Form 6-K PACIFIC DRILLING S.A. For: Feb 29

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March 1, 2016 6:20 AM EST


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 
 
 
FORM 6-K
 
 
 
 
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
Date of Report: February 29, 2016
Commission File Number 001-35345
 
  
PACIFIC DRILLING S.A.
 
 
 
8-10, Avenue de la Gare
L-1610 Luxembourg
(Address of principal executive offices)

 
 
 
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.
Form 20-F  x            Form 40-F  o
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):  ¨
Yes  o            No   x
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):  ¨
Yes  o            No  x
Indicate by check mark whether the registrant by furnishing the information contained in this Form, is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes  o            No   x
If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b):

 





INFORMATION CONTAINED IN THIS FORM 6-K REPORT
Attached to this report on Form 6-K as Exhibit 99.1 is our press release dated February 29, 2016 announcing results for the fourth quarter and full year ended December 31, 2015.
The press release shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that Section, unless the Company specifically incorporates the information by reference in a document filed under the Securities Act of 1933 or the Securities Exchange Act of 1934.
By filing this report on Form 6-K and furnishing this information, the Company makes no admission as to the materiality of any information contained in this report. The Company undertakes no duty or obligation to publicly update or revise the information contained in this report, although the Company may do so from time to time as management believes is warranted.
Certain expectations and projections regarding the Company’s future performance referenced in the press release are forward-looking statements. These expectations and projections are based on currently available competitive, financial, and economic data and are subject to future events and uncertainties. In addition to the above cautionary statements, all forward-looking statements contained herein should be read in conjunction with the Company’s SEC filings, including the risk factors described therein, and other public announcements.





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.
 
 
 
 
 
 
 
 
 
 
Pacific Drilling S.A.
 
 
 
(Registrant)
 
 
 
 
Dated:
February 29, 2016
 
By
 
/s/ Lisa Manget Buchanan
 
 
 
 
 
Lisa Manget Buchanan
 
 
 
 
 
Senior Vice President, General Counsel & Secretary





EXHIBIT INDEX
The following exhibit is filed as part of this Form 6-K:
 
 
 
Exhibit
Description
99.1
Press Release Announcing Fourth Quarter and Full Year 2015 Results



Exhibit 99.1

Pacific Drilling Announces Fourth-Quarter and Full-Year 2015 Results
Conference call set 9 a.m. Central time Tuesday, March 1

•
Adjusted EBITDA(a) for the fourth quarter of $149.8 million, representing an adjusted EBITDA margin(b) of 56.0 percent, and adjusted EBITDA for the full year of $595.1 million, an increase of 5.6 percent over the prior year’s adjusted EBITDA
•
Revenue efficiency(c) of 97.3 percent for the fourth quarter yielded revenue of $267.6 million. For the full year, revenue efficiency of 94.7 percent yielded revenue of $1,085.1 million.
•
Cash flow from operations for the full year was a record $422.1 million, an increase of 6.5 percent over the prior year as result of significant cost reductions of over $100.0 million for full-year 2015

LUXEMBOURG (Feb. 29, 2016) - Pacific Drilling S.A. (NYSE: PACD) today announced a net loss for fourth-quarter 2015 of $13.6 million or $0.06 per diluted share, compared to net income for third-quarter 2015 of $41.0 million or $0.19 per diluted share. Net income for fourth-quarter 2014 was $68.0 million or $0.32 per diluted share.
Net income for full-year 2015 was $126.2 million or $0.60 per diluted share, compared to net income for full-year 2014 of $188.3 million or $0.87 per diluted share.
On Oct. 29, 2015, we exercised our right to rescind the construction contract for the Pacific Zonda due to the shipyard’s failure to timely deliver the vessel in accordance with the specifications of the construction contract, and in connection with the rescission, the 2014 revolving credit facility was terminated on Oct. 30, 2015. Our fourth-quarter and full-year 2015 net income included a non-recurring loss of $40.2 million from the construction contract rescission and a $6.0 million write-off of deferred financing charges from termination of the 2014 revolving credit

