ITEM 3. LEGAL PROCEEDINGS
Not applicable.
ITEM 4.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of the Company's security holders during the fourth quarter of the fiscal year ended December 31, 1994.
PART II
ITEM 5.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Company's Common Stock, $0.10 par value per share, is listed on the New York Stock Exchange under the symbol "GLM." At February 28, 1995, there were 8,761 stockholders of record of the Common Stock. The high and low sales prices of the Common Stock as reported on the New York Stock Exchange Composite Transactions Tape for each full quarterly period within the past two years appear under "Consolidated Selected Quarterly Financial Data," which follows the notes to the consolidated financial statements.
The Company has not declared any dividends on Common Stock since February 1985. Subject to the preferential dividend rights of holders of the Company's preferred stock, if any, the holders of the Common Stock will be entitled to receive when, as and if declared by the Board of Directors out of funds legally available therefor, all other dividends payable in cash, in property, or in shares of Common Stock. The indenture governing the Company's Senior Secured Notes contains certain restrictions with respect to the payment of dividends on the Common Stock (other than stock dividends). (See Note 7 of Notes to Consolidated Financial Statements.) It is not expected that dividends will be declared or paid on the Common Stock in the foreseeable future.
ITEM 6.
ITEM 6. SELECTED FINANCIAL DATA
ITEM 7.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OPERATING RESULTS
SUMMARY
The Company reported operating income of $26.1 million for 1994 compared to $3.2 million for 1993. The improvement in operating results is due to (i) higher revenues and lower operating expenses attributable to operating five additional rigs in the lower-cost Gulf of Mexico market during 1994 compared to 1993, when they were operating for a portion of the year in weaker, higher-cost foreign markets, (ii) the full-year effect of three rigs acquired from Transocean Drilling AS in September 1993, (iii) lower mobilization expense attributable to moving fewer rigs during 1994, (iv) increased contract drilling dayrates in the U.S. Gulf of Mexico for 1994 compared to 1993, and (v) an increase in the number of turnkey drilling contracts completed. These improvements were partially offset by lower turnkey profit margins, normal declines in oil and gas production and lower oil and gas sales prices.
For 1993, the Company reported operating income of $3.2 million, compared to operating income of $15.7 million for 1992. Results for 1992 include an $11.0 million gain on the sale of one of the Company's offshore drilling rigs, the Glomar High Island VI. Aside from the sale of the High Island VI, the decline in operating results was attributable to lower contract drilling dayrates and utilization in the North Sea and higher expense associated with rig relocations, partially offset by higher contract drilling dayrates and utilization in the Gulf of Mexico, and by improvements in turnkey drilling and oil and gas operating income. Drilling management operating income increased to $9.8 million for 1993 from $0.2 million in 1992, primarily due to completing 18 turnkey wells in 1993 compared to 10 turnkey wells in 1992. The 1993 turnkey wells also had, on average, higher gross margins. Oil and gas operating income increased from $3.2 million in 1992 to $5.3 million in 1993, despite lower revenues, primarily due to lower depletion expense.
Data relating to the Company's operations by business segment follows:
In the U.K. sector of the North Sea, oil and gas operators' increasing optimism, among other factors, has resulted in higher dayrates and utilization since October of 1994. Offshore West Africa, dayrates and utilization appear to have stabilized despite political unrest and volatile oil prices. Demand in the U.S. Gulf of Mexico offshore drilling market began weakening in late December 1994 due to low natural gas prices.
The offshore drilling industry overall has been characterized by an oversupply of rigs, resulting in low dayrates and operating margins. Nevertheless, the Company reported net income of $1.3 million for 1994 as compared with a net loss of $26.5 million for 1993 and a net loss of $37.1 million for 1992, excluding nonrecurring gains and income.
CONTRACT DRILLING OPERATIONS
Data with respect to the Company's contract drilling operations follows:
Contract drilling revenues in 1994 increased by $12.3 million over 1993 due to higher rig utilization. Revenues from the Gulf of Mexico increased by $37.3 million due to (i) the 1993 mobilization to the Gulf of two rigs from West Africa and three rigs from the North Sea, (ii) the full-year effect of two of three rigs acquired from Transocean Drilling AS and (iii) higher dayrates for the Company's other rigs in the Gulf of Mexico. Revenues from the North Sea decreased by $28.1 million due to (i) the mobilization of the three rigs from the North Sea to the Gulf of Mexico in 1993, (ii) the sale of the offshore drilling rig, Glomar Moray Firth, to Transocean Drilling AS in September 1993 and the termination of a management contract with respect to that rig in December 1993, and (iii) lower North Sea dayrates and utilization. The increase in revenues in the "Other" category for 1994 compared to 1993 was due to higher dayrates and utilization on one rig in the Far East, the 1993 mobilization of one rig to Trinidad from the Gulf of Mexico, and the full-year effect of one of the three rigs acquired from Transocean Drilling AS in September 1993, partially offset by the mobilization of one rig from Alaska to West Africa in the fourth quarter of 1994 and the termination of a management contract in Alaska during 1993.
Revenues from the Gulf of Mexico increased to $76.4 million in 1993 from $15.6 million in 1992, as indicated in the table above. The increase resulted from the mobilization to the Gulf of (i) one rig from the Mediterranean in November 1992, (ii) two rigs from West Africa in April 1993, (iii) three rigs from the North Sea, one in April 1993, one in June 1993 and another in November 1993, and (iv) two rigs acquired in September 1993 from Transocean Drilling AS, as well as from higher dayrates and higher rig utilization in the Gulf of Mexico. The decrease in revenues attributable to the North Sea was due to the decline in North Sea dayrates, the mobilization of the three rigs from the North Sea to the Gulf of Mexico, and the termination of a management contract with respect to another company's rig. The decrease in revenues attributable to offshore West Africa was primarily the result of the sale of the Glomar Biscay II in the first quarter of 1993 and the mobilization of the two rigs from offshore West Africa to the Gulf of Mexico in April 1993. The decline in revenues in the "Other" category for 1993 compared to 1992 was due to the sale of the Glomar Biscay I and the Glomar Atlantic in the fourth quarter of 1992 and the first quarter of 1993, respectively.
Depreciation expense for contract drilling operations totaled $34.9 million for 1994, $32.0 million for 1993, and $36.7 million for 1992. The number of rigs in the active fleet and subject to depreciation expense averaged 25 rigs in 1994, 24 rigs in 1993, and 26 rigs in 1992.
Effective January 1, 1995, the Company increased to 25 years the estimated useful lives of its jackups and increased to 20 years the estimated useful lives of its semisubmersibles and drillship. In addition, salvage values were reduced to $500,000 per rig for jackups and $1,000,000 per rig for both semisubmersibles and the drillship. The effect of the change in estimated service lives and salvage values will be to decrease 1995 depreciation expense by approximately $12.5 million.
The Company's operating profit margin for contract drilling operations for 1994 increased to 12 percent from 2 percent in 1993 and 8 percent in 1992. The percentage for 1993 was relatively low primarily as a result of the cost of mobilizing a number of rigs from the North Sea and West Africa to the Gulf of Mexico in 1993. Furthermore, operating profit margins are affected by the level of the Company's rig utilization. When rig utilization is low, operating profit margins are negatively affected due to the fact that a significant portion of operating costs, such as depreciation expense, is fixed. The Company's rig utilization rate for 1994, 1993 and 1992 were 90 percent, 87 percent, and 78 percent, respectively.
As of December 31, 1994, the worldwide industry utilization rate for competitive offshore rigs was 78 percent, with 124 of the 560 worldwide rigs unemployed. The offshore drilling markets in which the Company participates continue to be characterized by contracts that are, generally, of a short-term or well-to-well nature, as they have been for the past several years. The Company anticipates that contracts on 15 of the Company's 24 rigs under contract as of February 28, 1995, will expire at varying times on or prior to May 31, 1995. No assurance can be made that the Company will obtain drilling contracts for the rig that is currently available, or for its two rigs currently undergoing refurbishment that are not committed to drilling contracts, or for its other rigs upon the completion of current contracts. Short- term contracts have been typical in the industry for the past decade. The Company considers its upcoming contract expirations typical of prevailing market conditions and in the normal course of business.
For the offshore drilling industry as a whole, the number of rigs under contract in the Gulf of Mexico increased throughout 1993 due to stronger domestic natural gas prices and a growing number of drilling prospects developed from enhanced seismic technology. As demand in the Gulf increased, drilling contractors during 1993 and 1994 relocated a significant number of offshore rigs from weak overseas markets to the Gulf, resulting in downward pressure on Gulf dayrates. In recent months, natural gas prices have fallen from a high of $2.84 per thousand cubic feet in February 1994 to a low of $1.27 in January 1995. In response to lower gas prices, demand for offshore drilling rigs in the U.S. Gulf of Mexico began weakening in late December 1994, as the number of rigs under contract decreased from approximately 142 rigs at the end of October 1994 to 131 rigs under contract at the end of December. As of February 28, 1995, the price of natural gas was $1.39 per thousand cubic feet, and there were 113 Gulf rigs under contract (63 percent utilization). Unless gas prices strengthen from current levels, drilling demand will remain depressed and may fall further. For the full year, average demand in the Gulf increased to 131 rigs under contract (75 percent utilization) for 1994 from 118 rigs (78 percent utilization) for 1993. As of February 28, 1995, all twelve of the Company's rigs in the Gulf of Mexico were under contract. The Company's average utilization rate for its rigs in the Gulf of Mexico was 99 percent for 1994.
