UNITED STATES |
X | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended |
OR |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to |
Commission File Number 1-8097 |
ENSCO International Incorporated |
DELAWARE (State or other jurisdiction of incorporation or organization) 500 North Akard Street Suite 4300 Dallas, Texas (Address of principal executive offices) | 76-0232579 (I.R.S. Employer Identification No.) 75201-3331 (Zip Code) |
Registrant's telephone number, including area code:(214) 397-3000 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 Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes There were |
ENSCO INTERNATIONAL INCORPORATEDINDEX TO FORM 10-QFOR THE QUARTER ENDED |
FORWARD-LOOKING STATEMENTS
|
PART I - FINANCIAL INFORMATION |
CONSOLIDATED STATEMENTS OF INCOME |
Three Months Ended | |||||||
---|---|---|---|---|---|---|---|
September 30, | |||||||
2003 | 2002 | ||||||
OPERATING REVENUES | $199 | .6 | $179 | .2 | |||
OPERATING EXPENSES | |||||||
Contract drilling | 114 | .7 | 93 | .5 | |||
Depreciation and amortization | 33 | .7 | 29 | .9 | |||
General and administrative | 5 | .2 | 4 | .8 | |||
153 | .6 | 128 | .2 | ||||
OPERATING INCOME | 46 | .0 | 51 | .0 | |||
OTHER INCOME (EXPENSE) | |||||||
Interest income | .9 | 1 | .1 | ||||
Interest expense, net | (8 | .9) | (7 | .7) | |||
Other, net | .8 | (1 | .8) | ||||
(7 | .2) | (8 | .4) | ||||
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES | 38 | .8 | 42 | .6 | |||
PROVISION FOR INCOME TAXES | |||||||
Current income taxes | 1 | .9 | 4 | .1 | |||
Deferred income taxes | 9 | .2 | 9 | .5 | |||
11 | .1 | 13 | .6 | ||||
INCOME FROM CONTINUING OPERATIONS | 27 | .7 | 29 | .0 | |||
INCOME FROM DISCONTINUED OPERATIONS, NET | .1 | 1 | .5 | ||||
NET INCOME | $ 27 | .8 | $ 30 | .5 | |||
EARNINGS PER SHARE - BASIC | |||||||
Continuing operations | $ .1 | 8 | $ .2 | 0 | |||
Discontinued operations | .0 | 1 | .0 | 1 | |||
$ .1 | 9 | $ .2 | 1 | ||||
EARNINGS PER SHARE - DILUTED | |||||||
Continuing operations | $ .1 | 8 | $ .2 | 0 | |||
Discontinued operations | .0 | 1 | .0 | 1 | |||
$ .1 | 9 | $ .2 | 1 | ||||
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING | |||||||
Basic | 149. | 8 | 143. | 6 | |||
Diluted | 150. | 2 | 144. | 3 | |||
CASH DIVIDENDS PER COMMON SHARE | $ .02 | 5 | $ .02 | 5 |
Three Months Ended | |||||||
---|---|---|---|---|---|---|---|
March 31, | |||||||
2004 | 2003 | ||||||
OPERATING REVENUES | $186 | .5 | $192 | .9 | |||
OPERATING EXPENSES | |||||||
Contract drilling | 107 | .4 | 109 | .5 | |||
Depreciation and amortization | 35 | .6 | . | 31 | .8 | ||
General and administrative | 5 | .7 | 5 | .9 | |||
148 | .7 | 147 | .2 | ||||
OPERATING INCOME | 37 | .8 | 45 | .7 | |||
OTHER INCOME (EXPENSE) | |||||||
Interest income | .8 | .7 | |||||
Interest expense, net | (10 | .0) | (9 | .2) | |||
Other, net | .5 | .2 | |||||
(8 | .7) | (8 | .3) | ||||
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES | 29 | .1 | 37 | .4 | |||
PROVISION FOR INCOME TAXES | |||||||
Current income tax expense | 2 | .2 | 2 | .6 | |||
Deferred income tax expense | 5 | .6 | 8 | .1 | |||
7 | .8 | 10 | .7 | ||||
INCOME FROM CONTINUING OPERATIONS | 21 | .3 | 26 | .7 | |||
LOSS FROM DISCONTINUED OPERATIONS | ( | .3) | (3 | .8) | |||
NET INCOME | $ 21 | .0 | $ 22 | .9 | |||
EARNINGS (LOSS) PER SHARE - BASIC | |||||||
Continuing operations | $ .1 | 4 | $ .1 | 8 | |||
Discontinued operations | (.0 | 0) | (.0 | 3) | |||
$ .1 | 4 | $ .1 | 5 | ||||
EARNINGS (LOSS) PER SHARE - DILUTED | |||||||
Continuing operations | $ .1 | 4 | $ .1 | 8 | |||
Discontinued operations | (.0 | 0) | (.0 | 3) | |||
$ .1 | 4 | $ .1 | 5 | ||||
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING | |||||||
Basic | 150 | .6 | 149 | .2 | |||
Diluted | 150 | .8 | 149 | .9 | |||
CASH DIVIDENDS PER COMMON SHARE | $ .0 | 25 | $ .0 | 25 | |||
The accompanying notes are an integral part of these financial statements. |
|
Nine Months Ended | |||||||
---|---|---|---|---|---|---|---|
September 30, | |||||||
2003 | 2002 | ||||||
OPERATING REVENUES | $591 | .6 | $455 | .3 | |||
OPERATING EXPENSES | |||||||
Contract drilling | 337 | .0 | 246 | .4 | |||
Depreciation and amortization | 100 | .6 | 84 | .6 | |||
General and administrative | 15 | .9 | 13 | .8 | |||
453 | .5 | 344 | .8 | ||||
OPERATING INCOME | 138 | .1 | 110 | .5 | |||
OTHER INCOME (EXPENSE) | |||||||
Interest income | 2 | .5 | 4 | .2 | |||
Interest expense, net | (27 | .2) | (23 | .6) | |||
Other, net | ( | .4) | 6 | .4 | |||
(25 | .1) | (13 | .0) | ||||
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES | 113 | .0 | 97 | .5 | |||
PROVISION FOR INCOME TAXES | |||||||
Current income taxes | 6 | .0 | 9 | .1 | |||
Deferred income taxes | 26 | .2 | 22 | .0 | |||
32 | .2 | 31 | .1 | ||||
INCOME FROM CONTINUING OPERATIONS | 80 | .8 | 66 | .4 | |||
DISCONTINUED OPERATIONS | |||||||
Income (loss) from discontinued operations, net | (3 | .1) | 3 | .6 | |||
