ENSCO PLC, 10-K filed on 3/2/2015
Annual Report
Document And Entity Information (USD $)
In Thousands, except Share data, unless otherwise specified
12 Months Ended
Dec. 31, 2014
Feb. 24, 2015
Jun. 30, 2014
Document And Entity Information [Abstract]
 
 
 
Document Type
10-K 
 
 
Amendment Flag
false 
 
 
Document Period End Date
Dec. 31, 2014 
 
 
Entity Registrant Name
Ensco plc 
 
 
Entity Central Index Key
0000314808 
 
 
Current Fiscal Year End Date
--12-31 
 
 
Document Fiscal Year Focus
2014 
 
 
Document Fiscal Period Focus
FY 
 
 
Entity Well-known Seasoned Issuer
Yes 
 
 
Entity Voluntary Filers
No 
 
 
Entity Current Reporting Status
Yes 
 
 
Entity Filer Category
Large Accelerated Filer 
 
 
Entity Public Float
 
 
$ 11,554,518 
Entity Common Shares, Shares Outstanding
 
234,172,524 
 
Consolidated Statements Of Income (USD $)
In Millions, except Per Share data, unless otherwise specified
12 Months Ended
Dec. 31, 2014
Dec. 31, 2013
Dec. 31, 2012
Income Statement [Abstract]
 
 
 
OPERATING REVENUES
$ 4,564.5 
$ 4,323.4 
$ 3,638.8 
OPERATING EXPENSES
 
 
 
Contract drilling (exclusive of depreciation)
2,076.9 
1,947.1 
1,642.8 
Asset Impairment Charges
4,218.7 
Depreciation
537.9 
496.2 
443.8 
General and administrative
131.9 
146.8 
148.9 
Total operating expenses
6,965.4 
2,590.1 
2,235.5 
OPERATING INCOME
(2,400.9)
1,733.3 
1,403.3 
OTHER INCOME (EXPENSE)
 
 
 
Interest income
13.0 
16.6 
22.8 
Interest expense, net
(161.4)
(158.8)
(123.6)
Other, net
0.5 
42.1 
2.2 
Other income (expense), net
(147.9)
(100.1)
(98.6)
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES
(2,548.8)
1,633.2 
1,304.7 
PROVISION FOR INCOME TAXES
 
 
 
Current income tax expense
264.0 
193.0 
200.8 
Deferred income tax expense (benefit)
(123.5)
10.1 
27.8 
Total provision for income taxes
140.5 
203.1 
228.6 
INCOME FROM CONTINUING OPERATIONS
(2,689.3)
1,430.1 
1,076.1 
DISCONTINUED OPERATIONS, NET
(1,199.2)
(2.2)
100.6 
NET INCOME
(3,888.5)
1,427.9 
1,176.7 
NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS
(14.1)
(9.7)
(7.0)
NET INCOME ATTRIBUTABLE TO ENSCO
(3,902.6)
1,418.2 
1,169.7 
EARNINGS PER SHARE - BASIC
 
 
 
Continuing operations
$ (11.70)
$ 6.09 
$ 4.62 
Discontinued operations
$ (5.18)
$ (0.01)
$ 0.43 
Total earnings per share - basic
$ (16.88)
$ 6.08 
$ 5.05 
EARNINGS PER SHARE - DILUTED
 
 
 
Continuing operations
$ (11.70)
$ 6.08 
$ 4.61 
Discontinued operations
$ (5.18)
$ (0.01)
$ 0.43 
Total earnings per share - diluted
$ (16.88)
$ 6.07 
$ 5.04 
NET INCOME ATTRIBUTABLE TO ENSCO SHARES - BASIC AND DILUTED
$ (3,910.5)
$ 1,403.1 
$ 1,157.4 
WEIGHTED-AVERAGE SHARES OUTSTANDING
 
 
 
