UNITED STATES |
ý | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, |
OR |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to |
Commission File Number 1-8097 |
|
(State or other jurisdiction of incorporation or organization) (Address of principal executive offices) | (I.R.S. Employer Identification No.) (Zip Code) |
|
|
Title of each class Class A Ordinary Shares, U.S. $0.10 par value American Depositary Shares, each representing one Class A Ordinary Share, U.S. $0.10 par value per Class A Ordinary Share | Name of each exchange on which registered New York Stock Exchange* New York Stock Exchange |
* | Not for trading, but only in connection with the registration of American depositary shares, pursuant to the requirements of the Securities and Exchange Commission. |
|
Indicate by check mark if the registrant is a well-known seasoned issuer as defined in Rule 405 of the Securities Act. Yes ý No o Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No o Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Š232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act: Non-accelerated filer o (Do not check if a smaller reporting company) Smaller reporting company o Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). The aggregate market value of As of February DOCUMENTS INCORPORATED BY REFERENCE Portions of the Company's Proxy Statement for the |
TABLE OF CONTENTS |
PART I | |||
ITEM 1. | BUSINESS | 3 | |
ITEM 1A. | RISK FACTORS | 11 | |
ITEM 1B. | UNRESOLVED STAFF COMMENTS | ||
ITEM 2. | PROPERTIES | ||
ITEM 3. | LEGAL PROCEEDINGS | ||
ITEM 4. | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS |
PART III | |||
ITEM 10. | DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE | ||
ITEM 11. | EXECUTIVE COMPENSATION | ||
ITEM 12. | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED | ||
ITEM 13. | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE | ||
ITEM 14. | PRINCIPAL ACCOUNTING FEES AND SERVICES |
PART IV | |||
ITEM 15. | EXHIBITS, FINANCIAL STATEMENT SCHEDULES | ||
SIGNATURES |
FORWARD-LOOKING STATEMENTS
Forward-looking statements include words or phrases such as "anticipate," "believe," "estimate," "expect," "intend," "plan," "project," "could," "may," "might," "should," "will" and words and phrases of similar import. The forward-looking statements include, but are not limited to, statements about the impact of the December 2009 reorganization of the Company's corporate structure (referred to elsewhere herein as the "redomestication") and our plans, objectives, expectations and intentions with respect thereto and with respect to future operations, including the tax savings or other benefits that we expect to achieve as a result of the redomestication. Forward-looking statements also include statements regarding future operations, market conditions, cash generation, the impact of recently contracted premium jackups, contributions from our ultra-deepwater semisubmersible rig fleet expansion program and expense management, industry trends or conditions and the business environment; statements regarding future levels of, or trends in, Forward-looking statements are made pursuant to safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Numerous factors could cause actual results to differ materially from those in the forward-looking statements, including: |
• | changes in U.S. or non-U.S. laws, including tax laws, that could effectively reduce or eliminate the benefits we expect to achieve from the redomestication, | |
• | an inability to realize expected benefits from the redomestication, | |
• | costs related to the redomestication and ancillary matters, which could be greater than expected, | |
• | industry conditions and competition, including changes in rig supply and demand or new technology, | |
• | risks associated with the | |
• | prices of oil and natural gas, | |
• | ||
• | excess rig availability or supply resulting from delivery of | |
• | ||
• | cyclical nature of the industry, | |
• | worldwide expenditures for oil and natural gas drilling, | |
• | the ultimate resolution of the ENSCO 69 situation in general and the potential return of the rig or package policy political risk insurance recovery in particular, | |
• | changes in the timing of revenue recognition resulting from the deferral of certain revenues for mobilization of our drilling rigs, time waiting on weather or time in shipyards, which are recognized over the contract term upon commencement of drilling operations, | |
• | operational risks, including excessive unplanned downtime due to rig or equipment breakdown, damage or repair in general and hazards created by severe storms and hurricanes in particular, | |
• | risks associated with offshore rig operations or rig relocations, | |
• | renegotiation, nullification, cancellation or breach of contracts or letters of intent with customers or other parties, including failure to negotiate definitive contracts following announcements or receipt of letters of intent, | |
• | inability to collect receivables, | |
• | changes in the dates new contracts actually commence, | |
• | changes in the dates our rigs will enter a shipyard, be delivered, return to service or enter service, | |
• | risks inherent to | |
• | availability of transport vessels to relocate rigs, | |
• | environmental or other liabilities, risks or losses, whether related to hurricane | |
• | limited availability or high cost of insurance coverage | |
• | self-imposed or regulatory limitations on drilling locations in the Gulf of Mexico during hurricane season, | |
• | impact of current and future government laws and regulation affecting the oil and gas industry in general and our operations in particular, including taxation, as well as repeal or modification of same, | |
• | ||
our ability to attract and retain skilled personnel, | ||
• | governmental action and political and economic uncertainties, including expropriation, nationalization, confiscation or deprivation of our assets, | |
• | terrorism or military action impacting our operations, assets or financial performance, | |
• | outcome of litigation, legal proceedings, investigations or insurance or other claims, | |
• | adverse changes in foreign currency exchange rates, including their impact on the fair value measurement of our derivative instruments, | |
• | potential long-lived asset or goodwill impairments, and | |
• | potential reduction in fair value of our auction rate securities. | |
Moreover, the United States Congress, the Internal Revenue Service (the "IRS"), the United Kingdom Parliament or Her Majesty's Revenue and Customs ("HMRC") may enact new statutory or regulatory provisions that could adversely affect our status as a non-U.S. corporation or otherwise adversely affect our anticipated consolidated effective income tax rate. Retroactive statutory or regulatory actions have occurred in the past, and there can be no assurance that any such provisions, if enacted or promulgated, would not have retroactive application. In addition to the numerous factors described above, you should carefully read and consider "Item 1A. Risk Factors" in Part I and "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" in Part II of this Form 10-K. |
|
3 |
The redomestication was accounted for as an internal reorganization of entities under common control and, therefore, Ensco Delaware's assets and liabilities were accounted for at their historical cost basis and not revalued in the transaction. We remain subject to the U.S. Securities and Exchange Commission (the "SEC") reporting requirements, the mandates of the Sarbanes-Oxley Act and the applicable corporate governance rules of the NYSE, and we will continue to report our consolidated financial results in U.S. dollars and in accordance with U.S. generally accepted accounting principles ("GAAP"). We also must comply with additional reporting requirements of English law. Our principal executive office is located at 6 Chesterfield Gardens, London W1J5BQ, England, United Kingdom, and our telephone number is +44 (1224) 780 400. Our website is www.enscointernational.com. Contract Drilling Operations We are in the process of developing a fleet of ultra-deepwater semisubmersible
We currently own and operate Our drilling rigs are used to drill and complete oil and natural gas wells. Demand for our drilling services is based upon many factors which are beyond our control, including: |
• | market price of oil and natural gas and the stability thereof, | |
• | production levels and related activities of the Organization of Petroleum Exporting Countries ("OPEC") and other oil and natural gas producers, | |
• | global oil supply and demand, | |
• | regional natural gas supply and demand, | |
• | worldwide expenditures for offshore oil and natural gas drilling, | |
• | long-term effect of worldwide energy conservation measures, | |
• | the development and use of alternatives to hydrocarbon-based energy sources, and | |
• | worldwide economic activity. | |
|
|
• | contract duration extending over a specific period of time or a period necessary to drill one or more wells, | |
• | term extension options in favor of our customer, generally exercisable upon advance notice to us, at mutually agreed, indexed or fixed rates, | |
• | provisions permitting early termination of the contract (i) if the rig is lost or destroyed or (ii) by the customer if operations are suspended for a specified period of time due to breakdown of major rig equipment, unsatisfactory performance, "force majeure" events beyond | |
• | some of our drilling contracts permit early termination of the contract by the customer | |
• | payment of compensation to us (generally in U.S. dollars although some contracts require a portion of the compensation to be paid in local currency) on a "day work" basis such that we receive a fixed amount for each day ("day rate") that the drilling unit is operating under contract (lower rates or no | |
• | payment by us of the operating expenses of the drilling unit, including crew labor and incidental rig supply costs, and | |
• | provisions in term contracts allowing us to recover certain labor and other operating cost increases from our customers through day rate adjustment or otherwise. | |
Financial information regarding our operating segments and geographic regions is presented in Note 13 to our consolidated financial statements included in "Item 8. Financial Statements and Supplementary Data." Additional financial information regarding our operating segments is presented in "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations." Backlog Information Our contract drilling backlog reflects firm commitments, typically represented by signed drilling contracts, and was calculated by multiplying the contracted operating day rate by the firm contract period. The contracted operating day rate excludes certain types of non-recurring revenues for rig mobilization, demobilization, contract preparation and other customer reimbursables. The following table summarizes our contract backlog of business as of February 1, 2010 and 2009 (in millions): |
2010(*) | 2009(*) | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Deepwater | $1,689 | .9 | $1,895 | .7 | |||||||||
Asia Pacific | 466 | .5 | 724 | .4 | |||||||||
Europe and Africa | 363 | .4 | 858 | .1 | |||||||||
North and South America | 435 | .3 | 556 | .8 | |||||||||
Total | $2,955 | .1 | $4,035 | .0 | |||||||||
(*) Backlog includes revenues realized during January of the respective year. |
|
|
2013 and | ||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2009 | 2010 | 2011 | 2012 | Beyond | Total | 2010 (*) | 2011 | 2012 | 2013 | Total | ||||||||||||||
Deepwater | $ 293 | .3 | $458 | .2 | $583 | .8 | $498 | .5 | $61 | .9 | $1,895 | .7 | $ 471 | .9 | $601 | .2 | $514 | .2 | $102 | .6 | $1,689 | .9 | ||
Asia Pacific | 581 | .3 | 143 | .1 | -- | -- | -- | 724 | .4 | 391 | .4 | 60 | .7 | 14 | .4 | -- | 466 | .5 | ||||||
Europe/Africa | 516 | .9 | 175 | .5 | 139 | .3 | 26 | .4 | -- | 858 | .1 | |||||||||||||
Europe and Africa | 239 | .5 | 102 | .7 | 21 | .2 | -- | 363 | .4 | |||||||||||||||
North and South America | 342 | .8 | 109 | .8 | 87 | .6 | 16 | .6 | -- | 556 | .8 | 232 | .6 | 144 | .4 | 58 | .3 | -- | 435 | .3 | ||||
Total | $1,734 | .3 | $886 | .6 | $810 | .7 | $541 | .5 | $61 | .9 | $4,035 | .0 | $1,335 | .4 | $909 | .0 | $608 | .1 | $102 | .6 | $2,955 | .1 | ||
(*) Backlog for the year ended December 31, 2010 includes revenues realized during January 2010. | (*) Backlog for the year ended December 31, 2010 includes revenues realized during January 2010. |
Our drilling contracts generally contain provisions permitting early termination of the contract (i) if the rig is lost or destroyed or (ii) by the customer if operations are suspended for a specified period of time due to breakdown of major rig equipment, unsatisfactory performance, "force majeure" events beyond Major Customers We provide our contract drilling services to major international, government-owned and independent oil and gas companies. Competition The offshore contract drilling industry is highly competitive with numerous industry participants. Drilling contracts are, for the most part, awarded on a competitive bid basis. Price competition is often the primary factor in determining which contractor is awarded a contract, although quality of service, operational and safety performance, equipment suitability and availability, location of equipment, reputation and technical expertise are also factors. We have numerous competitors in the offshore contract drilling industry, several of which are larger and have greater resources than us. Governmental Regulation Our operations are affected by political developments and by |
|
• | terrorist acts, war and civil disturbances, | |
• | expropriation, nationalization, deprivation or confiscation of our equipment, | |
• | expropriation or nationalization of a customer's property or drilling rights, | |
• | repudiation or nationalization of contracts, | |
• | assaults on property or personnel, | |
• | ||
• | exchange restrictions, | |
• | currency fluctuations, | |
• | changes in the manner or rate of taxation, | |
• | limitations on | |
• | ||
• | changes in political conditions, and | |
• | changes in monetary policies. |
7 |
We are subject to various tax laws and regulations in substantially all of the Our We currently conduct contract drilling operations in certain countries that have experienced substantial fluctuations in the value of their currency compared to the U.S. dollar. Our drilling contracts generally stipulate payment wholly or substantially in U.S. dollars, which reduces the impact currency fluctuations have on our earnings and cash flows. However, there is no assurance that our contracts will contain such payment terms in the future. A Our |
|
The table below sets forth certain information regarding our principal officers including our executive officers: |
Name | Age | Position | ||
Daniel W. Rabun | | Chairman, President and Chief Executive Officer | ||
William S. Chadwick, Jr. | | Executive Vice President - Chief Operating Officer | ||
John Mark Burns | 53 | Senior Vice President | ||
Patrick Carey Lowe | 51 | Senior Vice President | ||
James W. Swent III | | Senior Vice President - Chief Financial Officer | ||
52 | ||||
Vice President - Finance | ||||
H. E. Malone, Jr. | | Vice President | ||
Cary A. Moomjian, Jr. | | Vice President, General Counsel and Secretary | ||
Sean P. O'Neill | 46 | Vice President - Investor Relations | ||
Michael B. Howe | 43 | Treasurer | ||
Douglas J. Manko | | Controller and Assistant Secretary | ||
|
Daniel W. Rabun joined Ensco in March 2006 as President and as a member of the Board of Directors. Mr. Rabun was appointed to serve as the Company's Chief Executive Officer effective January 1, 2007 and elected Chairman of the Board of Directors in May 2007. Prior to joining the Company, Mr. Rabun was a partner at the international law firm of Baker & McKenzie LLP where he had practiced law since 1986, except for one year when he served as Vice President, General Counsel and Secretary of a company in Dallas, Texas. Mr. Rabun provided legal advice and counsel to us for over fifteen years before joining the Company and served as one of our directors during 2001. He has been a Certified Public Accountant since 1976 and a member of the Texas Bar since 1983. He holds a Bachelor of Business Administration Degree in Accounting from the University of Houston and a Juris Doctorate Degree from Southern Methodist University. William S. Chadwick, Jr. joined Ensco in June 1987 and was elected to his John Mark Burns joined Ensco in June 2008 and was elected to his current position of Senior Vice President in December 2009. Prior to his current position, Mr. Burns served as President of ENSCO Offshore International Company, a subsidiary of the Company. Prior to joining Ensco, Mr. Burns served in various international capacities with Noble Corporation (a leading offshore drilling contractor) and most recently served as Vice President & Division Manager responsible for offshore units located in the Gulf of Mexico. Mr. Burns holds a Bachelor of Arts Degree in Business and Political Science from Sam Houston State University. Patrick Carey Lowe joined Ensco in August 2008 as Senior Vice President. His responsibilities include the Deepwater Business Unit, capital projects, engineering and strategic planning. Prior to joining Ensco, Mr. Lowe was Vice President - Latin America for Occidental Oil & Gas (one of the world's largest independent oil and natural gas producers). He also served as President & General Manager, Occidental Petroleum of Qatar Ltd. from 2001 to 2007. Mr. Lowe held various drilling-related management positions with Sedco Forex and Schlumberger Oilfield Services from 1980 to 2000, including Business Manager - Drilling, North and South America and General Manager - Oilfield Services, Saudi Arabia, Bahrain and Kuwait. Following Schlumberger, he was associated with a business-to-business e-procurement company until he joined Occidental during 2001. Mr. Lowe holds a Bachelor of Science Degree in Civil Engineering from Tulane University. James W. Swent III joined Ensco in July 2003 and thereupon was elected to his
David A. Armour joined Ensco in October 1990 and was elected to his current position of Vice President - Finance in September 2008. Prior to his current position, Mr. Armour served the Company as Assistant Controller and Controller. From 1981 to 1990, Mr. Armour served in various capacities as an employee of the public accounting firm Deloitte & Touche LLP and its predecessor firm Touche Ross & Co. Mr. Armour holds a Bachelor of Business Administration Degree from The University of Texas at Austin. |
|
H. E. Malone, Jr. joined Ensco in August 1987 and was elected to his current position of Vice President Cary A. Moomjian, Jr. joined Ensco in January 2002 and thereupon was elected to his current position of Vice President, General Counsel and Secretary. Mr. Moomjian has over thirty years of experience in the oil and gas industry. From 1976 to 2001, Mr. Moomjian served in various management and executive capacities as an employee of Santa Fe International Corporation, including Vice President, General Counsel and Secretary from 1993 to 2001. Mr. Moomjian was admitted to the California Bar Sean P. O'Neill joined the Company in May 2009 as Vice President-Investor Relations. Prior to joining Ensco, Mr. O'Neill had served as Senior Vice President, Investor Relations and Corporate Communications of First Industrial Realty Trust, Inc. since 2004. Mr. O'Neill previously held similar positions at two Fortune 500 companies and was Managing Director of Strategic Investor Relations Consulting at Thomson Financial (Thomson Reuters). Mr. O'Neill holds a Bachelor of Science Degree in Finance from Fairfield University and a Masters of Business Administration Degree from DePaul University, Kellstadt Graduate School of Business. Mr. O'Neill is also a member of DePaul University's Finance Advisory Board. Michael B. Howe joined Ensco in February 2009 as Treasurer. Prior to joining the Company, Mr. Howe was an employee of Devon Energy Corp. (the largest U.S. based independent oil and natural gas producer) where he had served as Assistant Treasurer since 2002. Mr. Howe previously held positions in various capacities at Enron Corp., BG Group PLC and Arthur Andersen. Mr. Howe holds a Bachelor of Science Degree in Accounting from Oklahoma State University and a Masters of Business Administration Degree from The University of Texas at Austin. Douglas J. Manko joined Ensco in May 2004 and was elected to his current position of Controller and Assistant Secretary in December 2009. Prior to his current position, Mr. Manko served as Controller, Director - Management Systems and Manager - Accounting Public Officers generally serve for a one-year term or until |
|
|
12 |
Ensco International plc is a company formed under English law and has historic, continuous and substantial business activities in the U.K. as a result of its longstanding North Sea drilling activities and management and control over the Europe and Africa Business Unit, headquartered in Aberdeen, Scotland. Therefore, we believe Ensco International plc should not be treated as a U.S. corporation for U.S. federal income tax purposes under Section 7874. However, there is no certainty that the IRS will not assert a contrary position, in which case we could become involved in tax controversy with the IRS regarding possible additional U.S. tax liability. If we are unsuccessful in resolving any such tax controversy in our favor, we would likely not realize the tax savings we anticipate achieving through the redomestication, and we could be liable for additional U.S. federal income tax as a result of certain transactions undertaken as part of the redomestication. THE REDOMESTICATION MAY NOT ALLOW US TO MAINTAIN A COMPETITIVE CONSOLIDATED EFFECTIVE INCOME TAX RATE.We believe the redomestication should improve our ability to maintain a competitive consolidated effective income tax rate because the U.K. corporate tax rate is lower than the U.S. corporate tax rate and because the U.K. has implemented a dividend exemption system that generally does not subject non-U.K. earnings to U.K. tax when such earnings are repatriated to the U.K. in the form of dividends from non-U.K. subsidiaries. The U.K. Government is consulting on reform of the U.K. controlled foreign companies rules (the "CFC rules") and published a discussion document in January 2010 that contains updated CFC rules related proposals. It has been announced that consultation regarding reform of the CFC rules will continue during 2010 with draft legislation expected later in 2010 and amendments to the CFC rules not likely to be enacted until 2011. The effect of any such amendments to the CFC rules on Ensco International plc will not be clear until the new legislation is published and enacted in its entirety. We will closely monitor the proposed amendments in order to address and mitigate their effects (if any) and will consider submitting representations to the U.K. Government on such proposed amendments as may affect us. We cannot provide any assurances as to what our effective income tax rates will be because of, among other things, uncertainty regarding the nature and extent of our business activities in any particular jurisdiction in the future and the tax laws of such jurisdictions, as well as potential changes in U.K. and U.S. tax laws. Our actual effective income tax rates may vary from our expectation and that variance may be material. Additionally, the tax laws of other jurisdictions could change in the future, and such changes could cause a material change in our consolidated effective income tax rate. We also could be subject to future audits conducted by U.K., U.S. and other tax authorities, and the resolution of such audits could significantly impact our effective income tax rates in future periods, as would any reclassification or other matter (such as changes in applicable accounting rules) that increases the amounts we have provided for income taxes in our consolidated financial statements. There can be no assurance that we would be successful in attempting to mitigate the adverse impacts resulting from any changes in law, audits and other matters. Our inability to mitigate the negative consequences of any changes in the law, audits and other matters could cause our effective income tax rates to increase and our financial position, operating results or cash flows to be adversely affected. CHANGES IN LAWS, INCLUDING TAX LAW CHANGES, COULD ADVERSELY AFFECT ENSCO, ITS SUBSIDIARIES AND ITS SHAREHOLDERS.Changes in tax laws, regulations or treaties or the interpretation or enforcement thereof, in the U.S., the U.K. or elsewhere, could adversely affect the tax consequences of the redomestication to Ensco and its shareholders and/or our effective income tax rates (whether associated with the redomestication or otherwise). For example, one reason for the redomestication was to begin to align our structure so as to have an opportunity to take advantage of U.K. corporate tax rates, which are lower than the U.S. income tax rates, and to take advantage of the recent dividend exemption system implemented in the U.K., which generally does not subject earnings of non-U.K. subsidiaries to U.K. tax when such earnings are repatriated to the U.K. as dividends. Future changes in tax laws, regulations or treaties or the interpretation or enforcement thereof in general or any such changes resulting in a material change in the U.S. or U.K. tax rates in particular could reduce or eliminate the benefits that we expect to achieve from the redomestication. CHANGES IN EFFECTIVE INCOME TAX RATES OR ADVERSE OUTCOMES RESULTING FROM EXAMINATION OF OUR TAX RETURNS COULD ADVERSELY AFFECT OUR FINANCIAL RESULTS.Changes in the valuation of our deferred tax assets and liabilities or changes in tax treaties, regulations, accounting principles or interpretations thereof in one or more countries in which we operate could result in a higher effective income tax rate on our worldwide earnings and such change could be significant to our financial results. Our future effective income tax rates could also be adversely affected by lower than anticipated earnings in countries where we have lower statutory rates and higher than anticipated earnings in countries where we have higher statutory rates. In addition, we are subject to examinations of our income tax returns by HMRC, the IRS and other tax authorities. We regularly assess the likelihood of adverse outcomes resulting from these examinations to determine the adequacy of our provision for income taxes. There can be no assurance that such examinations will not have an adverse effect on our financial position, operating results or cash flows. |
13 |
|
|
English law prohibits us from conducting "on-market purchases" as our shares will not be traded on a recognized investment exchange in the U.K. English law also generally prohibits a company from repurchasing its own shares by way of "off-market purchases" without the prior approval of 75% of its shareholders by special resolution. Such approval lasts for a maximum period of up to five years. A special resolution was adopted to permit "off-market purchases" prior to the effective time of the redomestication. This special resolution will need to be renewed upon expiration (i.e., at least every five years) to permit "off-market purchases" and renewal for additional five-year terms may be sought more frequently. We have no assurances that situations will not arise where such shareholder approval requirements for any of these actions would deprive our shareholders of substantial benefits. OUR ABILITY TO DECLARE DIVIDENDS AND REPURCHASE SHARES WILL BE MORE LIMITED DUE TO THE REDOMESTICATION.Under English law, with limited exceptions, we will only be able to declare dividends, make distributions or repurchase shares out of distributable profits. Distributable profits are a company's accumulated realized profits, so far as not previously utilized by distribution or capitalization, less its accumulated realized losses, so far as not previously written off in a reduction or reorganization of capital duly made. It is expected that, subject to the risk factors discussed in this section and to the factors discussed in our Forward-Looking Statements, Ensco will have income from continuing operations sufficient to accumulate distributable profits in an amount sufficient to continue paying quarterly dividends at a rate of $0.025 per share on the anticipated schedule for the foreseeable future and to continue our repurchases of shares from employees in connection with the settlement of income tax withholding obligations arising from the vesting of share awards. However, our subsidiaries would need to declare a dividend payable to our U.K. parent and pay the associated withholding taxes to provide Ensco International plc the initial distributable profits sufficient to fully implement our previously disclosed Board authorization to repurchase up to $562.4 million of our shares. THE REDOMESTICATION WILL RESULT IN ADDITIONAL ONGOING COSTS.The redomestication will result in an increase in some of our ongoing expenses and require us to incur some new expenses. Some costs, including those related to relocation and employment of expatriate officers and other employees in our U.K. offices and holding Board of Directors meetings in the U.K., are expected to be higher than would be the case if our principal executive offices were not relocated to England. We also expect to incur new expenses, including professional fees, to comply with U.K. corporate and tax laws. THE MARKET FOR ADSs REPRESENTING CLASS A ORDINARY SHARES MAY DIFFER FROM THE FORMER MARKET FOR ENSCO COMMON STOCK.Although the ADSs are listed on the NYSE under the symbol "ESV," which is the same symbol under which common stock of Ensco Delaware was formerly listed, the market prices, trading volume and volatility of the ADSs could be different from those of the shares of Ensco Delaware common stock and certain funds and institutional holders may have rules or policies that restrict investment in ADSs. |
