UNITED STATES |
ý | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended |
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 |
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) |
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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 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 (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes 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. |
Large accelerated filer ý Non-accelerated filero (Do not check if a smaller reporting company) | Accelerated filer o Smaller reporting companyo |
There were |
ENSCO INTERNATIONAL INCORPORATEDINDEX TO FORM 10-QFOR THE QUARTER ENDED |
This report contains forward-looking statements that are subject to a number of risks and uncertainties and are based on information as of the date of this report. We assume no obligation to update these statements based on information after the date of this report. 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 regarding future operations, industry trends or conditions and the business environment; statements regarding future levels of, or trends in, utilization, day rates, revenues, operating expenses, contract term, contract backlog, capital expenditures, insurance, financing and funding; statements regarding future construction (including construction in progress and completion thereof), enhancement, upgrade or repair of rigs and timing thereof; statements regarding future mobilization, relocation or other movement of rigs and timing thereof; statements regarding future availability or suitability of rigs and timing thereof; and statements regarding the likely outcome of litigation, legal proceedings, investigations or insurance or other claims and timing thereof. 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: |
• | industry conditions and competition, including changes in rig supply and demand or new technology, | |
• | risks associated with the current global economic crisis and its impact on capital markets and liquidity, | |
• | prices of oil and natural gas in general and the | |
• | ||
• | excess rig availability or supply resulting from delivery of new drilling rigs, | |
• | heavy concentration of our rig fleet in premium jackups, | |
• | cyclical nature of the industry, | |
• | worldwide expenditures for oil and natural gas drilling, | |
• | changes in the timing of revenue recognition resulting from the deferral of revenues payable by our customers (which are recognized over the contract term upon commencement of drilling operations) for mobilization of our drilling rigs, time waiting on weather or time in shipyards, | |
• | operational risks, including hazards created by severe storms and hurricanes, | |
• | risks associated with offshore rig operations or rig relocations in general and in foreign jurisdictions in particular, | |
• | 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 domestic and foreign shipyard rig construction, repair or enhancement, including risks associated with concentration of our ENSCO 8500 Series® rig construction contracts in a single foreign shipyard, unexpected delays in equipment delivery and engineering or design issues following shipyard delivery, | |
• | availability of transport vessels to relocate rigs, | |
• | environmental or other liabilities, risks or losses, whether related to hurricane damage, losses or liabilities (including wreckage or debris removal) in the Gulf of Mexico or otherwise, that may arise in the future and are not covered by insurance or indemnity in whole or in part, | |
• | limited availability or high cost of insurance coverage for certain perils such as hurricanes in the Gulf of Mexico or associated removal of wreckage or debris, | |
• | 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, | |
• | governmental action and political and economic uncertainties, including expropriation, nationalization, confiscation or deprivation of our assets, | |
• | ||
• | our ability to attract and retain skilled personnel, | |
• | 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 financial instruments, | |
• | potential long-lived asset or goodwill impairments, and | |
• | potential reduction in fair value of our auction rate securities. |
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 our Annual Report on Form 10-K for the year ended December 31, 2008, as updated in this report. |
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PART I - FINANCIAL INFORMATION |
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ENSCO INTERNATIONAL INCORPORATED AND SUBSIDIARIES |
Three Months Ended | Three Months Ended | |||||||||||||
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March 31, | June 30, | |||||||||||||
2009 | 2008 | 2009 | 2008 | |||||||||||
OPERATING REVENUES | $514.1 | $568.5 | $511.6 | $609.4 | ||||||||||
OPERATING EXPENSES | ||||||||||||||
Contract drilling (exclusive of depreciation expense) | 173.2 | 186.0 | ||||||||||||
Contract drilling (exclusive of depreciation) | 177.8 | 203.0 | ||||||||||||
Depreciation | 48.0 | 46.4 | 49.3 | 46.7 | ||||||||||
General and administrative | 12.0 | 12.7 | 16.0 | 13.8 | ||||||||||
233.2 | 245.1 | 243.1 | 263.5 | |||||||||||
OPERATING INCOME | 280.9 | 323.4 | 268.5 | 345.9 | ||||||||||
OTHER INCOME (EXPENSE) | (4.3 | ) | 4.5 | |||||||||||
OTHER INCOME, NET | 6.9 | 6.8 | ||||||||||||
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES | 276.6 | 327.9 | 275.4 | 352.7 | ||||||||||
PROVISION FOR INCOME TAXES | ||||||||||||||
Current income tax expense | 47.8 | 53.9 | 38.1 | 63.5 | ||||||||||
Deferred income tax expense | 6.7 | 5.3 | 11.0 | 1.1 | ||||||||||
54.5 | 59.2 | 49.1 | 64.6 | |||||||||||
INCOME FROM CONTINUING OPERATIONS | 222.1 | 268.7 | 226.3 | 288.1 | ||||||||||
INCOME FROM DISCONTINUED OPERATIONS, NET | -- | 5.0 | ||||||||||||
DISCONTINUED OPERATIONS | ||||||||||||||
(Loss) income from discontinued operations, net | (13.1 | ) | 9.8 | |||||||||||
Loss on disposal of discontinued operations, net | (11.8 | ) | -- | |||||||||||
(24.9 | ) | 9.8 | ||||||||||||
NET INCOME | 222.1 | 273.7 | 201.4 | 297.9 | ||||||||||
NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS | (1.4 | ) | (1.7 | ) | ||||||||||
LESS: NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS | (1.1 | ) | (1.2 | ) | ||||||||||
NET INCOME ATTRIBUTABLE TO ENSCO | $220.7 | $272.0 | $200.3 | $296.7 | ||||||||||
EARNINGS PER COMMON SHARE - BASIC | ||||||||||||||
EARNINGS (LOSS) PER COMMON SHARE - BASIC | ||||||||||||||
Continuing operations | $ 1.56 | $ 1.85 | $ 1.59 | $ 1.99 | ||||||||||
Discontinued operations | -- | .04 | (.18 | ) | .07 | |||||||||
$ 1.56 | $ 1.89 | $ 1.41 | $ 2.06 | |||||||||||
EARNINGS PER COMMON SHARE - DILUTED | ||||||||||||||
EARNINGS (LOSS) PER COMMON SHARE - DILUTED | ||||||||||||||
Continuing operations | $ 1.56 | $ 1.85 | $ 1.59 | $ 1.98 | ||||||||||
Discontinued operations | -- | .03 | (.18 | ) | .07 | |||||||||
$ 1.56 | $ 1.88 | $ 1.41 | $ 2.05 | |||||||||||
NET INCOME ATTRIBUTABLE TO ENSCO COMMON SHARES | ||||||||||||||
Basic | $218.0 | $269.8 | $197.9 | $293.5 | ||||||||||
Diluted | $218.0 | $269.8 | $197.9 | $293.5 | ||||||||||
WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING | ||||||||||||||
Basic | 140.1 | 142.8 | 140.3 | 142.7 | ||||||||||
Diluted | 140.1 | 143.2 | 140.4 | 143.2 | ||||||||||
CASH DIVIDENDS PER COMMON SHARE | $ .025 | $ .025 | $ .025 | $ .025 | ||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements. 4 |
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Six Months Ended | |||||||
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June 30, | |||||||
2009 | 2008 | ||||||
OPERATING REVENUES | $1,020.9 | $1,169.3 | |||||
OPERATING EXPENSES | |||||||
Contract drilling (exclusive of depreciation) | 341.5 | 381.6 | |||||
Depreciation | 96.5 | 92.4 | |||||
General and administrative | 28.0 | 26.5 | |||||
466.0 | 500.5 | ||||||
OPERATING INCOME | 554.9 | 668.8 | |||||
OTHER INCOME, NET | 2.6 | 11.3 | |||||
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES | 557.5 | 680.1 | |||||
PROVISION FOR INCOME TAXES | |||||||
Current income tax expense | 87.6 | 116.8 | |||||
Deferred income tax expense | 17.8 | 6.4 | |||||
105.4 | 123.2 | ||||||
INCOME FROM CONTINUING OPERATIONS | 452.1 | 556.9 | |||||
DISCONTINUED OPERATIONS | |||||||
(Loss) income from discontinued operations, net | (16.8 | ) | 14.7 | ||||
Loss on disposal of discontinued operations, net | (11.8 | ) | -- | ||||
(28.6 | ) | 14.7 | |||||
NET INCOME | 423.5 | 571.6 | |||||
LESS: NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS | (2.5 | ) | (2.9 | ) | |||
NET INCOME ATTRIBUTABLE TO ENSCO | $ 421.0 | $ 568.7 | |||||
EARNINGS (LOSS) PER COMMON SHARE - BASIC | |||||||
Continuing operations | $ 3.17 | $ 3.85 | |||||
Discontinued operations | (.20 | ) | .10 | ||||
$ 2.97 | $ 3.95 | ||||||
EARNINGS (LOSS) PER COMMON SHARE - DILUTED | |||||||
Continuing operations | $ 3.17 | $ 3.83 | |||||
Discontinued operations | (.20 | ) | .10 | ||||
$ 2.97 | $ 3.93 | ||||||
NET INCOME ATTRIBUTABLE TO ENSCO COMMON SHARES | |||||||
Basic | $ 415.9 | $ 563.3 | |||||
Diluted | $ 415.9 | $ 563.3 | |||||
WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING | |||||||
Basic | 140.2 | 142.7 | |||||
Diluted | 140.2 | 143.2 | |||||
CASH DIVIDENDS PER COMMON SHARE | $ .05 | $ .05 |
The accompanying notes are an integral part of these condensed consolidated financial statements. 5 |
ENSCO INTERNATIONAL INCORPORATED AND SUBSIDIARIES |
March 31, | December 31, | June 30, | December 31, | |||||||
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2009 | 2008 | 2009 | 2008 | |||||||
(Unaudited) | (Unaudited) | |||||||||
ASSETS | ||||||||||
CURRENT ASSETS | ||||||||||
Cash and cash equivalents | $ 927.3 | $ 789.6 | $ 882.0 | $ 789.6 | ||||||
Accounts receivable, net | 476.6 | 482.7 | ||||||||
Accounts receivable, net of allowance of $26.2 and $20.6 | 488.6 | 482.7 | ||||||||
Other | 148.3 | 128.6 | 166.8 | 128.6 | ||||||
Total current assets | 1,552.2 | 1,400.9 | 1,537.4 | 1,400.9 | ||||||
PROPERTY AND EQUIPMENT, AT COST | 5,512.0 | 5,376.3 | 5,803.9 | 5,376.3 | ||||||
Less accumulated depreciation | 1,550.5 | 1,505.0 | 1,569.7 | 1,505.0 | ||||||
Property and equipment, net | 3,961.5 | 3,871.3 | 4,234.2 | 3,871.3 | ||||||
GOODWILL | 336.2 | 336.2 | 336.2 | 336.2 | ||||||
LONG-TERM INVESTMENTS | 61.9 | 64.2 | 61.6 | 64.2 | ||||||
OTHER ASSETS, NET | 173.1 | 157.5 | 179.6 | 157.5 | ||||||
$ 6,084.9 | $ 5,830.1 | $ 6,349.0 | $ 5,830.1 | |||||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||||
CURRENT LIABILITIES | ||||||||||
Accounts payable | $ 38.1 | $ 30.0 | $ 32.8 | $ 30.0 | ||||||
Accrued liabilities and other | 383.0 | 380.7 | 405.0 | 380.7 | ||||||
Current maturities of long-term debt | 17.2 | 17.2 | 17.2 | 17.2 | ||||||
Total current liabilities | 438.3 | 427.9 | 455.0 | 427.9 | ||||||
LONG-TERM DEBT | 274.3 | 274.3 | 265.7 | 274.3 | ||||||
DEFERRED INCOME TAXES | 344.9 | 340.5 | 356.8 | 340.5 | ||||||
OTHER LIABILITIES | 124.5 | 103.8 | 142.9 | 103.8 | ||||||
COMMITMENTS AND CONTINGENCIES | ||||||||||
