UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 11-K
ANNUAL REPORT
PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 [NO FEE REQUIRED]
For the fiscal year ended December 31, 2001
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [NO FEE REQUIRED]
For the transition period from to
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Commission file number 1-13926
A. Full title of the plan and the address of the plan, if different from
that of the issuer named below:
DIAMOND OFFSHORE 401(k) PLAN
B. Name of issuer of the securities held pursuant to the plan and the
address of its principal executive office:
DIAMOND OFFSHORE DRILLING, INC.
15415 KATY FREEWAY
HOUSTON, TEXAS 77094
REQUIRED INFORMATION
Item 4.
The financial statements and schedules of the Diamond Offshore 401(k)
Plan for the fiscal year ended December 31, 2001 (attached)
Exhibits
23.1 Consent of Deloitte & Touche LLP
AUDITED FINANCIAL STATEMENTS AND SCHEDULES
DIAMOND OFFSHORE 401(k) PLAN
Years ended December 31, 2001 and 2000 and
Supplemental Schedules for Year ended December 31, 2001
with Report of Independent Auditors
DIAMOND OFFSHORE 401(k) PLAN
Audited Financial Statements and Schedules
Years ended December 31, 2001 and 2000
CONTENTS
Independent Auditors' Report..................................................................... 1
Financial Statements:
Statements of Net Assets Available for Benefits, December 31, 2001 and 2000...................... 2
Statements of Changes in Net Assets Available for Benefits for the Years ended
December 31, 2001, 2000 and 1999....................................................... 3
Notes to Financial Statements.................................................................... 4
Supplemental Schedule for the year ended December 31, 2001:
Schedule H, Line 4i - Schedule of Assets (Held at End of Year)................................... 8
Schedules Omitted
Schedules other than those listed above are omitted because of the absence of
the conditions under which they are required.
INDEPENDENT AUDITORS' REPORT
TO THE PARTICIPANTS AND ADMINISTRATIVE COMMITTEE
OF THE DIAMOND OFFSHORE 401(k) PLAN
HOUSTON, TEXAS
We have audited the accompanying statements of net assets available for benefits
of the Diamond Offshore 401(k) Plan (the "Plan") as of December 31, 2001 and
2000, and the related statements of changes in net assets available for benefits
for each of the three years ended December 31, 2001, 2000 and 1999. These
financial statements are the responsibility of the Plan's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. 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 net assets available for benefits of the Plan as of
December 31, 2001 and 2000, and the changes in net assets available for benefits
for each of the three years ended December 31, 2001, 2000 and 1999 in conformity
with accounting principles generally accepted in the United States of America.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedule of assets (held
at end of year), December 31, 2001 is presented for the purpose of additional
analysis and is not a required part of the basic financial statements, but is
supplementary information required by the Department of Labor's Rules and
Regulations for Reporting and Disclosure under the Employment Retirement Income
Security Act of 1974. This schedule is the responsibility of the Plan's
management. Such schedule has been subjected to the auditing procedures applied
in our audit of the basic 2001 financial statements and, in our opinion, is
fairly stated in all material respects when considered in relation to the basic
financial statements taken as a whole.
DELOITTE & TOUCHE LLP
Houston, Texas
June 11, 2002
1
DIAMOND OFFSHORE 401(k) PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31,
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2001 2000
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INVESTMENTS AT FAIR VALUE:
Mutual funds ......................................... $ 88,620,065 $ 88,274,678
Diamond Offshore Drilling, Inc. common stock fund .... 3,441,761 3,515,377
Loans to participants ................................ 5,051,948 4,592,086
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Total investments .......................... 97,113,774 96,382,141
CONTRIBUTIONS RECEIVABLE:
Employee ............................................. 586,888 601,660
Employer ............................................. 533,645 1,506,131
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Total contributions receivable ............. 1,120,533 2,107,791
OTHER ASSETS ............................................... -- 14,543
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NET ASSETS AVAILABLE FOR BENEFITS .......................... $ 98,234,307 $ 98,504,475
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SEE NOTES TO FINANCIAL STATEMENTS.
