-----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, R9RTaIlaueHFKU9cS8jDsanGMGoWkmNXDH1QwH9Rk22yTtjeK7whZ3WDvXqqfqkj XVRojFQ7pCGy7JnSk/UWyA== 0001140361-09-017365.txt : 20090730 0001140361-09-017365.hdr.sgml : 20090730 20090730172220 ACCESSION NUMBER: 0001140361-09-017365 CONFORMED SUBMISSION TYPE: 10-Q/A PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 20090630 FILED AS OF DATE: 20090730 DATE AS OF CHANGE: 20090730 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PRIDE INTERNATIONAL INC CENTRAL INDEX KEY: 0000833081 STANDARD INDUSTRIAL CLASSIFICATION: DRILLING OIL & GAS WELLS [1381] IRS NUMBER: 760069030 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q/A SEC ACT: 1934 Act SEC FILE NUMBER: 001-13289 FILM NUMBER: 09974697 BUSINESS ADDRESS: STREET 1: 5847 SAN FELIPE STREET 2: SUITE 3300 CITY: HOUSTON STATE: TX ZIP: 77057 BUSINESS PHONE: 7137891400 MAIL ADDRESS: STREET 1: 5847 SAN FELIPE STREET 2: SUITE 3300 CITY: HOUSTON STATE: TX ZIP: 77057 FORMER COMPANY: FORMER CONFORMED NAME: PRIDE PETROLEUM SERVICES INC DATE OF NAME CHANGE: 19920703 10-Q/A 1 form10q-a.htm AMENDMENT NO. 1 TO FORM 10-Q form10q-a.htm
 



 
 
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________
 
Form 10-Q/A
(Amendment No. 1)
 
x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended June 30, 2009
 
Or
 
o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
Commission file number: 1-13289
________________
Pride International, Inc.
(Exact name of registrant as specified in its charter)

Delaware
76-0069030
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)

5847 San Felipe, Suite 3300
Houston, Texas
77057
(Address of principal executive offices)
(Zip Code)

(713) 789-1400
(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 o
 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  YES x     NO o
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
 
Large accelerated filer x
Accelerated filer o
Non-accelerated filer o
Smaller reporting company o
 
(Do not check if a smaller reporting company)
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes       No 
 
Indicate the number of shares outstanding of each of the issuer’s classes of common stock as of the latest practical date.
 
 
Outstanding as of
July 27, 2009
Common Stock, par value $.01 per share
173,703,741

 

 
 

 


 
EXPLANATORY NOTE

The purpose of this Amendment No. 1 to the Quarterly Report of Pride International, Inc. on Form 10-Q for the quarterly period ended June 30, 2009, which was filed with the Securities and Exchange Commission on July 30, 2009, is solely to furnish Exhibit 101 to the report.  The information furnished pursuant to Exhibit 101 shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section, and will not be incorporated by reference into any registration statement filed by Pride under the Securities Act of 1933, as amended, unless specifically identified therein as being incorporated therein by reference.

 
 
2

 

 Item 6. Exhibits†

4.1*
 
Second Supplemental Indenture dated as of June 2, 2009 by and between Pride and The Bank of New York Mellon (as successor to JPMorgan Chase Bank, N.A.), as Trustee.
     
12*
 
Computation of Ratio of Earnings to Fixed Charges.
     
31.1*
 
Certification of Chief Executive Officer of Pride pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
     
31.2*
 
Certification of Chief Financial Officer of Pride pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
     
32*
 
Certification of the Chief Executive and Chief Financial Officer of Pride pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
     
101.LAB**
 
XBRL Taxonomy Extension Label Linkbase
     
101.PRE**
 
XBRL Taxonomy Extension Presentation Linkbase
     
101.INS**
 
XBRL Instance Document
     
101.SCH**
 
XBRL Taxonomy Extension Schema
     
101.CAL**
 
XBRL Taxonomy Extension Calculation Linkbase
     
101.DEF**
 
XBRL Taxonomy Extension Definition Linkbase
____________
Pride and its subsidiaries are parties to several debt instruments that have not been filed with the SEC under which the total amount of securities authorized does not exceed 10% of the total assets of Pride and its subsidiaries on a consolidated basis. Pursuant to paragraph 4(iii) (A) of Item 601(b) of Regulation S-K, Pride agrees to furnish a copy of such instruments to the SEC upon request.

*
Previously filed.

**
Furnished herewith.




 
 
3

 

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.

 
PRIDE INTERNATIONAL, INC.
 
       
 
By:
/s/ BRIAN C. VOEGELE
 
   
Brian C. Voegele
 
   
Senior Vice President and Chief Financial Officer
 
       
Date: July 30, 2009
     
       
 
By:
 /s/ LEONARD E. TRAVIS
 
   
Leonard E. Travis
 
   
Vice President and Chief Accounting Officer
 
       
Date: July 30, 2009
     


 
 
4

 


INDEX TO EXHIBITS†

4.1*
 
Second Supplemental Indenture dated as of June 2, 2009 by and between Pride and The Bank of New York Mellon (as successor to JPMorgan Chase Bank, N.A.), as Trustee.
     
