SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (date of earliest event reported): October 28, 2003 TRANSOCEAN INC. (Exact name of registrant as specified in its charter) CAYMAN ISLANDS 333-75899 66-0587307 (State or other jurisdiction of (Commission (I.R.S. Employer incorporation or organization) File Number) Identification No.) 4 GREENWAY PLAZA HOUSTON, TEXAS 77046 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (713) 232-7500
ITEM 7. Financial Statements and Exhibits. (c) Exhibits The following exhibit is furnished pursuant to Item 12: 99.1 Transocean Inc. Press Release Reporting Third Quarter 2003 Financial Results. ITEM 12. Results of Operations and Financial Condition. The following information is furnished under Item 12 of Form 8-K (Results of Operations and Financial Condition) in accordance with Securities and Exchange Commission Release No. 33-8216. Our press release dated October 28, 2003, concerning third quarter 2003 financial results, furnished as Exhibit 99.1 to this report, is incorporated by reference herein. The press release contains certain measures (discussed below) which may be deemed "non-GAAP financial measures" as defined in Item 10 of Regulation S-K of the Securities Exchange Act of 1934, as amended. In the attached press release, we discuss net income, excluding the impact of costs related to the planned initial public offering of our Gulf of Mexico Shallow and Inland Water business segment, on a total and per share basis for the quarter ended September 30, 2003. We also discuss net income, excluding a tax benefit attributable to the restructuring of certain non-U.S. operations and the non-cash impairment of certain long-lived assets, on a total and per share basis for the quarter ended September 30, 2002. In addition, we discuss net income, excluding the impact of costs related to the planned initial public offering of our Gulf of Mexico Shallow and Inland Water business segment, after-tax impairment charges, an after-tax loss relating to the early retirement of debt and the favorable resolution of a non-U.S. income tax liability, on a total and per share basis for the nine months ended September 30, 2003. We also discuss net income, excluding the favorable resolution of a non-U.S. income tax liability, non-cash loss on the impairment of long-lived assets and a non-cash charge related to the adoption of Statement of Financial Accounting Standards 142, Goodwill and Other Tangible Assets, on a total and per share basis for the nine months ended September 30, 2002. This information is provided because management believes exclusion of these items will help investors compare results between periods and identify operating trends that could otherwise be masked by these items. The most directly comparable GAAP financial measure, net income (loss), and information reconciling the GAAP and non-GAAP measures are included in the press release. In the press release, we also discuss net debt at September 30, 2003 and at December 31, 2002. This information is provided because management believes net debt provides useful information regarding the level of our indebtedness by reflecting the amount of indebtedness assuming cash and investments were used to repay debt. The most directly comparable GAAP financial measure, total debt, and the information reconciling the GAAP and the non-GAAP measures are included in the press release. In the press release, we also discuss field operating income for each of our business segments for the quarters ended September 30 and June 30, 2003 and September 30, 2002. Management believes field operating income is a useful measure of the operating results of a particular segment since the measure only deducts expenses directly related to a segment's operations from that segment's revenues. The most directly comparable GAAP financial measure, operating income before general and administrative expenses, -1-
and information reconciling the GAAP and non-GAAP measures are included in the press release. The information furnished pursuant to this Item 12, including Exhibit 99.1, shall not be deemed to be "filed" for the purposes of Section 18 of the Securities Exchange Act of 1934, nor will it be incorporated by reference into any registration statement filed by Transocean Inc. under the Securities Act of 1933, as amended, unless specifically identified therein as being incorporated therein by reference. The furnishing of the information in this report is not intended to, and does not, constitute a determination or admission by Transocean Inc. that the information in this report is material or complete, or that investors should consider this information before making an investment decision with respect to any security of Transocean Inc. -2-
SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. TRANSOCEAN INC. Date: October 28, 2003 By: /s/ GREGORY L. CAUTHEN ----------------------------- Gregory L. Cauthen Senior Vice President and Chief Financial Officer -3-
INDEX TO EXHIBITS
EXHIBIT 99.1 TRANSOCEAN INC. Post Office Box 2765 Houston TX 77252 2765 (TRANSOCEAN INC. LOGO) - -------------------------------------------------------------------------------- ANALYST CONTACT: Jeffrey L. Chastain NEWS RELEASE 713-232-7551 MEDIA CONTACT: Guy A. Cantwell FOR RELEASE: October 28, 2003 713-232-7647 TRANSOCEAN INC. REPORTS THIRD QUARTER 2003 RESULTS HOUSTON--Transocean Inc. (NYSE: RIG) today reported net income for the three months ended September 30, 2003 of $11.0 million, or $0.03 per diluted share, on revenues of $622.9 million. The results included $8.0 million, or $0.03 per diluted share, of costs relating to the planned initial public offering (IPO) of the company's Gulf of Mexico Shallow and Inland Water business segment operated through its wholly-owned subsidiary, TODCO. Excluding the impact of the IPO costs, net income for the three months ended September 30, 2003 was $19.0 million, or $0.06 per diluted share. Results for the quarter compared to