Gain on disposal of discontinued operations, net | 4 | .1 | -- | ||||
1 | .0 | 3 | .6 | ||||
NET INCOME | $ 81 | .8 | $ 70 | .0 | |||
EARNINGS PER SHARE - BASIC | |||||||
Continuing operations | $ .5 | 4 | $ .4 | 8 | |||
Discontinued operations | .0 | 1 | .0 | 3 | |||
$ .5 | 5 | $ .5 | 1 | ||||
EARNINGS PER SHARE - DILUTED | |||||||
Continuing operations | $ .5 | 4 | $ .4 | 8 | |||
Discontinued operations | .0 | 1 | .0 | 2 | |||
$ .5 | 5 | $ .5 | 0 | ||||
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING | |||||||
Basic | 149. | 5 | 137. | 9 | |||
Diluted | 150. | 0 | 138. | 7 | |||
CASH DIVIDENDS PER COMMON SHARE | $ .07 | 5 | $ .07 | 5 |
|
ENSCO INTERNATIONAL INCORPORATED AND SUBSIDIARIES |
September 30, | December 31, | March 31, | December 31, | |||||||
---|---|---|---|---|---|---|---|---|---|---|
2003 | 2002 | 2004 | 2003 | |||||||
(Unaudited) | (Unaudited) | |||||||||
ASSETS | ||||||||||
CURRENT ASSETS | ||||||||||
Cash and cash equivalents | $ 326 | .9 | $ 147 | .1 | $ 297 | .3 | $ 354 | .0 | ||
Short-term investments | -- | 38 | .4 | |||||||
Accounts receivable, net | 164 | .4 | 162 | .8 | 151 | .0 | 149 | .4 | ||
Prepaid expenses and other | 41 | .0 | 39 | .2 | 36 | .4 | 39 | .9 | ||
Total current assets | 532 | .3 | 387 | .5 | 484 | .7 | 543 | .3 | ||
PROPERTY AND EQUIPMENT, AT COST | 3,100 | .4 | 3,090 | .0 | 3,216 | .9 | 3,126 | .3 | ||
Less accumulated depreciation | 875 | .2 | 832 | .0 | 910 | .7 | 909 | .1 | ||
Property and equipment, net | 2,225 | .2 | 2,258 | .0 | 2,306 | .2 | 2,217 | .2 | ||
GOODWILL | 341 | .6 | 350 | .2 | 342 | .7 | 342 | .7 | ||
ASSETS OF DISCONTINUED OPERATIONS | 40 | .6 | -- | |||||||
OTHER ASSETS, NET | 74 | .2 | 65 | .8 | 37 | .2 | 79 | .8 | ||
$3,173 | .3 | $3,061 | .5 | $3,211 | .4 | $3,183 | .0 | |||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||||
CURRENT LIABILITIES | ||||||||||
Accounts payable | $ 12 | .4 | $ 15 | .0 | $ 16 | .1 | $ 15 | .8 | ||
Accrued liabilities | 186 | .3 | 161 | .8 | 151 | .2 | 148 | .6 | ||
Current maturities of long-term debt | 23 | .0 | 21 | .5 | 23 | .0 | 23 | .0 | ||
Total current liabilities | 221 | .7 | 198 | .3 | 190 | .3 | 187 | .4 | ||
LONG-TERM DEBT | 558 | .4 | 547 | .5 | 547 | .1 | 549 | .9 | ||
DEFERRED INCOME TAXES | 325 | .8 | 332 | .3 | 337 | .0 | 345 | .9 | ||
LIABILITIES OF DISCONTINUED OPERATIONS | 14 | .1 | -- | |||||||
OTHER LIABILITIES | 16 | .9 | 16 | .4 | 17 | .7 | 18 | .7 | ||
COMMITMENTS AND CONTINGENCIES | ||||||||||
STOCKHOLDERS' EQUITY | ||||||||||
First preferred stock, $1 par value, 5.0 million shares authorized | ||||||||||
and none issued | -- | -- | ||||||||
Preferred stock, $1 par value, 15.0 million shares authorized | ||||||||||
and none issued | -- | -- | ||||||||
First preferred stock, $1 par value, 5.0 million shares authorized, | ||||||||||
none issued | -- | -- | ||||||||
Preferred stock, $1 par value, 15.0 million shares authorized, | ||||||||||
none issued | -- | -- | ||||||||
Common stock, $.10 par value, 250.0 million shares authorized, | ||||||||||
173.5 million and 172.6 million shares issued | 17 | .3 | 17 | .2 | ||||||
174.4 million and 173.9 million shares issued | 17 | .4 | 17 | .4 | ||||||
Additional paid-in capital | 1,399 | .5 | 1,383 | .5 | 1,415 | .6 | 1,409 | .0 | ||
Retained earnings | 905 | .8 | 835 | .3 | 945 | .9 | 928 | .6 | ||
Restricted stock (unearned compensation) | (7 | .7) | (5 | .8) | (12 | .6) | (13 | .0) | ||
Accumulated other comprehensive loss | (11 | .4) | (12 | .1) | (11 | .0) | (10 | .9) | ||
Treasury stock, at cost, 23.7 million and 23.6 million shares | (253 | .0) | (251 | .1) | ||||||
Treasury stock, at cost, 23.4 million shares | (250 | .1) | (250 | .0) | ||||||
Total stockholders' equity | 2,050 | .5 | 1,967 | .0 | 2,105 | .2 | 2,081 | .1 | ||
$3,173 | .3 | $3,061 | .5 | $3,211 | .4 | $3,183 | .0 |
The accompanying notes are an integral part of these financial statements. |
ENSCO INTERNATIONAL INCORPORATED AND SUBSIDIARIES |
Nine Months Ended September 30, | Three Months Ended March 31, | |||||||||
---|---|---|---|---|---|---|---|---|---|---|
2003 | 2002 | 2004 | 2003 | |||||||
OPERATING ACTIVITIES | ||||||||||
Net income | $ 81 | .8 | $ 70 | .0 | $ 21 | .0 | $ 22 | .9 | ||
Adjustments to reconcile net income to net cash provided | ||||||||||
by operating activities: | ||||||||||
(Income) loss from discontinued operations | 3 | .1 | (3 | .6) | ||||||
Loss from discontinued operations | .3 | 3 | .8 | |||||||
Depreciation and amortization | 100 | .6 | 84 | .6 | 35 | .6 | 31 | .8 | ||
Deferred income tax provision | 26 | .2 | 22 | .0 | 5 | .6 | 8 | .1 | ||
Gain on sale of discontinued operations, net | (4 | .1) | -- | |||||||
Tax benefit from stock compensation | 4 | .4 | 3 | .1 | 1 | .8 | 1 | .9 | ||
Amortization of other assets | 4 | .1 | 7 | .1 | 1 | .6 | .8 | |||
Net (gain) loss on asset dispositions | .5 | (5 | .9) | |||||||
Net gain on asset dispositions | ( | .1) | ( | .5) | ||||||
Other | 1 | .7 | 2 | .6 | .8 | .7 | ||||
