Transocean Proxy Statement and 2010 Annual Report

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TRANSOCEAN LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — Continued Note 8—Other Comprehensive Income The allocation of other comprehensive income (loss) attributable to controlling interest and to noncontrolling interest was as follows (in millions): Controlling interest AR-88 Years ended December 31, 2010 2009 2008 Noncontrolling interest (a) Total Controlling interest Noncontrolling interest (a) Total Controlling interest Noncontrolling interest (a) Total Unrecognized components of net periodic benefit costs $ (8 ) $ — $ (8) $ 37 $ — $ 37 $ (388 ) $ — $ (388) Recognized components of net periodic benefit costs 16 — 16 24 — 24 5 — 5 Unrecognized gain (loss) on derivative instruments (10 ) (19) (29) (4) 2 (2 ) (1 ) — (1) Recognized (gain) loss on derivative instruments 14 (2) 12 3 3 6 — — — Other, net — — — 1 — 1 (3 ) — (3) Other comprehensive income (loss) before income taxes 12 (21) (9) 61 5 66 (387 ) — (387) Income taxes related to other comprehensive income (9 ) — (9) 24 — 24 9 — 9 Other comprehensive income (loss), net of tax $ 3 $ (21) $ (18) $ 85 $ 5 $ 90 $ (378 ) $ — $ (378) ______________________________ (a) Includes amounts attributable to noncontrolling interest and redeemable noncontrolling interest. The components of accumulated other comprehensive income (loss), net of tax, were as follows (in millions): Controlling interest December 31, 2010 December 31, 2009 Noncontrolling interest Redeemable noncontrolling interest Controlling interest Noncontrolling interest Redeemable noncontrolling interest Unrecognized components of net periodic benefit costs (a) $ (335) $ — $ — $ (334 ) $ — $ — Unrecognized gain (loss) on derivative investments 5 (3) (13) 1 5 — Unrealized loss on marketable securities (2) — — (2 ) — — Accumulated other comprehensive income (loss) $ (332) $ (3) $ (13) $ (335 ) $ 5 $ — ______________________________ (a) Amounts are net of income tax effect of $36 million and $45 million for December 31, 2010 and 2009, respectively.
TRANSOCEAN LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — Continued Note 9—Drilling Fleet Expansion—Construction work in progress, recorded in property and equipment, was $1.5 billion and $3.7 billion at December 31, 2010 and 2009, respectively. The following table presents actual capital expenditures and other capital additions, including capitalized interest, for our remaining major construction projects for the three years ended December 31, 2010 (in millions): AR-89 Years ended December 31, 2010 2009 2008 2007 - 2006 Total Deepwater Champion (a) $ 206 $ 263 $ 155 $ 109 $ 733 Discoverer India (b) 203 291 250 — 744 Discoverer Luanda (b) (c) 174 220 208 107 709 Transocean Honor (d) 97 — — — 97 Dhirubhai Deepwater KG2 (b) (e) 36 371 91 179 677 Development Driller III (b) (a) 24 117 133 350 624 Discoverer Inspiration (b) 12 224 205 238 679 High-Specification Jackup TBN1 (f) 9 — — — 9 High-Specification Jackup TBN2 (f) 9 — — — 9 Discoverer Americas (b) 6 148 167 311 632 Discoverer Clear Leader (b) 6 115 107 409 637 Petrobras 10000 (b) (g) 6 735 — — 741 Dhirubhai Deepwater KG1 (b) (e) — 295 105 279 679 Sedco 700-series upgrades (b) — 71 124 396 591 Capitalized interest 89 182 147 93 511 Mobilization costs 89 155 — — 244 Total $ 966 $ 3,187 $ 1,692 $ 2,471 $ 8,316 ______________________________ (a) These costs include our initial investment in Deepwater Champion of $109 million and our initial investment in Development Driller III of $350 million, representing the estimated fair value of the rig at the time of our merger with GlobalSantaFe in November 2007. (b) The accumulated construction costs of these rigs are no longer included in construction work in progress, as their construction projects had been completed as of December 31, 2010. (c) The costs for Discoverer Luanda represent 100 percent of expenditures incurred since inception. ADDCL is responsible for all of these costs. We hold a 65 percent interest in ADDCL, and Angco Cayman Limited holds the remaining 35 percent interest. (d) In November 2010, we made an initial installment payment of $97 million to purchase a PPL Pacific Class 400 design jackup, to be named Transocean Honor, for $195 million. The High-Specification Jackup is under construction at PPL Shipyard Pte Ltd. in Singapore and is expected for delivery in the fourth quarter of 2011. (e) The costs for Dhirubhai Deepwater KG1 and Dhirubhai Deepwater KG2 represent 100 percent of TPDI’s expenditures, including those incurred prior to our investment in the joint venture. TPDI is responsible for all of these costs. We hold a 50 percent interest in TPDI, and Pacific Drilling holds the remaining 50 percent interest. (f) In December 2010, we made initial installment payments of $9 million each, to purchase two Keppel FELS Super B class design jackups for $186 million each. The two High-Specification Jackups are under construction at Keppel FELS yard in Singapore and are expected for delivery in the fourth quarter of 2012. (g) In June 2008, we reached an agreement with a joint venture formed by subsidiaries of Petrobras and Mitsui to acquire Petrobras 10000 under a capital lease contract. In connection with the agreement, we agreed to provide assistance and advisory services for the construction of the rig and operating management services once the rig commenced operations. On August 4, 2009, we accepted delivery of Petrobras 10000 and recorded non-cash additions of $716 million to property and equipment, net, along with a corresponding increase to long-term debt. Total capital additions include $716 million in capital costs incurred by Petrobras and Mitsui for the construction of the drillship and $19 million of other capital expenditures. The capital lease agreement has a 20-year term, after which we will have the right and obligation to acquire the drillship for one dollar. See Note 11—Debt and Note 14—Commitments and Contingencies. In March 2010, we acquired GSF Explorer, an asset formerly held under capital lease, in exchange for a cash payment in the amount of $15 million, terminating the capital lease obligation. See Note 11—Debt. Dispositions—During the year ended December 31, 2010, we completed the sale of two Midwater Floaters, GSF Arctic II and GSF Arctic IV. In connection with the sale, we received net cash proceeds of $38 million and non-cash proceeds in the form of two notes receivable in the aggregate amount of $165 million (see Note 4—Variable Interest Entities and Note 19—Fair Values of Financial Instruments). We operated GSF Arctic IV under a short-term bareboat charter with the new owner of the vessel, until November 2010. As a result of the sale, we recognized a loss on disposal of assets in the amount of $15 million ($0.04 per diluted share), which had no tax effect for the year ended December 31, 2010. For the year ended December 31, 2010, we recognized a gain on disposal of other unrelated assets in the amount of $5 million. In December 2010, we entered into an agreement to sell our Standard Jackup
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Transocean Proxy Statement and 2010
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2010 LETTER TO THE SHAREHOLDERS We
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In addition to a focus on meeting o
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Agenda Items INVITATION TO ANNUAL G
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(9) Election of Three New Directors
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We may accept a proxy by any form o
