-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, EtaWO7XKoIhBUlBndJnr7HbHa9GsN9fN6MvKWDBj9V6JS2S3CNt0l6jqcAr7QM29 y+JaDz/hvaIuvLcB27mCcw== 0000950129-01-502600.txt : 20010815 0000950129-01-502600.hdr.sgml : 20010815 ACCESSION NUMBER: 0000950129-01-502600 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20010630 FILED AS OF DATE: 20010814 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NABORS INDUSTRIES INC CENTRAL INDEX KEY: 0000798943 STANDARD INDUSTRIAL CLASSIFICATION: DRILLING OIL & GAS WELLS [1381] IRS NUMBER: 930711613 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-09245 FILM NUMBER: 1711976 BUSINESS ADDRESS: STREET 1: 515 W GREEN RD STE 1200 CITY: HOUSTON STATE: TX ZIP: 77067 BUSINESS PHONE: 2818740035 FORMER COMPANY: FORMER CONFORMED NAME: ANGLO ENERGY INC DATE OF NAME CHANGE: 19890316 10-Q 1 h89793e10-q.txt NABORS INDUSTRIES INC - PERIOD ENDED JUNE 30, 2001 1 ================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ---------- FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2001 COMMISSION FILE NUMBER: 1-9245 ---------- NABORS INDUSTRIES, INC. (Exact name of registrant as specified in its charter) DELAWARE 93-0711613 (State or other jurisdiction of (IRS Employer incorporation or organization) Identification No.) 515 W. GREENS ROAD, SUITE 1200 HOUSTON, TEXAS 77067 (Address of principal executive offices) (Zip Code) 281-874-0035 (Registrant's telephone number, including area code) 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 X No ----- ----- The number of shares of Common Stock, par value $.10 per share, outstanding as of July 31, 2001 was 144,489,042. ================================================================================ 2 NABORS INDUSTRIES, INC. AND SUBSIDIARIES INDEX
PAGE NO. Part I Financial Information Item 1. Financial Statements Condensed Consolidated Balance Sheets as of June 30, 2001 and December 31, 2000...........................................2 Condensed Consolidated Statements of Income for the Three Months Ended and Six Months Ended June 30, 2001 and 2000........................................................3 Condensed Consolidated Statements of Changes in Stockholders' Equity for the Six Months Ended June 30, 2001 and 2000...........................................4 Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2001 and 2000.................................................................5 Notes to Condensed Consolidated Financial Statements..........................................................6 Report of Independent Accountants.............................................10 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.........................11 Part II Other Information Item 1. Legal Proceedings.............................................................17 Item 4. Submission of Matters to a Vote of Security Holders...........................18 Item 6. Exhibits and Reports on Form 8-K..............................................18 Signatures..............................................................................19
3 PART I FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS NABORS INDUSTRIES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
JUNE 30, DECEMBER 31, 2001 2000 ----------- ------------ ASSETS Current assets: Cash and cash equivalents $ 432,892 $ 197,312 Marketable securities 242,240 138,939 Accounts receivable, net 477,586 350,302 Inventory and supplies 18,148 18,029 Prepaid expenses and other current assets 103,549 99,034 ----------- ----------- Total current assets 1,274,415 803,616 Property, plant and equipment, net 2,063,002 1,821,392 Goodwill, net 191,864 192,181 Marketable securities 524,808 214,702 Other long-term assets 126,492 104,977 ----------- ----------- Total assets $ 4,180,581 $ 3,136,868 ----------- ----------- LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Current portion of long-term obligations $ 2,510 $ 3,554 Trade accounts payable 134,317 139,162 Accrued liabilities 137,970 113,010 Income taxes payable 25,399 23,453 ----------- ----------- Total current liabilities 300,196 279,179 Long-term obligations 1,707,390 854,777 Other long-term liabilities 117,683 99,147 Deferred income taxes 190,400 97,297 ----------- ----------- Total liabilities 2,315,669 1,330,400 ----------- ----------- Commitments and contingencies (Note 4) Stockholders' equity: Common stock, par value $.10 per share: Authorized common shares 400,000; issued 147,676 and 147,155 14,767 14,715 Capital in excess of par value 1,090,810 1,145,847 Accumulated other comprehensive income 2,639 7,094 Retained earnings 830,782 643,629 Less treasury stock, at cost, 2,090 and 589 common shares (74,086) (4,817) ----------- ----------- Total stockholders' equity 1,864,912 1,806,468 ----------- ----------- Total liabilities and stockholders' equity $ 4,180,581 $ 3,136,868 ----------- -----------
The accompanying notes are an integral part of these condensed consolidated financial statements. 2 4 NABORS INDUSTRIES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30, 2001 2000 2001 2000 ------------ ------------ ------------ ------------ Revenues and other income: Operating revenues $ 584,819 $ 291,293 $ 1,098,653 $ 570,409 Earnings from unconsolidated affiliates 9,996 10,175 20,243 20,743 Interest income 15,676 1,842 28,936 2,431 Other income, net 3,056 6,325 12,324 12,149 ------------ ------------ ------------ ------------ Total revenues and other income 613,547 309,635 1,160,156 605,732 ------------ ------------ ------------ ------------ Costs and other deductions: Direct costs 349,369 196,806 672,605 390,268 General and administrative expenses 33,814 26,619 66,900 52,552 Depreciation and amortization 50,746 37,208 94,476 74,344 Interest expense 14,513 7,445 26,977 16,096 ------------ ------------ ------------ ------------ Total costs and other deductions 448,442 268,078 860,958 533,260 ------------ ------------ ------------ ------------ Income before income taxes and extraordinary gain 165,105 41,557 299,198 72,472 ------------ ------------ ------------ ------------ Income taxes: Current 11,388 3,492 26,323 8,734 Deferred 49,702 13,962 85,722 21,704 ------------ ------------ ------------ ------------ Total income taxes 61,090 17,454 112,045 30,438 ------------ ------------ ------------ ------------ Income before extraordinary gain 104,015 24,103 187,153 42,034 Extraordinary gain, net -- -- -- 1,703 ------------ ------------ ------------ ------------ Net income $ 104,015 $ 24,103 $ 187,153 $ 43,737 ------------ ------------ ------------ ------------ Earnings per share: Basic: Before extraordinary gain $ .71 $ .17 $ 1.28 $ .30 Extraordinary gain -- -- -- .01 ------------ ------------ ------------ ------------ Net income $ .71 $ .17 $ 1.28 $ .31 ------------ ------------ ------------ ------------ Diluted: Before extraordinary gain $ .63 $ .16 $ 1.14 $ .28 Extraordinary gain -- -- -- .01 ------------ ------------ ------------ ------------ Net income $ .63 $ .16 $ 1.14 $ .29 ------------ ------------ ------------ ------------ Weighted average number of shares outstanding: Basic 146,539 145,643 146,617 142,459 ------------ ------------ ------------ ------------ Diluted 173,309 152,745 171,796 150,798 ------------ ------------ ------------ ------------