12*
 
Computation of Ratio of Earnings to Fixed Charges.
     
31.1*
 
Certification of Chief Executive Officer of Pride pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
     
31.2*
 
Certification of Chief Financial Officer of Pride pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
     
32*
 
Certification of the Chief Executive and Chief Financial Officer of Pride pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
     
101.LAB**
 
XBRL Taxonomy Extension Label Linkbase
     
101.PRE**
 
XBRL Taxonomy Extension Presentation Linkbase
     
101.INS**
 
XBRL Instance Document
     
101.SCH**
 
XBRL Taxonomy Extension Schema
     
101.CAL**
 
XBRL Taxonomy Extension Calculation Linkbase
     
101.DEF**
 
XBRL Taxonomy Extension Definition Linkbase
____________
Pride and its subsidiaries are parties to several debt instruments that have not been filed with the SEC under which the total amount of securities authorized does not exceed 10% of the total assets of Pride and its subsidiaries on a consolidated basis. Pursuant to paragraph 4(iii) (A) of Item 601(b) of Regulation S-K, Pride agrees to furnish a copy of such instruments to the SEC upon request.

*
Previously filed.

**
Furnished herewith.

 
 
5

 

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(&#8220;Pride,&#8221; &#8220;we,&#8221; &#8220;our,&#8221; or &#8220;us&#8221;) is a leading international provider of offshore contract drilling services. We provide these services to oil and natural gas exploration and production companies through the operation and management of 44 offshore rigs. We also have four ultra-deepwater drillships under constructio n.</font></div> <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div><div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Basis of Presentation</font></div><div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div><div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 18pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In the third quarter of 2008, we entered into agreements to sell our Eastern Hemisphere land rig operations and completed the sale of all but one land rig used in those operations in the fourth quarter of 2008. The sale of the remaining land rig closed in the second quarter of 2009.&#160;&#160;The results of operations, for all periods presented, of the assets disposed of in these transactions&#160;have been reclassified to income from discontinued operations. Except where noted, the discussions in the following notes relate to our continuing operations only (see Note 2).</font></div><div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div><div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 18pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our unaudited consolidated financial statements included herein have been prepared without audit pursuant to the rules and regulations of the Securities and Exchange Commission (&#8220;SEC&#8221;). Certain information and disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in theUnited States have been condensed or omitted pursuant to such rules and regulations. We believe that the presentation and disclosures herein are a dequate to make the information not misleading. In the opinion of management, the unaudited consolidated financial information included herein reflects all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of our financial position, results of operations and cash flows for the interim periods presented. These unaudited consolidated financial statements should be read in conjunction with our audited consolidated financial statements and notes thereto included in our annual report on Form 10-K for the year ended December 31, 2008. The results of operations for the interim periods presented herein are not necessarily indicative of the results to be expected for a full year or any other interim period.</font></div><div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div><div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 18pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In the notes to the unaudited consolidated financial statements, all dollar and share amounts, other than per share amounts, in tabulations are in millions of dollars and shares, respectively, unless otherwise noted.</font></div><div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div><div style="DISPLAY: block; MARGIN-LEFT: 0pt; T EXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Subsequent Events</font></div><div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font></div> <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 18pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In preparing these financial statements, we have evaluated subsequent events through July 29, 2009, which is the date the financial statements are being issued.</font></div><div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font></div> <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Management Estimates</font></div><div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div><div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 18pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.</font></div> <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div><div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Property and Equipment</font></div><div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div><div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 18pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Property and equipment comprise a significant amount of our total assets. We determine the carrying value of these assets based on property and equipment policies that incorporate our estimates, assumptions and judgments relative to the carrying value, remaining useful lives and salvage value of our rigs and other assets.</font></div><div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div ><div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 18pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We evaluate our property and equipment for impairment whenever events or changes in circumstances indicate the carrying value of such assets or asset groups may not be recoverable. Asset impairment evaluations are, by nature, highly subjective. They involve expectations about future cash flows generated by our assets, and reflect management&#8217;sassumptions and judgments regarding future industry conditions and their effect on future utilization levels, dayrates and costs. The use of different estimates and assumptions could result in materially different carrying values of our assets and could materially affect our results of operations.</font></div><div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT - -FAMILY: Times New Roman">&#160;</font></div> <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div><div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 18pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The recent economic downturn has resulted in stacking additional rigs, and we may be required to stack more rigs or enter into lower dayrate contracts in response to current&#160;market conditions.