|
|
• | demand for oil and natural gas, | |
• | the ability of OPEC to set and maintain production levels and pricing, | |
• | the level of production by non-OPEC countries, | |
• | ||
• | laws and government regulations that limit, restrict or prohibit exploration and development of oil and natural gas in various jurisdictions, | |
• | advances in exploration and development technology, | |
• | disruption to exploration and development activities due to hurricanes and other severe weather conditions and the risk thereof, | |
• | the worldwide military or political environment, including uncertainty or instability resulting from an escalation or additional outbreak of armed hostilities or other crises in oil or natural gas producing areas of the Middle East or geographic areas in which we operate, or acts of terrorism, and | |
• | global economic conditions. |
THE OFFSHORE CONTRACT DRILLING INDUSTRY HISTORICALLY HAS BEEN CYCLICAL, WITH PERIODS OF LOW DEMAND AND EXCESS RIG AVAILABILITY THAT COULD RESULT IN ADVERSE EFFECTS ON OUR BUSINESS.Financial operating results in the offshore contract drilling industry historically have been very cyclical and primarily are related to the demand for drilling rigs and the available supply of drilling rigs. Demand for rigs is directly related to the regional and worldwide levels of offshore exploration and development spending by oil and gas companies, which is beyond our control. Offshore exploration and development spending may fluctuate substantially from The supply of offshore drilling rigs is limited and new rigs require substantial capital investment and a long period of time to construct. There are The increase in supply of offshore drilling rigs |
|
Future periods of
|
|
|
17 |
|
|
We require skilled personnel to operate our drilling rigs and to provide technical services and support for our business. Competition for skilled and other labor has intensified as additional rigs are added to the worldwide fleet. There are OUR DRILLING CONTRACTS WITH NATIONAL OIL COMPANIES EXPOSE US TO GREATER RISKS THAN WE NORMALLY ASSUME. We currently have OUR DRILLING RIG FLEET IS |
|
|
• | terrorist acts, war and civil disturbances, | |
• | expropriation, nationalization, deprivation or confiscation of our equipment, | |
• | expropriation or nationalization of a customer's property or drilling rights, | |
• | repudiation or nationalization of contracts, | |
• | assaults on property or personnel, | |
• | piracy, kidnapping and extortion demands, | |
• | exchange restrictions, | |
• | currency fluctuations, | |
• | changes in the manner or rate of taxation, | |
• | limitations on our ability to recover amounts due, | |
• | increased risk of government and vendor/supplier corruption, | |
• | changes in political conditions, and | |
• | changes in monetary policies. |
We are subject to various tax laws and regulations in substantially all |
|
We currently conduct contract drilling operations in certain countries that have experienced substantial fluctuations in the value of their currency compared to the U.S. dollar. Our drilling contracts generally stipulate payment wholly or substantially in U.S. dollars, which reduces the impact currency fluctuations have on our earnings and cash flows. However, there is no assurance that our contracts will contain such payment terms in the future. |
|
Our
|
|
|
|
|
• | failure of | |
• | delays in equipment deliveries or shipyard construction, | |
• | shortages of materials or skilled labor, | |
• | damage to shipyard facilities or construction work in progress, including damage resulting from fire, explosion, flooding, severe weather or terrorism, | |
• | unforeseen design or engineering problems, | |
• | unanticipated actual or purported change orders, | |
• | strikes, labor disputes or work stoppages, | |
• | financial or operating difficulties of equipment vendors or the shipyard while constructing, upgrading, refurbishing or repairing a rig or rigs, | |
• | unanticipated cost increases, | |
• | foreign currency exchange rate fluctuations impacting overall cost, | |
• | inability to obtain the requisite permits or approvals, | |
• | force majeure, and | |
• | additional risks inherent to shipyard projects in |
ENSCO 8504, ENSCO 8505 and ENSCO 8506 have not secured drilling contracts upon completion of their construction. These rigs are scheduled to be delivered |
|
|
|
|
|
Upon renewal of our annual insurance policies effective July 1, Our current liability insurance policies only provide coverage for Gulf of Mexico ultra-deepwater semisubmersible rig operations. Our limited windstorm insurance coverage exposes us to a significant level of risk due to jackup rig damage or loss related to severe weather conditions caused by Gulf of Mexico We have established operational procedures designed to mitigate risk to our jackup rigs in the Gulf of Mexico during hurricane season. In addition to procedures designed to better secure the drilling package on jackup rigs, improve jackup leg stability and increase the air gap to position the hull above waves, our procedures involve analysis of prospective drilling locations, which may include enhanced bottom surveys. These procedures may result in a decision to decline to operate on a customer designated location during hurricane season notwithstanding that the location, water depth and other standard operating conditions are within a rig's normal operating range. Our procedures and the associated regulatory requirements addressing Mobile Offshore Drilling Unit operations in the Gulf of Mexico during hurricane season, coupled with our decision to retain (self-insure) certain windstorm related risks, may result in a |
|
|
24 |
On November 2, 2009, the owners of two other subsea pipelines presented claims in the exoneration or limitation of liability proceedings we filed in U.S. District Court for the Southern District of Texas as described below. The claims were filed on behalf of Stingray Pipeline Company, LLC, and Tennessee Gas Pipeline seeking monetary damages incurred by reason of damage to pipelines allegedly caused by ENSCO 74 in the aftermath of Hurricane Ike. The Stingray claim is in the amount of $14.0 million, and the Tennessee Gas Pipeline claim is for unspecified damages. We are exposed to costs associated with removal of
Our liability insurance may not fully protect us from cost, liability or exposure associated with the loss of ENSCO 74. As respects liabilities to third-parties, including the aforementioned tanker and pipeline claims, our applicable insurance is subject to a $10.0 million per occurrence self-insured retention and an annual aggregate policy limit of $500.0 million. We believe all liabilities associated with the ENSCO 74 loss during Hurricane Ike resulted from a single occurrence under the terms of the applicable insurance policies. However, legal counsel for certain liability underwriters have asserted that the liability claims arise from separate occurrences. In the event of multiple occurrences, the self-insured retention is $15.0 million for two occurrences and $1.0 million for each occurrence thereafter. We plan to undertake all appropriate defensive measures and filed a petition for exoneration or limitation of liability under U.S. admiralty and maritime law in the U.S. District Court for the Southern District of Texas on September 2, 2009. The petition seeks exoneration from or limitation of liability for any and all injury, loss or damage caused, occasioned or occurred in relation to the ENSCO 74 loss in September 2008. The exoneration/limitation proceeding currently includes the SKS Satilla claim and the four pipeline claims described above. The matter has been scheduled for trial in September 2011. See Note 11 and Note 12 to our consolidated financial statements for additional information on the loss of ENSCO 74 and associated contingencies. OUR BUSINESS INVOLVES NUMEROUS OPERATING HAZARDS, AND WE ARE NOT FULLY INSURED AGAINST ALL OPERATING HAZARDS. Contract drilling and offshore oil and gas operations in general are subject to numerous risks, including the following: |
• | rig or other property damage, liability or loss, including removal of wreckage or debris, resulting from hurricanes and other severe weather conditions, collisions, groundings, blowouts, fires, explosions and other accidents or terrorism, | |
• | blowouts, fires, explosions and other loss of well control events causing damage to wells, reservoirs, production facilities and other properties and which may require wild well control, including drilling of relief wells, | |
• | craterings, punchthroughs or other events causing rigs to capsize, sink or otherwise incur significant damage or total loss, | |
• | extensive uncontrolled rig or well fires, blowouts, oil spills or other discharges of pollutants causing damage to the environment, | |
• | machinery breakdowns, equipment failures, personnel shortages, failure of subcontractors and vendors to perform or supply goods and services and other events causing the suspension or cancellation of drilling operations, and | |
• | unionization or similar collective actions by our employees or employees of subcontractors causing suspension of drilling operations or significant increases in operating costs. |
|
Although we currently maintain broad insurance coverage, subject to certain significant deductibles and levels of self-insurance or risk retention, it does not cover all types of losses and, in some situations such as rig loss or damage resulting from Gulf of Mexico hurricane related windstorm exposures, may not provide We generally obtain contractual indemnification obligating our customers to protect and indemnify us for all or part of the liabilities resulting from pollution and damage to the environment, damage to wells, reservoirs and other customer property, control of wild wells, drilling of relief wells and certain non-rig crew personnel injuries. Such indemnification protection may be qualified or limited and may exclude certain perils or events or the application of local law. In some circumstances, we are unable to obtain indemnification protection for some or all of the risks generally assumed by our customers, including risks and liabilities relating to environmental damage, well loss or damage or wild well control. The inability to obtain such indemnification or the failure of a customer to meet indemnification obligations or losses or liabilities resulting from uninsured or underinsured events could have a material adverse effect on our financial position, operating results and cash flows. Our contracts generally protect us in whole or part from certain losses sustained as a result of our negligence, most frequently as respects pollution and damage to the environment, damage to wells or reservoirs, control of wild wells, drilling of relief wells and consequential damages. However, losses resulting from contracts that do not contain such protection could have a material adverse affect on our financial position, operating results and cash flows. Losses resulting from our gross negligence or willful misconduct may not be protected contractually by specific provision or by application of law, and our insurance may not provide adequate protection for such losses. COMPLIANCE WITH OR BREACH OF ENVIRONMENTAL LAWS CAN BE COSTLY AND COULD LIMIT OUR OPERATIONS. Our operations are subject to The International Convention on Oil Pollution Preparedness, Response and Cooperation, the U.K. Merchant Shipping Act 1995, the U.K. Merchant Shipping (Oil Pollution Preparedness, Response and Cooperation Convention) Regulations 1998 and other related legislation and regulations and OPA 90 and other U.S. federal statutes applicable to us and our operations, as well as similar |
|
|
Contract Drilling Fleet The following table provides certain information about the rigs in our drilling fleet by operating segment as of February |
Rig Name | Rig Type | Year Built/ Rebuilt | Design | Maximum Water Depth/ Drilling Depth | Current Location | Current Customer | |||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Deepwater | |||||||||||||
ENSCO 7500 | Semisubmersible | 2000 | Dynamically Positioned | 8,000'/30,000' | Australia | Chevron | |||||||
ENSCO 8500 | Semisubmersible | 2008 | Dynamically Positioned | 8,500'/35,000' | Gulf of Mexico | ||||||||
ENSCO 8501 | Semisubmersible | 2009 | Dynamically Positioned | 8,500'/35,000' | Gulf of Mexico | Nexen/Noble Energy | |||||||
ENSCO 8502 | Semisubmersible | 2010(1) | Dynamically Positioned | 8,500'/35,000' | Singapore | Shipyard | |||||||
ENSCO 8503 | Semisubmersible | 2010(2) | Dynamically Positioned | 8,500'/35,000' | Singapore | Under construction(3) | |||||||
ENSCO | Semisubmersible | | Dynamically Positioned | 8,500'/35,000' | Singapore | Under construction(3) | |||||||
ENSCO | Semisubmersible | | Dynamically Positioned | 8,500'/35,000' | Singapore | Under construction(3) | |||||||
ENSCO | Semisubmersible | | Dynamically Positioned | 8,500'/35,000' | Singapore | Under construction(3) | |||||||
Asia Pacific | |||||||||||||
ENSCO 50 | Jackup | 1983/1998 | F&G L-780 MOD II-C | 300'/25,000' | |||||||||
ENSCO 51 | Jackup | 1981/2002 | F&G L-780 MOD II-C | 300'/25,000' | Available | ||||||||
ENSCO 52 | Jackup | 1983/1997 | F&G L-780 MOD II-C | 300'/25,000' | Malaysia | Petronas Carigali | |||||||
ENSCO 53 | Jackup | 1982/ | F&G L-780 MOD II-C | 300'/25,000' | |||||||||
ENSCO 54 | Jackup | 1982/1997 | F&G L-780 MOD II-C | 300'/25,000' | |||||||||
ENSCO 56 | Jackup | 1982/1997 | F&G L-780 MOD II-C | 300'/25,000' | |||||||||
ENSCO 57 | Jackup | 1982/2003 | F&G L-780 MOD II-C | 300'/25,000' | Malaysia | Petronas Carigali | |||||||
ENSCO 67 | Jackup | 1976/2005 | MLT 84-CE | 400'/30,000' | Indonesia | ||||||||
ENSCO 76 | Jackup | 2000 | MLT Super 116-C | Saudi Arabia | Saudi Aramco | ||||||||
ENSCO 84 | Jackup | 1981/2005 | MLT 82 SD-C | 250'/25,000' | |||||||||
ENSCO 88 | Jackup | 1982/2004 | MLT 82 SD-C | 250'/25,000' | Qatar | Ras Gas | |||||||
ENSCO 94 | Jackup | 1981/2001 | Hitachi 250-C | 250'/25,000' | Qatar | Ras Gas | |||||||
ENSCO 95 | Jackup | 1981/2005 | Hitachi 250-C | 250'/25,000' | Saudi Arabia | Saudi Aramco | |||||||
ENSCO 96 | Jackup | 1982/1997 | Hitachi 250-C | 250'/25,000' | |||||||||
ENSCO 97 | Jackup | 1980/1997 | MLT 82 SD-C | 250'/25,000' | |||||||||
ENSCO 104 | Jackup | 2002 | KFELS MOD V-B | 400'/30,000' | |||||||||
ENSCO 106 | Jackup | 2005 | KFELS MOD V-B | 400'/30,000' | |||||||||
ENSCO 107 | Jackup | 2006 | KFELS MOD V-B | 400'/30,000' | |||||||||
ENSCO 108 | Jackup | 2007 | KFELS MOD V-B | 400'/30,000' | |||||||||
ENSCO I | Barge | 1999 | Barge | --/18,000' | Singapore | ||||||||
ENSCO 70 | Jackup | 1981/1996 | Hitachi K1032N | 250'/30,000' | United Kingdom | ||||||||
ENSCO 71 | Jackup | 1982/1995 | Hitachi K1032N | 225'/25,000' | Denmark | Maersk | |||||||
ENSCO 72 | Jackup | 1981/1996 | Hitachi K1025N | 225'/25,000' | United Kingdom | ||||||||
ENSCO 80 | Jackup | 1978/1995 | MLT 116-CE | 225'/30,000' | United Kingdom | ||||||||
ENSCO 85 | Jackup | 1981/1995 | MLT 116-C | 300'/25,000' | |||||||||
ENSCO 92 | Jackup | 1982/1996 | MLT 116-C | 225'/25,000' | United Kingdom | ||||||||
ENSCO 100 | Jackup | 1987/ | MLT 150-88-C | 350'/30,000' | United Kingdom | ||||||||
ENSCO 101 | Jackup | 2000 | KFELS MOD V-A | 400'/30,000' | |||||||||
ENSCO 102 | Jackup | 2002 | KFELS MOD V-A | 400'/30,000' | United Kingdom | ConocoPhillips | |||||||
ENSCO 105 | Jackup | 2002 | KFELS MOD V-B | 400'/30,000' | Tunisia | BG |
|
Rig Name | Rig Type | Year Built/ Rebuilt | Design | Maximum Water Depth/ Drilling Depth | Current Location | Current Customer | |||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
North & South America | |||||||||||||
ENSCO 60 | Jackup | 1981/2003 | Levingston 111-C | 300'/25,000' | Gulf of Mexico | ||||||||
ENSCO 68 | Jackup | 1976/2004 | MLT 84-CE | 400'/30,000' | |||||||||
Venezuela | |||||||||||||
ENSCO 75 | Jackup | 1999 | MLT Super 116-C | 400'/30,000' | Gulf of Mexico | ||||||||
ENSCO 81 | Jackup | 1979/2003 | MLT 116-C | 350'/30,000' | Mexico | ||||||||
ENSCO 82 | Jackup | 1979/2003 | MLT 116-C | 300'/30,000' | Gulf of Mexico | ||||||||
ENSCO 83 | Jackup | 1979/2007 | MLT 82 SD-C | 250'/25,000' | |||||||||
ENSCO 86 | Jackup | 1981/2006 | MLT 82 SD-C | 250'/30,000' | Gulf of Mexico | ||||||||
ENSCO 87 | Jackup | 1982/2006 | MLT 116-C | 350'/25,000' | Gulf of Mexico | ||||||||
ENSCO 89 | Jackup | 1982/2005 | MLT 82 SD-C | 250'/25,000' | |||||||||
ENSCO 90 | Jackup | 1982/2002 | MLT 82 SD-C | 250'/25,000' | Gulf of Mexico | ||||||||
ENSCO 93 | Jackup | 1982/2008 | MLT 82 SD-C | 250'/25,000' | |||||||||
ENSCO 98 | Jackup | 1977/2003 | MLT 82 SD-C | 250'/25,000' | |||||||||
ENSCO 99 | Jackup | 1985/2005 | MLT 82 SD-C | 250'/30,000' | Gulf of Mexico |
(1) | ENSCO |
(2) | Rig is currently under construction. The "year built" provided is based on the current construction schedule. |
(3) | ENSCO |
Jackup rigs stand on the ocean floor with their hull and drilling equipment elevated above the water on connected leg supports. Jackup rigs are generally preferred over other rig types in shallow water depths of 400 feet or less, primarily because jackup rigs provide a more stable drilling platform with above water |
|
Over the life of a typical rig, We lease our executive offices in FCPA Internal Investigation Following disclosures by other offshore service companies announcing internal investigations involving the legality of amounts paid to and by customs brokers in connection with temporary importation of rigs and vessels into Nigeria, the Audit Committee of our Board of Directors and management commenced an internal investigation in July 2007. The investigation initially focused on our payments to customs brokers relating to the temporary importation of ENSCO 100, our only rig that As is customary for companies operating offshore Nigeria, we had engaged independent customs brokers to process customs clearance of routine shipments of equipment, materials and supplies and to process the ENSCO 100 temporary importation permits, extensions and renewals. One or more of the customs brokers that our subsidiary in Nigeria used to obtain the ENSCO 100 temporary import permits, extensions and renewals also provided this service to other offshore service companies that have undertaken FCPA compliance internal investigations. The principal purpose of our investigation was to determine whether any of the payments made to or by our customs brokers were inappropriate under the anti-bribery provisions of the FCPA or whether any violations of the recordkeeping or internal accounting Following notification to the Audit Committee and to KPMG LLP, our independent registered public accounting firm, in consultation with the Audit Committee's |
|
|
|
In November 2008, our Board of Directors approved enhanced FCPA compliance recommendations issued by the Audit Committee's Since ENSCO 100 completed its contract commitment and departed Nigeria in August 2007, this matter is not expected to have a material effect on or disrupt our current operations. As noted above, we are unable to predict the outcome of this matter or estimate the extent to which we may be exposed to any resulting potential liability, sanctions or significant additional expense. ENSCO 74 Loss In September 2008, ENSCO 74 was lost as a result of Hurricane Ike in the Gulf of Mexico. Portions of its legs remained underwater adjacent to the customer's platform, and we conducted extensive aerial and sonar reconnaissance but did not locate the rig hull. The rig was a total loss, as defined under the terms of our insurance policies. In March 2009, the sunken rig hull of ENSCO 74 was located approximately 95 miles from the original drilling location when it was struck by the oil tanker SKS Satilla. Following discovery of the sunken rig hull, we removed the accessible hydrocarbons onboard the rig and began planning for removal of the wreckage. As an interim measure, the wreckage has been appropriately marked, and the U.S. Coast Guard has issued a Notice to Mariners. We are currently communicating with various government agencies to address removal of the wreckage and related debris. On March 17, 2009, we received notice from legal counsel representing certain underwriters in a subrogation claim alleging that ENSCO 74 caused a pipeline to rupture during Hurricane Ike. On September 4, 2009, High Island Offshore System, LLC, commenced civil litigation against us in the U.S. District Court for the Southern District of Texas seeking damages for the cost of repairs and business interruption in excess of $26.0 million. Based on information currently available, primarily the adequacy of available defenses, we have not concluded that it is probable that a liability exists with respect to this matter. On March 18, 2009, SKS OBO & Tankers AS and Kristen Gehard Jebsen Skipsrederi AS, the owner and manager of the SKS Satilla, commenced civil litigation against us in the U.S. District Court for the Southern District of Texas seeking monetary damages of $10.0 million for losses incurred when the tanker struck the sunken hull of ENSCO 74. Based on information currently available, primarily the adequacy of available defenses, we have not concluded that it is probable a liability exists with respect to this matter. On June 9, 2009, we received notice from legal counsel representing another pipeline owner which allegedly sustained damages to a subsea pipeline caused by ENSCO 74 in the aftermath of Hurricane Ike. On September 18, 2009, Sea Robin Pipeline Company, LLC, commenced civil litigation against us in the Fifteenth Judicial Court for the Parish of Lafayette and in the Nineteenth Judicial Court for the Parish of Baton Rouge, State of Louisiana seeking unspecified damages in relation to the cost of repairing damage to the pipeline, loss of revenues, survey and other damages. Based on information currently available, we have concluded that it is remote that a liability exists with respect to this matter. |
31 |
We have liability insurance policies that provide coverage for third-party claims such as the tanker and pipeline claims, subject to a $10.0 million per occurrence self-insured retention and an annual aggregate limit of $500.0 million. We believe all liabilities associated with the ENSCO 74 loss during Hurricane Ike resulted from a single occurrence under the terms of the applicable insurance policies. However, legal counsel for certain liability underwriters have asserted that the liability claims arise from separate occurrences. In the event of multiple occurrences, the self-insured retention is $15.0 million for two occurrences and $1.0 million for each occurrence thereafter. The exoneration/limitation proceedings currently include the SKS Satilla claim and the four pipeline claims described above. The matter has been scheduled for trial in September 2011. Although we do not expect final disposition of the claims associated with the ENSCO 74 loss to have a material adverse effect upon our financial position, operating results or cash flows, there can be no assurances as to the ultimate outcome. ENSCO 29 Wreck Removal A portion of the ENSCO 29 platform drilling rig was lost over the side of a customer's platform as a result of Hurricane Katrina during Our liability insurance underwriters have issued letters reserving rights and effectively denying coverage by questioning the applicability of coverage for the potential ENSCO 29 wreckage and debris removal costs. While we anticipate that any ENSCO 29 wreckage and debris removal costs incurred will be largely or fully covered by insurance, a $1.2 million provision, representing the portion of the $5.0 million low end of the range of estimated removal cost we believe is subject to liability insurance coverage, was recognized during Asbestos Litigation |
|
|
|
Adoption of the Agreement and Plan of Merger and Reorganization by and between Ensco Delaware and ENSCO Newcastle LLC, a newly-formed Delaware limited liability company ("Ensco Mergeco") and a wholly-owned subsidiary of ENSCO Global Limited, a newly-formed Cayman Islands exempted company ("Ensco Cayman") and a wholly-owned subsidiary of Ensco Delaware, pursuant to which Ensco Mergeco merged with and into Ensco Delaware, with Ensco Delaware surviving the merger as a |
|
Votes For | Votes Against | Votes Abstaining | Broker Non-Votes | ||||
---|---|---|---|---|---|---|---|
109,027,297 | 1,638,164 | 240,252 | -- |
|
First Quarter | Second Quarter | Third Quarter | Fourth Quarter | Year | First Quarter | Second Quarter | Third Quarter | Fourth Quarter | Year | |||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2009 High | $32.37 | $42.47 | $43.14 | $51.30 | $51.30 | |||||||||||||||||
2009 Low | $22.04 | $25.05 | $32.26 | $39.73 | $22.04 | |||||||||||||||||
2008 High | $65.23 | $83.24 | $81.12 | $57.85 | $83.24 | $65.23 | $83.24 | $81.12 | $57.85 | $83.24 | ||||||||||||
2008 Low | $45.94 | $59.81 | $52.50 | $22.38 | $22.38 | $45.94 | $59.81 | $52.50 | $22.38 | $22.38 | ||||||||||||
2007 High | $56.59 | $63.28 | $67.61 | $60.94 | $67.61 | |||||||||||||||||
2007 Low | $45.00 | $53.12 | $50.57 | $51.80 | $45.00 | |||||||||||||||||
Dividends Our We began paying a $.025 per share quarterly cash dividend Exchange Controls There are no U.K. government laws, decrees or regulations that restrict or affect the export or import of capital, including but not limited to, foreign exchange controls on remittance of dividends on our ordinary shares or on the conduct of the Company's operations. U.K. Taxation The following paragraphs are intended to be a general guide to current U.K. tax law and HMRC practice applying as of the date of this report (both of which are subject to change at any time, possibly with retrospective effect) in respect of the taxation of capital gains, the taxation of dividends paid by Ensco International plc and stamp duty and SDRT on the transfer of Class A ordinary shares, uncertificated ADSs and ADSs evidenced by American depositary receipts ("ADRs"). In addition, the following paragraphs relate only to persons who are beneficial owners of the ADSs ("ADS holders"). These paragraphs may not relate to certain classes of holders of the ADSs, such as employees or directors of Ensco International plc or its affiliates, persons who are connected with Ensco International plc, insurance companies, charities, collective investment schemes, pension schemes or persons who hold ADSs other than as an investment, or U.K. resident individuals who are not domiciled in the U.K. These paragraphs do not describe all of the circumstances in which ADS holders may benefit from an exemption or relief from taxation. It is recommended that all ADS holders obtain their own taxation advice. In particular, non-U.K. resident or domiciled ADS holders are advised to consider the potential impact of any relevant double tax treaties, including the Convention Between the United States of America and the United Kingdom for the Avoidance of Double Taxation with respect to Taxes on Income to the extent applicable. |
34 |
