Annual Report 2011 - PGS
Annual Report 2011 - PGS Annual Report 2011 - PGS
Notes to the consolidated financial statements NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Note 23 - Other Intangible Assets The components of other intangible assets are summarized as follows: (In thousands of dollars) Patents and licenses Development cost Technology and other Exploration expenditures Total Purchase costs Purchase costs as of January 1, 2010 186,175 33,124 22,129 --- 241,428 Additions to costs 55 12,559 --- --- 12,614 Other/ translations adjustments (4,483) --- --- --- (4,483) Purchase costs as of December 31, 2010 181,747 45,683 22,129 --- 249,559 Additions to costs 952 19,008 --- 20,764 40,724 Other/ translations adjustments (1,051) --- --- --- (1,051) Purchase costs as of December 31, 2011 181,648 64,691 22,129 20,764 289,232 Accumulated amortization Amortization as of January 1, 2010 132,564 1,604 8,770 --- 142,938 Amortization expense 3,262 1,481 3,763 --- 8,506 Other/ translations adjustments (4,479) --- --- --- (4,479) Amortization as of December 31, 2010 131,347 3,085 12,533 --- 146,965 Amortization expense 3,304 1,538 3,763 --- 8,605 Other/ translations adjustments (1,049) --- --- --- (1,049) Amortization as of December 31, 2011 133,602 4,623 16,296 --- 154,521 Balance as of December 31, 2010 50,400 42,598 9,596 --- 102,594 Balance as of December 31, 2011 48,046 60,068 5,833 20,764 134,711 Estimated useful life 1 to 20 years 10 years (a) 1 to 12 years (b) (a) Estimated useful life from completion of development project. (b) Capitalized exploration expenditures are not amortized until the exploration is complete and the results have been evaluated at which the asset is evaluated for de-recognition or tested for impairment. The intangible assets have finite useful lives over which the assets are amortized. There were no impairment indicators in 2011, 2010 and 2009, see note 2 for additional information on impairment of intangible assets. Note 24 - Short-Term Debt and Current Portion of Long-Term Debt Short-term debt and current portion of long-term debt consist of the following: December 31, (In thousands of dollars) 2011 2010 Current portion of long-term debt (Note 25) 183,000 --- Short-term debt 11 --- Total 183,011 --- 27 PGS ANNUAL REPORT 2011 98 PGS Annual Report 2011
Notes to the consolidated financial statements NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Note 25 - Debt and Guarantees Long-term debt Long-term debt consists of the following: December 31, (In thousands of dollars) 2011 2010 Secured: Term loan B, Libor + margin, due 2015 470,533 470,533 Senior notes, due 2018 300,000 --- Convertible notes: Convertible notes, due 2012 183,785 319,633 Total 954,318 790,166 Less current portion (183,785) --- Less deferred loan costs (17,119) (6,473) Total long-term debt 753,414 783,693 Aggregate maturities of long-term debt, expected interest payments (excluding interest rate swaps) and finance lease obligations are as follows: December 31, (In thousands of dollars) 2011 2010 Year of repayment: 2011 --- 20,873 First quarter 2012 2,771 3,603 Second quarter 2012 18,491 8,342 Third quarter 2012 3,467 3,909 Fourth quarter 2012 201,167 328,524 2013 33,984 18,798 2014 31,431 24,332 2015 499,327 484,410 2016 22,125 --- 2017 and thereafter 344,250 --- Total 1,157,013 892,791 Interest portion (a) (202,695) (102,625) Total long term debt (including current portion) 954,318 790,166 (a) Calculation of expected interest payments are based on forward interest rates as of December 31, 2011 and 2010, respectively. All of the trade payables per December 31, 2011 of $61.7 million mature the first quarter of 2012. In 2011 the company made optional repurchases of the Convertible notes for a nominal amount of $153.9 million at an average price of 98.83%. In 2010, the Company made debt repayments of $139.2 million, of which $100.0 million was an optional prepayment of the Term Loan B (“Term Loan”) and $17.5 million was an optional prepayment of a scheduled 2011 final repayment of the 8.28% mortgage note. In 2011 there were no repayments of the Term Loan. In 2010, the Company made repayments of $101.5 million of the Term Loan of which $100.0 million was optional (see above. The Company has hedged the interest rate on 64% of the borrowings under the Term Loan (64% in 2010) by entering into interest rate swaps where the Company receives floating interest rate based on 3 months LIBOR and pays fixed interest rate between 4.62 to 5.34% per December 31, 2011 with a remaining life of 0.5 to 2.7 years. See Note 26 for further information. The Company’s senior secured credit facility of $950 million consists of at inception an eight-year $600 million ($470.5 million outstanding) Term Loan (maturing 2015) and at inception a five-year $350 million Revolving Credit Facility (“RCF”) (originally maturing 2012 and extended to 2015 in January 2011). The Term