&#160;&#160;Prolonged periods of low utilization and dayrates could result in the recognition of impairment charges on certain of our rigs if futurecash flow estimates, based upon information available to management at the time, indicate that the carrying value of these rigs may not be recoverable. Due to the stacking of additional rigs during the period and recent impairment announcements by other companies in our industry, we performed a projected undiscounted future cash flow analysis as of June 30, 2009 to determine the recoverability of the as set values of our mat-supported jackup fleet and, as a result of this analysis, determined that no impairmentwas required.</font></div><div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div><div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Fair Value Accounting</font></div><div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div><div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 18pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On January 1, 2008, we adopted, without any impact on our consolidated financial statements, the provisions of Statement of Financial Accounting Standards (&#8220;SFAS&#8221;) No. 157, <font style="DISPLAY: inline; FONT-STYLE: italic">Fair Value Measurement& lt;/font>, for our financial assets and liabilities with respect to which we have recognized or disclosedat fair value on a recurring basis.</font></div><div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div><div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 18pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In February 2008, the Financial Accounting Standards Board (&#8220;FASB&#8221;) issued FASB Staff Position (&#8220;FSP&#8221;) No. 157-2, <font style="DISPLAY: inline; FONT-STYLE: italic">Effective Date of FASB Statement No. 157, </font>which delayed the effective date for nonfinancial assets and nonfinancial liabilities to fiscal years beginning after November15, 2008, except for items that are measured at fair value in the financial statements on a recurring basis at least annually. On January 1, 2009, we adopted the provisions for nonfinancial assets and non financial liabilities that are not required or permitted to be measured at fair value on a recurring basis. The adoption did not have a material effect on our consolidated financial statements.</font></div><div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div><div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 18pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In February 2007, the FASB issued SFAS No. 159, <font style="DISPLAY: inline; FONT-STYLE: italic">The Fair Value Option for</font><font style="DISPLAY: inline; FONT-STYLE: italic">Financial Assets and Financial Liabilities &#8212; Including an amendment of FASB</font><font style="DISPLAY: inline; FONT-STYLE: italic">Statement No. 115. </font>SFASNo. 159 permits entities to choose to measure many financial instruments and certain other items at fair value. Unrealized gains and losses on items for whic h the fair value option has been elected will be recognized in earnings at each subsequent reporting date. SFAS No. 159 is effective for fiscal years beginning on or after January 1, 2008. The adoption of the provisions of SFAS No. 159 did not have a material impact on our consolidated financial statements.</font></div><div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div><div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Accounting Pronouncements</font></div><div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div><div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 18pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In December 2007, the FASB issued SFAS&#160;No.&#160;160, <font style=" DISPLAY: inline; FONT-STYLE: italic">Noncontrolling Interests in</font><font style="DISPLAY: inline; FONT-STYLE: italic">Consolidated Financial Statements</font>, which is an amendment of Accounting Research Bulletin&#160;No.&#160;51. SFAS&#160;No.&#160;160 establishes accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. It clarifies that a noncontrolling interest in a subsidiary is an ownership interest in the consolidated entity that should be reported as equity in the consolidated financial statements. In addition, SFAS&#160;No.&#160;160 requires expanded disclosures in the consolidated financial statements that clearly identify and distinguish between the interests of the parent&#8217;s owners and theinterests of the noncontrolling owners of a subsidiary. This statement is effective for the fiscal years, and interim periods within those fiscal years, beginning on or after December&#160;15, 2008. We adopted SFAS&#160;No.&#160;160 on January 1, 2009 but its adoption did not have a material impact on our consolidated financial statements.</font></div><div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div><div style="DISPLAY: block; MARGIN-LE FT: 0pt; TEXT-INDENT: 18pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On January 1, 2009, we adopted the provisions of SFAS No. 141 (Revised 2007), <font style="DISPLAY: inline; FONT-STYLE: italic">Business Combinations</font> (SFAS No. 141(R)), which retains the underlying concepts of SFAS No. 141 in that all business combinations are still required to be accounted for at fair value under the acquisition method of accounting, but changes the method of applying the acquisition method in a number of ways.&#160;&#160;Acquisition costs are no longer considered part of the fair value of an acquisition and will generally be expensed as incurred, noncontrolling interests are valued at fair value at the acquisition date, in-process research and development is recorded at fair value as an indefinite-lived intangible asset at the acquisition date, restructuring costs associated with a business combination are generally expensed subsequent to the acquisition date, and changes in deferred tax asset valuation allowances and income tax uncertainties after the acquisition date generally will affect income tax expense.&#160;</font></div> <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div><div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 18pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In April 2009, the FASB issued FSP&#160;SFAS 141(R)-1, <font style="DISPLAY: inline; FONT-STYLE: italic">Accounting for Assets Acquired and Liabilities Assumed in a Business Combination That Arise from Contingencies</font>, which amends the guidance in SFAS No. 141(R) to require contingent assets acquired and liabilities assumed in a businesscombination to be recognized at fair value on the acquisition date if fair value can be reasonably estimated during the measurement period.