In the U.K. sector of the North Sea (i) increasing optimism with respect to the outlook for stable oil prices, (ii) promising oil discoveries west of the Shetland Islands, (iii) operators' increased drilling to fulfill commitments to drill previously awarded blocks, (iv) fewer available North Sea rigs as a result of mobilizations to other areas and (v) increased levels of operators' cash flow, among other factors, have recently resulted in higher North Sea dayrates as operators began contracting available rigs to carry out 1995 drilling programs. As a result, dayrates and utilization in the U.K. sector of the North Sea have risen significantly, particularly for semisubmersible rigs. For the fourth quarter of 1994, average demand in the North Sea increased to 63 rigs under contract (77 percent utilization) from 62 rigs (75 percent utilization) for the third quarter of 1994. For the full year, average demand in the North Sea decreased to 64 rigs under contract (76 percent utilization) for 1994 from 81 rigs (79 percent utilization) for 1993. As of February 28, 1995, there were 63 North Sea rigs under contract (82 percent utilization), and all three of the Company's rigs in service in the North Sea were under contract. The Company's average utilization rate for its rigs in the North Sea was 68 percent for 1994.
During 1993, the civil war in Angola, the reduction of the Nigerian national oil company's participation in ongoing projects and volatile oil prices caused a reduction in the demand for drilling rigs offshore West Africa and, accordingly, a reduction in dayrates. During 1994, however, supply and demand appear to have stabilized. As a result, the Company mobilized two offshore drilling rigs, the Glomar High Island IX and the Glomar Adriatic VIII, from weakening markets to West Africa during 1994. Both rigs are currently under contract. For the fourth quarter of 1994, average drilling industry demand offshore West Africa increased to 27 rigs under contract (81 percent utilization) from 24 rigs (75 percent utilization) for the third quarter of 1994. For the full year, average demand offshore West Africa decreased to 24 rigs under contract (75 percent utilization) for 1994 from 26 rigs (70 percent utilization) for 1993. All five of the Company's rigs located offshore West Africa were employed as of February 28, 1995. The Company's average utilization rate for its rigs located offshore West Africa was 98 percent for 1994.
DRILLING MANAGEMENT SERVICES
Drilling management operations reported an $82.9 million increase in revenues, from $59.9 million in 1993 to $142.8 million in 1994, and a $6.7 million increase in operating income, from $9.8 million in 1993 to $16.5 million in 1994. The improvement resulted from the completion of 52 wells in 1994 as compared to 18 wells in 1993, partially offset by lower average gross profit margins on the 1994 wells. The increase in the number of turnkey wells drilled in 1994 was attributable in part to U.S. Gulf of Mexico oil and gas operators' increased acceptance of turnkey drilling as an alternative to dayrate contract drilling and to more aggressive pricing in the Company's turnkey bids. Seven of the 1994 wells incurred losses aggregating $5.4 million.
Drilling management operations reported a $32.0 million increase in revenues, from $27.9 million in 1992 to $59.9 million in 1993, and a $9.6 million increase in operating income, from $0.2 million in 1992 to $9.8 million in 1993. The improvement resulted from the completion of 18 wells in 1993 compared to 10 in 1992 and higher average gross margins on the 1993 wells. One of the 1992 wells incurred a loss of $1.8 million due to mechanical problems.
As a result of corporate consolidation adjustments, drilling management operating income was reduced to $10.8 million for 1994, $7.6 million for 1993 and a loss of $2.2 million for 1992. This compares with operating income on a before-adjustment basis of $16.5 million, $9.8 million and $0.2 million for 1994, 1993, and 1992, respectively. The adjustments were required to reduce earnings by an amount up to 100 percent of the profit earned on turnkey drilling contracts for wells drilled on oil and gas properties in which the Company had working interests. The amount of profit which must be eliminated is that amount which equals the Company's share of exploration and development costs required under applicable working interest agreements.
OIL AND GAS OPERATIONS
Data related to the Company's oil and gas production follows:
Oil and gas revenues for 1994 were lower than for 1993 due to lower volumes of oil and gas produced and lower oil and gas prices. Oil and gas production decreased as a result of normal declines, the 1993 sale of an oil producing property, and the temporary suspension of production in order to repair an oil and gas well in 1994, partially offset by production from two new properties. Operating income for 1994 was lower than for 1993 due to the lower revenues discussed above and higher costs associated with the development of new prospects, offset in part by a lower depletion rate. Depletion expense decreased to $1.9 million for 1994 from $3.3 million for 1993. The lower depletion rate resulted in part from the property sale in 1993, and from the deferral of profit earned on certain turnkey drilling contracts, which reduced the depletable base.
Revenues from gas production decreased significantly in 1993 as compared with 1992 despite higher gas prices, primarily due to overproduction in 1992 from one of the Company's primary offshore gas producing properties, Matagorda Island Block 668, in order to make up a prior gas production imbalance between the Company and its working interest partner. Revenues from oil production in 1993 also decreased as compared with 1992 due to lower oil prices, the 1993 sale of an oil producing property, and normal production declines. Despite the decrease in revenues, operating income increased in 1993 as compared with 1992 due to lower depletion expense, lower overhead expenses and lower lease operating expenses resulting from property sales. Depletion expense decreased to $3.3 million for 1993 from $10.0 million for 1992. The lower depletion expense resulted from a lower depletion rate due to property sales which reduced the depletable base and from lower production in 1993 compared to 1992.
OTHER INCOME AND EXPENSE
Interest expense declined by $1.9 million to $30.2 million in 1994 from $32.1 million in 1993 due to the reduction in long-term debt resulting from the retirement of the rig mortgage note for the Glomar Baltic I in August 1993. Interest expense declined by $11.5 million to $32.1 million in 1993 from $43.6 million in 1992 due to the reduction in long-term debt resulting from the Company's recapitalization in December 1992 and the retirement of the rig mortgage note for the Glomar Baltic I in August 1993.
In 1994, the Company capitalized $3.7 million of interest attributable to the acquisition and refurbishment of two offshore drilling rigs, the Glomar Adriatic IX and Glomar Adriatic X, which were acquired in February 1994. The Glomar Adriatic IX and Glomar Adriatic X are expected to become available for operation in April and July 1995, respectively.
Interest income increased to $3.8 million for 1994 from $2.7 million for 1993, primarily due to the recognition of $0.8 million in connection with the favorable 1994 settlement of the Company's demobilization obligations with respect to a third-party owned rig aboard the Glomar Beaufort Sea I. Interest income for 1993 was essentially unchanged from 1992.
During 1992, the Company settled its take-or-pay litigation with Transcontinental Gas Pipe Line Corporation, resulting in a gain of $55.0 million.
Other income for 1994 consisted of $1.4 million in dividend income and a $0.6 million gain on the sale of common stock of Transco Energy Company (see Liquidity and Capital Resources).
Income tax expense of $0.6 million for 1994, $0.3 million for 1993, and $3.1 million for 1992, consists primarily of foreign taxes. Despite reporting pretax income for 1994 and 1992, the Company reported no current provision for U.S. federal income taxes due to deductions for tax purposes not currently recognized for financial reporting purposes.
During 1992, the Company recognized an extraordinary gain of $28.3 million on the early retirement of debt in connection with the Recapitalization (see Liquidity and Capital Resources).
During 1994, the Company adopted Statement of Financial Accounting Standards ("SFAS") No. 112, "Employers' Accounting for Postemployment Benefits." The cumulative impact of this change was to decrease 1994 net income by $3.5 million. During 1992, the Company adopted SFAS No. 106, "Employers' Accounting for Postretirement Benefits Other Than Pensions," and SFAS No. 109, "Accounting for Income Taxes." The effect of SFAS No. 106 was to decrease 1992 net income by $1.9 million, and the effect of SFAS No. 109 was to increase 1992 net income by $3.3 million, each representing the cumulative effect of the change as of January 1, 1992.
The Company's net income for 1994 was $1.3 million compared to a net loss of $26.5 million for 1993 and net income of $57.2 million for 1992. The Company would have reported a net loss of $37.1 million for 1992 absent the settlement of the take-or-pay litigation with Transcontinental Gas Pipe Line Corporation, the extraordinary gain on extinguishment of debt and the gain on the sale of one of the Company's High Island class jackup rigs.
LIQUIDITY AND CAPITAL RESOURCES
In December 1992, the Company completed a recapitalization (the "Recapitalization") in order to reduce the amount and extend the maturity of its outstanding debt and to reduce its debt service requirements. The Recapitalization was comprised of (i) the offering and sale of 26,000,000 shares of common stock and a concurrent offering and sale of 12-3/4% Senior Secured Notes due 1999 (the "Senior Secured Notes") in an aggregate principal amount of $225.0 million and (ii) the application of the aggregate net proceeds from the offerings, plus a portion of the Company's available funds, to retire long-term debt in the amount of $342.7 million, including interest, at a total reacquisition cost of $314.4 million. In January 1993, the Company sold an additional 3,900,000 shares of common stock pursuant to the exercise of the underwriters' over-allotment option and received cash in the amount of $7.8 million, net of expenses.
In August 1993, the Company completed the sale of 17,250,000 shares of common stock in a public offering and received cash proceeds of $66.4 million, net of expenses. The Company used $26.0 million of the proceeds to retire the rig mortgage note for the Glomar Baltic I in August 1993 and $17.0 million to complete the purchase of three offshore drilling rigs from Transocean Drilling AS in September 1993.
