, directly and proportionally to part of the interest purchased, the guarantees granted to bank creditors of ODC through Shell Petroleum Company Ltd. and Shell Overseas Trading Limited.
Triton Colombia, along with its joint venture partners in the Company's Cusiana and Cupiagua fields in Colombia, has committed to upgrade the capacity of the Central Llanos pipeline which is owned by Empresa Colombiana de Petroleos ("Ecopetrol"). The Company has advanced total costs of $10,930,000 through May 31, 1994 on this project, including $2,132,000 reflected in receivables. The Company will recover this cost through lower pipeline tariffs as crude oil is transported through this pipeline.
The Company amortizes debt issue costs using the interest method over the life of the notes. Amortization related to the Company's debt issue costs was $1,479,000 in 1994, $461,000 in 1993 and $65,000 in 1992.
9. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
Accounts payable and accrued liabilities are summarized as follows:
TRITON ENERGY CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (AMOUNTS IN TABLES IN THOUSANDS)
10. LONG-TERM DEBT
A summary of long-term debt follows:
The Company completed the sale of $170,000,000 in principal amount of 9 3/4% Senior Subordinated Discount Notes ("9 3/4% Notes") due December 15, 2000, in December 1993, providing net proceeds to the Company of approximately $124,000,000. The original issue price was 75.1% of par, 9 3/4% Notes during the first three years of issue. Commencing December 15, 1996, interest on the 9 3/4% Notes will accrue at the rate of 9 3/4% per annum and will be payable semi-annually on June 15 and December 15, beginning on June 15, 1997. The Indenture for the 9 3/4% Notes contains financial covenants which include certain limitations on indebtedness, dividends, certain investments, transactions with affiliates, and engaging in mergers and consolidations. Additional provisions include optional and mandatory redemptions, and requirements associated with changes in control.
On November 13, 1992, the Company completed the sale of $240,000,000 in principal amount of Senior Subordinated Discount Notes ("1997 Notes") due November 1, 1997, providing net proceeds to the Company of approximately $126,000,000. The original issue price was 54.76% of par, representing a yield to maturity of 12 1/2% per annum compounded on a semi-annual basis without periodic payments of interest. The Indenture, as amended, for the 1997 Notes contains financial covenants including certain limitations on indebtedness, dividends, certain investments, transactions with affiliates, mergers and consolidations, and maintenance of at least $225,000,000 in net worth. Additional provisions include optional and mandatory redemptions, and requirements associated with changes in control.
As of May 31, 1994, Triton Europe had a revolving credit facility with a group of foreign banks with a nominal amount of up to $30,000,000 and a conditional acquisition facility of up to $50,000,000. At May 31, 1994, the facility had a borrowing base of $11,135,000, based
TRITON ENERGY CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (AMOUNTS IN TABLES IN THOUSANDS)
on the discounted present value of Triton Europe's future net oil and gas production for use in its exploration and development in Europe, bearing interest at the London Interbank Offered Rate (4 5/16% at May 31, 1994) plus 1/2% to 5/8%. Certain restrictive covenants in the agreement limit Triton Europe's ability to incur or guarantee indebtedness, dispose of certain assets and pay dividends. At May 31, 1994, Triton Europe had entered into negotiations to cancel the conditional acquisition facility, to reduce the nominal amount of the revolving credit facility to $20,000,000 and to include the Company as a borrower.
At May 31, 1993, Triton Canada had a C$24,000,000 bank credit facility, bearing interest at the bank's prime rate (6% at May 31, 1993) plus 1/4%.
The aggregate maturities of long-term debt for the five years ending May 1997 - $259; 1998 - $158,879; and $263 for 1999. The 1998 amount excludes accretion of interest on the 1997 Notes.
11. INCOME TAXES
The Company's provision for income taxes for 1994 and 1993 has been calculated in accordance with SFAS 109. For 1992 the provision was calculated in accordance with Accounting Principles Board Opinion No. 11.
The components of income (loss) from continuing operations before income taxes, minority interest, and cumulative effect of accounting change and the related income tax expense (benefit) follow:
TRITON ENERGY CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (AMOUNTS IN TABLES IN THOUSANDS)
A reconciliation of the differences between the United States federal statutory tax rate and the Company's effective income tax rate follows:
The deferred income tax provision for 1992 resulted primarily from timing differences in the capitalization, depletion and writedown of costs relating to oil and gas properties.
The components of the net deferred tax asset and liability are as follows:
TRITON ENERGY CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Amounts in tables in thousands)
At May 31, 1994, the Company had net operating loss and depletion carryforwards for United States tax purposes of approximately $212,338,000 and $6,800,000, respectively. In addition, at May 31, 1994, certain subsidiaries had separate return limitation year operating loss and depletion carryforwards of approximately $62,102,000 and $13,500,000, respectively, which are available to offset only the future taxable income of those subsidiaries. The depletion carryforwards are available indefinitely, and the net operating loss carryforwards expire principally from 1996 through 2008 and the separate return limitation year operating loss carryforwards expire from 1994 through 2000.
If certain changes in the Company's ownership should occur, there would be an annual limitation on the amount of carryforwards which can be utilized. To the extent a change in ownership does occur, the limitation is not expected to materially impact the utilization of such carryforwards.
The change in valuation allowance primarily reflects the increase in the Company's United States net operating loss carryforward, the effect of structure and a reduction in taxable temporary differences in France caused by 1994 writedowns under the SEC ceiling limitation.