ENSCO 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 shares issued | 18.2 | 18.2 | ||||||||
Preferred stock, $1 par value, 20.0 shares authorized and none issued | -- | -- | ||||||||
Common stock, $.10 par value, 250.0 shares authorized, | ||||||||||
182.6 and 181.9 shares issued | 18.3 | 18.2 | ||||||||
Additional paid-in capital | 1,768.6 | 1,761.2 | 1,781.9 | 1,761.2 | ||||||
Retained earnings | 4,331.2 | 4,114.0 | 4,527.9 | 4,114.0 | ||||||
Accumulated other comprehensive loss | (22.4 | ) | (17.0 | ) | (3.1 | ) | (17.0 | ) | ||
Treasury stock, at cost, 40.1 million shares | (1,199.7 | ) | (1,199.5 | ) | ||||||
Treasury stock, at cost, 40.2 and 40.1 shares | (1,203.5 | ) | (1,199.5 | ) | ||||||
Total Ensco stockholders' equity | 4,895.9 | 4,676.9 | 5,121.5 | 4,676.9 | ||||||
NONCONTROLLING INTERESTS | 7.0 | 6.7 | 7.1 | 6.7 | ||||||
Total stockholders' equity | 4,902.9 | 4,683.6 | ||||||||
Total equity | 5,128.6 | 4,683.6 | ||||||||
$ 6,084.9 | $ 5,830.1 | $ 6,349.0 | $ 5,830.1 |
6 |
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Three Months Ended March 31, | Six Months Ended June 30, | |||||||||
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2009 | 2008 | 2009 | 2008 | |||||||
OPERATING ACTIVITIES | ||||||||||
Net income attributable to Ensco | $ 220.7 | $ 272.0 | ||||||||
Adjustments to reconcile net income attributable to Ensco to net cash provided | ||||||||||
by operating activities of continuing operations: | ||||||||||
Net income | $ 423.5 | $ 571.6 | ||||||||
Adjustments to reconcile net income to net cash provided by operating | ||||||||||
activities of continuing operations: | ||||||||||
Depreciation expense | 48.0 | 46.4 | 96.5 | 92.4 | ||||||
Deferred income tax expense | 17.8 | 6.4 | ||||||||
Share-based compensation expense | 17.0 | 13.3 | ||||||||
Amortization expense | 8.0 | 8.3 | 15.9 | 16.7 | ||||||
Share-based compensation expense | 7.1 | 5.5 | ||||||||
Deferred income tax expense | 6.7 | 5.3 | ||||||||
Noncontrolling interests | 1.4 | 1.7 | ||||||||
Income from discontinued operations, net | -- | (5.0 | ) | |||||||
Loss (income) from discontinued operations, net | 16.8 | (14.7 | ) | |||||||
Loss on disposal of discontinued operations, net | 11.8 | -- | ||||||||
Other | 8.6 | 4.4 | 1.5 | (3.8 | ) | |||||
Changes in operating assets and liabilities: | ||||||||||
Increase in accounts receivable | (.7 | ) | (38.2 | ) | ||||||
Decrease (increase) in accounts receivable | 35.7 | (53.3 | ) | |||||||
Decrease (increase) in investments designated as trading securities | 2.3 | (83.0 | ) | 2.6 | (73.3 | ) | ||||
Increase in other assets | (27.5 | ) | (2.5 | ) | ||||||
Increase in accounts payable | 8.0 | 11.5 | ||||||||
Increase (decrease) in accrued and other liabilities | 39.3 | (79.8 | ) | |||||||
(Increase) decrease in other assets | (52.1 | ) | 8.4 | |||||||
Decrease in accounts payable and accrued and other liabilities | (.8 | ) | (167.3 | ) | ||||||
Net cash provided by operating activities of continuing operations | 321.9 | 146.6 | �� | 586.2 | 396.4 | |||||
INVESTING ACTIVITIES | ||||||||||
Additions to property and equipment | (184.6 | ) | (116.2 | ) | (471.5 | ) | (414.7 | ) | ||
Proceeds from disposal of discontinued operations | 4.9 | -- | 4.9 | -- | ||||||
Proceeds from disposition of assets | .8 | .7 | 1.7 | 4.0 | ||||||
Net cash used in investing activities | (178.9 | ) | (115.5 | ) | (464.9 | ) | (410.7 | ) | ||
FINANCING ACTIVITIES | ||||||||||
Reduction of long-term borrowings | (8.6 | ) | (10.5 | ) | ||||||
Cash dividends paid | (3.5 | ) | (3.6 | ) | (7.1 | ) | (7.2 | ) | ||
Distributions to noncontrolling interests | (1.1 | ) | (1.2 | ) | ||||||
Proceeds from exercise of stock options | 5.3 | 26.6 | ||||||||
Repurchase of common stock | (4.0 | ) | (111.2 | ) | ||||||
Other | -- | 4.8 | (4.0 | ) | 2.8 | |||||
Net cash used in financing activities | (4.6 | ) | -- | (18.4 | ) | (99.5 | ) | |||
Effect of exchange rate changes on cash and cash equivalents | (.3 | ) | (1.8 | ) | .1 | (2.5 | ) | |||
Net cash (used in) provided by operating activities of discontinued operations | (.4 | ) | 6.1 | (10.6 | ) | 18.4 | ||||
INCREASE IN CASH AND CASH EQUIVALENTS | 137.7 | 35.4 | ||||||||
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | 92.4 | (97.9 | ) | |||||||
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD | 789.6 | 629.5 | 789.6 | 629.5 | ||||||
CASH AND CASH EQUIVALENTS, END OF PERIOD | $ 927.3 | $ 664.9 | $ 882.0 | $ 531.6 |
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Three Months Ended | Six Months Ended | |||||||||||||||
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June 30, | June 30, | |||||||||||||||
2009 | 2008 | 2009 | 2008 | 2009 | 2008 | |||||||||||
Income from continuing operations | $222.1 | $268.7 | $226.3 | $288.1 | $452.1 | $556.9 | ||||||||||
Income from continuing operations attributable to noncontrolling interests | (1.4 | ) | (1.7 | ) | (1.1 | ) | (1.2 | ) | (2.5) | (2.9 | ) | |||||
Income from continuing operations attributable to Ensco | $220.7 | $267.0 | $225.2 | $286.9 | $449.6 | $554.0 | ||||||||||
Note 3 - Earnings Per Share On January 1, 2009, we adopted FASB Staff Position EITF 03-6-1, "Determining Whether Instruments Granted in Share-Based Payment Transactions are Participating Securities" The following table is a reconciliation of net income attributable to Ensco common shares used in our basic and diluted EPS computations for the |
Three Months Ended | Six Months Ended | |||||||||||||||
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June 30, | June 30, | |||||||||||||||
2009 | 2008 | 2009 | 2008 | 2009 | 2008 | |||||||||||
Net income attributable to Ensco | $220.7 | $272.0 | $200.3 | $296.7 | $421.0 | $568.7 | ||||||||||
Net income allocated to non-vested share awards | (2.7 | ) | (2.2 | ) | (2.4) | (3.2 | ) | (5.1) | (5.4 | ) | ||||||
Net income attributable to Ensco common shares | $218.0 | $269.8 | $197.9 | $293.5 | $415.9 | $563.3 | ||||||||||
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Three Months Ended | Six Months Ended | |||||||||||||||
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June 30, | June 30, | |||||||||||||||
2009 | 2008 | 2009 | 2008 | 2009 | 2008 | |||||||||||
Weighted-average common shares - basic | 140.1 | 142.8 | 140.3 | 142.7 | 140.2 | 142.7 | ||||||||||
Potentially dilutive share options | .0 | .4 | .1 | .5 | .0 | .5 | ||||||||||
Weighted-average common shares - diluted | 140.1 | 143.2 | 140.4 | 143.2 | 140.2 | 143.2 | ||||||||||
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Antidilutive share options totaling |
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Note 4 - Derivative Financial InstrumentsOn January 1, 2009, we adopted SFAS No. 161, "Disclosures about Derivative and Hedging Activities" ("SFAS 161"). This standard amends SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities" ("SFAS 133"), to change the disclosure requirements for derivative instruments and hedging activities. SFAS 161 requires enhanced disclosures about (a) how and why an entity uses derivative instruments, (b) how derivative instruments and related hedged items are accounted for under SFAS 133 and its related interpretations and (c) how derivative instruments and related hedged items affect an entity's financial position, operating results and cash flows. We use derivative financial instruments ("derivatives") to reduce our exposure to various market risks, primarily foreign currency All derivatives were recorded on our condensed 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 in accordance with SFAS 133. As of Derivatives recorded at fair value in our condensed consolidated balance sheets as of |
Derivative Assets | Derivative Liabilities | Derivative Assets | Derivative Liabilities | |||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
March 31, | December 31, | March 31, | December 31, | June 30, | December 31, | June 30, | December 31, | |||||||||||||||||||||||||||||||||
2009 | 2008 | 2009 | 2008 | 2009 | 2008 | 2009 | 2008 | |||||||||||||||||||||||||||||||||
Derivatives designated as hedging instruments | ||||||||||||||||||||||||||||||||||||||||
Foreign currency forward contracts - current(1) | $.2 | $ .3 | $26.3 | $25.8 | $8.2 | $ .3 | $6.7 | $25.8 | ||||||||||||||||||||||||||||||||
Foreign currency forward contracts - non-current(2) | .2 | 5.1 | 6.9 | .0 | 1.1 | 5.1 | 1.3 | .0 | ||||||||||||||||||||||||||||||||
Total derivatives designated as hedging instruments | $.4 | $5.4 | $33.2 | $25.8 | 9.3 | 5.4 | 8.0 | 25.8 | ||||||||||||||||||||||||||||||||
Derivatives not designated as hedging instruments | ||||||||||||||||||||||||||||||||||||||||
Foreign currency forward contracts - current(1) | $-- | $ .1 | $ .1 | $ .0 | .3 | .1 | .0 | .0 | ||||||||||||||||||||||||||||||||
Total derivatives not designated as hedging instruments | $-- | $ .1 | $ .1 | $ .0 | .3 | .1 | .0 | .0 | ||||||||||||||||||||||||||||||||
Total derivatives | $.4 | $5.5 | $33.3 | $25.8 | $9.6 | $5.5 | $8.0 | $25.8 | ||||||||||||||||||||||||||||||||
(1) | Derivative assets and liabilities which have maturity dates equal to or less than twelve months from the respective balance sheet |
(2) | Derivative assets and liabilities which have maturity dates greater than twelve months from the respective balance sheet |
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Gains and losses on derivatives designated as cash flow hedges in accordance with SFAS 133 included in our condensed consolidated statements of income for the Three Months Ended June 30, 2009 and 2008 |
Derivatives Designated as Cash Flow Hedges | Gain Recognized in Other Comprehensive Income ("OCI") on Derivatives (Effective Portion) | Gain or (Loss) Reclassified from Accumulated OCI into Income (Effective Portion) | Gain or (Loss) Recognized in Income on Derivatives (Ineffective Portion and Amount Excluded from Effectiveness Testing)(1) | ||||||||||||||
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2009 | 2008 | 2009 | 2008 | 2009 | 2008 | ||||||||||||
Foreign currency forward contracts(2) | $14.2 | $2.2 | $(5.0) | $2.6 | $4.1 | $(.3) | |||||||||||
Interest rate swap contracts(3) | -- | -- | (.1) | (.2) | -- | -- | |||||||||||
Total | $14.2 | $2.2 | $(5.1) | $2.4 | $4.1 | $(.3) | |||||||||||
Six Months Ended June 30, 2009 and 2008 |
Derivatives Designated as Cash Flow Hedges | Derivatives Designated as Cash Flow Hedges | Gain or (Loss) Recognized in OCI on Derivatives (Effective Portion) | Gain or (Loss) Reclassified from Accumulated OCI into Income (Effective Portion) | Gain or (Loss) Recognized in Income on Derivatives (Ineffective Portion and Amount Excluded from Effectiveness Testing)(1) | Derivatives Designated as Cash Flow Hedges | Gain or (Loss) Recognized in OCI on Derivatives (Effective Portion) | Gain or (Loss) Reclassified from Accumulated OCI into Income (Effective Portion) | Gain or (Loss) Recognized in Income on Derivatives (Ineffective Portion and Amount Excluded from Effectiveness Testing)(1) | ||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2009 | 2008 | 2009 | 2008 | 2009 | 2008 | 2009 | 2008 | 2009 | 2008 | 2009 | 2008 | |||||||||||||||||||||||