1

facility. A reconciliation of net income excluding charges(d) to reported net income is included in an accompanying schedule to this release.
CEO Chris Beckett said, “Pacific Drilling delivered another financially robust quarter capping a year with a strong revenue efficiency, and the most cost efficient operations since the company began operating, delivering record adjusted EBITDA for the year. In the face of a very challenging market environment, the Pacific team has demonstrated tremendous dedication and professionalism enabling us to achieve our cost cutting goals, generate additional liquidity, and achieve new performance records.”
Mr. Beckett continued, “Going forward, our efforts will continue to be focused on providing our clients with the highest quality service and safe and efficient operations, in combination with innovative technical and creative commercial solutions, which will continue to be differentiating factors for us. With the shipyard’s failure to deliver our final drillship by the required date, we have completed our current newbuild program and have no further new construction expenditures. Pacific Drilling has the newest and highest-quality fleet in the industry and is well positioned for an extended downturn.”
Fourth-Quarter and Full-Year 2015 Operational and Financial Commentary
Contract drilling revenue for fourth-quarter 2015 was $267.6 million, which included $20.4 million of deferred revenue amortization, compared to contract drilling revenue of $260.2 million for third-quarter 2015, which included $21.7 million of deferred revenue amortization. Revenue benefited from an overall improved revenue efficiency performance during the quarter, offset by the Pacific Khamsin completing its drilling operations on Dec. 17, 2015. Contract drilling revenue for the year ended Dec. 31, 2015, was $1,085.1 million, including $86.3 million of deferred revenue amortization, as compared to contract drilling revenue of $1,085.8 million, including $109.2 million of deferred revenue amortization, for the year ended Dec. 31, 2014.
Operating expenses for fourth-quarter 2015 were $104.9 million as compared to $98.3 million for third-quarter 2015. Operating expenses for fourth-quarter 2015 included $5.8 million in amortization of deferred costs, $7.0 million in reimbursable expenses, and $7.6 million in shore-based and other support costs. Direct rig-related daily operating expenses for operating rigs, excluding reimbursable costs and non-recurring personnel charges related to our Nigerian operations, averaged $150,300 in fourth-quarter 2015, as compared to $154,800 for third-quarter 2015. Operating expenses for full-year 2015 were $431.3 million as compared to our initial 2015 guidance of $500-$525 million and

2

$459.6 million for full-year 2014. The decrease in operating expenses was primarily the result of fleet-wide cost savings measures. In 2015, operating expenses included $26.0 million in amortization of deferred costs, $27.3 million in reimbursable expenses, and $32.5 million in shore-based and other support costs.
General and administrative expenses for fourth-quarter 2015 were $12.6 million as compared to $13.2 million for third-quarter 2015. General and administrative expenses for full-year 2015 were $55.5 million as compared to our initial 2015 guidance of $63-$66 million and $57.7 million for the prior year. The decrease in general and administrative expenses was primarily related to Company-wide cost savings measures.
Adjusted EBITDA for fourth-quarter 2015 was $149.8 million, compared to EBITDA of $148.2 million in the prior quarter. Adjusted EBITDA for the year ended Dec. 31, 2015, was $595.1 million, compared to adjusted EBITDA of $563.3 million for the year ended Dec. 31, 2014. Adjusted EBITDA margin for full-year 2015 was 54.8 percent, as compared to adjusted EBITDA margin of 51.9 percent for full-year 2014. A reconciliation of EBITDA and adjusted EBITDA to net income is included in the accompanying schedules to this release.
Interest expense for fourth-quarter 2015 was $50.1 million, as compared to $36.4 million for third-quarter 2015, primarily due to a reduction in capitalized interest resulting from placing the Pacific Meltem into service in late August 2015. Interest expense for full-year 2015 was $156.4 million.
Liquidity and Capital Expenditures
For full-year 2015, cash flow from operations was $422.1 million. Cash balances totaled $116.0 million as of Dec. 31, 2015, and total outstanding debt was $2.89 billion. As of Dec. 31, 2015, we had approximately $566.0 million of available liquidity, including $450.0 million of undrawn capacity under our 2013 revolving credit facility.
CFO Paul Reese commented, “2015 was a year of significant cost savings, which, coupled with the fourth quarter amendments of our credit facilities, generated substantial additional liquidity. In the fourth quarter, we exceeded our goals bringing daily rig related operating expenses to $150,000 and daily idle costs below $40,000. With no further new-build construction capex and no debt maturities until Dec. 2017, the cash that is generated from our existing backlog should reduce our net debt balance significantly. This positions us well during these challenging times in our industry.”
Investor Toolkit
Updated schedules of expected amortization of deferred revenue, depreciation and interest expense for our existing financing are available in the “Quarterly and Annual Results” subsection of the “Investor Relations” section of our website, www.pacificdrilling.com.
Footnotes