The Company's share of the cumulative undistributed earnings of its consolidated foreign subsidiaries which is intended to be permanently reinvested, and on which no United States taxes have been provided, was approximately $5,615,000 at May 31, 1994. Unrecognized deferred taxes on remittance of these funds are not expected to be material.
In 1993, the Company added $3,920,000 to additional paid-in capital for United States tax benefits attributable to the utilization of net operating loss carryforwards. These carryforwards related to periods prior to the Company's corporate readjustments.
12. EMPLOYEE BENEFITS
PENSION PLANS
The Company has a defined benefit pension plan covering substantially all employees in the United States. The benefits are based on years of service and the employee's final average monthly compensation. Contributions are intended to provide for benefits attributed to past and future services. The Company also has a supplemental executive retirement plan ("SERP") which is unfunded and provides supplemental pension benefits to a select group of management or key employees. The funding status of the plans follows:
TRITON ENERGY CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (AMOUNTS IN TABLES IN THOUSANDS)
A summary of the components of pension expense follows:
TRITON ENERGY CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (AMOUNTS IN TABLES IN THOUSANDS, EXCEPT SHARE DATA)
The projected benefit obligations assume a 7% discount rate and a 5% and 6% rate of increase in compensation expense for 1994 and 1993, respectively. The impact of the change from 6% to 5% reduced the projected benefit obligation of the defined benefit plan and SERP by $540,000 and $294,000, respectively. The expected long-term rate of return on assets is 9% for the defined benefit plan.
EMPLOYEE STOCK OWNERSHIP PLAN
Effective January 1, 1994, the Company amended and restated the employee stock ownership plan to form a 401(k) plan ("the plan"). The Company recognizes expense relating to the plan based on actual amounts contributed since January 1, 1994 ($184,000) and the shares allocated method prior to the amendment ($312,000 in 1993 and $1,301,000 in 1992).
13. REDEEMABLE PREFERRED STOCK OF SUBSIDIARY
Redeemable preferred stock of Triton Canada, a former subsidiary, for 1993 was shown net of the unamortized discounts recorded at the date of acquisition. Dividends on the redeemable preferred stocks are included in minority interest in the accompanying consolidated statements of operations. The principal terms and changes in the redeemable preferred stocks are summarized as follows:
TRITON ENERGY CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (AMOUNTS IN TABLES IN THOUSANDS)
14. SHAREHOLDERS' EQUITY
PREFERRED STOCK
In connection with the aquisition of the minority interest in Triton Europe, the Company designated a series of 550,000 preferred shares (522,460 shares issued) as 5% preferred stock, no par value, with a stated value of $34.41 per share. Each share of the Company's 5% preferred stock series is convertible into one common share, subject to adjustment in certain events. The 5% preferred stock is convertible anytime on or after October 1, 1994 and bears a fixed cumulative cash dividend of 5% per annum payable semi-annually on March 30 and September 30, commencing September 30, 1994. If not converted earlier, each 5% preferred share will be redeemed on March 30, 2004, either for cash, or at the option of the Company, for the Company's common stock.
CORPORATE READJUSTMENTS
being penalized by an accumulated deficit, Article 4.13B of the Texas Business Corporation Act formerly provided that a company may, subject to its board of directors' approval, eliminate that deficit through application of additional paid-in capital. Pursuant to board of directors' approvals on January 12, 1987 and August 6, 1986, the Company eliminated accumulated deficits of $5,253,000 at November 30, 1986 and $28,653,000 at May 31, 1986.
STOCK OPTIONS
Options to purchase the Company's common stock have been granted to officers and employees under various stock option plans. Grants generally become exercisable in 25% cumulative annual increments beginning one year from the date of issuance and expire at the end of ten years. At May 31, 1994, 1,424,394 shares were available for grant under the plans. Pursuant to the 1992 stock option plan, each nonemployee director receives an option to purchase 15,000 shares each year. A summary of option transactions follows:
TRITON ENERGY CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (AMOUNTS IN TABLES IN THOUSANDS, EXCEPT SHARE DATA)
The weighted average exercise price of options outstanding at May 31, 1994 was $33.52.
CONVERTIBLE DEBENTURE PLAN
The Company has a convertible debenture plan under which key management personnel, consultants and other persons providing service to the Company may purchase debentures that are convertible into shares of the Company's common stock. The aggregate number of common shares issuable upon conversion of the debentures cannot exceed 1,000,000 shares, subject to adjustment in certain events. Each debenture represents an unsecured, subordinated obligation due in seven to ten years and may be redeemed after three years at a redemption price of 120% of the principal amounts. The debentures bear interest at the prime rate, have conversion dates ranging from one to three years following the date of issuance and may be converted into the Company's common stock at prices ranging from $8.00 to $25.13 per share, subject to adjustment in certain events. At May 31, 1994, 253,977 shares were available for grant under the plan.
TRITON ENERGY CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (AMOUNTS IN TABLES IN THOUSANDS, EXCEPT SHARE DATA)
The participants in the plan purchased debentures by delivery of promissory notes to the Company. The promissory notes are secured by the debentures which are held as security by the Company, are due on the earlier of 2004 or termination of employment and require annual interest payments equal to prime plus 1/8%. The debentures are reflected as a noncurrent liability, net of the related promissory notes, in the Consolidated Balance Sheets as follows:
SHAREHOLDER RIGHTS PLAN
In June 1990, the Company's board of directors adopted a Shareholder Rights Plan pursuant to which preferred stock purchase rights were issued to holders of its common stock at the rate of one right for each share of common stock held as of the record date, June 26, 1990. The rights become exercisable only if a holder acquires beneficial ownership of 15% or more or announces a tender offer for 15% or more of the Company's common stock. Each right not owned by such 15% holder entitles the holder under such circumstance to purchase shares of common stock having a value equal to twice the $40 exercise price. The Company may redeem the rights at $.01 per right at any time until the 10th day following the public announcement that a 15% position has been acquired. Unless the rights become exercisable, they will expire on June 26, 2000.