Interest rate swap contracts(2) | $ -- | $ -- | $ (.2) | $ (.2) | $ -- | $ -- | ||||||||||||||||||||||||||||
Foreign currency forward contracts(3) | (15.4) | 3.2 | (9.8) | 2.0 | (6.5) | .4 | ||||||||||||||||||||||||||||
Foreign currency forward contracts(2) | $(1.2) | $5.4 | $(14.8) | $4.6 | $(2.4) | $.1 | ||||||||||||||||||||||||||||
Interest rate swap contracts(3) | -- | -- | (.3) | (.4) | -- | -- | ||||||||||||||||||||||||||||
Total | $(15.4) | $3.2 | $(10.0) | $1.8 | $(6.5) | $ .4 | $(1.2) | $5.4 | $(15.1) | $4.2 | $(2.4) | $ .1 | ||||||||||||||||||||||
(1) | Gains and losses recognized in income for ineffectiveness and amounts excluded from effectiveness testing were included in other income, |
(2) |
Gains and losses on derivatives reclassified from AOCI into income (effective portion) were included in contract drilling expense in our condensed consolidated statements of income. |
(3) | Losses on derivatives reclassified from accumulated other comprehensive income ("AOCI") into income (effective portion) were included in other income, net, in our condensed consolidated statements of income. |
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Net 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 derivatives as of |
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Net unrealized | $ | |||||
Net unrealized losses to be reclassified to | (.6 | ) | ||||
Net unrealized | $ | |||||
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Weighted-average grant-date fair value | $17.17 | ||||
Weighted-average exercise price | $41.29 |
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Risk-free interest rate | 1.8 | % | |||
Expected life (in years) | 3.9 | ||||
Expected volatility | 53.3 | % | |||
Dividend yield | .2 | % |
12 |
During the quarter ended June 30, 2009, we granted 526,383 non-vested share awards to our employees, officers and non-employee directors for annual equity awards and for equity awards granted to new or recently promoted employees, pursuant to our LTIP. Grants of non-vested share awards generally vest at a rate of 20% per year, as determined by a committee of the Board of Directors. Beginning in June 2009, non-vested share awards granted to certain officers vest at a rate of 33% per year. All non-vested share awards have voting and dividend rights effective on the date of grant and are measured using the market value of our common stock on the date of grant. The weighted-average grant-date fair value of non-vested share awards granted during the quarter ended June 30, 2009 was $40.83 per share. Note |
Three Months Ended | Six Months Ended | ||||||||
---|---|---|---|---|---|---|---|---|---|
June 30, | June 30, | ||||||||
2009 | 2008 | 2009 | 2008 | ||||||
Net income | $201.4 | $297.9 | $423.5 | $571.6 | |||||
Other comprehensive income: | |||||||||
Net change in fair value of derivatives | 14.2 | 2.2 | (1.2) | 5.4 | |||||
Reclassification of unrealized gains and losses on | |||||||||
derivatives from other comprehensive loss | |||||||||
(income) into net income | 5.1 | (2.4 | ) | 15.1 | (4.2 | ) | |||
Net other comprehensive income (loss) | 19.3 | (.2 | ) | 13.9 | 1.2 | ||||
Comprehensive income | 220.7 | 297.7 | 437.4 | 572.8 | |||||
Comprehensive income attributable to noncontrolling interests | (1.1 | ) | (1.2 | ) | (2.5) | (2.9 | ) | ||
Comprehensive income attributable to Ensco | $219.6 | $296.5 | $434.9 | $569.9 | |||||
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2009 | 2008 | ||||||||
---|---|---|---|---|---|---|---|---|---|
Net income | $222.1 | $273.7 | |||||||
Other comprehensive income: | |||||||||
Net change in fair value of derivatives | (15.4 | ) | 3.2 | ||||||
Reclassification of unrealized gains and losses on | |||||||||
derivatives from other comprehensive loss (income) | |||||||||
into net income | 10.0 | (1.8 | ) | ||||||
Net other comprehensive (loss) income | (5.4 | ) | 1.4 | ||||||
Comprehensive income | 216.7 | 275.1 | |||||||
Comprehensive income attributable to noncontrolling interests | (1.4 | ) | (1.7 | ) | |||||
Comprehensive income attributable to Ensco | $215.3 | $273.4 | |||||||
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Assets Measured at Fair Value on a Recurring Basis |
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 | |||||||||||||||||||||||||
(Level 1) | (Level 2) | (Level 3) | Total | (Level 1) | (Level 2) | (Level 3) | Total | |||||||||||||||||||||
As of March 31, 2009 | ||||||||||||||||||||||||||||
As of June 30, 2009 | ||||||||||||||||||||||||||||
Auction rate securities | $ -- | $ -- | $61.6 | $61.6 | ||||||||||||||||||||||||
Derivative instruments, net | -- | 1.6 | -- | 1.6 | ||||||||||||||||||||||||
Total financial assets | $ -- | $ 1.6 | $61.6 | $63.2 | ||||||||||||||||||||||||
As of December 31, 2008 | ||||||||||||||||||||||||||||
Auction rate securities | $ -- | $ -- | $61.9 | $61.9 | $ -- | $ -- | $64.2 | $64.2 | ||||||||||||||||||||
Total financial assets | $ -- | $ -- | $61.9 | $61.9 | $ -- | $ -- | $64.2 | $64.2 | ||||||||||||||||||||
Derivative instruments, net | $ -- | $32.9 | $ -- | $32.9 | $ -- | $20.3 | $ -- | $20.3 | ||||||||||||||||||||
Total financial liabilities | $ -- | $32.9 | $ -- | $32.9 | $ -- | $20.3 | $ -- | $20.3 | ||||||||||||||||||||
As of December 31, 2008 | ||||||||||||||||||||||||||||
Auction rate securities | $ -- | $ -- | $64.2 | $64.2 | ||||||||||||||||||||||||
Total financial assets | $ -- | $ -- | $64.2 | $64.2 | ||||||||||||||||||||||||
Derivative instruments, net | $ -- | $20.3 | $ -- | $20.3 | ||||||||||||||||||||||||
Total financial liabilities | $ -- | $20.3 | $ -- | $20.3 | ||||||||||||||||||||||||
Our derivative instruments were measured at fair value on a recurring basis using Level 2 inputs as of |
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As of |
2009 | 2008 | Three Months Ended | Six Months Ended | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
June 30, | June 30, | |||||||||||||
Beginning balance | $64.2 | $ -- | ||||||||||||
(Settlements) Purchases | (2.3 | ) | 83.0 | |||||||||||
Unrealized losses, net* | .0 | (3.1 | ) | |||||||||||
2009 | 2008 | 2009 | 2008 | |||||||||||
Beginning Balance | $61.9 | $79.9 | $64.2 | $ -- | ||||||||||
(Settlements) purchases | (.3 | ) | (9.7) | (2.6) | 73.3 | |||||||||
Unrealized losses* | -- | (.2) | -- | (3.3) | ||||||||||
Realized losses | -- | -- | -- | -- | -- | -- | ||||||||
Transfers in and/or out of Level 3 | -- | -- | -- | -- | -- | -- | ||||||||
Ending balance | $61.9 | $79.9 | $61.6 | $70.0 | $61.6 | $70.0 | ||||||||
* | Unrealized losses were included in other income, |
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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 While our valuation model was based on both Level 2 (credit quality and interest rates) and Level 3 inputs, we determined that �� Other Financial Instruments During the second quarter of 2009, we adopted FASB Staff Position No. FAS 107-1 and APB 28-1, "Interim Disclosures about Fair Value of Financial Instruments". This staff position amends SFAS No. 107, "Disclosures about Fair Value of Financial Instruments", to require disclosures about the fair value of financial instruments of publicly-traded companies for interim reporting periods as well as in annual financial statements. This staff position also amends APB Opinion No. 28, "Interim Financial Reporting", to require the aforementioned disclosures in summarized financial information at interim reporting periods. The carrying values and estimated fair values of our debt instruments as of June 30, 2009 and December 31, 2008 were as follows (in millions): |
June 30, | December 31, | ||||||||
---|---|---|---|---|---|---|---|---|---|
2009 | 2008 | ||||||||
Estimated | Estimated | ||||||||
Carrying | Fair | Carrying | Fair | ||||||
Value | Value | Value | Value | ||||||
4.65% Bonds, including current maturities | $ 51.8 | $ 56.7 | $ 54.0 | $ 62.1 | |||||
6.36% Bonds, including current maturities | 82.3 | 94.0 | 88.7 | 103.9 | |||||
7.20% Debentures | 148.8 | 144.9 | 148.8 | 140.3 |
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ENSCO 74 In September 2008, ENSCO 74 was lost as a result of Hurricane The |
Three Months Ended | Six Months Ended | ||||||||
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June 30, | June 30, | ||||||||
2009 | 2008 | 2009 | 2008 | ||||||
Revenues | $ -- | $27.7 | $ 4.8 | $48.1 | |||||
Operating expenses | 9.3 | 11.9 | 19.6 | 24.1 | |||||
Operating (loss) income before income taxes | (9.3 | ) | 15.8 | (14.8 | ) | 24.0 | |||
Income tax expense | 3.8 | 6.0 | 2.0 | 9.3 | |||||
Loss on disposal of discontinued operations, net | (11.8 | ) | -- | (11.8 | ) | -- | |||
(Loss) income from discontinued operations | $(24.9 | ) | $ 9.8 | $(28.6 | ) | $14.7 | |||
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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 control provisions of the FCPA occurred. Our Audit Committee engaged a Washington, D.C. law firm with significant experience in investigating and advising upon FCPA matters to assist in the internal investigation. Following notification to the Audit Committee and to KPMG LLP, our independent registered public accounting firm, in consultation with the Audit Committee's outside legal counsel, we voluntarily notified the United States Department of Justice and SEC that we had commenced an internal investigation. We expressed our intention to cooperate with both agencies, comply with their directives and fully disclose the results of the investigation. The internal investigation process has involved extensive reviews of documents and records, as well as production to the authorities, and interviews of relevant personnel. In addition to the temporary importation of ENSCO 100, the investigation has examined our customs clearance of routine shipments and immigration activities in Nigeria. Our internal investigation has essentially been concluded. A meeting to review the results of the investigation with the authorities was held on February 24, 2009. We expect to discuss a possible negotiated disposition with the authorities during the second 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 control provisions of the FCPA or whether the scope of the investigation will be extended to other issues in Nigeria or to other countries. We also are unable to predict what potential corrective measures, fines, sanctions or other remedies, if any, the agencies may seek against us or any of our employees. |
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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. |
19 |
In September 2008, ENSCO 74 was lost as a result of Hurricane Ike and was presumed to have sunk in the Gulf of Mexico, however, portions of its legs remained underwater adjacent to the customer's platform. Thereafter, we conducted extensive aerial and sonar reconnaissance but failed to 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 on the seabed approximately 95 miles from the original drilling location when it was reportedly struck by an oil tanker. Following discovery of the sunken rig hull, we 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 for loss of the 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 could range from |