U.K. Withholding Tax - Dividends paid by Ensco International plc will not be subject to any withholding or deduction for or on account of U.K. tax, irrespective of the residence or the individual circumstances of the ADS holders. U.K. Income Tax - An individual ADS holder who is resident or ordinarily resident in the U.K. may, depending on his or her individual circumstances, be subject to U.K. income tax on dividends received from Ensco International plc. An individual ADS holder who is not resident or ordinarily resident in the U.K. will not be subject to U.K. income tax on dividends received from Ensco International plc, unless the ADS holder carries on (whether solely or in partnership) any trade, profession or vocation through a branch or agency in the U.K. and the ADSs are used by or held by or for that branch or agency. In these circumstances, the non-U.K. resident ADS holder may, depending on his or her individual circumstances, be subject to U.K. income tax on dividends received from Ensco International plc. The rate of U.K. income tax which is payable with respect to dividends received by higher rate taxpayers in the tax year 2009/2010 is 32.5%. Individual ADS holders who are resident in the U.K. will be entitled to a tax credit equal to one-ninth of the amount of the dividend received from Ensco International plc, which will be taken into account in computing the gross amount of the dividend which is subject to income tax. The tax credit will be credited against the ADS holder's liability (if any) to income tax on the gross amount of the dividend. An individual ADS holder who is not subject to U.K. income tax on dividends received from Ensco International plc will not be entitled to claim payment of the tax credit in respect of such dividends. The right of an individual ADS holder who is not resident in the U.K. to a tax credit will depend on his or her individual circumstances. Individuals whose total income subject to income tax exceeds £150,000 will be subject to income tax in respect of dividends in excess of that amount at the new rate of 42.5% in the tax year 2010/2011. An individual's dividend income is treated as the top slice of their total income which is subject to income tax. U.K. Corporation Tax - Unless an exemption is available as discussed below, a corporate ADS holder that is resident in the U.K. will be subject to U.K. corporation tax on dividends received from Ensco International plc. A corporate ADS holder that is not resident in the U.K. will not be subject to U.K. corporation tax on dividends received from Ensco International plc unless the ADS holder carries on a trade in the U.K. through a permanent establishment in the U.K. and the dividends form part of the profits of a trade carried on through or from the permanent establishment or if the ADSs are used by, for or held by or for, the permanent establishment. In these circumstances, the non-U.K. resident corporate ADS holder may, depending on its individual circumstances and if the exemption discussed below is not available, be subject to U.K. corporation tax on dividends received from Ensco International plc. The full rate of corporation tax payable with respect to dividends received from Ensco International plc in financial years 2009 and 2010 is 28%, although smaller companies may be entitled to claim the small companies rate of tax. If dividends paid by Ensco International plc fall within an exemption from U.K. corporation tax set out in Part 9A of the U.K. Corporation Tax Act 2009, the receipt of the dividend by a corporate ADS holder will be exempt from U.K. corporation tax. Generally, the conditions for exemption from U.K. corporation tax on dividends paid by Ensco International plc should be satisfied, although the conditions which must be satisfied in any particular case will depend on the individual circumstances of the corporate ADS holders. |
|
U.K. Taxation of Capital Gains U.K. Withholding Tax - Capital gains accruing to non-U.K. resident ADS holders on the disposal of ADSs will not be subject to any withholding or deduction for or on account of U.K. tax, irrespective of the residence or the individual circumstances of the ADS holders. A disposal of ADSs by an individual ADS holder who is resident or ordinarily resident in the U.K. may, depending on his or her individual circumstances, give rise to a taxable gain or an allowable loss for the purposes of U.K. capital gains tax. An individual ADS holder who temporarily ceases to be resident or ordinarily resident in the U.K. for a period of less than five years and who disposes of his or her ADSs during that period of temporary non-residence may be liable to U.K. capital gains tax on a taxable gain accruing on the disposal on his or her return to the U.K. under certain anti-avoidance rules. An individual ADS holder who is neither resident nor ordinarily resident in the U.K. will not be subject to U.K. capital gains tax on capital gains arising on the disposal of their ADSs unless the ADS holder carries on a trade, profession or vocation in the U.K. through a branch or agency in the U.K. and the ADSs were acquired, used in or for the purposes of the branch or agency or used in or for the purposes of the trade, profession or vocation carried on by the ADS holder through the branch or agency. In these circumstances, the non-U.K. resident ADS holder may, depending on his or her individual circumstances, be subject to U.K. capital gains tax on taxable gains arising from a disposal of their ADSs. The rate of U.K. capital gains tax on taxable gains is 18% in the tax year 2009/2010. U.K. Corporation Tax - A disposal of ADSs by a corporate ADS holder which is resident in the U.K. may give rise to a taxable gain or an allowable loss for the purposes of U.K. corporation tax. A corporate ADS holder that is not resident in the U.K. will not be liable for U.K. corporation tax on taxable gains accruing on the disposal of its ADSs unless it carries on a trade in the U.K. through a permanent establishment in the U.K. and the ADSs were acquired, used in or for the purposes of the permanent establishment or used in or for the purposes of the trade carried on by the ADS holder through the permanent establishment. In these circumstances, the non-U.K. resident ADS holder may, depending on its individual circumstances, be subject to U.K. corporation tax on taxable gains arising from a disposal of its ADSs. The full rate of U.K. corporation tax on taxable gains in financial years 2009 and 2010 is 28%, although small companies may be entitled to claim the small companies rate of tax. Corporate ADS holders will be entitled to an indexation allowance in computing the amount of a taxable gain accruing on a disposal of the ADSs, which will provide relief for the effects of inflation by reference to movements in the U.K. retail price index. If the conditions of the substantial shareholding exemption set out in s.192A and Schedule 7AC of the U.K. Taxation of Chargeable Gains Act 1992 are satisfied in relation to a taxable gain accruing to a corporate ADS holder, the taxable gain will be exempt from U.K. corporation tax. The conditions of the substantial shareholding exemption which must be satisfied will depend on the individual circumstances of the corporate ADS holder. One of the conditions of the substantial shareholding exemption which must be satisfied is that the corporate ADS holder must have held a substantial shareholding in Ensco International plc throughout a twelve-month period beginning not more than two years before the day on which the disposal takes place. Ordinarily, a corporate ADS holder will not be regarded as holding a substantial shareholding in Ensco International plc unless it (whether alone, or together with other group companies) directly holds not less than 10% of Ensco International plc ordinary share capital (not represented by ADRs). |
|
The discussion below relates to holders of Class A ordinary shares or ADSs wherever resident (but not to holders such as market makers, brokers, dealers and intermediaries, to whom special rules apply). Transfer of Class A Ordinary Shares and Uncertified ADSs - Provided that any instrument of transfer is not executed in the U.K. and remains at all times outside the U.K. and the transfer does not relate to any matter or thing done or to be done in the U.K., no U.K. stamp duty is payable on the acquisition or transfer of (i) Class A ordinary shares not represented by ADSs and (ii) uncertificated ADSs (i.e., not evidenced by ADRs) held in a direct registration system. ADSs held in book-entry form on the facilities of The Depository Trust Company are not considered to be in a direct registration system. However, an unconditional agreement for such transfer, or a conditional agreement which subsequently becomes unconditional, will be liable to U.K. SDRT generally at the rate of 0.5% of the consideration for the transfer; but such liability will be cancelled if the agreement is completed by a duty stamped instrument of transfer within six years of the date of the agreement, or if the agreement was conditional, the date the agreement became unconditional. Where U.K. stamp duty is paid, any SDRT previously paid will be repaid on the making of an appropriate claim. U.K. Stamp duty and SDRT are normally paid by the purchaser. Transfer of ADSs Evidenced by ADRs - No U.K. stamp duty need, in practice, be paid on the acquisition or transfer of ADSs evidenced by ADRs provided that any instrument of transfer or contract for sale is not executed in the U.K. and remains at all times outside the U.K. and the transfer does not relate to any matter or thing done or to be done in the U.K. An agreement for the transfer of ADSs evidenced by ADRs will not give rise to a SDRT liability. Equity Compensation Plans For information on Issuer Purchases of Equity Securities The following table provides a summary of |
Issuer Purchases of Equity Securities | ||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Total Number | Approximate | Total Number | Approximate | |||||||||||||||||||||||||
of Shares | Dollar Value | of Shares | Dollar Value | |||||||||||||||||||||||||
Purchased as | of Shares that | Purchased as | of Shares that | |||||||||||||||||||||||||
Total | Part of Publicly | May Yet Be | Total | Part of Publicly | May Yet Be | |||||||||||||||||||||||
Number of | Announced | Purchased | Number of | Announced | Purchased | |||||||||||||||||||||||
Shares | Average Price | Plans or | Under Plans | Shares | Average Price | Plans or | Under Plans | |||||||||||||||||||||
Period | Period | Purchased | Paid per Share | Programs | or Programs | Period | Purchased | Paid per Share | Programs | or Programs | ||||||||||||||||||
October 1 - October 31 | 2,259 | $35.09 | -- | $562,000,000 | 690 | $39.03 | -- | $562,000,000 | ||||||||||||||||||||
November 1 - November 30 | 2,674 | $33.13 | -- | $562,000,000 | 3,045 | $46.38 | -- | $562,000,000 | ||||||||||||||||||||
December 1 - December 31 | 895 | $29.08 | -- | $562,000,000 | 1,393 | $41.90 | -- | $562,000,000 | ||||||||||||||||||||
Total | 5,828 | $33.27 | -- | 5,128 | $44.17 | -- |
|
|
The chart below presents a comparison of the five-year cumulative total return, assuming $100 invested on December 31, |
Cumulative Total Return | |||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
12/03 | 12/04 | 12/05 | 12/06 | 12/07 | 12/08 | ||||||||
ENSCO International Incorporated | 100.00 | 117.23 | 164.21 | 185.75 | 221.62 | 105.76 | |||||||
S & P 500 | 100.00 | 110.88 | 116.33 | 134.70 | 142.10 | 89.53 | |||||||
Dow Jones U.S. Oil Equipment & Services Index | 100.00 | 135.40 | 205.46 | 233.14 | 337.92 | 137.54 |
Cumulative Total Return | |||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
12/04 | 12/05 | 12/06 | 12/07 | 12/08 | 12/09 | ||||||||
Ensco International plc | 100.00 | 140.08 | 158.45 | 189.06 | 90.22 | 127.30 | |||||||
S & P 500 | 100.00 | 104.91 | 121.48 | 128.16 | 80.74 | 102.11 | |||||||
Dow Jones U.S. Oil Equipment & Services | 100.00 | 151.75 | 172.19 | 249.58 | 101.59 | 167.77 |
* $100 invested on December 31, |
|
Year Ended December 31, | Year Ended December 31, | |||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2008 | 2007 | 2006 | 2005 | 2004 | 2009 | 2008 | 2007 | 2006 | 2005 | |||||||||||||
(in millions, except per share amounts) | (in millions, except per share amounts) | |||||||||||||||||||||
Consolidated Statement of Income Data | ||||||||||||||||||||||
Revenues | $ | 2,450.4 | $ | 2,088.6 | $ | 1,769.8 | $ | 1,009.3 | $ | 713.7 | $ | 1,945.9 | $ | 2,393.6 | $ | 2,058.2 | $ | 1,748.7 | $991.1 | |||
Operating expenses | ||||||||||||||||||||||
Contract drilling (exclusive of depreciation) | 800.5 | 671.2 | 564.8 | 442.8 | 398.1 | 725.5 | 752.0 | 644.1 | 543.5 | 434.9 | ||||||||||||
Depreciation | 189.5 | 180.2 | 171.1 | 149.5 | 129.1 | 205.9 | 186.5 | 177.5 | 168.5 | 147.5 | ||||||||||||
General and administrative | 53.8 | 59.5 | 44.6 | 32.0 | 33.1 | 64.0 | 53.8 | 59.5 | 44.6 | 32.0 | ||||||||||||
Operating income | 1,406.6 | 1,177.7 | 989.3 | 385.0 | 153.4 | 950.5 | 1,401.3 | 1,177.1 | 992.1 | 376.7 | ||||||||||||
Other income (expense), net | (4.2 | ) | 37.8 | (5.9 | ) | (24.0 | ) | (33.6 | ) | 8.8 | (4.2 | ) | 37.8 | (5.9 | ) | (24.0 | ) | |||||
Provision for income taxes | 242.4 | 248.3 | 243.0 | 97.2 | 28.5 | 178.4 | 237.3 | 244.8 | 241.3 | 94.8 | ||||||||||||
Income from continuing operations | 1,160.0 | 967.2 | 740.4 | 263.8 | 91.3 | 780.9 | 1,159.8 | 970.1 | 744.9 | 257.9 | ||||||||||||
(Loss) income from discontinued operations, net(1) | (9.2 | ) | 24.8 | 28.7 | 21.1 | 1.7 | ||||||||||||||||
Income (loss) from discontinued operations, net(1) | 3.6 | (3.1 | ) | 28.8 | 30.3 | 27.5 | ||||||||||||||||
Cumulative effect of accounting change, net(2) | -- | -- | .6 | -- | -- | -- | -- | -- | .6 | -- | ||||||||||||
Net income | $ | 1,150.8 | $ | 992.0 | $ | 769.7 | $ | 284.9 | $ | 93.0 | 784.5 | 1,156.7 | 998.9 | 775.8 | 285.4 | |||||||
Net income attributable to noncontrolling interests | (5.1 | ) | (5.9 | ) | (6.9 | ) | (6.1 | ) | (.5 | ) | ||||||||||||
Net income attributable to Ensco | $ | 779.4 | $ | 1,150.8 | $ | 992.0 | $ | 769.7 | $284.9 | |||||||||||||
Earnings (loss) per share - basic | ||||||||||||||||||||||
Continuing operations | $ | 8.19 | $ | 6.59 | $ | 4.86 | $ | 1.74 | $ | .61 | $ | 5.45 | $ | 8.06 | $ | 6.52 | $ | 4.83 | $ 1.69 | |||
Discontinued operations | (.06 | ) | .17 | .19 | .14 | .01 | .03 | (.02 | ) | .19 | .20 | .18 | ||||||||||
Cumulative effect of accounting change | -- | -- | .00 | -- | -- | -- | -- | -- | .00 | -- | ||||||||||||
$ | 8.13 | $ | 6.76 | $ | 5.06 | $ | 1.88 | $ | .62 | $ | 5.48 | $ | 8.04 | $ | 6.71 | $ | 5.03 | $ 1.87 | ||||
Earnings (loss) per share - diluted | ||||||||||||||||||||||
Continuing operations | $ | 8.17 | $ | 6.57 | $ | 4.85 | $ | 1.73 | $ | .61 | $ | 5.45 | $ | 8.04 | $ | 6.50 | $ | 4.81 | $ 1.68 | |||
Discontinued operations | (.06 | ) | .17 | .19 | .14 | .01 | .03 | (.02 | ) | .19 | .20 | .18 | ||||||||||
Cumulative effect of accounting change | -- | -- | .00 | -- | -- | -- | -- | -- | .00 | -- | ||||||||||||
$ | 8.11 | $ | 6.73 | $ | 5.04 | $ | 1.87 | $ | .62 | $ | 5.48 | $ | 8.02 | $ | 6.69 | $ | 5.01 | $ 1.86 | ||||
Weighted-average common shares outstanding: | ||||||||||||||||||||||
Net income attributable to Ensco shares | ||||||||||||||||||||||
Basic | 141.6 | 146.7 | 152.2 | 151.7 | 150.5 | $ | 769.7 | $ | 1,138.2 | $ | 984.7 | $ | 765.4 | $283.9 | ||||||||
Diluted | 141.9 | 147.3 | 152.8 | 152.4 | 150.6 | $ | 769.7 | $ | 1,138.2 | $ | 984.7 | $ | 765.4 | $283.9 | ||||||||
Cash dividends per common share | $ | .10 | $ | .10 | $ | .10 | $ | .10 | $ | .10 | ||||||||||||
Consolidated Balance Sheet and Cash Flow Statement Data | ||||||||||||||||||||||
Working capital | $ | 973.0 | $ | 625.8 | $ | 602.3 | $ | 347.0 | $ | 277.9 | ||||||||||||
Total assets | 5,830.1 | 4,968.8 | 4,334.4 | 3,617.9 | 3,322.0 | |||||||||||||||||
Long-term debt, net of current portion | 274.3 | 291.4 | 308.5 | 475.4 | 527.1 | |||||||||||||||||
Stockholders' equity | 4,676.9 | 3,752.0 | 3,216.0 | 2,540.0 | 2,193.9 | |||||||||||||||||
Cash flow from continuing operations | 1,140.1 | 1,214.1 | 922.8 | 342.2 | 236.4 | |||||||||||||||||
Weighted-average shares outstanding | ||||||||||||||||||||||
Basic | 140.4 | 141.6 | 146.7 | 152.2 | 151.7 | |||||||||||||||||
Diluted | 140.5 | 141.9 | 147.2 | 152.8 | 152.3 | |||||||||||||||||
Cash dividends per share | $ | .10 | $ | .10 | $ | .10 | $ | .10 | $ .10 |
|
Consolidated Balance Sheet and Cash Flow Statement Data | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Working capital | $1,167.9 | $ 973.0 | $ 625.8 | $ 602.3 | $ 347.0 | ||||||
Total assets | 6,747.2 | 5,830.1 | 4,968.8 | 4,334.4 | 3,617.9 | ||||||
Long-term debt, net of current portion | 257.2 | 274.3 | 291.4 | 308.5 | 475.4 | ||||||
Ensco shareholders' equity | 5,499.2 | 4,676.9 | 3,752.0 | 3,216.0 | 2,540.0 | ||||||
Cash flow from continuing operations | 1,221.7 | 1,125.4 | 1,211.2 | 922.9 | 336.7 |
(1) | See Note 11 to |
(2) | On January 1, 2006, we recognized a cumulative adjustment related to the adoption of certain provisions of FASB ASC 718 (previously SFAS No. |
|
|
Redomestication The redomestication changed Ensco's corporate structure, which included a change of our place of incorporation from Delaware to the U.K. and the relocation of our principal executive offices to London, England. The redomestication, among other things, established a |
|
Historically, Drilling Rig Demand Demand for rigs is directly related to the regional and worldwide levels of offshore exploration and development spending by oil and gas companies, which is beyond our control. Offshore exploration and development spending may fluctuate substantially from |
• | demand for oil and natural gas, | |
• | regional and global economic conditions and changes therein, | |
• | political, social and legislative environments in | |
• | production and inventory levels and related activities of | |
• | technological advancements that impact the methods or cost of oil and natural gas exploration and development, | |
• | disruption to exploration and development activities due to hurricanes and other severe weather conditions and the risk thereof, and | |
• | the impact that these and other events, whether caused by economic conditions, international or national climate change regulations or other factors, may have on the current and expected future prices of oil and natural gas. |
|
|
|
|
Drilling Rig Supply During Jackup rig supply continues to increase as a result of newbuild construction programs which were initiated prior to the 2008 decline in oil and natural gas prices and global economic crisis. It has been reported that 58 newbuild jackup The limited availability of insurance for certain perils in some geographic regions and rig loss or damage due to hurricanes, blowouts, craterings, punchthroughs and other operational events may impact the supply of jackup or semisubmersible rigs in a particular market and cause fluctuations in |
|
|
Asia Pacific
Our
|
|
2008 | 2007 | 2006 | 2009 | 2008 | 2007 | |||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Revenues | $ | 2,450.4 | $ | 2,088.6 | $ | 1,769.8 | $ | 1,945.9 | $ | 2,393.6 | $ | 2,058.2 | ||||||||||
Operating expenses | ||||||||||||||||||||||
Contract drilling (exclusive of depreciation) | 800.5 | 671.2 | 564.8 | 725.5 | 752.0 | 644.1 | ||||||||||||||||
Depreciation | 189.5 | 180.2 | 171.1 | 205.9 | 186.5 | 177.5 | ||||||||||||||||
General and administrative | 53.8 | 59.5 | 44.6 | 64.0 | 53.8 | 59.5 | ||||||||||||||||
Operating income | 1,406.6 | 1,177.7 | 989.3 | 950.5 | 1,401.3 | 1,177.1 | ||||||||||||||||
Other income (expense), net | (4.2 | ) | 37.8 | (5.9 | ) | 8.8 | (4.2 | ) | 37.8 | |||||||||||||
Provision for income taxes | 242.4 | 248.3 | 243.0 | 178.4 | 237.3 | 244.8 | ||||||||||||||||
Income from continuing operations | 1,160.0 | 967.2 | 740.4 | 780.9 | 1,159.8 | 970.1 | ||||||||||||||||
(Loss) income from discontinued operations, net | (9.2 | ) | 24.8 | 28.7 | ||||||||||||||||||
Cumulative effect of accounting change, net | -- | -- | .6 | |||||||||||||||||||
Income (loss) from discontinued operations, net | 3.6 | (3.1 | ) | 28.8 | ||||||||||||||||||
Net income | $ | 1,150.8 | $ | 992.0 | $ | 769.7 | 784.5 | 1,156.7 | 998.9 | |||||||||||||
Net income attributable to noncontrolling interests | (5.1 | ) | (5.9 | ) | (6.9 | ) | ||||||||||||||||
Net income attributable to Ensco | $ | 779.4 | $ | 1,150.8 | $ | 992.0 | ||||||||||||||||
|
During 2008, revenues increased by
Rig Locations, Utilization and Average Day Rates As discussed below, we manage our business through four operating segments. However, our rigs are mobile and our jackup rigs |
2008 | 2007 | 2006 | 2009 | 2008 | 2007 | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Deepwater(1) | 2 | 1 | 1 | 3 | 2 | 1 | ||||||||
Asia Pacific | 20 | 20 | 19 | 20 | 20 | 20 | ||||||||
Europe/Africa(3) | 10 | 10 | 9 | |||||||||||
Europe and Africa | 10 | 10 | 10 | |||||||||||
North and South America | 14 | 14 | 15 | 13 | 13 | 13 | ||||||||
Under construction(1)(2)(4) | 6 | 4 | 4 | |||||||||||
Under construction(1)(2) | 5 | 6 | 4 | |||||||||||
Total | 52 | 49 | 48 | 51 | 51 | 48 | ||||||||
(1) |
(2) |
| The total number of rigs for each period excludes rigs reclassified as discontinued operations. |
|
|
2008 | 2007 | 2006 | 2009 | 2008 | 2007 | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Rig utilization(1) | ||||||||||||||
Deepwater | 95% | 97% | 87% | 85% | 95% | 97% | ||||||||
Asia Pacific(3) | 95% | 99% | 98% | 70% | 95% | 99% | ||||||||
Europe/Africa | 96% | 93% | 100% | |||||||||||
Europe and Africa | 77% | 96% | 93% | |||||||||||
North and South America | 97% | 79% | 90% | 67% | 97% | 77% | ||||||||
Total | 96% | 91% | 95% | 72% | 96% | 91% | ||||||||
Average day rates(2) | ||||||||||||||
Deepwater | $334,688 | $199,432 | $191,163 | $425,190 | $334,688 | $199,432 | ||||||||
Asia Pacific(3) | 152,981 | 131,384 | 89,568 | 143,315 | 152,981 | 131,384 | ||||||||
Europe/Africa | 221,164 | 198,551 | 149,072 | |||||||||||
Europe and Africa | 198,595 | 221,164 | 198,551 | |||||||||||
North and South America | 101,534 | 104,318 | 121,637 | 119,951 | 98,166 | 107,147 | ||||||||
Total | $155,150 | $140,984 | $115,868 | $162,300 | $155,441 | $142,704 | ||||||||
(1) | Rig utilization is derived by dividing the number of days under contract, including days associated with compensated mobilizations, by the number of days in the period. |
(2) | Average day rates are derived by dividing contract drilling revenues, adjusted to exclude certain types of non-recurring reimbursable revenues and lump sum revenues, by the aggregate number of contract days, adjusted to exclude contract days associated with certain mobilizations, demobilizations, shipyard contracts and standby contracts. |
(3) | Rig utilization and average day rates for the Asia Pacific operating segment include our jackup rigs only. The ENSCO I barge rig has been excluded. |
Operating Income We are in the process of developing a fleet of ultra-deepwater semisubmersible
The following tables summarize our operating income for each of the years in the three-year period ended December 31, |
|
|
North | |||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Europe | and | Operating | |||||||||||||||||||||
Asia | and | South | Segments | Reconciling | Consolidated | ||||||||||||||||||
Deepwater | Pacific | Africa | America | Total | Items | Total | |||||||||||||||||
Revenues | $ 254.1 | $ 724.0 | $569.1 | $398.7 | $1,945.9 | $ -- | $1,945.9 | ||||||||||||||||
Operating expenses Contract drilling (exclusive of depreciation) | 108.1 | 249.0 | 208.8 | 159.6 | 725.5 | -- | 725.5 | ||||||||||||||||
Depreciation | 22.2 | 88.0 | 44.5 | 49.9 | 204.6 | 1.3 | 205.9 | ||||||||||||||||
General and administrative | -- | -- | -- | -- | -- | 64.0 | 64.0 | ||||||||||||||||
Operating income | $ 123.8 | $ 387.0 | $315.8 | $189.2 | $1,015.8 | $ (65.3) | $ 950.5 | ||||||||||||||||
Year Ended December 31, 2008 |
North | North | |||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
and | Operating | Europe | and | Operating | ||||||||||||||||||||||||||||||||||||||||||
Asia | Europe/ | South | Segments | Reconciling | Consolidated | Asia | and | South | Segments | Reconciling | Consolidated | |||||||||||||||||||||||||||||||||||
Deepwater | Pacific | Africa | America | Total | Items | Total | Deepwater | Pacific | Africa | America | Total | Items | Total | |||||||||||||||||||||||||||||||||
Revenue | $ 84.4 | $1,052.9 | $804.1 | $509.0 | $2,450.4 | $ -- | $2,450.4 | |||||||||||||||||||||||||||||||||||||||
Revenues | $ 84.4 | $1,052.9 | $804.1 | $452.2 | $2,393.6 | $ -- | $2,393.6 | |||||||||||||||||||||||||||||||||||||||
Operating expenses Contract drilling (exclusive of depreciation) | 31.2 | 321.9 | 246.7 | 200.7 | 800.5 | -- | 800.5 | 31.2 | 316.0 | 246.7 | 158.1 | 752.0 | -- | 752.0 | ||||||||||||||||||||||||||||||||
Depreciation | 9.1 | 85.2 | 43.0 | 50.3 | 187.6 | 1.9 | 189.5 | 9.1 | 85.2 | 43.0 | 47.3 | 184.6 | 1.9 | 186.5 | ||||||||||||||||||||||||||||||||
General and administrative | -- | -- | -- | -- | -- | 53.8 | 53.8 | -- | -- | -- | -- | -- | 53.8 | 53.8 | ||||||||||||||||||||||||||||||||
Operating income | $ 44.1 | $ 645.8 | $514.4 | $258.0 | $1,462.3 | $ (55.7) | $1,406.6 | $ 44.1 | $ 651.7 | $514.4 | $246.8 | $1,457.0 | $ (55.7) | $1,401.3 | ||||||||||||||||||||||||||||||||
Total assets | $1,759.9 | $1,327.7 | $806.7 | $773.1 | $4,667.4 | $1,162.7 | $5,830.1 | |||||||||||||||||||||||||||||||||||||||
Capital expenditures | 657.8 | 42.6 | 22.7 | 46.3 | 769.4 | 2.7 | 772.1 |
Year Ended December 31, 2007 |
North | |||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
and | Operating | ||||||||||||||||||||||
Asia | Europe/ | South | Segments | Reconciling | Consolidated | ||||||||||||||||||
Deepwater | Pacific | Africa | America | Total | Items | Total | |||||||||||||||||
Revenue | $ 72.8 | $ 912.7 | $670.8 | $432.3 | $2,088.6 | $ -- | $2,088.6 | ||||||||||||||||
Operating expenses Contract drilling (exclusive of depreciation) | 28.8 | 271.9 | 208.4 | 162.1 | 671.2 | -- | 671.2 | ||||||||||||||||
Depreciation | 9.3 | 81.1 | 40.4 | 45.3 | 176.1 | 4.1 | 180.2 | ||||||||||||||||
General and administrative | -- | -- | -- | -- | -- | 59.5 | 59.5 | ||||||||||||||||
Operating income | $ 34.7 | $ 559.7 | $422.0 | $224.9 | $1,241.3 | $ (63.6) | $1,177.7 | ||||||||||||||||
Total assets | $973.8 | $1,386.6 | $773.6 | $808.8 | $3,942.8 | $1,026.0 | $4,968.8 | ||||||||||||||||
Capital expenditures | 352.4 | 50.6 | 22.0 | 93.0 | 518.0 | 1.4 | 519.4 |
|
North | North | |||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
and | Operating | Europe | and | Operating | ||||||||||||||||||||||||||||||||||||||||||
Asia | Europe/ | South | Segments | Reconciling | Consolidated | Asia | and | South | Segments | Reconciling | Consolidated | |||||||||||||||||||||||||||||||||||
Deepwater | Pacific | Africa | America | Total | Items | Total | Deepwater | Pacific | Africa | America | Total | Items | Total | |||||||||||||||||||||||||||||||||
Revenue | $ 60.9 | $ 585.5 | $497.1 | $626.3 | $1,769.8 | $ -- | $1,769.8 | |||||||||||||||||||||||||||||||||||||||
Revenues | $ 72.8 | $ 912.7 | $670.8 | $401.9 | $2,058.2 | $ -- | $2,058.2 | |||||||||||||||||||||||||||||||||||||||
Operating expenses Contract drilling (exclusive of depreciation) | 26.3 | 226.0 | 158.0 | 154.5 | 564.8 | -- | 564.8 | 28.8 | 265.0 | 208.4 | 141.9 | 644.1 | -- | 644.1 | ||||||||||||||||||||||||||||||||
Depreciation | 8.9 | 75.3 | 36.4 | 46.8 | 167.4 | 3.7 | 171.1 | 9.3 | 81.1 | 40.4 | 42.6 | 173.4 | 4.1 | 177.5 | ||||||||||||||||||||||||||||||||
General and administrative | -- | -- | -- | -- | -- | 44.6 | 44.6 | -- | -- | -- | -- | -- | 59.5 | 59.5 | ||||||||||||||||||||||||||||||||
Operating income | $ 25.7 | $ 284.2 | $302.7 | $425.0 | $1,037.6 | $ (48.3 | ) | $ 989.3 | $ 34.7 | $ 566.6 | $422.0 | $217.4 | $1,240.7 | $ (63.6) | $1,177.1 | |||||||||||||||||||||||||||||||
Total assets | $564.6 | $1,358.6 | $640.4 | $891.7 | $3,455.3 | $879.1 | $4,334.4 | |||||||||||||||||||||||||||||||||||||||
Capital expenditures | 299.5 | 128.9 | 9.5 | 88.0 | 525.9 | 2.0 | 527.9 |
|
During 2009, Deepwater revenues increased by $169.7 million as compared to the prior year. The increase in revenues was due to the commencement of ENSCO 8500 and ENSCO 8501 drilling operations, an increase in the day rate earned by ENSCO 7500 and the recognition of ENSCO 7500 mobilization revenues deferred during the rig's mobilization to Australia. In October 2008, we amended the existing ENSCO 7500 drilling contract and agreed to relocate the rig to Australia where we commenced drilling operations in April 2009 at a day rate of approximately $550,000. Revenues earned during the mobilization period were deferred and are being recognized ratably over the firm commitment period of the contract. The aforementioned revenue increases were partially offset by the deferral of ENSCO 7500 revenues during the rig's mobilization to Australia during the first quarter of 2009. Contract drilling expense increased by $76.9 million as compared to the prior year due to the commencement of ENSCO 8500 and ENSCO 8501 drilling operations, ENSCO 7500 mobilization expense and incremental expenses associated with operating ENSCO 7500 in Australia as compared to the Gulf of Mexico. Depreciation expense increased by $13.1 million primarily due to ENSCO 8500 and ENSCO 8501 as noted above. During 2008, Deepwater revenues increased by $11.6 million, or 16%, as compared to Asia Pacific During Depreciation expense increased by 3% as compared to the prior year, primarily due to the ENSCO 53 capital enhancement project completed during the second quarter of 2009 and depreciation on minor upgrades and improvements to our Asia Pacific fleet completed during 2008 and 2009. During 2008, Asia Pacific revenues increased by $140.2 million, or 15%, as compared to Europe and Africa During |
|
During 2008, North and South America During
During 2008, North and South America revenues increased by |
|
During
During 2008, general and administrative expense |
|
The following table summarizes other income (expense), net, for each of the years in the three-year period ended December 31, |
2008 | 2007 | 2006 | 2009 | 2008 | 2007 | |||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Interest income | $ | 14.0 | $ | 26.3 | $ | 14.9 | $ | 2.2 | $ | 14.0 | $ | 26.3 | ||||||||||
Interest expense, net: | ||||||||||||||||||||||
Interest expense | (21.6 | ) | (32.3 | ) | (35.4 | ) | (20.9 | ) | (21.6 | ) | (32.3 | ) | ||||||||||
Capitalized interest | 21.6 | 30.4 | 18.9 | 20.9 | 21.6 | 30.4 | ||||||||||||||||
-- | (1.9 | ) | (16.5 | ) | -- | -- | (1.9 | ) | ||||||||||||||
Other, net | (18.2 | ) | 13.4 | (4.3 | ) | 6.6 | (18.2 | ) | 13.4 | |||||||||||||