The accompanying notes are an integral part of these condensed consolidated financial statements. 3 5 NABORS INDUSTRIES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (IN THOUSANDS)
CAPITAL ACCUMULATED IN EXCESS OTHER TOTAL COMMON STOCK OF PAR COMPREHENSIVE RETAINED TREASURY STOCKHOLDERS' SHARES PAR VALUE VALUE INCOME (LOSS) EARNINGS STOCK EQUITY ----------- ---------- ----------- ------------- --------- --------- ------------- Balances, December 31, 1999 137,421 $ 13,742 $ 958,704 $ (3,828) $ 506,273 $ (4,817) $ 1,470,074 ----------- ---------- ----------- -------- --------- --------- ----------- Comprehensive income: Net income 43,737 43,737 Translation adjustment (1,700) (1,700) Unrealized gain on marketable securities, net 13,797 13,797 ----------- ---------- ----------- -------- --------- --------- ----------- Total comprehensive income -- -- -- 12,097 43,737 -- 55,834 ----------- ---------- ----------- -------- --------- --------- ----------- Issuance of common shares for warrants exercised 70 7 1,636 1,643 Issuance of common shares for stock options exercised 8,955 896 103,746 104,642 Tax effect of stock option deductions 39,632 39,632 ----------- ---------- ----------- -------- --------- --------- ----------- Subtotal 9,025 903 145,014 -- -- -- 145,917 ----------- ---------- ----------- -------- --------- --------- ----------- Balances, June 30, 2000 146,446 $ 14,645 $ 1,103,718 $ 8,269 $ 550,010 $ (4,817) $ 1,671,825 ----------- ---------- ----------- -------- --------- --------- ----------- Balances, December 31, 2000 147,155 $ 14,715 $ 1,145,847 $ 7,094 $ 643,629 $ (4,817) $ 1,806,468 ----------- ---------- ----------- -------- --------- --------- ----------- Comprehensive income: Net income 187,153 187,153 Translation adjustment 559 559 Unrealized loss on marketable securities, net (5,014) (5,014) ----------- ---------- ----------- -------- --------- --------- ----------- Total comprehensive income (loss) -- -- -- (4,455) 187,153 -- 182,698 ----------- ---------- ----------- -------- --------- --------- ----------- Issuance of common shares for stock options exercised 521 52 7,672 7,724 Common stock and treasury stock transactions (42,311) (69,269) (111,580) Tax effect of stock option deductions (20,398) (20,398) ----------- ---------- ----------- -------- --------- --------- ----------- Subtotal 521 52 (55,037) -- -- (69,269) (124,254) ----------- ---------- ----------- -------- --------- --------- ----------- Balances, June 30, 2001 147,676 $ 14,767 $ 1,090,810 $ 2,639 $ 830,782 $ (74,086) $ 1,864,912 ----------- ---------- ----------- -------- --------- --------- -----------
The accompanying notes are an integral part of these condensed consolidated financial statements. 4 6 NABORS INDUSTRIES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS)
SIX MONTHS ENDED JUNE 30, 2001 2000 ------------ ------------ Net cash provided by operating activities $ 240,873 $ 43,805 ------------ ------------ Cash flows from investing activities: Purchases of marketable securities, available-for-sale (441,189) (238,317) Sales of marketable securities, available-for-sale 28,193 13,986 Cash received from disposition of long-term assets 7,486 2,322 Capital expenditures (319,797) (98,534) ------------ ------------ Net cash used for investing activities (725,307) (320,543) ------------ ------------ Cash flows from financing activities: Proceeds from long-term borrowings 840,338 501,941 Reduction of long-term borrowings (3,556) (98,958) Debt issuance costs (12,879) (7,529) Common stock and treasury stock transactions (103,856) 106,285 Other (33) (269) ------------ ------------ Net cash provided by financing activities 720,014 501,470 ------------ ------------ Net increase in cash and cash equivalents 235,580 224,732 Cash and cash equivalents, beginning of period 197,312 80,580 ------------ ------------ Cash and cash equivalents, end of period $ 432,892 $ 305,312 ------------ ------------
The accompanying notes are an integral part of these condensed consolidated financial statements. 5 7 NABORS INDUSTRIES, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Interim Financial Information The unaudited condensed consolidated financial statements of Nabors Industries, Inc. are prepared in conformity with generally accepted accounting principles in the United States of America, or US GAAP. Pursuant to the rules and regulations of the Securities and Exchange Commission, certain information and footnote disclosures normally included in annual financial statements prepared in accordance with US GAAP have been omitted. Therefore, these financial statements should be read along with our Annual Report on Form 10-K for the year ended December 31, 2000. In our management's opinion, the condensed consolidated financial statements contain all adjustments necessary to present fairly our financial position as of June 30, 2001, and the results of our operations for each of the three-month and six-month periods ended June 30, 2001 and 2000 and the condensed consolidated statements of changes in stockholders' equity and of cash flows for each of the six-month periods ended June 30, 2001 and 2000 in accordance with US GAAP. Interim results for the six months ended June 30, 2001 may not be indicative of results that will be realized for the full year ending December 31, 2001. Our independent accountants have performed a review of, and issued a report on, these condensed consolidated interim financial statements in accordance with standards established by the American Institute of Certified Pubic Accountants. Pursuant to Rule 436(c) under the Securities Act of 1933, this report should not be considered a part of any registration statement prepared or certified within the meanings of Section 7 and 11 of the Act. Income Taxes Our effective tax rate was 37% during the current quarter and year-to- date, compared to 42% in the comparable prior year periods. This lower effective tax rate is primarily due to certain intercompany transfers of foreign assets formerly owned by U.S. entities to the foreign companies operating the assets, which generally operate in lower tax jurisdictions. Earnings Per Share Basic earnings per share for all periods presented equals net income divided by the weighted average number of shares of common stock outstanding during the period, excluding shares of common stock held in treasury. Diluted earnings per share for the three months and six months ended June 30, 2001, reflects the assumed conversion of our $825 million and $1.381 billion zero coupon convertible senior debentures, as the conversion in such periods would have been dilutive. As a result of this assumed conversion, to calculate diluted earnings per share for the three months and six months ended June 30, 2001, net income is adjusted to add back interest expense relating to the debentures totaling $5.32 million and $9.32 million, respectively, on an after-tax basis. This adjusted net income is then divided by the sum of: (1) the weighted average number of shares of common stock outstanding used for the basic computation, (2) the net effect of dilutive stock options and warrants, and (3) for the three months and six months ended June 30, 2001, 18.6 million and 16.7 million shares of common stock, respectively, assumed to be issued upon conversion of the debentures. Diluted earnings per share for the three months and six months ended June 30, 2000 does not reflect the assumed conversion of our $825 million zero coupon convertible senior debentures due 2020, as this conversion would have been anti-dilutive. Recent Accounting Pronouncements In June 2001, the Financial Accounting Standards Board issued SFAS No. 141 "Business Combinations" and SFAS No. 142 "Goodwill and Other Intangible Assets". SFAS 141 requires all business combinations completed after June 30, 2001, to be accounted for under the purchase method. This standard also establishes for all business combinations made after June 30, 2001, specific criteria for the recognition of intangible assets separately from goodwill. 