STOCK APPRECIATION RIGHTS PLAN
The Company has a stock appreciation rights ("SARs") plan which authorizes the granting of SARs to nonemployee directors of the Company. Upon exercise, SARs allow the holder to receive the difference between the SARs' exercise price and the fair market value of the common shares covered by SARs on the exercise date and expire at the earlier of ten years or a date based on the termination of the holder's membership on the board of directors. At May 31, 1994, 1993 and 1992 SARs covering 55,454, 65,604 and 85,604 common shares, respectively, were outstanding. At May 31, 1994, exercise prices ranged from $8.00 to $13.20 per share, 55,454 shares were exercisable and 17,940 shares were available for future grant. Compensation expense (benefit) of $(340,000) in 1994, $850,000 in 1993 and $3,356,000 in 1992 was recorded based on the quoted market value of the shares and the exercise provisions.
TRITON ENERGY CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (AMOUNTS IN TABLES IN THOUSANDS)
RESTRICTED STOCK PLAN
The Company has a restricted stock plan which provides for the award of up to 50,000 common shares to eligible key officers and employees. At the November 11, 1993 annual meeting, this plan was amended to also serve as an employee stock purchase plan. At May 31, 1994, 48,030 shares were available for issuance under the plan.
15. CREDIT RISK CONCENTRATIONS AND FAIR VALUE OF FINANCIAL INSTRUMENTS
SFAS No. 107 "Disclosure About Fair Value of Financial Instruments" requires disclosure, to the extent practicable, of the fair value of financial instruments which are recognized or unrecognized in the balance representative of the amount that could be realized or settled, nor does the fair value amount consider the tax consequences, if any, of realization or settlement. The table below reflects the financial instruments other than investments in marketable securities (see note 5) for which the fair value differs from the carrying amount of such financial instruments in the Company's balance sheet:
The fair value of the 1997 Notes is higher than the carrying amount in both 1994 and 1993 by $12,382,000 and $14,819,000, respectively, due to the improvements in the market for the Company's 1997 Notes reflecting investor demand. The fair value of the 9 3/4% Notes is lower than the carrying amount in 1994 by $7,705,000 due to increases in interest rates following the notes offering. The fair value of redeemable preferred stock is based on market prices.
The Company entered into a foreign exchange contract to purchase C$8,600,000 which matured in July 1994 to hedge exposure to Canadian tax liabilities resulting from the sale of Triton Canada common stock. The fair value of the foreign exchange contract is based on year-end quoted rates for contracts with similar terms and maturity dates; however, such fair value is offset by gains on the tax liability hedged by the contract so that there is no significant difference between the recorded value and the fair value of the Company's net foreign exchange position.
TRITON ENERGY CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (AMOUNTS IN TABLES IN THOUSANDS)
Financial instruments that are potentially subject to concentrations of equivalents consist of high credit quality financial instruments. At May 31, 1994 and 1993, no receivable from any customer exceeded 5% of shareholders' equity and, except for the purchasers of the Company's oil production in France and Indonesia during 1994 and in France during 1993 and 1992, no customer accounted for more than 5% of sales and other operating revenues. See note 20. Receivables, principally trade, are shown on the balance sheet net of allowances of $873,000 and $1,162,000 at May 31, 1994 and 1993, respectively.
16. OTHER INCOME
Other income is summarized as follows:
TRITON ENERGY CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (AMOUNTS IN TABLES IN THOUSANDS)
17. STATEMENTS OF CASH FLOWS
Supplemental disclosures of cash payments and noncash investing and financial information follow:
18. COMMITMENTS AND CONTINGENCIES
COMMITMENTS
Tests of the first eight wells in the Company's Cusiana and Cupiagua fields in Colombia indicate significant oil discoveries on which the Company expects to incur significant capital expenditures in the seven months ended December 31, 1994 for exploratory and development drilling, pipeline and production facilities and related activities. The Company's capital budget for the seven months ended December 31, 1994 is approximately $110,000,000, excluding capitalized interest, of which approximately $85,000,000 relates to Colombia. The seven-month budget period corresponds with the Company's intent to change its fiscal year-end to a calendar year-end beginning December 31, 1994, as announced on May 25, 1994. The Company believes that current working capital plus anticipated cash flows and asset sales will be sufficient to fund necessary expenditures into at least mid-1995.
TRITON ENERGY CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (AMOUNTS IN TABLES IN THOUSANDS)
During the normal course of business, the Company is subject to the terms of various operating agreements and capital commitments associated with the exploration and development of its oil and gas properties. Many of these commitments are discretionary on the part of the Company. It is management's belief that such commitments, including the capital requirements in Colombia, discussed above, will be met without any material adverse effect on the Company's consolidated financial condition.
The Company leases office space, other facilities and equipment under various operating leases expiring through 2009. Total rental expense was $2,648,000 in 1994, $3,957,000 in 1993 and $4,987,000 in 1992, including 1993 and 1992, respectively. At May 31, 1994, the minimum payments required, including discontinued operations are as follows (thousands of dollars): 1995 - $3,543; 1996 - $3,843; 1997 - $3,552; 1998 - $3,139; 1999 - $2,878 and thereafter - $4,174.