Basic
231.6 
230.9 
229.4 
Diluted
231.6 
231.1 
229.7 
CASH DIVIDENDS PER SHARE
$ 3.0 
$ 2.25 
$ 1.50 
Consolidated Statements of Comprehensive Income (USD $)
In Millions, unless otherwise specified
3 Months Ended 12 Months Ended
Dec. 31, 2014
Sep. 30, 2014
Jun. 30, 2014
Mar. 31, 2014
Dec. 31, 2013
Sep. 30, 2013
Jun. 30, 2013
Mar. 31, 2013
Dec. 31, 2014
Dec. 31, 2013
Dec. 31, 2012
Statement of Comprehensive Income [Abstract]
 
 
 
 
 
 
 
 
 
 
 
NET INCOME
$ (3,448.5)
$ 432.9 
$ (1,169.6)
$ 296.7 
$ 364.0 
$ 381.4 
$ 362.6 
$ 319.9 
$ (3,888.5)
$ 1,427.9 
$ 1,176.7 
OTHER COMPREHENSIVE INCOME (LOSS), NET
 
 
 
 
 
 
 
 
 
 
 
Net change in fair value of derivatives
 
 
 
 
 
 
 
 
(11.7)
(5.8)
8.7 
Reclassification of gains and losses on derivative instruments from other comprehensive (income) loss into net income
 
 
 
 
 
 
 
 
(0.9)
2.0 
Other
 
 
 
 
 
 
 
 
6.3 
1.9 
2.8 
NET OTHER COMPREHENSIVE INCOME (LOSS)
 
 
 
 
 
 
 
 
(6.3)
(1.9)
11.5 
COMPREHENSIVE INCOME
 
 
 
 
 
 
 
 
(3,894.8)
1,426.0 
1,188.2 
COMPREHENSIVE INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS
 
 
 
 
 
 
 
 
(14.1)
(9.7)
(7.0)
COMPREHENSIVE INCOME ATTRIBUTABLE TO ENSCO
 
 
 
 
 
 
 
 
$ (3,908.9)
$ 1,416.3 
$ 1,181.2 
Consolidated Balance Sheets (USD $)
Dec. 31, 2014
Dec. 31, 2013
CURRENT ASSETS
 
 
Cash and cash equivalents
$ 664,800,000 
$ 165,600,000 
Short-term Investments
757,300,000 
50,000,000 
Accounts receivable, net
883,300,000 
855,700,000 
Other
629,400,000 
463,900,000 
Total current assets
2,934,800,000 
1,535,200,000 
PROPERTY AND EQUIPMENT, AT COST
14,975,500,000 
17,498,500,000 
Less accumulated depreciation
2,440,700,000 
3,187,500,000 
Property and equipment, net
12,534,800,000 
14,311,000,000 
GOODWILL
276,100,000 
3,274,000,000 
OTHER ASSETS, NET
314,200,000 
352,700,000 
TOTAL ASSETS
16,059,900,000 
19,472,900,000 
CURRENT LIABILITIES
 
 
Accounts payable - trade
373,200,000 
341,100,000 
Accrued liabilities and other
696,600,000 
658,700,000 
Short-term debt
Current maturities of long-term debt
34,800,000 
47,500,000 
Total current liabilities
1,104,600,000 
1,047,300,000 
LONG-TERM DEBT
5,885,600,000 
4,718,900,000 
DEFERRED INCOME TAXES
179,500,000 
362,100,000 
OTHER LIABILITIES
667,300,000 
545,700,000 
ENSCO SHAREHOLDERS' EQUITY
 
 
Additional paid-in capital
5,517,500,000 
5,467,200,000 
Retained earnings
2,720,400,000 
7,327,300,000 
Accumulated other comprehensive income
11,900,000 
18,200,000 
Treasury shares, at cost, 6.5 million shares and 6.0 million shares
(59,000,000)
(45,200,000)
Total Ensco shareholders' equity
8,215,000,000 
12,791,600,000 
NONCONTROLLING INTERESTS
7,900,000 
7,300,000 
Total equity
8,222,900,000 
12,798,900,000 
Total liabilities and shareholders' equity
16,059,900,000 
19,472,900,000 
Class A Ordinary Shares, U.S. [Member]
 