6 8 SFAS 142 addresses the accounting for goodwill and other intangible assets after an acquisition. The most significant changes made by SFAS 142 are: 1) goodwill and intangible assets with indefinite lives will no longer be amortized; 2) goodwill and intangible assets with indefinite lives must be tested for impairment at least annually; and 3) the amortization period for the intangible assets with finite lives will no longer be limited to forty years. We will adopt SFAS 142 effective January 1, 2002, as required, and no longer will record goodwill amortization expense. This expense totaled $2.2 million ($.01 per diluted share), net of tax, for the six months ended June 30, 2001. NOTE 2 LONG-TERM OBLIGATIONS During February and March 2001, we completed a private placement of zero coupon convertible senior debentures due 2021. The aggregate principal amount of the debentures at maturity will be $1.381 billion. The debentures were issued at a discount with net proceeds to Nabors, after expenses, totaling approximately $828.0 million. The yield to maturity of the debentures is 2.5% compounded semi-annually with no periodic cash payments of interest. At the holder's option, the debentures can be converted, at any time prior to maturity or their earlier redemption, into Nabors common stock, at a conversion rate of 7.0745 shares per $1,000 principal amount at maturity. The conversion rate may be adjusted from time to time, upon the occurrence of specified events. Instead of delivering shares of common stock upon conversion of any debentures, we may elect to pay the holder cash for all or a portion of the debentures. The debentures can be put to us on February 5, 2006, February 5, 2011 and February 5, 2016 for a purchase price equal to the issue price plus accrued original issue discount to the date of repurchase. We may elect to pay all or a portion of the purchase in common stock instead of cash. We cannot redeem the debentures before February 5, 2006, after which we may redeem all or a portion of the debentures for cash at their accreted value. The proceeds from the issuance of the debentures will be used for general corporate purposes, including but not limited to, working capital, investment in subsidiaries and possible future business acquisitions. The proceeds have been invested in cash and marketable securities. On May 11, 2001, Nabors' registration statement with respect to resales of these debentures became effective. NOTE 3 COMMON STOCK During June 2001, our Board of Directors authorized the repurchase of up to $150 million of our common stock. In accordance with this authorization, we purchased 1.5 million shares of our common stock for approximately $69.3 million in June 2001. These shares are now held in treasury. During the second quarter of 2001, we entered into a private transaction with a counterparty to potentially purchase up to 1.0 million shares of our common stock during the third quarter of 2001. Pursuant to the terms of the transaction, we paid $47.4 million to the counterparty in the second quarter of 2001 which was recorded as a reduction of capital in excess of par value. Upon maturity of this transaction in July 2001, we received 1.0 million of our shares which we recorded as treasury stock. Additionally, during the second quarter of 2001, we entered into two separate private transactions with a counterparty in which we sold 2.0 million put options which, upon maturity during the third quarter of 2001, will result in our purchase of 2.0 million shares of our common stock or settlement in cash. Since the end of June, we have acquired an additional 1.1 million shares of our common stock for approximately $28.4 million. NOTE 4 COMMITMENTS AND CONTINGENCIES Capital Expenditures As of June 30, 2001, we had outstanding capital expenditure purchase commitments of approximately $120.0 million for drill pipe and refurbishment of rigs to be reactivated and for rig-related sustaining capital expenditures. 7 9 Contingencies In the class action lawsuit arising out of the initial public offering of Bayard Drilling Technologies, Inc. (prior to Bayard being acquired by Nabors), Yuan v. Bayard Drilling Technologies, Inc., et al., the parties have signed an agreement to settle the lawsuit, and the court has granted final approval to the settlement. The settlement amounts paid by Bayard (either directly or as a result of its indemnification obligations) were not material to Bayard or Nabors. In Verdin v. R&B Falcon Drilling USA, Inc., et al., Civil Action No. G-00-488, in the United States District Court for the Southern District of Texas, Galveston Division, the class action lawsuit against our offshore drilling subsidiaries alleging, among other things, conspiracy to depress wages and benefits paid to our offshore employees, we have reached a settlement, subject to court approval. The settlement amounts to be paid by Nabors' subsidiaries are not material to such subsidiaries or Nabors. In the event the settlement is not finalized, Nabors continues to believe the allegations in this lawsuit are without merit and Nabors' subsidiaries will defend vigorously the claims brought against them. In such event, we are unable, however, to predict the outcome of this lawsuit or the costs to be incurred in connection with its defense and there can be no assurance that this litigation will be resolved in our favor. An adverse result or prolonged litigation could have an adverse effect on the financial position or results of operations of Nabors. Nabors and its subsidiaries are defendants or otherwise involved in a number of other lawsuits in the ordinary course of their business. In the opinion of management, Nabors' ultimate liability with respect to these pending lawsuits is not expected to have a significant or material adverse effect on Nabors' consolidated financial position, cash flows or results of operations. NOTE 5 SUPPLEMENTAL INCOME STATEMENT INFORMATION Other income, net includes the following:
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30, ------------------------------ ----------------------------- 2001 2000 2001 2000 ------------ ------------ ------------ ------------ (IN THOUSANDS) Gains on marketable securities, net $ 3,354 $ 5,173 $ 7,216 $ 9,898 Gains (losses) on disposition of long-term assets, net (469) 470 3,958 1,282 Foreign currency gains (losses) (185) 123 297 358 Dividend income 211 19 373 37 Other 145 540 480 574 ------------ ------------ ------------ ------------ $ 3,056 $ 6,325 $ 12,324 $ 12,149 ------------ ------------ ------------ ------------