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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 in the aggregate amount of $10.0 million for losses incurred. 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 the claim of the tanker owner. On June 9, 2009, we received notice from legal counsel representing another pipeline owner which reportedly sustained damages to a subsea pipeline. The letter asserts these unquantified damages may have been caused by ENSCO 74 during Hurricane Ike. We presently are unable to determine whether the pipeline damages were caused by ENSCO 74 or the extent of the cost and losses associated with the damage. Based on information currently available, we have not concluded that it is probable that a liability exists with respect to this matter. |
20 |
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. In August 2007, we commenced litigation |
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Asbestos Litigation In August 2004, we and certain current and former subsidiaries were named as defendants, along with numerous other third-party companies as co-defendants, in three multi-party lawsuits filed in the Circuit Courts of Jones County (Second Judicial District) and Jasper County (First Judicial District), Mississippi. The lawsuits sought an unspecified amount of monetary damages on behalf of individuals alleging personal injury or death, primarily under the Jones Act, purportedly resulting from exposure to asbestos on drilling rigs and associated facilities during the period 1965 through 1986. 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. The |
21 |
The three cases pending in federal court were consolidated with 441 other lawsuits filed by a Houston law firm. These cases were referred to a Magistrate Judge, who ordered parties to conduct general discovery in these matters. Discovery specific to each plaintiff will take place at a later designated time, if deemed necessary by the parties and the 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 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 in August 2003 and may be applicable to our employees and employees of other drilling contractors that work offshore in United Kingdom ("U.K.") territorial waters or in the U.K. sector of the North Sea. Certain trade unions representing offshore employees have claimed that drilling contractors are not in compliance with the WTD in respect of paid time off (vacation time) for employees working offshore on a rotational basis (generally equal time working and off). A Labor Tribunal in Aberdeen, Scotland, rendered decisions in claims involving other offshore drilling contractors and offshore service companies on February 21, 2008. The Tribunal decisions effectively held that employers of offshore workers in the U.K. sector employed on an equal time on/time off rotation are obligated to accord such rotating personnel two-weeks annual paid time off from their scheduled offshore work assignment period. Both sides of the matter, employee and employer groups, appealed the Tribunal decision. The appeals were heard by the Employment Appeal Tribunal ("EAT") in December 2008. |
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As a consequence of the EAT decision, an equal on/off time offshore rotation has been deemed to be fully compliant with the WTD. The employee group (led by a trade union) We also 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.
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In addition to the foregoing, we are named defendants 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, management does not expect these matters to have a material adverse effect on our financial position, operating results or cash flows. Note 10 - Segment Information Our business consists of four operating segments: (1) Deepwater, (2) Asia Pacific, (3) Europe/Africa and (4) North and South America. Each of our four operating segments provides one service, contract drilling. Segment information for the
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North | North | |||||||||||||||||||||||||||||||||||||||||||||
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and | Operating | and | Operating | |||||||||||||||||||||||||||||||||||||||||||
Asia | Europe/ | South | Segments | Reconciling | Consolidated | Asia | Europe/ | South | Segments | Reconciling | Consolidated | |||||||||||||||||||||||||||||||||||
Deepwater | Pacific | Africa | America | Total | Items | Total | Deepwater | Pacific | Africa | America | Total | Items | Total | |||||||||||||||||||||||||||||||||
Revenue | $ -- | $ 220.9 | $196.4 | $ 96.8 | $ 514.1 | $ -- | $ 514.1 | |||||||||||||||||||||||||||||||||||||||
Revenues | $ 67.7 | $ 161.5 | $176.0 | $106.4 | $ 511.6 | $ -- | $ 511.6 | |||||||||||||||||||||||||||||||||||||||
Operating expenses Contract drilling (exclusive of depreciation) | 4.8 | 66.3 | 53.5 | 48.6 | 173.2 | -- | 173.2 | 23.7 | 61.0 | 52.6 | 40.5 | 177.8 | -- | 177.8 | ||||||||||||||||||||||||||||||||
Depreciation | 2.3 | 21.7 | 10.9 | 12.8 | 47.7 | .3 | 48.0 | 3.7 | 22.2 | 11.0 | 12.1 | 49.0 | .3 | 49.3 | ||||||||||||||||||||||||||||||||
General and administrative | -- | -- | -- | -- | -- | 12.0 | 12.0 | -- | -- | -- | -- | -- | 16.0 | 16.0 | ||||||||||||||||||||||||||||||||
Operating (loss) income | $ (7.1 | ) | $ 132.9 | $132.0 | $ 35.4 | $ 293.2 | $ (12.3) | $ 280.9 | ||||||||||||||||||||||||||||||||||||||
Operating income (loss) | $ 40.3 | $ 78.3 | $112.4 | $ 53.8 | $ 284.8 | $ (16.3) | $ 268.5 | |||||||||||||||||||||||||||||||||||||||
Total assets | $1,877.7 | $1,338.4 | $808.5 | $807.1 | $4,831.7 | $1,253.2 | $6,084.9 | $2,172.4 | $1,300.7 | $813.2 | $823.4 | $5,109.7 | $1,239.3 | $6,349.0 |
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North | North | |||||||||||||||||||||||||||||||||||||||||||||
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and | Operating | and | Operating | |||||||||||||||||||||||||||||||||||||||||||
Asia | Europe/ | South | Segments | Reconciling | Consolidated | Asia | Europe/ | South | Segments | Reconciling | Consolidated | |||||||||||||||||||||||||||||||||||
Deepwater | Pacific | Africa | America | Total | Items | Total | Deepwater | Pacific | Africa | America | Total | Items | Total | |||||||||||||||||||||||||||||||||
Revenue | $ 24.6 | $ 255.2 | $191.8 | $ 96.9 | $ 568.5 | $ -- | $ 568.5 | |||||||||||||||||||||||||||||||||||||||
Revenues | $ 32.6 | $ 263.5 | $201.8 | $111.5 | $ 609.4 | $ -- | $ 609.4 | |||||||||||||||||||||||||||||||||||||||
Operating expenses Contract drilling (exclusive of depreciation) | 8.5 | 74.8 | 57.9 | 44.8 | 186.0 | -- | 186.0 | 9.7 | 89.3 | 64.2 | 39.8 | 203.0 | -- | 203.0 | ||||||||||||||||||||||||||||||||
Depreciation | 2.2 | 21.1 | 10.5 | 12.2 | 46.0 | .4 | 46.4 | 2.3 | 21.2 | 10.8 | 11.9 | 46.2 | .5 | 46.7 | ||||||||||||||||||||||||||||||||
General and administrative | -- | -- | -- | -- | -- | 12.7 | 12.7 | -- | -- | -- | -- | -- | 13.8 | 13.8 | ||||||||||||||||||||||||||||||||
Operating income (loss) | $ 13.9 | $ 159.3 | $123.4 | $ 39.9 | $ 336.5 | $ (13.1) | $ 323.4 | $ 20.6 | $ 153.0 | $126.8 | $ 59.8 | $ 360.2 | $ (14.3) | $ 345.9 | ||||||||||||||||||||||||||||||||
Total assets | $1,082.1 | $1,389.5 | $868.1 | $832.6 | $4,172.3 | $1,022.7 | $5,195.0 | $1,274.0 | $1,356.1 | $845.5 | $823.2 | $4,298.8 | $ 906.1 | $5,204.9 |
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North | |||||||||||||||||||||||
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and | Operating | ||||||||||||||||||||||
Asia | Europe/ | South | Segments | Reconciling | Consolidated | ||||||||||||||||||
Deepwater | Pacific | Africa | America | Total | Items | Total | |||||||||||||||||
Revenues | $ 67.7 | $ 382.4 | $372.4 | $198.4 | $1,020.9 | $ -- | $1,020.9 | ||||||||||||||||
Operating expenses Contract drilling (exclusive of depreciation) | 28.5 | 127.3 | 106.1 | 79.6 | 341.5 | -- | 341.5 | ||||||||||||||||
Depreciation | 6.0 | 43.9 | 21.9 | 24.1 | 95.9 | .6 | 96.5 | ||||||||||||||||
General and administrative | -- | -- | -- | -- | -- | 28.0 | 28.0 | ||||||||||||||||
Operating income (loss) | $ 33.2 | $ 211.2 | $244.4 | $ 94.7 | $ 583.5 | $ (28.6) | $ 554.9 | ||||||||||||||||
Total assets | $2,172.4 | $1,300.7 | $813.2 | $823.4 | $5,109.7 | $1,239.3 | $6,349.0 |
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North | |||||||||||||||||||||||
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and | Operating | ||||||||||||||||||||||
Asia | Europe/ | South | Segments | Reconciling | Consolidated | ||||||||||||||||||
Deepwater | Pacific | Africa | America | Total | Items | Total | |||||||||||||||||
Revenues | $ 57.2 | $ 518.7 | $393.6 | $199.8 | $1,169.3 | $ -- | $1,169.3 | ||||||||||||||||
Operating expenses Contract drilling (exclusive of depreciation) | 18.2 | 164.1 | 122.1 | 77.2 | 381.6 | -- | 381.6 | ||||||||||||||||
Depreciation | 4.5 | 42.3 | 21.3 | 23.4 | 91.5 | .9 | 92.4 | ||||||||||||||||
General and administrative | -- | -- | -- | -- | -- | 26.5 | 26.5 | ||||||||||||||||
Operating income (loss) | $ 34.5 | $ 312.3 | $250.2 | $ 99.2 | $ 696.2 | $ (27.4) | $ 668.8 | ||||||||||||||||
Total assets | $1,274.0 | $1,356.1 | $845.5 | $823.2 | $4,298.8 | $ 906.1 | $5,204.9 |
Note 11 - Subsequent Events During the second quarter of 2009, we adopted SFAS No. 165, "Subsequent Events" (as amended) which establishes general standards regarding the accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. Adoption of this standard did not result in significant changes in the subsequent events that we are required to recognize or disclosure in our financial statements. We evaluated subsequent events through July 23, 2009, the date these condensed consolidated financial statements were filed with the SEC. On July 17, 2009, we received an $11.5 million payment from Petrosucre, a subsidiary of PDVSA. Petrosucre took over complete control of ENSCO 69 in January 2009, and we terminated our drilling contract with Petrosucre in June 2009 after it failed to satisfy contractual obligations and meet payment commitments. See "Note 8 - Discontinued Operations" for additional information on ENSCO 69. |
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Europe/Africa Our Europe/Africa offshore drilling operations are mainly conducted in northern North and South America
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RESULTS OF OPERATIONS �� The following table |
Three Months Ended | Six Months Ended | |||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
June 30, | June 30, | |||||||||||||||
2009 | 2008 | 2009 | 2008 | 2009 | 2008 | |||||||||||
Revenues | $514.1 | $568.5 | $511.6 | $609.4 | $1,020.9 | $1,169.3 | ||||||||||
Operating expenses | ||||||||||||||||
Contract drilling (exclusive of depreciation) | 173.2 | 186.0 | 177.8 | 203.0 | 341.5 | 381.6 | ||||||||||
Depreciation | 48.0 | 46.4 | 49.3 | 46.7 | 96.5 | 92.4 | ||||||||||