In May 1992, the Company settled its take-or-pay litigation (the "Transco Litigation") with Transcontinental Gas Pipe Line Corporation ("TGPL"), a subsidiary of Transco Energy Company ("Transco"), which had been filed in the United States District Court for the Southern District of Texas, Houston Division. In 1992, the Company received under the settlement $20.0 million in cash, TGPL's promissory note in the principal amount of $20.0 million (the "Transco Note"), and the right to receive a number of shares of Transco common stock, $0.50 par value per share, with a value of approximately $15.0 million. Such shares were placed in escrow for delivery in February 1994. In late 1992 Transco deposited U.S. government securities into a trust account in an amount sufficient to satisfy the required principal and interest payments due the Company under the Transco Note.
In 1994, Transco released to the Company the U.S. government securities held in the trust established to satisfy the Transco Note. The Company sold the securities and received sales proceeds totaling $15.2 million in full payment of the remaining balance due under the note, including interest. In addition, the Company received under the settlement 1,017,771 of the previously escrowed shares of Transco common stock, plus $1.1 million in previously escrowed dividends which were declared and paid on the escrowed shares during the period from June 1992 through February 1994, plus interest. During 1994, the Company sold all 1,017,771 shares of Transco common stock for $15.6 million, realizing a gain of $0.6 million.
In February 1994, the Company purchased two jackup drilling rigs, the Glomar Adriatic IX and Glomar Adriatic X. The Company paid $26.0 million in cash and issued to the seller's nominee 750,000 shares of Global Marine Inc. common stock to complete the purchase. In addition, the Company spent approximately $11 million to refurbish and upgrade the rigs in 1994 and anticipates spending an additional $13 million in 1995 to complete the refurbishment of the two rigs. The Glomar Adriatic IX and Glomar Adriatic X are expected to become available for operation in April and July 1995, respectively.
In May 1994, the Company purchased another offshore drilling unit, a 1983 Marathon LeTourneau 116-C jackup known as the "Bay Driller," for $13.8 million in cash. The rig was delivered to the Company in November 1994, at which time it was renamed the Glomar Adriatic XI. The rig is currently outfitted for use as an accommodation unit. The rig is committed to a drilling contract which is expected to commence in August 1995, prior to which the Company will reconfigure the rig at a cost of approximately $15 million, primarily to replace the rig's existing special-purpose drilling equipment with an enhanced drilling package.
As of December 31, 1994, the Company's long-term debt totaled $225.0 million, consisting of the Company's 12-3/4% Senior Secured Notes due 1999. As of December 31, 1994, total shareholders' equity amounted to $212.3 million.
The indenture under which the Senior Secured Notes are issued imposes significant operating and financial restrictions on the Company and requires that a first lien in favor of the trustee be maintained, for the benefit of the holders of Senior Secured Notes, on a significant portion of the Company's material assets. Such restrictions affect, and in many respects limit or prohibit, among other things, the ability of the Company to incur additional indebtedness, make certain investments, create liens, sell assets, engage in mergers or acquisitions and make dividends or other payments. The highly leveraged position of the Company and the restrictive covenants contained in and liens provided for under the indenture could significantly limit the ability of the Company to respond to changing business or economic conditions or to respond to substantial declines in operating results.
The Senior Secured Notes do not require any payments of principal prior to the stated maturity thereof in December 1999, except that the Company is required to make offers to purchase Senior Secured Notes with the proceeds of certain asset sales, upon a change of control, or if the Company's excess cash flow, as defined in the indenture, exceeds certain specified levels. The annual interest on the Senior Secured Notes is $28.7 million, payable semiannually, each June and December.
Capital expenditures for the Company's drilling fleet for 1995, other than for the refurbishment of the Glomar Adriatic IX and Glomar Adriatic X and for the reconfiguration of the Glomar Adriatic XI, are estimated to be $14 million. Capital expenditures for the Company's oil and gas operations are estimated to be $7 million for 1995, principally for exploratory drilling, development drilling of producing properties, the purchase of equipment used in connection with the producing properties, and workovers and recompletions.
As of December 31, 1994, the Company had $57.9 million in cash, cash equivalents and marketable securities, including $19.3 million which was restricted from use for general corporate purposes. The restricted amount includes $14.6 million in proceeds from asset sales and $4.7 million collateralizing outstanding operating letters of credit. The use of the proceeds from sales of assets is limited under the terms of the indenture governing the Senior Secured Notes. Approximately $9.6 million of asset sales proceeds will become available to the Company for general corporate purposes by April 1995. As of December 31, 1993, the Company had $44.6 million in cash and marketable securities, net of restricted amounts of $6.8 million.
An additional source of liquidity is the cash flow from the Company's oil and gas properties and drilling management service operations, both of which are available to service the Company's debt and to fund its working capital requirements and capital expenditures. Cash flow from the Company's oil and gas operations and drilling management services may be limited by certain factors. In particular, the anticipated capital expenditures during 1995 for oil and gas activities are expected to equal approximately four- fifths of the net cash flow from the Company's oil and gas properties. Cash flow from drilling management service operations is dependent primarily on the ability of the Company to obtain and perform successfully turnkey drilling contracts based on competitive bids and on the number of such contracts available for bid. Accordingly, results of the Company's drilling management service operations may vary widely from year to year.
The Company also has available to it a revolving credit and letter of credit facility expiring June 1996 for up to $25 million to be collateralized by accounts receivable due under drilling contracts. The amount the Company is able to borrow under the facility is subject to a borrowing base consisting of 80 percent of eligible accounts receivable. There were no amounts outstanding under this credit line as of December 31, 1994. The Company estimates that, as of December 31, 1994, it would have been able to borrow the full $25 million under the revolving credit agreement.
The Company believes that it will be able to meet all of its current obligations, including capital expenditures and debt service, from its cash flow from operations and its cash, cash equivalents and marketable securities. The Company's ability, however, to pay the principal amount of the Senior Secured Notes upon maturity in December 1999 from its cash flow from operations would require a substantial improvement in current industry conditions, including an increase in the average dayrate earned by the Company's contract drilling fleet. The Company may have available to it sources of liquidity other than cash flow from the Company's contract drilling fleet, including asset sales and equity or debt financings, to retire or otherwise refinance the principal amount of the Senior Secured Notes on or prior to maturity.
As part of upgrading and expanding its rig fleet and other assets, the Company considers and pursues the acquisition of suitable additional rigs and other assets on an ongoing basis. If the Company decides to undertake an acquisition, the issuance of additional shares of stock or, in certain instances, additional debt could be required. The Company may also consider the disposition of rigs and other assets if and when a disposition can be effected on favorable terms. Disposition proceeds, to the extent available, could also be used as a source of acquisition financing.
ITEM 8.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of Global Marine Inc.
We have audited the consolidated balance sheet of Global Marine Inc. and subsidiaries as of December 31, 1994 and 1993, and the related consolidated statements of operations, shareholders' equity, and cash flows for each of the three years in the period ended December 31, 1994. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Global Marine Inc. and subsidiaries as of December 31, 1994 and 1993, and the consolidated results of their operations and their cash flows for each of the three years in the period ended December 31, 1994 in conformity with generally accepted accounting principles.
As discussed in Notes 1, 9, and 11 to the consolidated financial statements, in 1992 the Company adopted the new methods of accounting for income taxes and for postretirement benefits other than pensions, and in 1994 the Company adopted the new method of accounting for postemployment benefits, as prescribed by applicable statements of the Financial Accounting Standards Board.
/s/ Coopers & Lybrand L.L.P.
Houston, Texas February 10, 1995
See notes to consolidated financial statements.
GLOBAL MARINE INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of Global Marine Inc. and its majority-owned subsidiaries. Unless the context otherwise requires, the term "Company" refers to Global Marine Inc. and its consolidated subsidiaries. Intercompany accounts and transactions are eliminated.
RECLASSIFICATIONS
Certain previously reported amounts have been reclassified to conform to the 1994 presentation.
CASH EQUIVALENTS
Cash equivalents consist of all highly liquid debt instruments with remaining maturities of three months or less at the time of purchase.
INVESTMENTS
Effective January 1, 1994, the Company adopted Statement of Financial Accounting Standards No. 115, "Accounting for Certain Investments in Debt and Equity Securities," which requires that equity securities that have readily determinable fair values and all investments in debt securities be designated as trading, available-for-sale, or held-to-maturity. Under the new standard, trading securities and available-for-sale securities are reported at fair value; held-to-maturity debt securities continue to be reported at amortized cost. There was no cumulative effect on prior years as a result of adopting the new standard. As of December 31, 1993, investments in cash equivalents and marketable securities consisted of short-term debt securities and were carried at amortized cost, which approximated market value.
PROPERTIES AND DEPRECIATION
Rigs and Drilling Equipment. Rigs and drilling equipment are carried at an amount equal to the fair market values of the rigs in the fleet as of December 31, 1988, plus the cost of rig acquisitions and other additions and improvements to the existing fleet, thereafter. Included in the cost of rigs and drilling equipment is an allocation of the interest cost incurred during the period required to construct or refurbish a rig. Expenditures for maintenance and repairs are charged to expense as incurred. Costs of property sold or retired and the related accumulated depreciation are removed from the accounts; resulting gains or losses are included in income.
Depreciation of rigs and drilling equipment is computed using the straight-line method, assuming a salvage value of ten percent, over their estimated service lives, as follows:
Estimated service lives represent the number of years from the date the asset was initially placed in service by the Company (if purchased new) or by the original owner.