$ | (4.2 | ) | $ | 37.8 | $ | (5.9 | ) | $ | 8.8 | $ | (4.2 | ) | $ | 37.8 |
|
|
Income tax rates imposed in the tax jurisdictions in which our Income tax expense was |
|
ENSCO 69 From May 2007 to June 2009, ENSCO 69 was contracted to Petrosucre, a subsidiary of Petróleos de Venezuela S.A., the national oil company of Venezuela ("PDVSA"). During portions of 2008 and 2009, PDVSA subsidiaries reportedly lacked funds and generally were not paying their contractors and service providers. In On June 4, 2009, after Petrosucre's failure to satisfy its contractual payment obligations, failure to reach a mutually acceptable agreement with us and Due to Petrosucre's failure to satisfy its contractual obligations and meet payment commitments, and in consideration of the
In Although the agreement obligates Petrosucre to make additional payments during 2010 for its use of the rig during 2009, the associated income was ENSCO 74 In September 2008, ENSCO 74 was lost as a result of Hurricane Ike. Portions of its legs remained underwater adjacent to the customer's platform, and we conducted extensive aerial and sonar reconnaissance but did not locate the rig hull. In March 2009, the sunken hull of ENSCO 74 was located approximately 95 miles from the original drilling location when it was struck by an oil tanker. The rig was a total loss, as defined under the terms of our insurance policies. The operating results of ENSCO 74 were reclassified as discontinued operations in our consolidated statements of income for the years ended December 31, 2008 and 2007. See Note 11 and Note 12 to our consolidated financial statements for additional information on the loss of ENSCO 74 and associated contingencies. |
|
|
2008 | 2007 | 2006 | |||||
---|---|---|---|---|---|---|---|
Revenues | $ 36.2 | $55.2 | $58.6 | ||||
Operating expenses | 14.1 | 17.0 | 25.5 | ||||
Operating income before income taxes | 22.1 | 38.2 | 33.1 | ||||
Income tax expense | 7.8 | 13.4 | 11.6 | ||||
(Loss) gain on disposal of discontinued operations, net | (23.5) | -- | 7.2 | ||||
(Loss) income from discontinued operations | $ (9.2) | $24.8 | $28.7 | ||||
|
2009 | 2008 | 2007 | |||||
---|---|---|---|---|---|---|---|
Revenues | $ 26.0 | $ 93.0 | $85.6 | ||||
Operating expenses | 3.1 | 59.7 | 39.9 | ||||
Operating income before income taxes | 22.9 | 33.3 | 45.7 | ||||
Income tax expense | 7.5 | 12.9 | 16.9 | ||||
Loss on disposal of discontinued operations, net | (11.8) | (23.5) | -- | ||||
Income (loss) from discontinued operations | $ 3.6 | $ (3.1) | $28.8 | ||||
As a result of continued auction failures, quoted prices for our auction rate securities did not exist as of December 31, We determined that use of a valuation model was the best available technique for measuring the fair value of our auction rate securities. We used an income approach valuation model to estimate the price that would be received in exchange for our auction rate securities in an orderly transaction between market participants ("exit price") as of December 31, While our valuation model was based on both Level 2 (credit quality and interest rates) and Level 3 inputs, we determined that Based on the results of our fair value
LIQUIDITY AND CAPITAL RESOURCES Although our business has historically been very cyclical, we have relied on our cash
|
|
Detailed explanations of our liquidity and capital resources for each of the years in the three-year period ended December 31, Cash Our cash |
2008 | 2007 | 2006 | 2009 | 2008 | 2007 | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Cash flow from continuing operations | $1,140.1 | $1,214.1 | $922.8 | |||||||||||
Cash flows from continuing operations | $1,221.7 | $1,125.4 | $1,211.2 | |||||||||||
Capital expenditures on continuing operations: | ||||||||||||||
New rig construction | $651.5 | $367.7 | $379.9 | $ 623.4 | $ 651.5 | $ 367.7 | ||||||||
Rig enhancements | 33.7 | 65.0 | 92.7 | 153.1 | 33.7 | 65.0 | ||||||||
Minor upgrades and improvements | 86.9 | 86.7 | 55.3 | 84.8 | 86.7 | 86.7 | ||||||||
$ 772.1 | $ 519.4 | $527.9 | $ 861.3 | $ 771.9 | $ 519.4 |
During 2008, cash flows from continuing operations declined by $85.8 million, or 7%, as compared to the prior year. The decline resulted primarily from a $72.3 million net investment in trading securities, a
We continue to expand the size and quality of our drilling rig fleet. During the three-year period ended December 31, Based on our current projections, we expect capital expenditures during |
|
Our long-term debt, total capital and long-term debt to total capital ratios as of December 31, 2009, 2008 |
2008 | 2007 | 2006 | 2009 | 2008 | 2007 | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Long-term debt | $ 274.3 | $ 291.4 | $ 308.5 | $ 257.2 | $ 274.3 | $ 291.4 | ||||||||
Total capital* | 4,951.2 | 4,043.4 | 3,524.5 | 5,756.4 | 4,951.2 | 4,043.4 | ||||||||
Long-term debt to total capital | 5.5% | 7.2% | 8.8% | 4.5% | 5.5% | 7.2% | ||||||||
* | Total capital includes long-term debt plus |
As of December 31, shares. From inception of our Contractual Obligations We have various contractual commitments related to our new rig construction agreements, long-term debt and operating leases. We expect to fund these commitments from our existing cash and cash equivalents and future operating cash |
Payments due by period | Payments due by period | |||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2010 | 2012 | 2011 | 2013 | |||||||||||||||||||
and | and | After | and | and | After | |||||||||||||||||
2009 | 2011 | 2013 | Total | 2010 | 2012 | 2014 | 2014 | Total | ||||||||||||||
New rig construction agreements | $ | 393.5 | $ | 1,009.3 | $ | 202.4 | $ | -- | $ | 1,605.2 | $482.4 | $644.5 | $ -- | $ -- | $1,126.9 | |||||||
Principal payments on long-term debt | 17.2 | 34.4 | 34.4 | 206.7 | 292.7 | 17.2 | 34.4 | 34.4 | 189.5 | 275.5 | ||||||||||||
Interest payments on long-term debt | 18.7 | 34.3 | 30.3 | 158.3 | 241.6 | 17.7 | 32.3 | 28.3 | 144.6 | 222.9 | ||||||||||||
Operating leases | 6.7 | 4.2 | 2.8 | 6.5 | 20.2 | 7.5 | 5.6 | 3.5 | 5.7 | 22.3 | ||||||||||||
Total contractual obligations | $ | 436.1 | $ | 1,082.2 | $ | 269.9 | $ | 371.5 | $ | 2,159.7 | $524.8 | $716.8 | $66.2 | $339.8 | $1,647.6 | |||||||
|
Additionally, our contractual obligations table does not include Liquidity Our liquidity position as of December 31, 2009, 2008 |
2008 | 2007 | 2006 | 2009 | 2008 | 2007 | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Cash and cash equivalents | $789.6 | $629.5 | $565.8 | $1,141.4 | $789.6 | $629.5 | ||||||||
Working capital | 973.0 | 625.8 | 602.3 | 1,167.9 | 973.0 | 625.8 | ||||||||
Current ratio | 3.3 | 2.2 | 2.6 | 3.4 | 3.3 | 2.2 |
57 |
We have net assets and liabilities denominated in numerous foreign currencies and use various methods to manage our exposure to changes in foreign currency exchange We |
|
As of December 31, 2009, we had derivatives outstanding to exchange an aggregate $350.0 million for various other currencies, including $216.6 million for Singapore dollars. If we were to incur a hypothetical 10% adverse change in foreign currency exchange rates, net unrealized losses associated with our foreign currency denominated assets and liabilities and related Auction Rate Securities We have generated a substantial cash To measure the fair value of our auction rate securities as of December 31, CRITICAL ACCOUNTING POLICIES AND ESTIMATES The preparation of financial statements and related disclosures in conformity with |
58 |
As of December 31, We develop and apply property and equipment accounting policies that are designed to appropriately and consistently capitalize those costs incurred to enhance, improve and extend the useful lives of our assets and expense those costs incurred to repair or maintain the existing condition or useful lives of our assets. The development and application of such policies requires estimates, judgments and assumptions by management relative to the nature of, and benefits from, expenditures on our assets. We establish property and equipment accounting policies that are designed to depreciate our assets over their estimated useful lives. The judgments and assumptions used by management in determining the |
|
The useful lives of our drilling rigs are difficult to estimate due to a variety of factors, including technological advances that impact the methods or cost of oil and natural gas exploration and development, changes in market or economic conditions and changes in laws or regulations affecting the drilling industry. We evaluate the remaining useful lives of our rigs on a periodic basis, considering operating condition, functional capability and market and economic factors. Our most recent change in estimated useful lives occurred Our fleet of |
Increase (decrease) in useful lives of our drilling rigs | Increase (decrease) in useful lives of our drilling rigs | Estimated increase (decrease) in depreciation expense that would have been recognized (in millions) | Increase (decrease) in useful lives of our drilling rigs | Estimated increase (decrease) in depreciation expense that would have been recognized (in millions) | ||
---|---|---|---|---|---|---|
10% | $(18.9) | $(22.3) | ||||
20% | (33.3) | (37.9) | ||||
(10%) | 16.3 | 17.0 | ||||
(20%) | 40.1 | 44.1 |
We evaluate the carrying value of our property and equipment, primarily our drilling rigs, when events or changes in circumstances indicate that the carrying value of such rigs may not be recoverable. Generally, extended periods of idle time and/or inability to contract rigs at economical rates are an indication that a rig may be impaired. However, the offshore drilling industry has historically been highly cyclical, and it is not unusual for rigs to be unutilized or underutilized for significant periods of time and subsequently resume full or near full utilization when business cycles change. Likewise, during periods of supply and demand imbalance, rigs are frequently contracted at or near cash break-even rates for extended periods of time until day rates increase when demand comes back into balance with supply. Impairment situations may arise with respect to specific individual rigs, groups of rigs, such as a specific type of drilling rig, or rigs in a certain geographic location. Our rigs are mobile and may generally be moved from markets with excess supply, if economically feasible. Our jackup |
|
If the global economy deteriorates and/or other events or changes in circumstances indicate that the carrying value of one or more drilling rigs may not be recoverable, we will conclude that a triggering event has occurred and perform a recoverability test. If, at the time of the recoverability test, management's judgments and assumptions regarding future industry conditions and operations have diminished, it is reasonably possible that we could conclude that one or more of our drilling rigs are impaired. We test goodwill for impairment on an annual basis or when events or changes in circumstances indicate that a potential impairment exists. The goodwill impairment test requires us to identify reporting units and estimate If the aggregate fair value of our reporting units exceeds our market capitalization, we evaluate the reasonableness of the implied control premium If the estimated fair value of a reporting unit exceeds its carrying value, its goodwill is considered not impaired. If the estimated fair value of a reporting unit is less than its carrying value, we estimate the implied fair value of the reporting unit's goodwill. If the carrying amount of the reporting unit's goodwill exceeds the implied fair value of the goodwill, an impairment loss is recognized in an amount equal to such excess. In the event we dispose of drilling rig operations that constitute a business, goodwill would be allocated in the determination of gain or loss on |
|
Asset impairment evaluations are, by nature, highly subjective. In most instances, they involve expectations of future cash flows to be generated by our drilling rigs, which reflect management's judgments and assumptions regarding future industry conditions and operations, as well as management's estimates of expected utilization, day rates, expense levels and capital requirements. The estimates, judgments and assumptions used by management in the application of our asset impairment policies reflect both historical experience and an assessment of current operational, industry, market, economic and political environments. The use of different estimates, judgments, assumptions and expectations regarding future industry conditions and operations would likely result in materially different asset carrying values |
|
We conduct operations and earn income in numerous The carrying values of deferred income tax assets and liabilities reflect the application of our income tax accounting policies The carrying values of liabilities for income taxes currently payable and unrecognized tax benefits We operate in many Tax returns are routinely subject to audit in most jurisdictions and tax liabilities are |
• | The IRS and HMRC may disagree with our interpretation of tax laws, treaties, or regulations with respect to the redomestication. | |
• | During recent years, the portion of our overall operations conducted in | |
• | In order to utilize tax planning strategies and conduct | |
• | We may conduct future operations in certain tax jurisdictions where tax laws are not well developed, and it may be difficult to secure adequate professional guidance. | |
• | Tax laws, regulations, agreements and treaties change frequently, requiring us to modify existing tax strategies to conform to such changes. |
|
|
|
|
|
|
|
Year Ended December 31, | Year Ended December 31, | |||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2008 | 2007 | 2006 | 2009 | 2008 | 2007 | |||||||||
OPERATING REVENUES | $ | 2,450.4 | $ | 2,088.6 | $ | 1,769.8 | $ | 1,945.9 | $ | 2,393.6 | $ | 2,058.2 | ||
OPERATING EXPENSES | ||||||||||||||
Contract drilling (exclusive of depreciation) | 800.5 | 671.2 | 564.8 | 725.5 | 752.0 | 644.1 | ||||||||
Depreciation | 189.5 | 180.2 | 171.1 | 205.9 | 186.5 | 177.5 | ||||||||
General and administrative | 53.8 | 59.5 | 44.6 | 64.0 | 53.8 | 59.5 | ||||||||
1,043.8 | 910.9 | 780.5 | 995.4 | 992.3 | 881.1 | |||||||||
OPERATING INCOME | 1,406.6 | 1,177.7 | 989.3 | 950.5 | 1,401.3 | 1,177.1 | ||||||||
OTHER INCOME (EXPENSE) | ||||||||||||||
Interest income | 14.0 | 26.3 | 14.9 | |||||||||||
Interest expense, net | -- | (1.9 | ) | (16.5 | ) | |||||||||
Other, net | (18.2 | ) | 13.4 | (4.3 | ) | |||||||||
OTHER INCOME (EXPENSE), NET | 8.8 | (4.2 | ) | 37.8 | ||||||||||
(4.2 | ) | 37.8 | (5.9 | ) | ||||||||||
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES AND CUMULATIVE EFFECT OF ACCOUNTING CHANGE | 1,402.4 | 1,215.5 | 983.4 | |||||||||||
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES | 959.3 | 1,397.1 | 1,214.9 | |||||||||||
PROVISION FOR INCOME TAXES | ||||||||||||||
Current income tax expense | 240.2 | 246.7 | 225.9 | 158.6 | 230.9 | 243.7 | ||||||||
Deferred income tax expense | 2.2 | 1.6 | 17.1 | 19.8 | 6.4 | 1.1 | ||||||||
242.4 | 248.3 | 243.0 | 178.4 | 237.3 | 244.8 | |||||||||
INCOME FROM CONTINUING OPERATIONS | 1,160.0 | 967.2 | 740.4 | 780.9 | 1,159.8 | 970.1 | ||||||||
DISCONTINUED OPERATIONS | ||||||||||||||
Income from discontinued operations, net | 14.3 | 24.8 | 21.5 | 15.4 | 20.4 | 28.8 | ||||||||
(Loss) gain on disposal of discontinued operations, net | (23.5 | ) | -- | 7.2 | ||||||||||
Loss on disposal of discontinued operations, net | (11.8 | ) | (23.5 | ) | -- | |||||||||
(9.2 | ) | 24.8 | 28.7 | 3.6 | (3.1 | ) | 28.8 | |||||||
INCOME BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGE | 1,150.8 | 992.0 | 769.1 | |||||||||||
CUMULATIVE EFFECT OF ACCOUNTING CHANGE FOR ADOPTION OF SFAS 123(R), NET | -- | -- | .6 | |||||||||||
NET INCOME | $ | 1,150.8 | $ | 992.0 | $ | 769.7 | 784.5 | 1,156.7 | 998.9 | |||||
NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS | (5.1 | ) | (5.9 | ) | (6.9 | ) | ||||||||
NET INCOME ATTRIBUTABLE TO ENSCO | $ | 779.4 | $ | 1,150.8 | $ | 992.0 | ||||||||
EARNINGS (LOSS) PER SHARE - BASIC | ||||||||||||||
Continuing operations | $ | 8.19 | $ | 6.59 | $ | 4.86 | $ | 5.45 | $ | 8.06 | $ | 6.52 | ||
Discontinued operations | (.06 | ) | .17 | .19 | .03 | (.02 | ) | .19 | ||||||
Cumulative effect of accounting change | -- | -- | .00 | |||||||||||
$ | 8.13 | $ | 6.76 | $ | 5.06 | |||||||||
$ | 5.48 | $ | 8.04 | $ | 6.71 | |||||||||
EARNINGS (LOSS) PER SHARE - DILUTED | ||||||||||||||
Continuing operations | $ | 8.17 | $ | 6.57 | $ | 4.85 | $ | 5.45 | $ | 8.04 | $ | 6.50 | ||
Discontinued operations | (.06 | ) | .17 | .19 | .03 | (.02 | ) | .19 | ||||||
Cumulative effect of accounting change | -- | -- | .00 | |||||||||||
$ | 8.11 | $ | 6.73 | $ | 5.04 | $ | 5.48 | $ | 8.02 | $ | 6.69 | |||
WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING | ||||||||||||||
NET INCOME ATTRIBUTABLE TO ENSCO SHARES | ||||||||||||||
Basic | 141.6 | 146.7 | 152.2 | $ | 769.7 | $ | 1,138.2 | $ | 984.7 | |||||
Diluted | 141.9 | 147.3 | 152.8 | $ | 769.7 | $ | 1,138.2 | $ | 984.7 | |||||
CASH DIVIDENDS PER COMMON SHARE | $ | .10 | $ | .10 | $ | .10 | ||||||||
WEIGHTED-AVERAGE SHARES OUTSTANDING | ||||||||||||||
Basic | 140.4 | 141.6 | 146.7 | |||||||||||
Diluted | 140.5 | 141.9 | 147.2 | |||||||||||
CASH DIVIDENDS PER SHARE | $ | .10 | $ | .10 | $ | .10 |
The accompanying notes are an integral part of these consolidated financial statements. |
ENSCO INTERNATIONAL PLC AND SUBSIDIARIES |
December 31, | |||||
---|---|---|---|---|---|
2009 | 2008 | ||||
ASSETS | |||||
CURRENT ASSETS | |||||
Cash and cash equivalents | $ | 1,141.4 | $ | 789.6 | |
Accounts receivable, net | 324.6 | 482.7 | |||
Other | 186.8 | 128.6 | |||
Total current assets | 1,652.8 | 1,400.9 | |||
PROPERTY AND EQUIPMENT, AT COST | 6,151.2 | 5,376.3 | |||
Less accumulated depreciation | 1,673.9 | 1,505.0 | |||
Property and equipment, net | 4,477.3 | 3,871.3 | |||
GOODWILL | 336.2 | 336.2 | |||
LONG-TERM INVESTMENTS | 60.5 | 64.2 | |||
OTHER ASSETS, NET | 220.4 | 157.5 | |||
$ | 6,747.2 | $ | 5,830.1 | ||
LIABILITIES AND SHAREHOLDERS' EQUITY | |||||
CURRENT LIABILITIES | |||||
Accounts payable - trade | $ | 159.1 | $ | 195.8 | |
Accrued liabilities and other | 308.6 | 214.9 | |||
Current maturities of long-term debt | 17.2 | 17.2 | |||
Total current liabilities | 484.9 | 427.9 | |||
LONG-TERM DEBT | 257.2 | 274.3 | |||
DEFERRED INCOME TAXES | 377.3 | 340.5 | |||
OTHER LIABILITIES | 120.7 | 103.8 | |||
COMMITMENTS AND CONTINGENCIES | |||||
ENSCO SHAREHOLDERS' EQUITY | |||||
Common stock, U.S. $.10 par value, 250.0 million shares authorized, 181.9 million shares issued as of December 31, 2008 | -- | 18.2 | |||
Class A ordinary shares, U.S. $.10 par value, 250.0 million shares authorized, 150.0 million shares issued as of December 31, 2009 | 15.0 | -- | |||
Class B ordinary shares, £1 par value, 50,000 shares authorized and issued as of December 31, 2009 | .1 | -- | |||
Additional paid-in capital | 602.6 | 1,761.2 | |||
Retained earnings | 4,879.2 | 4,114.0 | |||
Accumulated other comprehensive income (loss) | 5.2 | (17.0 | ) | ||
Treasury shares, at cost, 7.5 million shares and 40.1 million shares | (2.9 | ) | (1,199.5 | ) | |
Total Ensco shareholders' equity | 5,499.2 | 4,676.9 | |||
NONCONTROLLING INTERESTS | 7.9 | 6.7 | |||
Total equity | 5,507.1 | 4,683.6 | |||
$ | 6,747.2 | $ | 5,830.1 | ||
The accompanying notes are an integral part of these consolidated financial statements. |
|
|
December 31, | |||||
---|---|---|---|---|---|
2008 | 2007 | ||||
ASSETS | |||||
CURRENT ASSETS | |||||
Cash and cash equivalents | $ | 789.6 | $ | 629.5 | |
Accounts receivable, net | 482.7 | 383.2 | |||
Other | 128.6 | 116.6 | |||
Total current assets | 1,400.9 | 1,129.3 | |||
PROPERTY AND EQUIPMENT, AT COST | 5,376.3 | 4,704.7 | |||
Less accumulated depreciation | 1,505.0 | 1,345.8 | |||
Property and equipment, net | 3,871.3 | 3,358.9 | |||
GOODWILL | 336.2 | 336.2 | |||
LONG-TERM INVESTMENTS | 64.2 | -- | |||
OTHER ASSETS, NET | 157.5 | 144.4 | |||
$ | 5,830.1 | $ | 4,968.8 | ||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||
CURRENT LIABILITIES | |||||
Accounts payable | $ | 30.0 | $ | 18.8 | |
Accrued liabilities and other | 380.7 | 465.6 | |||
Current maturities of long-term debt | 17.2 | 19.1 | |||
Total current liabilities | 427.9 | 503.5 | |||
LONG-TERM DEBT | 274.3 | 291.4 | |||
DEFERRED INCOME TAXES | 340.5 | 352.0 | |||
OTHER LIABILITIES | 110.5 | 69.9 | |||
COMMITMENTS AND CONTINGENCIES | |||||
STOCKHOLDERS' EQUITY | |||||
Preferred stock, $1 par value, 20.0 million shares authorized | |||||
and none issued | -- | -- | |||
Common stock, $.10 par value, 250.0 million shares authorized, | |||||
181.9 million and 180.3 million shares issued | 18.2 | 18.0 | |||
Additional paid-in capital | 1,761.2 | 1,700.5 | |||
Retained earnings | 4,114.0 | 2,977.5 | |||
Accumulated other comprehensive loss | (17.0 | ) | (4.2 | ) | |
Treasury stock, at cost, 40.1 million shares and 36.4 million shares | (1,199.5 | ) | (939.8 | ) | |
Total stockholders' equity | 4,676.9 | 3,752.0 | |||
$ | 5,830.1 | $ | 4,968.8 | ||
|
ENSCO INTERNATIONAL CONSOLIDATED STATEMENTS OF CASH FLOWS (in millions) |
Year Ended December 31, | Year Ended December 31, | |||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2008 | 2007 | 2006 | 2009 | 2008 | 2007 | |||||||||
OPERATING ACTIVITIES | ||||||||||||||
Net income | $ | 1,150.8 | $ | 992.0 | $ | 769.7 | $ | 784.5 | $ | 1,156.7 | $ | 998.9 | ||
Adjustments to reconcile net income to net cash provided | ||||||||||||||
by operating activities of continuing operations: | ||||||||||||||
Depreciation expense | 189.5 | 180.2 | 171.1 | 205.9 | 186.5 | 177.5 | ||||||||
Share-based compensation expense | 35.5 | 27.3 | 36.9 | |||||||||||
Amortization expense | 32.5 | 10.9 | 8.2 | 31.5 | 32.5 | 10.9 | ||||||||
Share-based compensation expense | 27.3 | 36.9 | 21.9 | |||||||||||
Bad debt expense | 16.2 | 1.4 | .4 | |||||||||||
Unrealized loss on trading securities | 8.1 | -- | -- | |||||||||||
Excess tax benefit from share-based compensation | (5.3 | ) | (6.6 | ) | (3.6 | ) | ||||||||
Deferred income tax expense | 2.2 | 1.6 | 17.1 | 19.8 | 6.4 | 1.1 | ||||||||
Income from discontinued operations, net | (14.3 | ) | (24.8 | ) | (21.5 | ) | (15.4 | ) | (20.4 | ) | (28.8 | ) | ||
Loss (gain) on disposal of discontinued operations, net | 23.5 | -- | (7.2 | ) | ||||||||||
Loss on disposal of discontinued operations, net | 11.8 | 23.5 | -- | |||||||||||
Other | (1.2 | ) | .4 | 6.6 | .3 | 4.3 | (6.2 | ) | ||||||
Changes in operating assets and liabilities: | ||||||||||||||
Increase in accounts receivable | (110.7 | ) | (45.8 | ) | (70.2 | ) | ||||||||
Increase in investments designated as trading securities | (72.3 | ) | -- | -- | ||||||||||
Decrease (increase) in accounts receivable | 185.0 | (110.7 | ) | (45.8 | ) | |||||||||
Decrease (increase) in trading securities | 5.5 | (72.3 | ) | -- | ||||||||||
Increase in other assets | (40.5 | ) | (133.6 | ) | (25.8 | ) | (72.6 | ) | (40.5 | ) | (133.6 | ) | ||
Increase (decrease) in accounts payable | 11.2 | 6.5 | (6.7 | ) | ||||||||||
(Decrease) increase in accrued liabilities and other | (76.9 | ) | 195.0 | 62.8 | ||||||||||
Increase (decrease) in liabilities | 29.9 | (67.9 | ) | 200.3 | ||||||||||
Net cash provided by operating activities of continuing operations | 1,140.1 | 1,214.1 | 922.8 | 1,221.7 | 1,125.4 | 1,211.2 | ||||||||
INVESTING ACTIVITIES | ||||||||||||||
Additions to property and equipment | (772.1 | ) | (519.4 | ) | (527.9 | ) | (861.3 | ) | (771.9 | ) | (519.4 | ) | ||
�� Proceeds from disposal of discontinued operations | 45.1 | -- | 23.7 | |||||||||||
Proceeds from disposal of discontinued operations | 4.9 | 45.1 | -- | |||||||||||
Proceeds from disposition of assets | 5.2 | 7.7 | 2.9 | 2.7 | 5.2 | 7.6 | ||||||||
Net cash used in investing activities | (721.8 | ) | (511.7 | ) | (501.3 | ) | (853.7 | ) | (721.6 | ) | (511.8 | ) | ||
FINANCING ACTIVITIES | ||||||||||||||
Repurchase of common stock | (259.7 | ) | (527.6 | ) | (161.0 | ) | ||||||||
Proceeds from exercise of stock options | 27.3 | 35.8 | 41.8 | |||||||||||
Reduction of long-term borrowings | (19.0 | ) | (165.3 | ) | (17.1 | ) | (17.2 | ) | (19.0 | ) | (165.3 | ) | ||
Cash dividends paid | (14.3 | ) | (14.8 | ) | (15.3 | ) | (14.2 | ) | (14.3 | ) | (14.8 | ) | ||
Excess tax benefit from share-based compensation | 5.3 | 6.6 | 3.6 | |||||||||||
Proceeds from exercise of share options | 9.6 | 27.3 | 35.8 | |||||||||||
Repurchase of shares | (6.5 | ) | (259.7 | ) | (527.6 | ) | ||||||||
Other | (5.9 | ) | 1.5 | .9 | ||||||||||
Net cash used in financing activities | (260.4 | ) | (665.3 | ) | (148.0 | ) | (34.2 | ) | (264.2 | ) | (671.0 | ) | ||
Effect of exchange rate changes on cash and cash equivalents | (15.0 | ) | (.8 | ) | (.2 | ) | .5 | (15.0 | ) | (.8 | ) | |||
Net cash provided by operating activities of discontinued operations | 17.2 | 27.4 | 24.0 | 17.5 | 35.5 | 36.1 | ||||||||
INCREASE IN CASH AND CASH EQUIVALENTS | 160.1 | 63.7 | 297.3 | 351.8 | 160.1 | 63.7 | ||||||||
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR | 629.5 | 565.8 | 268.5 | 789.6 | 629.5 | 565.8 | ||||||||
CASH AND CASH EQUIVALENTS, END OF YEAR | $ | 789.6 | $ | 629.5 | $ | 565.8 | $ | 1,141.4 | $ | 789.6 | $ | 629.5 |
The accompanying notes are an integral part of these consolidated financial statements. 68 |
|
ENSCO INTERNATIONAL |
1. DESCRIPTION OF THE BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
Our contract drilling operations are integral to the exploration, development and production of oil and natural gas. Our business levels and corresponding operating results are significantly affected by worldwide levels of offshore exploration and development spending by oil and gas companies. Redomestication On December 23, 2009, we completed a reorganization of the corporate structure of the group of companies controlled by our predecessor, ENSCO International Incorporated ("Ensco Delaware"), pursuant to which an indirect, wholly-owned subsidiary merged with Ensco Delaware, and Ensco International plc became our publicly-held parent company incorporated under English law (the "redomestication"). In connection with the redomestication, each issued and outstanding share of common stock of Ensco Delaware was converted into the right to receive one American depositary share ("ADS" or "share"), each representing one Class A ordinary share, par value U.S. $0.10 per share, of Ensco International plc. The ADSs are governed by a deposit agreement with Citibank, N.A. as depositary and trade on the New York Stock Exchange (the "NYSE") under the symbol "ESV," the symbol for Ensco Delaware common stock before the redomestication. We are now incorporated under English law as a public limited company and have relocated our principal executive offices to London, England. Unless the context requires otherwise, the terms "Ensco," "Company," "we," "us" and "our" refer to Ensco International plc together with all subsidiaries and predecessors. The redomestication was accounted for as an internal reorganization of entities under common control and, therefore, Ensco Delaware's assets and liabilities were accounted for at their historical cost basis and not revalued in the transaction. We remain subject to the U.S. Securities and Exchange Commission (the "SEC") reporting requirements, the mandates of the Sarbanes-Oxley Act and the applicable corporate governance rules of the NYSE, and we will continue to report our consolidated financial results in U.S. dollars and in accordance with U.S. generally accepted accounting principles ("GAAP"). We also must comply with additional reporting requirements of English law. Principles of Consolidation The accompanying consolidated financial statements include the accounts of Pervasiveness of Estimates The preparation of financial statements in conformity with |
|
|
|
Highly liquid investments with maturities of three months or less at the date of purchase are considered cash equivalents. Highly liquid investments with maturities of greater than three months but less than one year Property and Equipment All costs incurred in connection with the acquisition, construction, enhancement and improvement of assets are capitalized, including allocations of interest incurred during periods that our drilling rigs are under construction or undergoing major enhancements and improvements. Repair and maintenance costs are charged to contract drilling expense in the period in which they occur. Upon sale or retirement of assets, the related cost and accumulated depreciation are removed from the balance sheet and the resulting gain or loss is included in contract drilling expense. Our property and equipment is depreciated on the straight-line method, after allowing for salvage values, over the estimated useful lives of our assets. Drilling rigs and related equipment are depreciated over estimated useful lives ranging from 4 to 30 years. Buildings and improvements are depreciated over estimated useful lives ranging from 2 to 30 years. Other equipment, including computer and communications hardware and software costs, is depreciated over estimated useful lives ranging from 2 to 6 years. We evaluate the carrying value of our property and equipment for impairment when events or changes in circumstances indicate that the carrying value of such assets may not be recoverable. For property and equipment used in our operations, recoverability is generally determined by comparing the net carrying value of an asset to