General and administrative | 12.0 | 12.7 | 16.0 | 13.8 | 28.0 | 26.5 | ||||||||||
Operating income | 280.9 | 323.4 | 268.5 | 345.9 | 554.9 | 668.8 | ||||||||||
Other income (expense) | (4.3) | 4.5 | ||||||||||||||
Other income, net | 6.9 | 6.8 | 2.6 | 11.3 | ||||||||||||
Provision for income taxes | 54.5 | 59.2 | 49.1 | 64.6 | 105.4 | 123.2 | ||||||||||
Income from continuing operations | 222.1 | 268.7 | 226.3 | 288.1 | 452.1 | 556.9 | ||||||||||
Income from discontinued operations, net | -- | 5.0 | ||||||||||||||
(Loss) income from discontinued operations, net | (24.9 | ) | 9.8 | (28.6 | ) | 14.7 | ||||||||||
Net income | 222.1 | 273.7 | 201.4 | 297.9 | 423.5 | 571.6 | ||||||||||
Net income attributable to noncontrolling interests | (1.4) | (1.7) | ||||||||||||||
Less: Net income attributable to noncontrolling interests | (1.1 | ) | (1.2 | ) | (2.5 | ) | (2.9 | ) | ||||||||
Net income attributable to Ensco | $220.7 | $272.0 | $200.3 | $296.7 | $ 421.0 | $ 568.7 | ||||||||||
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Oil and natural gas prices have declined substantially from their Rig Locations, Utilization and Average Day Rates We manage our business through four operating segments. Our jackup rigs are mobile and occasionally move between operating segments in response to market conditions and contract opportunities. The following table summarizes our offshore drilling rigs by segment and rigs under construction as of |
2009 | 2008 | June 30, | June 30, | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2009 | 2008 | |||||||||||||
Deepwater(1) | 2 | 1 | ||||||||||||
Deepwater(1)(2) | 3 | 1 | ||||||||||||
Asia Pacific | 20 | 20 | 20 | 20 | ||||||||||
Europe/Africa | 10 | 10 | 10 | 10 | ||||||||||
North and South America | 14 | 14 | 13 | 13 | ||||||||||
Under construction(1)(2) | 6 | 4 | ||||||||||||
Under construction(1)(2)(3) | 5 | 6 | ||||||||||||
Total(3) | 52 | 49 | ||||||||||||
Total(4) | 51 | 50 | ||||||||||||
(1) | During the third quarter of 2008, we accepted delivery of ENSCO 8500 and mobilized the rig to the Gulf of Mexico. The rig |
(2) | During the second quarter of 2009, we accepted delivery of ENSCO 8501 which is currently mobilizing to the Gulf of Mexico from Singapore. ENSCO 8501 is expected to commence drilling operations in the Gulf of Mexico under a three-and-a-half-year contract in October 2009. |
(3) | During the third quarter of 2008, we entered into |
| The total number of rigs for each period excludes rigs reclassified as discontinued operations. |
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2009 | 2008 | ||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Rig utilization(1) | |||||||||||
Deepwater | 100% | 96% | |||||||||
Asia Pacific(3) | 78% | 97% | |||||||||
Europe/Africa | 99% | 99% | |||||||||
North and South America | 69% | 91% | |||||||||
Total | 80% | 95% | |||||||||
Average day rates(2) | |||||||||||
Deepwater | $ -- | $279,962 | |||||||||
Asia Pacific(3) | 161,538 | 143,303 | |||||||||
Europe/Africa | 218,947 | 213,123 | |||||||||
North and South America | 121,341 | 85,955 | |||||||||
Total | $168,176 | $146,010 | |||||||||
Three Months Ended | Six Months Ended | ||||||||
---|---|---|---|---|---|---|---|---|---|
June 30, | June 30, | ||||||||
2009 | 2008 | 2009 | 2008 | ||||||
Rig Utilization(1) | |||||||||
Deepwater | 96% | 98% | 98% | 97% | |||||
Asia Pacific(3) | 63% | 91% | 70% | 94% | |||||
Europe/Africa | 87% | 97% | 93% | 98% | |||||
North and South America | 72% | 100% | 70% | 95% | |||||
Total | 72% | 95% | 76% | 95% | |||||
Average Day Rates(2) | |||||||||
Deepwater | $490,865 | $365,496 | $490,865 | $323,215 | |||||
Asia Pacific(3) | 144,517 | 152,906 | 154,093 | 148,023 | |||||
Europe/Africa | 219,715 | 217,710 | 219,309 | 215,435 | |||||
North and South America | 119,190 | 93,333 | 119,127 | 89,605 | |||||
Total | $171,439 | $154,454 | $169,656 | $150,958 | |||||
(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. |
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Our business consists of four operating segments: (1) Deepwater, (2) Asia Pacific, (3) Europe/Africa and (4) North and South America. Each of our four operating segments provides one service, contract drilling. Segment information for the |
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North | North | |||||||||||||||||||||||||||||||||||||||||||||
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and | Operating | and | Operating | |||||||||||||||||||||||||||||||||||||||||||
Asia | Europe/ | South | Segments | Reconciling | Consolidated | Asia | Europe/ | South | Segments | Reconciling | Consolidated | |||||||||||||||||||||||||||||||||||
Deepwater | Pacific | Africa | America | Total | Items | Total | Deepwater | Pacific | Africa | America | Total | Items | Total | |||||||||||||||||||||||||||||||||
Revenue | $ -- | $220.9 | $196.4 | $96.8 | $514.1 | $ -- | $514.1 | |||||||||||||||||||||||||||||||||||||||
Revenues | $67.7 | $161.5 | $176.0 | $106.4 | $511.6 | $ -- | $511.6 | |||||||||||||||||||||||||||||||||||||||
Operating expenses Contract drilling (exclusive of depreciation) | 4.8 | 66.3 | 53.5 | 48.6 | 173.2 | -- | 173.2 | 23.7 | 61.0 | 52.6 | 40.5 | 177.8 | -- | 177.8 | ||||||||||||||||||||||||||||||||
Depreciation | 2.3 | 21.7 | 10.9 | 12.8 | 47.7 | .3 | 48.0 | 3.7 | 22.2 | 11.0 | 12.1 | 49.0 | .3 | 49.3 | ||||||||||||||||||||||||||||||||
General and administrative | -- | -- | -- | -- | -- | 12.0 | 12.0 | -- | -- | -- | -- | -- | 16.0 | 16.0 | ||||||||||||||||||||||||||||||||
Operating (loss) income | $(7.1 | ) | $132.9 | $132.0 | $35.4 | $293.2 | $(12.3) | $280.9 | ||||||||||||||||||||||||||||||||||||||
Operating income (loss) | $40.3 | $ 78.3 | $112.4 | $ 53.8 | $284.8 | $(16.3) | $268.5 |
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North | North | |||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
and | Operating | and | Operating | |||||||||||||||||||||||||||||||||||||||||||
Asia | Europe/ | South | Segments | Reconciling | Consolidated | Asia | Europe/ | South | Segments | Reconciling | Consolidated | |||||||||||||||||||||||||||||||||||
Deepwater | Pacific | Africa | America | Total | Items | Total | Deepwater | Pacific | Africa | America | Total | Items | Total | |||||||||||||||||||||||||||||||||
Revenue | $24.6 | $255.2 | $191.8 | $96.9 | $568.5 | $ -- | $568.5 | |||||||||||||||||||||||||||||||||||||||
Revenues | $32.6 | $263.5 | $201.8 | $111.5 | $609.4 | $ -- | $609.4 | |||||||||||||||||||||||||||||||||||||||
Operating expenses Contract drilling (exclusive of depreciation) | 8.5 | 74.8 | 57.9 | 44.8 | 186.0 | -- | 186.0 | 9.7 | 89.3 | 64.2 | 39.8 | 203.0 | -- | 203.0 | ||||||||||||||||||||||||||||||||
Depreciation | 2.2 | 21.1 | 10.5 | 12.2 | 46.0 | .4 | 46.4 | 2.3 | 21.2 | 10.8 | 11.9 | 46.2 | .5 | 46.7 | ||||||||||||||||||||||||||||||||
General and administrative | -- | -- | -- | -- | -- | 12.7 | 12.7 | -- | -- | -- | -- | -- | 13.8 | 13.8 | ||||||||||||||||||||||||||||||||
Operating income (loss) | $13.9 | $159.3 | $123.4 | $39.9 | $336.5 | $(13.1) | $323.4 | $20.6 | $153.0 | $126.8 | $ 59.8 | $360.2 | $(14.3) | $345.9 |
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North | |||||||||||||||||||||||
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and | Operating | ||||||||||||||||||||||
Asia | Europe/ | South | Segments | Reconciling | Consolidated | ||||||||||||||||||
Deepwater | Pacific | Africa | America | Total | Items | Total | |||||||||||||||||
Revenues | $67.7 | $382.4 | $372.4 | $198.4 | $1,020.9 | $ -- | $1,020.9 | ||||||||||||||||
Operating expenses Contract drilling (exclusive of depreciation) | 28.5 | 127.3 | 106.1 | 79.6 | 341.5 | -- | 341.5 | ||||||||||||||||
Depreciation | 6.0 | 43.9 | 21.9 | 24.1 | 95.9 | .6 | 96.5 | ||||||||||||||||
General and administrative | -- | -- | -- | -- | -- | 28.0 | 28.0 | ||||||||||||||||
Operating income (loss) | $33.2 | $211.2 | $244.4 | $ 94.7 | $ 583.5 | $(28.6) | $ 554.9 | ||||||||||||||||
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North | |||||||||||||||||||||||
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and | Operating | ||||||||||||||||||||||
Asia | Europe/ | South | Segments | Reconciling | Consolidated | ||||||||||||||||||
Deepwater | Pacific | Africa | America | Total | Items | Total | |||||||||||||||||
Revenues | $57.2 | $518.7 | $393.6 | $199.8 | $1,169.3 | $ -- | $1,169.3 | ||||||||||||||||
Operating expenses Contract drilling (exclusive of depreciation) | 18.2 | 164.1 | 122.1 | 77.2 | 381.6 | -- | 381.6 | ||||||||||||||||
Depreciation | 4.5 | 42.3 | 21.3 | 23.4 | 91.5 | .9 | 92.4 | ||||||||||||||||
General and administrative | -- | -- | -- | -- | -- | 26.5 | 26.5 | ||||||||||||||||
Operating income (loss) | $34.5 | $312.3 | $250.2 | $ 99.2 | $ 696.2 | $(27.4) | $ 668.8 | ||||||||||||||||
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Deepwater revenues for the quarter ended Deepwater revenues for the six-month period ended June 30, 2009 increased by $10.5 million, or 18%, as compared to the prior year period. The increase in revenues was due to an increase in the day rate earned by ENSCO 7500, the recognition of ENSCO 7500 mobilization revenues and the commencement of ENSCO 8500 drilling operations in June 2009, partially offset by the deferral of |
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Asia Pacific revenues for the quarter ended Asia Pacific revenues for the six-month period ended June 30, 2009 declined by $136.3 million, or 26%, as compared to the prior year period. The decline in revenues was primarily due to a decline in utilization to 70% from 94% in the prior year period, partially offset by a 4% increase in average day rates. The decline in utilization occurred due to lower levels of spending by oil and gas companies as noted above, coupled with excess rig availability in the region. The increase in average day rates resulted from higher levels of spending by oil and gas companies during 2008 prior to the |