3

(a) EBITDA and adjusted EBITDA are non-GAAP financial measures. For a definition of EBITDA and adjusted EBITDA and a reconciliation to net income, please refer to the schedules included in this release.
(b) EBITDA margin is defined as EBITDA divided by contract drilling revenue. Adjusted EBITDA margin is defined as adjusted EBITDA divided by contract drilling revenue. Management uses this operational metric to track company results and believes that this measure provides additional information that highlights the impact of our operating efficiency as well as the operating and support costs incurred in achieving the revenue performance.
(c) Revenue efficiency is defined as actual contractual dayrate revenue (excluding mobilization fees, upgrade reimbursements and other revenue sources) divided by the maximum amount of contractual dayrate revenue that could have been earned during such period.
(d) Net income excluding charges is a non-GAAP financial measure. For a definition of net income excluding charges and a reconciliation to net income, please refer to the schedules included in this release.
Conference Call
Pacific Drilling will conduct a conference call at 9 a.m. Central time on Tuesday, March 1, to discuss fourth-quarter and full-year 2015 results. To participate, please dial +1 913-312-0823 or 1-888-204-4368 and refer to confirmation code 1396374 five to 10 minutes prior to the scheduled start time. The call also will be webcast on www.pacificdrilling.com and can be accessed by a link posted in the “Events & Presentations” subsection of the “Investor Relations” section.
An audio replay of the call may be accessed after noon Central time on Tuesday, March 1, 2016, by dialing +1 719-457-0820 or 1-888-203-1112, and using access code 1396374. A replay of the call also will be available on the company’s website.
About Pacific Drilling
With its best-in-class drillships and highly experienced team, Pacific Drilling is committed to becoming the industry’s preferred high-specification, floating-rig drilling contractor. Pacific Drilling’s fleet of seven drillships represents one of the youngest and most technologically advanced fleets in the world. For more information about Pacific Drilling, including our current Fleet Status, please visit our website at www.pacificdrilling.com.

Forward-Looking Statements
Certain statements and information contained in this press release, and oral statements made regarding the subjects of this press release, including the conference call announced herein, constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, and are generally identifiable by the use of words such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “our ability to,” “plan,” “potential,” “project,” “should,” “will,” “would,” or other similar words, which are generally not historical in nature. Our forward-looking statements express our current expectations or forecasts of possible future results or events, including future client contract opportunities, availability of vessels, revenues and operating results and revenue efficiency. Although we believe that these forward-looking statements are reasonable as and when made, these statements are not guarantees, and actual future results may differ materially due to a variety of factors. These statements involve significant risks

4

and uncertainties (many of which are beyond our control) and assumptions that could cause actual results to differ materially from our historical experience and our present expectations or projections. Important factors that could cause actual results to differ materially from projections include: future levels of offshore drilling activity; our ability to secure new and maintain existing drilling contracts, including possible cancellation or suspension of drilling contracts as a result of mechanical difficulties, performance, market changes or other reasons; changes in worldwide rig supply and demand, competition and technology; actual contract commencement dates; downtime and other risks associated with offshore rig operations, including unscheduled repairs or maintenance, relocations, severe weather or hurricanes; and our ability to repay debt and adequacy of and access to sources of liquidity. For additional information regarding factors that could cause our actual results to differ from our projected results, please see our filings with the Securities and Exchange Commission (SEC), including our Annual Report on Form 20-F and Current Reports on Form 6-K. These documents are available through our website at www.pacificdrilling.com or through the SEC’s Electronic Data and Analysis Retrieval System at www.sec.gov.
Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date hereof. We undertake no obligation to publicly update or revise any forward-looking statements after the date they are made, whether as a result of new information, future events or otherwise.
Contact:    Johannes (John) P. Boots
Pacific Drilling SA
+352 26 84 57 81