2
DIAMOND OFFSHORE 401(k) PLAN
STATEMENTS OF CHANGES IN NET ASSETS
AVAILABLE FOR BENEFITS
YEAR ENDED DECEMBER 31,
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2001 2000 1999
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INVESTMENT INCOME (LOSS):
Dividends and interest ............................................. $ 3,025,618 $ 8,171,860 $ 5,350,459
Net (depreciation) appreciation in fair value of investments ....... (14,796,438) (14,807,746) 12,142,679
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Total investment income (loss) ............................... (11,770,820) (6,635,886) 17,493,138
CONTRIBUTIONS:
Employee ........................................................... 9,858,203 9,083,837 8,867,035
Employer ........................................................... 6,912,796 6,215,916 6,435,106
Rollover ........................................................... 98,982 72,452 20,919
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Total contributions .......................................... 16,869,981 15,372,205 15,323,060
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Total additions .............................................. 5,099,161 8,736,319 32,816,198
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DEDUCTIONS:
Benefit payments ................................................... (5,344,187) (6,960,433) (5,346,395)
Miscellaneous expenses ............................................. (25,142) (51,061) (264,266)
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Total deductions ............................................. (5,369,329) (7,011,494) (5,610,661)
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(DECREASE) INCREASE IN NET ASSETS AVAILABLE
FOR BENEFITS ....................................................... (270,168) 1,724,825 27,205,537
NET ASSETS AVAILABLE FOR BENEFITS:
Beginning of period ................................................ 98,504,475 96,779,650 69,574,113
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End of period ...................................................... $ 98,234,307 $ 98,504,475 $ 96,779,650
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SEE NOTES TO FINANCIAL STATEMENTS.
3
DIAMOND OFFSHORE 401(k) PLAN
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION
The Diamond Offshore 401(k) Plan (the "Plan") was established effective
July 1, 1989. Diamond Offshore Management Company, a wholly-owned subsidiary of
Diamond Offshore Drilling, Inc., (the "Company"), is the Plan's sponsor.
Effective December 1, 2001, the Plan changed trustees from the Scudder Trust
Company ("Scudder") to Fidelity Management Trust Company ("Fidelity"). The
adoption of the Plan in its entirety is intended to comply with the provisions
of Sections 401(a), 401(k) and 401(m) of the Internal Revenue Code (the "IRC")
and applicable regulations thereunder. The Plan is intended to qualify as a
profit-sharing plan in accordance with the requirement of Section 401(a)(27) of
the IRC.
2. DESCRIPTION OF PLAN
The following description of the Plan provides only general information.
Participants should refer to the Plan agreement for a complete description of
the Plan's provisions.
GENERAL - The Plan is a defined contribution retirement plan for U.S.
employees of the Company and its subsidiaries. The Plan is subject to the
provisions of the Employee Retirement Income Security Act of 1974 ("ERISA") and
the IRC.
ADMINISTRATION - The Plan is administered by an administrative committee
appointed by the President of the Company.
PARTICIPANTS - Effective January 1, 1999, all U.S. employees as of
December 31, 1998 became eligible to participate in the Plan on January 1, 1999.
Employees with an original hire date on or after January 1, 1999, who have
completed one year of service from their date of hire, became or will become a
participant of the Plan.
CONTRIBUTIONS - The Company makes a profit sharing contribution equal to
3.75% of the employee's qualified yearly earnings and a matching contribution
equal to 25% for every percent the employee contributes up to a maximum of 6%.
Matching contributions to the Plan on behalf of the participant are based on the
participant's investment election. Company contributions were made monthly in
2001 and quarterly in 2000 and 1999. In addition, each participant may make
voluntary contributions of up to 15% of his or her annual compensation, as
defined by the Plan. Employee contributions are made through payroll deductions.
INVESTMENT FUNDS - Effective December 1, 2001, the Plan offered
participants 19 investment options. Plan participants, at their sole discretion,
may transfer amounts between the various investment options, including the
Diamond Offshore Drilling, Inc. Common Stock Fund, at any time. The descriptions
of these investment options per the prospectuses of the respective investments
are as follows:
Fidelity Managed Income Portfolio II: This fund invests in investment
contracts offered by major insurance companies and other approved
financial institutions and in certain types of fixed income securities.
PIMCO Total Return Fund - Administrative Class: This fund invests in all
types of bonds, including U.S. government, corporate, mortgage and
foreign.
Fidelity Equity-Income Fund: This fund normally invests at least 65% of
total assets in income-producing equity securities, which tend to lead to
investments in large cap "value" stocks.
Spartan U.S. Equity Index Fund: This fund normally invests at least 80% of
assets in common stocks included in the S&P 500(R), which broadly
represents the performance of common stocks publicly traded in the United
States.
4
Fidelity Dividend Growth Fund: This fund normally invests at least 65% of
total assets primarily in common stocks of companies that Fidelity
believes have the potential for dividend growth. The fund may invest in
securities of domestic and foreign issuers.
Fidelity Growth Company Fund: This fund normally invests primarily in
common stocks of companies that Fidelity believes have above-average
growth potential. The fund may invest in securities of domestic and
foreign issuers.
Fidelity Low-Priced Stock Fund: This fund normally invests at least 65% of
total assets in low-priced common stocks (those priced at or below $35 per
share), which can lead to investments in small and medium sized companies.