 
ENSCO SHAREHOLDERS' EQUITY
 
 
Common shares, value
24,100,000 
24,000,000 
Common Class B, Par Value In GBP [Member]
 
 
ENSCO SHAREHOLDERS' EQUITY
 
 
Common shares, value
$ 100,000 
$ 100,000 
Consolidated Balance Sheets (Parenthetical)
Dec. 31, 2014
Dec. 31, 2013
Dec. 31, 2014
Class A Ordinary Shares, U.S. [Member]
USD ($)
Dec. 31, 2013
Class A Ordinary Shares, U.S. [Member]
USD ($)
Dec. 31, 2014
Common Class B, Par Value In GBP [Member]
GBP (£)
Dec. 31, 2013
Common Class B, Par Value In GBP [Member]
GBP (£)
Common shares, par value
 
 
$ 0.10 
$ 0.10 
£ 1 
£ 1 
Common shares, shares authorized
 
 
450,000,000 
450,000,000.0 
50,000 
50,000 
Common shares, shares issued
 
 
240,700,000 
239,500,000 
50,000 
50,000 
Treasury shares, shares held
6,500,000 
6,000,000 
 
 
 
 
Consolidated Statements Of Cash Flows (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2014
Dec. 31, 2013
Dec. 31, 2012
OPERATING ACTIVITIES
 
 
 
Net income
$ (3,888.5)
$ 1,427.9 
$ 1,176.7 
Adjustments to reconcile net income to net cash provided by operating activities of continuing operations:
 
 
 
Discontinued operations, net
1,199.2 
2.2 
(100.6)
Asset Impairment Charges
4,218.7 
Cost of Services, Depreciation
537.9 
496.2 
443.8 
Settlement of warranty or other claims
(11.0)
(57.9)
Share-based compensation expense
45.1 
50.3 
53.2 
Amortization of intangibles and other, net
(7.9)
(28.4)
(33.6)
Deferred income tax expense (benefit)
(123.5)
10.1 
27.8 
Other
(16.4)
15.0 
6.0 
Changes in operating assets and liabilities
93.3 
(151.1)
439.2 
Net cash provided by operating activities of continuing operations
2,057.9 
1,811.2 
1,954.6 
INVESTING ACTIVITIES
 
 
 
Additions to property and equipment
(1,568.8)
(1,763.5)
(1,713.2)
Purchases of short-term investments
(790.6)
(50.0)
(90.0)
Proceeds from Sale of Property, Plant, and Equipment
169.2 
6.0 
3.2 
Maturities of short-term investments
83.3 
50.0 
44.5 
Net cash used in investing activities of continuing operations
(2,106.9)
(1,757.5)
(1,755.5)
FINANCING ACTIVITIES
 
 
 
Cash dividends paid
(703.0)
(525.6)
(348.1)
Reduction of long-term borrowings
(60.1)
(47.5)
(47.5)
Proceeds from exercise of share options
2.6 
22.3 
35.8 
Debt financing costs
(13.4)
(4.6)
Commercial paper borrowings, net
(125.0)
Equity financing costs
66.7 
Proceeds from issuance of senior notes
1,246.4 
Other
(29.8)
(21.7)
(17.4)
Net cash (used in) provided by financing activities of continuing operations
442.7 
(577.1)
(435.5)
DISCONTINUED OPERATIONS
 
 
 
Operating activities
(3.8)
169.3 
232.5 
Investing activities
109.3 
32.8 
58.3 
Net Cash Provided by (Used in) Discontinued Operations
105.5 
202.1 
290.8 
Effect of exchange rate changes on cash and cash equivalents
(0.2)
2.0 
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
499.2 
(321.5)
56.4 
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR
165.6 
487.1 
430.7 
CASH AND CASH EQUIVALENTS, END OF YEAR
664.8 
165.6 
487.1 
Ensco Plc [Member]
 
 
 
OPERATING ACTIVITIES
 
 
 
Net income
(3,902.6)
1,418.2 
1,169.7 
Adjustments to reconcile net income to net cash provided by operating activities of continuing operations:
 
 
 