GUARANTEES
At May 31, 1994, the Company had guaranteed approximately $8,555,000 of loans related to its ownership in a Colombian pipeline and $1,695,000 for exploration in Italy. The Company has also guaranteed up to $1,300,000 in indebtedness that may be incurred by the chief executive officer of the Company to finance the construction of his primary residence.
REGULATORY MATTERS
The Company continues to cooperate with inquiries by the Commission and the Department of Justice (the "Department") regarding possible violations of the Foreign Corrupt Practices Act in connection with the Company's operations in Indonesia. Based upon the information available to the Company to date, the Company believes that it will be able to resolve any issues that either the Commission or the Department ultimately might raise concerning these matters in a manner that would not have a material adverse effect on the Company's consolidated financial condition.
TRITON ENERGY CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (AMOUNTS IN TABLES IN THOUSANDS)
ENVIRONMENTAL MATTERS
The Company is subject to extensive environmental laws and regulations. These laws regulate the discharge of materials into the environment and may require the Company to remove or mitigate the environmental effects of the disposal or release of petroleum substances at various sites. Also, the Company remains liable for certain environmental matters that may arise from formerly owned fuel businesses which were involved in the storage, handling and sale of hazardous materials, including fuel storage in underground tanks. The Company believes that the level of future expenditures for environmental matters, including clean-up obligations, is impracticable to determine with a precise and reliable degree of accuracy. Management believes that such costs, when finally determined, will not have a material adverse effect on the Company's consolidated financial position. During the years ended May 31, 1994, 1993 and 1992, the Company accrued $4,400,000, nil and $1,234,000, respectively, for environmental costs.
LITIGATION
The Company is also subject to ordinary litigation that is incidental to its business, none of which is expected to have a material adverse effect on the Company's consolidated financial condition.
19. RELATED PARTY TRANSACTIONS
affiliates at May 31, 1992 included $1,880,000 and $1,744,000, respectively, due from Aero for fuel purchases. Total fuel sales to Aero were $1,030,000 in 1994, $3,960,000 in 1993 and $2,941,000 in 1992. In fiscal 1992, the Company purchased certain equipment from Aero for $547,000 and leased the equipment back to Aero pursuant to an operating lease with annual rentals of $147,000 over a five-year term.
The Company charged Crusader $585,000 in 1994, 1993 and 1992 for administrative services. Also during 1994, the Company was paid $1,200,000 by Crusader for acting as agent in issuing its 6% Notes and recorded $620,000 as other income.
TRITON ENERGY CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Amounts in tables in thousands)
20. SEGMENT AND GEOGRAPHIC DATA
The Company is an independent energy company engaged in oil and gas exploration and production in 11 countries. The Company also provides aviation related products and services.
Segment data follows:
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (AMOUNTS IN TABLES IN THOUSANDS)
TRITON ENERGY CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Amounts in tables in thousands)
TRITON ENERGY CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (AMOUNTS IN TABLES IN THOUSANDS)
Information about the Company's operations by geographic area follows:
Substantially all oil sales in France were to Societe Nationale Elf Aquitaine, which is principally owned by the French government. All oil sales in Indonesia are sold to Pertamina, the Indonesian government oil company.
21. SUBSEQUENT EVENTS (UNAUDITED)
On July 26, 1994, the Export-Import Bank of the United States authorized a final commitment for a comprehensive guarantee of approximately $35 million for certain financing related to the Company's interest in initial field development of its Cusiana project in Colombia. The guarantee covers expenditures for oilfield equipment and other machinery manufactured in the United States for export to the Colombian project. The effective date for coverage is retroactive for purchases made since March 3, 1993.
Effective July 19, 1994, the Company's wholly-owned subsidiary, Triton Colombia, purchased from BP Exploration Company (Colombia) Limited ("BP") and Total Exploratie En Produktie Maatschappij B.V. ("TOTAL") an undivided 1% and 11% interest, respectively, in the Association Contract for Sector Rio Chitamena for $9,800,000. Additional consideration of $1,100,000 is to be paid upon the occurrence of certain conditions, but not before January 3, 1995.
TRITON ENERGY CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (AMOUNTS IN TABLES IN THOUSANDS)
On July 19, 1994, Triton Colombia, BP, TOTAL and Ecopetrol entered into an Integral Plan for the Unified Exploitation of the Cusiana Oil Structure in the Santiago de las Atalayas ("SDLA"), Tauramena and Rio Chitamena Association Contract Areas. Under the plan, the parties have agreed to develop the Cusiana oil structure in a technically efficient and cooperative manner during the three consecutive periods of time represented by the successive expirations of the three association contract areas covering the extent of the Cusiana oil structure. During each period, petroleum produced from the unified area will be owned by the parties according to their respective undivided interests in each unexpired contract area based on the original barrels of oil equivalent in place under each contract area.
On July 15, 1994, Triton Colombia executed a memorandum of understanding with Ecopetrol, BP, TOTAL, TransCanada PipeLines Colombia Limited and IPL Energy (Colombia) Ltd., regarding the proposed formation of a joint stock company to finance and own a pipeline and port facilities. This project is Cusiana and Cupiagua fields to the port of Covenas. The Company's equity participation under this agreement would be approximately 9.6%. Formation of the joint stock company is subject to numerous conditions, including negotiation and execution of definitive agreements and board approvals.
TRITON ENERGY CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (AMOUNTS IN TABLES IN THOUSANDS)
22. QUARTERLY FINANCIAL DATA (UNAUDITED)
Gross profit (loss) consists of sales and other operating revenues less operating expenses, depreciation, depletion and amortization and writedowns pertaining to operating assets.
