Item 3. Legal Proceedings
The Company is one of the defendants in certain litigation brought in July 1984 by the Cheyenne-Arapaho Tribes of Oklahoma in the U.S. District Court for the Western District of Oklahoma, seeking to set aside two communitization agreements with respect to three leases involving tribal lands in which the Company previously owned interests and to have those leases declared expired. In June 1989, the U.S. District Court entered an interim order in favor of the plaintiffs. On appeal, the U.S. Court of Appeals for the Tenth Circuit upheld the decision of the trial court and petitions for rehearing of that decision were denied. Petitions for writs of certiorari filed by the parties with the U.S. Supreme Court have been denied, and the case has been remanded to the trial court for determination of damages.
In November 1988, a lawsuit was filed in the U.S. District Court for the Southern District of West Virginia against Reading & Bates Coal Co., a wholly owned subsidiary of the Company, by SCW Associates, Inc. claiming breach of an alleged agreement to purchase the stock of Belva Coal Company, a wholly owned subsidiary of Reading & Bates Coal Co. with coal properties in West Virginia. When those coal properties were sold in July 1989 as part of the disposition of the Company's coal operations, the purchasing joint venture indemnified Reading & Bates Coal Co. and the Company against any liability Reading & Bates Coal Co. might incur as the result of this litigation. A judgment for the plaintiff of $32,000 entered in February 1991 was satisfied and Reading & Bates Coal Co. was indemnified by the purchasing joint venture. On October 31, 1990, SCW Associates, Inc., the plaintiff in the above-referenced action, filed a separate ancillary action in the Circuit Court, Kanawha County, West Virginia against the Company and a wholly owned subsidiary of Reading & Bates Coal Co., Caymen Coal, Inc. (former owner of the Company's West Virginia coal properties), as well as the joint venture, Mr. William B. Sturgill personally (former President of Reading & Bates Coal Co.), three other companies in which the Company believes Mr. Sturgill holds an equity interest, two employees of the joint venture, First National Bank of Chicago and First Capital Corporation. The lawsuit seeks to recover compensatory damages of $50 million and punitive damages of $50 million for alleged tortious interference with the contractual rights of the plaintiff and to impose a constructive trust on the proceeds of the use and/or sale of the assets of Caymen Coal, Inc. as they existed on October 15, 1988. Subsequently, the court entered an order dismissing the Company's indirect subsidiary. The Company intends to defend its interests vigorously and believes the damages alleged by the plaintiff in this action are highly exaggerated. In any event, the Company believes that it has valid defenses and that it will prevail in this litigation.
On March 17, 1995, an action was filed by Louis Silverman, individually and on behalf of all other shareholders of Reading & Bates Corporation similarly situated, against the Company and the individual members of its board of directors in the Court of Chancery of the State of Delaware, New Castle County. On April 7, 1995 three additional actions were filed on behalf of Congregation Beth Joseph, Harry Lewis and Mortimer Shulman against the Company and its directors in the Court of Chancery of the State of Delaware. In each of the four actions, the plaintiff alleges, inter alia, that the directors breached their fiduciary duties by rejecting the previously announced unsolicited merger proposal made by Sonat Offshore Drilling Inc. and by adopting the previously announced shareholder rights plan. Each of the named plaintiffs in the four actions purports to be an owner of the Company's Common Stock and seeks to represent a class of shareholders of the Company who are similarly situated. Each of the plaintiffs seeks injunctive relief, damages in unspecified amounts and certain other relief, including costs and expenses. The Company believes each of the plaintiff's claims in these four actions are groundless and that the defendants have meritorious defenses in each action. The Company intends to defend each action vigorously.
The Company is involved in these and various other legal actions arising in the normal course of business. After taking into consideration the evaluation of such actions by counsel for the Company, management is of the opinion that outcome of all known and potential claims and litigation will not have a material adverse effect on the Company's business or consolidated financial position or results of operations. See Note E of Notes to Consolidated Financial Statements.
Item 4.

Item 4. Submission of Matters to a Vote of Security Holders
No matter was submitted to a vote of security holders of the Company during the fourth quarter of fiscal year 1995.
Regulation S-K Item 401(b)
EXECUTIVE OFFICERS OF THE REGISTRANT
The following table sets forth certain information concerning each executive officer of the Company. Unless otherwise indicated, each has served in the positions set forth for more than five years. Executive officers are elected for a term of one year. There are no family relationships between any of the persons named.
PART II
Item 5.

Item 5. Market for the Registrant's Common Stock and Related Stockholder Matters
The Company's Common Stock is traded on the New York and Pacific Stock Exchanges under the symbol "RB". The following table shows for the periods indicated the high and low sales prices of the Common Stock as reported on the New York Stock Exchange Composite Transactions Tape.
There were approximately 7,100 holders of record of the Company's Common Stock as of February 29, 1996.
The Company has not paid cash dividends on the Common Stock since the first quarter of 1986 and management does not expect any cash dividends will be declared or paid on the Common Stock in the reasonably foreseeable future.
In March 1995, the Company adopted a Preferred Share Rights Agreement. See "FINANCIAL CONDITION" under Item 7.
Item 6.

Item 6. Selected Financial Data
READING & BATES CORPORATION AND SUBSIDIARIES
(in thousands except per share amounts)
Item 7.

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
FINANCIAL CONDITION
Merger Proposal
On February 28, 1995, the Company announced that it had received an unsolicited merger proposal from Sonat Offshore Drilling Inc. ("Sonat Offshore") providing for the acquisition of 100% of the common stock of the Company for a combination of Sonat Offshore common stock and $100 million in cash. As proposed by Sonat Offshore, the Company's shareholders would have, at their election, received either (i) .357 shares of Sonat Offshore common stock or (ii) $7.50 of cash for each share of the Company. To the extent that the election resulted in an under- or oversubscription as to the $100 million of cash, a proration formula would have been utilized. The Company engaged Morgan Stanley & Co. Incorporated to act as its financial advisor with respect to evaluating the Sonat Offshore proposal. On March 16, 1995, the Company announced that its board of directors had rejected the Sonat Offshore proposal on the basis that it was not in the best interests of the Company and its shareholders. On April 18, 1995, Sonat Offshore announced that the merger discussions had broken off following the rejection by the Company of Sonat Offshore's proposal. The Company responded the same day announcing that discussions with Sonat Offshore had not to that date demonstrated a willingness on the part of Sonat Offshore to consider a transaction that would be reflective of the short-term or long-term business prospects and value of the Company. Subsequent to their announcing their intent to break off discussions in April 1995, Sonat Offshore initiated additional discussions in May 1995 with regard to potential merger transactions. However, these subsequent discussions similarly did not result in terms that recognized the Company's current or long-term value. The Company and Sonat Offshore discontinued discussions in June 1995. The Company remains willing to engage in discussions regarding possible business combinations that would potentially strengthen its competitive position in the offshore drilling industry, appropriately reflect the underlying value of the Company and maximize shareholder value.
Arcade Acquisition
In June 1994, the Company completed a transaction which increased its direct ownership in Arcade Drilling AS ("Drilling") and sold its entire ownership in Arcade Shipping AS ("Shipping"). The transaction consisted of the Company selling its entire 82.6% ownership in Shipping for approximately $27.8 million, purchasing from Shipping its entire 46.2% ownership in Drilling and equity securities in Dragon Oil for approximately $45.4 million and Shipping repaying a loan of approximately $12.9 million to the Company. This transaction resulted in a net cash outflow of $4.7 million. Also in September 1994, the Company purchased an additional 5.7% of Drilling's outstanding shares pursuant to a mandatory tender offer in Norway required by the Oslo Stock Exchange. In December 1995, the management agreement for one of Drilling's drilling units expired and a subsidiary of the Company now manages the drilling unit. See "The Company's Fleet" under Items 1 and 2. As of December 31, 1995, the Company's direct ownership in Drilling was 74.4%. See Note B of Notes to Consolidated Financial Statements.
Purchase of Semisubmersibles
In September 1994, the Company purchased the second-generation semisubmersible "RIG 41" (ex "BENVRACKIE") with the intent to contribute the drilling unit to a new joint venture with DeepTech International Inc. The objective of the new joint venture company was to acquire and operate semisubmersible drilling units to be converted for use as floating production systems. However, it was subsequently agreed by the Company and DeepTech International Inc. not to establish the new joint venture and the rig is currently stacked and available for conversion to a floating production system or deployment, after completion of upgrades, as a conventional drilling unit.
In September 1995, the Company purchased the support vessel "IOLAIR" from BP Exploration Operating Company Limited ("BP Exploration"). The "IOLAIR" is a dynamically positioned third-generation deepwater semisubmersible support vessel built in 1982 for field support and living accommodations. The "IOLAIR" is currently contracted with BP Exploration and is expected to undergo a comprehensive upgrade in 1996 after which it would be used under a long-term contract with BP Exploration for its west of Shetland development program for up to 200 days per year. The vessel would be available for use by other North Sea area operators for the remaining period of each year. Also in September 1995, the Company purchased the second-generation semisubmersible drilling unit "RIG 42" from FPS II, Inc. "RIG 42" is a candidate for the extended well test market, deepwater and/or harsh environment drilling or eventual conversion to a floating production system. In connection with the purchase of "RIG 42" the Company issued 1,232,057 shares of the Company's Common Stock, par value $.05 per share and filed a shelf registration statement in September 1995 registering such 1,232,057 shares (see "Shelf Registration" below).
Sale/Lease-back of Drilling Units
In November 1995, the Company entered into a sale/lease-back of the "M. G. HULME, JR.". As part of this transaction the Company could receive up to $60 million in cash, inclusive of a $10 million funding provision for upgrades, and agreed to lease the drilling unit for ten years. As of December 31, 1995, the Company had received $52.5 million. The lease-back is accounted for as an operating lease and a deferred gain of $7.4 million was recorded and is being amortized over the life of the lease. In addition, the lease contains a provision which allows the Company to repurchase the drilling unit at the end of the lease for a fair market price. See Note E of Notes to Consolidated Financial Statements.
In March 1992, the Company entered into a sale/lease-back of the "SONNY VOSS". Proceeds received of $27.7 million resulted in a gain of $6.3 million which was deferred and was being amortized over the lease term. In December 1994, for a fee of $.5 million, the Company negotiated an early release from all of its remaining lease obligations with respect to the "SONNY VOSS". Such lease obligations were scheduled to have expired in September 1995 and the net effect of the early release on the Company's results of operations was a gain of $.5 million recognized as a reduction of operating expenses in the fourth quarter of 1994. See Note E of Notes to Consolidated Financial Statements.
Purchase of Oil & Gas Interest
In October 1995, the Company purchased an approximately 20% working interest in the Green Canyon 254 Allegheny oil and gas development project in the U.S. Gulf of Mexico from the operator, Enserch Exploration, Inc. ("Enserch"). The third-generation semisubmersible "M. G. HULME, JR." has been contracted for three years to drill the development wells upon completion of an upgrade of the unit for operations in up to 3,300 feet of water, and the Company is expected to convert either its second-generation semisubmersible "RIG 41", or an equivalent unit, to a floating production vessel capable of processing up to 70,000 barrels of oil per day. In addition, Mobil Exploration & Producing U.S. Inc., an affiliate of Mobil Corporation, has a 40% working interest in the project. Enserch is expected to retain the remaining 40% working interest. As of December 31, 1995, the Company had accumulated costs related to the project of approximately $23.3 million which are included in Property and Equipment, Other.
Purchase of Lease Debt
In the third quarter of 1994, the Company purchased certain notes and interests relating to the lease debt outstanding associated with the operating leases of the drilling units "GEORGE H. GALLOWAY" and "C.E. THORNTON", and the secured contingent obligations associated with the capital lease of the "F.G. McCLINTOCK". Total consideration for the transaction was approximately $36.5 million which consisted of the Company paying cash of approximately $12.2 million and issuing 4,230,235 shares of the Company's Common Stock, par value $.05 per share, totalling approximately $24.3 million at then prevailing stock prices. In October 1994, the Company filed a shelf registration registering such shares (see "Shelf Registration" below). In the second quarter of 1995, the Company acquired title to the "GEORGE H. GALLOWAY". See Note E of Notes to Consolidated Financial Statements.
Public Offering
In July 1993, the Company effected a public offering (the "1993 Offering") of 2,990,000 shares of $1.625 Convertible Preferred Stock, par value $1.00 per share (the "Preferred Stock"), pursuant to which the Company raised gross proceeds of approximately $74.7 million in cash (net proceeds of approximately $71.2 million). The proceeds were utilized to repay indebtedness under two credit facilities, both under the ING Facility, totalling approximately $17.1 million. See "LIQUIDITY AND CAPITAL RESOURCES - ING Facility". The remaining proceeds were used by the Company for working capital and general corporate purposes. The Preferred Stock is convertible at the option of the holder at any time into shares of the Company's Common Stock at a conversion rate of 2.899 shares of Common Stock for each share of Preferred Stock (equivalent to a conversion price of $8.625 per share of Common Stock), subject to adjustment in certain events. Annual dividends are $1.625 per share and are cumulative and are payable quarterly commencing September 30, 1993. The Preferred Stock is redeemable at any time on and after September 30, 1996, at the option of the Company, in whole or in part, at a redemption price of $26.1375 per share, and thereafter at prices decreasing ratably annually to $25.00 per share on and after September 30, 2003, plus accrued and unpaid dividends. The holders of the Preferred Stock do not have any voting rights, except as required by applicable law, and except that, among other things, whenever accrued and unpaid dividends on the Preferred Stock are equal to or exceed the equivalent of six quarterly dividends payable on the Preferred Stock, the holders of the Preferred Stock will be entitled to elect two directors to the Board until the dividend arrearage has been paid in full. The term of office of all directors so elected will terminate immediately upon such payment. The Preferred Stock has a liquidation preference of $25.00 per share, plus accrued and unpaid dividends. The Company has declared and paid all cumulative dividends accrued on the Preferred Stock through December 31, 1995.