5

PACIFIC DRILLING S.A. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(in thousands, except per share amounts) (unaudited)

 
Three Months Ended
 
Years Ended December 31,
 
December 31, 2015
 
September 30, 2015
 
December 31, 2014
 
2015
 
2014
 
2013
 
 
 
 
 
 
 
 
 
 
 
 
Revenues
 
 
 
 
 
 
 
 
 
 
 
Contract drilling
$
267,600

 
$
260,176

 
$
319,737

 
$
1,085,063

 
$
1,085,794

 
$
745,574

 
 
 
 
 
 
 
 
 
 
 
 
Costs and expenses
 
 
 
 
 
 
 
 
 
 
 
Operating expenses
(104,870
)
 
(98,334
)
 
(123,836
)
 
(431,261
)
 
(459,617
)
 
(337,277
)
General and administrative expenses
(12,609
)
 
(13,208
)
 
(14,889
)
 
(55,511
)
 
(57,662
)
 
(48,614
)
Depreciation expense
(67,679
)
 
(61,472
)
 
(56,547
)
 
(243,457
)
 
(199,337
)
 
(149,465
)
 
(185,158
)
 
(173,014
)
 
(195,272
)
 
(730,229
)
 
(716,616
)
 
(535,356
)
Loss from construction contract rescission
(40,155
)
 
—

 
—

 
(40,155
)
 
—

 
—

Operating income
42,287

 
87,162

 
124,465

 
314,679

 
369,178

 
210,218

Other expense
 
 
 
 
 
 
 
 
 
 
 
Costs on interest rate swap termination
—

 
—

 
—

 
—    

 
—

 
(38,184
)
Interest expense
(50,064
)
 
(36,361
)
 
(39,874
)
 
(156,361
)
 
(130,130
)
 
(94,027
)
Total interest expense
(50,064
)
 
(36,361
)
 
(39,874
)
 
(156,361
)
 
(130,130
)
 
(132,211
)
Costs on extinguishment of debt
—

 
—

 
—

 
—

 
—

 
(28,428
)
Other expense
(364
)
 
(459
)
 
(1,902
)
 
(3,217
)
 
(5,171
)
 
(1,554
)
Income (loss) before income taxes
(8,141
)
 
50,342

 
82,689

 
155,101

 
233,877

 
48,025

Income tax expense
(5,451
)
 
(9,344
)
 
(14,645
)
 
(28,871
)
 
(45,620
)
 
(22,523
)
Net income (loss)
$
(13,592
)
 
$
40,998

 
$
68,044

 
$
126,230

 
$
188,257

 
$
25,502

Earnings (loss) per common share, basic
$
(0.06
)
 
$
0.19

 
$
0.32

 
$
0.60

 
$
0.87

 
$
0.12

Weighted average number of common shares, basic
210,771

 
210,650

 
217,132

 
211,454

 
217,223

 
216,964

Earnings (loss) per common share, diluted
$
(0.06
)
 
$
0.19

 
$
0.32

 
$
0.60

 
$
0.87

 
$
0.12

Weighted average number of common shares, diluted
210,771

 
210,661

 
217,197

 
211,557

 
217,376

 
217,421



6

PACIFIC DRILLING S.A. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(in thousands, except par value) (unaudited)

 
December 31,
 
September 30,
 
December 31,
 
2015
 
2015
 
2014
Assets:
 
 
 
 
 