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PROXY STATEMENT FOR ANNUAL GENERAL
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of the dividend reserve from capita
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You may revoke your proxy card at a
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AGENDA ITEM 2. Discharge of the Mem
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AGENDA ITEM 4. Reallocation of Free
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AGENDA ITEM 6. Conditional Agenda I
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Proposal of the Board of Directors
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AGENDA ITEM 8. Reduction of the Max
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Nominees for Director—Class III
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November 2007. Since August 2008, M
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The Board of Directors has conclude
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e disclosed and not whether a parti
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Submit nominations to our Corporate
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The Executive Compensation Committe
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Committee is ‘‘financially lite
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AUDIT COMMITTEE REPORT The Audit Co
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SECURITY OWNERSHIP OF DIRECTORS AND
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As a direct consequence of the Maco
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Executive Compensation Program—Gu
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$100,000. Accordingly, neither Long
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Element Targeted Position Comments
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In February 2010, the Committee rev
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Safety Performance. Our business in
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Timing of the system roll out compr
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total target value for stock option
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Executive Compensation Program—He
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Perquisites and Other Personal Bene
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• a cash severance benefit equal
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Summary Compensation Table EXECUTIV
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(17) In 2010, Mr. Toma’s base pay
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Outstanding Equity Awards at Fiscal
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Option Exercises and Shares Vested
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offset to allow for the fact that h
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Contributions are based on a partic
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(3) The terms and conditions of the
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(1) Based on the target (100%) payo
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Mr. Newman Mr. Rosa Mr. Brown Mr. B
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AGENDA ITEM 10 Appointment of Ernst
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Proposal AGENDA ITEM 11. Advisory V
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OTHER MATTERS Compensation Committe
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Annexes P-81
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(2) Shareholders may, upon the term
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3 Der Verwaltungsrat ist ermächtig
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Annex C Amended Article 22 of the A
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TRANSOCEAN LTD. AND SUBSIDIARIES IN
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Item 1. Business PART I Overview Tr
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Jackup rigs are mobile self-elevati
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Midwater Floaters The following tab
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Markets Our operations are geograph
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Integrated Services From time to ti
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Item 1A. Risk Factors Risks related
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Our business depends on the level o
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events” above. Our inability to r
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The application of the Working Time
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We are subject to litigation that,
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these tests, “passive income” i
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Item 2. Properties The description
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LDEQ would not rescind the enforcem
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Patent litigation—In 2007, severa
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Executive Officers of the Registran
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PART II Item 5. Market for Registra
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the “virtual second trading line
Page 141 and 142: Item 6. Selected Financial Data The
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Page 155 and 156: During the year ended December 31,
Page 157 and 158: applicable margin, ranging from 3.1
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Page 165 and 166: such U.S. business. In November 200
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Page 171 and 172: in partial exposure to foreign exch
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TRANSOCEAN LTD. NOTES TO STATUTORY
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Note 7—Board of Directors Compens
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As of December 31, 2009 Name TRANSO
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As of December 31, 2009 TRANSOCEAN
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provided, however, that: TRANSOCEAN
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Transocean is a leading internation
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Under the terms and conditions cont
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As of December 31, 2010, December 3
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3. Board of Directors 3.1/ The memb
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Corporation during 1994 and 1995 an
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� Members of Executive Management
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Long-Term Incentive Plan The annual
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Pension Benefits for Fiscal Year 20
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Our Articles of Association further
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7. Mandatory Offer Requirement / Ch
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Annex 1 Subsidiaries of Transocean
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Name Jurisdiction Registered Office
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Name Jurisdiction Registered Office
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Board Of Directors Robert E. Rose C
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Transocean Proxy Statement and 2010 Annual Report

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