Effective January 1, 1995, the Company increased to 25 years the estimated useful lives of its jackups and increased to 20 years the estimated useful lives of its semisubmersibles and drillship. In addition, salvage values were reduced to $500,000 per rig for jackups and $1,000,000 per rig for both semisubmersibles and the drillship. The effect of the change in estimated service lives and salvage values will be to decrease 1995 depreciation expense by approximately $12.5 million.
Oil and Gas Properties. The Company capitalizes all costs attributable to the acquisition, exploration and development of oil and gas reserves under the full cost method of accounting. The depreciation, depletion and amortization provision is computed using the units-of-production method. The depletable base consists of capitalized costs, estimated future costs to develop proved reserves and estimated future dismantlement costs, and is reduced by profit earned on the Company's turnkey drilling contracts for wells drilled on properties in which the Company has working interests. In addition, the depletable base is reduced by proceeds from sales of oil and gas properties, unless the sale involves a significant quantity of reserves in relation to total reserves, in which case a gain or loss would be recognized. The costs of unproved properties and major development projects are not subject to depreciation, depletion and amortization until they are fully evaluated. All unproved properties are reviewed at least annually to ascertain if impairment has occurred. Costs of proved oil and gas properties which exceed the present value of estimated future net revenues are charged to expense.
REVENUE RECOGNITION
Contract drilling services are performed generally on a daily rate basis under individual contracts for either a stated period of time or the time required to drill a well or number of wells. Revenues from contract drilling services and the related expenses are recognized on a per day basis as the work progresses. Revenues from turnkey drilling contracts, which are classified under drilling management revenues, are derived from the design and execution of a specific offshore drilling program at a fixed price to the oil and gas operator. Revenues from turnkey drilling contracts and the related expenses are recognized upon completion of the turnkey contract.
GAS BALANCING
The Company uses the sales method to account for its undertaken positions subject to gas balancing agreements. Under the sales method, the Company postpones revenue recognition of its proportionate share in production delivered to another producer's customer, and postpones recognition of the related lease operating expense until such time as (i) the Company's customer begins taking delivery of the product and/or (ii) the cessation of production, in which case the Company's related gas balancing agreements require monetary settlement.
FOREIGN CURRENCY TRANSLATION
The U.S. dollar is the functional currency for all of the Company's operations. Foreign currency transaction gains and losses are included in income during the period in which they arise. Such amounts for 1994, 1993 and 1992 were not material.
POSTEMPLOYMENT BENEFITS
Effective January 1, 1994, the Company adopted Statement of Financial Accounting Standards No. 112, "Employers' Accounting for Postemployment Benefits." SFAS No. 112 requires the recognition of expense for postemployment benefits on an accrual basis, rather than the cash-basis approach used previously. Postemployment benefits include severance pay, disability-related benefits and continuation of health care costs during the period after employment but before retirement. The cumulative impact of this change as of January 1, 1994, was a charge to earnings in the amount of $3.5 million ($0.02 per share). Other than the cumulative effect, the effect of the change on earnings was not material.
NOTE 2 - INVESTMENTS
At December 31, 1994, all of the Company's investments in cash equivalents and marketable securities consisted of debt securities which were classified as held-to-maturity and were carried at amortized cost. A summary of the estimated fair values of investments, as of December 31, 1994 follows:
The estimated fair values of investments approximated their amortized cost; therefore, there were no unrealized gains or losses as of December 31, 1994.
The estimated fair values of investments as of December 31, 1994 grouped by contractual maturities follows:
As of December 31, 1994, $19.3 million of the Company's marketable securities was restricted from general use, including $14.6 million in proceeds from asset sales and $4.7 million collateralizing outstanding operating letters of credit. The use of the proceeds from sales of assets is limited under the terms of the indenture governing the Senior Secured Notes. Approximately $9.6 million of asset sales proceeds will become available to the Company for general corporate purposes by April 1995.
NOTE 3 - LONG-TERM DEBT
In December 1992, the Company completed a recapitalization, which was comprised, in part, of (i) the offering and sale of 26,000,000 shares of common stock and a concurrent offering and sale of 12-3/4% Senior Secured Notes due 1999 (the "Senior Secured Notes") in an aggregate principal amount of $225.0 million and (ii) the application of the aggregate net proceeds from the offerings, plus a portion of the Company's available funds, to retire long- term debt in the amount of $342.7 million, including interest, at a total reacquisition cost of $314.4 million. The Company recorded a $28.3 million extraordinary gain on extinguishment of debt in connection with the recapitalization.
Long-term debt as of December 31, 1994 and 1993, consisted of the 12-3/4% Senior Secured Notes in the amount of $225.0 million, due December 15, 1999. Interest on the Senior Secured Notes is payable semi-annually each June and December. The Senior Secured Notes do not require any payments of principal prior to the stated maturity thereof on December 15, 1999, except that the Company is required to make offers to purchase Senior Secured Notes upon the occurrence of certain events, which are defined in the indenture governing the Senior Secured Notes, such as asset sales or a change of control or if the excess cash flow of the Company exceeds certain specified levels.
The Senior Secured Notes are not redeemable at the option of the Company prior to December 15, 1997. On or after December 15, 1997, the Senior Secured Notes are redeemable at the option of the Company, in whole at any time or in part from time to time, at a price of 102 percent of principal if redeemed during the twelve months beginning December 15, 1997, or at a price of 100 percent of principal if redeemed on or after December 15, 1998, in each case together with interest accrued to the redemption date.
The Senior Secured Notes are collateralized by 23 rigs and all of the capital stock of the Company's direct or indirect subsidiaries, excluding the stock of Petdrill, Inc., and certain other subsidiaries as defined in the indenture. The indenture under which the Senior Secured Notes are issued imposes significant operating and financial restrictions on the Company. Such restrictions affect, and in many respects limit or prohibit, among other things, the ability of the Company to incur additional indebtedness, make capital expenditures, create liens, sell assets, engage in mergers or acquisitions and make dividends or other payments.
In June 1993, the Company entered into a revolving credit agreement with a major international bank to provide a three-year revolving credit and letter of credit facility for up to $25 million to be collateralized by accounts receivable due under drilling contracts. The amount the Company is able to borrow under the facility is subject to a borrowing base consisting of 80 percent of eligible accounts receivable. Borrowings under the facility would accrue interest at the lowest of one of three market-based interest rates, one of which is the prime rate plus 1- 1/2 percent. The unused portion of the line of credit is subject to an annual commitment fee of one-half of one percent. There were no amounts outstanding under this credit line as of December 31, 1994 or 1993. The Company estimates that, as of December 31, 1994, it would have been able to borrow the full $25 million under the revolving credit agreement.
NOTE 4 - ACCRUED LIABILITIES
Accrued liabilities as of December 31 consisted of the following:
NOTE 5 - COMMITMENTS AND CONTINGENCIES
The Company has numerous noncancelable operating leases for office facilities and equipment. The leases have remaining terms ranging up to seven years, some of which may be renewed at the Company's option. Certain leases are subject to rent revisions based on the Consumer Price Index or increases in building operating costs. Rent expense for 1994, 1993, and 1992 was $6.9 million, $6.1 million, and $6.8 million, respectively.
Future minimum rental payments for the Company's lease obligations as of December 31, 1994, were as follows:
On November 7, 1994, the Company entered into an agreement in principle, subject to definitive documentation, to purchase the Glomar Beaufort Sea I, which previously had been operated by the Company under a long-term lease which expired in December 1994. The Company has agreed to pay an amount of up to $9.0 million, payable out of future cash flow or sales proceeds from the rig, if any. The full $9.0 million would be paid only if the Company's share of future cash flow or rig sales proceeds exceed $40 million. The Company would have no obligation to pay any amount if the rig fails to generate any future cash flows.
The Company is involved in various lawsuits resulting from personal injury and, from time to time, performance of services and property damage. The Company has accrued for the anticipated cost of settlement of these claims. In the opinion of management, resolution of these matters will not have a material adverse effect on its results of operations or financial position.
NOTE 6 - FINANCIAL INSTRUMENTS
CONCENTRATIONS OF CREDIT RISK
The market for the Company's services and products is the offshore oil and gas industry, and the Company's customers consist primarily of major integrated international oil companies and independent oil and gas producers. The Company performs ongoing credit evaluations of its customers and generally does not require material collateral. The Company maintains reserves for potential credit losses, and such losses have been within management's expectations.
At December 31, 1994 and 1993, the Company had cash deposits concentrated primarily in four major banks. In addition, the Company had certificates of deposits, commercial paper and Eurodollar time deposits with a variety of companies and financial institutions with strong credit ratings. As a result of the foregoing, the Company believes that credit risk in such instruments is minimal.
FAIR VALUES OF FINANCIAL INSTRUMENTS
The estimated fair value of the Company's $225.0 million carrying value of long-term debt approximated $240.8 million and $249.2 million as of December 31, 1994 and 1993, respectively. The estimates of fair values were based on quoted market prices. The fair values of the Company's cash equivalents, marketable securities, trade receivables and trade payables approximated their carrying values due to the short-term maturities of these instruments (see Note 2).
NOTE 7 - CAPITAL STOCK
The Company is authorized to issue 300,000,000 shares of common stock, $0.10 par value per share, and 10,000,000 shares of preferred stock, $0.01 par value per share. As of December 31, 1994, 135,591,815 shares of common stock were unissued, including 15,255,837 shares reserved for issuance under stock option and incentive plans. None of the preferred stock was issued or outstanding as of December 31, 1994.