Fidelity Mid-Cap Stock Fund: This fund normally invests at least 65% of
total assets in common stocks of companies with medium market
capitalizations (those with market capitalizations similar to companies in
the S&P MidCap 400(R) Index).
Managers Special Equity Fund: This fund primarily invests in common stocks
that are believed to have superior growth potential, either in stocks of
companies that are in the early stages of their corporate life cycle or
not yet well recognized, or in more established companies that are
experiencing rapid growth. The fund will invest at least 65% of its assets
in small to medium-sized companies.
Strong Opportunity Fund: This fund invests mainly in stocks, both domestic
and foreign, of medium-sized companies that the adviser believes are
under-researched and attractively valued.
American Funds EuroPacific Growth Fund - Class A: This fund invests
primarily in stocks of companies that do most of their business outside
the United States. Normally, at least 65% of the fund's total assets will
be invested in securities of companies from Europe or the Pacific Basin.
Janus Adviser Worldwide Fund: This fund invests primarily in common stocks
of foreign and domestic companies. The fund has the flexibility to invest
on a worldwide basis, in companies and organizations of any size.
Diamond Offshore Drilling, Inc. Common Stock Fund: This fund invests in
the common stock of the Company and reinvests dividends of the Company's
stock, if any, into additional shares of the Company.
Fidelity Freedom Income Fund: This fund invests approximately 20% in
Fidelity stock mutual funds, 40% in Fidelity bond mutual funds and 40% in
Fidelity money market mutual funds.
Fidelity Freedom 2000 Fund: This fund invests approximately 26% in
Fidelity stock mutual funds, 42% in Fidelity bond mutual funds and 32% in
Fidelity money market mutual funds.
Fidelity Freedom 2010 Fund: This fund invests approximately 47% in
Fidelity stock mutual funds, 44% in Fidelity bond mutual funds and 9% in
Fidelity money market mutual funds.
Fidelity Freedom 2020 Fund: This fund invests approximately 71% in
Fidelity stock mutual funds and 29% in Fidelity bond mutual funds.
Fidelity Freedom 2030 Fund: This fund invests approximately 83% in
Fidelity stock mutual funds and 17% in Fidelity bond mutual funds.
Fidelity Freedom 2040 Fund: This fund invests approximately 90% in
Fidelity stock mutual funds and 10% in Fidelity bond mutual funds.
5
PARTICIPANT ACCOUNTS - Each participant's account is credited with the
Company's and the participant's contributions and an allocation of the Plan's
earnings. Allocations are based primarily on account balances at specified dates
as provided under the terms of the Plan.
VESTING - Beginning January 1, 1999 each participant has, at all times, a
fully vested and nonforfeitable interest in his or her contributions, the
earnings thereon and employer contributions made by the Company. Prior to
January 1, 1999, matching contributions made by the Company to participant
accounts were vested 100% after five years of service.
FORFEITURES - Forfeitures resulting from the separation of service of
participants not fully vested in the Plan are applied to reduce Company
contributions to the Plan. See "Vesting."
LOANS - Participants may borrow from his or her account a minimum of
$1,000 up to the lesser of: i) one-half the vested value of the account or ii)
$50,000. Such loans bear interest of prime + 1.0%, with varying maturity dates,
not exceeding five years.
PAYMENT OF BENEFITS - Upon separation of service, each participant may
elect to receive the entire account balance in a lump-sum payment. At December
31, 2001, there are no unpaid amounts allocated to the accounts of persons who
have elected to withdraw from the Plan. At December 31, 2000, amounts payable to
participants who had terminated or withdrawn from the Plan and requested benefit
payments were $367,230.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING - The financial statements of the Plan are prepared on
the accrual basis of accounting.
INVESTMENT VALUATION AND INCOME RECOGNITION - The Plan's investment
securities are stated at fair value as determined by quoted market prices. Loans
are valued at cost which approximates market value. Purchases and sales of
securities are recorded on a trade-date basis. Dividends are recorded on the
ex-dividend date. The net (depreciation) appreciation in fair value of
investment securities consist of the net change in unrealized (depreciation)
appreciation in fair value and realized gains (losses) upon the sale of
investments. The net change in unrealized (depreciation) appreciation and
realized gains (losses) upon sale are determined using the fair values as of the
beginning of the year or the purchase price if acquired since that date.
PAYMENT OF BENEFITS - Benefits are recorded when paid.
TRUSTEE FEES - Under Scudder, normal recurring trustee fees were paid by
the Company, the Plan's sponsor. Fees paid by the Company were $42,992 and
$48,292 for the years ended December 31, 2001 and 2000, respectively. Under
Fidelity, there are no separate trustee fees.