Shelf Registration
In October 1994, the Company filed a shelf registration registering the 4,230,235 shares of the Company's Common Stock issued for the purchase of the leased rigs as discussed above. In September 1995, the Company filed a shelf registration registering the 1,232,057 shares of the Company's Common Stock issued for the purchase of "RIG 42", as previously discussed, and the Company has been informed that all of such shares have been sold. Pursuant to the terms of the registration rights agreements among the Company and certain other holders of the Company's Common Stock, as currently in effect, the Company is required to maintain continuously effective shelf registration statements with respect to approximately 7.4 million shares of its Common Stock until the earlier to occur of (i) the sale of such shares by the holders thereof or (ii) August 1, 1996 (in the case of approximately 5.4 million shares) or September 14, 1996 (in the case of approximately 2 million shares).
Preferred Share Rights Agreement
On March 15, 1995, the Company's board of directors declared a dividend of one preferred share purchase right (a "Right") for each outstanding share of the Company's Common Stock outstanding on March 31, 1995 (the "Record Date"). Each Right entitles the registered holder to purchase from the Company one one-hundredth of a share of Series B Junior Participating Preferred Stock, par value $1.00 per share (the "Preferred Shares") of the Company at a price of $30.50, subject to adjustment. The Rights will not become exercisable until 10 days after a public announcement that a person or group has acquired 10% or more of the Company's Common Stock (thereby becoming an "Acquiring Person") or the commencement of a tender or exchange offer upon consummation of which such person or group would own 10% or more of the Company's Common Stock (the earlier of such dates being called the "Distribution Date"). Rights will be issued for all shares of the Company's Common Stock issued and outstanding on the Record Date. Until the Distribution Date, the Rights will be evidenced by the certificates representing the Company's Common Stock and will be transferrable only with the Company's Common Stock. In the event that any person or group becomes an Acquiring Person, each Right, other than Rights beneficially owned by the Acquiring Person (which will thereafter be void), will thereafter entitle its holder to purchase shares of the Company's Common Stock having a market value of two times the exercise price of the Right. After any person or group has become an Acquiring Person and prior to the acquisition by such person or group of 50% or more of the outstanding shares of Common Stock, the Company's board of directors may exchange each Right (other than Rights of the Acquiring Person), in whole or in part, at an exchange ratio of one Common Share or one one-hundredth of a Preferred Share per Right. If after a person or group has become an Acquiring Person, the Company is acquired in a merger or other business combination transaction or 50% or more of its assets or earning power are sold, each Right will entitle its holder to purchase, at the Right's then current exercise price, that number of shares of common stock of the acquiring company which at the time of such transaction will have a market value of two times the exercise price of the Right. The board of directors of the Company may redeem the Rights in whole, but not in part, at a price of $.01 per Right at any time prior to such time as any person or group becomes an Acquiring Person. The Rights expire on March 31, 2005. Preferred Shares purchasable upon exercise of the Rights will not be redeemable. Each Preferred Share will be entitled to a preferential quarterly dividend payment equal to the greater of $1 per share or 100 times the dividend declared per Common Share. Liquidation preference will be equal to the greater of $100 per share or 100 times the payment made per Common Share. Each Preferred Share will have one vote, voting together with the Common Stock. See "LIQUIDITY AND CAPITAL RESOURCES".
Reverse Stock Split
On October 2, 1992, the Company effected a one-for-five reverse stock split of the Common Stock. All share and per share amounts have been restated.
Miscellaneous
In February 1992, Statement of Financial Accounting Standards No. 109, Accounting for Income Taxes ("SFAS 109") was issued and supersedes substantially all existing income tax pronouncements. The Company adopted SFAS 109 effective January 1, 1993. The cumulative effect of the accounting change at January 1, 1993 was not material to the Company's consolidated results of operations or financial position. See Note A of Notes to Consolidated Financial Statements.
In October 1993, the Company announced that Mr. J. T. Angel, President and Chief Operating Officer, as well as a member of the Board of Directors, resigned from those positions in order to pursue other business interests. In the fourth quarter of 1993, the Company recorded a charge of approximately $1.1 million against earnings related to a severance agreement with Mr. Angel.
In March 1995, Statement of Financial Accounting Standards No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of ("SFAS 121") was issued. SFAS 121, which becomes effective in 1996, requires that certain long-lived assets be reviewed for impairment whenever events indicate that the carrying amount of an asset may not be recoverable, and that an impairment loss be recognized under certain circumstances in the amount by which the carrying value exceeds the fair value of the asset. In 1995, the Company adopted SFAS 121 which had no effect on the Company's consolidated results of operations or consolidated financial position. See Note A of Notes to Consolidated Financial Statements.
For a discussion of certain legal proceedings see Part I, Item 3.
LIQUIDITY AND CAPITAL RESOURCES
Liquidity
At December 31, 1995, the Company had working capital of $41.3 million compared to $6.7 million at December 31, 1994. The $34.6 million increase is primarily due to improved cash flow and new term financing in 1995 that was used to repay the ING Facility (as discussed below) and the Company's debentures that matured in 1995.
Cash provided by operating activities during 1995 amounted to $34.5 million, an increase of $3.7 million from 1994. Cash provided by operating activities during 1994 amounted to approximately $30.8 million, an increase of $4.3 million from 1993.
Cash used in investing activities was $3.5 million in 1995 compared to $48.8 million in 1994 compared to $29.4 million in 1993. During 1995, the Company entered into a sale/lease-back transaction of the "M.G. HULME, JR." drilling unit that provided approximately $50 million of cash and used $51.9 million to purchase property and equipment, such as the oil and gas interest in the Gulf of Mexico as previously discussed. During 1994, the Company used $10.7 million to purchase additional shares in Drilling and $38.4 million to purchase property and equipment, such as the purchase of certain notes and interests relating to the lease debt outstanding associated with the operating leases of the drilling units "GEORGE H. GALLOWAY" and "C. E. THORNTON" and the secured contingent obligations associated with the capital lease of the drilling unit "F. G. McCLINTOCK", and the purchase of the second-generation semisubmersible drilling unit "RIG 41". During 1993, the Company used $20.6 million to purchase additional shares in Drilling and Shipping. See "FINANCIAL CONDITION".
Cash used in financing activities was $37.1 million in 1995 compared to $20 million in 1994 compared to cash provided by financing activities of $30.1 million in 1993. During 1995, the Company made principal payments of $85.3 million which was primarily the repayment of the ING Facility and the 8% Convertible Subordinated Debentures which matured in 1995, paid Preferred Stock dividends of $4.9 million and received $50 million from two new financing sources and $3 million from the exercise of employee stock options. During 1994, the Company made principal payments of $24.6 million, paid Preferred Stock dividends of $4.9 million and received $9.5 million from the ING Facility. During 1993, the Company received $71.2 million of net proceeds from the 1993 Offering, received $11.6 million from the ING Facility and made principal payments of $50.6 million and paid dividends of $2.1 million on the Preferred Stock. See "FINANCIAL CONDITION".
Liquidity of the Company should be considered in light of the fluctuations in demand experienced by drilling contractors as changes in oil and gas producers' expectations and budgets occur. These fluctuations can impact the Company's liquidity as supply and demand factors directly affect utilization and dayrates, which are the primary determinants of cash flow from the Company's operations. The Company's management currently expects that its cash flow from operations, in combination with cash on hand and other sources, including new debt, new equity, asset disposals and/or by proper scheduling of its planned capital or other expenditures, will be sufficient to satisfy the Company's 1996 working capital needs, dividends on and the possible redemption of the Preferred Stock, planned investments, capital expenditures, debt and other payment obligations. The Company currently expects to call for redemption its Preferred Stock in accordance with its terms on or after September 30, 1996. The Company expects that most, if not all, holders of the Preferred Stock will convert their shares into Common Stock rather than allow the Company to redeem their shares. At present, the Company would expect to fund the Preferred Stock redemption, if any, out of working capital.
At December 31, 1995, approximately $17.1 million of total consolidated cash and cash equivalents of $36.2 million were restricted from the Company's use outside of Drilling's activities. See "Drilling" below regarding recent changes in such restrictions.
Capital Expenditures and Deferred Charges
Planned capital expenditures and deferred charges (including mobilization, demobilization and contract preparation costs not recoverable from the Company's customers or claim proceeds from insurance underwriters) for 1996 are expected to aggregate in excess of $73 million principally for upgrades or replacement of equipment either to fulfill obligations under existing contracts or to improve the marketability of certain of the Company's drilling units and for mobilization of the Company's drilling units between drilling sites. Additionally, the Company has capital funding obligations for its participation in the previously discussed oil and gas development project estimated to be in excess of $17 million for 1996. The Company anticipates that such capital expenditures will be funded through cash provided by operations and/or an increase of an existing credit facility and/or new financing. Certain projects currently being considered by the Company would require, if they materialize, capital expenditures or other cash requirements not included in the above estimate. In addition to planned capital expenditures referred to above, the Company will also continue to review acquisitions of drilling units from time to time and will also consider further investments in floating production equipment. See "Item 1. Business - Business Strategy".
ING Facility
The Company's principal credit facility agreement (the "ING Facility") with ING Bank was fully repaid in November 1995 from funds provided by the sale/lease-back of the "M. G. HULME, JR." and the CBK Facility, as discussed below. The ING Facility consisted of four facilities, "Facility A", "Facility C", "Facility D" and "Facility E". A fifth credit facility ("Facility F") was both created and repaid during 1993. Facility A was in the form of a term loan with an original balance of $30 million. Facilities C, D & E consisted of $30 million of working capital financing. Facility C was in the form of an overdraft account up to a maximum of $15 million. Facility D was in the form of a $5 million long-term letter of credit which collateralized a $15 million note payable relating to the "HARVEY H. WARD" drilling unit. Facility E was in the form of short-term letters of credit aggregating $10 million, which supported bid, performance and other bonds needed by the Company in the ordinary course of its business. Facility F consisted of a revolving credit facility in an amount not to exceed $15.5 million, for the purchase of shares of Shipping and Drilling. In March 1993, the Company received approximately $11.6 million from Facility F and in July 1993 the Company repaid Facility F from proceeds from the 1993 Offering. In addition, a separate facility ("Facility B") provided by ING Bank was in the form of a term loan with an original balance of $45 million. Facility B was the result of ING Bank acquiring, in June 1991, certain interests in two promissory notes issued in connection with the previous sale and lease-back to the Company of the "C.E. THORNTON" and the "GEORGE H. GALLOWAY" drilling units. The present value of the Company's obligations under such operating leases at date of repayment amounted to approximately $23.2 million. Substantially all of the Company's assets (including its shares of Drilling) that did not serve as collateral for other obligations of the Company collateralized the ING Facility. See Notes C, D and E of Notes to Consolidated Financial Statements.
CBK Facility
In November 1995, the Company entered into a five year $55 million credit facility agreement (the "CBK Facility") with Christiania Bank og Kreditkasse. The CBK Facility consists of a $45 million reducing revolving credit facility ("CBK Facility A") and a $10 million standby letter of credit facility ("CBK Facility B"). CBK Facility A allows the Company to make drawdowns, minimum of $1 million, as funds are needed, shall be reduced/repaid by nine semi-annual installments of $3.4 million commencing in May 1996 and one final reduction/repayment of $14.4 million in November 2000 and bears interest at the London Interbank Offered Rate ("LIBOR") (5.719% at December 31, 1995) plus 1.75%. In addition, a commitment fee of .75% per annum is paid on the unused portion of CBK Facility A. CBK Facility B is in the form of stand-by letters of credit aggregating $10 million, for use in the ordinary course of business. Any amounts available under CBK Facility A may be utilized under CBK Facility B. At December 31, 1995, $20 million was outstanding under CBK Facility A and $13.3 million was outstanding under CBK Facility B, leaving $21.7 million available under CBK Facility A. The CBK Facility contains covenants which require the Company to meet certain ratios and working capital conditions, and is collateralized by vessel mortgages on two of the drilling units owned by the Company and related assignments of insurance and earnings. See Notes C and E of Notes to Consolidated Financial Statements.
CIT Financing
In May 1995, the Company entered into a $25 million loan agreement with The CIT Group/Equipment Financing, Inc. In December 1995, the Company borrowed an additional $5 million under such loan agreement. The loan bears interest at the one month LIBOR (5.719 % at December 31, 1995) plus 2.5%, and interest is payable monthly. Principal repayments are $5,416,667 in November 1996, 34 monthly installments of $416,667 commencing in December 1996 and one payment of $10,416,655 in October 1999. The loan agreement contains covenants which require the Company to meet certain financial conditions, including, among others, a cash flow coverage ratio and a long-term debt to total assets ratio, and is collateralized by vessel mortgages on two of the drilling units owned by the Company and related assignments of insurance and earnings.