In the fourth quarter of 1994, the Company recorded writedowns of $6,845,000, primarily resulting from application of the SEC ceiling limitation caused by a downward revision in the estimated reserves for France. The Company also recognized a gain of $1,500,000 on the sale of its investment in Aero.
In the fourth quarter of 1993, the Company recorded a loss provision of $16,077,000 on the discontinued operations of the wholesale fuel segment. $3,920,000 was booked to additional paid-in capital, with the adoption of SFAS No. 109 due to the then pending sale of Triton Canada, the sale of certain domestic properties and anticipated income from Colombian operations.
23. OIL AND GAS DATA
The following tables provide additional information about the Company's oil and gas exploration and production activities. Equity affiliate amounts reflect only the Company's proportionate interest in Crusader.
TRITON ENERGY CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (AMOUNTS IN TABLES IN THOUSANDS)
RESULTS OF OPERATIONS
The results of operations for oil and gas producing activities, considering direct costs only, follow:
The Company's equity share of Crusader's results of operations for oil and gas producing activities follows:
TRITON ENERGY CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (AMOUNTS IN TABLES IN THOUSANDS)
COSTS INCURRED AND CAPITALIZED COSTS
The costs incurred in oil and gas acquisition, exploration and development activities and related capitalized costs follow:
TRITON ENERGY CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (AMOUNTS IN TABLES IN THOUSANDS)
A summary of costs excluded from depletion at May 31, 1994 by year incurred follows:
The Company has significant property acquisition and exploration costs which have not been evaluated and are not currently subject to depletion. At this time the Company is unable to predict either the timing of the inclusion of those costs and the related oil and gas reserves in its depletion computation or their potential future impact on depletion rates. Drilling or other exploration activities are being conducted in each of these cost centers. The major development project relates solely to Cusiana and is expected to be placed in service within one year.
TRITON ENERGY CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (AMOUNTS IN TABLES IN THOUSANDS)
The Company's equity share of costs incurred by Crusader follows:
TRITON ENERGY CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (AMOUNTS IN TABLES IN THOUSANDS)
OIL AND GAS RESERVE DATA (UNAUDITED)
The following tables present the Company's estimates of its proved oil and gas reserves. These estimates were prepared by the Company's independent and internal petroleum reservoir engineers. The Company emphasizes that reserve estimates are inherently imprecise and are expected to change as future information becomes available. Oil reserves are stated in thousands of barrels and gas reserves are stated in millions of cubic feet. The largest portion of the Company's reserves relate to the SDLA and Tauramena contract areas in Colombia. The Company had a 20% and 50% interest in the reserves of SDLA and Tauramena, respectively, for 1992 and 1991. The reserves for 1994 and 1993 reflect the equalization of these interests to 24% and Ecopetrol's decision to exercise its contractual right to acquire 50% of the working interest through the declaration of commerciality. The Company consequently has a 9.6% working interest in these areas after 20% governmental royalties.
TRITON ENERGY CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (AMOUNTS IN TABLES IN THOUSANDS)
The Company's proportional equity interest in Crusader's estimated proved developed and undeveloped oil and gas reserves at May 31 follows:
STANDARDIZED MEASURE OF DISCOUNTED FUTURE NET CASH INFLOWS AND CHANGES THEREIN (UNAUDITED)
The following table presents a standardized measure of discounted future net cash inflows relating to proved oil and gas reserves. Future cash inflows were computed by applying year-end prices of oil and gas relating to the Company's proved reserves to the estimated year-end quantities of those reserves. Future price changes were considered only to the extent provided by contractual agreements in existence at year-end. Future production and development costs were computed by estimating those expenditures expected to occur in developing and producing the proved oil and gas reserves at the end of the year, based on year-end costs. Actual future cash inflows may vary considerably and the standardized measure does not necessarily represent the fair value of the Company's oil and gas reserves.
TRITON ENERGY CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (AMOUNTS IN TABLES IN THOUSANDS)
The Company's proportional equity interest in Crusader's standardized measure of discounted future net cash inflows follows:
TRITON ENERGY CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (AMOUNTS IN TABLES IN THOUSANDS)
Changes in the standardized measure of discounted future net cash inflows follow:
At May 31, 1994, 1993 and 1992, nil, $33,426,000 and $61,364,000, respectively, of the consolidated standardized measure of discounted future net cash inflows was attributable to minority interests in consolidated subsidiaries. The Company's weighted average oil price per barrel during 1994 and at May 31, 1994 was $15.38 and $16.64, respectively.