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Europe/Africa revenues for the quarter ended Europe/Africa revenues for the six-month period ended June 30, 2009 declined by $21.2 million, or 5%, as compared to the prior year period. The decline was primarily due to a decline in utilization to 93% from 98% in the prior year period. The decline in utilization occurred due to lower levels of spending by oil and gas companies as noted above. Contract drilling expense declined by $16.0 million, or 13%, as compared to the prior year quarter, primarily due to a decline in mobilization expense and the impact of decreased utilization, partially offset by an increase in repair and maintenance expense. Depreciation expense increased by 3% due to depreciation on minor upgrades and improvements to our Europe/Africa fleet completed during 2008 and the first half of 2009. North and South America North and South America revenues for the quarter ended North and South America revenues for the six-month period ended June 30, 2009 declined by $1.4 million as compared to the prior year period. The decline was primarily due to a decline in utilization to 70% from 95% in the prior year period, largely offset by a 33% increase in average day rates. The decline in utilization occurred due to lower levels of spending by oil and gas companies as noted above. The increase in average day rates was largely due to the relocation of ENSCO 89, ENSCO 93 and ENSCO 98 to Mexico and ENSCO 68 to Venezuela as noted above. Contract drilling expense increased by $2.4 million, or 3%, as compared to the prior year period, due to an increase in repair and maintenance and mobilization expense in addition to incremental expenses associated with operating in Mexico and Venezuela, partially offset by the impact of decreased utilization. Depreciation expense increased by 3% primarily due to ENSCO 93 capital enhancement projects completed during the second quarter of 2009 and first quarter of 2008, the ENSCO 89 capital enhancement project completed during the second quarter of 2009 and depreciation on minor upgrades and improvements to our North and South America fleet completed during 2008 and the first half of 2009. Other General and administrative expense for the
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Three Months Ended | Six Months Ended | |||||||||||||
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June 30, | June 30, | |||||||||||||
2009 | 2008 | 2009 | 2008 | 2009 | 2008 | |||||||||
Interest income | $ 0.7 | $ 5.0 | $ .4 | $3.7 | $ 1.1 | $ 8.7 | ||||||||
Interest expense, net: | ||||||||||||||
Interest expense | (5.3 | ) | (5.7 | ) | (5.3 | ) | (5.1 | ) | (10.6) | (10.8 | ) | |||
Capitalized interest | 5.3 | 5.7 | 5.3 | 5.1 | 10.6 | 10.8 | ||||||||
-- | -- | -- | -- | -- | -- | |||||||||
Other, net | (5.0 | ) | (.5 | ) | 6.5 | 3.1 | 1.5 | 2.6 | ||||||
$(4.3 | ) | $ 4.5 | $6.9 | $6.8 | $ 2.6 | $11.3 | ||||||||
Other, net, for the three-month and six-month periods ended June 30, 2009 included net foreign currency exchange gains of $6.5 million and $500,000, respectively. Other, net, for the quarter ended Provision for Income Taxes The provision for income taxes for the quarter ended The provision for income taxes for the six-month period ended June 30, 2009 declined by $17.8 million as compared to the prior year period. The decline was primarily attributable to decreased profitability, partially offset by an increase in the effective tax rate from 18.1% for the six-month period ended June 30, 2008 to 18.9% for the six-month period ended June 30, 2009, primarily due to a decline in the relative portion of our earnings generated by our international subsidiaries as noted above. Discontinued Operations ENSCO 69 From May 2007 to June 2009, ENSCO 69 was contracted to Petrosucre, a subsidiary of PDVSA, the national oil company of Venezuela. PDVSA subsidiaries reportedly lack funds and, since late 2008, generally have not been paying their contractors and service providers. In January 2009, we suspended drilling operations on ENSCO 69 after Petrosucre failed to satisfy its contractual obligations and meet commitments relative to the payment of past due invoices. Petrosucre then took over complete control of ENSCO 69 drilling operations utilizing Petrosucre employees and a portion of the Venezuelan rig crews we had utilized. When Petrosucre initially advised us that it temporarily was taking over operations on the rig, we placed our supervisory rig personnel on ENSCO 69 to observe Petrosucre's operations. 34 |
Due to Petrosucre's longstanding failure to satisfy its contractual obligations and meet payment commitments, and in consideration of the Venezuelan government's recent nationalization of assets owned by international oil and gas companies and oilfield service companies, we believe it is remote that ENSCO 69 will be returned to us by Petrosucre and operated again by Ensco. 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 operating results for the three-month and six-month periods ended June 30, 2009 and 2008 were reclassified as discontinued operations in our condensed consolidated statements of income. See Note 8 to our condensed consolidated financial statements for additional information on ENSCO 69. ENSCO 74 In September 2008, ENSCO 74 was lost as a result of Hurricane Ike. Thereafter, we conducted extensive aerial and sonar reconnaissance but failed to locate the rig hull. The rig was a total loss, as defined under the terms of our insurance policies. In March 2009, the sunken hull of ENSCO 74 was located on the seabed approximately 95 miles from the original drilling location when it was reportedly struck by an oil tanker. The operating results of ENSCO 74 were reclassified as discontinued operations in our condensed consolidated statements of income for the three-month and six-month periods ended June 30, 2008. See Note 9 to our condensed consolidated financial statements for additional information on the loss of ENSCO 74. The following table summarizes our (loss) income from discontinued operations for the three-month and six-month periods ended June 30, 2009 and 2008 (in millions): |
Three Months Ended | Six Months Ended | ||||||||
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June 30, | June 30, | ||||||||
2009 | 2008 | 2009 | 2008 | ||||||
Revenues | $ -- | $27.7 | $ 4.8 | $48.1 | |||||
Operating expenses | 9.3 | 11.9 | 19.6 | 24.1 | |||||
Operating (loss) income before income taxes | (9.3 | ) | 15.8 | (14.8 | ) | 24.0 | |||
Income tax expense | 3.8 | 6.0 | 2.0 | 9.3 | |||||
Loss on disposal of discontinued operations, net | (11.8 | ) | -- | (11.8 | ) | -- | |||
(Loss) income from discontinued operations | $(24.9 | ) | $ 9.8 | $(28.6 | ) | $14.7 | |||
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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 |
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Based on the results of our The carrying Assets measured at fair value using significant Level 3 inputs constituted 1% of our total assets as of LIQUIDITY AND CAPITAL RESOURCES Although our business has historically been very cyclical, we have relied on our cash flow from continuing operations to meet liquidity needs and fund the majority of our cash requirements. We have maintained a strong financial position through the disciplined and conservative use of debt. A substantial portion of our cash flow is invested in the expansion and enhancement of our fleet of drilling rigs in general and construction of our ENSCO 8500 Series® rigs in particular. We believe the current global economic crisis and During the |
36 |
Detailed explanations of our liquidity and capital resources for the |
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2009 | 2008 | ||||
---|---|---|---|---|---|
Cash flow from continuing operations | $321.9 | $146.6 | |||
Capital expenditures on continuing operations | |||||
New rig construction | $118.8 | $ 76.4 | |||
Rig enhancements | 38.5 | 16.3 | |||
Minor upgrades and improvements | 27.3 | 23.5 | |||
$184.6 | $116.2 | ||||
Six Months Ended | |||||
---|---|---|---|---|---|
June 30, | |||||
2009 | 2008 | ||||
Cash flow from continuing operations | $586.2 | $396.4 | |||
Capital expenditures on continuing operations | |||||
New rig construction | $328.5 | $345.3 | |||
Rig enhancements | 88.3 | 22.1 | |||
Minor upgrades and improvements | 54.7 | 47.3 | |||
$471.5 | $414.7 | ||||
We continue to expand the size and quality of our drilling rig fleet. We have Based on our current projections, we expect capital expenditures during 2009 to include approximately $530.0 million for construction of our ENSCO 8500® Series rigs, approximately $160.0 million for rig enhancement projects and approximately $100.0 million for minor upgrades and improvements. Depending on market conditions and opportunities, we may make additional capital expenditures to upgrade rigs and construct or acquire additional rigs. |
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Our long-term debt, total capital and long-term debt to total capital ratios as of |
March 31, | December 31, | June 30, | December 31, | |||||||
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2009 | 2008 | 2009 | 2008 | |||||||
Long-term debt | $ 274.3 | $ 274.3 | $ 265.7 | $ 274.3 | ||||||
Total capital* | 5,170.2 | 4,951.2 | $5,387.2 | $4,951.2 | ||||||
Long-term debt to total capital | 5.3% | 5.5% | 4.9 | % | 5.5 | % |
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From inception of our stock repurchase programs in March 2006 through December 31, 2008, we repurchased an aggregate 16.5 million shares at a cost of $937.6 million (an average cost of $56.79 per share). No shares were repurchased under our Board-authorized stock repurchase programs during the Liquidity Our liquidity position as of |
March 31, | December 31, | June 30, | December 31, | |||||||
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2009 | 2008 | 2009 | 2008 | |||||||
Cash and cash equivalents | $ 927.3 | $789.6 | $ 882.0 | $789.6 | ||||||
Working capital | 1,113.9 | 973.0 | $1,082.4 | $973.0 | ||||||
Current ratio | 3.5 | 3.3 | 3.4 | 3.3 |
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38 |
We believe the current global economic crisis and In addition to |
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Derivatives We use derivatives to reduce our exposure to various market risks, primarily foreign currency �� We utilize derivatives to hedge forecasted foreign currency denominated transactions, primarily to reduce our exposure to foreign currency risk associated with the portion of our remaining ENSCO 8500 Series® construction obligations denominated in Singapore dollars and contract drilling expenses denominated in various other currencies. As of 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 rates. We predominantly structure our drilling contracts in U.S. dollars, which significantly reduces the portion of our cash flows and assets denominated in foreign currencies. We also employ various strategies, including the use of derivatives, to match foreign currency denominated assets with equal or near equal amounts of foreign currency denominated liabilities, thereby minimizing exposure to earnings fluctuations caused by changes in foreign currency exchange rates. We utilize derivative instruments and undertake foreign currency hedging activities in accordance with our established policies for the management of market risk. We minimize our credit risk relating to the counterparties of our derivatives by transacting with multiple, high-quality As of |
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We have generated a substantial cash |