Cash and cash equivalents
$
116,033

 
$
151,065

 
$
167,794

Accounts receivable
168,050

 
146,444

 
231,027

Materials and supplies
98,243

 
101,982

 
95,660

Deferred financing costs, current
14,636

 
14,710

 
14,665

Deferred costs, current
10,582

 
12,640

 
25,199

Prepaid expenses and other current assets
12,467

 
21,349

 
17,056

Total current assets
420,011

 
448,190

 
551,401

Property and equipment, net
5,143,556

 
5,408,315

 
5,431,823

Deferred financing costs
29,583

 
35,324

 
45,978

Long-term receivable
202,575

 
—

 
—

Other assets
36,753

 
29,107

 
48,099

Total assets
$
5,832,478

 
$
5,920,936

 
$
6,077,301

Liabilities and shareholders’ equity:
 
 
 
 
 
Accounts payable
$
44,167

 
$
37,773

 
$
40,577

Accrued expenses
44,221

 
44,123

 
45,963

Long-term debt, current
89,583

 
89,583

 
369,000

Accrued interest
16,442

 
36,174

 
24,534

Derivative liabilities, current
7,483

 
9,315

 
8,648

Deferred revenue, current
49,227

 
58,598

 
84,104

Total current liabilities
251,123

 
275,566

 
572,826

Long-term debt, net of current maturities
2,795,845

 
2,848,439

 
2,781,242

Deferred revenue
60,639

 
72,226

 
108,812

Other long-term liabilities
32,816

 
29,620

 
35,549

Total long-term liabilities
2,889,300

 
2,950,285

 
2,925,603

Commitments and contingencies
 
 
 
 
 
Shareholders’ equity:
 
 
 
 
 
Common shares, $0.01 par value per share, 5,000,000 shares authorized, 232,770 shares issued and 211,207 and 215,784 shares outstanding as of December 31, 2015 and December 31, 2014, respectively
2,185

 
2,179

 
2,175

Additional paid-in capital
2,381,420

 
2,377,411

 
2,369,432

Treasury shares, at cost
(30,000
)
 
(30,000
)
 
(8,240
)
Accumulated other comprehensive loss
(23,490
)
 
(30,037
)
 
(20,205
)
Retained earnings
361,940

 
375,532

 
235,710

Total shareholders’ equity
2,692,055

 
2,695,085

 
2,578,872

Total liabilities and shareholders’ equity
$
5,832,478

 
$
5,920,936

 
$
6,077,301



7

PACIFIC DRILLING S. A. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(in thousands) (unaudited)

 
 
Three Months Ended
 
Years Ended December 31,
 
 
December 31, 2015
 
September 30, 2015
 
December 31, 2014
 
2015
 
2014
 
2013
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash flow from operating activities:
 
 
 
 
 
 
 
 
 
 
 
 
Net income (loss)
 
$
(13,592
)
 
$
40,998

 
$
68,044

 
$
126,230

 
$
188,257

 
$
25,502

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
 
 
 
 
 
 
 
 
 
Depreciation expense
 
67,679

 
61,472

 
56,547

 
243,457

 
199,337

 
149,465

Amortization of deferred revenue
 
(20,449
)
 
(21,655
)
 
(25,884
)
 
(86,276
)
 
(109,208
)
 
(72,515
)
Amortization of deferred costs
 
5,832

 
5,836

 
11,531

 
25,951

 
51,173

 
39,479

Amortization of deferred financing costs
 
3,307

 
2,772

 
2,951

 
11,278

 
10,416

 
10,106

Amortization of debt discount
 
313

 
250

 
235

 
1,015

 
817

 
445

Write-off of unamortized deferred financing costs
 
5,965

 
—    

 
—    

 
5,965

 
—

 
27,644

Costs on interest rate swap termination
 
—    

 
—    

 
—    

 
—

 
—

 
38,184

Loss from construction contract rescission
 
38,084

 
—    

 
—    

 
38,084

 
—

 
—

Deferred income taxes
 
8,534

 
2,799

 
15,281

 
9,840

 
18,661

 
(3,119
)
Share-based compensation expense
 
4,095

 
2,615

 
2,952

 
12,534

 
10,484

 
9,315

Changes in operating assets and liabilities:
 
 
 
 
 
 
 
 
 
 
 
 
Accounts receivable
 
(21,606
)
 
43,052

 
(46,736
)
 
62,977

 
(24,949
)
 
(53,779
)
Materials and supplies
 
3,739

 
444

 
(3,564
)
 