Goodwill |
|
|
Deepwater | $ | 143.6 | $ | 143.6 | ||||||
Asia Pacific | 84.6 | 84.6 | ||||||||
Europe/Africa | 61.4 | |||||||||
Europe and Africa | 61.4 | |||||||||
North and South America | 46.6 | 46.6 | ||||||||
Total | $ | 336.2 | $ | 336.2 |
We test goodwill for impairment on an annual basis as of December 31 of each year or when events or changes in circumstances indicate that a potential impairment exists. The goodwill impairment test requires us to identify reporting units and estimate
We determined there was no impairment of goodwill as of December 31, Operating Revenues and Expenses Substantially all of our drilling contracts ("contracts") are performed on a day rate basis, and the terms of such contracts are typically for a specific period of time or the period of time required to complete a specific task, such as drill a well. Contract revenues and expenses are recognized on a per day basis, as the work is performed. Day rate revenues are typically earned, and contract drilling expense is typically incurred, on a uniform basis over the terms of our contracts. In connection with some contracts, we receive lump-sum fees or similar compensation for the mobilization of equipment and personnel prior to the commencement of drilling services or the demobilization of equipment and personnel upon contract completion. Fees received for the mobilization or demobilization of equipment and personnel are included in operating revenues. The costs incurred in connection with the mobilization and demobilization of equipment and personnel are included in contract drilling expense. Mobilization fees received and costs incurred are deferred and recognized on a straight-line basis over the period that the related drilling services are performed. Demobilization fees and related costs are recognized as incurred upon contract completion. Costs associated with the mobilization of equipment and personnel to more promising market areas without contracts are expensed as incurred. Deferred mobilization costs were included in other current assets and other assets, net, and totaled |
|
We must obtain certifications from various regulatory bodies in order to operate our drilling rigs and must maintain such certifications through periodic inspections and surveys. The costs incurred in connection with maintaining such certifications, including inspections, tests, surveys and drydock, as well as remedial structural work and other compliance costs, are deferred and amortized over the corresponding certification periods. Deferred regulatory certification and compliance costs were included in other current assets and other assets, net, and totaled In certain countries in which we operate, taxes such as sales, use, value-added, gross receipts and excise may be assessed by the local government on our revenues. We generally record our tax-assessed revenue transactions on a net basis in our consolidated Derivative We use All derivatives are recorded on our consolidated balance sheet at fair value. Accounting for the gains and losses resulting from changes in the fair value of derivatives depends on the use of the derivative and whether it qualifies for hedge Changes in the fair value of derivatives that are designated as hedges of the fair value of recognized assets or liabilities or unrecognized firm commitments ("fair value hedges") are recorded currently in earnings and included in other income (expense), net, in our consolidated statement of income. Changes in the fair value of derivatives that are designated as hedges of the variability in expected future cash flows associated with existing recognized assets or liabilities or forecasted transactions ("cash flow hedges") are recorded in accumulated other comprehensive Gains and losses on a cash flow hedge, or a portion of a cash flow hedge, that no longer |
|
Derivatives with asset fair values are reported in other current assets or other assets, net, depending on maturity date. Derivatives with liability fair values are reported in accrued liabilities and other, or other liabilities depending on maturity date. Income Taxes We conduct operations and earn income in numerous Deferred tax assets and liabilities are recognized for the anticipated future tax effects of temporary differences between the financial statement basis and the tax basis of our assets and liabilities using the enacted tax rates in effect at year-end. A valuation allowance for deferred tax assets is recorded when it is more-likely-than-not that the benefit from the deferred tax asset will not be realized. In many of the Our drilling rigs frequently move from one taxing jurisdiction to another based on where they are contracted to perform drilling services. The movement of drilling rigs among taxing jurisdictions may involve a transfer of drilling rig ownership among our subsidiaries. In some instances, we may determine that certain temporary differences will not result in a taxable or deductible amount in future years, as it is more-likely-than-not we will commence operations and depart from a given taxing jurisdiction without such temporary differences being recovered or settled. Under these circumstances, no future tax consequences are expected and no deferred taxes are recognized in connection with such operations. We evaluate these determinations on a periodic basis and, in the event our expectations relative to future tax consequences change, the applicable deferred taxes are recognized. |
|
|
|
We sponsor several share-based compensation plans that provide equity compensation to our employees, officers and directors. Fair Value Measurements On January 1, 2008, we adopted certain provisions of FASB ASC 820-10 (previously SFAS No. 157, "Fair Value Measurements" Our
See "Note 8 - Fair Value Measurements" for additional information on the fair value measurement of our |
|
|
2008 | 2007 | 2006 | |||||
---|---|---|---|---|---|---|---|
Weighted-average common shares - basic | 141.6 | 146.7 | 152.2 | ||||
Potentially dilutive common shares: | |||||||
Share options | .3 | .5 | .6 | ||||
Non-vested share awards | -- | .1 | .0 | ||||
Weighted-average common shares - diluted | 141.9 | 147.3 | 152.8 | ||||
The following table is a reconciliation of net income attributable to Ensco shares used in |
2009 | 2008 | 2007 | |||||
---|---|---|---|---|---|---|---|
Net income attributable to Ensco | $779.4 | $1,150.8 | $992.0 | ||||
Net income allocated to non-vested share awards | (9.7 | ) | (12.6 | ) | (7.3 | ) | |
Net income attributable to Ensco shares | $769.7 | $1,138.2 | $984.7 | ||||
|
2009 | 2008 | 2007 | |||||
---|---|---|---|---|---|---|---|
Weighted-average shares - basic | 140.4 | 141.6 | 146.7 | ||||
Potentially dilutive share options | .1 | .3 | .5 | ||||
Weighted-average shares - diluted | 140.5 | 141.9 | 147.2 | ||||
Noncontrolling interests are classified as equity on our
|
|
|
2009 | 2008 | 2007 | |||||
---|---|---|---|---|---|---|---|
Income from continuing operations | $780.9 | $1,159.8 | $970.1 | ||||
Income from continuing operations attributable to noncontrolling interests | (5.1 | ) | (5.9 | ) | (6.9 | ) | |
Income from continuing operations attributable to Ensco | $775.8 | $1,153.9 | $963.2 | ||||
2. PROPERTY AND EQUIPMENT Property and equipment as of December 31, 2009 and 2008 consisted of the following (in millions): |
2009 | 2008 | ||||
---|---|---|---|---|---|
Drilling rigs and equipment | $ | 4,801.1 | $ | 3,829.8 | |
Other | 47.0 | 45.5 | |||
Work in progress | 1,303.1 | 1,501.0 | |||
$ | 6,151.2 | $ | 5,376.3 | ||
As of December 31, 2009 and 2008, we held $66.8 million and $72.3 million (par value), respectively, of long-term debt instruments with variable interest rates that periodically reset through an auction process ("auction rate securities"). Our auction rate securities were originally acquired in January 2008 and have final maturity dates ranging from 2025 to 2047. Auctions for our auction rate securities |
|
Our investments in auction rate securities as of December 31,
|
|
Upon acquisition in January 2008, we designated our auction rate securities as trading securities Our auction rate securities were measured at fair value as of December 31, 2009 and 2008, and
|
2008 | 2007 | ||||
---|---|---|---|---|---|
Drilling rigs and equipment | $ | 3,829.8 | $ | 3,816.4 | |
Other | 45.5 | 40.4 | |||
Work in progress | 1,501.0 | 847.9 | |||
$ | 5,376.3 | $ | 4,704.7 | ||
4. LONG-TERM DEBT Long-term debt as of December 31, |
2008 | 2007 | 2009 | 2008 | |||||||
---|---|---|---|---|---|---|---|---|---|---|
7.20% Debentures due 2027 | $148.9 | $148.8 | ||||||||
6.36% Bonds due 2015 | 76.0 | 88.7 | ||||||||
4.65% Bonds due 2020 | $ 54.0 | $ 58.5 | 49.5 | 54.0 | ||||||
6.36% Bonds due 2015 | 88.7 | 101.4 | ||||||||
7.20% Debentures due 2027 | 148.8 | 148.7 | ||||||||
Other | -- | 1.9 | ||||||||
291.5 | 310.5 | 274.4 | 291.5 | |||||||
Less current maturities | (17.2 | ) | (19.1 | ) | (17.2 | ) | (17.2 | ) | ||
Total long-term debt | $274.3 | $291.4 | $257.2 | $274.3 |
|
|
In November 1997, Bonds Due 2015 and 2020 In January 2001, a subsidiary of Ensco Delaware issued $190.0 million of 15-year bonds to provide long-term financing for ENSCO 7500. The bonds will be repaid in 30 equal semiannual principal installments of $6.3 million ending in December 2015. Interest on the bonds is payable semiannually, in June and December, at a fixed rate of 6.36%. In October 2003, a subsidiary of Ensco Delaware issued $76.5 million of 17-year bonds to provide long-term financing for ENSCO 105. The bonds will be repaid in 34 equal semiannual principal installments of $2.3 million ending in October 2020. Interest on the bonds is payable semiannually, in April and October, at a fixed rate of 4.65%. Both bond issuances are guaranteed by the United States of America, acting by and through the United States Department of Transportation, Maritime Administration ("MARAD"), and Ensco Delaware issued separate guaranties to MARAD, guaranteeing the performance of obligations under the bonds. On February 19, 2010, the documents governing MARAD's guarantee commitments were amended to address certain changes arising from the redomestication and to include Ensco International plc as an additional guarantor of the debt obligations. Revolving Credit Facility Advances under the Credit Facility bear interest at LIBOR plus an applicable margin rate (currently .35% per annum), depending on our credit rating. We pay a facility fee (currently .10% per annum) on the total $350.0 million commitment, which is also based on our credit rating, and pay an additional utilization fee on outstanding advances if such advances equal or exceed 50% of the total $350.0 million commitment. We had no amounts outstanding under the Credit Facility as of December 31, Maturities The aggregate maturities of our long-term debt, excluding unamortized discounts of |
2010 | $ | 17.2 | |||
2011 | 17.2 | ||||
2012 | 17.2 | ||||
2013 | 17.2 | ||||
2014 | 17.2 | ||||
Thereafter | 189.5 | ||||
Total | $ | 275.5 | |||
|
2009 | $ | 17.2 | |||
2010 | 17.2 | ||||
2011 | 17.2 | ||||
2012 | 17.2 | ||||
2013 | 17.2 | ||||
Thereafter | 206.7 | ||||
Total | $ | 292.7 | |||
78 |
On January 1, 2009, we adopted certain disclosure provisions of FASB ASC 815-10-50 (previously SFAS No. 161, "Disclosures about Derivative Instruments and Hedging Activities"). These provisions require enhanced disclosures about (a) how and why an entity uses derivative instruments, (b) how derivative instruments and related hedged items are accounted for under FASB ASC 815 (previously SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities") and (c) how derivative instruments and related hedged items affect an entity's financial position, operating results and cash flows. We use derivatives to reduce our exposure to various market risks, primarily foreign currency exchange rate risk. We maintain a foreign currency risk management strategy that utilizes derivatives to reduce our exposure to unanticipated fluctuations in earnings and cash flows caused by changes in foreign currency exchange rates. Although no interest rate related derivative instruments were outstanding as of December 31, 2009 and 2008, we occasionally employ an interest rate risk management strategy that utilizes derivative instruments to minimize or eliminate unanticipated fluctuations in earnings and cash flows arising from changes in, and volatility of, interest rates. We minimize our credit risk relating to the counterparties of our derivatives by transacting with multiple, high-quality financial institutions, thereby limiting exposure to individual counterparties, and by monitoring the financial condition of our counterparties. We do not enter into derivatives for trading or other speculative purposes. All derivatives were recorded on our consolidated balance sheets at fair value. Accounting for the gains and losses resulting from changes in the fair value of derivatives depends on the use of the derivative and whether it qualifies for hedge accounting. See "Note 1 - Description of the Business and Summary of Significant Accounting Policies" for additional information on how derivatives are accounted for under FASB ASC 815. As of December 31, 2009 and 2008, our consolidated balance sheets included net foreign currency derivative assets of $13.2 million and net foreign currency derivative liabilities of $20.3 million, respectively. See "Note 8 - Fair Value Measurements" for additional information on the fair value measurement of our derivatives. Derivatives recorded at fair value on our consolidated balance sheets as of December 31, 2009 and 2008 consisted of the following (in millions): |
Assets | Liabilities | |||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2009 | 2008 | 2009 | 2008 | |||||||||||||||||
Derivatives Designated as Hedging Instruments | ||||||||||||||||||||
Foreign currency forward contracts - current(1) | $10.2 | $ .3 | $1.1 | $25.8 | ||||||||||||||||
Foreign currency forward contracts - non-current(2) | 3.8 | 5.1 | -- | .0 | ||||||||||||||||
14.0 | 5.4 | 1.1 | 25.8 | |||||||||||||||||
Derivatives not Designated as Hedging Instruments | ||||||||||||||||||||
Foreign currency forward contracts - current(1) | .3 | .1 | .0 | .0 | ||||||||||||||||
.3 | .1 | .0 | .0 | |||||||||||||||||
Total | $14.3 | $5.5 | $1.1 | $25.8 | ||||||||||||||||
(1) | Derivative assets and liabilities that have maturity dates equal to or less than twelve months from the respective balance sheet dates were included in other current assets and accrued liabilities and other, respectively, on our consolidated balance sheets. |
(2) | Derivative assets and liabilities that have maturity dates greater than twelve months from the respective balance sheet dates were included in other assets, net, and other liabilities, respectively, on our consolidated balance sheets. |
|
Gains and losses on derivatives designated as cash flow hedges included in our consolidated statements of income for each of the years in the three-year period ended December 31, 2009 were as follows (in millions): |
Gain (Loss) Recognized in Other Comprehensive Income (Loss) ("OCI") on Derivatives (Effective Portion) | (Loss) Gain Reclassified from AOCI into Income (Effective Portion) | (Loss) Gain Recognized in Income on Derivatives (Ineffective Portion and Amount Excluded from Effectiveness Testing)(1) | |||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2009 | 2008 | 2007 | 2009 | 2008 | 2007 | 2009 | 2008 | 2007 | |||||||||
Foreign currency forward contracts(2) | $13.5 | $(16.4) | $8.2 | $(8.0) | $(2.9) | $ 7.9 | $(2.9) | $(1.0) | $ .7 | ||||||||
Interest rate lock contracts(3) | -- | -- | -- | (.7) | (.7) | (1.0) | -- | -- | -- | ||||||||
Total | $13.5 | $(16.4) | $8.2 | $(8.7) | $(3.6) | $ 6.9 | $(2.9) | $(1.0) | $ .7 | ||||||||
(1) | Gains and losses recognized in income for ineffectiveness and amounts excluded from effectiveness testing were included in other income (expense), net, in our consolidated statements of income. |
(2) | Gains and losses on derivative instruments reclassified from AOCI into income (effective portion) were included in contract drilling expense in our consolidated statements of income. |
(3) | Losses on derivatives reclassified from AOCI into income (effective portion) were included in other income (expense), net, in our consolidated statements of income. |
|
|
If we were to incur a hypothetical 10% adverse change in foreign currency exchange rates, net unrealized losses associated with our foreign currency denominated assets and liabilities and related As of December 31, |
Net unrealized losses to be reclassified to contract drilling expense | $ | 15.1 | |
Net unrealized losses to be reclassified to interest expense | .6 | ||
Net unrealized losses to be reclassified to earnings | $ | 15.7 | |
Net gains to be reclassified to contract drilling expense | $ | 3.9 | |
Net losses to be reclassified to other income (expense), net | (.6 | ) | |
Net gains to be reclassified to earnings | $ | 3.3 | |
6. COMPREHENSIVE INCOME Accumulated other comprehensive |
2008 | 2007 | 2006 | 2009 | 2008 | 2007 | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Net Income | $ | 1,150.8 | $ | 992.0 | $ | 769.7 | $784.5 | $1,156.7 | $ 998.9 | |||||
Other comprehensive income: | ||||||||||||||
Net change in fair value of derivatives | (16.4) | 8.2 | 5.8 | 13.5 | (16.4) | 8.2 | ||||||||
Reclassification of unrealized gains and losses on derivatives from other comprehensive loss (income) into net income | 3.6 | (6.9 | ) | (.4 | ) | |||||||||
Reclassification of unrealized gains and losses on derivative instruments from other comprehensive loss (income) into net income | 8.7 | 3.6 | (6.9) | |||||||||||
Net other comprehensive (loss) income | (12.8 | ) | 1.3 | 5.4 | ||||||||||
Net other comprehensive income (loss) | 22.2 | (12.8) | 1.3 | |||||||||||
Comprehensive income | $ | 1,138.0 | $ | 993.3 | $ | 775.1 | 806.7 | 1,143.9 | 1,000.2 | |||||
Comprehensive income attributable to noncontrolling interests | (5.1) | (5.9) | (6.9) | |||||||||||
Comprehensive income attributable to Ensco | $801.6 | $1,138.0 | $ 993.3 | |||||||||||
In Prior to the redomestication, Ensco Delaware retired 40.2 million treasury shares with a historical cost totaling $1,203.9 million under authorization from our Board of
|
|
|
Accumulated | Accumulated | |||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Additional | Other | Other | ||||||||||||||||||||||||||||
Common Stock | Paid-In | Retained | Comprehensive | Treasury | Additional | Comprehensive | ||||||||||||||||||||||||
Shares | Amounts | Capital | Earnings | Loss | Stock | Paid-In | Retained | Income | Treasury | Noncontrolling | ||||||||||||||||||||
Shares | Par Value | Capital | Earnings | (Loss) | Shares | Interest | ||||||||||||||||||||||||
BALANCE, December 31, 2005 | 176.8 | $17.7 | $1,554.9 | $1,229.5 | $(10.9 | ) | $ (251.2 | ) | ||||||||||||||||||||||
Cumulative effect of adoption of SAB 108 | -- | -- | -- | 10.6 | -- | -- | ||||||||||||||||||||||||
Cumulative effect of adoption of SFAS 123(R) | -- | -- | (.8 | ) | -- | -- | -- | |||||||||||||||||||||||
Net income | -- | -- | -- | 769.7 | -- | -- | ||||||||||||||||||||||||
Cash dividends paid | -- | -- | -- | (15.3 | ) | -- | -- | |||||||||||||||||||||||
Common stock issued under | ||||||||||||||||||||||||||||||
share-based compensation | ||||||||||||||||||||||||||||||
plans, net | 1.9 | .2 | 41.7 | -- | -- | -- | ||||||||||||||||||||||||
Tax benefit from share-based | ||||||||||||||||||||||||||||||
compensation | -- | -- | 3.6 | -- | -- | -- | ||||||||||||||||||||||||
Repurchase of common stock | -- | -- | -- | -- | -- | (161.0 | ) | |||||||||||||||||||||||
Share-based compensation expense | -- | -- | 21.9 | -- | -- | -- | ||||||||||||||||||||||||
Net other comprehensive income | -- | -- | -- | -- | 5.4 | -- | ||||||||||||||||||||||||
BALANCE, December 31, 2006 | 178.7 | 17.9 | 1,621.3 | 1,994.5 | (5.5 | ) | (412.2 | ) | 178.7 | $17.9 | $1,621.3 | $1,994.5 | $ (5.5) | $ (412.2) | $ 3.4 | |||||||||||||||
Cumulative effect of adoption of FIN 48 | -- | -- | -- | 5.8 | -- | -- | -- | -- | -- | 5.8 | -- | -- | -- | |||||||||||||||||
Net income | -- | -- | -- | 992.0 | -- | -- | -- | -- | -- | 992.0 | -- | -- | 6.9 | |||||||||||||||||
Cash dividends paid | -- | -- | -- | (14.8 | ) | -- | -- | -- | -- | -- | (14.8 | ) | -- | -- | -- | |||||||||||||||
Common stock issued under | ||||||||||||||||||||||||||||||
share-based compensation | ||||||||||||||||||||||||||||||
Distributions to noncontrolling interests | -- | -- | -- | -- | -- | -- | (5.7) | |||||||||||||||||||||||
Shares issued under share-based compensation | ||||||||||||||||||||||||||||||
plans, net | 1.6 | .1 | 35.7 | -- | -- | -- | 1.6 | .1 | 35.7 | -- | -- | -- | -- | |||||||||||||||||
Tax benefit from share-based | ||||||||||||||||||||||||||||||
compensation | -- | -- | 6.6 | -- | -- | -- | -- | -- | 6.6 | -- | -- | -- | -- | |||||||||||||||||
Repurchase of common stock | -- | -- | -- | -- | -- | (527.6 | ) | |||||||||||||||||||||||
Share-based compensation expense | -- | -- | 36.9 | -- | -- | -- | ||||||||||||||||||||||||
Repurchase of shares | -- | -- | -- | -- | -- | (527.6) | -- | |||||||||||||||||||||||
Share-based compensation cost | -- | -- | 36.9 | -- | -- | -- | -- | |||||||||||||||||||||||
Net other comprehensive income | -- | -- | -- | -- | 1.3 | -- | -- | -- | -- | -- | 1.3 | -- | -- | |||||||||||||||||
BALANCE, December 31, 2007 | 180.3 | 18.0 | 1,700.5 | 2,977.5 | (4.2 | ) | (939.8 | ) | 180.3 | 18.0 | 1,700.5 | 2,977.5 | (4.2) | (939.8) | 4.6 | |||||||||||||||
Net income | -- | -- | -- | 1,150.8 | -- | -- | -- | -- | -- | 1,150.8 | -- | -- | 5.9 | |||||||||||||||||
Cash dividends paid | -- | -- | -- | (14.3 | ) | -- | -- | -- | -- | -- | (14.3 | ) | -- | -- | -- | |||||||||||||||
Common stock issued under | ||||||||||||||||||||||||||||||
share-based compensation | ||||||||||||||||||||||||||||||
Distributions to noncontrolling interests | -- | -- | -- | -- | -- | -- | (3.8) | |||||||||||||||||||||||
Shares issued under share-based compensation | ||||||||||||||||||||||||||||||
plans, net | 1.6 | .2 | 27.1 | -- | -- | -- | 1.6 | .2 | 27.1 | -- | -- | -- | -- | |||||||||||||||||
Tax benefit from share-based | ||||||||||||||||||||||||||||||
compensation | -- | -- | 5.3 | -- | -- | -- | -- | -- | 5.3 | -- | -- | -- | -- | |||||||||||||||||
Repurchase of common stock | -- | -- | -- | -- | -- | (259.7 | ) | |||||||||||||||||||||||
Share-based compensation expense | -- | -- | 28.3 | -- | -- | -- | ||||||||||||||||||||||||
Repurchase of shares | -- | -- | -- | -- | -- | (259.7) | -- | |||||||||||||||||||||||
Share-based compensation cost | -- | -- | 28.3 | -- | -- | -- | -- | |||||||||||||||||||||||
Net other comprehensive loss | -- | -- | -- | -- | (12.8 | ) | -- | -- | -- | -- | -- | (12.8) | -- | -- | ||||||||||||||||
BALANCE, December 31, 2008 | 181.9 | $18.2 | $1,761.2 | $4,114.0 | $(17.0 | ) | $(1,199.5 | ) | 181.9 | 18.2 | 1,761.2 | 4,114.0 | (17.0) | (1,199.5) | 6.7 | |||||||||||||||
Net income | -- | -- | -- | 779.4 | -- | -- | 5.1 | |||||||||||||||||||||||
Cash dividends paid | -- | -- | -- | (14.2 | ) | -- | -- | -- | ||||||||||||||||||||||
Distributions to noncontrolling interests | -- | -- | -- | -- | -- | -- | (3.9) | |||||||||||||||||||||||
Shares issued under share-based compensation | ||||||||||||||||||||||||||||||
plans, net | .9 | .1 | 9.5 | -- | -- | -- | -- | |||||||||||||||||||||||
Tax deficiency from share-based | ||||||||||||||||||||||||||||||
compensation | -- | -- | (2.4) | -- | -- | -- | -- | |||||||||||||||||||||||
Repurchase of shares | -- | -- | -- | -- | -- | (6.5) | -- | |||||||||||||||||||||||
Retirement of treasury shares | (40.2) | (4.0) | (1,200.0) | -- | -- | 1,203.9 | -- | |||||||||||||||||||||||
Share-based compensation cost | -- | -- | 34.3 | -- | -- | -- | -- | |||||||||||||||||||||||
Net other comprehensive income | -- | -- | -- | -- | 22.2 | -- | -- | |||||||||||||||||||||||
Cancellation of shares of common stock during redomestication | (142.6) | (14.3) | -- | -- | -- | -- | -- | |||||||||||||||||||||||
Issuance of ordinary shares pursuant to the redomestication | 150.1 | 15.1 | -- | -- | -- | (.8) | -- | |||||||||||||||||||||||
BALANCE, December 31, 2009 | 150.1 | $ 15.1 | $ 602.6 | $4,879.2 | $ 5.2 | $ (2.9) | $ 7.9 | |||||||||||||||||||||||
|
|
|
Quoted Prices in | Significant | Quoted Prices in | Significant | |||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Active Markets | Other | Significant | Active Markets | Other | Significant | |||||||||||||||||||||||
for | Observable | Unobservable | for | Observable | Unobservable | |||||||||||||||||||||||
Identical Assets | Inputs | Identical Assets | Inputs | Inputs | ||||||||||||||||||||||||
(Level 1) | (Level 2) | (Level 3) | Total | (Level 1) | (Level 2) | (Level 3) | Total | |||||||||||||||||||||
As of December 31, 2008 | ||||||||||||||||||||||||||||
As of December 31, 2009 | ||||||||||||||||||||||||||||
Auction rate securities | $ -- | $ -- | $64.2 | $64.2 | $ -- | $ -- | $60.5 | $60.5 | ||||||||||||||||||||
Supplemental executive retirement plan assets | 18.7 | -- | -- | 18.7 | ||||||||||||||||||||||||
Derivatives, net | -- | 13.2 | -- | 13.2 | ||||||||||||||||||||||||
Total financial assets | $ -- | $ -- | $64.2 | $64.2 | $18.7 | $13.2 | $60.5 | $92.4 | ||||||||||||||||||||
Derivative instruments, net | $ -- | $20.3 | $ -- | $20.3 | ||||||||||||||||||||||||
As of December 31, 2008 | ||||||||||||||||||||||||||||
Total financial liabilities | $ -- | $20.3 | $ -- | $20.3 | ||||||||||||||||||||||||
As of December 31, 2007 | ||||||||||||||||||||||||||||
Derivative instruments, net | $ -- | $ 4.6 | $ -- | $ 4.6 | ||||||||||||||||||||||||
Auction rate securities | $ -- | $ -- | $64.2 | $64.2 | ||||||||||||||||||||||||
Supplemental executive retirement plan assets | 13.9 | -- | -- | 13.9 | ||||||||||||||||||||||||
Total financial assets | $ -- | $ 4.6 | $ -- | $ 4.6 | $13.9 | $ -- | $64.2 | $78.1 | ||||||||||||||||||||
Derivatives, net | $ -- | $20.3 | $ -- | $20.3 | ||||||||||||||||||||||||
Total financial liabilities | $ -- | $20.3 | $ -- | $20.3 | ||||||||||||||||||||||||
|
As of December 31, 2009 and 2008, we held long-term debt instruments with variable interest rates that periodically reset through an auction process totaling $66.8 million and $72.3 million (par value), respectively. These auction rate securities were classified as long-term investments on our consolidated balance sheets. Our auction rate securities were originally acquired in January 2008 and have maturity dates ranging from 2025 to 2047. Our auction rate securities were measured at fair value on a recurring basis using significant Level 3 inputs as of December 31, 2009 and 2008. |
2009 | 2008 | ||||
---|---|---|---|---|---|
Beginning Balance | $64.2 | $ -- | |||
(Sales) purchases, net | (5.5) | 72.3 | |||
Unrealized gains (losses)* | 1.8 | (8.1) | |||
Realized losses | -- | -- | |||
Transfers in and/or out of Level 3 | -- | -- | |||
Ending balance | $60.5 | $64.2 | |||
Unrealized |
|
We determined that use of a valuation model was the best available technique for measuring the fair value of our auction rate securities. We used an income approach valuation model to estimate the price that would be received in exchange for our auction rate securities in an orderly transaction between market participants ("exit price") as of December 31, While our valuation model was based on both Level 2 (credit quality and interest rates) and Level 3 inputs, we determined that our Level 3 inputs were Supplemental Executive Retirement Plan Assets and Liabilities The ENSCO Supplemental Executive Retirement Plans (the "SERP") are non-qualified plans where eligible employees and non-employee directors may defer a portion of their compensation for use after retirement. Assets held in the SERP were marketable securities measured at fair value on a recurring basis using Level 1 inputs and were included in other assets, net, on our consolidated balance sheets as of December 31, 2009 and 2008. The fair value measurement of assets held in the SERP was based on quoted market prices. Derivatives Our derivatives were measured at fair value on a recurring basis using Level 2 inputs as of December 31, 2009 and 2008. See "Note 5 - Derivative Instruments" for additional information on our derivatives, including a description of our foreign currency hedging activities and related methodologies used to manage foreign currency exchange rate risk. The fair value measurement of our derivatives was based on market prices that are generally observable for similar assets or liabilities at commonly quoted intervals. Other Financial Instruments The carrying values and estimated fair values of our debt instruments as of December 31, 2009 and 2008 were as follows (in millions): |
December 31, | December 31, | ||||||||
---|---|---|---|---|---|---|---|---|---|
2009 | 2008 | ||||||||
Estimated | Estimated | ||||||||
Carrying | Fair | Carrying | Fair | ||||||
Value | Value | Value | Value | ||||||
7.20% Debentures | $148.9 | $155.9 | $148.8 | $140.3 | |||||
6.36% Bonds, including current maturities | 76.0 | 85.8 | 88.7 | 103.9 | |||||
4.65% Bonds, including current maturities | 49.5 | 53.8 | 54.0 | 62.1 |
|
9.