Discontinued operations, net
Asset Impairment Charges
 
 
Cost of Services, Depreciation
0.2 
0.3 
0.4 
Net cash provided by operating activities of continuing operations
(63.8)
(114.8)
(71.6)
INVESTING ACTIVITIES
 
 
 
Additions to property and equipment
Purchases of short-term investments
(716.1)
Proceeds from Sale of Property, Plant, and Equipment
(0.3)
Maturities of short-term investments
FINANCING ACTIVITIES
 
 
 
Cash dividends paid
(703.0)
(525.6)
(348.1)
Reduction of long-term borrowings
Proceeds from exercise of share options
2.6 
22.3 
23.9 
Debt financing costs
(13.4)
 
Commercial paper borrowings, net
 
 
(125.0)
Equity financing costs
 
 
66.7 
Proceeds from issuance of senior notes
1,246.4 
 
 
Other
(13.7)
(14.4)
(11.6)
Net cash (used in) provided by financing activities of continuing operations
1,020.8 
(110.5)
107.1 
DISCONTINUED OPERATIONS
 
 
 
Operating activities
Investing activities
Net Cash Provided by (Used in) Discontinued Operations
Effect of exchange rate changes on cash and cash equivalents
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
240.9 
(225.3)
35.2 
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR
46.5 
271.8 
236.6 
CASH AND CASH EQUIVALENTS, END OF YEAR
287.4 
46.5 
271.8 
Ensco International Inc [Member]
 
 
 
OPERATING ACTIVITIES
 
 
 
Net income
(3,657.4)
259.8 
256.2 
Adjustments to reconcile net income to net cash provided by operating activities of continuing operations:
 
 
 
Discontinued operations, net
Asset Impairment Charges
 
 
Cost of Services, Depreciation
7.6 
4.0 
3.5 
Net cash provided by operating activities of continuing operations
(167.6)
(128.7)
(38.2)
INVESTING ACTIVITIES
 
 
 
Additions to property and equipment
(37.2)
Purchases of short-term investments
Proceeds from Sale of Property, Plant, and Equipment
(4.1)
0.4 
Maturities of short-term investments
FINANCING ACTIVITIES
 
 
 
Cash dividends paid
Reduction of long-term borrowings
Proceeds from exercise of share options
11.9 
Debt financing costs
(4.6)
 
Commercial paper borrowings, net
 
 
Equity financing costs
 
 
Proceeds from issuance of senior notes
 
 
Other
Net cash (used in) provided by financing activities of continuing operations
204.3 
131.6 
39.5 
DISCONTINUED OPERATIONS
 
 
 
Operating activities
Investing activities
Net Cash Provided by (Used in) Discontinued Operations
Effect of exchange rate changes on cash and cash equivalents
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
(0.5)
(1.2)
1.7 
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR
0.5 
1.7 
CASH AND CASH EQUIVALENTS, END OF YEAR
0.5 
1.7 
Pride International Inc Member
 
 
 
OPERATING ACTIVITIES
 
 
 
Net income
(3,799.0)
83.7 
189.2 
Adjustments to reconcile net income to net cash provided by operating activities of continuing operations:
 
 
 
Discontinued operations, net
Asset Impairment Charges
 
 
Cost of Services, Depreciation
Net cash provided by operating activities of continuing operations
(90.9)
(62.9)
(21.6)
INVESTING ACTIVITIES
 
 
 
Additions to property and equipment
Purchases of short-term investments
Proceeds from Sale of Property, Plant, and Equipment
Maturities of short-term investments
FINANCING ACTIVITIES
 
 
 
Cash dividends paid
Reduction of long-term borrowings
Proceeds from exercise of share options
Debt financing costs
 
Commercial paper borrowings, net
 
 
Equity financing costs
 
 
Proceeds from issuance of senior notes
 
 
Other
Net cash (used in) provided by financing activities of continuing operations
176.8 
(17.2)
84.0 
DISCONTINUED OPERATIONS
 
 
 