Drilling
As of December 31, 1995, Drilling had a $42.5 million term loan payable to The Chase Manhattan Bank, N.A. as agent for a syndicate of banks (including itself). The adjusted payment terms of this bank obligation currently provide for repayment of principal in 17 semiannual installments which commenced in August 1991. The Company has not guaranteed repayment of such obligation. Drilling has also entered into an interest rate swap agreement, which is combined with the bank credit facility for payment purposes (as set forth below). The swap agreement terminates in August 1996 and the notional principal swapped amount will have been reduced on a semiannual basis to $30.6 million at that time. At December 31, 1995, the notional principal amount of $34.1 million bears interest at 10.69% and the remaining principal amount bears interest at the 6 month LIBOR (5.531% at December 31, 1995) plus 1.75%. Following the termination of the swap agreement, the remaining balance of the loan will bear interest at LIBOR plus 1.75%. The loan is collateralized by the drilling units "HENRY GOODRICH" and "PAUL B. LOYD, JR." (ex "SONAT ARCADE FRONTIER"). The loan agreement was amended in November 1995 to change certain financial condition requirements and such changes are reflected below. The amended loan agreement requires Drilling to meet certain financial conditions, including maintaining current assets of at least twice the level of current liabilities and liquid assets of at least $2 million ($10 million if Drilling can not annually provide to the lenders satisfactory contractual commitments for the employment of both drilling units for the next twelve months), maintaining a ratio of operating cash flow (including actual and projected cash flows) to interest charges of at least 1.75 to 1 and maintaining a ratio of total liabilities to tangible net worth of no more than 1 to 1. Additionally, the amended loan agreement (i) restricts the payment of dividends by Drilling to not more than 50% of net earnings after tax per year, (ii) prohibits Drilling from making loans, granting credit, giving any guarantee or indemnity to or for the benefit of any other person or assuming any liability with respect to any obligation of any other person, (iii) prohibits Drilling from engaging in any merger or consolidation and (iv) prohibits the encumbrance of Drilling's assets or the sale of such assets other than at fair market value, in each case without the prior written consent of the banks party to the loan agreement holding a majority of the outstanding balance. The amended loan agreement allows Drilling to declare a distribution to stockholders in the first quarter of 1996 up to $15 million provided $2 million of liquid assets remain after payment of such distribution. The Company currently expects to receive approximately $11.2 million with respect to such distribution in the first quarter of 1996. It is also an event of default if there should occur a material adverse change in the financial or business condition of Drilling. Pursuant to a series of waivers, for the period from May 1, 1992 to May 1, 1993, the bank syndicate waived the requirement that Drilling comply with the actual operating cash flow ratio covenant. For the period from January 1, 1992, to April 30, 1993, the bank syndicate waived the requirement that Drilling comply with the projected operating cash flow ratio covenant. In connection with the most recent waiver, Drilling was required to pay on April 30, 1993 (i) a fee to the bank syndicate of approximately $.1 million and (ii) the last two semiannual installments (totalling $8 million). Since May 1, 1993, Drilling has not requested any additional waivers. Drilling expects to meet its repayment obligations under the facility through cash flow generated from operations and current working capital. At December 31, 1995, Drilling held $17.1 million in cash and cash equivalents available to satisfy such obligations, but otherwise subject to the restrictions on use of such cash and cash equivalents set out in such amended loan agreement. See Note C of Notes to Consolidated Financial Statements.
RESULTS OF OPERATIONS
The Company reported net income for 1995 of $21.8 million ($.28 earnings per share after preferred stock dividends of $4.9 million), compared to a net loss of $17.1 million ($.39 loss per share after preferred stock dividends of $4.9 million) for 1994 and net income of $4.7 million ($.05 earnings per share after preferred stock dividends of $2.1 million) for 1993. Included in the 1995 results is an extraordinary gain of $3.4 million related to the extinguishment of a debt obligation.
Operating revenues are primarily a function of dayrates and utilization. The $43.7 million increase in 1995 over 1994 is primarily due to the increased utilization of the fourth-generation semisubmersible and jack-up fleets. Also contributing to the increased operating revenues is the increase in average dayrates earned by the units, again particularly in the semisubmersible and jack-up fleets. The $14.7 million decrease in 1994 compared to 1993 is primarily due to the decreased utilization of these fleets between those two years.
Unit utilization measured in terms of the number of days the units were earning revenues to the total days the units were owned or leased by the Company (the operating method) for the years ended December 31, 1995, 1994 and 1993 is shown below by class:
The utilization trends experienced by the Company are generally consistent with those experienced by the industry.
Average dayrates for the Company's units for the years ended December 31, 1995, 1994 and 1993 are shown below by class (in thousands):
Operating expenses do not necessarily fluctuate in proportion to changes in operating revenues due to the continuation of personnel on board and equipment maintenance when the Company's units are stacked. It is only during prolonged stacked periods that the Company is significantly able to reduce labor costs and equipment maintenance expense. Additionally, labor costs fluctuate due to the geographic diversification of the Company's units and the mix of labor between expatriates and nationals as stipulated in the contracts. Labor costs have increased in the last three fiscal years primarily due to higher salary levels, inflation and the decline of the U.S. dollar relative to certain foreign currencies of countries where the Company operates. Equipment maintenance expenses fluctuate depending upon the type of activity the drilling unit is performing and the age and condition of the equipment. Scheduled maintenance of equipment and overhauls are performed on a basis of number of hours operated in accordance with the Company's preventive maintenance program.
Operating expenses increased in 1995 as compared to 1994 due to higher operating costs for several rigs and the addition of the "IOLAIR" to the fleet. This increase was offset somewhat by lease expense which decreased between the two years due to the 1994 termination of the lease for the "SONNY VOSS" and the elimination of the "GEORGE H. GALLOWAY" and "C. E. THORNTON" leases due to a 1994 purchase of the lease obligations by the Company.
Despite the increase in operating expenses in 1995, operating expenses as a percentage of revenues decreased by 13.0% in 1995 compared to 1994 due mainly to increased revenues in 1995. Also contributing to this decrease is the reduction of operating expenses in 1995 as compared to 1994 associated with reduced lease expense in the amount of $8.3 million. Currently, management expects operating expenses as a percentage of revenue to continue to decrease over the next two years. Although management currently expects operating expenses to rise during this period due to higher operating costs and the addition of two rigs to the fleet, operating revenues are currently expected to rise at a faster rate due to contracts with higher dayrates, some of which are already in place.
Included in operating expenses for 1994 is a credit of approximately $3.1 million due to the recognition of the remaining deferred gain on the sale/lease-back of the "SONNY VOSS" as the Company was prematurely released from its lease obligation.
Operating expenses as a percentage of revenues increased by 8.7% in 1994 compared to 1993 due to decreased revenues as well as increased operating costs in Australia and overall equipment maintenance costs.
Included in operating expenses for 1993 is a credit of approximately $1.8 million due to the recognition of the deferred gain on the sale/lease-back of the "SONNY VOSS" and a credit of approximately $1.2 million due to the recognition of a gain on the "JACK BATES" casualty caused by Hurricane Andrew in 1992.
Depreciation and amortization expense increased $1.5 million in 1995 compared to 1994 due to increased utilization of the fleet.
Depreciation and amortization expense decreased $.8 million in 1994 compared to 1993.
General and administrative expenses decreased $.9 million in 1995 compared to 1994 primarily related to the reduction of expenses for Drilling's office located in Oslo.
General and administrative expenses increased $1 million in 1994 compared to 1993 after adjusting 1993 by $1.1 million of termination benefits that were accrued in 1993. The increase is primarily due to an increase in payroll and related expenses.
Despite a decrease in the average principal debt balance outstanding during 1995 as compared to 1994 due to the refinancing of the Company's principal credit facility with ING Bank in the fourth quarter of 1995 as well as the repayment of scheduled principal payments on the Company's long-term obligations, interest expense increased by $1.6 million. This increase is primarily attributable to the purchase of certain notes and interest relating to the lease debt outstanding for the previously leased rigs, "C.E. THORNTON" and "GEORGE H. GALLOWAY" in the latter part of 1994. Noncash interest expense attributable to amortization of discount and deferrals associated with the 8% Senior Subordinated Convertible Debentures due 1998 and the 8% Convertible Subordinated Debentures which were repaid in the fourth quarter of 1995 for the year ended December 31, 1995 was $4 million.
Despite a decrease in the average principal debt balance outstanding during 1994 compared to 1993 due to the repayment of scheduled principal payments on the Company's long-term obligations, interest expense remained constant in 1994 compared to 1993 due to higher interest rates in 1994. Noncash interest expense attributable to amortization of discount and deferrals associated with the 8% Senior Subordinated Convertible Debentures due 1998 and the 8% Convertible Subordinated Debentures which were repaid in the fourth quarter of 1995 for the year ended December 31, 1994 was $3.6 million.
Interest income decreased $1.4 million in 1995 compared to 1994 due to interest earned on decreased average cash and cash equivalents balance. Conversely, interest income increased $1.2 million in 1994 compared to 1993 due to interest earned on the increased average outstanding cash and cash equivalents balance primarily due to proceeds received from the 1993 Offering.
For 1995, other, net included $1.2 million of expenses associated with the merger discussions with Sonat Offshore.
For 1994, other, net included the recognition of a $1.2 million loss associated with interests in the exploration and production of oil and gas, a $.8 million expense for the change in the estimate of the reserve for prior workers compensation claims and a $.7 million loss on the sale of a cash investment due to the decline in the market value.
Income tax expense for 1995 decreased as compared to 1994 despite increases in revenues and income before income taxes. Such decrease is primarily due to a change in the Company's foreign geographic areas of operations coupled with the resolution, in the third quarter of 1995, of a foreign tax assessment at less than expected cost.
Income tax expense was recognized for the year ended December 31, 1994 despite losses before income taxes of $13.9 million. This represents income tax expense incurred with respect to certain foreign operations.
Minority interest relates primarily to the results of Drilling and the percentage attributable to stockholders other than the Company. Drilling reported income in 1995 of $5.6 million and losses of $3 million and $4.5 million in 1994 and 1993, respectively. The ownership percentages attributable to stockholders other than the Company were 25.7%, 26.1% and 46.8% for the years ending December 31, 1995, 1994 and 1993, respectively.
The impact of inflation on the Company's operations for the three years ended December 31, 1995 has not been material.
Item 8.

Item 8. Financial Statements and Supplementary Data
READING & BATES CORPORATION AND SUBSIDIARIES
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors and Stockholders Reading & Bates Corporation
We have audited the accompanying consolidated balance sheets of Reading & Bates Corporation (a Delaware corporation) and Subsidiaries as of December 31, 1995 and 1994, and the related consolidated statements of operations, cash flows and stockholders' equity for each of the three years in the period ended December 31, 1995. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Reading & Bates Corporation and Subsidiaries as of December 31, 1995 and 1994, and the consolidated results of their operations and their cash flows for each of the three years in the period ended December 31, 1995 in conformity with generally accepted accounting principles.
Arthur Andersen LLP
Houston, Texas February 13, 1996
READING & BATES CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET December 31, 1995 and 1994 (dollars in thousands)
The accompanying notes are an integral part of the consolidated financial statements.
READING & BATES CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET December 31, 1995 and 1994 (in thousands except share amounts)
The accompanying notes are an integral part of the consolidated financial statements.
READING & BATES CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENT OF OPERATIONS (in thousands except per share amounts)
The accompanying notes are an integral part of the consolidated financial statements.
READING & BATES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS (in thousands)
The accompanying notes are an integral part of the consolidated financial statements.
READING & BATES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
For the Three Years Ended December 31, 1995 (in thousands)
The accompanying notes are an integral part of the consolidated financial statements.
READING & BATES CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ______________
(A) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
CONSOLIDATION - The consolidated financial statements include the accounts of Reading & Bates Corporation ("Reading & Bates") and its subsidiaries, including its majority-owned subsidiary Arcade Drilling AS ("Drilling") (collectively, the "Company"). As of December 31, 1995, Reading & Bates owned approximately 74.4% of the outstanding stock of Drilling (see Note B). Investments in unconsolidated investees are accounted for on the equity method. All significant intercompany accounts and transactions have been eliminated.
CASH AND CASH EQUIVALENTS - The Company considers all highly liquid investments purchased with a maturity of three months or less to be cash equivalents. At December 31, 1995, $17.1 million of the cash and cash equivalents balance related to Drilling. Such cash and cash equivalents balance is available to Drilling for all purposes subject to certain debt covenants under a credit facility provided by The Chase Manhattan Bank, N.A. ("Chase Manhattan") which require the maintenance of a minimum of $10 million in liquid assets and, under certain circumstances, prohibit Drilling from paying dividends or granting loans (including to the Company). In the fourth quarter of 1995, the credit facility was amended to i) lower the $10 million requirement of liquid assets to $2 million provided that Drilling could annually provide to the lenders satisfactory contractual commitments for employment of both of the drilling units for the next twelve months and ii) allow Drilling to declare a distribution to stockholders in the first quarter of 1996 up to $15 million provided $2 million of liquid assets remained after payment of such distribution.
MATERIALS AND SUPPLIES INVENTORY - Materials and supplies are stated at the lower of average cost or market.
PROPERTY AND EQUIPMENT - Property and equipment are recorded at historical cost as adjusted in the Company's quasi-reorganization in 1989. Reading & Bates' drilling units are depreciated under either the units-of-production method or the straight-line method. Drilling's drilling units are depreciated under the straight-line method. Estimated useful lives for drilling equipment range from three to twenty-five years. Gain (loss) on disposal of properties is credited (charged) to income. Effective January 1, 1993, the Company changed its estimate of the useful lives of its fourth-generation semisubmersible fleet from an average of 16 years to 25 years. This change was made to reflect the estimated period during which such assets will remain in service. For the year ended December 31, 1993, the change had the effect of reducing depreciation expense and increasing net income by approximately $6.8 million or $.12 per share. In 1995, the Company purchased an approximately 20% working interest in the Green Canyon 254 Allegheny oil and gas development project in the U.S. Gulf of Mexico from the operator, Enserch Exploration, Inc. As of December 31, 1995, the Company had accumulated costs related to the project of approximately $23.3 million which are included in Property and Equipment, Other (see Note D).
