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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
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
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): December 9, 2010
PARKER DRILLING COMPANY
(Exact name of Registrant as specified in its charter)
Delaware | 1-7573 | 73-0618660 | ||
(State or other jurisdiction of | (Commission | (I.R.S. Employer | ||
incorporation) | File Number) | Identification No.) |
5 Greenway Plaza, Suite 100, Houston, Texas
(Address of principal executive offices)
(Address of principal executive offices)
77046
(Zip Code)
(Zip Code)
Registrants telephone number, including area code: (281) 406-2000
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the
filing obligation of the registrant under any of the following provisions (See General Instruction
A.2. below):
o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |
o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |
o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |
o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
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Item 8.01 Other Events | ||||||||
SIGNATURE |
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Item 8.01 Other Events.
Update on Kazakhstan Ministry of Finance Tax Audit previously disclosed in Commission
filings
On August 14, 2009, the Kazakhstan Branch of Parker Drillings subsidiary, Parker Drilling
Company International Limited (PKD Kazakhstan), received an Act of Tax Audit from the Ministry
of Finance of Kazakhstan (MinFin) for the period January 1, 2005 through December 31, 2007. PKD
Kazakhstan was assessed additional taxes in the amount of KZT 1.45 billion and associated
interest in the amount of KZT 700 million. The amounts assessed relate to corporate income
taxes and interest in connection with the disallowance of the head offices management and
administrative expenses, loan interest and state duties, as well as Value Added Taxes (VAT) and
interest in connection with VAT offset on debts classified as doubtful by MinFin and for
property taxes and interest in connection with Barge Rig 257 as a result of MinFin applying a
lower rate of depreciation.
On September 25, 2009, PKD Kazakhstan appealed the Act of Tax Audit with MinFin on the basis PKD
Kazakhstan was exercising its rights provided by the Convention between the Government of the
United States of America and the Government of the Republic of Kazakhstan for the Avoidance of
Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income and Capital
(the Convention), as well as improper application of Kazakhstan Tax Code provisions.
On January 13, 2010, PKD Kazakhstan received a response from MinFin to the appeal filed
September 25, 2009. MinFin agreed with PKD Kazakhstan to remove the assessment related to
property taxes and interest in connection with Barge Rig 257 which reduced the overall
assessment by KZT 741 million. MinFin simultaneously caused the Tax Department of the Atyrau
Oblast (Tax Department) to issue a revised Tax Notification to PKD Kazakhstan for the residual
assessment of KZT 959 million of taxes and KZT 450 million of associated interest, which
residual assessment remains outstanding.
On March 1, 2010, PKD Kazakhstan filed a claim against the Tax Department, in the Special
Inter-district Economic Court of Atyrau Oblast, seeking to invalidate the revised Tax
Notification. On May 5, 2010, the court elected not to issue a ruling on the merits of the case
on the basis of an alleged lack of standing. PKD Kazakhstan adjusted and re-filed its claim in
June 2010. On August 17, 2010, the Special Inter-district Economic Court of Atyrau Oblast
rendered a decision on the merits of the case, rejecting PKD Kazakhstans re-filed claim and
allowing the revised Tax Notification to stand.
On September 17, 2010 PKD Kazakhstan filed an appeal to the Atyrau Oblast Court. That appeal was
heard by a single judge on October 27, 2010, at the conclusion of which the court announced its
decision to let the lower court decision stand without amendment or cancellation. Thereafter,
on November 18, 2010, PKD Kazakhstan filed an appeal to a three-judge panel of the Atyrau Oblast
Court. On December 9, 2010 the court announced its decision to uphold the lower court decision
and allow the revised Tax Notification to stand.
PKD Kazakhstan continues to believe that it properly exercised its rights provided by the
Convention and that MinFin improperly applied certain provisions of the Kazakhstan Tax Code. PKD
Kazakhstan intends to submit a further discretionary appeal to the Supreme Court of the Republic
of Kazakhstan. However, there can be no assurance that the Supreme Court will accept and hear
the appeal. PKD Kazakhstan may also pursue relief under the Convention.
As a result of the decision on December 9, PKD Kazakhstan has an obligation to pay the residual
assessment. The amount now due related to the tax assessment and applicable interest is
approximately $11.0 million. In addition, PKD Kazakhstan anticipates that it will be obligated
to pay
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an administrative penalty of approximately $3.2 million arising from the same alleged
underpayment of taxes. PKD Kazakhstan intends to pay these amounts voluntarily and in-full
prior to December 31, 2010 to avoid enforcement actions and additional interest while we pursue
further challenges. The Companys fourth quarter financials will reflect an expense of
approximately $12.6 million, which amount is net of anticipated tax benefits.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly
caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
PARKER DRILLING COMPANY | ||||||
Dated: December 14, 2010 |
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By: | /s/ W. Kirk Brassfield
|
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Senior Vice President and Chief Financial Officer |