Changes in operating assets and liabilities: | ||||||||||
Increase in accounts receivable | (1 | .1) | (15 | .0) | (1 | .5) | (12 | .2) | ||
Increase in prepaid expenses and other assets | (8 | .9) | (16 | .8) | ||||||
Decrease in accounts payable | (2 | .7) | (3 | .6) | ||||||
Decrease (increase) in prepaid expenses and other assets | 2 | .8 | (3 | .0) | ||||||
Increase in accounts payable | .3 | 5 | .5 | |||||||
Increase in accrued liabilities | .5 | 6 | .7 | 2 | .0 | 10 | .9 | |||
Net cash provided by operating activities of continuing operations | 206 | .1 | 151 | .2 | 70 | .2 | 70 | .7 | ||
INVESTING ACTIVITIES | ||||||||||
Additions to property and equipment | (141 | .3) | (156 | .7) | (125 | .6) | (53 | .3) | ||
Net cash used in Chiles acquisition | -- | (99 | .9) | |||||||
Net proceeds from sale of discontinued operations | 78 | .8 | -- | |||||||
Proceeds from disposition of assets | 4 | .4 | 24 | .4 | .6 | .6 | ||||
Purchase of investments | -- | (1 | .0) | |||||||
Investment in joint venture | ( | .3) | -- | |||||||
Sale of investments | 38 | .4 | 23 | .0 | -- | 1 | .3 | |||
Investment in joint venture | (11 | .7) | -- | |||||||
Net cash used in investing activities of continuing operations | (31 | .4) | (210 | .2) | ||||||
Net cash used by investing activities of continuing operations | (125 | .3) | (51 | .4) | ||||||
FINANCING ACTIVITIES | ||||||||||
Proceeds from long-term borrowings | 26 | .7 | -- | |||||||
Reduction of long-term borrowings | (14 | .5) | (57 | .3) | (2 | .9) | (2 | .9) | ||
Cash dividends paid | (11 | .3) | (10 | .5) | (3 | .7) | (3 | .7) | ||
Proceeds from exercise of stock options | 7 | .7 | 17 | .3 | 4 | .8 | 2 | .6 | ||
Deferred financing costs | -- | (1 | .3) | |||||||
Other | ( | .7) | (1 | .1) | -- | ( | .6) | |||
Net cash provided by (used in) financing activities of continuing operations | 7 | .9 | (52 | .9) | ||||||
Net cash used by financing activities of continuing operations | (1 | .8) | (4 | .6) | ||||||
Effect of exchange rate changes on cash and cash equivalents | .8 | (1 | .5) | ( | .5) | ( | .2) | |||
Net cash used in discontinued operations | (3 | .6) | (2 | .4) | ||||||
Net cash provided (used) by discontinued operations | .7 | (2 | .7) | |||||||
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | 179 | .8 | (115 | .8) | (56 | .7) | 11 | .8 | ||
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD | 147 | .1 | 278 | .8 | 354 | .0 | 147 | .1 | ||
CASH AND CASH EQUIVALENTS, END OF PERIOD | $326 | .9 | $163 | .0 | $297 | .3 | $158 | .9 |
The accompanying notes are an integral part of these financial statements. |
ENSCO INTERNATIONAL INCORPORATED AND SUBSIDIARIES |
Note 1 - Unaudited Financial Statements The accompanying consolidated financial statements of ENSCO International Incorporated The financial data for the Results of operations for the
Certain reclassifications have been made to the Note 2 - Earnings Per Share For the |
Three Months | Nine Months | |||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Ended September 30, | ||||||||||||||||||
2003 | 2002 | 2003 | 2002 | 2004 | 2003 | |||||||||||||
Weighted average common shares-basic | 149 | .8 | 143 | .6 | 149 | .5 | 137 | .9 | 150 | .6 | 149 | .2 | ||||||
Potentially dilutive common shares: | ||||||||||||||||||
Restricted stock grants | .1 | .1 | ||||||||||||||||
Stock options | .4 | .7 | .5 | .8 | .1 | .6 | ||||||||||||
Weighted average common shares-diluted | 150 | .2 | 144 | .3 | 150 | .0 | 138 | .7 | 150 | .8 | 149 | .9 |
Options to purchase |
The Company uses the intrinsic value method of accounting for employee stock options in accordance with Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees." No compensation expense related to employee stock options is included in the Company's net income, as the exercise price of the Company's stock options equals the market value of the underlying stock on the date of grant. The following table includes disclosures required by Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based Compensation" ("SFAS 123"), as amended by Statement of Financial Accounting Standards No. 148, "Accounting for Stock-Based Compensation - Transition and Disclosure," and illustrates the effect on net income and earnings per share as if the Company had applied the fair value recognition provisions of SFAS 123 (in millions, except per share amounts): |
Three Months Ended September 30, | Nine Months Ended September 30, | Three Months Ended | ||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2003 | 2002 | 2003 | 2002 | March 31, | ||||||||||||
2004 | 2003 | |||||||||||||||
Net income as reported | $27 | .8 | $30 | .5 | $81 | .8 | $70 | .0 | ||||||||
Net income, as reported | $21 | .0 | $22 | .9 | ||||||||||||
Less stock-based employee compensation expense, net of tax | (2 | .5) | (3 | .3) | (6 | .7) | (7 | .3) | (2 | .3) | (2 | .1) | ||||
Pro forma net income | $25 | .3 | $27 | .2 | $75 | .1 | $62 | .7 | $18 | .7 | $20 | .8 | ||||