|
|
|
2008 | 2007 | 2006 | |||||
---|---|---|---|---|---|---|---|
Contract drilling | $ 3.3 | $ 5.8 | $ 6.5 | ||||
General and administrative | 5.0 | 7.8 | 8.7 | ||||
Share option compensation expense included in | |||||||
operating expenses | 8.3 | 13.6 | 15.2 | ||||
Tax benefit | (2.3) | (3.8) | (4.2) | ||||
Total share option compensation expense included | |||||||
in net income | $ 6.0 | $ 9.8 | $11.0 | ||||
|
2007 | 2006 | ||||||
---|---|---|---|---|---|---|---|
Risk-free interest rate | 4.8 | % | 4.9 | % | |||
Expected term (in years) | 4.7 | 4.8 | |||||
Expected volatility | 29.8 | % | 35.4 | % | |||
Dividend yield | .2 | % | .2 | % |
|
|
|
Weighted- | Weighted- | ||||||||
---|---|---|---|---|---|---|---|---|---|
Average | Average | ||||||||
Exercise | Contractual | Intrinsic | |||||||
Share Options | Shares | Price | Term | Value | |||||
Outstanding as of January 1, 2008 | 2,495 | $43 | .37 | ||||||
Granted | -- | -- | |||||||
Exercised | (739 | ) | 36 | .94 | |||||
Forfeited | (212 | ) | 52 | .79 | |||||
Outstanding as of December 31, 2008 | 1,544 | $45 | .15 | 3 | .7 | $326 | |||
Exercisable as of December 31, 2008 | 806 | $39 | .83 | 3 | .0 | $326 | |||
|
2008 | 2007 | 2006 | |||||
---|---|---|---|---|---|---|---|
Weighted-average grant-date fair value of | |||||||
share options granted (per share) | $ -- | $20.44 | $18.54 | ||||
Intrinsic value of share options exercised during | |||||||
the year (in millions) | $25.5 | $30.0 | $28.9 |
|
Options Outstanding | Options Exercisable | ||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Weighted-Average | |||||||||||
Number | Remaining | Weighted-Average | Number | Weighted-Average | |||||||
Exercise Prices | Outstanding | Contractual Life | Exercise Price | Exercisable | Exercise Price | ||||||
$23.12 - $27.85 | 302 | .6 years | $27.31 | 302 | $27.31 | ||||||
31.22 - 33.55 | 208 | 3.3 years | 33.41 | 103 | 33.26 | ||||||
43.64 - 47.12 | 280 | 4.4 years | 46.50 | 178 | 46.43 | ||||||
50.09 - 60.74 | 754 | 4.9 years | 55.01 | 223 | 54.53 | ||||||
1,544 | 3.7 years | $45.15 | 806 | $39.83 | |||||||
|
|
Under the LTIP, During |
|
|
2008 | 2007 | 2006 | 2009 | 2008 | 2007 | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Contract drilling | $11.4 | $ 5.5 | $2.7 | $16.8 | $11.4 | $ 5.5 | ||||||||
General and administrative | 7.6 | 17.5 | 4.0 | 11.4 | 7.6 | 17.5 | ||||||||
Non-vested share award compensation expense | ||||||||||||||
Non-vested share award related compensation expense | ||||||||||||||
included in operating expenses | 19.0 | 23.0 | 6.7 | 28.2 | 19.0 | 23.0 | ||||||||
Tax benefit | (4.7 | ) | (7.1 | ) | (2.0 | ) | (7.0 | ) | (4.7 | ) | (7.1 | ) | ||
Total non-vested share award compensation | ||||||||||||||
Total non-vested share award related compensation | ||||||||||||||
expense included in net income | $14.3 | $15.9 | $4.7 | $21.2 | $14.3 | $15.9 | ||||||||
The following table summarizes the value of non-vested share awards granted and vested during each of the years in the three-year period ended December 31, |
2008 | 2007 | 2006 | 2009 | 2008 | 2007 | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Weighted-average grant-date fair value of | ||||||||||||||
non-vested share awards granted (per share) | $67.99 | $60.18 | $49.09 | $40.91 | $67.99 | $60.18 | ||||||||
Total fair value of non-vested share awards | ||||||||||||||
vested during the period (in millions) | $ 17.9 | $ 19.8 | $ 4.8 | $18.6 | $17.9 | $19.8 |
|
|
Weighted- | Weighted- | |||||||||
---|---|---|---|---|---|---|---|---|---|---|
Average | Average | |||||||||
Grant-Date | Grant-Date | |||||||||
Non-Vested Share Award | Shares | Fair Value | ||||||||
Shares | Fair Value | |||||||||
Non-vested as of January 1, 2008 | 1,153 | $50.11 | ||||||||
Non-vested as of January 1, 2009 | 1,755 | $60.27 | ||||||||
Granted | 970 | 67.99 | 613 | 40.91 | ||||||
Vested | (262 | ) | 49.99 | (495 | ) | 58.89 | ||||
Forfeited | (106 | ) | 45.70 | (62 | ) | 56.94 | ||||
Non-vested as of December 31, 2008 | 1,755 | $60.27 | ||||||||
Non-vested as of December 31, 2009 | 1,811 | $54.21 |
As of December 31, |
|
Share Option Awards Under the LTIP, share option awards ("options") may be issued to our officers, non-employee directors and key employees who are in a position to contribute materially to our growth, development and long-term success. A maximum 7.5 million shares were reserved for issuance as options under the LTIP. Options granted to officers and employees generally become exercisable in 25% increments over a four-year period or 33% increments over a three-year period and, to the extent not exercised, expire on the seventh anniversary of the date of grant. Options granted to non-employee directors are immediately exercisable and, to the extent not exercised, expire on the seventh anniversary of the date of grant. The exercise price of options granted under the LTIP equals the market value of the underlying shares on the date of grant. As of December 31, 2009, options to purchase 1.2 million shares were outstanding under the LTIP and 5.3 million shares were available for issuance as options. Upon option exercise, new shares may be issued or shares may be issued out of treasury at the Company's discretion. The following table summarizes option related compensation expense recognized during each of the years in the three-year period ended December 31, 2009 (in millions): |
2009 | 2008 | 2007 | |||||
---|---|---|---|---|---|---|---|
Contract drilling | $ 1.7 | $ 3.3 | $ 5.8 | ||||
General and administrative | 3.7 | 5.0 | 7.8 | ||||
Option related compensation expense included in | |||||||
operating expenses | 5.4 | 8.3 | 13.6 | ||||
Tax benefit | (1.6) | (2.3) | (3.8) | ||||
Total option related compensation expense included | |||||||
in net income | $ 3.8 | $ 6.0 | $ 9.8 | ||||
|
2009 | 2008 | 2007 | |||||
---|---|---|---|---|---|---|---|
Risk-free interest rate | 1.8 | % | -- | 4.8 | % | ||
Expected term (in years) | 3.9 | -- | 4.7 | ||||
Expected volatility | 53.3 | % | -- | 29.8 | % | ||
Dividend yield | .2 | % | -- | .2 | % |
|
|
|
Weighted- | Weighted- | ||||||||
---|---|---|---|---|---|---|---|---|---|
Average | Average | ||||||||
Exercise | Contractual | Intrinsic | |||||||
Shares | Price | Term | Value | ||||||
Outstanding as of January 1, 2009 | 1,544 | $45 | .15 | ||||||
Granted | 115 | 41 | .29 | ||||||
Exercised | (344 | ) | 28 | .03 | |||||
Forfeited | (48 | ) | 52 | .06 | |||||
Expired | (54 | ) | 53 | .60 | |||||
Outstanding as of December 31, 2009 | 1,213 | $48 | .98 | 3 | .8 | $1,043 | |||
Exercisable as of December 31, 2009 | 794 | $47 | .87 | 3 | .4 | $1,043 | |||
The following table summarizes the value of options granted and exercised during each of the years in the three-year period ended December 31, 2009: |
2009 | 2008 | 2007 | |||||
---|---|---|---|---|---|---|---|
Weighted-average grant-date fair value of | |||||||
options granted (per share) | $17.17 | $ -- | $20.44 | ||||
Intrinsic value of options exercised during | |||||||
the year (in millions) | $ 3.6 | $25.5 | $30.0 |
|
Options Outstanding | Options Exercisable | ||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Weighted-Average | |||||||||||
Number | Remaining | Weighted-Average | Number | Weighted-Average | |||||||
Exercise Prices | Outstanding | Contractual Life | Exercise Price | Exercisable | Exercise Price | ||||||
$23.12 - $33.55 | 163 | 2.4 years | $33.54 | 163 | $33.54 | ||||||
41.29 - 47.12 | 381 | 4.2 years | 45.10 | 228 | 46.48 | ||||||
50.09 - 52.82 | 369 | 3.5 years | 50.31 | 243 | 50.32 | ||||||
57.38 - 60.74 | 300 | 4.4 years | 60.67 | 160 | 60.69 | ||||||
1,213 | 3.8 years | $48.98 | 794 | $47.87 | |||||||
As of December 31, 2009, there was $4.7 million of total unrecognized compensation cost related to options, which is expected to be recognized over a weighted-average period of 1.5 years. |
|
On November 3, 2009, our Board of Directors approved amendments to the LTIP which, among other things, provide for a type of performance award payable in Ensco shares, cash or a combination thereof upon attainment of specified performance goals based on relative total shareholder return and absolute and relative return on capital employed. The performance goals are determined by a committee or subcommittee of the Board of Directors. The LTIP provides for the issuance of up to a maximum of 2.5 million new shares for the payment of performance awards, all of which were available for the payment of performance awards as of December 31, 2009. Performance awards that are paid in Ensco shares may be issued as new shares or issued out of treasury at the Company's discretion. In November 2009, performance awards were issued to certain of our officers who are in a position to contribute materially to our growth, development and long-term success. Performance awards generally vest at the end of a three-year measurement period based on attainment of performance goals. Our performance awards are liability awards with compensation expense measured based on the estimated probability of attainment of the specified performance goals and recognized on a straight-line basis over the requisite service period. The estimated probable outcome of attainment of the specified performance goals is based on historical experience and any subsequent changes in this estimate are recognized as a cumulative adjustment to compensation cost in the period in which the change in estimate occurs. We recognized $1.9 million of compensation expense for performance awards during the year ended December 31, 2009, which was included in general and administrative expense in our consolidated statement of income. No performance award compensation expense was recognized during the years ended December 31, 2008 and 2007. As of December 31, 2009, there was $11.2 million of total unrecognized compensation cost related to unvested performance awards, which is expected to be recognized over a weighted-average period of 1.5 years. Savings Plan We have a profit sharing plan (the “ENSCO Savings Plan”) which covers eligible employees, as defined. Profit sharing contributions require Board of Directors approval and may be paid in cash or The ENSCO Savings Plan includes a 401(k) savings plan feature which allows eligible employees to make tax deferred contributions to the plan. We generally make matching cash contributions that vest over a three-year period based on the amount of employee contributions and rates set by our Board of Directors. We match 100% of the amount contributed by the employee up to a maximum of 5% of eligible salary. Matching contributions totaled
|
|
|
2008 | 2007 | 2006 | |||||
---|---|---|---|---|---|---|---|
Current income tax expense (benefit): | |||||||
Federal | $120.3 | $ 98.8 | $133.6 | ||||
State | (.3 | ) | 4.8 | 1.0 | |||
International | 120.2 | 143.1 | 91.3 | ||||
240.2 | 246.7 | 225.9 | |||||
Deferred income tax expense (benefit): | |||||||
Federal | 12.2 | 5.5 | 17.0 | ||||
International | (10.0 | ) | (3.9 | ) | .1 | ||
2.2 | 1.6 | 17.1 | |||||
Total income tax expense | $242.4 | $248.3 | $243.0 | ||||
2009 | 2008 | 2007 | |||||
---|---|---|---|---|---|---|---|
Current income tax expense: | |||||||
U.S. | $ 63.8 | $113.8 | $101.3 | ||||
Non-U.S. | 94.8 | 117.1 | 142.4 | ||||
158.6 | 230.9 | 243.7 | |||||
Deferred income tax expense (benefit): | |||||||
U.S. | 24.2 | 11.7 | 5.0 | ||||
Non-U.S. | (4.4 | ) | (5.3 | ) | (3.9 | ) | |
19.8 | 6.4 | 1.1 | |||||
Total income tax expense | $178.4 | $237.3 | $244.8 | ||||
The following table summarizes significant components of deferred income tax assets (liabilities) as of December 31, |
2008 | 2007 | 2009 | 2008 | |||||||
---|---|---|---|---|---|---|---|---|---|---|
Deferred tax assets: | ||||||||||
Accrued liabilities | $ 16.1 | $ 13.7 | ||||||||
Share-based compensation | 10.3 | 9.3 | ||||||||
Deferred revenue | 9.7 | 9.0 | $ 34.1 | $ 9.7 | ||||||
Receivables | 5.7 | .3 | ||||||||
Derivatives | 5.0 | -- | ||||||||
Employee benefits, including share-based compensation | 25.6 | 21.2 | ||||||||
Other | 8.3 | 2.4 | 18.3 | 24.2 | ||||||
Total deferred tax assets | 55.1 | 34.7 | 78.0 | 55.1 | ||||||
Deferred tax liabilities: | ||||||||||
Property and equipment | (320.2 | ) | (311.4 | ) | (348.9 | ) | (320.2 | ) | ||
Intercompany transfers of property | (36.6 | ) | (43.7 | ) | (45.5 | ) | (36.6 | ) | ||
Deferred costs | (18.5 | ) | (15.6 | ) | (23.5 | ) | (18.5 | ) | ||
Other | (.4 | ) | (2.9 | ) | (7.7 | ) | (.4 | ) | ||
Total deferred tax liabilities | (375.7 | ) | (373.6 | ) | (425.6 | ) | (375.7 | ) | ||
Net deferred tax liability | $(320.6 | ) | $(338.9 | ) | $(347.6 | ) | $(320.6 | ) | ||
Net current deferred tax asset | $ 19.9 | $ 13.1 | $ 29.7 | $ 19.9 | ||||||
Net noncurrent deferred tax liability | (340.5 | ) | (352.0 | ) | (377.3 | ) | (340.5 | ) | ||
Net deferred tax liability | $(320.6 | ) | $(338.9 | ) | $(347.6 | ) | $(320.6 | ) |
|
In December 2009, we incurred an $8.8 million current income tax expense in connection with certain restructuring activities undertaken immediately following our redomestication. Our consolidated effective income tax rate on continuing operations for each of the years in the three-year period ended December 31, |
2008 | 2007 | 2006 | 2009 | 2008 | 2007 | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Statutory income tax rate | 35.0 | % | 35.0 | % | 35.0 | % | ||||||||
Foreign taxes | (19.1 | ) | (14.0 | ) | (8.9 | ) | ||||||||
U.S. statutory income tax rate | 35.0 | % | 35.0 | % | 35.0 | % | ||||||||
Non-U.S. taxes | (18.1 | ) | (19.3 | ) | (14.2 | ) | ||||||||
Amortization of deferred charges associated with intercompany rig sales | 1.1 | (.1 | ) | (.2 | ) | 1.7 | 1.1 | (.1 | ) | |||||
Net expense (benefit) in connection with resolutions | ||||||||||||||
Redomestication related income taxes | .9 | -- | -- | |||||||||||
Net (benefit) expense in connection with resolutions | ||||||||||||||
of tax issues and adjustments relating to prior years | .5 | (.6 | ) | (.6 | ) | (.9 | ) | .5 | (.6 | ) | ||||
Other | (.2 | ) | .1 | (.6 | ) | -- | (.3 | ) | -- | |||||
Effective income tax rate | 17.3 | % | 20.4 | % | 24.7 | % | 18.6 | % | 17.0 | % | 20.1 | % | ||
Unrecognized Tax Benefits On January 1, 2007, we adopted the recognition and disclosure provisions of |
2008 | 2007 | 2009 | 2008 | |||||||
---|---|---|---|---|---|---|---|---|---|---|
Balance, beginning of year | $ | 13.5 | $ | 19.3 | $26.8 | $13.5 | ||||
Increases in unrecognized tax benefits as a result of tax positions taken during the current year | 7.2 | 1.3 | 2.0 | 7.2 | ||||||
Increases in unrecognized tax benefits as a result of tax positions taken during prior years | 12.7 | 4.5 | -- | 12.7 | ||||||
Decreases in unrecognized tax benefits as a result of tax positions taken during prior years | (1.3 | ) | (11.0 | ) | (2.7 | ) | (1.3 | ) | ||
Settlements with taxing authorities | (.9 | ) | (.5 | ) | (8.7 | ) | (.9 | ) | ||
Lapse of applicable statutes of limitations | (3.3 | ) | (.6 | ) | (.8 | ) | (3.3 | ) | ||
Impact of foreign currency exchange rates | (1.1 | ) | .5 | 1.0 | (1.1 | ) | ||||
Balance, end of year | $ | 26.8 | $ | 13.5 | $17.6 | $26.8 |
|
During the During 2008, in connection with an examination of a prior period tax return, we recognized a $5.4 million liability for unrecognized tax benefits associated with certain tax positions taken in prior years, which resulted in an $8.9 million net income tax expense, inclusive of interest and penalties. During During 2007, new information became available in one of our Statutes of limitations applicable to certain of our tax positions will lapse during Intercompany Transfer of Drilling Rigs In
In December 2007, we transferred ownership of three drilling rigs among two of our subsidiaries resulting in an income tax liability of $96.5 million which was paid during 2008. The $96.5 million of income taxes paid and the tax effects of $54.8 million of reversing temporary differences of the selling subsidiary were deferred and are being amortized over the remaining useful lives of the related drilling rigs, which ranged from three to eight years. As of December 31, |
|
|
|
We do not provide The earnings distribution was undertaken because it provided, with minimal U.S. tax impact, substantial funding flexibility for management initiatives, including the continuation and/or extension of our ongoing As of December 31, 11. DISCONTINUED OPERATIONS ENSCO 69 From May 2007 to June 2009, ENSCO 69 was contracted to Petrosucre, a subsidiary of Petróleos de Venezuela S.A., the national oil company of Venezuela ("PDVSA"). During portions of 2008 and 2009, PDVSA subsidiaries reportedly lacked funds and generally were not paying their contractors and service providers. In On June 4, 2009, after Petrosucre's failure to satisfy its contractual payment obligations, failure to reach a mutually acceptable agreement with us and
|
|
|
In Although the agreement obligates Petrosucre to make additional payments during 2010 for its use of the rig during 2009, the associated income was not recognized in ENSCO 74 |
|
|
2008 | 2007 | 2006 | 2009 | 2008 | 2007 | |||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Revenues | $36.2 | $55.2 | $58.6 | $ 26.0 | $93.0 | $85.6 | ||||||||||||||||
Operating expenses | 14.1 | 17.0 | 25.5 | 3.1 | 59.7 | 39.9 | ||||||||||||||||
Operating income before income taxes | 22.1 | 38.2 | 33.1 | 22.9 | 33.3 | 45.7 | ||||||||||||||||
Income tax expense | 7.8 | 13.4 | 11.6 | 7.5 | 12.9 | 16.9 | ||||||||||||||||
(Loss) gain on disposal of discontinued operations, net | (23.5 | ) | -- | 7.2 | ||||||||||||||||||
Loss on disposal of discontinued operations, net | (11.8 | ) | (23.5 | ) | -- | |||||||||||||||||
(Loss) income from discontinued operations | $ (9.2 | ) | $24.8 | $28.7 | ||||||||||||||||||
Income (loss) from discontinued operations | $ 3.6 | $ (3.1 | ) | $28.8 |
Debt and interest expense are not allocated to our discontinued operations. 12. COMMITMENTS AND CONTINGENCIES Leases We are obligated under leases for certain of our offices and equipment. Rental expense relating to operating leases was $14.2 million, $13.9 million Capital Commitments The following table summarizes the aggregate contractual commitments related to our |
2009 | $ | 393.5 | ||||||||
2010 | 597.0 | $ | 482.4 | |||||||
2011 | 412.3 | 425.5 | ||||||||
2012 | 202.4 | 219.0 | ||||||||
Total | $ | 1,605.2 | $ | 1,126.9 |
FCPA Internal Investigation Following disclosures by other offshore service companies announcing internal investigations involving the legality of amounts paid to and by customs brokers in connection with temporary importation of rigs and vessels into Nigeria, the Audit Committee of our Board of Directors and management commenced an internal investigation in July 2007. The investigation initially focused on our payments to customs brokers relating to the temporary importation of ENSCO 100, our only rig that |
|
The principal purpose of our investigation was to determine whether any of the payments made to or by our customs brokers were inappropriate under the anti-bribery provisions of the FCPA or whether any violations of the recordkeeping or internal accounting Following notification to the Audit Committee and to KPMG LLP, our independent registered public accounting firm, in consultation with the Audit Committee's Although we believe the U.S. authorities will take into account our voluntary disclosure, our cooperation with the agencies and the remediation and compliance enhancement activities that are underway, we are unable to predict the ultimate disposition of this matter, whether we will be charged with violation of the anti-bribery, recordkeeping or internal accounting In November 2008, our Board of Directors approved enhanced FCPA compliance recommendations issued by the Audit Committee's Since ENSCO 100 completed its contract commitment and departed Nigeria in August 2007, this matter is not expected to have a material effect on or disrupt our current operations. As noted above, we are unable to predict the outcome of this matter or estimate the extent to which we may be exposed to any resulting potential liability, sanctions or significant additional expense. ENSCO 74 Loss In September 2008, ENSCO 74 was lost as a result of Hurricane Ike in the Gulf of Mexico. Portions of its legs remained underwater adjacent to the customer's platform, and we conducted extensive aerial and sonar reconnaissance but did not locate the rig hull. The rig was a total loss, as defined under the terms of our insurance policies. |
96 |
Physical damage to our rigs caused by a hurricane, the associated "sue and labor" costs to mitigate the insured loss and removal, salvage and recovery costs are all covered by our property insurance policies subject to a $50.0 million per occurrence retention (deductible). The insured value of ENSCO 74 was $100.0 million, and we have received the net $50.0 million due under our policies for loss of the rig. Coverage for ENSCO 74 sue and labor costs and wreckage and debris removal costs under our property insurance policies is limited to $25.0 million and $50.0 million, respectively. Supplemental wreckage and debris removal coverage is provided under our liability insurance policies, subject to an annual aggregate limit of $500.0 million. We also have a customer contractual indemnification that provides for reimbursement of any ENSCO 74 wreckage and debris removal costs that are not recovered under our insurance policies. We believe it is probable that we will be required to remove the leg sections of ENSCO 74 remaining adjacent to the customer's platform because they may interfere with the customer's future operations. We also believe it is probable that we will be required to remove the ENSCO 74 rig hull and related debris from the seabed due to the navigational risk it imposes. We estimate the leg removal costs to range from $16.0 million to $30.0 million and the hull and related debris removal costs to range from $36.0 million to $55.0 million. We expect the cost of removal of the legs and the hull and related debris to be fully covered by our insurance without any additional retention. A $16.0 million liability, representing the low end of the range of estimated leg removal costs, and a corresponding receivable for recovery of those costs, was recorded as of December 31, 2009. A $36.0 million liability, representing the low end of the range of estimated hull and related debris removal costs, and a corresponding receivable for recovery of those costs, was recorded as of December 31, 2009. As of December 31, 2009, $1.7 million of wreck and debris removal costs had been incurred, primarily related to the removal of hydrocarbons from the rig. The aggregate $50.3 million liability for leg and hull and related debris removal costs and aggregate $52.0 million receivable for recovery of those costs were included in accrued liabilities and other, and other assets, net, respectively, on our December 31, 2009 consolidated balance sheet. On March 17, 2009, we received notice from legal counsel representing certain underwriters in a subrogation claim alleging that ENSCO 74 caused a pipeline to rupture during Hurricane Ike. On September 4, 2009, civil litigation was filed seeking damages for the cost of repairs and business interruption in an amount in excess of $26.0 million. Based on information currently available, primarily the adequacy of available defenses, we have not concluded that it is probable that a liability exists with respect to this matter. On March 18, 2009, the owner of the oil tanker that struck the hull of ENSCO 74 commenced civil litigation against us seeking monetary damages of $10.0 million for losses incurred when the tanker struck the sunken hull of ENSCO 74. Based on information currently available, primarily the adequacy of available defenses, we have not concluded that it is probable a liability exists with respect to this matter. On June 9, 2009, we received notice from legal counsel representing another pipeline owner which allegedly sustained damages to a subsea pipeline caused by ENSCO 74 in the aftermath of Hurricane Ike. On September 18, 2009, the owner of the pipeline commenced civil litigation against us seeking unspecified damages in relation to the cost of repairing damage to the pipeline, loss of revenues, survey and other damages. Based on information currently available, we have concluded that it is remote that a liability exists with respect to this matter. |
|
We filed a petition for exoneration or limitation of liability under U.S. admiralty and maritime law on September 2, 2009. The petition seeks exoneration from or limitation of liability for any and all injury, loss or damage caused, occasioned or occurred in relation to the ENSCO 74 loss in September 2008. On November 2, 2009, the owners of two other subsea pipelines presented claims in the exoneration/limitation of liability proceedings seeking monetary damages incurred by reason of damage to pipelines allegedly caused by ENSCO 74 in the aftermath of Hurricane Ike. One claim is in the amount of $14.0 million, while the other is for unspecified damages. Based on information currently available, we have concluded that it is remote that liabilities exist with respect to these matters. We have liability insurance policies that provide coverage for third-party claims such as the tanker and pipeline claims, subject to a $10.0 million per occurrence self-insured retention and an annual aggregate limit of $500.0 million. We believe all liabilities associated with the ENSCO 74 loss during Hurricane Ike resulted from a single occurrence under the terms of the applicable insurance policies. However, legal counsel for certain liability underwriters have asserted that the liability claims arise from separate occurrences. In the event of multiple occurrences, the self-insured retention is $15.0 million for two occurrences and $1.0 million for each occurrence thereafter. The exoneration/limitation proceedings currently include the claim of the owner of the tanker that struck ENSCO 74 in March 2009 and the four pipeline claims. Although we do not expect final disposition of the claims associated with the ENSCO 74 loss to have a material adverse effect upon our financial position, operating results or cash flows, there can be no assurances as to the ultimate outcome. ENSCO 69 We have filed an insurance claim under our package policy, which includes coverage for certain political risks, and are evaluating legal remedies against Petrosucre for contractual and other ENSCO 69 related damages. ENSCO 69 has an insured value of $65.0 million under our package policy, subject to a $10.0 million deductible. By letter dated September 30, 2009, legal counsel acting for the package policy underwriters denied coverage under the package policy and reserved rights. We have retained coverage counsel who are reviewing the letter from underwriters' counsel. We were unable to conclude that collection of insurance proceeds associated with the loss of ENSCO 69 was probable as of December 31, 2009. Accordingly, no ENSCO 69 related insurance recoveries were recognized in our consolidated statement of income for the year ended December 31, 2009. ENSCO 29 Wreck Removal A portion of the ENSCO 29 platform drilling rig was lost over the side of a customer's platform as a result of Hurricane Katrina during |
|
While we anticipate that any ENSCO 29 wreckage and debris removal costs incurred will be largely or fully covered by insurance, a $1.2 million provision, representing the portion of the $5.0 million low end of the range of estimated removal cost we believe is subject to liability insurance coverage, was recognized during |
98 |
In compliance with the Mississippi Rules of Civil Procedure, the individual claimants in the original multi-party lawsuits whose claims were not dismissed were ordered to file either new or amended single plaintiff complaints naming the specific defendant(s) against whom they intended to pursue claims. As a result, out of more than 600 initial multi-party claims, we have been named as a defendant by 65 individual plaintiffs. Of these claims, 62 claims or lawsuits are pending in Mississippi state courts and three are pending in the U.S. District Court as a result of their removal from state court. We intend to vigorously defend against these claims and have filed responsive pleadings preserving all defenses and challenges to jurisdiction and venue. However, discovery is still ongoing and, therefore, available information regarding the nature of all pending claims is limited. At present, we cannot reasonably determine how many of the claimants may have valid claims under the Jones Act or estimate a range of potential liability exposure, if any. In addition to the pending cases in Mississippi, we have eight other asbestos or lung injury claims pending against us in litigation in various other jurisdictions. Although we do not expect the final disposition of the Mississippi and other asbestos or lung injury lawsuits to have a material adverse effect upon our financial position, operating results or cash flows, there can be no assurances as to the ultimate outcome of the lawsuits. Working Time Directive Legislation known as the U.K. Working Time Directive ("WTD") was introduced |
|
A Labor Tribunal in Aberdeen, Scotland, rendered decisions in claims involving other offshore drilling contractors and offshore service companies |
|
Based on information currently available, we do not expect the ultimate resolution of these matters to have a material adverse effect on our financial position, operating results or cash flows.