SCHEDULE II
TRITON ENERGY CORPORATION AND SUBSIDIARIES AMOUNTS RECEIVABLE FROM RELATED PARTIES AND UNDERWRITERS, PROMOTERS, AND EMPLOYEES OTHER THAN RELATED PARTIES THREE YEARS ENDED MAY 31, 1994 (IN THOUSANDS)
SCHEDULE V
TRITON ENERGY CORPORATION AND SUBSIDIARIES PROPERTY AND EQUIPMENT THREE YEARS ENDED MAY 31, 1994 (IN THOUSANDS)
SCHEDULE VI
TRITON ENERGY CORPORATION AND SUBSIDIARIES ACCUMULATED DEPRECIATION AND DEPLETION OF PROPERTY AND EQUIPMENT THREE YEARS ENDED MAY 31, 1994 (IN THOUSANDS)
SCHEDULE VIII
TRITON ENERGY CORPORATION AND SUBSIDIARIES VALUATION AND QUALIFYING ACCOUNTS THREE YEARS ENDED MAY 31, 1994 (IN THOUSANDS)
SCHEDULE IX
TRITON ENERGY CORPORATION AND SUBSIDIARIES SHORT-TERM BORROWINGS THREE YEARS ENDED MAY 31, 1994 (IN THOUSANDS, EXCEPT PERCENTAGES)
SCHEDULE X
TRITON ENERGY CORPORATION AND SUBSIDIARIES SUPPLEMENTAL STATEMENTS OF OPERATIONS INFORMATION THREE YEARS ENDED MAY 31, 1994 (IN THOUSANDS)
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of Crusader Limited
We have audited the consolidated financial statements of Crusader Limited and 1(a), have been prepared on the basis of accounting principles accepted in the United States by restating the primary consolidated financial statements of Crusader Limited which are denominated in Australian dollars and prepared in accordance with Australian Accounting Standards. In connection with our audit of the consolidated financial statements, we also audited the financial statement schedules as listed in the accompanying index. These consolidated financial statements and financial statement schedules are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit.
We conducted our audit 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 audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the results of operations and cash flows of Crusader Limited and subsidiaries for the year ended May 31, 1992, in conformity with accounting principles generally accepted in the United States. Also, in our opinion, the related financial statement schedules, when considered in relation to the basic consolidated financial statements taken as a whole, present fairly, in all material respects, the information set forth therein.
KPMG PEAT MARWICK
Brisbane, Australia August 14, 1992
CRUSADER LIMITED AND SUBSIDIARIES CONSOLIDATED STATEMENT OF EARNINGS YEAR ENDED MAY 31, 1992 (IN THOUSANDS, EXCEPT SHARE DATA)
See accompanying notes to consolidated financial statements.
CRUSADER LIMITED AND SUBSIDIARIES CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY YEAR ENDED MAY 31, 1992 (IN THOUSANDS, EXCEPT SHARE DATA)
See accompanying notes to consolidated financial statements.
CRUSADER LIMITED AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CASH FLOWS YEAR ENDED MAY 31, 1992 (IN THOUSANDS)
See accompanying notes to consolidated financial statements.
CRUSADER LIMITED AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) PRINCIPLES OF PRESENTATION AND CONSOLIDATION
Crusader Limited is incorporated in Queensland, Australia. The primary consolidated financial statements of Crusader Limited and its subsidiaries (the "Company") are denominated in Australian dollars and prepared in accordance with Australian Accounting Standards.
The accompanying consolidated financial statements reflect the result of restating the primary consolidated financial statements of the Company into United States dollars and in accordance with United States generally accepted accounting principles for inclusion as supplementary information in the Form 10-K of Triton Energy Corporation ("Triton") which at May 31, 1992 owned approximately 49.9% of the issued common stock of the Company.
All significant intercompany balances and transactions have been eliminated in consolidation.
(b) INVENTORIES
Inventories are stated at the lower of cost (first-in, first-out or average) or market value.
(c) PROPERTY AND EQUIPMENT
The Company follows the full cost method of accounting for costs of exploration and development of oil and gas reserves, whereby all productive and nonproductive costs, including costs applicable to internal technical personnel directly associated with these efforts, are capitalized. Individual countries are designated as separate cost centers. All capitalized costs plus the undiscounted future development costs of proved reserves are depleted on the unit-of-production method based on total proved reserves applicable to each country. Gain or loss is recognized only on sale of oil and gas properties involving significant reserves.
Costs related to acquisition, holding and initial exploration of areas in which proved reserves have not been established are capitalized and periodically evaluated for possible impairment.
Costs related to exploration and development of hardrock mineral properties are capitalized in respect of each separate area of interest until such time as a discovery is made or the area is abandoned. Exploration and development expenditures which are not expected to be recovered from future production or those associated with abandoned properties are charged to producing areas are amortized on the units-of-production method based on total reserves applicable to the area.
CRUSADER LIMITED AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Restoration work is carried out progressively during the course of mining. Provision is made over the life of the mine for the cost of finally restoring distributed areas after mining is completed.
Substantially all depreciation of other property is provided at rates based on the estimated useful lives of the property.
The Company capitalizes interest on qualifying assets, principally coal briquetting plant and unevaluated oil and gas properties. Interest capitalized was $2,161,000 in 1992.
The coal briquetting plant was constructed during fiscal 1992 and will commence commercial production during fiscal 1993.
Repairs and maintenance are expensed as incurred and renewals and betterments are capitalized.
(d) FOREIGN CURRENCY TRANSLATION
The Company's primary financial statements have been translated into United States dollars in accordance with Statement of Financial Accounting Standards ("SFAS") No. 52. Exchange adjustments resulting from foreign currency transactions are recognized in income, whereas adjustments resulting from translations of financial statements are reflected as a separate component of shareholders' equity. Local currencies are used as the functional currencies.
(e) INCOME TAXES
Deferred income taxes are provided for the tax effect of timing differences in the recognition of revenue and expense for income tax and financial accounting purposes.
In February 1992, the Financial Accounting Standards Board issued SFAS No. 109, "Accounting for Income Taxes," which will require the Company to change its method of accounting for income taxes. The Company currently accounts for income taxes under APB 11, having elected not to adopt SFAS No. 96 prior to its required effective date. SFAS No. 109 will change the Company's method of accounting for income taxes from the deferred method required by APB 11 to the asset and liability method. The Company is currently required to adopt the provisions on either a prospective or retroactive basis during its fiscal year ending May 31, 1994. The Company has not yet determined the effects of adopting the new statement, nor whether the statement will be prospectively or retroactively applied.