The indenture governing the Senior Secured Notes contains certain restrictions with respect to the payment of dividends on the common stock (other than stock dividends). Specifically, the indenture restricts the payment of dividends based on (i) availability of funds under a formula based on previously unapplied cumulative net income since September 30, 1992 plus certain stock sale proceeds after December 23, 1992 and (ii) satisfaction of the then applicable minimum interest coverage ratio for debt incurrence. Cumulative net income for purposes of the test excludes gains or losses on asset sales and certain other nonrecurring charges or credits specified in the indenture. Based on the above restrictions, the Company was prohibited from paying dividends on the common stock as of December 31, 1994.
The Company has three stock option plans, the Global Marine Inc. 1989 Stock Option and Incentive Plan (the "Employee Plan"), the Global Marine Inc. 1994 Non-Employee Stock Option and Incentive Plan (the "Non-Employee Plan"), and the 1990 Non-Employee Director Stock Option Plan (the "Director Plan"). Under the Employee and Non-Employee Plans, incentive and non-qualified options to purchase shares of common stock may be granted to key employees or certain non-employees, and shares of common stock may be sold to employees or certain non-employees at prices below the market price at the time of the sale. Under the Director Plan, non-qualified options to purchase shares of common stock are automatically granted each year to outside directors of the Company. Under the plans, one- half of each option grant is exercisable beginning one year after the date of grant with the remainder exercisable after two years. Options expire ten years after the date of grant. Options become exercisable in full if more than 50 percent of the Company's outstanding common stock is acquired by a person or a single group of persons.
During 1994, up to 200,000 shares of common stock were offered for conditional sale under the Employee Plan to certain key employees at a price of $0.10 per share. The exact number of shares to be offered is dependent on the performance of the Company as measured against certain long-term performance goals. None, some or all of the shares will be issued no sooner than February 1997.
Shares of common stock available for future option grants and incentive stock sales under the option plans totaled 5,830,637 and 7,041,691 at December 31, 1994 and 1993, respectively.
NOTE 8 - NET INCOME (LOSS) PER COMMON SHARE
Net income per common share is based on the weighted average number of common shares outstanding and, for those periods in which they have a dilutive effect, shares contingently issuable due to outstanding options and incentive sales. The net loss per share is based on the weighted average number of common shares outstanding. The number of shares used were 163,828,711 for 1994, 151,984,669 for 1993, and 116,337,978 for 1992. Shares for 1992 include 1,703,048 share equivalents attributable to outstanding options. Shares for 1994 and 1993 exclude the effect of outstanding options because their effect was either immaterial or antidilutive.
NOTE 9 - INCOME TAXES
Effective January 1, 1992, the Company adopted the provisions of Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes." Under SFAS No. 109, deferred income taxes are recorded to reflect the tax consequences on future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each year-end. The new standard replaced SFAS No. 96, which the Company adopted in 1988. The cumulative effect of the accounting change on years prior to 1992 was a $3.3 million reduction in the Company's deferred tax liability as of January 1, 1992. The Company reported the cumulative effect of the change in the 1992 statement of operations and, as a result, increased 1992 net income by $3.3 million ($0.03 per share). The effect of the change on 1992 net income, excluding the cumulative effect upon adoption, was not material.
A reconciliation of the differences between income taxes computed at the U.S. federal statutory rate (35 percent for 1994 and 1993 and 34 percent for 1992) and the Company's reported provision for income taxes follows:
As of December 31, 1994, the Company had deferred tax assets totaling $445.7 million, deferred tax liabilities totaling $49.9 million, and a valuation allowance in the amount of $395.8 million. The valuation allowance is based on the likelihood that the net deferred tax asset in the amount of $395.8 million will not be realized. The net change in the valuation allowance during 1994 was an increase of $0.9 million. The components of the deferred tax amounts as of December 31 were as follows:
As of December 31, 1994, the Company had $1,170.3 million in net operating loss carryforwards ("NOLs") expiring from 1999 to 2009 and $29.0 million in investment tax credit carryforwards ("Credits") expiring from 1995 to 2000.
The NOLs and Credits are subject to review and potential disallowance by the Internal Revenue Service ("IRS") upon audit of the federal income tax returns of the Company. Section 382 of the Internal Revenue Code of 1986, as amended, may impair the future availability of the NOLs and the Credits if there is a change in ownership of more than 50 percent of the Company's common stock, including future changes in the ownership of the common stock. This limitation, if it applied, would limit the utilization of the NOLs and the Credits in each taxable year to an amount equal to the product of the federal long-term tax-exempt bond rate prescribed monthly by the IRS and the fair market value of all the Company's stock at the time of the ownership change. The interpretation of Section 382 is subject to numerous uncertainties. Accordingly, while the Company believes its loss carryforwards are available to it without limitation, such availability is not certain, nor is it certain that such carryforwards, if presently available without limitation, will continue to be available without limitation.
NOTE 10 - INDUSTRY SEGMENT INFORMATION
The principal industry segments of the Company are contract drilling, drilling management services and oil and gas exploration, development and production. In the industry segment data which follows, intersegment revenues are recorded at transfer prices which approximate the prices charged to unaffiliated customers and have been eliminated from consolidated revenues. Operating income consists of revenues less the related operating costs and expenses, excluding interest and unallocated corporate expenses. Adjustments and eliminations as they relate to operating income include the reduction to drilling management operating income attributable to service contracts on oil and gas properties in which the Company has economic interests.
No single customer provided more than ten percent of revenues for 1994. In 1993 one customer provided $29.2 million of contract drilling revenues. In 1992 one customer provided $37.8 million and another customer provided $34.0 million of contract drilling revenues.
The Company may be exposed to the risk of foreign currency exchange losses in connection with its foreign operations. Such losses are the result of holding net monetary assets (cash and receivables in excess of payables) denominated in foreign currencies during periods of a strengthening U.S. dollar. The Company's foreign exchange gains and losses, which are primarily attributable to the British pound, have not been and are not expected to be material. This is because the Company's revenues are primarily denominated in U.S. dollars; revenues in each foreign currency are approximately equal to the Company's local expenses in that currency; and the Company does not speculate in foreign currencies or maintain significant foreign currency cash balances.
NOTE 11 - RETIREMENT PLANS
PENSIONS
The Company has defined benefit pension plans covering substantially all of its employees. For the most part, benefits are based on the employee's length of service and average earnings for the five highest consecutive calendar years of compensation during the last fifteen years of service. Substantially all benefits are paid from funds previously provided to trustees. The Company is the sole contributor to the plans, and its funding objective is to fund participants' benefits under the plans as they accrue, taking into consideration future salary increases. The components of net pension cost were as follows:
The following table sets forth the funded status of the plans and the amounts recognized in the Company's consolidated balance sheet as of December 31:
Plan assets consist primarily of listed stocks and bonds, fixed-income investments and real estate.
The expected long-term rate of return on plan assets used to compute pension cost was 9.0 percent for 1994, 1993, and 1992. The assumed rate of increase in future compensation levels ranged from 5.5 percent to 6.5 percent for each of 1994, 1993, and 1992. The discount rate used to calculate the actuarial present value of the projected benefit obligation was 8.25 percent for 1994, 7.5 percent for 1993, and 8.5 percent for 1992.
The Company has a defined contribution savings plan in which substantially all of the Company's domestic employees are eligible to participate. Company contributions to this plan are based on the amount of employee contributions. Charges to expense with respect to this plan totaled $0.5 million for each of 1994, 1993 and 1992.
Other Postretirement Benefits
The Company provides life insurance and health care benefits to substantially all retired employees, their covered dependents and beneficiaries. Generally, employees who have reached the age of 55 and have rendered a minimum of five years of service are eligible for these benefits. For the most part, health care benefits are contributory while life insurance benefits are noncontributory.
Effective January 1, 1992, the Company adopted Statement of Financial Accounting Standards No. 106, "Employers' Accounting for Postretirement Benefits Other Than Pensions," with respect to retiree life insurance and health care benefits. Under SFAS No. 106, the Company is required to accrue the estimated cost of such benefits during the employees' active service period. The Company previously expensed the cost of these benefits as benefits were paid. The cumulative effect on prior years of adopting SFAS No. 106 was a $1.9 million increase to a liability for retiree life insurance and health care benefits as of January 1, 1992. The Company elected to recognize immediately in income the cumulative effect of the change and charged 1992 earnings in the amount of $1.9 million ($0.02 per share). The effect of the adoption of SFAS No. 106 on 1992 net income excluding the cumulative effect of the change was not material.
Net postretirement life insurance and health care cost consisted of the following components:
Benefits under the Company's postretirement life insurance and health care plans are not funded. The status of the plans as of December 31 was as follows:
The assumed health care cost trend rate used in measuring the accumulated postretirement benefit obligation was 8.0 percent for 1995, gradually declining to 6.0 percent by the year 2015 and remaining at that level thereafter. The effect of a one-percentage point increase in the assumed health care cost trend rate for each future year on (i) the portion of the accumulated postretirement benefit obligation applicable to health care benefits as of December 31, 1994 and (ii) the net postretirement health care cost for the year then ended would be immaterial. The assumed discount rate used in determining the accumulated postretirement benefit obligation was 7.0 percent for 1994 and 1993.
NOTE 12 - SUPPLEMENTAL CASH FLOW INFORMATION
Cash interest payments during 1994, 1993, and 1992 totaled $28.7 million, $28.9 million and $23.5 million, respectively. Cash payments for income taxes totaled $1.1 million in 1994, $5.4 million in 1993, and $1.4 million in 1992.