net income of $255.2 million, or $0.79 per diluted share, on revenues of $695.2 million for the three months ended September 30, 2002. Results for the three months ended September 30, 2002 included a tax benefit totaling $176.2 million, or $0.54 per diluted share, attributable to the restructuring of certain non-U.S. operations, partially offset by a $26.6 million after-tax loss, or $0.08 per diluted share, resulting from the non-cash impairment of certain long-lived assets. Excluding the impact of the tax benefit and the non-cash loss due to the impairment of assets, net income for the three months ended September 30, 2002 was $105.6 million, or $0.33 per diluted share. For the nine months ended September 30, 2003, net income totaled $13.7 million, or $0.04 per diluted share, on revenues of $1,842.8 million. Year-to-date 2003 results included the previously discussed costs associated with the planned IPO of TODCO, after-tax asset impairment charges totaling $26.6 million, or $0.08 per diluted share, and an after-tax loss of $13.8 million, or $0.04 per diluted share, relating to the early retirement of debt, partially offset by a favorable resolution of a non-U.S. income tax liability of $14.6 million, or $0.04 per diluted share. Excluding the impact of the IPO costs, impairment charges, debt retirement loss and favorable income tax resolution, net income for the nine months ended September 30, 2003 was $47.5 million, or $0.15 per diluted share. During the corresponding nine months ended September 30, 2002, the company reported a net loss of $951.2 million, or $2.94 per diluted share, on revenues of $2,009.3 million. Results for the first nine months of 2002 included the previously discussed tax benefit and non-cash loss on the impairment of long-lived assets, in addition to a non-cash charge of $1,363.7 million, or $4.22 per diluted share, pertaining to the adoption in January 2002 of Statement of Financial Accounting Standards 142 (FAS 142), Goodwill and Other Intangible Assets. Excluding the impact of the year-to-date tax benefit of $175.7 million, or $0.54 per diluted share, non-cash loss on the impairment of long-lived assets of $27.3 million, or $0.08 per diluted share, and loss from the non-cash charge relating to the adoption of FAS 142, net income for the nine months ended September 30, 2002 was $264.1 million, or $0.82 per diluted share. Cash flow from operations totaled $159.4 million and $464.6 million for the three and nine months ended September 30, 2003. Net debt (defined as long-term debt plus debt due within one year less cash and cash equivalents) declined to $2,895.1 million at September 30, 2003, from $3,282.5 million at December 31, 2002. Revenues associated with the company's International and U.S. Floater Contract Drilling Services business segment were $564.4 million for the three months ended September 30, 2003, improving 3% from revenues of $548.5 million during the preceding quarter of 2003. During the third quarter of 2002, segment revenues totaled $641.2 million. Segment operating income, before general and administrative expense, was $118.9 million during the current quarter, while field operating income (defined as revenues less operating and maintenance expenses) during that period was $222.0 million. Segment field operating income for the three months ended September 30, 2003 was
negatively impacted by approximately $17 million due to an ongoing disagreement with a customer concerning the applicable dayrate and other costs on the ultra-deepwater drillship Discoverer Enterprise following the riser separation incident on May 21, 2003. The segment results compared to operating income of $84.2 million and field operating income of $192.6 million during the preceding quarter of 2003 and $190.0 million and $315.5 million, respectively, during the corresponding three months in 2002. Segment fleet utilization improved to 71% for the three months ended September 30, 2003, from 68% during the preceding quarter of 2003, resulting primarily from improved utilization in the company's fleet of deepwater rigs. During the corresponding three months of 2002, segment utilization was 79%. Prospects for the company's International and U.S. Floater Contract Drilling Services business segment are uncertain over the next six to nine months. Over this period, market dayrates for the industry's most technically advanced rigs will be difficult to predict and intermittent idle time could be experienced as several of these units, including four of the company's 5th Generation deepwater rigs, conclude contracts. The company continues to believe that over the long term, deepwater exploration and development drilling opportunities in Angola, Nigeria, India and other emerging locations represent a potentially significant source of future rig demand. In the company's Mid-Water fleet, no measurable improvement is expected through the first quarter of 2004 when seasonal demand in the North Sea is expected to offer additional drilling opportunities through the spring and summer months. Finally, a stable level of activity is expected to persist in most of the international jackup market sectors. The modest overcapacity present in the West Africa jackup market sector is expected to largely dissipate by mid-2004, although dayrates associated with near-term contract signings in the region are expected to decline from average levels experienced over the past 12 months. Operating revenues from the company's Gulf of Mexico Shallow and Inland Water business segment continued to show improvement, totaling $58.5 million for the three months ended September 30, 2003 compared to $55.4 million during the preceding three months in 2003 and $54.0 million during the corresponding three months in 2002. The 6% revenue increase from the preceding quarter in 2003 was attributable to improvements in both average fleet utilization and dayrates among the segment's jackup rigs. The business segment recorded a reduced