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CRITICAL ACCOUNTING POLICIES The preparation of our consolidated financial statements and related disclosures in conformity with GAAP requires management to make estimates, judgments and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Our significant accounting policies are included in Note 1 to the Consolidated Financial Statements for the year ended December 31, 2008 included in our Annual Report on Form 10-K filed with the SEC on February 26, 2009. These policies, along with our underlying judgments and assumptions made in their application, have a significant impact on our consolidated financial statements. We identify our critical accounting policies as those that are the most pervasive and important to the portrayal of our financial position and operating results, and that require the most difficult, subjective and/or complex judgments by management regarding estimates in matters that are inherently uncertain. Our critical accounting policies are those related to property and equipment, impairment of long-lived assets and goodwill and income taxes. Property and Equipment As of 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 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 estimated useful lives of our property and equipment reflect both historical experience and expectations regarding future operations, utilization and performance of our assets. The use of different estimates, judgments and assumptions in the establishment of our property and equipment accounting policies, especially those involving the useful lives of our rigs, would likely result in materially different carrying values of assets and operating results. For additional information on the useful lives of our drilling rigs, including an analysis of the impact of various changes in useful life assumptions, see "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Policies and Estimates" in Part II of our Annual Report on Form 10-K for the year ended December 31, 2008. |
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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 rigs and ultra-deepwater semisubmersible rigs are suited for, and accessible to, broad and numerous markets throughout the world. 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 the fair value of those units as of the testing date. Our four operating segments represent our reporting units in accordance with SFAS No. 142, "Goodwill and Other Intangible Assets (as amended)". In most instances, our calculation of the fair value of our reporting units is based on estimates of future discounted cash flows to be generated by our drilling rigs, which reflect management's judgments and assumptions regarding future industry conditions and operations, including expected utilization, day rates, expense levels and capital requirements for each of our drilling rigs. If the aggregate fair value of our reporting units exceeds our market capitalization, we evaluate the reasonableness of the implied control premium which includes a comparison to implied control premiums from recent market transactions within our industry or other relevant benchmark data. To the extent that the implied control premium based on the aggregate fair value of our reporting units is not reasonable, we adjust the discount rate used in our discounted cash flow model and reduce the estimated fair values of our reporting units accordingly. 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 If the global economic environment continues to deteriorate and/or our expectations relative to future offshore drilling industry conditions decline, we may conclude that the fair value of one or more of our reporting units has more-likely-than-not declined below its carrying amount and perform a goodwill impairment test. If, at the time of the goodwill impairment test, management's judgments and assumptions regarding future industry conditions and operations have diminished, or if the market value of our common stock has declined, we may conclude that the goodwill of one or more of our reporting units has been impaired. It is reasonably possible that the judgments and assumptions inherent in our goodwill impairment test may change in response to future market conditions. 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 and operating results. |
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We conduct operations and earn income in numerous international countries and are subject to the laws of tax jurisdictions within those countries, as well as U.S. Federal and state tax laws. As of The carrying values of deferred income tax assets and liabilities reflect the application of our income tax accounting policies in accordance with SFAS No. 109, "Accounting for Income Taxes" ("SFAS 109"), and are based on management's estimates, judgments and assumptions regarding future operating results and levels of taxable income, as well as management's judgments regarding the interpretation of the provisions of SFAS 109. Carryforwards and tax credits are assessed for realization as a reduction of future taxable income by using a more-likely-than-not determination. In December 2007, substantially all of the undistributed earnings of our non-U.S. subsidiaries were distributed to our U.S. parent. A U.S. deferred tax liability has not been recognized for the remaining undistributed earnings of our non-U.S. subsidiaries because it is their intention to reinvest such earnings indefinitely. Should our non-U.S. subsidiaries elect to make a distribution of these earnings, or be deemed to have made a distribution of them through application of various provisions of the Internal Revenue Code, we may be subject to additional U.S. income taxes. The carrying values of liabilities for income taxes currently payable and unrecognized tax benefits reflect our application of the provisions of FASB Interpretation No. 48, "Accounting for Uncertainty in Income Taxes - an interpretation of FASB Statement No. 109", and are based on management's interpretation of applicable tax laws and incorporate management's estimates, judgments and assumptions regarding the use of tax planning strategies in various taxing jurisdictions. The use of different estimates, judgments and assumptions in connection with accounting for income taxes, especially those involving the deployment of tax planning strategies, may result in materially different carrying values of income tax assets and liabilities and operating results. We operate in many international jurisdictions where tax laws relating to the offshore drilling industry are not well developed. In jurisdictions where available statutory law and regulations are incomplete or underdeveloped, we obtain professional guidance and consider existing industry practices before utilizing tax planning strategies and meeting our tax obligations. |
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• | During recent years, the portion of our overall operations conducted in international tax jurisdictions has increased, and we currently anticipate that this trend will continue. | |
• | In order to utilize tax planning strategies and conduct international operations efficiently, our subsidiaries frequently enter into transactions with affiliates that are generally subject to complex tax regulations and are frequently reviewed by tax authorities. | |
• | 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. |
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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 recently operated offshore Nigeria. 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 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 control provisions of the FCPA occurred. Our Audit Committee engaged a Washington, D.C. law firm with significant experience in investigating and advising upon FCPA matters to assist in the internal investigation. Following notification to the Audit Committee and to KPMG LLP, our independent registered public accounting firm, in consultation with the Audit Committee's outside legal counsel, we voluntarily notified the United States Department of Justice and SEC that we had commenced an internal investigation. We expressed our intention to cooperate with both agencies, comply with their directives and fully disclose the results of the investigation. The internal investigation process has involved extensive reviews of documents and records, as well as production to the authorities, and interviews of relevant personnel. In addition to the temporary importation of ENSCO 100, the investigation has examined our customs clearance of routine shipments and immigration activities in Nigeria. Our internal investigation has essentially been concluded. A meeting to review the results of the investigation with the authorities was held on February 24, 2009. We expect to discuss a possible negotiated disposition with the authorities during the second 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 control provisions of the FCPA or whether the scope of the investigation will be extended to other issues in Nigeria or to other countries. We also are unable to predict what potential corrective measures, fines, sanctions or other remedies, if any, the agencies may seek against us or any of our employees. |
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ENSCO 74 Loss In September 2008, ENSCO 74 was lost as a result of Hurricane Ike and was presumed to have sunk in the Gulf of Mexico, however, portions of its legs remained underwater adjacent to the customer's platform. Thereafter, we conducted extensive aerial and sonar reconnaissance but failed to 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 on the seabed approximately 95 miles from the original drilling location when it was reportedly struck by the oil tanker SKS Satilla. Following discovery of the sunken rig hull, we
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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 |
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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. In August 2007, we commenced litigation in the Texas District Court of Dallas County against certain underwriters at Lloyd's of London and other insurance companies, Bryan Johnson and BC Johnson Associates, LLC (collectively "the Underwriters") alleging breach of contract, wrongful denial, bad faith and other claims which seek a declaration that removal of wreckage and debris is covered under our liability insurance, monetary damages, attorneys' fees and other remedies. The Underwriters removed the case to the United States District Court for the Northern District of Texas, Dallas Division. The case was then remanded back to the Texas District Court by the United States District Court. The Underwriters subsequently appealed the remand to the United States Court of Appeals. The litigation is in an early stage and is currently pending a decision from the United States Court of Appeals. 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 2006. |
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In August 2004, we and certain current and former subsidiaries were named as defendants, along with numerous other third-party companies as co-defendants, in three multi-party lawsuits filed in the Circuit Courts of Jones County (Second Judicial District) and Jasper County (First Judicial District), Mississippi. The lawsuits sought an unspecified amount of monetary damages on behalf of individuals alleging personal injury or death, primarily under the Jones Act, purportedly resulting from exposure to asbestos on drilling rigs and associated facilities during the period 1965 through 1986. |