8 10 NOTE 6 SEGMENT INFORMATION The following table sets forth financial information with respect to our reportable segments:
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30, 2001 2000 2001 2000 ------------ ------------ ------------ ------------ (IN THOUSANDS) Operating revenues and Earnings from unconsolidated affiliates: Contract drilling (1) $ 556,363 $ 280,766 $ 1,042,848 $ 547,656 Manufacturing and logistics (2) 70,682 35,157 132,930 70,088 Other (3) (32,230) (14,455) (56,882) (26,592) ------------ ------------ ------------ ------------ Total $ 594,815 $ 301,468 $ 1,118,896 $ 591,152 ------------ ------------ ------------ ------------ Income derived from operating activities: (4) Contract drilling (1) $ 145,878 $ 40,291 $ 259,128 $ 72,055 Manufacturing and logistics (2) 24,838 7,521 45,793 15,618 Other (5) (9,830) (6,977) (20,006) (13,685) ------------ ------------ ------------ ------------ Total $ 160,886 $ 40,835 $ 284,915 $ 73,988 Interest expense (14,513) (7,445) (26,977) (16,096) Interest income 15,676 1,842 28,936 2,431 Other income, net 3,056 6,325 12,324 12,149 ------------ ------------ ------------ ------------ Income before income taxes and extraordinary gain $ 165,105 $ 41,557 $ 299,198 $ 72,472 ------------ ------------ ------------ ------------
JUNE 30, DECEMBER 31, 2001 2000 ------------ ------------ Total assets: Contract drilling (6) $ 2,696,356 $ 2,232,340 Manufacturing and logistics (7) 338,418 305,770 Other (5) 1,145,807 598,758 ------------ ------------ Total $ 4,180,581 $ 3,136,868 ------------ ------------
(1) Includes Earnings from unconsolidated affiliates, accounted for by the equity method, of $4.2 million, $ 4.3 million, $8.4 million and $7.8 million for each of the three-month and six-month periods ended June 30, 2001 and 2000, respectively. (2) Includes Earnings from unconsolidated affiliates, accounted for by the equity method, of $5.8 million, $5.9 million, $11.8 million and $12.9 million for each of the three-month and six-month periods ended June 30, 2001 and 2000, respectively. (3) Includes the elimination of inter-segment manufacturing and logistics sales. (4) "Income derived from operating activities" has historically been referred to as "operating income" by us. It is computed by subtracting: direct costs, general and administrative expenses, and depreciation and amortization from Operating revenues and then adding Earnings from unconsolidated affiliates. (5) Includes the elimination of inter-segment transactions and unallocated corporate expenses and assets. (6) Includes $21.8 million and $22.8 million of investments in unconsolidated affiliates, accounted for by the equity method, at June 30, 2001 and December 31, 2000, respectively. (7) Includes $33.5 million and $24.5 million of investments in unconsolidated affiliates, accounted for by the equity method, at June 30, 2001 and December 31, 2000, respectively. 9 11 REPORT OF INDEPENDENT ACCOUNTANTS To the Stockholders and Board of Directors of Nabors Industries, Inc.: We have reviewed the accompanying condensed consolidated balance sheet of Nabors Industries, Inc. and its subsidiaries as of June 30, 2001, and the related condensed consolidated statements of income for each of the three-month and six-month periods ended June 30, 2001 and 2000 and the condensed consolidated statements of changes in stockholders' equity and of cash flows for the six-month periods ended June 30, 2001 and 2000. These financial statements are the responsibility of the Company's management. We conducted our review in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with auditing standards generally accepted in the United States of America, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our review, we are not aware of any material modifications that should be made to the accompanying condensed consolidated interim financial statements for them to be in conformity with accounting principles generally accepted in the United States of America. We previously audited, in accordance with auditing standards generally accepted in the United States of America, the consolidated balance sheet as of December 31, 2000, and the related consolidated statements of income, changes in stockholders' equity and of cash flows for the year then ended (not presented herein), and in our report dated January 25, 2001, except for Note 15, as to which the date is March 13, 2001, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of December 31, 2000, is fairly stated in all material respects in relation to the consolidated balance sheet from which it has been derived. /s/ PricewaterhouseCoopers LLP Houston, Texas July 24, 2001 10 12 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 2001 COMPARED TO THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 2000 Operating revenues and Earnings from unconsolidated affiliates for the second quarter of fiscal year 2001 totaled $594.8 million, representing an increase of $293.3 million, or 97%, as compared to the prior year period. Current quarter income derived from operating activities(1) and net income totaled $160.9 million and $104.0 million ($.63 per diluted share), respectively, representing increases of 294% and 332% compared to the prior year period. Operating revenues and Earnings from unconsolidated affiliates for the first six months of fiscal year 2001 totaled $1.1 billion, representing an increase of $527.7 million, or 89%, compared to the prior year period. Income derived from operating activities and net income totaled $284.9 million and $187.2 million ($1.14 per diluted share), respectively, representing increases of 285% and 328% compared to the prior year period. The increase in our operating results is due to substantial improvements in all of our business units, driven primarily by the convergence of supply and demand for natural gas and oil brought about by global economic growth and the increasing difficulty, expense and long lead times involved in adding to supply. This is particularly true for North American natural gas, for which demand has steadily increased due to its environmental desirability and its increasing use in electric power generation. Natural gas prices, which averaged $3.05 per mcf during the first six months of 2000, averaged $5.17 per mcf during the first six months of 2001. Oil prices averaged $28.31 per barrel during the first six months of 2001, down slightly from $28.93 per barrel during the first six months of 2000. The increase in the price of natural gas and the sustained higher price of oil during the past 21 months has resulted in increased capital spending by customers for our services. This increased spending has been especially evident in our US Lower 48, Canada and Gulf of Mexico operations for natural gas-related drilling and workover activities. The increase in North American land drilling activity is illustrated by the increase in the total US active land rig count, which averaged 999 working rigs during the six months ended June 30, 2001 compared to 665 working rigs during the six months ended June 30, 2000. Additionally, the Canadian land, International land and