EXPENSES - Administrative expenses of the Plan are paid by the Company, as
provided in the Plan document.
USE OF ESTIMATES - The preparation of financial statements in conformity
with accounting principles generally accepted in the United States of America
requires Plan management to make estimates and assumptions that affect the
reported amounts of net assets available for benefits and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of the Plan's income and expenses during the reporting
period. Actual results could differ from these estimates.
4. RISKS AND UNCERTAINTIES
The Plan provides for various investments in common stock and registered
investment companies. Investment securities, in general, are exposed to various
risks, such as interest rate, credit and overall market volatility risk. Due to
the level of risk associated with certain investment securities, it is
reasonably possible that changes in the values of investment securities will
occur in the near term.
6
5. INVESTMENTS
The following is a summary of individual Plan assets in excess of 5% of
total Plan assets at December 31, 2001 and 2000:
2001 2000
DESCRIPTION OF INVESTMENT
Fidelity Managed Income Portfolio II* $ 31,081,949
Scudder Stable Value Fund* $ 25,638,197
Fidelity Equity Income Fund* 13,867,535
Scudder Growth and Income Fund* 13,944,533
Fidelity Dividend Growth Fund* 11,910,018
MFS Research Fund A* 13,923,316
Fidelity Growth Company Fund* 17,604,893
Putnam New Opportunities Fund A* 22,109,975
Loans to participants* 5,051,948 4,592,086**
*Party-in-interest
**Shown for comparative purposes only
6. PLAN TERMINATION
Although the Company has not expressed any intent to do so, it has the
right under the Plan to discontinue its contributions at any time and to
terminate the Plan subject to the provisions of ERISA. Upon termination of the
Plan by the Company, the trustee will distribute to each participant the amounts
credited to his or her account. No amount will revert to the Company in the
event of the Plan's termination.
7. FEDERAL INCOME TAXES
The Plan obtained a favorable tax determination letter from the Internal
Revenue Service ("IRS") dated February 25, 1997. Though the Plan has been
amended since that date, it is the opinion of the plan administrator that the
Plan has met, and continues to meet, all necessary IRS requirements exempting it
from federal income taxes; therefore, no provision for income taxes has been
made. The Plan was submitted for a new IRS determination letter on February 28,
2002.
8. PARTY-IN-INTEREST TRANSACTIONS
Certain Plan investments are shares of mutual funds managed by the trustee
of the Plan. The Diamond Offshore Drilling, Inc. Common Stock Fund invests in
the common stock of Diamond Offshore Drilling, Inc. Transactions with the
trustee and the Company qualify as party-in-interest transactions.
7
DIAMOND OFFSHORE 401(k) PLAN
SCHEDULE H, LINE 4i - SCHEDULE OF ASSETS (HELD AT END OF YEAR)
December 31, 2001
CURRENT
IDENTITY OF ISSUE DESCRIPTION OF INVESTMENT VALUE
Fidelity Mid-Cap Stock Fund* Mutual Fund $ 2,221,454
Fidelity Managed Income Portfolio II* Mutual Fund 31,081,949
PIMCO Total Return Admin. Mutual Fund 2,895,948
Fidelity Freedom 2020 Fund* Mutual Fund 1,743,622
Fidelity Equity Income Fund* Mutual Fund 13,867,535
Spartan U.S. Equity Index Fund Mutual Fund 3,247,936
Fidelity Dividend Growth Fund* Mutual Fund 11,910,018
American Funds - Euro-Pacific Growth A Mutual Fund 4,030,945
Fidelity Growth Company Fund* Mutual Fund 17,604,893
Strong Opportunity Fund Mutual Fund 154
Fidelity Low-Priced Stock Fund* Mutual Fund 4,571
Fidelity Freedom 2010 Fund* Mutual Fund 100
Fidelity Freedom 2030 Fund* Mutual Fund 2,911
Fidelity Freedom 2040 Fund* Mutual Fund 8,029
Diamond Offshore Drilling, Inc.* Common Stock, par value $0.01 3,441,761
Participant Loans* Loans to participants, bearing interest of
Prime +1.0%, with varying maturity dates,
not exceeding five years 5,051,948
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TOTAL $97,113,774
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*Party in interest
8
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Plan administrative committee of the Diamond Offshore 401(k) Plan
(the "Plan"), which administers the Plan, has duly caused this annual report to
be signed on its behalf by the undersigned, thereunto duly authorized, on the
27th day of June, 2002.
By: /s/ Robert L. Charles
Name: Robert L. Charles
Title: Administrative Committee Member
9
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
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23.1 Consent of Independent Auditors
10