STOCKHOLDERS' EQUITY - The Company's accumulated deficit at March 31, 1991 was eliminated as a result of the Company's recapitalization in 1991.
INCOME TAXES - Deferred income taxes are recognized for revenues and expenses reported in different years for financial statement purposes and income tax purposes. In February 1992, Statement of Financial Accounting Standards No. 109, Accounting for Income Taxes ("SFAS 109") was issued and supersedes substantially all existing income tax pronouncements. The Company adopted SFAS 109 effective January 1, 1993. The cumulative effect of the accounting change at January 1, 1993 was not material to the Company's consolidated results of operations or financial position.
REVENUE RECOGNITION - Revenues from drilling contracts are recognized as they are earned. Proceeds associated with the early termination of a contract for a drilling unit are recorded as deferred income and recognized as drilling contract revenues over the remaining term of the contract or until such time as the drilling unit begins a new contract. There were no such amounts deferred at December 31, 1995 or 1994. In 1993, the Company secured a contract to convert a semisubmersible drilling unit into a floating production system. Under this contract the Company, for a fixed fee and certain incentives, functioned as an agent for its customer and accordingly, disbursements made on behalf of the customer were netted against receipts from the customer in the accompanying financial statements. The contract was completed in the third quarter of 1995 and the disbursements and receipts associated with the contract through that date amounted to approximately $123 million.
FOREIGN CURRENCY TRANSACTIONS - The net gains and losses resulting from foreign currency transactions included in determining net income amounted to a net loss of $.8 million in 1995, a net loss of $.6 million in 1994 and a net gain of $.1 million in 1993. The Company may enter into forward exchange contracts to hedge specific commitments and anticipated transactions. During 1995 and 1994, the Company did not enter into any forward exchange contracts.
EXTRAORDINARY GAIN - In December 1995, the Company recorded an extraordinary gain of $3,430,000 for the extinguishment of a debt obligation (see Note C).
EARNINGS (LOSS) PER COMMON SHARE - Earnings (loss) per common share is computed by dividing income (loss), after deducting the preferred stock dividend, by the weighted average number of common shares outstanding during the year. The effects of common equivalent shares were antidilutive or immaterial for all periods presented and, accordingly, no adjustment was made for these common equivalent shares. The computation of fully diluted earnings per share is not presented as the results are antidilutive.
CONCENTRATION OF CREDIT RISK - The Company maintains cash balances with commercial banks throughout the world. The Company's cash equivalents generally consist of commercial paper, money-market mutual funds and interest-bearing deposits with strong credit rated financial institutions and generally mature within three months, therefore, bearing minimal risk. However, in 1994 the Company incurred a $.7 million loss on the sale of a cash investment due to the decline in the market value. No losses were incurred during 1995.
The Company's revenues were generated primarily from its drilling units. Revenues can be generated from a small number of customers which are primarily major U.S. oil and gas companies or their subsidiaries and foreign government-owned oil and gas companies. The Company performs ongoing credit evaluations of its customers' financial conditions and generally requires no collateral from its customers. The Company's allowance for doubtful accounts at December 31, 1995 and 1994 was $1,123,000 and $373,000, respectively.
INDUSTRY CONDITIONS - Results of operations and financial condition of the Company should be considered in light of the fluctuations in demand experienced by drilling contractors as changes in oil and gas producers' expectations and budgets occur. These fluctuations can impact the Company's results of operations and financial condition as supply and demand factors directly affect utilization and dayrates, which are the primary determinants of cash flow from the Company's operations.
LIQUIDITY - As of December 31, 1995, the Company's total consolidated cash and cash equivalents were $36.2 million. Of this amount, approximately $17.1 million is restricted from the Company's use outside of Drilling (see CASH AND CASH EQUIVALENTS above). The Company's management currently expects that its cash flow from operations, in combination with cash on hand and other sources, including new debt, new equity, asset disposals and/or by proper scheduling of its planned capital or other expenditures, will be sufficient to satisfy the Company's 1996 working capital needs, dividends on and possible redemption of the preferred stock, planned investments, capital expenditures, debt and other payment obligations. The Company currently expects to call for redemption its preferred stock in accordance with its terms on or after September 30, 1996. Also, the Company expects that most, if not all, holders of the preferred stock will convert their shares into common stock rather than allow the Company to redeem their shares. At present, the Company would expect to fund the preferred stock redemption, if any, out of working capital.
NEWLY ISSUED ACCOUNTING STANDARD - In March 1995, Statement of Financial Accounting Standards No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of ("SFAS 121") was issued. SFAS 121, which becomes effective in 1996, requires that certain long-lived assets be reviewed for impairment whenever events indicate that the carrying amount of an asset may not be recoverable, and that an impairment loss be recognized under certain circumstances in the amount by which the carrying value exceeds the fair value of the asset. In 1995, the Company adopted SFAS 121 which had no effect on the Company's consolidated results of operations or financial position.
ESTIMATES - The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and 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.
RECLASSIFICATION - Certain prior period amounts in the consolidated financial statements have been reclassified for comparative purposes. Such reclassifications had no effect on the net income (loss) or the overall financial condition of the Company.
(B) INVESTMENT IN ARCADE
ARCADE ACQUISITION - In June 1991, as part of its strategy of emphasizing geographic diversification and "fourth-generation" semisubmersible drilling technology, the Company began acquiring the stock of Arcade Shipping AS ("Shipping") and Drilling, both of which are Norwegian companies (the "Arcade Acquisition"). Beginning with the first quarter of 1992, the Company began to consolidate the accounts of Drilling and Shipping into the consolidated financial statements of the Company. Drilling owns the "HENRY GOODRICH" and the "PAUL B. LOYD, JR." (ex "SONAT ARCADE FRONTIER"), two fourth- generation semisubmersible drilling units. Shipping, which the Company sold its ownership interest in June 1994, had two principal lines of operations, the shipping operations which included owning and chartering vessels and the drilling operations which principally consisted of the ownership of approximately 46.2% of the outstanding stock of Drilling. The shipping operations of Shipping had been accounted for as discontinued operations until June 1994, when the Company completed a transaction which consisted of the Company selling its entire 82.6% ownership in Shipping for approximately $27.8 million, purchasing from Shipping its entire 46.2% ownership in Drilling and equity securities in Dragon Oil for approximately $45.4 million and Shipping repaying a loan of approximately $12.9 million to the Company. This transaction resulted in a net cash outflow of $4.7 million.
The Arcade Acquisition has been funded through short-term financing, a private placement of both preferred and common stocks and the Company's working capital. As of December 31, 1995, the Company had acquired approximately 74.4% of the outstanding stock of Drilling, at an accumulated cost of approximately $113.5 million.
The following unaudited pro forma selected financial data for the three years ended December 31, 1995 show the consolidated data as if the Arcade Acquisition (ownership percentage as of December 31, 1995) and related financing activities had occurred on January 1, 1993, (in thousands except per share amounts):
DISCONTINUED OPERATIONS OF SHIPPING - On June 22, 1994, the Company sold its entire ownership in Shipping (see above). Shipping's operating revenues and net loss from January 1, 1994 to the date of sale were approximately $6.5 million and $2 million, respectively. Operating revenues and net loss of discontinued operations not included in the Consolidated Statement of Operations for the year ended December 31, 1993 were $14.8 million and $4.6 million, respectively.
(C) LONG-TERM OBLIGATIONS
Long-term obligations at December 31, 1995 and 1994 consisted of the following (in thousands):
(D) SHORT-TERM OBLIGATIONS
Short-term obligations at December 31, 1995 and 1994 consisted of the following (in thousands):
(E) COMMITMENTS AND CONTINGENCIES
CAPITAL EXPENDITURES - At December 31, 1995, the Company had purchase commitments of $3.4 million for equipment on drilling units.
OPERATING LEASES - The Company has operating leases covering premises and equipment. Certain operating leases contain renewal options and have options to purchase the asset at fair market value at the end of the lease term. Net rent expense amounted to $2.3 million (1995), $11.2 million (1994) and $12.7 million (1993). As of December 31, 1995, future minimum rental payments relating to operating leases were as follows (in thousands):
In November 1995, the Company entered into a sale/lease-back of the "M. G. HULME, JR.". As part of this transaction the Company could receive up to $60 million in cash, inclusive of a $10 million funding provision for upgrades, and agreed to lease the drilling unit for ten years. As of December 31, 1995, the Company had received $52.5 million. The lease-back is accounted for as an operating lease and a deferred gain of $7.4 million was recorded and is being amortized over the life of the lease (see Note F).
In the third quarter of 1994, the Company purchased certain notes and interests relating to the lease debt outstanding associated with the operating leases of the drilling units "GEORGE H. GALLOWAY" and "C.E. THORNTON", and the secured contingent obligations associated with the capital lease of the "F.G. McCLINTOCK". Total consideration for the transaction was approximately $36.5 million which consisted of cash of approximately $12.2 million and the Company issuing 4,230,235 shares of the Company's Common Stock, par value $.05 per share, totalling approximately $24.3 million at then prevailing stock prices. Since through such purchases, the Company now controls and has effective ownership of the three rigs, it recorded the purchase of the notes and interests as purchases of the rigs. The Company now has title to the "GEORGE H. GALLOWAY" and "F. G. McCLINTOCK". In the fourth quarter of 1994, the Company reclassed the remaining lease obligation (Facility B) from other liabilities to debt obligations (see Note C).
In March 1992, the Company entered into a sale/lease-back of the "SONNY VOSS". Proceeds received of $27.7 million resulted in a gain of $6.3 million which was deferred and was being amortized over the lease term. In December 1994, for a fee of $.5 million, the Company negotiated an early release from all of its remaining lease obligations with respect to the "SONNY VOSS". Such lease obligations were scheduled to have expired in September 1995 and the net effect of the early release on the Company's statement of operations was a gain of $.5 million recognized as a reduction of operating expenses in the fourth quarter of 1994.
LITIGATION - The Company is one of the defendants in certain litigation brought in July 1984 by the Cheyenne-Arapaho Tribes of Oklahoma in the U.S. District Court for the Western District of Oklahoma, seeking to set aside two communitization agreements with respect to three leases involving tribal lands in which the Company previously owned interests and to have those leases declared expired. In June 1989, the U.S. District Court entered an interim order in favor of the plaintiffs. On appeal, the U.S. Court of Appeals for the Tenth Circuit upheld the decision of the trial court and petitions for rehearing of that decision were denied. Petitions for writs of certiorari filed by the parties with the U.S. Supreme Court have been denied, and the case has been remanded to the trial court for determination of damages.
In November 1988, a lawsuit was filed in the U.S. District Court for the Southern District of West Virginia against Reading & Bates Coal Co., a wholly owned subsidiary of the Company, by SCW Associates, Inc. claiming breach of an alleged agreement to purchase the stock of Belva Coal Company, a wholly owned subsidiary of Reading & Bates Coal Co. with coal properties in West Virginia. When those coal properties were sold in July 1989 as part of the disposition of the Company's coal operations, the purchasing joint venture indemnified Reading & Bates Coal Co. and the Company against any liability Reading & Bates Coal Co. might incur as the result of this litigation. A judgment for the plaintiff of $32,000 entered in February 1991 was satisfied and Reading & Bates Coal Co. was indemnified by the purchasing joint venture. On October 31, 1990, SCW Associates, Inc., the plaintiff in the above-referenced action, filed a separate ancillary action in the Circuit Court, Kanawha County, West Virginia against the Company and a wholly owned subsidiary of Reading & Bates Coal Co., Caymen Coal, Inc. (former owner of the Company's West Virginia coal properties), as well as the joint venture, Mr. William B. Sturgill personally (former President of Reading & Bates Coal Co.), three other companies in which the Company believes Mr. Sturgill holds an equity interest, two employees of the joint venture, First National Bank of Chicago and First Capital Corporation. The lawsuit seeks to recover compensatory damages of $50 million and punitive damages of $50 million for alleged tortious interference with the contractual rights of the plaintiff and to impose a constructive trust on the proceeds of the use and/or sale of the assets of Caymen Coal, Inc. as they existed on October 15, 1988. Subsequently, the court entered an order dismissing the Company's indirect subsidiary. The Company intends to defend its interests vigorously and believes the damages alleged by the plaintiff in this action are highly exaggerated. In any event, the Company believes that it has valid defenses and that it will prevail in this litigation.
The Company is involved in these and various other legal actions arising in the normal course of business. After taking into consideration the evaluation of such actions by counsel for the Company, management is of the opinion that the outcome of all known and potential claims and litigation will not have a material adverse effect on the Company's business or consolidated financial position or results of operations.
EMPLOYMENT CONTRACTS - The Company has committed under employment contracts to provide two key executives with severance benefits totalling approximately $3.7 million which vest in September 2003 or earlier if the executive both reduces his ownership of the Company's common stock below a specified level and resigns. The Company amortizes the cost of the severance benefits over the ten year period from September 1993 to September 2003, unless the executive reduces his stock ownership and resigns prior to September 2003 in which case the unamortized severance cost would be expensed.
LETTERS OF CREDIT - At December 31, 1995, the Company had letters of credit outstanding and unused totalling $13.3 million and $21.7 million, respectively (see Note C). At December 31, 1994, the Company had letters of credit outstanding and unused totalling $13.1 million and $11.9 million, respectively.