US Offshore rig counts have increased by 11%, 20% and 30%, respectively, as compared to the six months ended June 30, 2000. While today's US natural gas prices remain at relatively high levels, they have been steadily declining during the past six months and averaged $2.93 per mcf during July 2001. Although the majority of our customers currently indicate their drilling programs will remain flat or decline modestly in the second half of 2001, demand for additional rigs in the US Lower 48 drilling market has been substantially reduced. While we remain cautious about our US Lower 48 business, our current view is that any possible diminished activity will likely be rapidly self-correcting and therefore relatively short in duration. Our other businesses provide a substantial degree of diversity away from the US natural gas market, and all of them indicate positive outlooks barring any major unforeseen event or significant worldwide recession. (1) "Income derived from operating activities" has historically been referred to as "operating income" by us. It is computed by subtracting: direct costs, general and administrative expenses, and depreciation and amortization from Operating revenues and then adding Earnings from unconsolidated affiliates. 11 13 The following tables set forth certain financial information with respect to our reportable segments and rig activity:
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30, INCREASE INCREASE 2001 2000 (DECREASE) 2001 2000 (DECREASE) --------- --------- ---------- ----------- --------- ---------- (IN THOUSANDS, EXCEPT PERCENTAGES) Reportable segments: Operating revenues and Earnings from unconsolidated affiliates: Contract drilling (1) $ 556,363 $ 280,766 $ 275,597 98% $ 1,042,848 $ 547,656 $ 495,192 90% Manufacturing and logistics (2) 70,682 35,157 35,525 101% 132,930 70,088 62,842 90% Other (3) (32,230) (14,455) (17,775) (123)% (56,882) (26,592) (30,290) (114)% --------- --------- --------- ----------- --------- --------- Total $ 594,815 $ 301,468 $ 293,347 97% $ 1,118,896 $ 591,152 $ 527,744 89% --------- --------- --------- ----------- --------- --------- Income derived from operating activities: Contract drilling (1) $ 145,878 $ 40,291 $ 105,587 262% $ 259,128 $ 72,055 $ 187,073 260% Manufacturing and logistics (2) 24,838 7,521 17,317 230% 45,793 15,618 30,175 193% Other (4) (9,830) (6,977) (2,853) (41)% (20,006) (13,685) (6,321) (46)% --------- --------- --------- ----------- --------- --------- -- Total $ 160,886 $ 40,835 $ 120,051 294% $ 284,915 $ 73,988 $ 210,927 285% --------- --------- --------- ----------- --------- ---------
(1) Includes Earnings from unconsolidated affiliates, accounted for by the equity method, of $4.2 million, $4.3 million, $8.4 million and $7.8 million, for each of the three-month and the six-month periods ended June 30, 2001 and 2000, respectively. (2) Includes Earnings from unconsolidated affiliates, accounted for by the equity method, of $5.8 million, $5.9 million, $11.8 million and $12.9 million, for each of the three-month and the six-month periods ended June 30, 2001 and 2000, respectively. (3) Includes the elimination of inter-segment manufacturing and logistics sales. (4) Includes the elimination of inter-segment transactions and unallocated corporate expenses.
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30, 2001 2000 INCREASE 2001 2000 INCREASE ---- ---- ------------------- ---- ---- ------------------ Rig activity (1): Rig years (2) 353.6 236.8 119.3 51% 349.3 235.4 113.9 48% Rig utilization 61% 42% 19% 45% 60% 42% 18% 43%
(1) Excludes labor contracts and domestic land well-servicing rigs. (2) Rig years represents a measure of the number of equivalent rigs operating during a given period. For example, one rig operating 182.5 days during a 365-day period represents 0.5 rig years. 12 14 The following table sets forth certain industry data:
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30, INCREASE INCREASE 2001 2000 (DECREASE) 2001 2000 (DECREASE) ---- ---- -------------------- ---- ---- --------------------- Industry data: Average US natural gas spot price ($/mcf) (1) $ 4.16 $ 3.55 $ 0.61 17% $ 5.17 $ 3.05 $ 2.12 70% Average West Texas intermediate crude oil spot price ($/bbl) (1) $ 27.88 $ 28.95 $ (1.07) (4)% $ 28.31 $ 28.93 $ (.62) (2)% Average US land rig count (2) 1,047 694 353 51% 999 665 334 50% Average Canadian land rig count (2) 249 204 45 22% 379 340 39 11% Average International land rig count (2) 524 453 71 16% 521 435 86 20% Average US Offshore rig count (2) 167 134 33 25% 168 129 39 30%
(1) Source: Bloomberg (2) Source: Baker Hughes Contract drilling. This segment includes our drilling, workover and well-servicing operations, on land and offshore. Second quarter 2001 Operating revenues and Earnings from unconsolidated affiliates for the contract drilling segment totaled $556.4 million and income derived from operating activities totaled $145.9 million, representing increases of 98% and 262%, respectively, compared to the prior year quarter. Equivalent rig years (excluding labor contracts and domestic land well-servicing rigs) increased to 353.6 years during the second quarter of 2001 from an average of 234.3 years during the prior year quarter. For the six months ended June 30, 2001, contract drilling operating revenues and Earnings from unconsolidated affiliates totaled $1.04 billion and income derived from operating activities totaled $259.1 million representing increases of 90% and 260%, respectively, compared to the prior year period. Equivalent rig years increased to 349.3 years from an average of 235.4 years during the prior year period. Alaskan revenues increased during the current quarter and year-to-date due to higher equivalent rig years and higher average dayrates. Equivalent rig years in Alaska increased to 10.5 years during the current quarter from 8.4 years in the prior year quarter and increased to 10.6 years during the six months ended June 30, 2001 from 8.7 years during the prior year period. Canadian revenues were higher during the current quarter and year-to-date due to higher average dayrates associated with continued strong demand for natural gas drilling services throughout the Canadian market. Equivalent rig years in Canada decreased to 14.9 years during the current quarter from 16.0 years in the prior year quarter and decreased to 22.0 years during the first six months of 2001 from 22.4 years during the prior year period. US Lower 48 drilling revenues increased dramatically during the current quarter and year-to-date as a result of increased demand for drilling services. The prolonged strength of the North American natural gas market has resulted in significant increases in both equivalent rig years and dayrates. While today's US natural gas prices remain at relatively high levels, they have been steadily declining during the past six months. Although the majority of our customers currently indicate their drilling programs will remain flat or decline modestly in the second half of 2001, demand for additional rigs in the US Lower 48 drilling market has been substantially reduced. Consequently, we have temporarily suspended our rig reactivation program until there is a resumption of demand for incremental rigs. We will however, complete eight SCR rigs currently being refurbished, all of which have contract commitments. US Lower 48 equivalent rig years increased to 242.5 years during the current quarter from 139.5 years during the prior year quarter and increased to 231.8 years during the first six months of 2001 from 136.5 years during the prior year period. 