During 1994, the Company acquired two offshore drilling rigs for $26.0 million in cash plus 750,000 shares of Global Marine Inc. common stock.
In September 1993, the Company acquired a 100 percent ownership interest in three offshore drilling rigs in exchange for a 100 percent ownership interest in its offshore drilling rig, the Glomar Moray Firth I, plus $17.0 million in cash.
During 1992, in accordance with provisions of its debt agreements, the Company deferred the payment of interest totaling $18.3 million. This amount was added to outstanding principal prior to payment.
NOTE 13 - LITIGATION SETTLEMENT
On May 27, 1992, the Company settled its take-or-pay litigation (the "Transco Litigation") with Transcontinental Gas Pipe Line Corporation ("TGPL"), a subsidiary of Transco Energy Company ("Transco"), which had been filed in the United States District Court for the Southern District of Texas, Houston Division. In 1992, the Company received under the settlement $20.0 million in cash, TGPL's promissory note in the principal amount of $20.0 million (the "Transco Note"), and the right to receive a number of shares of Transco common stock, $0.50 par value per share, with a value of approximately $15.0 million. Such shares were placed in escrow for delivery in February 1994. In late 1992 Transco deposited U.S. government securities into a trust account in an amount sufficient to satisfy the required principal and interest payments due the Company under the Transco Note.
In 1994, Transco released to the Company the U.S. government securities held in the trust established to satisfy the Transco Note. The Company sold the securities and received sales proceeds totaling $15.2 million in full payment of the remaining balance due under the note, including interest. In addition, the Company received under the settlement 1,017,771 of the previously escrowed shares of Transco common stock, plus $1.1 million in previously escrowed dividends which were declared and paid on the escrowed shares during the period from June 1992 through February 1994, plus interest. During 1994, the Company sold all 1,017,771 shares of Transco common stock for $15.6 million, realizing a gain of $0.6 million. Total Transco dividends received during 1994, which amounted to $1.4 million, plus the realized gain on sale of Transco common stock of $0.6 million, are classified as other income on the consolidated statement of operations.
SUPPLEMENTAL OIL AND GAS DISCLOSURE (UNAUDITED)
The Company's estimated net proved reserves and proved developed reserves of crude oil, natural gas and natural gas liquids are shown in the table below:
Proved reserves are estimated quantities of crude oil, natural gas and natural gas liquids which geological and engineering data demonstrate with reasonable certainty to be recoverable in future years from known reservoirs under existing economic and operating conditions. All of the Company's proved reserves are located in the United States. Proved developed reserves are those proved reserves that can be expected to be recovered through existing wells with existing equipment and operating methods.
The estimates of the Company's proved oil and gas reserves were prepared by Ryder Scott Company Petroleum Engineers and were based on data supplied to them by the Company. Ryder Scott Company Petroleum Engineers has issued reports that include descriptions of the bases used in preparing the reserve estimates. These reports are filed as exhibits to this Annual Report on Form 10-K.
SUPPLEMENTAL OIL AND GAS DISCLOSURE (UNAUDITED)
Capitalized costs of unproved oil and gas properties excluded from the full cost amortization pool as of December 31, 1994 and 1993 totaled $1.1 million and $0.5 million, respectively. Costs incurred related to oil and gas activities consisted of the following:
The 1992 exploration costs were negative as a result of the deferral of profit earned on turnkey wells drilled on oil and gas properties in which the Company had working interests.
The calculation of estimated future net cash flows in the following table assumed the continuation of existing economic conditions. Future net cash inflows were computed by applying year-end prices (except for future price changes as allowed by contract) of oil and gas to the expected future production of proved reserves, less estimated future expenditures (based on year- end costs) expected to be incurred in developing and producing such reserves.
The standardized measure of discounted future net cash flows relating to proved oil and gas reserves as of December 31 follows:
SUPPLEMENTAL OIL AND GAS DISCLOSURE (UNAUDITED)
Principal sources of changes in the standardized measure of discounted future net cash flows follow:
Results of operations from producing activities follow:
CONSOLIDATED SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) (In millions, except per share data)
During the first quarter of 1994, the Company adopted Statement of Financial Accounting Standards No. 112, "Employers' Accounting for Postemployment Benefits." The cumulative impact of this change as of January 1, 1994 was an increase in the net loss in the amount of $3.5 million ($0.02 per share). Other than the cumulative effect, the effect of the accounting change was not material.
The net loss for the first quarter of 1994 also includes the receipt of $1.1 million in previously escrowed dividends on its investment in common stock of Transco.
Net income for the fourth quarter of 1994 includes interest income of $0.8 million recognized in connection with the favorable settlement of the Company's demobilization obligations with respect to a third-party owned rig aboard the Glomar Beaufort Sea I.
Net income for the fourth quarter of 1993 includes a gain of $1.0 million related to a favorable settlement of a foreign income tax liability.
The Company did not declare any dividends on its common stock in either 1994 or 1993.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of Global Marine Inc.
Our report on the consolidated financial statements of Global Marine Inc. and subsidiaries is included on page 26 of this Form 10-K. In connection with our audits of such financial statements, we have also audited the related financial statement schedule listed in the index on page 54 of this Form 10-K.
In our opinion, the financial statement schedule referred to above, when considered in relation to the basic financial statements taken as a whole, presents fairly, in all material respects, the information required to be included therein.
/s/ Coopers & Lybrand L.L.P.
Houston, Texas February 10, 1995
ITEM 9.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
Not applicable.
PART III
ITEM 10.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
As permitted by General Instruction G, the information called for by this item with respect to the Company's directors is incorporated by reference from the Company's definitive proxy statement to be filed pursuant to Regulation 14A within 120 days after the end of the last fiscal year. Information with respect to the Company's executive officers is set forth in Part I of this Annual Report on Form 10-K under the caption "Executive Officers of the Registrant."
ITEM 11.
ITEM 11. EXECUTIVE COMPENSATION
As permitted by General Instruction G, the information called for by this item is incorporated by reference from the Company's definitive proxy statement to be filed pursuant to Regulation 14A within 120 days after the end of the last fiscal year.
ITEM 12.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
As permitted by General Instruction G, the information called for by this item is incorporated by reference from the Company's definitive proxy statement to be filed pursuant to Regulation 14A within 120 days after the end of the last fiscal year.
ITEM 13.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
As permitted by General Instruction G, the information called for by this item is incorporated by reference from the Company's definitive proxy statement to be filed pursuant to Regulation 14A within 120 days after the end of the last fiscal year.
PART IV
ITEM 14.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
Page (a) Financial Statements, Schedules and Exhibits
(1) Financial Statements Report of Independent Accountants 26 Consolidated Statement of Operations 27 Consolidated Balance Sheet 28 Consolidated Statement of Cash Flows 30 Consolidated Statement of Shareholders' Equity 31 Notes to Consolidated Financial Statements 32 (2) Financial Statement Schedule Report of Independent Accountants 51 Schedule II - Valuation and Qualifying Accounts 52
Schedules other than those listed above are omitted for the reason that they are not applicable.
(3) Exhibits
The following instruments are included as exhibits to this Annual Report on Form 10-K and are filed herewith unless otherwise indicated. Exhibits incorporated by reference are so indicated by parenthetical information.
3(i).1 Restated Certificate of Incorporation of the Company as filed with the Secretary of State of Delaware on March 15, 1989, effective March 16, 1989. (Incorporated herein by this reference to Exhibit 3(i).1 of the Registrant's Annual Report on Form 10-K for the year ended December 31, 1993.)
3(i).2 Certificate of Amendment of the Restated Certificate of Incorporation of the Company as filed with the Secretary of State of Delaware on May 11, 1990. (Incorporated herein by this reference to Exhibit 3(i).2 of the Registrant's Annual Report on Form 10-K for the year ended December 31, 1993.)
3(i).3 Certificate of Correction of the Restated Certificate of Incorporation of the Company as filed with the Secretary of State of Delaware on September 25, 1990. (Incorporated herein by this reference to Exhibit 3(i).3 of the Registrant's Annual Report on Form 10-K for the year ended December 31, 1993.)
3(i).4 Certificate of Amendment of the Restated Certificate of Incorporation of the Company as filed with the Secretary of State of Delaware on May 11, 1992. (Incorporated herein by this reference to Exhibit 3(i).4 of the Registrant's Annual Report on Form 10-K for the year ended December 31, 1993.)
3 (i).5 Certificate of Amendment of the Restated Certificate of Incorporation of the Company as filed with the Secretary of State of Delaware on May 12, 1994. (Incorporated herein by this reference to Exhibit 4.5 of the Registrant's Registration Statement on Form S-3 (No. 33-53691) filed with the Commission on May 18, 1994.)
3(ii).1 By-laws of the Company as amended on May 10, 1989. (Incorporated herein by this reference to Exhibit 3(ii).1 of the Registrant's Annual Report on Form 10-K for the year ended December 31, 1993.)
4.1 Indenture, dated as of December 23, 1992, between the Company and Wilmington Trust Company, as Trustee, with respect to the Senior Secured Notes. (Incorporated herein by this reference to Exhibit 4.5 of Post-Effective Amendment No. 2 to the Registrant's Registration Statement on Form S-3 (No. 33-34013) filed with the Commission on January 22, 1993.)
4.2 First Priority Naval Mortgage, dated April 29, 1993, from Global Marine Drilling Company to Wilmington Trust Company, as Trustee. (Incorporated herein by this reference to Exhibit 4.6 of the Registrant's Registration Statement on Form S-3 (No. 33-65272) filed with the Commission on June 30, 1993.)