Basic earnings per share: | ||||||||||||||||
As reported | $ . | 19 | $ . | 21 | $ . | 55 | $ . | 51 | $ .1 | 4 | $ .1 | 5 | ||||
Pro forma | . | 17 | . | 19 | . | 50 | . | 45 | .1 | 2 | .1 | 4 | ||||
Diluted earnings per share: | ||||||||||||||||
As reported | $ . | 19 | $ . | 21 | $ . | 55 | $ . | 50 | $ .1 | 4 | $ .1 | 5 | ||||
Pro forma | . | 17 | . | 19 | . | 50 | . | 45 | .1 | 2 | .1 | 4 | ||||
|
Balance at December 31, 2002 | $350 | .2 | |
Purchase price adjustments | (8 | .6) | |
Balance at September 30, 2003 | $341 | .6 | |
|
Unrealized losses reclassified to interest expense | $1 | .2 | |
Unrealized gains reclassified to operating expenses | (1 | .0) | |
Net unrealized loss reclassified to earnings | $ | .2 | |
|
Note |
Three Months | Nine Months | |||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Ended September 30, | Ended September 30, | |||||||||||||||||
2003 | 2002 | 2003 | 2002 | 2004 | 2003 | |||||||||||||
Net income | $27 | .8 | $30 | .5 | $81 | .8 | $70 | .0 | $21 | .0 | $ 22 | .9 | ||||||
Other comprehensive income (loss): | ||||||||||||||||||
Net change in fair value of derivatives | 1 | .8 | (3 | .5) | .1 | (2 | .7) | ( | .4) | ( | .5) | |||||||
Reclassification of unrealized gains and losses on | ||||||||||||||||||
derivatives from other comprehensive income | ||||||||||||||||||
(loss) into net income | .2 | .2 | .6 | .2 | .3 | .2 | ||||||||||||
Net other comprehensive income (loss) | 2 | .0 | (3 | .3) | 0 | .7 | (2 | .5) | ||||||||||
Net other comprehensive loss | ( | .1) | ( | .3) | ||||||||||||||
Total comprehensive income | $29 | .8 | $27 | .2 | $82 | .5 | $67 | .5 | $20 | .9 | $ 22 | .6 | ||||||
The components of the accumulated other comprehensive loss section of stockholders' equity at |
September 30, | December 31, | March 31, | December 31, | |||||||
---|---|---|---|---|---|---|---|---|---|---|
2003 | 2002 | 2004 | 2003 | |||||||
Cumulative translation adjustment | $ 1 | .1 | $ 1 | .1 | $ 1 | .1 | $ 1 | .1 | ||
Net unrealized losses on derivatives | 10 | .3 | 11 | .0 | 9 | .9 | 9 | .8 | ||
Total accumulated other comprehensive loss | $11 | .4 | $12 | .1 | $11 | .0 | $10 | .9 | ||
At March 31, 2004, the net unrealized losses on derivative instruments included in accumulated other comprehensive loss totaled $9.9 million and the estimated amount that will be reclassified to earnings during the next twelve months is as follows (in millions): |
Unrealized gains reclassified to operating expenses | $ | .8 | |||
Unrealized losses reclassified to interest expense | ( | .7) | |||
Net unrealized gain reclassified to earnings | $ | .1 | |||
Note |
Three Months | Nine Months | Three Months Ended | ||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Ended September 30, | Ended September 30, | March 31, | ||||||||||||||
2003 | 2002 | 2003 | 2002 | 2004 | 2003 | |||||||||||
Revenues | $ | -- | $12 | .6 | $ 7 | .6 | $36 | .0 | ||||||||
Contract drilling | $ 2 | .5 | $ 2 | .2 | ||||||||||||
Marine transportation | -- | 7 | .6 | |||||||||||||
2 | .5 | 9 | .8 | |||||||||||||
Operating expenses | ( | .1) | 12 | .6 | 12 | .4 | 35 | .5 | ||||||||
Contract drilling | 3 | .0 | 2 | .9 | ||||||||||||
Marine transportation | -- | 12 | .7 | |||||||||||||
Operating income (loss) before income taxes | .1 | -- | (4 | .8) | .5 | |||||||||||
3 | .0 | 15 | .6 | |||||||||||||
Operating loss before income taxes | ( | .5) | (5 | .8) | ||||||||||||
Income tax benefit | -- | 1 | .5 | 1 | .7 | 3 | .1 | ( | .2) | (2 | .0) | |||||
Gain on sale of discontinued operations, net | -- | -- | 4 | .1 | -- | |||||||||||
Income from discontinued operations | $ | .1 | $ 1 | .5 | $ 1 | .0 | $ 3 | .6 | ||||||||
Loss from discontinued operations | $( | .3) | $(3 | .8) | ||||||||||||
The aggregate carrying value of the ENSCO 23, ENSCO 24 and ENSCO 55 and the deferred tax liability associated with such carrying value are reported as assets of discontinued operations and liabilities of discontinued operations, respectively, on the March 31, 2004 consolidated balance sheet. The Company does not expect to recognize a significant gain or loss in connection with the disposition of the ENSCO 23, ENSCO 24 and ENSCO 55. Note |
ENSCO Enterprises Limited Condensed Balance Sheet September 30, 2003 (In Millions) (Unaudited) | |||
Assets | |||
Cash and cash equivalents | $ 7 | .0 | |
Charter revenue receivable | 2 | .8 | |
Property and equipment, net of accumulated depreciation | 123 | .9 | |
$133 | .7 | ||
Liabilities and Stockholders' Equity | |||
Interest payable | $ 10 | .8 | |
Notes payable | 129 | .8 | |
Stockholders' equity | |||
Common stock | -- | ||
Accumulated deficit | (6 | .9) | |
Total stockholders' equity | (6 | .9) | |
$133 | .7 | ||
Three Months Ended | Nine Months Ended | ||||
---|---|---|---|---|---|
September 30, 2003 | September 30, 2003 | ||||
Charter revenue | $ 4 | .1 | $ 12 | .4 | |
Depreciation expense | (2 | .0) | (4 | .0) | |
Interest expense | (2 | .4) | (7 | .3) | |