Loan, which has no financial maintenance covenants, has a floating interest rate of LIBOR + 175 basis points. The credit agreement generally requires the Company to apply 50% of excess cash flow to repay outstanding borrowings for financial years when the total leverage ratio exceeds 2.5:1 or the senior leverage ratio exceeds 2:1 (see Note 26 for definitions of leverage ratios). Excess cash flow for any period is defined as net cash flow provided by operating activities less capital expenditures and scheduled debt services during that period, minus capital income taxes to be paid in the next period and capital expenditure committed in the period but to be paid in future periods. The Company can make optional prepayments to reduce the outstanding principal balance at no penalty. The Term Loan is an obligation of PGS ASA and PGS Finance Inc. as co-borrowers, is secured by pledges of shares of material subsidiaries and is guaranteed by the same material subsidiaries. In addition, the Company may also under the $950 million credit agreement be able to borrow an additional $400 million either as a term loan or as an RCF. Such additional borrowing would be secured by the same collateral that secures the Term Loan and borrowings under the existing RCF. The $400 million convertible notes ($190.6 million outstanding per December 31, 2011) were issued in December 2007 and are due in December 2012. The convertible notes are convertible into ordinary shares of PGS ASA. The total number of shares to be issued if all convertible notes are converted at the conversion price is 10.2 million ordinary shares, representing 4.68% of the Company’s current issued ordinary share capital. Due to repurchases, 4.9 million shares are issuable if all the notes were converted at December 31, 2011. The conversion price is NOK 216.19 per share and is fixed in USD based upon the fixed exchange rate, which represented a 40% premium over the volume weighted average price of the Company’s ordinary shares at the time of offering. The fixed rate of exchange is 5.5188 NOK per 1.00 USD and the coupon has been set at 2.7% per PGS ANNUAL REPORT 2011 28 PGS Annual Report 2011 99
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Notes to the consolidated financial statements<br />
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS<br />
Note 23 - Other Intangible Assets<br />
The components of other intangible assets are summarized as follows:<br />
(In thousands of dollars)<br />
Patents and<br />
licenses<br />
Development<br />
cost<br />
Technology<br />
and other<br />
Exploration<br />
expenditures Total<br />
Purchase costs<br />
Purchase costs as of January 1, 2010 186,175 33,124 22,129 --- 241,428<br />
Additions to costs 55 12,559 --- --- 12,614<br />
Other/ translations adjustments (4,483) --- --- --- (4,483)<br />
Purchase costs as of December 31, 2010 181,747 45,683 22,129 --- 249,559<br />
Additions to costs 952 19,008 --- 20,764 40,724<br />
Other/ translations adjustments (1,051) --- --- --- (1,051)<br />
Purchase costs as of December 31, <strong>2011</strong> 181,648 64,691 22,129 20,764 289,232<br />
Accumulated amortization<br />
Amortization as of January 1, 2010 132,564 1,604 8,770 --- 142,938<br />
Amortization expense 3,262 1,481 3,763 --- 8,506<br />
Other/ translations adjustments (4,479) --- --- --- (4,479)<br />
Amortization as of December 31, 2010 131,347 3,085 12,533 --- 146,965<br />
Amortization expense 3,304 1,538 3,763 --- 8,605<br />
Other/ translations adjustments (1,049) --- --- --- (1,049)<br />
Amortization as of December 31, <strong>2011</strong> 133,602 4,623 16,296 --- 154,521<br />
Balance as of December 31, 2010 50,400 42,598 9,596 --- 102,594<br />
Balance as of December 31, <strong>2011</strong> 48,046 60,068 5,833 20,764 134,711<br />
Estimated useful life 1 to 20 years 10 years (a) 1 to 12 years (b)<br />
(a) Estimated useful life from completion of development project.<br />
(b) Capitalized exploration expenditures are not amortized until the exploration is complete and the results have been evaluated at which the asset is<br />
evaluated for de-recognition or tested for impairment.<br />
The intangible assets have finite useful lives over which the assets are amortized. There were no impairment indicators in <strong>2011</strong>,<br />
2010 and 2009, see note 2 for additional information on impairment of intangible assets.<br />
Note 24 - Short-Term Debt and Current Portion of Long-Term Debt<br />
Short-term debt and current portion of long-term debt consist of the following:<br />
December 31,<br />
(In thousands of dollars) <strong>2011</strong> 2010<br />
Current portion of long-term debt (Note 25) 183,000 ---<br />
Short-term debt 11 ---<br />
Total 183,011 ---<br />
27 <strong>PGS</strong> ANNUAL REPORT <strong>2011</strong><br />
98 <strong>PGS</strong> <strong>Annual</strong> <strong>Report</strong> <strong>2011</strong>