(2,583
)
 
(29,951
)
 
(16,083
)
Prepaid expenses and other assets
 
(11,071
)
 
3,018

 
(16,123
)
 
(10,840
)
 
(56,493
)
 
(30,840
)
Accounts payable and accrued expenses
 
(10,654
)
 
10,869

 
(964
)
 
(18,712
)
 
20,865

 
12,301

Deferred revenue
 
(509
)
 
1,447

 
8,267

 
3,226

 
117,001

 
94,482

Net cash provided by operating activities
 
59,667

 
153,917

 
72,537

 
422,146

 
396,410

 
230,587

Cash flow from investing activities:
 
 
 
 
 
 
 
 
 
 
 
 
Capital expenditures
 
(38,134
)
 
(41,208
)
 
(386,519
)
 
(181,458
)
 
(1,136,205
)
 
(876,142
)
Decrease in restricted cash
 
—    

 
—    

 
—    

 
—

 
—

 
172,184

Net cash used in investing activities
 
(38,134
)
 
(41,208
)
 
(386,519
)
 
(181,458
)
 
(1,136,205
)
 
(703,958
)
Cash flow from financing activities:
 
 
 
 
 
 
 
 
 
 
 
 
Net proceeds (payments) from shares issued under share-based compensation plan
 
(80
)
 
(37
)
 
(79
)
 
(536
)
 
95

 
—

Proceeds from long-term debt
 
50,000

 
—    

 
400,000

 
315,000

 
760,000

 
1,656,250

Payments on long-term debt
 
(102,915
)
 
(66,875
)
 
(36,208
)
 
(581,083
)
 
(41,833
)
 
(1,480,000
)
Payments for costs on interest rate swap termination
 
—    

 
—    

 
—    

 
—    

 
—

 
(41,993
)
Payments for financing costs
 
(3,570
)
 
—    

 
(7,069
)
 
(4,070
)
 
(7,569
)
 
(62,684
)
Purchases of treasury shares
 
—    

 
—    

 
(7,227
)
 
(21,760
)
 
(7,227
)
 
—

Net cash provided by (used in) financing activities
 
(56,565
)
 
(66,912
)
 
349,417

 
(292,449
)
 
703,466

 
71,573

Increase (decrease) in cash and cash equivalents
 
(35,032
)
 
45,797

 
35,435

 
(51,761
)
 
(36,329
)
 
(401,798
)
Cash and cash equivalents, beginning of period
 
151,065

 
105,268

 
132,359

 
167,794

 
204,123

 
605,921

Cash and cash equivalents, end of period
 
$
116,033

 
$
151,065

 
$
167,794

 
$
116,033

 
$
167,794

 
$
204,123



8

EBITDA and Adjusted EBITDA Reconciliation
EBITDA is defined as earnings before interest, taxes, depreciation and amortization. Adjusted EBITDA is defined as earnings before interest, costs from debt refinancing, loss from construction contract rescission, taxes, depreciation and amortization. EBITDA and adjusted EBITDA do not represent and should not be considered alternatives to net income, operating income, cash flow from operations or any other measure of financial performance presented in accordance with generally accepted accounting principles in the United States of America (“GAAP”) and our calculation of EBITDA and adjusted EBITDA may not be comparable to that reported by other companies. EBITDA and adjusted EBITDA are included herein because they are used by management to measure the company’s operations and are intended to exclude charges or credits of a non-routine nature that would detract from an understanding of our operations. Management believes that EBITDA and adjusted EBITDA present useful information to investors regarding the company’s operating performance during the periods presented below.
PACIFIC DRILLING S.A. AND SUBSIDIARIES
Supplementary Data—Reconciliation of Net Income (Loss) to Non-GAAP EBITDA and Adjusted EBITDA
(in thousands) (unaudited)

 
Three Months Ended
 
Years Ended December 31,
 
December 31, 2015
 
September 30, 2015
 
December 31, 2014
 
2015
 
2014
 
2013
Net income (loss)
$
(13,592
)
 
$
40,998

 
$
68,044

 
$
126,230

 
$
188,257

 
$
25,502

 
 