Other Matters In addition to the foregoing, we are named defendants or parties in certain other lawsuits, claims or proceedings incidental to our business and are involved from time to time as parties to governmental investigations or proceedings, including matters related to taxation, arising in the ordinary course of business. Although the outcome of such lawsuits or other proceedings cannot be predicted with certainty and the amount of any liability that could arise with respect to such lawsuits or other proceedings cannot be predicted accurately, 13. SEGMENT INFORMATION We are in the process of developing a fleet of ultra-deepwater semisubmersible |
|
|
|
|
|
North | |||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Europe | and | Operating | |||||||||||||||||||||
Asia | and | South | Segments | Reconciling | Consolidated | ||||||||||||||||||
Deepwater | Pacific | Africa | America | Total | Items | Total | |||||||||||||||||
Revenue | $ 254.1 | $ 724.0 | $569.1 | $398.7 | $1,945.9 | $ -- | $1,945.9 | ||||||||||||||||
Operating expenses Contract drilling (exclusive of depreciation) | 108.1 | 249.0 | 208.8 | 159.6 | 725.5 | -- | 725.5 | ||||||||||||||||
Depreciation | 22.2 | 88.0 | 44.5 | 49.9 | 204.6 | 1.3 | 205.9 | ||||||||||||||||
General and administrative | -- | -- | -- | -- | -- | 64.0 | 64.0 | ||||||||||||||||
Operating income | $ 123.8 | $ 387.0 | $315.8 | $189.2 | $1,015.8 | $ (65.3) | $ 950.5 | ||||||||||||||||
Total assets | $2,444.6 | $1,290.6 | $779.9 | $856.0 | $5,371.1 | $1,376.1 | $6,747.2 | ||||||||||||||||
Capital expenditures | 644.4 | 45.7 | 66.2 | 102.3 | 858.6 | 2.7 | 861.3 |
|
North | North | |||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
and | Operating | Europe | and | Operating | ||||||||||||||||||||||||||||||||||||||||||
Asia | Europe/ | South | Segments | Reconciling | Consolidated | Asia | and | South | Segments | Reconciling | Consolidated | |||||||||||||||||||||||||||||||||||
Deepwater | Pacific | Africa | America | Total | Items | Total | Deepwater | Pacific | Africa | America | Total | Items | Total | |||||||||||||||||||||||||||||||||
Revenue | $84.4 | $1,052.9 | $804.1 | $509.0 | $2,450.4 | $ -- | $2,450.4 | $ 84.4 | $1,052.9 | $804.1 | $452.2 | $2,393.6 | $ -- | $2,393.6 | ||||||||||||||||||||||||||||||||
Operating expenses Contract drilling (exclusive of depreciation) | 31.2 | 321.9 | 246.7 | 200.7 | 800.5 | -- | 800.5 | 31.2 | 316.0 | 246.7 | 158.1 | 752.0 | -- | 752.0 | ||||||||||||||||||||||||||||||||
Depreciation | 9.1 | 85.2 | 43.0 | 50.3 | 187.6 | 1.9 | 189.5 | 9.1 | 85.2 | 43.0 | 47.3 | 184.6 | 1.9 | 186.5 | ||||||||||||||||||||||||||||||||
General and administrative | -- | -- | -- | -- | -- | 53.8 | 53.8 | -- | -- | -- | -- | -- | 53.8 | 53.8 | ||||||||||||||||||||||||||||||||
Operating income | $44.1 | $645.8 | $514.4 | $258.0 | $1,462.3 | $(55.7) | $1,406.6 | $ 44.1 | $ 651.7 | $514.4 | $246.8 | $1,457.0 | $ (55.7) | $1,401.3 | ||||||||||||||||||||||||||||||||
Total assets | $1,759.9 | $1,327.7 | $806.7 | $773.1 | $4,667.4 | $1,162.7 | $5,830.1 | $1,759.9 | $1,327.7 | $806.7 | $773.1 | $4,667.4 | $1,162.7 | $5,830.1 | ||||||||||||||||||||||||||||||||
Capital expenditures | 657.8 | 42.6 | 22.7 | 46.3 | 769.4 | 2.7 | 772.1 | 657.8 | 42.6 | 22.7 | 46.1 | 769.2 | 2.7 | 771.9 |
|
|
North | |||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
and | Operating | ||||||||||||||||||||||
Asia | Europe/ | South | Segments | Reconciling | Consolidated | ||||||||||||||||||
Deepwater | Pacific | Africa | America | Total | Items | Total | |||||||||||||||||
Revenue | $72.8 | $912.7 | $670.8 | $432.3 | $2,088.6 | $ -- | $2,088.6 | ||||||||||||||||
Operating expenses Contract drilling (exclusive of depreciation) | 28.8 | 271.9 | 208.4 | 162.1 | 671.2 | -- | 671.2 | ||||||||||||||||
Depreciation | 9.3 | 81.1 | 40.4 | 45.3 | 176.1 | 4.1 | 180.2 | ||||||||||||||||
General and administrative | -- | -- | -- | -- | -- | 59.5 | 59.5 | ||||||||||||||||
Operating income | $34.7 | $559.7 | $422.0 | $224.9 | $1,241.3 | $(63.6) | $1,177.7 | ||||||||||||||||
Total assets | $973.8 | $1,386.6 | $773.6 | $808.8 | $3,942.8 | $1,026.0 | $4,968.8 | ||||||||||||||||
Capital expenditures | 352.4 | 50.6 | 22.0 | 93.0 | 518.0 | 1.4 | 519.4 |
|
|
North | North | |||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
and | Operating | Europe | and | Operating | ||||||||||||||||||||||||||||||||||||||||||
Asia | Europe/ | South | Segments | Reconciling | Consolidated | Asia | and | South | Segments | Reconciling | Consolidated | |||||||||||||||||||||||||||||||||||
Deepwater | Pacific | Africa | America | Total | Items | Total | Deepwater | Pacific | Africa | America | Total | Items | Total | |||||||||||||||||||||||||||||||||
Revenue | $60.9 | $585.5 | $497.1 | $626.3 | $1,769.8 | $ -- | $1,769.8 | $ 72.8 | $ 912.7 | $670.8 | $401.9 | $2,058.2 | $ -- | $2,058.2 | ||||||||||||||||||||||||||||||||
Operating expenses Contract drilling (exclusive of depreciation) | 26.3 | 226.0 | 158.0 | 154.5 | 564.8 | -- | 564.8 | 28.8 | 265.0 | 208.4 | 141.9 | 644.1 | -- | 644.1 | ||||||||||||||||||||||||||||||||
Depreciation | 8.9 | 75.3 | 36.4 | 46.8 | 167.4 | 3.7 | 171.1 | 9.3 | 81.1 | 40.4 | 42.6 | 173.4 | 4.1 | 177.5 | ||||||||||||||||||||||||||||||||
General and administrative | -- | -- | -- | -- | -- | 44.6 | 44.6 | -- | -- | -- | -- | -- | 59.5 | 59.5 | ||||||||||||||||||||||||||||||||
Operating income | $25.7 | $284.2 | $302.7 | $425.0 | $1,037.6 | $(48.3) | $ 989.3 | $ 34.7 | $ 566.6 | $422.0 | $217.4 | $1,240.7 | $ (63.6) | $1,177.1 | ||||||||||||||||||||||||||||||||
Total assets | $564.6 | $1,358.6 | $640.4 | $891.7 | $3,455.3 | $879.1 | $4,334.4 | $973.8 | $1,386.6 | $773.6 | $808.8 | $3,942.8 | $1,026.0 | $4,968.8 | ||||||||||||||||||||||||||||||||
Capital expenditures | 299.5 | 128.9 | 9.5 | 88.0 | 525.9 | 2.0 | 527.9 | 352.4 | 50.6 | 22.0 | 93.0 | 518.0 | 1.4 | 519.4 |
As of December 31, For purposes of our geographic areas disclosures, we attribute revenues to the geographic location where such |
Revenues | Long-lived Assets | Revenues | Long-lived Assets | |||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2008 | 2007 | 2006 | 2008 | 2007 | 2006 | 2009 | 2008 | 2007 | 2009 | 2008 | 2007 | |||||||||||||||
United Kingdom | $ 353.2 | $ 478.3 | $ 392.5 | $ 457.4 | $ 309.0 | $ 425.5 | ||||||||||||||||||||
United States | $ 485.8 | $ 474.7 | $ 666.2 | $1,663.6 | $1,640.3 | $1,219.5 | 267.0 | 485.8 | 474.7 | 1,806.7 | 1,663.6 | 1,640.3 | ||||||||||||||
United Kingdom | 478.3 | 392.5 | 325.9 | 309.0 | 425.5 | 242.7 | ||||||||||||||||||||
Indonesia | 254.2 | 116.1 | 29.5 | 153.9 | 325.4 | 139.9 | 75.7 | 254.2 | 116.1 | 50.2 | 153.9 | 325.4 | ||||||||||||||
Singapore | -- | -- | -- | 550.5 | 17.1 | 85.9 | -- | -- | -- | 720.1 | 550.5 | 17.1 | ||||||||||||||
Other foreign countries | 1,232.1 | 1,105.3 | 748.2 | 1,194.3 | 950.6 | 1,272.4 | ||||||||||||||||||||
Other countries | 1,250.0 | 1,175.3 | 1,074.9 | 1,442.9 | 1,194.3 | 950.6 | ||||||||||||||||||||
Total | $2,450.4 | $2,088.6 | $1,769.8 | $3,871.3 | $3,358.9 | $2,960.4 | $1,945.9 | $2,393.6 | $2,058.2 | $4,477.3 | $3,871.3 | $3,358.9 |
|
14. SUPPLEMENTAL FINANCIAL INFORMATION Consolidated Balance Sheet Information Accounts receivable, net, as of December 31, |
2008 | 2007 | 2009 | 2008 | |||||||
---|---|---|---|---|---|---|---|---|---|---|
Trade | $483.5 | $372.2 | $310.1 | $483.5 | ||||||
Other | 19.7 | 16.4 | 17.9 | 19.7 | ||||||
503.2 | 388.6 | 328.0 | 503.2 | |||||||
Allowance for doubtful accounts | (20.5 | ) | (5.4 | ) | (3.4 | ) | (20.5 | ) | ||
$482.7 | $383.2 | $324.6 | $482.7 |
|
2008 | 2007 | 2009 | 2008 | |||||||
---|---|---|---|---|---|---|---|---|---|---|
Inventory | $ 47.0 | $ 39.7 | $ 53.1 | $ 47.0 | ||||||
Prepaid taxes | 39.6 | 16.4 | ||||||||
Deferred tax assets | 30.0 | 20.3 | ||||||||
Deferred mobilization costs | 24.4 | 26.3 | 29.0 | 24.4 | ||||||
Deferred tax assets | 20.3 | 15.1 | ||||||||
Prepaid taxes | 16.4 | 9.5 | ||||||||
Prepaid expenses | 9.4 | 8.3 | 13.6 | 9.4 | ||||||
Other | 11.1 | 17.7 | 21.5 | 11.1 | ||||||
$128.6 | $116.6 | $186.8 | $128.6 |
|
Other assets, net, as of December 31, |
2008 | 2007 | 2009 | 2008 | |||||||
---|---|---|---|---|---|---|---|---|---|---|
Prepaid taxes on intercompany transfers of property | $ 91.3 | $114.4 | $ 99.0 | $ 91.3 | ||||||
Wreckage and debris removal receivables | 55.8 | 18.8 | ||||||||
Deferred mobilization costs | 23.1 | 2.9 | 23.7 | 23.1 | ||||||
Wreckage and debris removal receivables | 18.8 | 3.8 | ||||||||
Supplemental executive retirement plans | 13.9 | 15.8 | ||||||||
Supplemental executive retirement plan assets | 18.7 | 13.9 | ||||||||
Other | 10.4 | 7.5 | 23.2 | 10.4 | ||||||
$157.5 | $144.4 | $220.4 | $157.5 |
Accrued liabilities and other as of December 31, |
2008 | 2007 | 2009 | 2008 | |||||||
---|---|---|---|---|---|---|---|---|---|---|
Capital expenditures | $105.1 | $ 96.1 | ||||||||
Taxes | $ 97.3 | $ 48.2 | ||||||||
Deferred revenue | 89.0 | 67.7 | ||||||||
Wreckage and debris removal | 50.3 | 15.0 | ||||||||
Personnel costs | 50.5 | 49.6 | 48.6 | 50.5 | ||||||
Taxes | 48.2 | 195.1 | ||||||||
Derivative liabilities | 25.8 | 1.6 | 1.1 | 25.8 | ||||||
Other operating expenses | 65.6 | 57.2 | ||||||||
Deferred and prepaid revenue | 67.8 | 61.2 | ||||||||
Wreckage and debris removal | 15.0 | -- | ||||||||
Other | 2.7 | 4.8 | 22.3 | 7.7 | ||||||
$380.7 | $465.6 | $308.6 | $214.9 | |||||||
Other liabilities as of December 31, |
2008 | 2007 | 2009 | 2008 | |||||||
---|---|---|---|---|---|---|---|---|---|---|
Deferred revenue | $ 51.2 | $ 34.4 | ||||||||
Unrecognized tax benefits (inclusive of interest and penalties) | $ 39.7 | $32.7 | 33.4 | 39.7 | ||||||
Deferred revenue | 34.4 | 4.8 | ||||||||
Supplemental executive retirement plans | 13.9 | 15.8 | ||||||||
Self-insured maritime employer's liability | 7.8 | 5.3 | ||||||||
Wreckage and debris removal | 5.0 | 5.0 | ||||||||
Supplemental executive retirement plan liabilities | 21.0 | 13.9 | ||||||||
Other | 9.7 | 6.3 | 15.1 | 15.8 | ||||||
$110.5 | $69.9 | $120.7 | $103.8 |
|
Consolidated Statement of Income Information Repair and maintenance expense related to continuing operations for each of the years in the three-year period ended December 31, |
2008 | 2007 | 2006 | |||||
---|---|---|---|---|---|---|---|
Repair and maintenance expense | $125.0 | $98.7 | $73.3 |
2009 | 2008 | 2007 | |||||
---|---|---|---|---|---|---|---|
Repair and maintenance expense | $124.6 | $123.6 | $97.7 |
|
Consolidated Statement of Cash Flows Information Cash paid for interest and income taxes for each of the years in the three-year period ended December 31, |
2008 | 2007 | 2006 | 2009 | 2008 | 2007 | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Interest, net of amounts capitalized | $ .5 | $ 4.6 | $ 15.3 | $ .1 | $ .5 | $ 4.6 | ||||||||
Income taxes | 350.5 | 214.3 | 206.3 | 153.8 | 348.6 | 213.2 |
Capitalized interest totaled $20.9 million, $21.6 million
|
2008 | 2007 | ||||||||
---|---|---|---|---|---|---|---|---|---|
Estimated | Estimated | ||||||||
Carrying | Fair | Carrying | Fair | ||||||
Amount | Value | Amount | Value | ||||||
4.65% Bonds, including current maturities | $ 54.0 | $ 39.5 | $ 58.5 | $ 54.7 | |||||
6.36% Bonds, including current maturities | 88.7 | 80.0 | 101.4 | 108.7 | |||||
7.20% Debentures | 148.8 | 140.3 | 148.7 | 165.3 |
Concentration of Credit Risk We are exposed to credit risk relating to our receivables from customers, our cash and cash equivalents and investments and our use of During the year ended December 31, 2009, one customer provided $249.6 million, or 13%, of consolidated revenues which were attributable to our Europe and Africa and Asia Pacific operating segments. During the years ended December 31, 2008 |
|
The following table summarizes our unaudited quarterly consolidated income statement data for the years ended December 31, |
2008 | First Quarter | Second Quarter | Third Quarter | Fourth Quarter | Year | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Operating revenues | $568.5 | $624.0 | $635.8 | $622.1 | $2,450.4 | ||||||||||||
Operating expenses | |||||||||||||||||
Contract drilling (exclusive of depreciation) | 187.7 | 210.4 | 193.4 | 209.0 | 800.5 | ||||||||||||
Depreciation | 46.4 | 47.5 | 47.7 | 47.9 | 189.5 | ||||||||||||
General and administrative | 12.7 | 13.8 | 15.2 | 12.1 | 53.8 | ||||||||||||
Operating income | 321.7 | 352.3 | 379.5 | 353.1 | 1,406.6 | ||||||||||||
Interest income | 5.0 | 3.7 | 3.2 | 2.1 | 14.0 | ||||||||||||
Other, net | (.5 | ) | 3.1 | (9.7 | ) | (11.1 | ) | (18.2 | ) | ||||||||
Income from continuing operations before | |||||||||||||||||
income taxes | 326.2 | 359.1 | 373.0 | 344.1 | 1,402.4 | ||||||||||||
Provision for income taxes | 59.2 | 67.8 | 71.8 | 43.6 | 242.4 | ||||||||||||
Income from continuing operations | 267.0 | 291.3 | 301.2 | 300.5 | 1,160.0 | ||||||||||||
Income (loss) from discontinued operations, net | 5.0 | 5.4 | (18.9 | ) | (.7 | ) | (9.2 | ) | |||||||||
Net income | $272.0 | $296.7 | $282.3 | $299.8 | $1,150.8 | ||||||||||||
Earnings (loss) per share - basic | |||||||||||||||||
Continuing operations | $ 1.87 | $ 2.04 | $ 2.13 | $ 2.15 | $ 8.19 | ||||||||||||
Discontinued operations | .04 | .04 | (.13 | ) | (.01 | ) | (.06 | ) | |||||||||
$ 1.90 | $ 2.08 | $ 2.00 | $ 2.14 | $ 8.13 | |||||||||||||
Earnings (loss) per share - diluted | |||||||||||||||||
Continuing operations | $ 1.86 | $ 2.03 | $ 2.13 | $ 2.14 | $ 8.17 | ||||||||||||
Discontinued operations | .03 | .04 | (.13 | ) | (.00 | ) | (.06 | ) | |||||||||
$ 1.90 | $ 2.07 | $ 1.99 | $ 2.14 | $ 8.11 | |||||||||||||
2009 | First Quarter | Second Quarter | Third Quarter | Fourth Quarter | Year | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Operating revenues | $509.3 | $511.6 | $425.4 | $499.6 | $1,945.9 | ||||||||||||
Operating expenses | |||||||||||||||||
Contract drilling (exclusive of depreciation) | 163.7 | 177.8 | 183.3 | 200.7 | 725.5 | ||||||||||||
Depreciation | 47.2 | 49.3 | 53.3 | 56.1 | 205.9 | ||||||||||||
General and administrative | 12.0 | 16.0 | 13.6 | 22.4 | 64.0 | ||||||||||||
Operating income | 286.4 | 268.5 | 175.2 | 220.4 | 950.5 | ||||||||||||
Other income (expense), net | (4.3 | ) | 6.9 | 3.6 | 2.6 | 8.8 | |||||||||||
Income from continuing operations before income taxes | 282.1 | 275.4 | 178.8 | 223.0 | 959.3 | ||||||||||||
Provision for income taxes | 56.3 | 49.1 | 28.4 | 44.6 | 178.4 | ||||||||||||
Income from continuing operations | 225.8 | 226.3 | 150.4 | 178.4 | 780.9 | ||||||||||||
(Loss) income from discontinued operations, net | (3.7 | ) | (24.9 | ) | .4 | 31.8 | 3.6 | ||||||||||
Net income | 222.1 | 201.4 | 150.8 | 210.2 | 784.5 | ||||||||||||
Net income attributable to noncontrolling interests | (1.4 | ) | (1.1 | ) | (1.1 | ) | (1.5 | ) | (5.1 | ) | |||||||
Net income attributable to Ensco | $220.7 | $200.3 | $149.7 | $208.7 | $779.4 | ||||||||||||
Earnings (loss) per share - basic | |||||||||||||||||
Continuing operations | $ 1.58 | $ 1.59 | $ 1.05 | $ 1.24 | $ 5.45 | ||||||||||||
Discontinued operations | (.02 | ) | (.18 | ) | .00 | .22 | .03 | ||||||||||
$ 1.56 | $ 1.41 | $ 1.05 | $ 1.46 | $ 5.48 | |||||||||||||
Earnings (loss) per share - diluted | |||||||||||||||||
Continuing operations | $ 1.58 | $ 1.59 | $ 1.05 | $ 1.24 | $ 5.45 | ||||||||||||
Discontinued operations | (.02 | ) | (.18 | ) | .00 | .22 | .03 | ||||||||||
$ 1.56 | $ 1.41 | $ 1.05 | $ 1.46 | $ 5.48 | |||||||||||||
|
2007 | First Quarter | Second Quarter | Third Quarter | Fourth Quarter | Year | |||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2008 | First Quarter | Second Quarter | Third Quarter | Fourth Quarter | Year | |||||||||||||||||||||||||||||
Operating revenues | $501.5 | $533.0 | $536.4 | $517.7 | $2,088.6 | $559.9 | $609.4 | $619.5 | $604.8 | $2,393.6 | ||||||||||||||||||||||||
Operating expenses | ||||||||||||||||||||||||||||||||||
Contract drilling (exclusive of depreciation) | 159.1 | 166.0 | 175.5 | 170.6 | 671.2 | 178.6 | 203.0 | 185.2 | 185.2 | 752.0 | ||||||||||||||||||||||||
Depreciation | 44.1 | 45.7 | 46.2 | 44.2 | 180.2 | 45.7 | 46.7 | 47.0 | 47.1 | 186.5 | ||||||||||||||||||||||||
General and administrative | 16.0 | 19.1 | 11.5 | 12.9 | 59.5 | 12.7 | 13.8 | 15.2 | 12.1 | 53.8 | ||||||||||||||||||||||||
Operating income | 282.3 | 302.2 | 303.2 | 290.0 | 1,177.7 | 322.9 | 345.9 | 372.1 | 360.4 | 1,401.3 | ||||||||||||||||||||||||
Other income (expense), net | 4.5 | 6.8 | (6.5 | ) | (9.0 | ) | (4.2 | ) | ||||||||||||||||||||||||||
Interest income | 6.2 | 6.3 | 7.1 | 6.7 | 26.3 | |||||||||||||||||||||||||||||
Interest expense, net | (1.1 | ) | (.8 | ) | -- | -- | (1.9 | ) | ||||||||||||||||||||||||||
Other, net | 4.5 | 2.3 | 2.7 | 3.9 | 13.4 | |||||||||||||||||||||||||||||
Income from continuing operations before | ||||||||||||||||||||||||||||||||||
income taxes | 291.9 | 310.0 | 313.0 | 300.6 | 1,215.5 | |||||||||||||||||||||||||||||
Income from continuing operations before income taxes | 327.4 | 352.7 | 365.6 | 351.4 | 1,397.1 | |||||||||||||||||||||||||||||
Provision for income taxes | 64.7 | 63.3 | 53.6 | 66.7 | 248.3 | 58.6 | 64.6 | 68.8 | 45.3 | 237.3 | ||||||||||||||||||||||||
Income from continuing operations | 227.2 | 246.7 | 259.4 | 233.9 | 967.2 | 268.8 | 288.1 | 296.8 | 306.1 | 1,159.8 | ||||||||||||||||||||||||
Income from discontinued operations, net | 5.1 | 7.7 | 7.3 | 4.7 | 24.8 | |||||||||||||||||||||||||||||
Income (loss) from discontinued operations, net | 4.9 | 9.8 | (13.1 | ) | (4.7 | ) | (3.1 | ) | ||||||||||||||||||||||||||
Net income | 273.7 | 297.9 | 283.7 | 301.4 | 1,156.7 | |||||||||||||||||||||||||||||
Net income attributable to noncontrolling interests | (1.7 | ) | (1.2 | ) | (1.4 | ) | (1.6 | ) | (5.9 | ) | ||||||||||||||||||||||||
Net income attributable to Ensco | $272.0 | $296.7 | $282.3 | $299.8 | $1,150.8 | |||||||||||||||||||||||||||||
Net income | $232.3 | $254.4 | $266.7 | $238.6 | $992.0 | |||||||||||||||||||||||||||||
Earnings per share - basic | ||||||||||||||||||||||||||||||||||
Earnings (loss) per share - basic | ||||||||||||||||||||||||||||||||||
Continuing operations | $ 1.52 | $ 1.67 | $ 1.78 | $ 1.63 | $ 6.59 | $ 1.86 | $ 1.99 | $ 2.07 | $ 2.15 | $ 8.06 | ||||||||||||||||||||||||
Discontinued operations | .03 | .05 | .05 | .03 | .17 | .03 | .07 | (.09 | ) | (.03 | ) | (.02 | ) | |||||||||||||||||||||
$ 1.55 | $ 1.72 | $ 1.83 | $ 1.66 | $ 6.76 | $ 1.89 | $ 2.06 | $ 1.98 | $ 2.12 | $ 8.04 | |||||||||||||||||||||||||
Earnings per share - diluted | ||||||||||||||||||||||||||||||||||
Earnings (loss) per share - diluted | ||||||||||||||||||||||||||||||||||
Continuing operations | $ 1.51 | $ 1.66 | $ 1.77 | $ 1.62 | $ 6.57 | $ 1.85 | $ 1.98 | $ 2.06 | $ 2.14 | $ 8.04 | ||||||||||||||||||||||||
Discontinued operations | .03 | .05 | .05 | .03 | .17 | .03 | .07 | (.09 | ) | (.03 | ) | (.02 | ) | |||||||||||||||||||||
$ 1.54 | $ 1.72 | $ 1.82 | $ 1.66 | $ 6.73 | $ 1.88 | $ 2.05 | $ 1.97 | $ 2.11 | $ 8.02 |
|
|
|
|
The information required by this item is contained in our Proxy Statement and incorporated herein by reference. |
|
Number of securities | Number of securities | |||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
remaining available for | remaining available for | |||||||||||||
Number of securities | future issuance under | Number of securities | future issuance under | |||||||||||
to be issued upon | Weighted-average | equity compensation | to be issued upon | Weighted-average | equity compensation | |||||||||
exercise of | exercise price of | plans (excluding | exercise of | exercise price of | plans (excluding | |||||||||
outstanding options, | securities reflected in | outstanding options, | securities reflected in | |||||||||||
Plan category | Plan category | warrants and rights | column (a)) | Plan category | warrants and rights | column (a))(1) | ||||||||
(a) | (b) | (c) | (a) | (b) | (c) | |||||||||
Equity compensation plans approved by security holders | 1,543,761 | $45.15 | 5,871,194 | 1,212,888 | $48.98 | 5,306,619 | ||||||||
Equity compensation plans not approved by security holders* | 98 | 23.12 | -- | |||||||||||
Equity compensation plans not approved by security holders(2) | 98 | 23.12 | -- | |||||||||||
Total | 1,543,859 | $45.15 | 5,871,194 | 1,212,986 | $48.98 | 5,306,619 | ||||||||
| Under the LTIP, 5.3 million shares remained available for future issuances of equity awards as of December 31, 2009. Of the 5.3 million shares authorized for future issuances, 5.3 million are authorized for future option issuances, 3.3 million are authorized for future issuances of non-vested share awards and 2.5 million are authorized for future issuances for the payment of performance awards. Our performance award grants may be settled in Ensco shares, cash or a combination thereof. | ||
(2) | In connection with the acquisition of Chiles Offshore Inc. ("Chiles") | ||
|
Additional information required by this item is included in our Proxy Statement and incorporated herein by reference. |
|
|
Item 15. Exhibits, Financial Statement Schedules |
(a) | The following documents are filed as part of this report: |
1. Financial Statements |
Reports of Independent Registered Public Accounting Firm |
Consolidated Statements of Income |
Consolidated Balance Sheets |
Consolidated Statements of Cash Flows |
Notes to Consolidated Financial Statements | |||
2. Financial Statement Schedules: |
The schedules for which provision is made in the applicable accounting regulations of the SEC are not required under the related instructions or are inapplicable or provided elsewhere in the financial statements and, therefore, have been omitted. | ||
3. Exhibits |
|
Exhibit No. |
2.1 | - | Agreement and Plan of Merger and Reorganization, dated as of November 9, 2009, between ENSCO International Incorporated and ENSCO Newcastle LLC (incorporated by reference to Annex A to the Registrant's Registration Statement on Form S-4 (File No. 333-162975) filed on November 9, 2009). |
3.1 | - |