13 15 US land well-servicing operations improved during the current quarter and year-to-date due to increased activity and rates per hour primarily resulting from higher natural gas and oil prices. US land well-servicing hours increased to 505,000 hours during the current quarter from 425,000 hours during the prior year quarter and increased to 984,000 hours during the six months ended June 30, 2001 from 833,000 hours during the prior year period. International revenues increased during the current quarter and year-to-date due to higher average dayrates and higher equivalent rig years in our South American operations, primarily in Colombia and Ecuador, our Middle East operations, principally in Oman, and our African operations, primarily in Algeria. Additionally, effective January 1, 2001 we purchased our partner's 49% interest in the Argentina operation for $4.5 million and now own 100% of the operation. Previously, our interest was accounted for using the equity method of accounting. These increases were partially offset by decreased activity in Kazakhstan. International equivalent rig years increased to 46.6 years during the current quarter from 39.9 years during the prior year quarter and increased to 47.2 years during the first six months of 2001 from 38.0 years during the prior year period. Offshore revenues increased during the current quarter and year-to-date due to increased revenues in the Gulf of Mexico. The Gulf of Mexico improvement resulted from increased platform, jackup and barge workover and platform drilling activity and higher average dayrates. Internationally, offshore revenues decreased primarily due to decreased activity in Mexico, partially offset by increased activity in Brazil and the Congo. Offshore equivalent rig years increased to 39.1 years during the current quarter from 33.0 years during the prior year quarter and increased to 37.7 years during the first six months of 2001 from 29.8 years during the prior year period. Manufacturing and logistics. This segment includes our supply vessel, top drive manufacturing, rig instrumentation and software, and construction and transportation operations. Manufacturing and logistics Operating revenues and Earnings from unconsolidated affiliates were $70.7 million during the current quarter, representing an increase of 101% compared with the prior year quarter. Income derived from operating activities for this segment increased to $24.8 million compared to $7.5 million, representing an increase of 230% compared to the prior year quarter. For the six months ended June 30, 2001, manufacturing and logistics Operating revenues and Earnings from unconsolidated affiliates totaled $132.9 million and income derived from operating activities totaled $45.8 million, representing increases of 90% and 193%, respectively. Increases in this segment resulted from increased top drive sales and higher equivalent vessel years and higher average vessel dayrates for our supply vessel operation. Equivalent supply vessel years increased to 25.9 years during the current quarter from 19.3 years during the prior year quarter and increased to 25.9 years during the six months ended June 30, 2001 from 17.0 years during the prior year period. Other Financial Information. Gross margin percentage is calculated by dividing gross margin by operating revenues. Gross margin is calculated by subtracting direct costs from operating revenues. The gross margin percentage increased during the three-month and six-month periods ended June 30, 2001 primarily due to higher average dayrates at virtually all of our business units. General and administrative expenses and depreciation and amortization expense as a percentage of operating revenues decreased during the current quarter and year-to-date due to the increase in our revenues, as these expenses were spread over a larger revenue base. Interest expense increased during the current quarter and year-to-date due to higher average debt outstanding, resulting from the issuance of our $825 million zero coupon convertible senior debentures in June 2000 and our $1.381 billion zero coupon convertible senior debentures in February and March 2001. Interest income increased during the current quarter and year-to-date due to higher average cash balances resulting from the investment of the proceeds from the issuances of these debentures. Other income decreased during the current quarter due to lower gains on marketable securities. We realized net gains on sales of marketable securities totaling $3.8 million and unrealized holding losses on marketable securities classified as trading totaling $.4 million during the current quarter. Other income increased slightly during the first six months of 2001 primarily due to higher gains on dispositions of long-term assets, partially offset by lower gains on marketable securities. We recorded $4.0 million in gains on disposition of long-term assets primarily attributable to insurance proceeds received on a rig destroyed in a blowout. We also realized gains on sales of marketable securities totaling $8.3 million and unrealized holding losses on marketable securities classified as trading totaling $1.1 million during the first six months of 2001. 14 16 Our effective tax rate was 37% during the current quarter and year-to-date, compared to 42% in the comparable prior year periods. This lower effective tax rate is primarily due to certain intercompany transfers of foreign assets formerly owned by U.S. entities to the foreign companies operating the assets, which generally operate in lower tax jurisdictions. LIQUIDITY AND CAPITAL RESOURCES We currently have cash and cash equivalents and investments in marketable securities totaling $1.2 billion. In addition, we generate significant cash from operations over the course of a twelve-month period. We also have substantial borrowing capacity under various credit facility arrangements, and have access to public debt and equity capital markets. Our ability to raise money in the public markets is enhanced by our senior unsecured debt ratings as provided by Moody's Investor Service and Standard & Poor's which are currently "A3" and "A-", respectively. During June 2001, our Board of Directors authorized the repurchase of up to $150 million of our common stock. In accordance with this authorization, we purchased 1.5 million shares of our common stock for approximately $69.3 million in June 2001. These shares are now held in treasury. During the second quarter of 2001, we entered into a private transaction with a counterparty to potentially purchase up to 1.0 million shares of our common stock during the third quarter of 2001. Pursuant to the terms of the transaction, we paid $47.4 million to the counterparty in the second quarter of 2001 and upon maturity of this transaction in July 2001, we received 1.0 million of our shares. Additionally, during the second quarter of 