CRUSADER LIMITED AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(f) EARNINGS PER COMMON SHARE
average shares outstanding. Shares issuable upon conversion of the convertible notes issued during 1989 are excluded from the computation as the effect is antidilutive.
(g) STATEMENT OF CASH FLOWS
The Company generally considers all highly liquid investments purchased with a maturity of three months or less to be cash equivalents.
2. INVESTMENTS
INVESTMENT IN TRITON ENERGY CORPORATION
At May 31, 1992, the Company owned approximately 4% of Triton's common stock. The Company's investment in Triton, using the cost method, was $14,632,000 at May 31, 1992. During 1989, a subsidiary of the Company advanced to Triton from surplus U.S. dollar funds an amount of $7,000,000, bearing interest at 12.5%, and repayable in four equal installments commencing February 1990. The unpaid balance of the advances was nil and $3,500,000 at May 31, 1992 and 1991, respectively. Triton also performs administrative services on behalf of the Company. Fees for these services amounted to $585,000 in 1992.
In February and May, 1992, the Company sold 400,647 shares of Triton common stock for $14,084,000, resulting in a gain of $8,698,000.
INVESTMENT IN AUSTRALIAN HYDROCARBONS N.L. ("AHY")
At May 31, 1992 the Company owned approximately 49% of AHY, a company which operates in the oil and gas industry in Australia and the United States. As a result of the ownership and majority representation on the AHY Board of Directors, the Company began consolidating its interest in AHY during 1991. The results of AHY's operations are not material to the Company's consolidated financial statements.
CRUSADER LIMITED AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
3. INCOME TAXES
The components of income tax expense consisted of the following for the year ended May 31, 1992 (in thousands):
A reconciliation of the differences between the amounts computed by applying the Australian federal statutory tax rate of 39% to loss before income taxes and minority interest and the actual income taxes for the year ended May 31, 1992 follows (in thousands):
Deferred taxes arose primarily due to deferred income for financial statement purposes and variations in the Company's capitalization policies concerning exploration expenditures and related depletion for income tax and financial reporting purposes.
4. RETIREMENT PLANS
The Company contributes to a defined benefit retirement plan administered by a Board of Trustees, covering substantially all employees. Contributions and benefits are actuarially determined. A subsidiary of the Company also contributes to a defined contribution retirement plan, administered by a Board of Trustees, covering substantially all its employees. Another subsidiary contributes to a deferred profit sharing plan administered by a Board of Trustees covering substantially all of its employees. Total plan contributions were $511,000 in 1992.
CRUSADER LIMITED AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
5. COMMITMENTS AND CONTINGENCIES
The Company leases office facilities, motor vehicles and plant with minimum average annual rentals of approximately $633,000 under terms of various leases expiring from 1992 through 1996.
The Company has an interest in the Cooper Basin Gas and Liquids Unit of South Australia. The owners' participation factors in production, capital investment and certain operating expenses are periodically reviewed in relation to each party's interest in the reserves of the unit. In fiscal 1990, the Company recorded adjustments to reflect a downward adjustment of its interest in the unit, to approximately 6% which was retroactive to January 1, 1987. The 6% interest has been utilized in the financial statements for 1992.
On June 18, 1991, the Supreme Court of South Australia decided that this January 1, 1987 review and adjustment was invalid. The effect of this decision is that the January 1, 1987 review and adjustment will be redone and meanwhile each party will be restored to their pre-January 1, 1987 retroactive to January 1, 1989 and January 1, 1991, have been suspended pending the outcome of the January 1, 1987 review and adjustment.
As a result of the above, net revenue totaling $23,750,000 has been deferred for the period January 1, 1987 to May 31, 1992.
The Company is presently undergoing an audit by the Australian Taxation Office ("ATO") in respect of the 1989 and 1990 fiscal years as part of the ATO's program to audit all major Australian public companies. Discussions are continuing between the Company, its advisors and the ATO, particularly in respect of submissions made by the ATO regarding interest on certain intercompany offshore loans.
The outcome of the audit is uncertain at this point in time and the Company is presently unable to estimate the likely amount of any additional or penalty taxes that may be assessed to the Company. Any such taxes will be vigorously disputed by the Company. Although the outcome of this matter cannot presently be determined, the Company does not believe that it would be material to its financial condition.
6. FINANCIAL INSTRUMENTS AND CREDIT RISK CONCENTRATIONS
Financial instruments that are potentially subject to concentration of credit risk consist principally of cash equivalents and receivables. Cash equivalents consist of high credit quality financial instruments. At May 31, 1992, no receivable from any customer exceeded 5% of shareholders' equity and, except for two purchasers of the Company's gas production in Australia and two purchasers of the Company's coal production, no customer accounted for more than 5% of sales and other operating revenues in 1992. See note 7 regarding concentration of receivables by business segment and geographic area at May 31, 1992.
CRUSADER LIMITED AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
7. SEGMENT DATA
The Company is engaged principally in oil and gas exploration and production, coal mining, coal processing and gas processing. Segment data follows for 1992 (thousands of dollars):
CRUSADER LIMITED AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Contracts with two unaffiliated customers accounted for approximately $8,829,000 and $6,484,000 in 1992 of gas sales in Australia. Most of the Company's coal production is exported to Japan and Europe under short-term contracts. Two unaffiliated customers, accounted for sales of approximately $9,214,000 and $8,826,000 in 1992.