Net income (loss) | ( | .3) | 1 | .1 | |
|
Three Months Ended | |||||||
---|---|---|---|---|---|---|---|
March 31, | |||||||
2004 | 2003 | ||||||
Charter revenue | $ 1 | .6 | $ 4 | .3 | |||
Depreciation expense | ( | .5) | (1 | .0) | |||
Interest expense | ( | .8) | (2 | .4) | |||
Net income | $ | .3 | $ | .9 | |||
The The Company's equity
|
The following analysis highlights the Company's consolidated operating results for the |
Three Months Ended | Nine Months Ended | ||||||||
---|---|---|---|---|---|---|---|---|---|
September 30, | September 30, | ||||||||
2003 | 2002 | 2003 | 2002 | ||||||
Operating Results | |||||||||
Revenues | $199 | .6 | $179 | .2 | $591 | .6 | $455 | .3 | |
Operating expenses | |||||||||
Contract drilling | 114 | .7 | 93 | .5 | 337 | .0 | 246 | .4 | |
Depreciation and amortization | 33 | .7 | 29 | .9 | 100 | .6 | 84 | .6 | |
General and administrative | 5 | .2 | 4 | .8 | 15 | .9 | 13 | .8 | |
Operating income | 46 | .0 | 51 | .0 | 138 | .1 | 110 | .5 | |
Other expense, net | 7 | .2 | 8 | .4 | 25 | .1 | 13 | .0 | |
Provision for income taxes | 11 | .1 | 13 | .6 | 32 | .2 | 31 | .1 | |
Income from continuing operations | 27 | .7 | 29 | .0 | 80 | .8 | 66 | .4 | |
Income from discontinued operations | .1 | 1 | .5 | 1 | .0 | 3 | .6 | ||
Net income | $27 | .8 | $30 | .5 | $81 | .8 | $70 | .0 | |
Revenues | |||||||||
Jackup rigs: | |||||||||
North America | $ 57 | .5 | $ 50 | .2 | $155 | .4 | $119 | .3 | |
Europe/Africa | 41 | .5 | 47 | .8 | 139 | .5 | 131 | .4 | |
Asia Pacific | 62 | .5 | 48 | .5 | 182 | .3 | 126 | .5 | |
South America/Caribbean | 8 | .4 | 4 | .1 | 24 | .1 | 4 | .1 | |
Total jackup rigs | 169 | .9 | 150 | .6 | 501 | .3 | 381 | .3 | |
Semisubmersible rig - North America | 16 | .5 | 17 | .2 | 50 | .0 | 44 | .3 | |
Barge rig - Asia Pacific | 5 | .0 | 2 | .1 | 14 | .4 | 2 | .1 | |
Barge rigs - South America/Caribbean | 4 | .1 | 3 | .7 | 11 | .4 | 12 | .4 | |
Platform rigs - North America | 4 | .1 | 5 | .6 | 14 | .5 | 15 | .2 | |
Total | $199 | .6 | $179 | .2 | $591 | .6 | $455 | .3 | |
Contract Drilling Expense | |||||||||
Jackup rigs: | |||||||||
North America | $ 38 | .9 | $ 32 | .9 | $112 | .6 | $ 92 | .1 | |
Europe/Africa | 24 | .7 | 22 | .9 | 73 | .9 | 58 | .4 | |
Asia Pacific | 33 | .7 | 22 | .5 | 99 | .5 | 54 | .7 | |
South America/Caribbean | 3 | .4 | 1 | .9 | 9 | .8 | 1 | .9 | |
Total jackup rigs | 100 | .7 | 80 | .2 | 295 | .8 | 207 | .1 | |
Semisubmersible rig - North America | 5 | .1 | 4 | .8 | 14 | .5 | 16 | .2 | |
Barge rig - Asia Pacific | 3 | .3 | 2 | .2 | 9 | .0 | 2 | .2 | |
Barge rigs - South America/Caribbean | 2 | .8 | 2 | .8 | 8 | .1 | 10 | .4 | |
Platform rigs - North America | 2 | .8 | 3 | .5 | 9 | .6 | 10 | .5 | |
Total | $114 | .7 | $ 93 | .5 | $337 | .0 | $246 | .4 | |
Rig Utilization:(1) | |||||||||
Jackup rigs: | |||||||||
North America | 86% | 87% | 86% | 89% | |||||
Europe/Africa | 91% | 79% | 93% | 76% | |||||
Asia Pacific | 88% | 76% | 87% | 77% | |||||
South America/Caribbean | 98% | 100% | 99% | 100% | |||||
Total jackup rigs | 88% | 83% | 88% | 83% | |||||
Semisubmersible rig - North America | 95% | 100% | 97% | 89% | |||||
Barge rig - Asia Pacific | 100% | 100% | 98% | 100% | |||||
Barge rigs - South America/Caribbean | 17% | 15% | 17% | 16% | |||||
Platform rigs - North America | 40% | 60% | 44% | 56% | |||||
Total | 76% | 73% | 77% | 72% | |||||
Average day rates:(2) | |||||||||
Jackup rigs: | |||||||||
North America | $ 31,987 | $ 30,542 | $ 29,208 | $ 25,095 | |||||
Europe/Africa | 61,025 | 78,507 | 67,534 | 78,363 | |||||
Asia Pacific | 62,989 | 59,029 | 62,980 | 58,126 | |||||
South America/Caribbean | 90,040 | 75,771 | 85,408 | 75,771 | |||||
Total jackup rigs | 47,803 | 47,993 | 47,512 | 44,027 | |||||
Semisubmersible rig - North America | 189,433 | 187,048 | 188,700 | 184,423 | |||||
Barge rig - Asia Pacific | 41,923 | 41,750 | 41,172 | 41,750 | |||||
Barge rigs - South America/Caribbean | 42,569 | 38,120 | 40,135 | 40,191 | |||||
Platform rigs - North America | 25,846 | 26,688 | 26,170 | 25,595 | |||||
Total | $ 50,118 | $ 50,290 | $ 49,587 | $ 46,456 | |||||
2004 | 2003 | ||||||||
---|---|---|---|---|---|---|---|---|---|
Revenues | $186 | .5 | $192 | .9 | |||||
Operating expenses | |||||||||
Contract drilling | 107 | .4 | 109 | .5 | |||||
Depreciation and amortization | 35 | .6 | 31 | .8 | |||||
General and administrative | 5 | .7 | 5 | .9 | |||||
Operating income | 37 | .8 | 45 | .7 | |||||
Other expense, net | (8 | .7) | (8 | .3) | |||||
Provision for income taxes | 7 | .8 | 10 | .7 | |||||
Income from continuing operations | 21 | .3 | 26 | .7 | |||||
Loss from discontinued operations | ( | .3) | (3 | .8) | |||||
Net income | $ 21 | .0 | $ 22 | .9 | |||||