2001, we entered into two separate private transactions with a counterparty in which we sold 2.0 million put options which, upon maturity during the third quarter of 2001 will result in the purchase of 2.0 million shares of our common stock or settlement in cash. Since the end of June, we have acquired an additional 1.1 million shares of our common stock for approximately $28.4 million. During February and March 2001, we completed a private placement of zero coupon convertible senior debentures due 2021. The aggregate principal amount of the debentures at maturity will be $1.381 billion. The debentures were issued at a discount with net proceeds to Nabors, after expenses, totaling approximately $828.0 million. The yield to maturity of the debentures is 2.5% compounded semi-annually with no periodic cash payments of interest. At the holder's option, the debentures can be converted, at any time prior to maturity or their earlier redemption, into Nabors common stock at a conversion rate of 7.0745 shares per $1,000 principal amount at maturity. The conversion rate may be adjusted from time to time, upon the occurrence of specified events. Instead of delivering shares of common stock upon conversion of any debentures, we may elect to pay the holder cash for all or a portion of the debentures. The debentures can be put to us on February 5, 2006, February 5, 2011 and February 5, 2016 for a purchase price equal to the issue price plus accrued original issue discount to the date of repurchase. We may elect to pay all or a portion of the purchase in common stock instead of cash. We cannot redeem the debentures before February 5, 2006, after which we may redeem all or a portion of the debentures for cash at any time at their accreted value. The proceeds from the issuance of the debentures will be used for general corporate purposes, including but not limited to, working capital, investment in subsidiaries and possible future business acquisitions. The proceeds have been invested in cash and marketable securities. On May 11, 2001, Nabors registration statement with respect to resales of these debentures became effective. We had working capital of $974.2 million as of June 30, 2001, representing a $449.8 million increase compared to December 31, 2000. The increase in working capital is primarily attributable to our receipt of proceeds from the issuance of the zero coupon debentures as well as an increase in accounts receivable resulting from the increase in rig activity. Our ratio of funded debt to funded debt plus stockholders' equity, commonly referred to as the funded debt to capital ratio, was 0.48:1 as of June 30, 2001, as compared to 0.32:1 as of December 31, 2000. This increase is due to the issuance of the zero coupon debentures due 2021. Net cash provided by operating activities totaled $240.9 million during the six months ended June 30, 2001, compared to net cash provided by operating activities totaling $43.8 million during the prior year period. During the six- month period ended June 30, 2001, net income was increased for non-cash items such as depreciation, amortization and deferred taxes and decreased for earnings from unconsolidated affiliates. Cash was used for overall increases in our working capital accounts, primarily accounts receivable. During the prior year period, net income was increased for non-cash items such as depreciation, amortization and deferred taxes and cash was used by an overall increase in our working capital accounts. 15 17 Net cash used for investing activities totaled $725.3 million during the current six-month period, compared to $320.5 million during the prior year period. We used cash primarily for purchases of marketable securities and for capital expenditures during both the current and the prior year periods. The sale of marketable securities and the disposition of long-term assets during both the current and the prior year periods provided our cash. Financing activities provided cash totaling $720.0 million during the current six-month period compared to $501.5 million during the prior year period. During the current period, cash was primarily provided by our issuance of our $1.381 billion zero coupon convertible senior debentures during February and March 2001 partially offset by cash used to repurchase shares of our common stock. During the prior year period, cash was primarily provided by the issuance of our $825 million zero coupon convertible senior debentures during June 2000 and our receipt of proceeds from the exercise of options to acquire 9.0 million shares of our common stock, partially offset by cash used for the repurchase of approximately $96.0 million of our Pool 8.625% Notes. Our cash and cash equivalents and investments in marketable securities totaled $1.2 billion as of June 30, 2001. We currently have credit facility arrangements with various banks with total availability of $259.9 million. As of June 30, 2001, our remaining availability, after outstanding letters of credit, totaled approximately $228.2 million. As of June 30, 2001, we had outstanding capital expenditure purchase commitments of approximately $120.0 million for drill pipe and refurbishment of rigs to be reactivated and for rig-related sustaining capital expenditures. Our current cash equivalents, investments in marketable securities, credit facility position and projected cash flow generated from current operations are expected to more than adequately finance our sustaining capital expenditures and debt service requirements for the next twelve months. 16 18 OTHER MATTERS FORWARD-LOOKING STATEMENTS The statements in this document that relate to matters that are not historical facts are "forward-looking statements" within the meaning of Section 27A of the Securities Exchange Act of 1933 and Section 21E of the Securities Exchange Act of 1934. When used in this document, words such as "anticipate", "believe", "expect", "plan", "intend", "estimate", "project", "will", "should" "could", "may", "predict" and similar expressions are intended to identify forward-looking statements. Future events and actual results may differ materially from the results set forth in or implied in the forward-looking statements. Factors that might cause such a difference include: o fluctuations in worldwide prices of natural gas and oil and demand for natural gas and oil; o fluctuations in levels of oil and natural gas exploration and development activities; o fluctuations in the demand for contract drilling and workover services; o the existence of competitors, technological changes and developments in the industry; o the existence of operating risks inherent in the contract drilling and workover industries; o the existence of regulatory uncertainties; o the possibility of political instability in any of the countries in which we do business; and o general economic conditions. Our businesses depend, to a large degree, on the level of spending by oil and gas companies for exploration, development and production activities. Therefore, a sustained increase or decrease in the price of natural gas or oil, which could have a material impact on exploration and production activities, could also materially affect our financial condition, results of operations and cash