&#160;&#160;If fair value cannot be reasonably estimated during the measurement period, the contingent asset or liability would be recognized in accordance with SFAS No. 5, <font style="DISPLAY: inline; FONT-STYLE: italic">Accounting for Contingencie s</font>, and FASB Interpretation (FIN) No. 14, <font style="DISPLAY: inline; FONT-STYLE: italic">Reasonable Estimation of theAmount of a Loss</font>.&#160;&#160;Further, this FSP eliminated the specific subsequent accounting guidance for contingent assets and liabilities from Statement 141(R), without significantly revising the guidance in SFAS No. 141.&#160;&#160;However, contingent consideration arrangements of an acquiree assumed by the acquirer in a business combination would still be initially and subsequently measured at fair value in accordance with SFAS No. 141(R).&#160;&#160;This FSP is effective for all business acquisitionsoccurring on or after the beginning of the first annual reporting period beginning on or after December 15, 2008.&#160;&#160;We adopted the provisions of SFAS No. 141(R) and FSP SFAS 141(R)-1 for business combinations with an acquisition date on or after January 1, 2009.</font></div><div style="DISPLAY: block; MAR GIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font></div> <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 18pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In April 2009, the FASB issued FSP SFAS 157-4, <font style="DISPLAY: inline; FONT-STYLE: italic">Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly</font>, which provides additional guidance for estimating fair value in accordancewith SFAS No. 157 when the volume and level of activity for the asset or liability have significantly decreased.&#160;&#160;This FSP re-emphasizes that regardless of market conditions the fair value measurement is an exit price concept as defined in SFAS No. 157.&#160;&#160;This FSP clarifies and includes additional factors to consider in determining whether there has been a significant decrease in market activity for an asset or liability and provides additi onal clarification on estimating fair value when themarket activity for an asset or liability has declined significantly.&#160;&#160;The scope of this FSP does not include assets and liabilities measured under level 1 inputs.&#160;&#160;FSP SFAS 157-4 is applied prospectively to all fair value measurements where appropriate and will be effective for interim and annual periods ending after June 15, 2009.&#160;&#160;We adopted the provisions of FSP SFAS 157-4 effective April 1, 2009, with no material impact on our consolidated financial statements.</font></div><div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div><div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 18pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In April 2009, the FASB issued FSP SFAS 107-1 and APB 28-1, <font style="DISPLAY: inline; FONT-STYLE: italic">Interim Disclosures about Fair Value of Financ ial Instruments</font>.&#160;&#160;This FSP amends SFAS No. 107, <font style="DISPLAY: inline; FONT-STYLE: italic">Disclosures about Fair Value of Financial Instruments</font>, to require publicly-traded companies, as defined in APB Opinion No. 28, <font style="DISPLAY: inline; FONT-STYLE: italic">Interim Financial Reporting</font>, to provide disclosures on the fair value of financial instruments in interim financial statements.&#160;&#160;FSP SFAS 107-1 and APB 28-1&#160;is effective for interim periods ending after June 15, 2009.&#160;&#160;We adopted the new disclosure requirements in our second quarter 2009 financial statements with no material impact on our consolidated financial statements.</font></div> <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div><div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 18pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In April 2009, the FASB issued FSP SFAS 115-2 and SFAS 124-2, <font style="DISPLAY: inline; FONT-STYLE: italic">Recognition and Presentation of Other-Than-Temporary Impairments</font>.&#160;&#160;This FSP amends the other-than-temporary impairment guidance in U.S. GAAP for debt securities to make the guidance more operational and to improvethe presentation and disclosure of other-than-temporary impairments on debt and equity securities in the financial statements. This FSP does not amend existing recognition and measurement guidance related to other-than-temporary impairments of equity securities.&#160; FSP SFAS 115-2 and SFAS 124-2 is effective for interim and annual periods ending after June 15, 2009, with early adoption permit ted for periods ending after March 15, 2009. An entity may early adopt this FSP only if it also elects to early adoptFSP FAS 157-4.&#160;&#160;We adopted FSP SFAS 115-2 and SFAS 124-2 effective April 1, 2009, with no material impact on our consolidated financial statements.</font></div><div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div><div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 18pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In May 2009, the FASB issued SFAS No. 165, <font style="DISPLAY: inline; FONT-STYLE: italic">Subsequent Events</font>, which establishes (i) the period after the balance sheet date during which management shall evaluate events or transactions that may occur for potential recognition or disclosure in the financial statements; (ii) the circumstances under which an entity shall recognize events or transactions occurring after the balance sheet date in its financial statements; and (iii) the disclosures that an entity shall make about events or transactions that occurred after the balance sheet date. This statement is effective for interim or annual financial periods ending after June 15, 2009, and shall be applied prospectively.&#160; We adopted SFAS No. 165 effective April 1, 2009, with no material impact on our consolidated financial statements.</font></div> <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div><div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 18pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In June 2009, the FASB issued SFAS No. 166, <font style="DISPLAY: inline; FONT-STYLE: italic">Accounting for Transfers of Financial Assets &#8211; An Amendment of FASB Statement No. 140</font>.&#160;&#160;This statement is a revision to SFAS No. 140, <font style="DISPLAY: inline; FONT-STYLE: italic">Accounting for Transfers and Servicing of FinancialAssets and Extinguishments of Liabilities,</font> and will require more disclosure about transfers of financial assets, including securitization transactions, and where entities have continuing exposure to the risks related to transferred financial assets. It eliminates the concept of a &#8220;qualifying special-purpose entity,&#8221; changes the requirements for d erecognizing financial assets, and requires additional disclosures.&#160;&#160;It also enhances information reported to users of financial statements by providinggreater transparency about transfers of financial assets and an entity&#8217;s continuing involvement in transferred financial assets.