Operating activities
Investing activities
Net Cash Provided by (Used in) Discontinued Operations
Effect of exchange rate changes on cash and cash equivalents
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
85.9 
(80.1)
62.4 
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR
4.9 
85.0 
22.6 
CASH AND CASH EQUIVALENTS, END OF YEAR
90.8 
4.9 
85.0 
Other Non Guarantor Subsidiaries Member
 
 
 
OPERATING ACTIVITIES
 
 
 
Net income
(3,710.9)
1,684.1 
1,419.6 
Adjustments to reconcile net income to net cash provided by operating activities of continuing operations:
 
 
 
Discontinued operations, net
1,199.2 
2.2 
(100.6)
Asset Impairment Charges
4,218.7 
 
 
Cost of Services, Depreciation
530.1 
491.9 
439.9 
Net cash provided by operating activities of continuing operations
2,380.2 
2,117.6 
2,086.0 
INVESTING ACTIVITIES
 
 
 
Additions to property and equipment
(1,531.6)
(1,763.5)
(1,713.2)
Purchases of short-term investments
(74.5)
(50.0)
(90.0)
Proceeds from Sale of Property, Plant, and Equipment
169.2 
10.1 
3.1 
Maturities of short-term investments
83.3 
50.0 
44.5 
FINANCING ACTIVITIES
 
 
 
Cash dividends paid
Reduction of long-term borrowings
(60.1)
(47.5)
(47.5)
Proceeds from exercise of share options
Debt financing costs
 
Commercial paper borrowings, net
 
 
Equity financing costs
 
 
Proceeds from issuance of senior notes
 
 
Other
(16.1)
(7.3)
(5.8)
Net cash (used in) provided by financing activities of continuing operations
(959.2)
(581.0)
(666.1)
DISCONTINUED OPERATIONS
 
 
 
Operating activities
(3.8)
169.3 
232.5 
Investing activities
109.3 
32.8 
58.3 
Net Cash Provided by (Used in) Discontinued Operations
105.5 
202.1 
290.8 
Effect of exchange rate changes on cash and cash equivalents
(0.2)
2.0 
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
172.9 
(14.9)
(42.9)
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR
113.7 
128.6 
171.5 
CASH AND CASH EQUIVALENTS, END OF YEAR
286.6 
113.7 
128.6 
Consolidated Adjustments Member
 
 
 
OPERATING ACTIVITIES
 
 
 
Net income
11,181.4 
(2,017.9)
(1,858.0)
Adjustments to reconcile net income to net cash provided by operating activities of continuing operations:
 
 
 
Discontinued operations, net
 
Asset Impairment Charges
 
 
Cost of Services, Depreciation
Net cash provided by operating activities of continuing operations
INVESTING ACTIVITIES
 
 
 
Additions to property and equipment
Purchases of short-term investments
Proceeds from Sale of Property, Plant, and Equipment
Maturities of short-term investments
FINANCING ACTIVITIES
 
 
 
Cash dividends paid
Reduction of long-term borrowings
Proceeds from exercise of share options
Debt financing costs
 
Commercial paper borrowings, net
 
 
Equity financing costs
 
 
Proceeds from issuance of senior notes
 
 
Other
Net cash (used in) provided by financing activities of continuing operations
DISCONTINUED OPERATIONS
 
 
 
Operating activities
Investing activities
Net Cash Provided by (Used in) Discontinued Operations
Effect of exchange rate changes on cash and cash equivalents
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR
CASH AND CASH EQUIVALENTS, END OF YEAR
$ 0 
$ 0 
$ 0 
Description Of The Business And Summary Of Significant Accounting Policies
DESCRIPTION OF THE BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
    Business
 
We are one of the leading providers of offshore contract drilling services to the international oil and gas industry. We own an offshore drilling rig fleet of 70 rigs, including seven rigs under construction, spanning most of the strategic markets around the globe. Our rig fleet includes ten drillships, 13 dynamically positioned semisubmersible rigs, five moored semisubmersible rigs and 42 jackup rigs.  Our fleet is the world's second largest amongst competitive rigs, our ultra-deepwater fleet is one of the newest in the industry, and our premium jackup fleet is the largest of any offshore drilling company.