4.1 | - | Deposit Agreement, dated as of September 29, 2009, by and among ENSCO International Limited, Citibank, N.A., as Depositary, and the holders and beneficial owners of American Depositary Shares issued thereunder (incorporated by reference to Exhibit 4.1 to the Registrant's Registration Statement on Form S-4 (File No. 333-162975) filed on November 9, 2009). |
4.2 | - | Form of American Depositary Receipt for American Depositary Shares representing Deposited Class A Ordinary Shares of Ensco International plc (incorporated by reference to the prospectus supplement (File No. 333-162978) filed on December 18, 2009 to the Registration Statement on Form F-6 (File No. 333-162978) filed by Citibank, N.A. as ADS depositary to Ensco International plc). |
4.3 | - | Indenture, dated November 20, 1997, between the Company and Bankers Trust Company, as Trustee (incorporated by reference to Exhibit 4.1 to the Registrant's Current Report on Form 8-K |
- | First Supplemental Indenture, dated November 20, 1997, between the Company and Bankers Trust Company, as trustee, supplementing the Indenture dated as of November 20, 1997 (incorporated by reference to Exhibit 4.2 to the Registrant's Current Report on Form 8-K |
- | Second Supplemental Indenture dated December 22, 2009, among ENSCO International Incorporated, Ensco International plc and Deutsche Bank Trust Company Americas, as trustee (incorporated by reference to Exhibit 4.1 to the Registrant's Current Report on Form 8-K filed on December 23, 2009, File No. 1-8097). |
4.6 | - | Form of Debenture (incorporated by reference to Exhibit 4.4 to the Registrant's Current Report on Form 8-K |
|
- | Trust Indenture dated December 15, 1999, between ENSCO |
|
- | Supplement No.1, dated January 25, 2001, to the Trust Indenture dated December 15, 1999, between ENSCO Offshore Company and Bankers Trust Company (incorporated by reference to Exhibit 10.3 to the Registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 2001, File No. 1-8097). |
- | Amended and Restated Credit Agreement among ENSCO International Incorporated and ENSCO Offshore International Company as Borrowers, the lenders signatory thereto, Citigroup Global Markets Inc. and J.P. Morgan Securities Inc. as Joint Lead Arrangers and Joint Book Managers, Citibank, N.A. as Administrative Agent, JPMorgan Chase Bank, NA, as Syndication Agent, DnB NOR Bank ASA, New York Branch as Issuing Bank, The Bank Of Tokyo-Mitsubishi, Ltd., DnB NOR Bank ASA, New York Branch, and Wells Fargo Bank, N.A. as Co-Documentation Agents, and Mizuho Corporate Bank, Ltd. and SunTrust Bank as Co-Agents concerning a $350 million unsecured revolving credit facility, dated as of June 23, 2005 (incorporated by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K |
*10.2 | - | First Amendment to the Amended and Restated Credit Agreement among ENSCO International Incorporated, a Delaware corporation, ENSCO Offshore International Company, a Cayman Islands exempted company, Ensco International plc, an English public limited company, ENSCO Global Limited, a Cayman Islands exempted company, Citibank, N.A. as administrative agent, and the banks party thereto, dated December 23, 2009. |
|
*10.3 | - | Amended and Restated Guaranty among ENSCO International Incorporated, a Delaware corporation, Ensco International plc, a public limited company organized under English law and ENSCO Global Limited, a Cayman Island exempted company, each as guarantors, in favor of Citibank, N.A., dated December 23, 2009. |
+ | - | ENSCO International Incorporated 1998 Incentive Plan (incorporated by reference to Exhibit 4.1 to the Registrant's Form S-8 filed on July 7, 1998, Registration No. 333-58625). |
+10.5 | - | Amendment to the ENSCO International Incorporated 1998 Incentive Plan (incorporated by reference to Exhibit 10.19 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 2002, File No. 1-8097). |
+10.6 | - | Amendment to the ENSCO International Incorporated 1998 Incentive Plan (incorporated by reference to Exhibit 10.29 to the Registrant's Annual Report of Form 10-K for the year ended December 31, 2005, File No. 1-8097). |
+10.7 | - | Amendment to the ENSCO International Incorporated 1998 Incentive Plan, dated as of May 31, 2006 (incorporated by reference to Exhibit 10.4 to the Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2006, File No. 1-8097). |
+10.8 | - | Amendment to the ENSCO International Incorporated 1998 Incentive Plan, executed on December 22, 2009 and effective as of December 23, 2009 (incorporated by reference to Exhibit 10.4 to the Registrant's Current Report on Form 8-K filed on December 23, 2009, File No. 1-8097). |
+10.9 | - | ENSCO International Incorporated 2000 Stock Option Plan (formerly known as the Chiles Offshore Inc. 2000 Stock Option Plan) (incorporated by reference to Exhibit 4.6 to the Registrant's Registration Statement on Form S-8 filed on August 7, 2002, Registration No. 333-97757). |
+10.10 | - | Amendment No. 1 to the ENSCO International Incorporated 2000 Stock Option Plan (incorporated by reference to Exhibit 4.7 to the Registrant's Registration Statement on Form S-8 filed on August 7, 2002, Registration No. 333-97757). |
+10.11 | - | Amendment No. 2 to the ENSCO International Incorporated 2000 Stock Option Plan (incorporated by reference to Exhibit 4.8 to the Registrant's Registration Statement on Form S-8 filed on August 7, 2002, Registration No. 333-97757). |
+10.12 | - | Amendment No. 3 to the ENSCO International Incorporated 2000 Stock Option Plan (incorporated by reference to Exhibit 10.18 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 2002, File No. 1-8097). |
+ | - | Amendment No. 4 to the ENSCO International Incorporated |
+ |
- | ENSCO Non-Employee Director Deferred Compensation Plan (incorporated by reference to Exhibit 10.1 to the Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 2003, File No. 1-8097). |
+10.15 | - | Amendment No. 1 to the ENSCO Non-Employee Director Deferred Compensation Plan, dated as of March 11, 2008 (incorporated by reference to Exhibit 10.3 to the Registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 2008, File No. 1-8097). |
+10.16 | - | Amendment No. 2 to the ENSCO Non-Employee Director Deferred Compensation Plan, dated August 4, 2009 (incorporated by reference to Exhibit 10.4 to the Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 2009, File No. 1-8097). |
+10.17 | - | Amendment No. 3 to the ENSCO Non-Employee Director Deferred Compensation Plan, executed on December 22, 2009 and effective as of the dates indicated therein (incorporated by reference to Exhibit 10.11 to the Registrant's Current Report on Form 8-K filed on December 23, 2009, File No. 1-8097). |
|
+10.18 | - | ENSCO Supplemental Executive Retirement Plan, as amended and restated effective January 1, 2004 (incorporated by reference to Exhibit 10.2 to the Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 2003, File No. 1-8097). |
+ | - | Amendment No. 1 to the ENSCO Supplemental Executive Retirement Plan (As Amended and Restated Effective January 1, 2004), dated as of March 11, 2008 (incorporated by reference to Exhibit 10.1 to the Registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 2008, File No. 1-8097). |
+10.20 | - | Amendment No. 2 to the ENSCO Supplemental Executive Retirement Plan (As Amended and Restated effective January 1, 2004), dated November 4, 2008 (incorporated by reference to Exhibit 10.57 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 2008, File No. 1-8097). |
+10.21 | - | Amendment No. 3 to the ENSCO Supplemental Executive Retirement Plan (As Amended and Restated Effective January 1, 2004), dated August 4, 2009 (incorporated by reference to Exhibit 10.2 to the Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 2009, File No. 1-8097). |
+10.22 | - | Amendment No. 4 to the ENSCO Supplemental Executive Retirement Plan (As Amended and Restated Effective January 1, 2009), executed on December 22, 2009 and effective as of the dates indicated therein (incorporated by reference to Exhibit 10.10 to the Registrant's Current Report on Form 8-K filed on December 23, 2009, File No. 1-8097). |
+10.23 | - | ENSCO Supplemental Executive Retirement Plan and Non-Employee Director Deferred Compensation Plan Trust Agreement, as revised and restated effective January 1, 2004 (incorporated by reference to Exhibit 10.3 to the Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 2003, File No. 1-8097). |
+ |
- | ENSCO 2005 Non-Employee Director Deferred Compensation Plan, effective January 1, 2005 (incorporated by reference to Exhibit 99.2 to the Registrant's Current Report on Form 8-K |
+ | - | Amendment No. 1 to the ENSCO 2005 Non-Employee Director Deferred Compensation Plan, dated as of March 11, 2008 (incorporated by reference to Exhibit 10.4 to the Registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 2008, File No. 1-8097). |
+10.26 | - | Amendment No. 2 to the ENSCO 2005 Non-Employee Director Deferred Compensation Plan, dated as of November 4, 2008 (incorporated by reference to Exhibit 10.60 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 2008, File No. 1-8097). |
+10.27 | - | Amendment No. 3 to the ENSCO 2005 Non-Employee Director Deferred Compensation Plan, dated August 4, 2009 (incorporated by reference to Exhibit 10.5 to the Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 2009, File No. 1-8097). |
+10.28 | - | Amendment No. 4 to the ENSCO 2005 Non-Employee Director Deferred Compensation Plan, executed on December 22, 2009 and effective as of December 23, 2009 (incorporated by reference to Exhibit 10.9 to the Registrant's Current Report on Form 8-K filed on December 23, 2009, File No. 1-8097). |
+10.29 | - | ENSCO 2005 Supplemental Executive Retirement Plan (As Amended and Restated effective January 1, 2005), dated November 4, 2008 (incorporated by reference to Exhibit 10.56 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 2008, File No. 1-8097). |
+10.30 | - | Amendment No. 1 to the ENSCO 2005 Supplemental Executive Retirement Plan (As Amended and Restated Effective January 1, 2005), dated August 4, 2009 (incorporated by reference to Exhibit 10.3 to the Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 2009, File No. 1-8097). |
*+10.31 | - | Amendment No. 2 to the ENSCO 2005 Supplemental Executive Retirement Plan (As Amended and Restated Effective January 1, 2005) dated November 3, 2009. |
+10.32 | - | Amendment No. 3 to the ENSCO 2005 Supplemental Executive Retirement Plan (As Amended and Restated Effective January 1, 2005), executed on December 22, 2009 and effective as of December 23, 2009 (incorporated by reference to Exhibit 10.8 to the Registrant's Current Report on Form 8-K filed on December 23, 2009). |
+10.33 | - | ENSCO 2005 Benefit Reserve Trust, effective January 1, 2005 (incorporated by reference to Exhibit 99.3 to the Registrant's Current Report on Form 8-K |
|
+ | - | ENSCO |
+ |
- | Amendment No. 6 to the ENSCO Savings Plan (As Revised and Restated Effective January 1, 1997), dated as of September 1, 2005 (incorporated by reference to Exhibit 10.1 to the Registrant's Quarterly Report of Form 10-Q for the quarter ended September 30, 2005, File No. 1-8097). |
+ | - | Amendment No. 7 to the ENSCO Savings Plan (As Revised and Restated Effective January 1, 1997), dated as of November 9, 2005 (incorporated by reference to Exhibit 10.29 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 2006, File No. 1-8097). |
+ |
- | Amendment No. 8 to the ENSCO Savings Plan (As Revised and Restated Effective January 1, 1997), dated as of May 9, 2006 (incorporated by reference to Exhibit 10.1 to the Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2006, File No. 1-8097). |
+ |
- | Amendment No. 9 to the ENSCO Savings Plan (As Revised and Restated Effective January 1, 1997), dated as of December 26, 2006 (incorporated by reference to Exhibit 10.40 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 2006, File No. 1-8097). |
+ | - | Amendment No. 10 to the ENSCO Savings Plan (As Revised and Restated Effective January 1, 1997), dated as of December 26, 2006 (incorporated by reference to Exhibit 10.41 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 2006, File No. 1-8097). |
|
+ |
- | Amendment No. 11 to the ENSCO Savings Plan (As Revised and Restated Effective January 1, 1997), dated as of November 6, 2007 (incorporated by reference to Exhibit 10.43 |
+ |
- | Amendment No. 12 to the ENSCO Savings Plan (As Revised and Restated Effective January 1, 1997), dated as of March 11, 2008 (incorporated by reference to Exhibit 10.5 |
+ |
|
- | Amendment No. 13 to the ENSCO Savings Plan (As Revised and Restated Effective January 1, 1997), dated November 4, |
+ |
- | Amendment No. |
+10.44 | - | Amendment No. 15 to the ENSCO Savings Plan (As Revised and Restated Effective January 1, 1997), dated as of November |
+ | - | Amendment No. 16 to the ENSCO Savings Plan (As Revised and Restated Effective January 1, 1997), executed on December 22, 2009 and effective as of December 23, 2009 (incorporated by reference to Exhibit 10.7 to the Registrant's Current Report on Form 8-K filed on December 23, 2009, File No. 1-8097). |
+10.46 | - | Trust Deed with respect to the Trust to be known as The Ensco Multinational Savings Plan between Ensco International Incorporated (as Plan Sponsor) and Citco Trustees (Cayman) Limited (as Original Trustee), effective as of January 1, |
+10.47 | - | Deed of Amendment to the Ensco Multinational Savings Plan between Citco Trustees (Cayman) Limited (as Trustee) and ENSCO International Incorporated (as Plan Sponsor), dated August 4, 2009 (incorporated by reference to Exhibit 10.6 to the Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 2009, File No. 1-8097). |
|
+10.48 | - | Deed of Amendment No. 2 to the Ensco Multinational Savings Plan, executed as of December 21, 2009 and effective as of December 23, 2009 (incorporated by reference to Exhibit 10.2 to the Registrant's Current Report on Form 8-K filed on December 23, 2009, File No. 1-8097). |
+10.49 | - | Deed of Assumption, dated December 22, 2009, executed by Ensco International plc. (incorporated by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K filed on December 23, 2009, File No. 1-8097). |
+10.50 | - | ENSCO International Incorporated 2005 Long-Term Incentive Plan (As Revised and Restated on December 22, 2009 and As Assumed by Ensco International plc as of December 23, 2009, including Annex 1 and Annex 2 thereto) (incorporated by reference to Exhibit 10.3 to the Registrant's Current Report on Form 8-K filed on December 23, 2009, File No. 1-8097). |
+10.51 | - | Form of ENSCO International Incorporated 2005 Long-Term Incentive Award Terms and Conditions and Acceptance Agreement (incorporated by reference to Exhibit 10.7 to the Registrant's Current Report on Form 8-K filed on November 6, 2009, File No. 1-8097). |
+10.52 | - | Form of Ensco Performance-Based Long-Term Incentive Award Summary (incorporated by reference to Exhibit 10.6 to the Registrant's Current Report on Form 8-K filed on November 6, 2009, File No. 1-8097). |
+10.53 | - | ENSCO International Incorporated 2005 Cash Incentive Plan, effective January 1, 2005 (incorporated by reference to Exhibit C to the Registrant's Definitive Proxy Statement filed on March 21, 2005, File No. 1-8097). |
+10.54 | - | Amendment to the ENSCO International Incorporated 2005 Cash Incentive Plan, dated as of May 21, 2008 (incorporated by reference to Exhibit 10.2 to the Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2008, File No. 1-8097). |
+10.55 | - | Second Amendment to the ENSCO International Incorporated 2005 Cash Incentive Plan, dated as of November 4, 2008 (incorporated by reference to Exhibit 10.59 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 2008, File No. 1-8097). |
+10.56 | - | 2009 Performance Criteria for Named Executive Officers under the ENSCO 2005 Cash Incentive Plan (incorporated by reference to Item 5.02 to the Registrant's Current Report on Form 8-K dated December 30, 2008, File No. 1-8097). |
+10.57 | - | ENSCO International Incorporated Form of Indemnification Agreement with Non-Employee Directors (incorporated by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K filed on November 6, 2009, File No. 1-8097). |
+10.58 | - | ENSCO International Incorporated Form of Indemnification Agreement with Executive Officers (incorporated by reference to Exhibit 10.2 to the Registrant's Current Report on Form 8-K filed on November 6, 2009, File No. 1-8097). |
+10.59 | - | ENSCO International Incorporated Form of Indemnification Agreement with Daniel W. Rabun (incorporated by reference to Exhibit 10.3 to the Registrant's Current Report on Form 8-K filed on November 6, 2009, File No. 1-8097). |
+10.60 | - | ENSCO International Incorporated Form of Indemnification Agreement with John Mark Burns (incorporated by reference to Exhibit 10.4 to the Registrant's Current Report on Form 8-K filed on November 6, 2009, File No. 1-8097). |
+10.61 | - | Form of Indemnification Agreement of ENSCO International Incorporated (incorporated by reference to Exhibit 10.12 to the Registrant's Current Report on Form 8-K filed on December 23, 2009, File No. 1-8097). |
+10.62 | - | Form of Deed of Indemnity of Ensco International plc (incorporated by reference to Exhibit 10.13 to the Registrant's Current Report on Form 8-K filed on December 23, 2009, File No. 1-8097). |
+10.63 | - | Employment Offer Letter Agreement dated January 13, 2006 and accepted on February 6, 2006 between the Company and Daniel W. Rabun (incorporated by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K filed on February 6, 2006, File No. 1-8097). |
+10.64 | - | Amendment to the Employment Offer Letter Agreement between ENSCO International Incorporated and Daniel W. Rabun, dated December 22, 2009 (incorporated by reference to Exhibit 10.15 to the Registrant's Current Report on Form 8-K filed on December 23, 2009, File No. 1-8097). |
116 |
+10.65 | - | Amendment and Restatement of the Letter Agreement between ENSCO International Incorporated and William S. Chadwick, Jr., dated December 22, 2009 (incorporated by reference to Exhibit 10.14 to the Registrant's Current Report on Form 8-K filed on December 23, 2009, File No. 1-8097). |
+10.66 | - | Employment Offer Letter dated May 19, 2008 and accepted on May 22, 2008 between the Registrant and Mark Burns (incorporated by reference to Exhibit 10.3 to the Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2008, File No. 1-8097). |
+10.67 | - | Employment Offer Letter dated June 23, 2008 and accepted July 22, 2008 between the Registrant and Carey Lowe (incorporated by reference to Exhibit 10.1 to the Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 2008, File No. 1-8097). |
+10.68 | - | Summary of Changes in Compensation of Non-Employee Directors, effective June 1, 2009 (incorporated by reference to Exhibit 10.1 to the Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2009, File No. 1-8097). |
+10.69 | - | Separation Agreement dated June 29, 2009 between Phillip J. Saile and ENSCO International Incorporated (incorporated by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K dated June 30, 2009, File No. 1-8097). |
+10.70 | - | Retirement Agreement dated February 28, 2007 between the Company and Carl F. Thorne (incorporated by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K filed on February 28, 2007, File No. 1-8097). |
+10.71 | - | Summary of Relocation Benefits of Certain Executive Officers (incorporated by reference to Item 5.02 to the Registrant's Current Report on Form 8-K filed on November 30, 2009, File No. 1-8097). |
*21.1 | - | Subsidiaries of the Registrant. |
*23.1 | - | Consent of Independent Registered Public Accounting Firm. |
**31.1 | - | Certification of the Chief Executive Officer of Registrant pursuant to Rule 13a-14 or 15d-14 of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
**31.2 | - | Certification of the Chief Financial Officer of Registrant pursuant to Rule 13a-14 or 15d-14 of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
**32.1 | - | Certification of the Chief Executive Officer of Registrant pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
**32.2 | - | Certification of the Chief Financial Officer of Registrant pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
**101.INS | - | XBRL Instance Document |
**101.SCH | - | XBRL Taxonomy Extension Schema |
**101.CAL | - | XBRL Taxonomy Extension Calculation Linkbase |
**101.DEF | - | XBRL Taxonomy Extension Definition Linkbase |
**101.LAB | - | XBRL Taxonomy Extension Label Linkbase |
**101.PRE | - | XBRL Taxonomy Extension Presentation Linkbase |
* Filed herewith |
** Furnished herewith |
+ Management contracts or compensatory plans and arrangements required to be filed as exhibits pursuant to Item 15(b) of this report. |
|
|
(Registrant) | ||
By /s/ DANIEL W. RABUN Daniel W. Rabun Chairman, President and Chief Executive Officer |
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the Registrant and in the capacities and on the date indicated. |
Signatures | Title | Date | ||
/s/ DANIEL W. RABUN Daniel W. Rabun | Chairman, President and Chief Executive Officer | February 25, 2010 | ||
/s/ DAVID M. CARMICHAEL David M. Carmichael | Director | February | ||
/s/ J. RODERICK CLARK J. Roderick Clark | Director | February | ||
/s/ C. CHRISTOPHER GAUT C. Christopher Gaut | Director | February | ||
/s/ GERALD W. HADDOCK Gerald W. Haddock | Director | February | ||
/s/ THOMAS L. KELLY II Thomas L. Kelly II | Director | February | ||
/s/ KEITH O. RATTIE Keith O. Rattie | Director | February | ||
/s/ RITA M. RODRIGUEZ Rita M. Rodriguez | Director | February | ||
/s/ PAUL E. ROWSEY, III Paul E. Rowsey, III | Director | February | ||
/s/ JAMES W. SWENT III James W. Swent III | Senior Vice President - Chief Financial Officer | February | ||
/s/ DAVID A. ARMOUR David A. Armour | Vice President - Finance | February | ||
/s/ DOUGLAS J. MANKO Douglas J. Manko | Controller and Assistant Secretary | February |
|