&#160;&#160;This statement will be effective at the start of a reporting entity&#8217;s first fiscal year beginning after November 15, 2009. Early application is not permitted. We will adopt this statement effective January 1, 2010 and we do not expect the adoption to have a material impact on our consolidated financial statements.</font></div><div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div><div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 18pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In June 2009, the FASB issued SFAS No. 167, <font style="DISPLAY: inline; FONT-STY LE: italic">Amendments to FASB Interpretation No. 46(R)</font>.&#160;&#160;This statement is a revision to FASB Interpretation No. 46 (Revised December 2003), <font style="DISPLAY: inline; FONT-STYLE: italic">Consolidation of Variable Interest Entities,</font> andchanges how a reporting entity determines when an entity that is insufficiently capitalized or is not controlled through voting (or similar rights) should be consolidated. The determination of whether a reporting entity is required to consolidate another entity is based on, among other things, the other entity&#8217;s purpose and design and the reporting entity&#8217;s ability to direct the activities of the other entity that most significantly impact the other entity&#8217;s economic performance.&#160;&#160;This statement willrequire a reporting entity to provide additional disclosures about its involvement with variable interest entities and any significant changes in risk exposure due to that invol vement. A reporting entity will be required to disclose how its involvement with a variable interest entity affects the reporting entity&#8217;s financial statements.&#160;&#160;This statement will be effective at the start of a reporting entity&#8217;s first fiscal year beginning after November 15, 2009. Early application is not permitted. We willadopt this statement effective January 1, 2010 and we do not expect the adoption to have a material impact on our consolidated financial statements.</font></div><div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div><div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 18pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In June 2009, the FASB issued SFAS No. 168, <font style="DISPLAY: inline; FONT-STYLE: italic">The FASB Accounting Standards Codification</font><font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: text - -top">TM</font><font style="DISPLAY: inline; FONT-STYLE: italic"> and the Hierarchy of Generally Accepted Accounting Principles&#8212;a replacement of FASB Statement No. 162</font>.&#160;&#160;The FASB Accounting Standards Codification<font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: text-top; FONT-STYLE: italic">TM</font> (Codification) will become the source of authoritative U.S. generally accepted accounting principles (GAAP) recognized by the FASB to be applied by nongovernmental entities. Rules and interpretive releases of the Securities and Exchange Commission (SEC) under authority of federal securities laws are also sources of authoritative GAAP for SEC registrants. On the effective date of this statement, the Codification will supersede all then-existing non-SEC accounting and reporting standards. 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In February 2006, the Audit Committee of our Board of Directors assumed direct responsibility over the investigationand retained independent outside counsel to investigate the allegations, as well as corresponding accounting entries and internal control issues, and to advise the Audit Committee.</font></div><div style="DISPLAY: block ; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div><div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div><div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The investigation, which is continuing, has found evidence suggesting that payments, which may violate the U.S. Foreign Corrupt Practices Act, were made to government officials in Venezuela and Mexico aggregating less than $1 million. The evidence to date regarding these payments suggests that payments were made beginning in early 2003through 2005 (a) to vendors with the intent that they would be transferred to government officials for the purpose of extending drilling contracts for two jackup rigs and one semisubmersible rig operating offshore Venezuela; and (b) to one or more government officials, or to vendors with the intent that they would be transferred to government officials, for the purpose of collecting payment for work completed in connection with offshore drilling contracts in Venezuela. In addition, the evidence suggests thatother payments were made beginning in 2002 through early 2006 (a) to one or more government officials in Mexico in connection with the clearing of a jackup rig and equipment through customs, the movement of personnel through immigration or the acceptance of a jackup rig under a drilling contract; and (b) with respect to the potentially improper entertainment of government officials in Mexico.</font></div><div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div><div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div><div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">< font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The Audit Committee, through independent outside counsel, has undertaken a review of our compliance with the FCPA in certain of our other international operations. This review has found evidence suggesting that during the period from 2001 through 2006 payments were made directly or indirectly to government officials in Saudi Arabia, Kazakhstan, Brazil, Nigeria, Libya, Angola and the Republic of the Congo in connection with clearing rigs or equipment through customs or resolving outstanding issues with customs, immigration, tax, licensing or merchant marine authorities in those countries. In addition, this review has found evidence suggesting that in 2003 payments were made to one or more third parties with the intent that they would be transferred to a government official in India for the purpose of resolving a customs dispute related to the importationof one of our jackup rigs. The evidence suggests that the aggregate amount of payments referred to in this paragraph is less than $2.5 million. In addition, the U.S. Department of Justice ("DOJ") has asked us to provide information with respect to (a) our relationships with a freight and customs agent and (b) our importation of rigs into Nigeria.</font></div><div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div><d iv style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div><div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The investigation of the matters described above and the Audit Committee's compliance review are ongoing. Accordingly, there can be no assurances that evidence of additional potential FCPA violations may not be uncovered in those or other countries.