 
 
 
 
 
 
 
 
 
 
Add:
 
 
 
 
 
 
 
 
 
 
 
Costs on interest rate swap termination
—    

 
—    

 
—

 
—

 
—

 
38,184

Write-off of unamortized deferred financing costs
5,965

 
—

 
—

 
—

 
—

 
27,644

Interest expense
44,099

 
36,361

 
39,874

 
156,361

 
130,130

 
66,383

Interest expense
50,064

 
36,361

 
39,874

 
156,361

 
130,130

 
132,211

Depreciation expense
67,679

 
61,472

 
56,547

 
243,457

 
199,337

 
149,465

Income taxes
5,451

 
9,344

 
14,645

 
28,871

 
45,620

 
22,523

EBITDA
$
109,602

 
$
148,175

 
$
179,110

 
$
554,919

 
$
563,344

 
$
329,701

 
 
 
 
 
 
 
 
 
 
 
 
Add:
 
 
 
 
 
 
 
 
 
 
 
Costs on extinguishment of debt
—

 
—

 
—

 
—

 
—

 
28,428

Loss from construction contract rescission
40,155

 
—

 
—

 
40,155

 
—

 
—

Adjusted EBITDA
$
149,757

 
$
148,175

 
$
179,110

 
$
595,074

 
$
563,344

 
$
358,129



9

Net Income Excluding Charges Reconciliation
During the fourth quarter of 2015, the company recorded a $40.2 million loss provision as a result of the construction contract rescission and a $6.0 million write-off of unamortized deferred financing costs related to our termination of the 2014 revolving credit facility. During the second quarter of 2013, the company closed a refinancing transaction which resulted in non-recurring costs primarily related to swap termination fees and the write-off of unamortized deferred financing costs. Management believes that net income excluding charges related to our loss from construction contract rescission and refinancings provides useful and comparable information to investors regarding the company’s operating performance. Specifically, the excluded charges are of a non-routine nature and management believes they detract from an understanding of our operating performance and comparisons with other periods. Net income excluding charges does not represent and should not be considered an alternative to or substitute for net income, operating income, cash flow from operations or any other measure of financial performance presented in accordance with GAAP, and our calculation of net income excluding charges may not be comparable to that reported by other companies.
PACIFIC DRILLING S.A. AND SUBSIDIARIES
Supplementary Data—Reconciliation of Net Income (Loss) and Earnings (Loss) per Share to Non-GAAP Net Income Excluding Charges and Earnings per Share Excluding Charges
(in thousands, except per share information) (unaudited)

 
Three Months Ended
 
Years Ended December 31,
 
December 31, 2015
 
September 30, 2015
 
December 31, 2014
 
2015
 
2014
 
2013
Net income (loss)
$
(13,592
)
 
$
40,998

 
$
68,044

 
$
126,230

 
$
188,257

 
$
25,502

Add:
 
 
 
 
 
 
 
 
 
 
 
Loss from construction contract rescission
40,155

 
—

 
—

 
40,155

 
—

 
—

Costs on interest rate swap termination
—

 
—

 
—

 
—

 
—

 
38,184

Costs on extinguishment of debt
5,965

 
—

 
—

 
5,965

 
—

 
28,428

Net income excluding charges
$
32,528

 
$
40,998

 
$
68,044

 
$
172,350

 
$
188,257

 
$
92,114

 
 
 
 
 
 
 
 
 
 
 
 
Earnings (loss) per common share, basic and diluted
$
(0.06
)
 
$
0.19

 
$
0.32

 
$
0.60

 
$
0.87

 
$
0.12

Add:
 
 
 
 
 
 
 
 
 
 
 
Loss from construction contract rescission
0.19

 
—

 
—

 
0.19

 
—

 
—

Costs on interest rate swap termination
—    

 
—

 
—

 
—    

 
—

 
0.18

Costs on extinguishment of debt
0.03

 
—

 
—

 
0.03

 
—

 
0.13

Earnings excluding charges per common share, basic and diluted
$
0.16

 
$
0.19

 
$
0.32

 
$
0.82

 
$
0.87

 
$
0.43



10

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