flows. PART II OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS. The following discusses developments with respect to two material lawsuits reported in our annual report on Form 10-K for the year ended December 31, 2000 and in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2001. In the class action lawsuit arising out of the initial public offering of Bayard Drilling Technologies, Inc. (prior to Bayard being acquired by Nabors), Yuan v. Bayard Drilling Technologies, Inc., et al., the parties have signed an agreement to settle the lawsuit, and the court has granted final approval to the settlement. The settlement amounts paid by Bayard (either directly or as a result of its indemnification obligations) were not material to Bayard or Nabors. In Verdin v. R&B Falcon Drilling USA, Inc., et al., Civil Action No. G-00-488, in the United States District Court for the Southern District of Texas, Galveston Division, the class action lawsuit against our offshore drilling subsidiaries alleging, among other things, conspiracy to depress wages and benefits paid to our offshore employees, we have reached a settlement, subject to court approval. The settlement amounts to be paid by Nabors' subsidiaries are not material to such subsidiaries or Nabors. In the event the settlement is not finalized, Nabors continues to believe the allegations in this lawsuit are without merit and Nabors' subsidiaries will defend vigorously the claims brought against them. In such event, we are unable, however, to predict the outcome of this lawsuit or the costs to be incurred in connection with its defense and there can be no assurance that this litigation will be resolved in our favor. An adverse result or prolonged litigation could have an adverse effect on the financial position or results of operations of Nabors. Nabors and its subsidiaries are defendants or otherwise involved in a number of other lawsuits in the ordinary course of their business. In the opinion of management, Nabors' ultimate liability with respect to these pending lawsuits is not expected to have a significant or material adverse effect on Nabors' consolidated financial position, cash flows or results of operations. 17 19 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS At the 2001 Annual Meeting of Shareholders held on June 5, 2001, 129,137,226 shares were present in person or by proxy, constituting 87.95% of the outstanding common stock of Nabors entitled to vote. The sole matter voted upon at the annual meeting was: Election of Directors: The stockholders elected three Class I Directors to the Board of Directors of Nabors to serve for a three-year term, until 2004: James L. Payne Votes cast in favor: 127,663,242 Votes withheld: 1,473,984 Hans W. Schmidt Votes cast in favor: 128,226,390 Votes withheld: 910,836 Richard A. Stratton Votes cast in favor: 128,246,983 Votes withheld: 890,243
Class II Directors, Anthony G. Petrello, Myron M. Sheinfeld and Martin J. Whitman, continued in office with terms expiring in 2002. Class III Directors, Eugene M. Isenberg and Jack Wexler, continued in office with terms expiring in 2003. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits 11 Statement re: Computation of Per Share Earnings 15.1 Awareness Letter of Independent Accountants (b) Reports on Form 8-K o Report on Form 8-K filed with the Securities and Exchange Commission on April 20, 2001 with respect to Nabors' first quarter 2001 earnings release. o Report on Form 8-K filed with the Securities and Exchange Commission on July 25, 2001 with respect to Nabors' second quarter 2001 earnings release. 18 20 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. NABORS INDUSTRIES, INC. /s/ Anthony G. Petrello -------------------------------------------- Anthony G. Petrello President and Chief Operating Officer /s/ Bruce P. Koch -------------------------------------------- Bruce P. Koch Vice President - Finance (principal financial and accounting officer) Dated: August 14, 2001 19 21 INDEX TO EXHIBITS
EXHIBIT NUMBER DESCRIPTION - ------ ----------- 11 Statement re: Computation of Per Share Earnings 15.1 Awareness Letter of Independent Accountants
EX-11 3 h89793ex11.txt STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS 1 EXHIBIT 11 NABORS INDUSTRIES, INC. AND SUBSIDIARIES COMPUTATION OF PER SHARE EARNINGS (In thousands, except per share amounts)
Three Months Ended June 30, Six Months Ended June 30, 2001 2000 2001 2000 ----------- ----------- ----------- ----------- Basic: Weighted average number of shares outstanding 146,539 145,643 146,617 142,459 ----------- ----------- ----------- ----------- Income before extraordinary gain $ 104,015 $ 24,103 $ 187,153 $ 42,034 Extraordinary gain, net -- -- -- 1,703 ----------- ----------- ----------- ----------- Net income $ 104,015 $ 24,103 $ 187,153 $ 43,737 ----------- ----------- ----------- ----------- Earnings per share: Before extraordinary gain $ .71 $ .17 $ 1.28 $ .30 Extraordinary gain, net -- -- -- .01 ----------- ----------- ----------- ----------- Net income $ .71 $ .17 $ 1.28 $ .31 ----------- ----------- ----------- ----------- Diluted: Weighted average number of shares outstanding 146,539 145,643 146,617 142,459 Net effect of dilutive stock options and warrants based on the treasury stock method using average market price 8,140 7,102 8,438 8,339 Assumed conversion of $825.0 million and $1.381 billion zero coupon convertible senior notes 18,630 -- 16,741 -- ----------- ----------- ----------- ----------- Total 173,309 152,745 171,796 150,798 ----------- ----------- ----------- ----------- Income before extraordinary gain $ 104,015 $ 24,103 $ 187,153 $ 42,034 Extraordinary gain, net -- -- -- 1,703 ----------- ----------- ----------- ----------- Net income 104,015 24,103 187,153 43,737 Add interest expense on assumed conversion of $825.0 million and $1.381 billion zero coupon convertible senior notes, net of tax 5,320 -- 9,316 -- ----------- ----------- ----------- ----------- Total $ 109,335 $ 24,103 $ 196,469 $ 43,737 ----------- ----------- ----------- ----------- Earnings per share: Before extraordinary gain $ .63 $ .16 $ 1.14 $ .28 Extraordinary gain, net -- -- -- .01 ----------- ----------- ----------- ----------- Net income $ .63 $ .16 $ 1.14 $ .29 ----------- ----------- ----------- -----------
EX-15.1 4 h89793ex15-1.txt AWARENESS LETTER OF INDEPENDENT ACCOUNTANTS 1 EXHIBIT 15.1 August 14, 2001 Securities and Exchange Commission 450 Fifth Street, N.W. Washington, D.C. 20549 Re: Nabors Industries, Inc. and Subsidiaries Registration Statements on Form S-8, Form S-3, and Form S-4. We are aware that our report dated July 24, 2001 on our review of the interim condensed consolidated financial information of Nabors Industries, Inc. and Subsidiaries as of and for the period ended June 30, 2001 and included in the Company's Form 10-Q for the quarter then ended is incorporated by reference in the Company's registration statements on Form S-8 (Registration Numbers 333-92483, 333-91829, 333-91743, 333-87069, 333-86289, 333-76077, 333-45446 and 333-11313), on Form S-3 (Registration Numbers 333-81137, 333-44532 and 333-59844) and on Form S-4 (Registration Numbers 333-84781 and 333-72397). /s/ PricewaterhouseCoopers LLP -----END PRIVACY-ENHANCED MESSAGE-----