</font></div><div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div><div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div><div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"& gt;Our management and the Audit Committee of our Board of Directors believe it likely that then members of our senior operations management either were aware, or should have been aware, that improper payments to foreign government officials were made or proposed to be made. Our former Chief Operating Officer resigned as Chief Operating Officereffective on May 31, 2006 and has elected to retire from the company, although he will remain an employee, but not an officer, during the pendency of the investigation to assist us with the investigation and to be available for consultation and to answer questions relating to our business. His retirement benefits will be subject to the determination by our Audit Committee or our Board of Directors that it does not have cause (as defined in his retirement agreement with us) to terminate his employment. Other personnel,including officers, have been terminated or placed on administrative leave or have resigned in connection with the investigation. We have taken and will co ntinue to take disciplinary actions where appropriate and various other corrective action to reinforce our commitment to conducting our business ethically and legally and to instill in our employees our expectation that they uphold the highest levels of honesty, integrity, ethical standards and compliance with the law.</font></div><div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div><div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div><div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We voluntarily disclosed information relating to the initial allegations and other information found in the investigation and compliance review to the DOJ and the SEC, and we have cooperated and continue to cooperate with these authorit ies. For any violations of the FCPA, we may be subject to fines, civil and criminal penalties, equitable remedies, including profit disgorgement, and injunctive relief. Civil penalties under the antibribery provisions of the FCPA could range up to $10,000 per violation, with a criminal fine up to the greater of $2 million per violation or twice the gross pecuniary gain to us or twice the gross pecuniary loss to others, if larger. Civil penalties under the accounting provisions of the FCPA can range up to $500,000 per violation and a company that knowingly commits a violation can be fined up to $25 million per violation.In addition, both the SEC and the DOJ could assert that conduct extending over a period of time may constitute multiple violations for purposes of assessing the penalty amounts. Often, dispositions for these types of matters result in modifications to business practices and compliance programs and possibly a monitor being appointed to review future business and practices with the goal of ensuring compliance with the FCPA.</font></div><div style="DISPLAY: block; MARGIN-LEFT: 0pt; TE XT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div><div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div><div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We are engaged in discussions with the DOJ and the SEC regarding a potential negotiated resolution of these matters, which could be settled during 2009 and which, as described above, could involve a significant payment by us. We believe that it is likely that any settlement will include both criminal and civil sanctions. No amounts have been accrued related to any potential fines, sanctions, claims or other penalties, which could be material individually or in the aggregate, but an accrual could be made as early as the third quarter of 2009. There can be no assurance that these discussions will result in a final settlement of any or all of these issues or, if a settlement is reached, the timing of any such settlement or that the terms of any such settlement would not have a material adverse effect on us.</font></div><div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div><div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div><div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We could also face fines, sanctions and other penalties from authorities in the relevant foreign jurisdictions, including prohibition of our participating in or curtailment of business operations in those jurisdictions and the seizure of rigs or other assets. Our customers in those jurisdictions could seek to impose penalties or take otheractions adverse to our interests. We could also face other third-party claims by directors, officers, employees, affiliates, advisors, attorneys, agents, stockholders, debt holders, or other interest holders or constituents of our company. For additional information regarding a stockholder demand letter related to these matters, please see the discussion below under "- Demand Letter". In addition, disclosure of the subject matter of the investigation could adversely affect our reputation and our ability to obtainnew business or retain existing business from our current clients and potential clients, to attract and retain employees and to access the capital markets. No amounts have been accrued related to any potential fines, sanctions, claims or other penalties referenced in this paragraph, which could be material individually or in the aggregate.</font></div><div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div><div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div><div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We cannot currently predict what, if any, actions may be taken by the DOJ, the SEC, any other applicable government or other authorities or our customers or other third parties or the effect the actions may have on our results of operations, financial condition or cash flows, on our consolidated financial statements or on our business in the countries at issue and other jurisdictions.</font></div> <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div><div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div><div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Litigation</font></div> <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div><div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div><div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Since 2004, certain of our subsidiaries have been named, along with numerous other defendants, in several complaints that have been filed in the Circuit Courts of the State of Mississippi by several hundred individuals that allege that they were employed by some of the named defendants between approximately 1965 and 1986. The complaints allege that certain drilling contractors used products containing asbestos in their operations and seek, among other things, an award of unspecified compensatory and punitive damages. Nine individuals of the many plaintiffs in these suits have been identified as allegedly having worked for us. We intend to defend ourselves vigorously and, based on the information available to us at this time, we do not expect the outcome of these lawsuits to have a material adverse effect on our financial position, results ofoperations or cash flows; however, there can be no assurance as to the ultimate outcome of these lawsuits.