First quarter 2004 revenues decreased $6.4 million, or 3%, from the prior year first quarter. The decrease in revenues is due primarily to reduced day rates for the Europe/Africa jackup rigs and reduced utilization for the Asia Pacific jackup rigs and the ENSCO 7500, partially offset by increased day rates for the North America jackup rigs. First quarter 2004 contract drilling expense decreased $2.1 million, or 2%, from the prior year first quarter. The decrease in contract drilling expense is primarily due to a $2.5 million decrease in costs associated with the ENSCO 102 joint venture charter operations, which ceased effective January 31, 2004 upon ENSCO's acquisition of the rig from the joint venture (see Note 5 to the Company's Consolidated Financial Statements for information concerning the Company's charter of the ENSCO 102). |
Detailed explanations of the Company's operating results for the three month periods ended March 31, 2004 and 2003, including discussions of revenue and contract drilling expenses based on geographical location and type of rig, are set forth below. Revenue and Contract Drilling Expense The following is an analysis of the Company's revenues, contract drilling expense, rig utilization and average day rates for the three month periods ended March 31, 2004 and 2003 (in millions): |
2004 | 2003 | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Revenues | |||||||||||||
Jackup rigs: | |||||||||||||
North America | $ 65.1 | $44.8 | |||||||||||
Europe/Africa | 37.6 | 48.8 | |||||||||||
Asia Pacific | 53.0 | 61.8 | |||||||||||
South America/Caribbean | 8.1 | 7.3 | |||||||||||
Total jackup rigs | 163.8 | 162.7 | |||||||||||
Semisubmersible rig - North America | 11.9 | 16.4 | |||||||||||
Barge rig - Asia Pacific | 3.8 | 4.7 | |||||||||||
Barge rigs - South America/Caribbean | 4.3 | 3.4 | |||||||||||
Platform rigs - North America | 2.7 | 5.7 | |||||||||||
Total | $186.5 | $192.9 | |||||||||||
Contract Drilling Expense | |||||||||
Jackup rigs: | |||||||||
North America | $ 37.5 | $ 34.4 | |||||||
Europe/Africa | 25.1 | 25.0 | |||||||
Asia Pacific | 30.8 | 33.8 | |||||||
South America/Caribbean | 3.2 | 3.1 | |||||||
Total jackup rigs | 96.6 | 96.3 | |||||||
Semisubmersible rig - North America | 4.3 | 4.9 | |||||||
Barge rig - Asia Pacific | 1.9 | 2.8 | |||||||
Barge rigs - South America/Caribbean | 2.8 | 2.5 | |||||||
Platform rigs - North America | 1.8 | 3.0 | |||||||
Total | $107.4 | $109.5 | |||||||
Rig Utilization(1) | |||||||||
Jackup rigs: | |||||||||
North America | 87% | 83% | |||||||
Europe/Africa | 91% | 91% | |||||||
Asia Pacific | 76% | 89% | |||||||
South America/Caribbean | 98% | 100% | |||||||
Total jackup rigs | 85% | 87% | |||||||
Semisubmersible rig - North America | 66% | 97% | |||||||
Barge rig - Asia Pacific | 100% | 99% | |||||||
Barge rigs - South America/Caribbean | 17% | 17% | |||||||
Platform rigs - North America | 33% | 84% | |||||||
Total | 74% | 79% | |||||||
Average day rates(2) | |||||||||
Jackup rigs: | |||||||||
North America | $ 38,964 | $ 27,960 | |||||||
Europe/Africa | 56,506 | 71,724 | |||||||
Asia Pacific | 63,931 | 63,154 | |||||||
South America/Caribbean | 89,637 | 80,087 | |||||||
Total jackup rigs | 50,166 | 48,474 | |||||||
Semisubmersible rig - North America | 184,815 | 188,336 | |||||||
Barge rig - Asia Pacific | 41,788 | 41,321 | |||||||
Barge rigs - South America/Caribbean | 41,900 | 36,401 | |||||||
Platform rigs - North America | 28,486 | 26,129 | |||||||
Total | $ 51,481 | $ 50,285 | |||||||
(1) | Utilization is the ratio of aggregate contract days divided by the number of days in the period. |
(2) | Average day rates are derived by dividing | |
The following is |
Number of Rigs | ||||||||||
---|---|---|---|---|---|---|---|---|---|---|
Number of Rigs | March 31, | |||||||||
2003 | 2002 | 2004 | 2003 | |||||||
Jackup rigs: | ||||||||||
North America | 22 | 22 | ||||||||
North America(1) | 21 | 21 | ||||||||
Europe/Africa | 8 | 8 | 8 | 8 | ||||||
Asia Pacific | 12 | 12 | 12 | 12 | ||||||
South America/Caribbean | 1 | 1 | 1 | 1 | ||||||
Total jackup rigs | 43 | 43 | 42 | 42 | ||||||
Semisubmersible rig - North America | 1 | 1 | 1 | 1 | ||||||
Barge rig - Asia Pacific | 1 | 1 | 1 | 1 | ||||||
Barge rigs - South America/Caribbean | 6 | 6 | 6 | 6 | ||||||
Platform rigs - North America | 5 | 5 | ||||||||
Platform rigs(2) | 3 | 3 | ||||||||
Total | 56 | 56 | ||||||||
Total(3) | 53 | 53 | ||||||||
| Excludes the jackup rig ENSCO 55, which was operating in North America at both March 31, 2004 and 2003 but is pending sale and transfer in connection with the execution of |
(2) | Excludes the platform rigs ENSCO 23 and |
(3) | In addition to the | |
2005. |
Europe/Africa Jackup Rigs
Asia Pacific Jackup Rigs
South America/Caribbean Jackup Rig North America Semisubmersible Rig
Asia Pacific Barge Rig