(F) ACCRUED LIABILITIES AND OTHER NONCURRENT LIABILITIES
The components of "Accrued liabilities" at December 31, 1995 and 1994 were as follows (in thousands):
The components of "OTHER NONCURRENT LIABILITIES" at December 31, 1995 and 1994 were as follows (in thousands):
(G) INCOME TAXES
Income tax expense for the years ended December 31, 1995, 1994 and 1993 consisted of the following (in thousands):
The domestic and foreign components of income (loss) before income taxes for the years ended December 31, 1995, 1994 and 1993 were as follows (in thousands):
The effective tax rate, as computed on income before income taxes, differs from the statutory U.S. income tax rate for the years ended December 31, 1995, 1994 and 1993 due to the following:
Income taxes of $4,093,000 were recognized in 1994 despite losses before income taxes. The expense resulted primarily from income tax expense incurred with respect to certain foreign operations. The Company was limited in utilization of tax benefits from investment tax credits prior to 1986 and operating losses in 1994.
Deferred income taxes result from those transactions which affect financial and taxable income in different years. The nature of these transactions (all of which were long-term) and the income tax effect of each as of December 31, 1995 and 1994 was as follows (in thousands):
Valuation allowance is necessary to reflect the anticipated expiration of tax benefits (primarily net operating loss carryforwards) prior to their utilization. The estimated amount of net operating loss carry forward available increased in 1995 and the Company recognized corresponding additional valuation allowance.
Recapitalizations of the Company in 1989 and 1991 resulted in ownership changes for federal income tax purposes. As a result of these ownership changes, the amount of tax benefit carryforwards generated prior to the ownership changes which may be utilized to offset federal taxable income is limited by the Internal Revenue Code to approximately $2.7 million annually plus certain built-in gains that existed as of the date of such changes. Net tax operating losses of $18,283,000 arising since the 1991 ownership change are not subject to this limitation. Any tax benefits due to the utilization of carryforwards which were generated prior to the recapitalization in 1991 will be reported as a credit to "Capital in excess of par value".
(H) CAPITAL SHARES
On March 15, 1995, the Company's board of directors declared a dividend of one preferred share purchase right (a "Right") for each outstanding share of the Company's Common Stock outstanding on March 31, 1995 (the"Record Date"). Each Right entitles the registered holder to purchase from the Company one one-hundredth of a share of Series B Junior Participating Preferred Stock, par value $1.00 per share (the "Preferred Shares") of the Company at a price of $30.50, subject to adjustment. The Rights will not become exercisable until 10 days after a public announcement that a person or group has acquired 10% or more of the Company's Common Stock (thereby becoming an "Acquiring Person") or the commencement of a tender or exchange offer upon consummation of which such person or group would own 10% or more of the Company's Common Stock (the earlier of such dates being called the "Distribution Date"). Rights will be issued for all shares of the Company's Common Stock issued and outstanding on the Record Date. Until the Distribution Date, the Rights will be evidenced by the certificates representing the Company's Common Stock and will be transferrable only with the Company's Common Stock. In the event that any person or group becomes an Acquiring Person, each Right, other than Rights beneficially owned by the Acquiring Person (which will thereafter be void), will thereafter entitle its holder to purchase shares of the Company's Common Stock having a market value of two times the exercise price of the Right. After any person or group has become an Acquiring Person and prior to the acquisition by such person or group of 50% or more of the outstanding shares of Common Stock, the Company's board of directors may exchange each Right (other than Rights of the Acquiring Person), in whole or in part, at an exchange ratio of one Common Share or one one-hundredth of a Preferred Share per Right. If after a person or group has become an Acquiring Person, the Company is acquired in a merger or other business combination transaction or 50% or more of its assets or earning power are sold, each Right will entitle its holder to purchase, at the Right's then current exercise price, that number of shares of common stock of the acquiring company which at the time of such transaction will have a market value of two times the exercise price of the Right. The board of directors of the Company may redeem the Rights in whole, but not in part, at a price of $.01 per Right at any time prior to such time as any person or group becomes an Acquiring Person. The Rights expire on March 31, 2005. Preferred Shares purchasable upon exercise of the Rights will not be redeemable. Each Preferred Share will be entitled to a preferential quarterly dividend payment equal to the greater of $1 per share or 100 times the dividend declared per Common Share. Liquidation preference will be equal to the greater of $100 per share or 100 times the payment made per Common Share. Each Preferred Share will have one vote, voting together with the Common Stock.
CONVERTIBLE PREFERRED STOCK - In July 1993, the Company effected a public offering of 2,990,000 shares of $1.625 Convertible Preferred Stock, par value $1.00 per share (the "Preferred Stock"), pursuant to which the Company raised gross proceeds of approximately $74.7 million in cash (net proceeds of approximately $71.2 million). The proceeds were utilized to repay indebtedness under two credit facilities, both under the ING Facility, totalling approximately $17.1 million. The remaining proceeds were used by the Company for working capital and general corporate purposes. The Preferred Stock is convertible at the option of the holder at any time into shares of the Company's Common Stock at a conversion rate of 2.899 shares of Common Stock for each share of Preferred Stock (equivalent to a conversion price of $8.625 per share of Common Stock), subject to adjustment in certain events. Annual dividends are $1.625 per share and are cumulative and are payable quarterly commencing September 30, 1993. The Preferred Stock is redeemable at any time on and after September 30, 1996, at the option of the Company, in whole or in part, at a redemption price of $26.1375 per share, and thereafter at prices decreasing ratably annually to $25.00 per share on and after September 30, 2003, plus accrued and unpaid dividends. The holders of the Preferred Stock do not have any voting rights, except as required by applicable law and except that, among other things, whenever accrued and unpaid dividends on the Preferred Stock are equal to or exceed the equivalent of six quarterly dividends payable on the Preferred Stock, the holders of the Preferred Stock will be entitled to elect two directors to the Board until the dividend arrearage has been paid in full. The term of office of all directors so elected will terminate immediately upon such payment. The Preferred Stock has a liquidation preference of $25.00 per share, plus accrued and unpaid dividends. During 1995, 5,000 shares of the Preferred Stock were converted into 14,495 shares of the Company's Common Stock.
COMMON STOCK - In the third quarter of 1994, the Company issued 4,230,235 shares of the Company's Common Stock in association with the purchase of certain notes and interests relating to the lease debt outstanding on the drilling units "GEORGE H. GALLOWAY" and the "C. E. THORNTON", and the secured contingent obligations on the "F. G. McCLINTOCK" (see Note E).
In September 1995, the Company issued 1,232,057 shares of the Company's Common Stock in association with the purchase of "RIG 42" and filed a shelf registration statement in September 1995 registering such 1,232,057 shares. The Company has been informed that all of such shares have been sold. Pursuant to the terms of registration rights agreements among the Company and certain other holders of the Company's Common Stock, as currently in effect, the Company is required to maintain continuously effective shelf registration statements with respect to approximately 7.4 million shares of its Common Stock until the earlier to occur of (i) the sale of such shares by the holders thereof or (ii) August 1, 1996 (in the case of approximately 5.4 million shares) or September 14, 1996 (in the case of approximately 2 million shares).
As of December 31, 1995, authorized, unissued shares of Common Stock were reserved for issuance as follows:
Class A (Cumulative Convertible) Capital Stock (the "Class A Stock") has been included with "Capital in excess of par value" due to the insignificance of the $880 outstanding at December 31, 1995 and 1994.
(I) EMPLOYEE BENEFIT PLANS
PENSION PLANS - The Company has three noncontributory pension plans. Substantially all of its employees are covered by one or more of these plans. Plan benefits are primarily based on years of service and average high thirty-six month compensation.
The Reading & Bates Pension Plan (the "Domestic Plan") is qualified under the Employee Retirement Income Security Act (ERISA). It is the Company's policy to fund this plan not less than the minimum required by ERISA. It is the Company's policy to contribute to the Reading & Bates Offshore Pension Plan (the "Offshore Plan") an amount equal to the normal cost plus amounts sufficient to amortize the initial unfunded actuarial liability and subsequent unfunded liability caused by plan or assumption changes over thirty years. The unfunded liability arising from actuarial gains and losses is funded over fifteen years. The Offshore Plan is a nonqualified plan and is not subject to ERISA funding requirements. The Domestic and Offshore Plans invest in cash equivalents, fixed income and equity securities.
The Reading & Bates Retirement Benefit Replacement Plan (the "Replacement Plan") is a self-administered unfunded excess benefit plan. All members of the Domestic Plan or the Reading & Bates Savings Plan are potential participants in the Replacement Plan.
Net Pension costs for the years ended December 31, 1995, 1994 and 1993 included the following components (in thousands):
The funded status of the plans at December 31, 1995 was as follows (in thousands):
The additional minimum liability is shown as a reduction of stockholders' equity.
The weighted average discount rate and rate of increase in future compensation levels used in determining the actuarial present value of the projected benefit obligations was 7.4% and 4.5%, respectively. The weighted average expected long-term rate of return on assets was 10%.
POSTRETIREMENT BENEFITS - In addition to providing pension benefits, the Company provides certain health care and life insurance benefits for retired employees. The Company's employees may become eligible for these benefits if they reach normal or early retirement age while working for the Company and if they have accumulated 15 years (25 years effective January 1, 1996) of service. Health care costs are paid as they are incurred. Life insurance benefits are provided through an insurance company whose premiums are based on benefits paid during the year.
Postretirement benefit costs for the years ended December 31, 1995, 1994 and 1993 included the following (in thousands):
The health care cost trend rates used to measure the expected cost in 1996 for medical, dental and vision benefits were 8%, 5.5% and 5.5%, respectively, each graded down to an ultimate trend rate of 5%, 4.5% and 4.5%, respectively, to be achieved in the year 2021. The weighted average discount rate and rate of increase in future compensation levels used in determining the actuarial present value of the projected benefit obligation was 7.4% and 4.5%, respectively. The effect of a one-percentage-point increase in health care cost trend rates for future periods would increase the service cost and interest cost portion of net periodic postretirement benefit cost approximately 16%. The accumulated postretirement benefit obligation would increase by approximately 12.8%.
The amounts recognized in the Company's Consolidated Balance Sheet at December 31, 1995 and 1994 was as follows (in thousands):
SAVINGS PLANS - The Company has two savings plans, the Reading & Bates Savings Plan and the Reading & Bates Offshore Savings Plan. Under the plans, an employee may contribute up to 10% of base salary (subject to certain limitations) and the Company may make matching contributions at a rate of up to $1.00 for each dollar contributed by the employee up to 6% of the employee's base salary. Since January 1, 1992, the Company has made matching contributions at a rate of $.50 for each dollar contributed by the employee. Employees may direct the investment of their contributions and the contributions of the Company in various plan options.
Twenty-five percent of the Company's contribution vests after two years of an employee's service with the Company, 50% after three years, 75% after four years and 100% after five years. Compensation costs under the plans amounted to $518,000 in 1995, $531,000 in 1994 and $502,000 in 1993.
STOCK OPTION PLAN - The Company's 1990 Stock Option Plan (the "1990 Plan") is intended to provide an incentive that will allow the Company to retain in its employ, persons of the training, experience and ability necessary for the development and financial success of the Company. The 1990 Plan authorized options with respect to 1,966,000 shares of Common Stock to be granted to certain employees of the Company at an adjusted option price of $7.375 per share. On September 25, 1991, options with respect to all 1,966,000 shares were granted. Total adjusted compensation under the 1990 Plan of approximately $1,550,000 represents the excess of market price at the measurement date over the option price multiplied by the number of options granted. This amount was recognized as expense over the four year vesting period which commenced in March 1991. Compensation recognized under the plan for the three years ending December 31, 1995, 1994 and 1993 totalled approximately $126,000, $507,000 and $507,000, respectively. The plan will terminate on March 29, 2001.
STOCK INCENTIVE PLANS - The Company has two stock incentive plans, the 1992 Long-Term Incentive Plan (the "1992 Plan") and the 1995 Long-Term Incentive Plan (the "1995 Plan"). Both plans provide for grants of stock options, stock appreciation rights, stock awards and cash awards, which may be granted singly, in combination or in tandem. An aggregate of 1,000,000 and 2,500,000 shares of Common Stock is available for awards granted wholly or partly in Common Stock under the 1992 Plan and 1995 Plan, respectively. In 1992, the Company granted Restricted Stock Awards under the 1992 Plan totalling 300,000 shares of Common Stock. Such shares awarded are restricted as to transfer until vested pursuant to a schedule whereby 1/24th of the total number of shares is vested per calendar quarter from June 30, 1992 through March 31, 1998 (subject to certain conditions). The market value at the date of grant of the Common Stock granted was recorded as unearned compensation and is amortized to expense over the periods during which the restrictions lapse or shares vest. In 1995, the Company granted Stock Options under the 1992 Plan and 1995 Plan with respect to 700,000 and 600,000 shares of Common Stock, respectively, at option prices ranging from $9.00 to $13.875 per share (the market price on the date of grants). Such options become exercisable either over a three or four year period from the date of grant and no options are exercisable within six months or later than ten years from the date of grant. Also in 1995, the Company granted Restricted Stock Awards under the 1995 Plan totalling 544,200 shares of Common Stock. Such shares awarded are restricted as to transfer until fully vested three years from the date of grant. The market value at the date of grant of the Common Stock granted was recorded as unearned compensation and is amortized to expense over the period during which the shares vest. Unearned compensation is shown as a reduction of stockholders' equity.
DIRECTOR STOCK OPTION PLAN - The Company's 1995 Director Stock Option Plan (the "1995 Director Plan") is intended to obtain and retain non-employee members of the board of directors by rewarding them for making major contributions to the success of the Company. The 1995 Director Plan authorized options with respect to 200,000 shares of Common Stock to be granted at an option price of $7.375 per share. In 1995, the Company granted 120,000 options. The market value of the Company's Common Stock at the date of grant was less than the option price, and no compensation expense was recorded.