</font></div><div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div><div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div><div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DIS PLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Environmental Matters</font></div><div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div><div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div><div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We are currently subject to pending notices of assessment issued from 2002 to 2009 pursuant to which governmental authorities in Brazil are seeking fines in an aggregate amount of less than $750,000 for releases of drilling fluids from rigs operating offshore Brazil. We are contesting these notices. We intend to defend ourselves vigorouslyand, based on the information available to us at this time, we do not expect the outcome of these assessments to have a material a dverse effect on our financial position, results of operations or cash flows; however, there can be no assurance as to the ultimate outcome of these assessments.</font></div><div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div><div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div><div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We are currently subject to a pending administrative proceeding initiated in July 2009 by a governmental authority of Spain pursuant to which such governmental authority is seeking payment in an aggregate amount of approximately $4 million for an alleged environmental spill originating from the Pride North America while it was operating offshore Spain. We expect to be indemnified for any payments resulting from this incident by our client under the terms of the drilling contract. The client has posted guarantees with the Spanish government to cover potential penalties. We intend to defend ourselves vigorously and, based on the information available to us at this time, we do not expect the outcome of the proceeding to have a material adverse effect on our financial position, results of operations or cash flows; however, there can be no assuranceas to the ultimate outcome of the proceeding.</font></div><div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div><div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div><div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roma n">Demand Letter</font></div> <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div><div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div><div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In June 2009, we received a demand letter from counsel representing Kyle Arnold. The letter states that Mr. Arnold is one of our stockholders and that he believes that certain of our current and former officers and directors violated their fiduciary duties related to the issues described above under "&#8212;FCPA Investigation." The letterrequests that our Board of Directors take appropriate action against the individuals in question. In response to this letter, the Board has formed a special committee to evaluate the issues raised by the letter and determine a course of action for the company. The committee has retained counsel to advise it.</font></div> <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div><div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div><div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Loss of Pride Wyoming</font></div><div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div><div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div><div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In September 2008, the Pride Wyoming, a 250-foot slot-type jackup rig operating in the U.S. G ulf of Mexico, was deemed a total loss for insurance purposes after it was severely damaged and sank as a result of Hurricane Ike. The rig had a net book value of approximately $14 million and was insured for $45 million. We expect to incur costsof approximately $53 million for removal of the wreckage and salvage operations, not including any costs arising from damage to offshore structures owned by third parties. These costs for removal of the wreckage and salvage operations in excess of a $1 million retention are expected to be covered by our insurance. We will be responsible for payment of the $1 million retention, $2.5 million in premium payments for a removal of wreckage claim and for any costs not covered by our insurance. Initial removal and salvageoperations for the Pride Wyoming began in the fourth quarter of 2008 but were suspended due to weather conditions. These operations resumed in May 2009. 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Other pieces of the rig may have also caused damage to certain other offshore struct ures. In October 2008, we filed a complaint in the U.S. Federal District Court pursuant to the Limitation of Liability Act, which has the potential to statutorily limit our exposure for claims arising out of third-party damages caused by the loss of the Pride Wyoming. Based on information available to us at this time, we do not expect the outcome of these potential claims to have a material adverse effecton our financial position, results of operations or cash flows; however, there can be no assurance as to the ultimate outcome of these potential claims. Although we believe we have adequate insurance, we will be responsible for any awards not covered by our insurance.</font></div><div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div><div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div><div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; M ARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Other</font></div> <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div><div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div><div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We are routinely involved in other litigation, claims and disputes incidental to our business, which at times involve claims for significant monetary amounts, some of which would not be covered by insurance. In the opinion of management, none of the existing litigation will have a material adverse effect on our financial position, resultsof operations or cash flows. 