4.3 First Preferred Fleet Mortgage, dated December 23, 1992, from Global Marine Drilling Company to Wilmington Trust Company, as Trustee. (Incorporated herein by this reference to Exhibit 4.7 of Post-Effective Amendment No. 2 to the Registrant's Registration Statement on Form S-3 (No. 33-34013) filed with the Commission on January 22, 1993.)
4.4 Release of Vessel from Lien of First Preferred Fleet Mortgage, dated April 30, 1993, by Wilmington Trust Company, as Trustee. (Incorporated herein by this reference to Exhibit 4.8 of the Registrant's Registration Statement on Form S-3 (No. 33-65272) filed with the Commission on June 30, 1993.)
4.5 First Preferred Fleet Mortgage, dated December 23, 1992, from Global Marine Deepwater Drilling Inc. to Wilmington Trust Company, as Trustee. (Incorporated herein by this reference to Exhibit 4.8 of Post-Effective Amendment No. 2 to the Registrant's Registration Statement on Form S-3 (No. 33-34013) filed with the Commission on January 22, 1993.)
4.6 Release of Vessel from Lien of Mortgage, dated January 27, 1993, by Wilmington Trust Company, as Trustee. (Incorporated herein by this reference to Exhibit 4.6 of the Registrant's Annual Report on Form 10-K for the year ended December 31, 1993.)
4.7 First Priority Naval Mortgage, dated March 17, 1993, from Global Marine Nautilus Inc. to Wilmington Trust Company, as Trustee. (Incorporated herein by this reference to Exhibit 4.10 of the Registrant's Registration Statement on Form S-3 (No. 33-65272) filed with the Commission on June 0, 1993.)
4.8 Release of Vessel from Lien of First Priority Naval Fleet Mortgage, dated September 8, 1993, by Wilmington Trust Company, as Trustee. (Incorporated herein by this reference to Exhibit 4.8 of the Registrant's Annual Report on Form 10-K for the year ended December 31, 1993.)
4.9 Supplement No. 1, dated September 8, 1993, to First Priority Naval Fleet Mortgage from Global Marine Nautilus Inc. to Wilmington Trust Company, as Trustee. (Incorporated herein by this reference to Exhibit 4.9 of the Registrant's Annual Report on Form 10-K for the year ended December 31, 1993.)
4.10 Assumption Agreement and Supplement No. 2, dated December 16, 1993, to First Priority Naval Fleet Mortgage among Global Marine Drilling Company and Wilmington Trust Company, as Trustee. (Incorporated herein by this reference to Exhibit 4.10 of the Registrant's Annual Report on Form 10- K for the year ended December 31, 1993.)
4.11 First Preferred Fleet Mortgage, dated December 23, 1992, from Global Marine West Africa Inc. to Wilmington Trust Company, as Trustee. (Incorporated herein by this reference to Exhibit 4.10 of Post-Effective Amendment No. 2 to the Registrant's Registration Statement on Form S-3 (No. 33-34013) filed with the Commission on January 22, 1993.)
4.12 First Preferred Ship Mortgage, dated December 23, 1992, from Global Marine Adriatic Inc. to Wilmington Trust Company, as Trustee. (Incorporated herein by this reference to Exhibit 4.11 of Post-Effective Amendment No. 2 to the Registrant's Registration Statement on Form S-3 (No. 33-34013) filed with the Commission on January 22, 1993.)
4.13 Assumption Agreement and Supplement No.1, dated March 4, 1993, to First Preferred Ship Mortgage among Global Marine Adriatic Inc., as Original Mortgagor, Global Marine Drilling Company, as Assuming Mortgagor, and Wilmington Trust Company, as Trustee. (Incorporated herein by this reference to Exhibit 4.13 of the Registrant's Registration Statement on Form S-3 (No. 33-65272) filed with the Commission on June 30, 1993.)
4.14 First Preferred Ship Mortgage, dated December 23, 1992, from Global Marine Australia Inc. to Wilmington Trust Company, as Trustee. (Incorporated herein by this reference to Exhibit 4.12 of Post-Effective Amendment No. 2 to the Registrant's Registration Statement on Form S-3 (No. 33-34013) filed with the Commission on January 22, 1993.)
4.15 First Preferred Ship Mortgage, dated December 23, 1992, from Global Marine Bismarck Sea Inc. to Wilmington Trust Company, as Trustee. (Incorporated herein by this reference to Exhibit 4.13 of Post-Effective Amendment No. 2 to the Registrant's Registration Statement on Form S-3 (No. 33-34013) filed with the Commission on January 22, 1993.)
4.16 First Priority Naval Mortgage, dated March 17, 1993, from Global Marine North Sea Inc. to Wilmington Trust Company, as Trustee. (Incorporated herein by this reference to Exhibit 4.16 of the Registrant's Registration Statement on Form S-3 (No. 33-65272 ) filed with the Commission on June 30, 1993.)
4.17 Subsidiary Pledge Agreement, dated December 23, 1992, between Global Marine Adriatic Inc. and Wilmington Trust Company, as Trustee. (Incorporated herein by this reference to Exhibit 4.15 of Post-Effective Amendment No. 2 to the Registrant's Registration Statement on Form S-3 (No. 33-34013) filed with the Commission on January 22, 1993.)
4.18 Subsidiary Pledge Agreement, dated December 23, 1992, between Global Marine Australia Inc. and Wilmington Trust Company, as Trustee. (Incorporated herein by this reference to Exhibit 4.16 of Post-Effective Amendment No. 2 to the Registrant's Registration Statement on Form S-3 (No. 33-34013) filed with the Commission on January 22, 1993.)
4.19 Subsidiary Pledge Agreement, dated December 23, 1992, between Global Marine Bismarck Sea Inc. and Wilmington Trust Company, as Trustee. (Incorporated herein by this reference to Exhibit 4.17 of Post-Effective Amendment No. 2 to the Registrant's Registration Statement on Form S-3 (No. 33-34013) filed with the Commission on January 22, 1993.)
4.20 Subsidiary Pledge Agreement, dated December 23, 1992, between Global Marine Deepwater Drilling Inc. and Wilmington Trust Company, as Trustee. (Incorporated herein by this reference to Exhibit 4.18 of Post-Effective Amendment No. 2 to the Registrant's Registration Statement on Form S-3 (No. 33-34013) filed with the Commission on January 22, 1993.)
4.21 Subsidiary Pledge Agreement, dated December 23, 1992, between Global Marine Drilling Company Inc. and Wilmington Trust Company, as Trustee. (Incorporated herein by this reference to Exhibit 4.19 of Post-Effective Amendment No. 2 to the Registrant's Registration Statement on Form S-3 (No. 33-34013) filed with the Commission on January 22, 1993.)
4.22 Subsidiary Pledge Agreement, dated December 23, 1992, between Global Marine Nautilus Inc. and Wilmington Trust Company, as Trustee. (Incorporated herein by this reference to Exhibit 4.20 of Post-Effective Amendment No. 2 to the Registrant's Registration Statement on Form S-3 (No. 33-34013) filed with the Commission on January 22, 1993.)
4.23 Subsidiary Pledge Agreement, dated December 23, 1992, between Global Marine North Sea Inc. and Wilmington Trust Company, as Trustee. (Incorporated herein by this reference to Exhibit 4.21 of Post-Effective Amendment No. 2 to the Registrant's Registration Statement on Form S-3 (No. 33-34013) filed with the Commission on January 22, 1993.)
4.24 Subsidiary Pledge Agreement, dated December 23, 1992, between Global Marine West Africa Inc. and Wilmington Trust Company, as Trustee. (Incorporated herein by this reference to Exhibit 4.22 of Post-Effective Amendment No. 2 to the Registrant's Registration Statement on Form S-3 (No. 33-34013) filed with the Commission on January 22, 1993.)
10.1 Credit Agreement, dated June 24, 1993, among Global Marine Inc., Global Marine Drilling Company, Global Marine Australia Inc., Global Marine Baltic Inc., Global Marine Deepwater Drilling Inc. and Societe Generale, New York Branch. (Incorporated herein by this reference to Exhibit 10.1 of the Registrant's Registration Statement on Form S-3 (No. 33-65272) filed with the Commission on June 30, 1993.)
10.2 Memorandum of Agreement, dated June 6, 1993, between Global Marine Inc. and Transocean Drilling AS, and Amendment No. 1 thereto dated June 16, 1993. (Incorporated herein by this reference to Exhibit 99.1 of the Registrant's Registration Statement on Form S-3 (No. 33-65272) filed with the Commission on June 30, 1993.)
10.3 Letter of Intent in Order to Form a Joint Venture, dated June 6, 1993, between Global Marine Inc. and Transocean Drilling AS. (Incorporated herein by this reference to Exhibit 99.2 of the Registrant's Registration Statement on Form S-3 (No. 33-65272) filed with the Commission on June 30, 1993.)
10.4 Purchase and Sale Agreement, dated August 24, 1993, between Global Marine Inc. and Transocean Drilling AS. (Incorporated herein by this reference to Exhibit 10.3 of the Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 1993.)
10.5 Management Agreement (relating to Glomar Moray Firth I), dated September 10, 1993, between Global Marine Nautilus Inc. and Transocean Drilling AS. (Incorporated herein by this reference to Exhibit 10.4 of the Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 1993.)
10.6 Management Agreement (relating to Transocean No. 5), dated September 10, 1993, between Global Marine Nautilus Inc. and Transocean Drilling AS. (Incorporated herein by this reference to Exhibit to 10.5 of the Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 1993.)