Stock option transactions under the plans were as follows:
(J) RELATED PARTY TRANSACTIONS
In 1994, as a part of the purchase of certain notes and interests relating to two of the leased drilling units "C.E. THORNTON" and "F.G. McCLINTOCK" (see Note E), the Company paid cash of $93,500 and issued 44,000 shares of Common Stock to BCL Investment Partners, L.P. ("BCL"), a major shareholder of the Company during 1994. Such cash and Common Stock represented payment for BCL's proportionate holdings of such notes and interests and was paid pro rata to all sellers of such notes and interests.
Drilling has rig management agreements with Sonat Offshore Drilling Inc. ("Sonat Offshore"), a major shareholder of Drilling, for the operation and marketing of both of its drilling units. In December 1995, the management agreement for one of Drilling's drilling units expired and a subsidiary of the Company now manages the drilling unit. For each of the years ending December 31, 1995, 1994 and 1993, Drilling paid to Sonat Offshore approximately $2.6 million, $2.5 million and $2.5 million, respectively, for such management services. In addition, Drilling has a bareboat charter agreement with Sonat Offshore for the other drilling unit. For the years ended December 31, 1995, 1994 and 1993, Drilling received from Sonat Offshore approximately $11.8 million, $13.9 million, and $14.7 million, respectively, for such bareboat charter. At December 31, 1995 and 1994, Drilling had a net receivable from Sonat Offshore of $5.4 million and $4.9 million, respectively.
(K) MAJOR CUSTOMERS AND GEOGRAPHIC INFORMATION
The Company, together with its 50% or less owned unconsolidated investees, operates principally in international offshore contract drilling of oil and gas wells. For the year ended December 31, 1995, revenues from two customers of $29.4 million and $28.9 million each accounted for 14% of the Company's total operating revenues. For the year ended December 31, 1994, revenues from one customer of $35.2 million accounted for 21% of the Company's total operating revenues. For the year ended December 31, 1993, revenues from three customers of $39.6 million, $37.7 million and $20.3 million accounted for 22%, 20% and 11%, respectively, of the Company's total operating revenues.
Geographic information about the Company's operations for the three years ended December 31, 1995 is as follows (in thousands):
READING & BATES CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL CONSOLIDATED FINANCIAL INFORMATION
QUARTERLY FINANCIAL DATA (UNAUDITED)
Summarized quarterly financial data for the two years ended December 31, 1995, are as follows (in thousands except for per share amounts):
Item 9.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Not applicable.
PART III
The information called for by Part III of Form 10-K is incorporated by reference from the Registrant's Proxy Statement relating to its annual meeting of Stockholders to be held May 14, 1996, which will be filed by the Registrant with the Securities and Exchange Commission no later than 120 days after the close of the fiscal year. Also reference is made to the information contained under the captioned "Executive Officers of Registrant" contained in Part I hereof.
PART IV
Item 14. Exhibits, Financial Statements and Reports on Form 8-K
(a) Financial Statements and Exhibits 1. Financial Statements:
Report of Independent Public Accountants Consolidated Balance Sheet as of December 31, 1995 and 1994 Consolidated Statement of Operations for the years ended December 31, 1995, 1994 and 1993 Consolidated Statement of Cash Flows for the years ended December 31, 1995, 1994 and 1993 Consolidated Statement of Stockholders' Equity for the years ended December 31, 1995, 1994 and 1993 Notes to Consolidated Financial Statements Supplemental Consolidated Financial Information (unaudited)
2. Exhibits:
Exhibit 3.1- The Registrant's Restated Certificate of Incorporation. (Filed as Exhibit 3.1 to Post-Effective Amendment No. 2 to the Company's Registration Statement on Form 8-A/A dated May 27, 1994 and incorporated herein by reference.)
Exhibit 3.2- Certificate of Designations of Series B Junior Participating Preferred Stock of the Registrant.
Exhibit 3.3- The Registrant's Bylaws, as amended and restated effective March 2, 1995. (Filed as Exhibit 3.1 to the Registrant's Form 8-K dated March 3, 1995 and incorporated herein by reference.)
Exhibit 4.1- Indenture relating to the Registrant's 8% Senior Subordinated Convertible Debentures due 1998 dated as of August 29, 1989, between the Registrant and IBJ Schroder Bank & Trust Company, as Trustee. (Filed as Exhibit 4.1 to the Company's Annual Report on Form 10- K for 1989 and incorporated herein by reference.)
Exhibit 4.2- Form of the Registrant's registered 8% Senior Subordinated Convertible Debentures due 1998. (Filed as Exhibit 4.2 to Registration No. 33-28580 and incorporated herein by reference.)
Exhibit 4.3- Form of the Registrant's bearer 8% Senior Subordinated Convertible Debentures due 1998. (Filed as Exhibit 4.3 to Registration No. 33-28580 and incorporated herein by reference.)
Exhibit 4.4- Form of the Registrant's Common Stock Certificate. (Filed as Exhibit 4.6 to Registration No. 33-51120 and incorporated herein by reference.)
Exhibit 4.5- Form of Preferred Stock Certificate for $1.625 Convertible Preferred Stock ($1.00 par value). (Filed as Exhibit 4.4 to Registration No. 33-65476 and incorporated herein by reference.)
Exhibit 4.6- Registration Rights Agreement dated as of March 29, 1991 among the Registrant, Holders as referred therein and members of Offering Committee as referred therein. (Filed as Exhibit 4.22 to the Company's Annual Report on Form 10-K for 1990 and incorporated herein by reference.)
Exhibit 4.7- Amendment No. 1, dated as of September 1, 1992, to the Registration Rights Agreement filed as Exhibit 4.7 hereto. (Filed as Exhibit 4.18 to Registration No. 33- 51120 and incorporated herein by reference.)
Exhibit 4.8- Amendment No. 2, dated as of June 1, 1993, to the Registration Rights Agreement. (Filed as Exhibit 4.8 to Registration No. 33-65476 and incorporated herein by reference.)
Exhibit 4.9- Amendment No. 3, dated as of August 1, 1994, to the Registration Rights Agreement. (Filed as Exhibit 4.5 to the Registration No. 33-56029 and incorporated herein by reference.)
Exhibit 4.10- Common Stock Issuance Agreement dated as of August 24, 1994 between the Company and BCL Investment Partners L.P. (Filed as Exhibit 4.24 to the Company's Annual Report on Form 10-K for 1994 and incorporated herein by reference.)
Exhibit 4.11- Common Stock Issuance Agreement dated August 31, 1995 between the Company and DeepFlex Production Partners L.P. (Filed as Exhibit 4.7 to Registration No. 33- 62727 and incorporated herein by reference.)
Exhibit 4.12- Rights Agreement dated as of March 15, 1995, including Exhibit A, "Form of Certificate of Designations"; Exhibit B, "Form of Rights Certificate"; Exhibit C, "Summary of Rights to Purchase Preferred Shares". (Filed as Exhibit 4 to the Company's Registration Statement on Form 8-A dated March 22, 1995 and incorporated herein by reference.)
Exhibit 10.1- Amended and Restated Lease Restructuring Agreement dated as of March 29, 1991 among the Registrant, other obligors, the Lessors, the Lease Lenders, the Lease Trustees, the Lease Equity Participant and the Lease Agent, all as named therein. (Filed as Exhibit 4.26 to the Company's Annual Report on Form 10-K for 1990 and incorporated herein by reference.)
Exhibit 10.2- Bareboat Charter Party Amendment No. 2 dated March 29, 1991 between The Connecticut National Bank, as Owner Trustee and Reading & Bates Drilling Co., a subsidiary of the Registrant, as Charterer. (Filed as Exhibit 4.27 to the Company's Annual Report on Form 10-K for 1990 and incorporated herein by reference.)
Exhibit 10.3- Bareboat Charter Party Amendment No. 3 dated as of March 29, 1991 between The Connecticut National Bank, as Owner Trustee and Reading & Bates Exploration Co., a subsidiary of the Registrant, as Charterer. (Filed as Exhibit 4.28 to the Company's Annual Report on Form 10-K for 1990 and incorporated herein by reference.)
Exhibit 10.4- Amendment No. 1 to Trust Indenture and First Preferred Ship Mortgage dated as of March 29, 1991 between Reading & Bates Exploration Co., a subsidiary of the Registrant, and State Street Bank and Trust Company of Connecticut, National Association, as Indenture Trustee. (Filed as Exhibit 4.29 to the Company's Annual Report on Form 10-K for 1990 and incorporated herein by reference.)
Exhibit 10.5- Amended and Restated Credit Facility Agreement dated as of April 27, 1995 among the Registrant, Reading & Bates Drilling Co., Reading & Bates Exploration Co., Reading and Bates, Inc., Reading and Bates Borneo Drilling Co., Ltd. and Reading & Bates (A) Pty. Ltd., subsidiaries of the Registrant, and Internationale Nederlanden Bank N.V. (Filed as Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q for the Second Quarter of 1995 and incorporated herein by reference.)
Exhibit 10.6- Amendment No. 1, dated July 31, 1995, to the Amended and Restated Credit Facility Agreement dated as of April 27, 1995 among the Registrant, Reading & Bates Drilling Co., Reading & Bates Exploration Co., Reading and Bates, Inc., Reading and Bates Borneo Drilling Co., Ltd. and Reading & Bates (A) Pty. Ltd., subsidiaries of the Registrant, and Internationale Nederlanden Bank N.V. (Filed as Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the Third Quarter of 1995 and incorporated herein by reference.)
Exhibit 10.7- Amendment No. 2, dated November 29, 1995, to the Amended and Restated Credit Facility Agreement dated as of April 27, 1995 among the Registrant, Reading & Bates Drilling Co., Reading & Bates Exploration Co., Reading and Bates, Inc., Reading and Bates Borneo Drilling Co., Ltd. and Reading & Bates (A) Pty. Ltd., subsidiaries of the Registrant, and Internationale Nederlanden Bank N.V.
Exhibit 10.8- Amendment No. 3 to Trust Indenture dated November 29, 1995 among the Registrant, Reading & Bates Drilling Co., Reading & Bates Exploration Co., Reading and Bates, Inc., Reading and Bates Borneo Drilling Co., Ltd. and Reading & Bates (A) Pty. Ltd., subsidiaries of the Registrant, and Bank One, Texas, N.A., as trustee.
Exhibit 10.9- Amendment No. 7, dated November 29, 1995, to Preferred Fleet Mortgage dated March 29, 1991 between Reading & Bates Drilling Co., a subsidiary of the Registrant, and Bank One, Texas, N.A., as trustee.
Exhibit 10.10- Amendment No. 3 to Assignment of Drilling Contract Revenues and Earnings dated November 29, 1995 among the Registrant, Reading & Bates Drilling Co., Reading & Bates Exploration Co. and Reading & Bates, Inc., subsidiaries of the Registrant, and Bank One, Texas, N.A., as trustee.
Exhibit 10.11- Amendment No. 3 to Assignment of Insurances dated November 29, 1995 among the Registrant, Reading & Bates Drilling Co., Reading & Bates Exploration Co. and Reading & Bates, Inc., subsidiaries of the Registrant, and Bank One, Texas, N.A., as trustee.
Exhibit 10.12- Galloway Assignment Agreement dated November 29, 1995 between Internationale Nederlanden Bank N.V. and Reading & Bates Offshore, Limited, a subsidiary of the Registrant.
Exhibit 10.13- Thornton Assignment Agreement dated November 29, 1995 between Internationale Nederlanden Bank N.V. and Reading & Bates Offshore, Limited, a subsidiary of the Registrant.
Exhibit 10.14- Termination of Charter Payments Agreement dated November 29, 1995 among the Registrant, Reading & Bates Drilling Co., Reading & Bates Exploration Co. and Reading & Bates, Inc., subsidiaries of the Registrant, and Internationale Nederlanden Bank N.V.
Exhibit 10.15- Termination Agreement dated November 29, 1995 among the Registrant, Reading & Bates Drilling Co., Reading & Bates Exploration Co. and Reading & Bates, Inc., Reading & Bates Borneo Drilling Co., Ltd. and Reading & Bates (A) Pty. Ltd., subsidiaries of the Registrant, and Internationale Nederlanden Bank N.V.
Exhibit 10.16- Letter of Credit Wind-Down Agreement dated November 28, 1995 between the Registrant and Internationale Nederlanden Bank, N.V.
Exhibit 10.17- Termination of Pledge Agreement dated November 29, 1995 among the Registrant, Reading & Bates Drilling Co., Reading & Bates Exploration Co. and Reading & Bates, Inc., Reading & Bates Borneo Drilling Co., Ltd. and Reading & Bates (A) Pty. Ltd., subsidiaries of the Registrant, and Internationale Nederlanden Bank N.V.
Exhibit 10.18- Termination of Assignment of Drilling Contract Revenues and Earnings dated November 29, 1995 among the Registrant, Reading & Bates Drilling Co., Reading & Bates Exploration Co. and Reading & Bates, Inc., subsidiaries of the Registrant, and Bank One, Texas, N.A., as trustee.
Exhibit 10.19- Termination of Assignment of Drilling Contract Revenues and Earnings dated November 29, 1995 among Reading & Bates Borneo Drilling Co., Ltd., a subsidiary of the Registrant, and Bank One, Texas, N.A., as trustee.
Exhibit 10.20- Termination of Assignment of Drilling Contract Revenues and Earnings dated November 29, 1995 among Reading & Bates (A) Pty. Ltd., a subsidiary of the Registrant, and Bank One, Texas, N.A., as trustee.
Exhibit 10.21- Termination of Assignment of Insurances dated November 29, 1995 among the Registrant, Reading & Bates Drilling Co., Reading & Bates Exploration Co. and Reading & Bates, Inc., subsidiaries of the Registrant, and Bank One, Texas, N.A., as trustee.