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</font></td><td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160; </font></td><td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160; </font></td><td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160; </font></td><td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160; </font></td><td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160; </font></td><td align="left" valign="bottom" width="1%">&l t;font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160; </font></td><td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160; </font></td><td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; 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General Other Non-cash Items Foreign Currency Hedges, Net of Tax Foreign Currency Translation Prepaid expenses and other current assets Other income (expense), net Preferred stock, shares authorized (in shares) Preferred stock, issued (in shares) Net Proceeds From Disposition of Latin America Land and E&P Services Segments, Net of Cash Disposed Proceeds from Sale of Tender-assist Rigs, net Proceeds from debt borrowings Proceeds from sale of equity method investment Proceeds from dispositions of property and equipment Proceeds from Sale of Platform Rigs, Net Proceeds From Exercise of Stock Options PROPERTY AND EQUIPMENT PROPERTY AND EQUIPMENT Property and equipment, net Purchases of property and equipment Purchases of property and equipment Reimbursable revenues Repayments of borrowings Repayments of borrowings Repurchase of Common Stock Restricted Cash Retained earnings Revenues excluding reimbursable revenues Note 12. Subsequent Events Note 10. Segment and Enterprise-Related Information STOCKHOLDERS' EQUITY CURRENT ASSETS Total current assets Proceeds from insurance Diluted Basic Note 3. Property and Equipment Reimbursable costs Total assets Interest income Accrued Expenses and Other Current Liabilities OTHER LONG-TERM LIABILITIES Note 8. Employee Stock Plans Deferred income taxes DEFERRED INCOME TAXES ASSETS Treasury stock, at cost; 0.8 and 0.7 shares Treasury stock, at cost; 0.8 and 0.7 shares Note 11. Other Supplemental Information Net income Excess tax benefits from stock-based compensation Excess tax benefits from stock-based compensation Preferred stock, par value (in dollars per share) Common stock, shares issued (in shares) Increase (decrease) in deferred revenue Operating Costs, Excluding Depreciation and Amortization INTANGIBLE AND OTHER ASSETS BASIC EARNINGS PER SHARE DILUTED EARNINGS PER SHARE EARNINGS PER SHARE INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES Common stock, par value (in dollars per share) Treasury stock, shares (in shares) Total stockholders' equity INCOME TAXES INCOME TAXES Preferred stock, $0.01 par value; 50.0 shares authorized; none issued Paid-in Capital [Member] Goodwill Stock Based Compensation Under Employee and Director Incentive Plans, Net, Value Exercise of Stock Options, Value Conversion of Convertible Debentures, Value Repurchase and Retirement of Common Stock, Value Stock Based Compensation Under Employee And Director Incentive Plans, Net, Shares Exercise of Stock Options, Shares Conversion of Convertible Debentures, Shares Repurchase and Retirement of Common Stock, Shares Adjustment to Initially Apply FIN 48, Net of Tax Repurchase and Retirement of Common Stock, Shares COSTS AND EXPENSES COSTS AND EXPENSES Tax Benefit on Non-Qualified Stock Options Shares: Balance Note 7. Earnings Per Share Minority interest SHARES USED IN PER SHARE CALCULATIONS INCOME FROM CONTINUING OPERATIONS, NET OF TAX Depreciation and amortization Net effect of changes in operating accounts Accounts payable Accrued expenses and other current liabilities Adjustments to reconcile net income to net cash from operating activities Other, net SFAS No. 158 Change in Funded Status Adjustment To Initially Apply SFAS No. 158, Net of Tax Amortization of deferred contract liabilities Income from the amortization of a liability to complete firm revenue contracts which was recorded as part of business combination accounting to the extent that future cash flows under a non-cancelable executory contract were below current market rates for a contract with similar terms. Operating costs, excluding depreciation and amortization Generally recurring costs associated with normal operations except for the portion of these expenses which can be clearly related to production and included in cost of sales or services. Excludes Selling, General and Administrative Expense. Also excludes Depreciation and Amortization--The current period expense charged against earnings on long-lived, physical assets used in the normal conduct of business and not intended for resale to allocate or recognize the cost of assets over their useful lives; or to record the reduction in book value of an intangible asset over the benefit period of such asset. Examples include buildings, production equipment and customer lists. Proceeds from sale of tender-assist rigs, net The cash inflow from the sale of long-lived, physical assets that are used in the normal conduct of business to produce goods and services and not intended for resale. GENERAL DISCONTINUED OPERATIONS AND OTHER DIVESTITURES DEBT DERIVATIVES AND FINANCIAL INSTRUMENTS INCOME TAXES EMPLOYEE STOCK PLANS COMMITMENTS AND CONTINGENCIES SEGMENT AND ENTERPRISE-RELATED INFORMATION OTHER SUPPLEMENTAL INFORMATION SUBSEQUENT EVENTS Change in deferred gain on asset sales and retirements The net change during the reporting period in a deferred gain liability due to the recognition of a previously deferred gain offset by gains deferred during the current period. Proceeds from the sale of Eastern Hemisphere land rigs, net The cash inflow from the sale of long-lived, physical assets that are used in the normal conduct of business to produce goods and services and not intended for resale. Proceeds from sale of platform rigs, net The cash inflow from the sale of long-lived, physical assets that are used in the normal conduct of business to produce goods and services and not intended for resale. Gain on sale of Eastern Hemisphere land rigs Gain (loss) after tax expense (benefit), not previously recognized and resulting from the sale of a business component, which is recognized at the date of sale. A gain (loss) reflects the amount by which the consideration received exceeds (is exceeded by) the net carrying amount (reflecting previous provisions for loss on disposal, if any) of the disposal group. Gain on sale of Latin America and E&P Services segments Gain (loss) after tax expense (benefit), not previously recognized and resulting from the sale of a business component, which is recognized at the date of sale. A gain (loss) reflects the amount by which the consideration received exceeds (is exceeded by) the net carrying amount (reflecting previous provisions for loss on disposal, if any) of the disposal group. EX-100.PRE 5 pde-20090630_pre.xml XBRL TAXONOMY EXTENSION PRESENTATION LINKBASE EX-100.CAL 6 pde-20090630_cal.xml XBRL TAXONOMY EXTENSION CALCULATION LINKBASE
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