10.7 Letter Employment Agreement dated February 14, 1995, between the Company and C. Russell Luigs.
10.8 Consulting Agreement dated February 14, 1986, between Challenger Minerals Inc. and Donald B. Brown. (Incorporated herein by this reference to Exhibit 10.2 of the Company's Annual Report on Form 10-K for the year ended December 31, 1987.)
10.9 Consulting Agreement dated as of February 18, 1986, between Challenger Minerals Inc. and William C. Walker. (Incorporated herein by this reference to Exhibit 10.3 of the Company's Annual Report on Form 10-K for the year ended December 31, 1987.)
10.10 Form of Letter Severance Agreement dated February 7, 1989, between the Company and six executive officers, respectively. (Incorporated herein by this reference to Exhibit 10.5 of the Registrant's Annual Report on Form 10-K for the year ended December 31, 1988.)
10.11 Letter Severance Agreement dated May 7, 1992, between the Company and one executive officer. (Incorporated herein by this reference to Exhibit 10.5 of the Registrant's Annual Report on Form 10-K for the year ended December 31, 1992.)
10.12 Global Marine Inc. 1989 Stock Option and Incentive Plan. (Incorporated herein by this reference to Exhibit 10.6 of the Registrant's Annual Report on Form 10-K for the year ended December 31, 1988.)
10.13 First Amendment to Global Marine Inc. 1989 Stock Option and Incentive Plan. (Incorporated herein by this reference to Exhibit 10.6 of the Registrant's Annual Report on Form 10-K for the year ended December 31, 1990.)
10.14 Second Amendment to Global Marine Inc. 1989 Stock Option and Incentive Plan. (Incorporated herein by this reference to Exhibit 10.7 of the Registrant's Annual Report on Form 10-K for the year ended December 31, 1991.)
10.15 Third Amendment to Global Marine Inc. 1989 Stock Option and Incentive Plan. (Incorporated herein by this reference to Exhibit 10.19 of the Registrant's Annual Report on Form 10-K for the year ended December 31, 1993.)
10.16 Fourth Amendment to Global Marine Inc. 1989 Stock Option and Incentive Plan.
10.17 Form of Incentive Stock Sale Agreement dated February 8, 1994, between the Company and nine executive officers, respectively. (Incorporated herein by this reference to Exhibit 10.21 of the Registrant's Annual Report on Form 10-K for the year ended December 31, 1993.)
10.18 Form of Incentive Stock Sale Agreement dated February 14, 1995, between the Company and nine executive officers, respectively.
10.19 Form of Performance Stock Memorandum dated June 7, 1994, regarding conditional opportunity to acquire Company stock granted to six executive officers, respectively. (Incorporated herein by this reference to Exhibit 10.1 of the Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 1994.)
10.20 Form of Performance Stock Memorandum dated February 14, 1995, regarding conditional opportunity to acquire Company stock granted to six executive officers, respectively.
10.21 Executive Life Insurance Plan. (Incorporated herein by this reference to Exhibit 10.5 of the Company's Annual Report on Form 10-K for the year ended December 31, 1988.)
10.22 Global Marine Inc. Executive Supplemental Retirement Plan of 1990. (Incorporated herein by this reference to Exhibit 10.8 of the Registrant's Annual Report on Form 10-K for the year ended December 31, 1990.)
10.23 Global Marine Benefit Equalization Retirement Plan effective January 1, 1990. (Incorporated herein by this reference to Exhibit 10.8 of the Registrant's Annual Report on Form 10-K for the year ended December 31, 1989.)
10.24 Global Marine Benefit Equalization Retirement Trust as established effective January 1, 1990. (Incorporated herein by this reference to Exhibit 10.9 of the Registrant's Annual Report on Form 10-K for the year ended December 31, 1989.)
10.25 Form of Indemnification Agreement entered into between the Company and each of its directors and officers. (Incorporated herein by this reference to Exhibit 10.12 of the Company's Annual Report on Form 10-K for the year ended December 31, 1986.)
10.26 Amended and Restated Retirement Plan for Outside Directors. (Incorporated herein by this reference to Exhibit 10.12 of the Registrant's Annual Report on Form 10-K for the year ended December 31, 1990.)
10.27 Global Marine Inc. 1990 Non-Employee Director Stock Option Plan (Incorporated herein by this reference to Exhibit 10.18 of the Registrant's Annual Report on Form 10-K for the year ended December 31, 1991.)
10.28 Global Marine Inc. 1994 Management Incentive Award Plan. (Incorporated herein by this reference to Exhibit 10.30 of the Registrant's Annual Report on Form 10-K for the year ended December 31, 1993.)
10.29 Global Marine Inc. 1995 Management Incentive Award Plan.
11.1 Computation of Earnings Per Common Share.
21.1 List of Subsidiaries.
23.1 Consent of Coopers & Lybrand L.L.P., Independent Accountants.
23.2 Consent of Independent Petroleum Engineers (Ryder Scott Company Petroleum Engineers).
27.1 Financial Data Schedule. (Exhibit 27.1 is being submitted as an exhibit only in the electronic format of this Annual Report on Form 10-K being submitted to the Securities and Exchange Commission. Exhibit 27.1 shall not be deemed filed for purposes of Section 11 of the Securities Act of 1933, Section 18 of the Securities Exchange Act of 1934 or Section 323 of the Trust Indenture Act, or otherwise be subject to the liabilities of such sections, nor shall it be deemed a part of any registration statement to which it relates.)
99.1 Report of Independent Petroleum Engineers dated February 8, 1995.
99.2 Report of Independent Petroleum Engineers dated February 7, 1994. (Incorporated herein by this reference to Exhibit 99.1 of the Company's Annual Report on Form 10-K for the year ended December 31, 1993.)
99.3 Reports of Independent Petroleum Engineers dated January 29, 1993. (Incorporated herein by this reference to Exhibit 28.1 of the Company's Annual Report on Form 10-K for the year ended December 31, 1992.)
The Company hereby undertakes, pursuant to Regulation S-K, Item 601(b), paragraph (4) (iii), to furnish to the Securities and Exchange Commission on request agreements defining the rights of holders of long-term debt of the Company and its consolidated subsidiaries not filed herewith in accordance with said Item.
Management Contracts, Compensatory Plans and Arrangements:
The following management contracts, compensatory plans and arrangements, which are required to be filed as exhibits to this Annual Report on Form 10-K, are included in the immediately preceding list as Exhibits 10.7 through 10.29. The parenthetical information in the following list specifies, for each such contract, plan or arrangement, its exhibit number in the immediately preceding list, which list includes information regarding the filing with which it can be found.
Employment Agreement:
Letter Employment Agreement dated February 14, 1995, between the Company and C. Russell Luigs (Exhibit 10.7).
Consulting Agreements:
Consulting Agreement, dated as of February 18, 1986, between Challenger Minerals Inc. and Donald B. Brown (Exhibit 10.8); Consulting Agreement, dated as of February 18, 1986, between Challenger Minerals Inc. and William C. Walker (Exhibit 10.9).
Severance Agreements:
Form of Letter Severance Agreement dated February 7, 1989, between the Company and six executive officers, respectively (Exhibit 10.10); Form of Letter Severance Agreement dated May 7, 1992, between the Company and one executive officer (Exhibit 10.11).
Stock Option Plans and Agreements Thereunder:
Global Marine Inc. 1989 Stock Option and Incentive Plan (Exhibit 10.12); First Amendment thereto (Exhibit 10.13); Second Amendment thereto (Exhibit 10.14); Third Amendment thereto (Exhibit 10.15). Fourth Amendment thereto (Exhibit 10.16).
Form of Incentive Stock Sale Agreement dated February 8, 1994, between the Company and nine executive officers, respectively (Exhibit 10.17); Form of Incentive Stock Sale Agreement dated February 14, 1995, between the Company and nine executive officers, respectively (Exhibit 10.18).
Form of Performance Stock Memorandum dated June 7, 1994, regarding conditional opportunity to acquire Company stock granted to six executive officers, respectively (Exhibit 10.19); Form of Performance Stock Memorandum dated February 14, 1995, regarding conditional opportunity to acquire Company stock granted to six executive officers, respectively (Exhibit 10.20).
Global Marine Inc. 1990 Non-Employee Director Stock Option Plan (Exhibit 10.27).
Life Insurance Plan:
Executive Life Insurance Plan (Exhibit 10.21).
Retirement Plans:
Global Marine Inc. Executive Supplemental Retirement Plan of 1990 (Exhibit 10.22).
Global Marine Benefit Equalization Retirement Plan effective January 1, 1990 (Exhibit 10.23).
Global Marine Benefit Equalization Retirement Trust as established effective January 1, 1990 (Exhibit 10.24).
Amended and Restated Retirement Plan for Outside Directors (Exhibit 10.26).
Indemnification Agreements:
Form of Indemnification Agreement entered into between the Company and each of its directors and officers (Exhibit 10.25).
Incentive Award Plans:
Global Marine Inc. 1994 Management Incentive Award Plan (Exhibit 10.28); Global Marine Inc. 1995 Management Incentive Award Plan (Exhibit 10.29).
(b) Reports on Form 8-K
The Company did not file any Current Reports on Form 8-K during the last quarter of 1994.
SIGNATURES REQUIRED FOR FORM 10-K
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
GLOBAL MARINE INC. (REGISTRANT)
Date: March 16, 1995 By: J. C. MARTIN (J. C. Martin) Senior Vice President and Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.