Exhibit 10.22- Termination of Assignment of Insurances dated November 29, 1995 among Reading & Bates Borneo Drilling Co., Ltd., a subsidiary of the Registrant, and Bank One, Texas, N.A., as trustee.
Exhibit 10.23- Termination of Assignment of Insurances dated November 29, 1995 among Reading & Bates (A) Pty. Ltd., a subsidiary of the Registrant, and Bank One, Texas, N.A., as trustee.
Exhibit 10.24- Termination of Pledge Agreement and Irrevocable Proxy dated November 29, 1995 between the Registrant and Bank One, Texas, N.A., as trustee.
Exhibit 10.25- Termination of Pledge Agreement and Irrevocable Proxy dated November 29, 1995 between Reading & Bates Drilling Co., a subsidiary of the Registrant, and Bank One, Texas, N.A., as trustee.
Exhibit 10.26- Termination of Pledge Agreement and Irrevocable Proxy dated November 29, 1995 between Reading & Bates Exploration Co., a subsidiary of the Registrant, and Bank One, Texas, N.A., as trustee.
Exhibit 10.27- Termination of Indenture of Trust dated November 29, 1995 among the Registrant, Reading & Bates Drilling Co., Reading & Bates Exploration Co. and Reading & Bates, Inc., Reading & Bates Borneo Drilling Co., Ltd. and Reading & Bates (A) Pty. Ltd., subsidiaries of the Registrant, and Bank One, Texas, N.A., as trustee.
Exhibit 10.28*- Reading & Bates 1990 Stock Option Plan. (Filed as Appendix A to the Company's Proxy Statement dated April 26, 1993 and incorporated herein by reference.)
Exhibit 10.29*- 1992 Long-Term Incentive Plan of Reading & Bates Corporation. (Filed as Exhibit B to the Registrant's Proxy Statement dated April 27, 1992 and incorporated herein by reference.)
Exhibit 10.30*- 1995 Long-Term Incentive Plan of Reading & Bates Corporation (Filed as Exhibit 99.A to the Company's Proxy Statement dated March 29, 1995 and incorporated herein by reference.)
Exhibit 10.31*- 1995 Director Stock Option Plan of Reading & Bates Corporation (Filed as Exhibit 99.B to the Company's Proxy Statement dated March 29, 1995 and incorporated herein by reference.)
Exhibit 10.32*- Director Stock Option Agreement dated as of September 14, 1993 between the Registrant and C. A. Donabedian. (Filed as Exhibit 10.15 to the Company's Annual Report on Form 10-K for 1993 and incorporated herein by reference.)
Exhibit 10.33*- Surrender Letter dated as of February 7, 1995 by C. A. Donabedian.
Exhibit 10.34*- Director Stock Option Agreement dated as of September 14, 1993 between the Registrant and J. W. McLean. (Filed as Exhibit 10.16 to the Company's Annual Report on Form 10-K for 1993 and incorporated herein by reference.)
Exhibit 10.35*- Surrender Letter dated as of February 7, 1995 by J. W. McLean.
Exhibit 10.36*- Director Stock Option Agreement dated as of September 14, 1993 between the Registrant and R. L. Sandmeyer. (Filed as Exhibit 10.17 to the Company's Annual Report on Form 10-K for 1993 and incorporated herein by reference.)
Exhibit 10.37*- Surrender Letter dated as of February 7, 1995 by R. L. Sandmeyer.
Exhibit 10.38*- Director Stock Option Agreement dated as of September 14, 1993 between the Registrant and S. A. Webster. (Filed as Exhibit 10.18 to the Company's Annual Report on Form 10-K for 1993 and incorporated herein by reference.)
Exhibit 10.39*- Surrender Letter dated as of February 7, 1995 by S. A. Webster.
Exhibit 10.40*- Stock Option Agreement dated as of February 7, 1995 between A.L. Chavkin and the Registrant.
Exhibit 10.41*- Stock Option Agreement dated as of February 7, 1995 between Willem Cordia and the Registrant.
Exhibit 10.42*- Stock Option Agreement dated as of February 7, 1995 between C.A. Donabedian and the Registrant.
Exhibit 10.43*- Stock Option Agreement dated as of February 7, 1995 between Ted Kalborg and the Registrant.
Exhibit 10.44*- Stock Option Agreement dated as of February 7, 1995 between J.W. McLean and the Registrant.
Exhibit 10.45*- Stock Option Agreement dated as of February 7, 1995 between R.L. Sandmeyer and the Registrant.
Exhibit 10.46*- Stock Option Agreement dated as of February 7, 1995 between S.A. Webster and the Registrant.
Exhibit 10.47*- Stock Option Agreement dated as of April 19, 1995 between M.A.E. Lacqueur and the Registrant.
Exhibit 10.48*- Stock Option Agreement with respect to the 1995 Long- Term Incentive Plan dated February 6, 1996 between the Registrant and Paul B. Loyd, Jr.
Exhibit 10.49*- Stock Option Agreement with respect to the 1992 Long- Term Incentive Plan dated February 6, 1996 between the Registrant and Paul B. Loyd, Jr.
Exhibit 10.50*- Employment Agreement dated as of November 1, 1991 between the Registrant and L. E. Voss, Jr. (Filed as Exhibit 10.34 to the Company's Annual Report on Form 10-K for 1991 and incorporated herein by reference.)
Exhibit 10.51*- Amendment No. 1, dated as of October 1, 1993, to the Employment Agreement dated as of November 1, 1991 between the Registrant and L. E. Voss, Jr. (Filed as Exhibit 10.22 to the Company's Annual Report on Form 10-K for 1993 and incorporated herein by reference.)
Exhibit 10.52*- Employment Agreement dated as of November 1, 1991 between the Registrant and T. W. Nagle. (Filed as Exhibit 10.35 to the Company's Annual Report on Form 10-K for 1991 and incorporated herein by reference.)
Exhibit 10.53*- Amendment No. 1, dated as of October 1, 1993, to the Employment Agreement dated as of November 1, 1991 between the Registrant and T. W. Nagle. (Filed as Exhibit 10.24 to the Company's Annual Report on Form 10-K for 1993 and incorporated herein by reference.)
Exhibit 10.54*- Employment Agreement dated as of November 1, 1991 between the Registrant and C. R. Ofner. (Filed as Exhibit 10.36 to the Company's Annual Report on Form 10-K for 1991 and incorporated herein by reference.)
Exhibit 10.55*- Amendment No. 1, dated as of October 1, 1993, to the Employment Agreement dated as of November 1, 1991 between the Registrant and C. R. Ofner. (Filed as Exhibit 10.26 to the Company's Annual Report on Form 10-K for 1993 and incorporated herein by reference.)
Exhibit 10.56*- Employment Agreement dated as of November 1, 1991 between the Registrant and D. L. McIntire. (Filed as Exhibit 10.37 to the Company's Annual Report on Form 10-K for 1991 and incorporated herein by reference.)
Exhibit 10.57*- Amendment No. 1, dated as of October 1, 1993, to the Employment Agreement dated as of November 1, 1991 between the Registrant and D. L. McIntire. (Filed as Exhibit 10.28 to the Company's Annual Report on Form 10-K for 1993 and incorporated herein by reference.)
Exhibit 10.58*- Employment Agreement dated as of November 1, 1991 between the Registrant and W. K. Hillin. (Filed as Exhibit 10.38 to the Company's Annual Report on Form 10-K for 1991 and incorporated herein by reference.)
Exhibit 10.59*- Amendment No. 1, dated as of October 1, 1993, to the Employment Agreement dated as of November 1, 1991 between the Registrant and W. K. Hillin. (Filed as Exhibit 10.30 to the Company's Annual Report on Form 10-K for 1993 and incorporated herein by reference.)
Exhibit 10.60*- Employment Agreement dated as of January 1, 1992 between the Registrant and Paul B. Loyd, Jr. (Filed as Exhibit 10.42 to Registration No. 33-51120 and incorporated herein by reference.)
Exhibit 10.61*- Amendment No. 1, dated as of October 1, 1993, to the Employment Agreement dated as of January 1, 1992 between the Registrant and Paul B. Loyd, Jr. (Filed as Exhibit 10.32 to the Company's Annual Report on Form 10-K for 1993 and incorporated herein by reference.)
Exhibit 10.62*- Employment Agreement dated as of January 1, 1992 between the Registrant and C. Kirk Rhein, Jr. (Filed as Exhibit 10.43 to Registration No. 33-51120 and incorporated herein by reference.)
Exhibit 10.63*- Amendment No. 1, dated as of October 1, 1993, to the Employment Agreement dated as of January 1, 1992 between the Registrant and C. Kirk Rhein, Jr. (Filed as Exhibit 10.34 to the Company's Annual Report on Form 10-K for 1993 and incorporated herein by reference.)
Exhibit 10.64*- Employment Agreement dated as of January 1, 1992 between the Registrant and J. T. Angel. (Filed as Exhibit 10.44 to Registration No. 33-51120 and incorporated herein by reference.)
Exhibit 10.65*- Agreement amending Employment Agreement dated October 7, 1993 between the Registrant and J. T. Angel. (Filed as Exhibit 10.36 to the Company's Annual Report on Form 10-K for 1993 and incorporated herein by reference.)
Exhibit 10.66- Agreement dated as of August 31, 1991 among Registrant, Arcade Shipping AS and Sonat Offshore Drilling Inc. (Filed as Exhibit 10.40 to the Company's Annual Report on Form 10-K for 1991 and incorporated herein by reference.)
Exhibit 10.67- Thornton Waiver Agreement dated as of May 31, 1991 among the Noteholders, the Owner Trustee and the Indenture Trustee named therein. (Filed as Exhibit 10.46 to Registration No. 33-51120 and incorporated herein by reference.)
Exhibit 10.68- Thornton Rescission Agreement dated as of June 28, 1991 among Reading & Bates Exploration Co., the Registrant, the Noteholders, the Owner Trustee, the Indenture Trustee and the Owner Participant named therein. (Filed as Exhibit 10.49 to Registration No. 33-51120 and incorporated herein by reference.)
Exhibit 10.69- Thornton Assignment Agreement dated as of June 28, 1991 between the Holders named therein and NMB Postbank Groep N.V. (Filed as Exhibit 10.50 to Registration No. 33-51120 and incorporated herein by reference.)
Exhibit 10.70- Facility Agreement dated February 21, 1991 between Arcade Drilling AS, Chase Investment Bank Limited and The Chase Manhattan Bank, N.A. (Filed as Exhibit 10.51 to Registration No. 33-51120 and incorporated herein by reference.)
Exhibit 10.71- Amendment Agreement dated November 30, 1995 to Facility Agreement dated February 21, 1991 between Arcade Drilling AS, Chase Investment Bank Limited and The Chase Manhattan Bank, N.A.
Exhibit 10.72- Hull 515 Rig Management Agreement dated October 26, 1990 between Arcade Drilling AS and Sonat Offshore Drilling Inc. (Filed as Exhibit 10.52 to Registration No. 33-51120 and incorporated herein by reference.)
Exhibit 10.73- HG Rig Management Agreement dated October 26, 1990 between Arcade Drilling AS and Sonat Offshore Drilling Inc. (Filed as Exhibit 10.53 to Registration No. 33- 51120 and incorporated herein by reference.)
Exhibit 10.74- Modification Agreement dated as of May 27, 1992 between Arcade Drilling AS and Sonat Offshore Drilling Inc. (Filed as Exhibit 10.54 to Registration No. 33-51120 and incorporated herein by reference.)
Exhibit 10.75- Charter Payments Agreement dated as of September 30, 1991 among the Registrant, Reading & Bates Drilling Co., Reading & Bates Exploration Co., Reading and Bates, Inc. and NMB Postbank Groep, N.V. (Filed as Exhibit 10.57 to Registration No. 33-51120 and incorporated herein by reference.)
Exhibit 10.76- Amendment No. 1, dated as of June 30, 1992, to Charter Payments Agreement dated as of September 30, 1991 among the Registrant, Reading and Bates Drilling Co., Reading and Bates Exploration Co., Reading and Bates, Inc. and Internationale Nederlanden Bank N.V. (formerly known as NMB Postbank Groep N.V.). (Filed as Exhibit 10.36 to the Company's Annual Report on Form 10-K for 1992 and incorporated herein by reference.)
Exhibit 10.77- ISDA Interest and Currency Exchange Agreement dated as of October 26, 1990 between The Chase Manhattan Bank, N.A. and K/S Frontier Drilling, and Novation Agreement with respect thereto dated February 28, 1991. (Filed as Exhibit 10.62 to Registration No. 33-51120 and incorporated herein by reference.)
Exhibit 10.78- Assignment Agreement "F. G. McClintock" dated as of August 24, 1994 between the Company and BCL Investment Partners L.P. (Filed as Exhibit 10.55 to the Company's Annual Report on Form 10-K for 1994 and incorporated herein by reference.)
Exhibit 10.79- Assignment Agreement "F. G. McClintock" dated as of September 27, 1994 between the Company and BT Advisors, Inc. (Filed as Exhibit 10.56 to the Company's Annual Report on Form 10-K for 1994 and incorporated herein by reference.)
Exhibit 10.80- Assignment Agreement "C. E. Thornton" dated as of August 24, 1994 between the Company and BCL Investment Partners L.P. (Filed as Exhibit 10.57 to the Company's Annual Report on Form 10-K for 1994 and incorporated herein by reference.)
Exhibit 10.81- Assignment Agreement "C. E. Thornton" dated as of September 27, 1994 between the Company and BT Advisors, Inc. (Filed as Exhibit 10.58 to the Company's Annual Report on Form 10-K for 1994 and incorporated herein by reference.)