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The The three cases pending in federal court were consolidated with 441 other lawsuits filed by a Houston law firm. These cases were referred to a Magistrate Judge, who ordered parties to conduct general discovery in these matters. Discovery specific to each plaintiff will take place at a later designated time, if deemed necessary by the parties and the 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 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. Other Matters In addition to the foregoing, we are named defendants 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, management does not expect these matters to have a material adverse effect on our financial position, operating results or cash flows. |
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There are numerous factors that affect our business and results of operations, many of which are beyond our control. In addition to information set forth in this quarterly report, 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 our Annual Report on Form 10-K for the year ended December 31, 2008, which contains descriptions of significant factors that might cause the actual results of operations in future periods to differ materially from those currently anticipated or expected. Except as set forth below, there have been no material changes from the risk factors previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2008. THE POTENTIAL FOR GULF OF MEXICO HURRICANE RELATED WINDSTORM DAMAGE OR LIABILITIES COULD RESULT IN UNINSURED LOSSES AND MAY CAUSE US TO ALTER OUR OPERATING PROCEDURES DURING HURRICANE SEASON, WHICH COULD ADVERSELY AFFECT OUR BUSINESS. Certain areas in and near the Gulf of Mexico experience hurricanes and other extreme weather conditions on a relatively frequent basis. Some of our drilling rigs in the Gulf Insurance companies incurred substantial losses in the offshore drilling, exploration and production industries as a consequence of hurricanes that occurred in the Gulf of Mexico during 2004, 2005 and 2008. Accordingly, insurance companies have substantially reduced the levels of insurance coverage available for losses arising from named tropical storm or hurricane damage in the Gulf of Mexico
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Our current 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 hurricanes. Moreover, our current liability insurance policies only provide coverage for Gulf of Mexico windstorm exposures for removal of wreckage and debris in excess of $50.0 million per occurrence as respects our jackup |
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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, As noted above, we have a $50.0 million per occurrence deductible for windstorm loss or damage to our ultra-deepwater semisubmersible rig in the Gulf of Mexico and have elected not to purchase loss or damage insurance coverage for our eight jackup rigs in the area. Moreover, we have retained the risk for the first $50.0 million of liability exposure for removal of wreckage and debris resulting from windstorm related exposures associated with our rigs in the Gulf of Mexico. These retained exposures for property loss or damage and liabilities associated with Gulf of Mexico hurricanes could have a material adverse effect on our financial position, operating results and cash flows if we sustain significant uninsured or underinsured losses or liabilities as a result of Gulf of Mexico hurricanes. |
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WE MAY INCUR ASSET IMPAIRMENTS AS A RESULT OF THE DETERIORATING GLOBAL ECONOMY AND THE POTENTIAL RESULTING DECLINE IN DEMAND FOR OFFSHORE DRILLING RIGS.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. The offshore drilling industry historically has 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. However, if the global economic environment continues to deteriorate and the offshore drilling industry were to incur a significant prolonged downturn, impairment charges may occur with respect to specific individual rigs, groups of rigs, such as a specific type of drilling rig, or rigs in a certain geographic location. 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 the fair value of those units as of the testing date. In most instances, our calculation of the fair value of our reporting units is based on estimates of future discounted cash flows to be generated by our drilling rigs, which reflect management's judgments and assumptions regarding future industry conditions and operations, including expected utilization, day rates, expense levels and capital requirements for each of our drilling rigs. If the aggregate fair value of our reporting units exceeds our market capitalization, we evaluate the reasonableness of the implied control premium. If we determine the implied control premium is not reasonable, we adjust the discount rate in our discounted cash flow model and reduce the estimated fair values of our reporting units accordingly. If the global economic environment continues to deteriorate and/or our expectations relative to future offshore drilling industry conditions decline, we may conclude that the fair value of one or more of our reporting units has CHANGES IN LAWS, EFFECTIVE INCOME TAX RATES OR ADVERSE OUTCOMES RESULTING FROM EXAMINATION OF OUR TAX RETURNS COULD ADVERSELY AFFECT OUR FINANCIAL RESULTS.Our future effective income tax rates could be adversely affected by changes in tax laws, both domestically and internationally. The current U.S. administration has proposed sweeping tax reforms which would significantly increase the tax obligations of U.S. multi-national corporations such as Ensco. The proposed legislation, if enacted, would have a significant adverse effect on our financial position, operating results and cash flows. Our future effective 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, by changes in the valuation of our deferred tax assets and liabilities or by changes in tax treaties, regulations, accounting principles or interpretations thereof in one or more countries in which we operate. In addition, we are subject to the continuous examination of our income tax returns by the Internal Revenue Service 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 condition, operating results or cash flows. |
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The table below provides a summary of our repurchases of common stock during the quarter ended |
Issuer Purchases of Equity Securities | Issuer Purchases of Equity Securities | Issuer Purchases of Equity Securities | ||||||||||||||||||||||||||
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Approximate | ||||||||||||||||||||||||||||
Total Number | Approximate | Total Number | Dollar | |||||||||||||||||||||||||
of Shares | Dollar Value of | of Shares | Value of | |||||||||||||||||||||||||
Average | Purchased as | Shares that | Average | Purchased as | Shares that | |||||||||||||||||||||||
Total | Price | Part of Publicly | May Yet Be | Total | Price | Part of Publicly | May Yet Be | |||||||||||||||||||||
Number of | Paid | Announced | Purchased | Number of | Paid | Announced | Purchased | |||||||||||||||||||||
Shares | per | Plans or | Under Plans | Shares | per | Plans or | Under Plans | |||||||||||||||||||||
Period | Period | Purchased | Share | Programs | or Programs | Period | Purchased | Share | Programs | or Programs | ||||||||||||||||||
January 1 - January 31 | 64 | $30.33 | -- | $562,000,000 | ||||||||||||||||||||||||
February 1 - February 28 | 1,137 | 23.85 | -- | $562,000,000 | ||||||||||||||||||||||||
March 1 - March 31 | 4,603 | 27.21 | -- | $562,000,000 | ||||||||||||||||||||||||
April 1 - April 30 | 23,670 | $26.72 | -- | $562,000,000 | ||||||||||||||||||||||||
May 1 - May 31 | 9,059 | 34.53 | -- | $562,000,000 | ||||||||||||||||||||||||
June 1 - June 30 | 70,353 | 41.20 | -- | $562,000,000 | ||||||||||||||||||||||||
Total | 5,804 | $26.59 | -- | 103,082 | $37.29 | -- | ||||||||||||||||||||||
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(i) | Election of three Class I Directors, each for a three-year term: | |
Votes For | Votes Against | Votes Abstain | |||||
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C. Christopher Gaut | 113,397,563 | 6,549,547 | 73,298 | ||||
Gerald W. Haddock | 117,351,874 | 2,540,461 | 128,073 | ||||
Paul E. Rowsey, III | 118,266,019 | 1,678,210 | 76,179 | ||||
The terms of the following Directors continued after the meeting: Daniel W. Rabun, J. Roderick Clark, David M. Carmichael, Thomas L. Kelly II, Keith O. Rattie and Rita M. Rodriguez. |
(ii) | Approval of an amendment to the 2005 Long-Term Incentive Plan and reapproval of the material terms of the performance goals therein for purposes of Section 162(m) of the Internal Revenue Code: | |
Votes For | Votes Against | Votes Abstain | Broker Non-Votes |
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82,009,675 | 24,372,686 | 125,514 | 13,512,533 |
(iii) | Ratification of the Audit Committee's appointment of KPMG LLP as the Company's independent registered public accounting firm for 2009: | |
Votes For | Votes Against | Votes Abstain | |
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119,251,406 | 715,570 | 53,432 | |
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Exhibit No. |
3.1 | Amended and Restated Certificate of Incorporation of the Company (incorporated by reference to Exhibit A to the Company's Definitive Proxy Statement filed with the Commission on March 21, 2005, File No. 1-08097). | |
3.2 | Revised and Restated Bylaws of the Company, effective November 4, 2008 (incorporated by reference to Exhibit 3.1 to the Registrant's Current Report on Form 8-K dated November 4, 2008, File No. 1-08097). | |
4.1 | 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 dated November 24, 1997, File No. 1-08097). | |
4.2 | 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 dated November 24, 1997, File No. 1-08097). | |
4.3 | Form of Debenture (incorporated by reference to Exhibit 4.4 to the Registrant's Current Report on Form 8-K dated November 24, 1997, File No. 1-08097). | |
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*10.2 | Sixth Amendment to the ENSCO International Incorporated 2005 | |
10.3 | Separation Agreement dated June 29, 2009 between Phillip J. Saile and | |
*15.1 | Letter regarding unaudited interim financial information. | |
*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. | |
**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. |
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ENSCO INTERNATIONAL INCORPORATED | ||
Date: | /s/ JAMES W. SWENT III James W. Swent III Senior Vice President - Chief Financial Officer | |
/s/ DAVID A. ARMOUR David A. Armour Vice President - Finance | ||
/s/ DOUGLAS J. MANKO Douglas J. Manko Controller | ||
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