Geographical segment information follows for 1992 (thousands of dollars):
Other is grouped with Australia in all years.
subsidiaries which conducted its coal operations in South East Asia for $5,160,000 in cash. The cash proceeds are to be used to improve working capital. The loss resulting from this sale of $3,135,000 has been reflected in the writedown of unevaluated coal properties in the year ended May 31, 1992.
Writedown of assets for the year ended May 31, 1992 included $2,353,000 relating to proved coal properties and plant, $4,020,000 relating to unevaluated coal properties and $3,503,000 relating to other property and equipment.
CRUSADER LIMITED AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
8. OIL AND GAS DATA
The following tables provide additional information about the Company's oil and gas exploration and production activities for 1992:
RESULTS OF OPERATIONS
The results of operations considering direct costs only for oil and gas producing activities follow (thousands of dollars):
COSTS INCURRED AND CAPITALIZED COSTS
The total costs incurred in oil and gas property acquisition, exploration and development activities and related capitalized costs follow (thousands of dollars, except per barrel data):
CRUSADER LIMITED AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
OIL AND GAS RESERVE DATA (UNAUDITED)
The following table presents the Company's estimates of its proved oil and gas reserves. These estimates were prepared by the Company's independent petroleum reservoir engineers. The Company emphasizes that reserve estimates are inherently imprecise and are expected to change as future information becomes available. Liquid reserves are stated in thousands of barrels and gas reserves are stated in millions of cubic feet.
STANDARDIZED MEASURE OF DISCOUNTED FUTURE NET CASH FLOWS AND CHANGES THEREIN (UNAUDITED)
The following table (thousands of dollars) presents a standardized measure of discounted future net cash flows and changes therein relating to proved oil and gas reserves. Future cash inflows were computed by applying year-end prices of oil and gas relating to the Company's proved reserves to the estimated year-end quantities of these reserves. Future price changes were considered only to the extent provided by contractual agreements in existence at year-end. Future production and development costs were computed by estimating the expenditures to be incurred in developing and producing the proved oil and gas reserves at the end of the year, based on year-end costs. The standardized measure of discounted future cash flows represents the present value of estimated future net cash flows using a discount rate of 10% per annum. Actual future cash inflows may vary considerably and the standardized measure does not necessarily represent the fair value of the Company's oil and gas reserves.
CRUSADER LIMITED AND SUBSIDIARIES
Changes in the standardized measure of discounted future cash flows follow (thousands of dollars):
9. RELATED PARTY DISCLOSURES
A subsidiary of the Company has entered into an agreement with PT Karimtanisa Utama ("Karimtanisa"), a company in which the wife of a director of the subsidiary has an interest. Under the agreement the subsidiary will farm into exploration areas in Indonesia in which Karimtanisa has interests. These agreements were, in the main, entered into before the director became so related and all before he became a director. They require the subsidiary to fund exploration and development (if any) and to pay certain sums to Karimtanisa in the future at various stages if the subsidiary chooses to proceed to commercially develop any of these interests. Subsequent to May 31, 1992, the Company sold this subsidiary. In addition, the director has resigned subsequent to May 31, 1992.
CRUSADER LIMITED AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Triton owns 49.9% of Crusader's 12% Convertible Subordinated Unsecured Notes on which Triton received $957,000 in interest during fiscal 1992.
10. EVENTS (UNAUDITED) SUBSEQUENT TO THE DATE OF THE REPORT OF INDEPENDENT ACCOUNTANTS
In February 1993, a settlement of the January 1, 1987 Review and Adjustment dispute (see note 5) was reached in principle between Crusader and Santos Limited. Under the terms of the settlement, Crusader's interest in an expanded area of interest is fixed at 4.75%. Previously, Crusader's interests have been limited to the Cooper Basin Unit and the Nappacoongee Murteree Block. Under the terms of the settlement agreement, Crusader's interests would be expanded to include certain additional leases. Also in connection with this arrangement the total of net revenues that were deferred by Crusader since January 1, 1987, was remitted to the Unit Operator.
The audit by the Australian Taxation Office (ATO) (see note 5) has been completed and as a result an additional tax expense of approximately US$800,300 was recorded in the 1993 fiscal year.
The coal briquetting plant commenced production during the first quarter of fiscal 1994.
SCHEDULE V CRUSADER LIMITED AND SUBSIDIARIES PROPERTY AND EQUIPMENT YEAR ENDED MAY 31, 1992 (IN THOUSANDS)
- - - -------------------------- Note - Other changes principally represent foreign currency translation adjustments.
SCHEDULE VI CRUSADER LIMITED AND SUBSIDIARIES ACCUMULATED DEPRECIATION AND DEPLETION OF PROPERTY AND EQUIPMENT YEAR ENDED MAY 31, 1992 (IN THOUSANDS)
- - - ------------------------- adjustments.
SCHEDULE IX
CRUSADER LIMITED AND SUBSIDIARIES SHORT-TERM BORROWINGS YEAR ENDED MAY 31, 1992 (IN THOUSANDS, EXCEPT PERCENTAGES)
- - - ------------------------ Notes: (1) Loans represent short-term money market borrowings at varying interest rates, which are partially secured. (2) Sum of balance outstanding at month end/12 months. (3) Actual interest expense/average borrowings.
SCHEDULE X CRUSADER LIMITED AND SUBSIDIARIES SUPPLEMENTAL STATEMENT OF EARNINGS INFORMATION YEAR ENDED MAY 31, 1992 (IN THOUSANDS)