operating loss, before general and administrative expense, of $24.9 million during the current quarter, while the segment's field operating loss (defined as revenues less operating and maintenance expenses) narrowed to $2.1 million, compared to $49.5 million and $15.2 million, respectively, during the preceding quarter of 2003. For the corresponding three months in 2002, the segment's operating loss totaled $38.1 million while the field operating loss was $1.4 million. Segment fleet utilization improved to 44% in the current quarter, compared to 42% during the preceding quarter of 2003 and 38% during the corresponding three months in 2002. The Gulf of Mexico Shallow and Inland Water business segment continues to benefit from a declining base of jackup rig supply in the Gulf of Mexico, which has helped to lift utilization and dayrates in an otherwise flat rig demand environment. Demand in the Gulf of Mexico inland barge fleet has trended lower, while total supply is unchanged. However, deep gas drilling interest among several exploration and production companies operating in the Gulf of Mexico is expected to increase, offering the prospect for improving demand in 2004. The company continues to monitor market conditions for its planned IPO of TODCO, which operates its Gulf of Mexico Shallow and Inland Water business segment. The company first announced its divestiture plans in the third quarter of 2002. As the IPO had not been completed by the end of the third quarter of 2003, the company recognized its previously deferred costs relating to the offering. General and administrative expense for the three months ended September 30, 2003 included $8.0 million of IPO-related costs, of which $6.4 million was deferred in previous periods. The company expects to complete the IPO when market conditions warrant, subject to various factors. Conference Call Information Transocean will conduct a teleconference call at 10:00 a.m. ET on October 28, 2003. To participate, dial 303-262-2130 approximately five to 10 minutes prior to the scheduled start time of the call. In addition, the conference call will be simultaneously broadcast over the Internet in a listen-only mode and can be accessed by logging onto the company's website at www.deepwater.com and selecting "Investor Relations." It
may also be accessed via the Internet at www.CompanyBoardroom.com by typing in the company's New York Stock Exchange trading symbol, "RIG." A telephonic replay of the conference call should be available after 1:00 p.m. ET on October 28 and can be accessed by dialing 303-590-3000 and referring to the passcode 553847. Also, a replay will be available through the Internet and can be accessed by visiting either of the above-referenced Worldwide Web addresses. Monthly Fleet Update and Cash Operating Cost Information Drilling rig status and contract information, as well as cash operating cost information on Transocean Inc.'s offshore drilling fleet, has been condensed into three reports titled "Monthly Fleet Update," "Monthly Fleet Update - Jackups and Barges" and "Cash Operating Cost," which are available through the company's website at www.deepwater.com. The reports are located in the "Investor Relations/Financial Reports" section of the website. By subscribing to the Transocean Financial Report Alert, you will be immediately notified when new postings are made to this page by an automated e-mail that will provide a link directly to the page that has been updated. Shareholders and other interested parties are invited to sign up for this service. Forward-Looking Disclaimer Statements regarding future opportunities and outlook for the company and the company's two business segments and fleet categories, dayrates, rig utilization, drilling activity, completion of the TODCO initial public offering, as well as any other statements that are not historical facts in this release, are forward-looking statements that involve certain risks, uncertainties and assumptions. These include but are not limited to operating hazards and delays, risks associated with international operations, results of investigations regarding riser, actions by customers and other third parties, the future price of oil and gas and other factors detailed in the company's most recent Form 10-K and other filings with the Securities and Exchange Commission. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those indicated. Transocean Inc. is the world's largest offshore drilling contractor with more than 160 full or partially owned and managed mobile offshore drilling units, inland drilling barges and other assets utilized in the support of offshore drilling activities worldwide. The company's mobile offshore drilling fleet is considered one of the most modern and versatile in the world with 13 fifth-generation semisubmersibles and drillships, 15 other deepwater semisubmersibles and drillships, 31 mid-water semisubmersibles and drillships and 50 jackup drilling rigs. Transocean Inc. specializes in technically demanding segments of the offshore drilling business, including industry-leading positions in deepwater and harsh environment drilling services. With a current equity market capitalization in excess of $6 billion, the company's ordinary shares are traded on the New York Stock Exchange under the symbol "RIG." ### 03-37
TRANSOCEAN INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In millions, except per share data) (Unaudited)
TRANSOCEAN INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (In millions, except share data)
TRANSOCEAN INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In millions) (Unaudited)
Transocean Inc. Fleet Operating Statistics
TRANSOCEAN INC. AND SUBSIDIARIES NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS ADJUSTED INCOME (LOSS) AND EARNINGS (LOSS) PER SHARE RECONCILIATION (IN US$ MILLIONS)
(TRANSOCEAN INC. LOGO) TRANSOCEAN INC. AND SUBSIDIARIES NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS (IN US$ MILLIONS)