Exhibit 10.82- Assignment Agreement "George H. Galloway" dated as of August 24, 1994 between the Company and Elliott Associates L.P. (Filed as Exhibit 10.59 to the Company's Annual Report on Form 10-K for 1994 and incorporated herein by reference.)
Exhibit 10.83- Loan Agreement dated as of May 25, 1995 among the Registrant and Reading & Bates Offshore, Limited, a subsidiary of the Registrant, and the CIT Group/Equipment Financing, Inc. (Filed as Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the Second Quarter of 1995 and incorporated herein by reference.)
Exhibit 10.84- Amendment No. 1 dated as of December 20, 1995 Loan Agreement dated as of May 25, 1995 among The CIT Group/Equipment Financing, Inc. and Reading & Bates Offshore, Limited, a subsidiary of the Registrant and the Registrant.
Exhibit 10.85- Amendment No. 1 dated as of December 20, 1995 to the Guaranty dated as of May 25, 1995 made by the Registrant in favor of The CIT Group/Equipment Financing, Inc.
Exhibit 10.86- First Preferred Fleet Mortgage dated May 25, 1995 between The CIT Group/Equipment Financing, Inc. and Reading & Bates Offshore, Limited, a subsidiary of the Registrant.
Exhibit 10.87- Supplement No. 1 dated July 13, 1995 to First Preferred Fleet Mortgage dated May 25, 1995 between The CIT Group/Equipment Financing, Inc. and Reading & Bates Offshore, Limited, a subsidiary of the Registrant.
Exhibit 10.88- Supplement No. 2 dated December 20, 1995 to First Preferred Fleet Mortgage dated May 25, 1995 between The CIT Group/Equipment Financing, Inc. and Reading & Bates Offshore, Limited, a subsidiary of the Registrant.
Exhibit 10.89- General Assignment of Earnings dated May 25, 1995 by Reading & Bates Offshore, Limited, a subsidiary of the Registrant, in favor of The CIT Group/Equipment Financing, Inc.
Exhibit 10.90- Assignment of Insurance dated May 25, 1995 by Reading & Bates Offshore, Limited, a subsidiary of the Registrant, in favor of The CIT Group/Equipment Financing, Inc.
Exhibit 10.91- Memorandum of Agreement dated August 31, 1995 between FPS II, Inc., as holder of legal title for the benefit of DeepFlex Production Partners, L.P. and Reading & Bates (U.K.) Limited, a subsidiary of the Registrant. (Filed as Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q for the Third Quarter of 1995 and incorporated herein by reference.)
Exhibit 10.92- Agreement for the sale and purchase of Semi-Submersible Emergency Support Vessel Iolair dated September 8, 1995 between BP Exploration Operating Company Limited and Reading & Bates (Caledonia) Limited, a subsidiary of the Registrant. (Filed as Exhibit 10.3 to the Company's Quarterly Report on Form 10-Q for the Third Quarter of 1995 and incorporated herein by reference.)
Exhibit 10.93- Mortgage of a Ship dated September 8, 1995 between Reading & Bates (Caledonia) Limited, a subsidiary of the Registrant, and BP Exploration Operating Company Limited. (Filed as Exhibit 10.4 to the Company's Quarterly Report on Form 10-Q for the Third Quarter of 1995 and incorporated herein by reference.)
Exhibit 10.94- Mortgage of a Ship dated September 8, 1995 between Reading & Bates (Caledonia) Limited, a subsidiary of the Registrant, and Britoil plc. (Filed as Exhibit 10.5 to the Company's Quarterly Report on Form 10-Q for the Third Quarter of 1995 and incorporated herein by reference.)
Exhibit 10.95- Deed of Covenant dated September 8, 1995 between Reading & Bates (Caledonia) Limited, a subsidiary of the Registrant, and BP Exploration Operating Company Limited. (Filed as Exhibit 10.6 to the Company's Quarterly Report on Form 10-Q for the Third Quarter of 1995 and incorporated herein by reference.)
Exhibit 10.96- Deed of Covenant dated September 8, 1995 between Reading & Bates (Caledonia) Limited, a subsidiary of the Registrant, and Britoil Public Limited Company. (Filed as Exhibit 10.7 to the Company's Quarterly Report on Form 10-Q for the Third Quarter of 1995 and incorporated herein by reference.)
Exhibit 10.97- Performance Guarantee dated September 8, 1995 by the Registrant in favour of BP Exploration Operating Company Limited. (Filed as Exhibit 10.8 to the Company's Quarterly Report on Form 10-Q for the Third Quarter of 1995 and incorporated herein by reference.)
Exhibit 10.98- Performance Guarantee dated September 8, 1995 by the Registrant in favour of Britoil plc. (Filed as Exhibit 10.9 to the Company's Quarterly Report on Form 10-Q for the Third Quarter of 1995 and incorporated herein by reference.)
Exhibit 10.99- Initial Services Agreement dated September 8, 1995 between Britoil Public Limited Company and Reading & Bates (Caledonia) Limited, a subsidiary of the Registrant. (Filed as Exhibit 10.10 to the Company's Quarterly Report on Form 10-Q for the Third Quarter of 1995 and incorporated herein by reference.)
Exhibit 10.100- Heads of Agreement for the provision of Vessel Services dated September 8, 1995 between Britoil Public Limited Company, Reading & Bates (Caledonia) Limited, a subsidiary of the Registrant, and the Registrant. (Filed as Exhibit 10.11 to the Company's Quarterly Report on Form 10-Q for the Third Quarter of 1995 and incorporated herein by reference.)
Exhibit 10.101- Credit Facility Agreement dated November 16, 1995 among the Registrant, Reading & Bates Drilling Co. and Reading & Bates Exploration Co., subsidiaries of the Registrant, and Christiania Bank Og Kreditkasse, as agent.
Exhibit 10.102- Guarantee dated November 28, 1995 by the Registrant in favor of Christiania Bank Og Kreditkasse.
Exhibit 10.103- First Preferred Mortgage on the "Jack Bates" dated November 28, 1995 between Reading & Bates Drilling Co., a subsidiary of the Registrant, and Wilmington Trust Company, as Indenture Trustee.
Exhibit 10.104- First Preferred Mortgage on the "D.R. Stewart" dated November 28, 1995 between Reading & Bates Exploration Co., a subsidiary of the Registrant, and Wilmington Trust Company, as Indenture Trustee.
Exhibit 10.105- Indenture of Trust dated November 16, 1995 among Reading & Bates Drilling Co. and Reading & Bates Exploration Co., subsidiaries of the Registrant, and Wilmington Trust Company, as Indenture Trustee.
Exhibit 10.106- General Assignment with respect to the "Jack Bates" dated November 28, 1995 by Reading & Bates Drilling Co., a subsidiary of the Registrant, in favor of Christiania Bank Og Kreditkasse, as agent.
Exhibit 10.107- General Assignment with respect to the "D.R. Stewart" dated November 28, 1995 by Reading & Bates Exploration Co., a subsidiary of the Registrant, in favor of Christiania Bank Og Kreditkasse, as agent.
Exhibit 10.108- Assignment of Insurances with respect to the "Jack Bates" dated November 28, 1995 by Reading & Bates Drilling Co., a subsidiary of the Registrant, in favor of Christiania Bank Og Kreditkasse, as agent.
Exhibit 10.109- Assignment of Insurances with respect to the "D.R. Stewart" dated November 28, 1995 by Reading & Bates Exploration Co., a subsidiary of the Registrant, in favor of Christiania Bank Og Kreditkasse, as agent.
Exhibit 10.110- Memorandum of Agreement dated November 28, 1995 between Reading and Bates, Inc., a subsidiary of the Registrant, and Deep Sea Investors, L.L.C.
Exhibit 10.111- Bareboat Charter "M.G. Hulme, Jr." dated November 28, 1995 between Deep Sea Investors, L.L.C. and Reading & Bates Drilling Co., a subsidiary of the Registrant.
Exhibit 10.112- Purchase and Sale Agreement dated October 18, 1995 between Enserch Exploration, Inc. and Reading & Bates Development Co., a subsidiary of the Registrant.
Exhibit 10.113- Assignment and Bill of Sale (OCS-G-8504) effective as of May 1, 1995 between Enserch Exploration, Inc. and Reading & Bates Development Co., a subsidiary of the Registrant.
Exhibit 10.114- Assignment and Bill of Sale (OCS-G-8012 effective as of May 1, 1995 between Enserch Exploration, Inc. and Reading & Bates Development Co., a subsidiary of the Registrant.
Exhibit 10.115- Assignment and Bill of Sale (OCS-G- 7049) effective as of May 1, 1995 between Enserch Exploration, Inc. and Reading & Bates Development Co., a subsidiary of the Registrant.
Exhibit 10.116- Assignment and Bill of Sale (OCS-G-8010) effective as of May 1, 1995 between Enserch Exploration, Inc. and Reading & Bates Development Co., a subsidiary of the Registrant.
Exhibit 10.117- Assignment and Bill of Sale (OCS-G-13696) effective as of May 1, 1995 between Enserch Exploration, Inc. and Reading & Bates Development Co., a subsidiary of the Registrant.
Exhibit 10.118- Assignment and Bill of Sale (OCS-G-13171) effective as of May 1, 1995 between Enserch Exploration, Inc. and Reading & Bates Development Co., a subsidiary of the Registrant.
Exhibit 10.119- Assignment and Bill of Sale (OCS-G-8005) effective as of May 1, 1995 between Enserch Exploration, Inc. and Reading & Bates Development Co., a subsidiary of the Registrant.
Exhibit 10.120- Assignment and Bill of Sale (OCS-G-8000) effective as of May 1, 1995 between Enserch Exploration, Inc. and Reading & Bates Development Co., a subsidiary of the Registrant.
Exhibit 10.121- Assignment and Bill of Sale (OCS-G-8006) effective as of May 1, 1995 between Enserch Exploration, Inc. and Reading & Bates Development Co., a subsidiary of the Registrant.
Exhibit 10.122- Assignment and Bill of Sale (OCS-G-8876) effective as of May 1, 1995 between Enserch Exploration, Inc. and Reading & Bates Development Co., a subsidiary of the Registrant.
Exhibit 10.123- Payment Agreement dated October 18, 1995 between Enserch Exploration, Inc. and Reading & Bates Development Co., a subsidiary of the Registrant.
Exhibit 10.124- Mortgage and Security Agreement dated October 18, 1995 between Enserch Exploration, Inc. and Reading & Bates Development Co., a subsidiary of the Registrant.
Exhibit 10.125- Operating Agreement made effective as of May 1, 1995 among Enserch Exploration, Inc., Mobil Oil Corporation, Mobil Oil exploration & Producing Southeast Inc. and Reading & Bates Development Co., a subsidiary of the Registrant.
Exhibit 10.126- Option Agreement made effective as of May 1, 1995 between Enserch Exploration, Inc. and Reading & Bates Development Co., a subsidiary of the Registrant.
Exhibit 11 - Computation of Earnings Per Common Share
Exhibit 21 - Schedule of Subsidiaries of the Company
Exhibit 23 - Consent of Arthur Andersen LLP
Exhibit 27 - Financial Data Schedule. (Exhibit 27 is being submitted as an exhibit only in the electronic format of this Annual Report on Form 10-K being submitted to the Securities and Exchange Commission.)
Exhibit 99 - Annual Report on Form 11-K with respect to Reading & Bates Savings Plan.
Instruments with respect to certain long-term obligations of the Company are not being filed as exhibits hereto as the securities authorized thereunder do not exceed 10% of the Company's total assets. The Company agrees to furnish a copy of each such instrument to the Securities and Exchange Commission upon its request.
* Management contract or compensatory plan or arrangement required to be filed as an exhibit pursuant to the requirements of Item 14(c) of Form 10-K.
(b) Reports on Form 8-K
There were four Current Reports on Form 8-K filed during the three months ended December 31, 1995. A Current Report on Form 8-K was filed on October 16, 1995 disclosing the Company's 3rd quarter 1995 earnings; filed October 25, 1995 disclosing the Company's purchase of a 20% working interest in the Green Canyon 254 Allegheny project from Enserch Exploration, Inc.; filed November 9, 1995 disclosing that ARCO China Inc. elected to exercise three option wells for the "JACK BATES"; and filed December 4, 1995 disclosing the closing of two separate financings aggregating approximately $115 million, which included the sale/lease-back of the "M.G. HULME, JR.".
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed by the undersigned, thereunto duly authorized on March 11, 1996.
READING & BATES CORPORATION
By /s/ Paul B. Loyd, Jr. ------------------------- Paul B. Loyd, Jr. President, Chief Executive Officer, Chairman and Director
Pursuant to the requirements of the Securities Exchange Act of l934, this report has been signed below by the following persons on behalf of the Registrant in the capacities indicated on March 11, 1996.
By /s/ Paul B. Loyd Jr. By /s/Macko A. E. Laqueur --------------------------- --------------------------- Paul B. Loyd, Jr. Macko A. E. Laqueur President, Chief Director Executive Officer, Chairman and Director
By /s/ C. Kirk Rhein, Jr. By /s/ Charles A. Donabedian --------------------------- -------------------------- C. Kirk Rhein, Jr. Charles A. Donabedian Vice Chairman and Director Director
By /s/ Tim W. Nagle By /s/ J. W. McLean --------------------------- -------------------------- Tim W. Nagle J. W. McLean Executive Vice President, Director Finance and Administration Principal Accounting Officer
By /s/ Ted Kalborg By /s/ Arnold L. Chavkin --------------------------- --------------------------- Ted Kalborg Arnold L. Chavkin Director Director
By /s/ Steven A. Webster By /s/ Robert L. Sandmeyer --------------------------- --------------------------- Steven A. Webster Robert L. Sandmeyer Director Director