South America/Caribbean Barge Rigs Platform Rigs First quarter 2004 revenues for the North America platform rigs decreased by $3.0 million, or 53%, compared to the prior year first quarter. The decrease in revenues is due primarily to a reduction in utilization to 33% in the current year quarter from 84% in the prior year first quarter. First quarter contract drilling expense for the North America platform rigs decreased by $1.2 million, or 40%, from the prior year first quarter due primarily to reduced utilization. Depreciation and Amortization Depreciation and amortization expense for the first quarter of 2004 increased by $3.8 million, or 12%, as compared to the prior year first quarter. The increase
General and Administrative General and administrative expense in the
Other Income (Expense) Other income (expense) for the |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2003 | 2002 | 2003 | 2002 | 2004 | 2003 | |||||||||
Interest income | $ | .9 | $ 1 | .1 | $ 2 | .5 | $ 4 | .2 | $ | .8 | $ | .7 | ||
Interest expense, net: | ||||||||||||||
Interest expense | (9 | .4) | (9 | .2) | (28 | .5) | (26 | .5) | (10 | .1) | (9 | .6) | ||
Capitalized interest | .5 | 1 | .5 | 1 | .3 | 2 | .9 | .1 | .4 | |||||
(8 | .9) | (7 | .7) | (27 | .2) | (23 | .6) | (10 | .0) | (9 | .2) | |||
Other, net | .8 | (1 | .8) | ( | .4) | 6 | .4 | .5 | .2 | |||||
$ (7 | .2) | $ (8 | .4) | $(25 | .1) | $(13 | .0) | $ (8 | .7) | $(8 | .3) |
Interest expense increased by $500,000 in the first quarter of 2004, as compared to the first quarter of 2003, due to minor increases in outstanding debt and average effective interest rates. Capitalized interest decreased $300,000 in the first quarter of 2004, as compared to the prior year
Provision for Income Taxes The first quarter 2004 provision for income taxes Discontinued OperationsIn February 2004, the Company entered into an agreement to exchange three rigs (ENSCO 23, ENSCO 24 and ENSCO 55) and $55.0 million for the construction of a new high performance premium jackup rig to be named ENSCO 107. The transaction is subject to execution of a definitive construction contract and regulatory approvals and is expected to be finalized during the second quarter of 2004. The results of operations of the ENSCO 23, ENSCO 24 and ENSCO 55 have been reclassified as discontinued operations in the consolidated statements of income for the three month periods ended March 31, 2004 and 2003. Following is a summary of |
Three Months Ended | |||||||
---|---|---|---|---|---|---|---|
March 31, | |||||||
2004 | 2003 | ||||||
Revenues | |||||||
Contract drilling | $ 2 | .5 | $ 2 | .2 | |||
Marine transportation | -- | 7 | .6 | ||||
2 | .5 | 9 | .8 | ||||
Operating expenses | |||||||
Contract drilling | 3 | .0 | 2 | .9 | |||
Marine transportation | -- | 12 | .7 | ||||
3 | .0 | 15 | .6 | ||||
Operating loss before income taxes | ( | .5) | (5 | .8) | |||
Income tax benefit | ( | .2) | (2 | .0) | |||
Loss from discontinued operations | $( | .3) | $(3 | .8) | |||
The reduction in loss from discontinued operations in the first quarter of 2004 as compared to the prior year first quarter is attributable to the sale of the Company's marine transportation fleet in April 2003 and resulting cessation of marine transportation operations. The first quarter 2004 operating results of the ENSCO 23, ENSCO 24 and ENSCO 55 are little changed from the comparable prior year quarter. |
Three Months Ended | Nine Months Ended | ||||||||
---|---|---|---|---|---|---|---|---|---|
September 30, | September 30, | ||||||||
2003 | 2002 | 2003 | 2002 | ||||||
Revenues | $ | -- | $12 | .6 | $ 7 | .6 | $36 | .0 | |
Operating expenses | ( | .1) | 12 | .6 | 12 | .4 | 35 | .5 | |
Operating income (loss) before income taxes | .1 | -- | (4 | .8) | .5 | ||||
Income tax benefit | -- | 1 | .5 | 1 | .7 | 3 | .1 | ||
Gain on sale of discontinued operations, net | -- | -- | 4 | .1 | -- | ||||
Income from discontinued operations | $ | .1 | $ 1 | .5 | $ 1 | .0 | $ 3 | .6 | |
LIQUIDITY AND CAPITAL RESOURCESThe Company has historically relied on its cash flow from operations to meet liquidity needs and fund the majority of its cash requirements. Management believes the Company has maintained a strong financial position through the disciplined and conservative use of debt. A substantial majority of the Company's cash flow has been invested in the expansion and enhancement of its fleet of drilling rigs. During the three month period ended March 31, 2004, the Company's primary source of cash consisted of $70.2 million generated from continuing drilling operations and its primary use of cash consisted of $125.6 million for the acquisition, enhancement and other improvement of drilling rigs. During the three month period ended March 31, 2003, the Company's primary source of cash consisted of $70.7 million generated from continuing drilling operations and its primary use of cash consisted of $53.3 million for the enhancement and other improvement of drilling rigs. Detailed explanations of the Company's liquidity and capital resources for the three month periods ended March 31, 2004 and 2003, including discussions of cash flow from operations, capital expenditures, financing and off-balance sheet arrangements, are set forth below. Cash Flow and Capital Expenditures The Company's cash flow from continuing operations and capital expenditures of continuing operations for the |
2003 | 2002 | ||||
---|---|---|---|---|---|
Cash flow from operations | $206 | .1 | $151 | .2 | |
Capital expenditures | |||||
New construction | $ | .9 | $ 20 | .3 | |
Enhancements | 106 | .5 | 109 | .3 | |
Minor upgrade and improvements | 33 | .9 | 27 | .1 | |
$141 | .3 | $156 | .7 | ||
2004 | 2003 | ||||
---|---|---|---|---|---|
Cash flow from continuing operations | $ 70 | .2 | $ 70 | .7 | |
Capital expenditures on continuing operations | |||||
Rig acquisition | $ 94 | .6 | $ | -- | |
New construction | -- | .6 | |||
Enhancements | 19 | .2 | 39 | .5 | |
Minor upgrades and improvements | 11 | .8 | 13 | .2 | |
$ 125 | .6 | $ 53 | .3 | ||
Cash flow from continuing operations Effective January 31, 2004, the Company purchased the ENSCO 102 from an affiliated joint venture for a net payment of $94.6 million. In addition to the
Financing and Capital Resources In connection with the acquisition of Chiles Offshore Inc. ("Chiles") in August 2002, the Company assumed Chiles' bonds that were originally issued to provide long-term financing for the ENSCO On January 25, 2001, the Company issued $190.0 million of 15-year bonds to provide long-term financing for the ENSCO 7500. In November 1997, the Company issued $300.0 million of unsecured debt in a public offering, consisting of $150.0 million of 6.75% Notes due November 15, 2007 (the "Notes") and $150.0 million of 7.20% Debentures due November 15, 2027 (the "Debentures"). Interest on the Notes and the Debentures is payable semiannually in May and November, and totals $20.9 million on an annual basis. The Company has a $250.0 million unsecured revolving credit agreement (the "Credit Agreement") with a syndicate of banks that matures in July 2007. Interest on amounts borrowed under the Credit Agreement is based on LIBOR plus an applicable margin rate (currently 0.525%), depending on the Company's credit rating. The Company pays a facility fee (currently 0.225% per annum) on the total $250.0 million commitment, which also is based on the Company's credit rating. In addition, the Company is required to pay a utilization fee of 0.25% per annum on outstanding advances under the facility if such advances exceed 33% of the total $250.0 million commitment. The Company is required to maintain certain financial covenants under the Credit Agreement, including a specified level of interest coverage, debt ratio and tangible net worth. The Company is in compliance with the covenants of all of its debt instruments. Off-Balance Sheet Arrangements During the If the
The Company's equity
Liquidity The Company's liquidity position at |
September 30, 2003 | December 31, 2002 | March 31, | December 31, | |||||||
---|---|---|---|---|---|---|---|---|---|---|
2004 | 2003 | |||||||||
Cash and short-term investments | $ 326 | .9 | $ 185 | .5 | ||||||
Cash and cash equivalents | $ 297 | .3 | $ 354 | .0 | ||||||
Working capital | 310 | .6 | 189 | .2 | 294 | .4 | 355 | .9 | ||
Current ratio | 2 | .4 | 2 | .0 | 2 | .5 | 2 | .9 | ||
At Management expects to fund the Company's short-term liquidity needs, including contractual obligations and anticipated capital expenditures, Management expects to fund the Company's long-term liquidity needs, including The Company has historically funded the majority of its liquidity from operating cash flow. |
Issuer Purchases of Equity Securities | ||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Total Number | Maximum | |||||||||||||
of Shares | Number of | |||||||||||||
Average | Purchased as | Shares that | ||||||||||||
Total | Price | Part of Publicly | May Yet Be | |||||||||||
Number of | Paid | Announced | Purchased | |||||||||||
Shares | per | Plans or | Under Plans | |||||||||||
Period | Purchased | Share | Programs | or Programs | ||||||||||
January | -- | -- | -- | -- | ||||||||||
February | 1,585 | $28.72 | -- | -- | ||||||||||
March | -- | -- | -- | -- | ||||||||||
Total | 1,585 | $28.72 | -- | -- | ||||||||||
|
Item 6. Exhibits and Reports on Form 8-K (a) Exhibits Filed with this Report Exhibit No. |
| ||
15.1 | Letter | |
31.1 | Certification of the Chief Executive Officer of Registrant Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
31.2 | Certification of the Chief Financial Officer of Registrant Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
32.1 | Certification of the Chief Executive Officer of Registrant Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |
32.2 | Certification of the Chief Financial Officer of Registrant Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |
(b) Reports on Form 8-K |
During the quarter ended |
SIGNATURESPursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. |
ENSCO INTERNATIONAL INCORPORATED | ||
Date: | /s/ H. E. MALONE, JR. H. E. Malone, Jr. Vice President - Accounting & Tax & Information Systems | |
/s/ DAVID A. ARMOUR David A. Armour Controller | ||