Our customers include many of the leading national and international oil companies, in addition to many independent operators. We are among the most geographically diverse offshore drilling companies, with current operations and drilling contracts spanning approximately 20 countries on six continents in nearly every major offshore basin around the world. The markets in which we operate include the U.S. Gulf of Mexico, Mexico, Brazil, the Mediterranean, the North Sea, the Middle East, West Africa, Australia and Southeast Asia.

We provide drilling services on a "day rate" contract basis. Under day rate contracts, we provide a drilling rig and rig crews and receive a fixed amount per day for each day we are performing drilling or related services. Our customers bear substantially all of the ancillary costs of constructing the well and supporting drilling operations, as well as the economic risk relative to the success of the well. In addition, our customers may pay all or a portion of the cost of moving our equipment and personnel to and from the well site. We do not provide "turnkey" or other risk-based drilling services.

Redomestication

During 2009, we completed a reorganization of the corporate structure of the group of companies controlled by our predecessor, ENSCO International Incorporated ("Ensco Delaware"), pursuant to which an indirect, wholly-owned subsidiary merged with Ensco Delaware, and Ensco plc became our publicly-held parent company incorporated under English law (the "redomestication").

We remain subject to the U.S. Securities and Exchange Commission (the "SEC") reporting requirements, the mandates of the Sarbanes-Oxley Act of 2002, as amended, and the applicable corporate governance rules of the New York Stock Exchange ("NYSE"), and we will continue to report our consolidated financial results in U.S. dollars and in accordance with U.S. generally accepted accounting principles ("U.S. GAAP"). We also must comply with additional reporting requirements of English law.

Basis of Presentation—U.K. Companies Act 2006 Section 435 Statement

The accompanying consolidated financial statements have been prepared in accordance with U.S. GAAP, which the Board of Directors consider to be the most meaningful presentation of our results of operations and financial position.  The accompanying consolidated financial statements do not constitute statutory accounts required by the U.K. Companies Act 2006, which for the year ended December 31, 2014 will be prepared in accordance with generally accepted accounting principles in the U.K. and delivered to the Registrar of Companies in the U.K. following the annual general meeting of shareholders.  The U.K. statutory accounts are expected to include an unqualified auditor’s report, which is not expected to contain any references to matters on which the auditors drew attention by way of emphasis without qualifying the report or any statements under Sections 498(2) or 498(3) of the U.K. Companies Act 2006.
 
Principles of Consolidation

The accompanying consolidated financial statements include the accounts of Ensco plc and its majority-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated. Certain previously reported amounts have been reclassified to conform to the current year presentation.

Pervasiveness of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make certain estimates, judgments and assumptions that affect the reported amounts of assets and liabilities, the related revenues and expenses and disclosures of gain and loss contingencies as of the date of the financial statements. Actual results could differ from those estimates.

Foreign Currency Remeasurement and Translation

Our functional currency is the U.S. dollar. As is customary in the oil and gas industry, a majority of our revenues and expenses are denominated in U.S. dollars; however, a portion of the revenues earned and expenses incurred by certain of our subsidiaries are denominated in currencies other than the U.S. dollar ("foreign currencies"). These transactions are remeasured in U.S. dollars based on a combination of both current and historical exchange rates. Most transaction gains and losses, including certain gains and losses on our derivative instruments, are included in other, net, in our consolidated statement of operations.  Certain gains and losses from the translation of foreign currency balances of our non-U.S. dollar functional currency subsidiaries are included in accumulated other comprehensive income on our consolidated balance sheet.  Net foreign currency exchange gains and losses, inclusive of offsetting fair value derivatives, were $2.6 million of losses, $6.4 million of gains and $3.5 million of losses, and were included in other, net, in our consolidated statements of operations for the years ended December 31, 2014, 2013 and 2012, respectively.

Cash Equivalents and Short-Term Investments

Highly liquid investments with maturities of three months or less at the date of purchase are considered cash equivalents. Highly liquid investments with maturities of greater than three months but less than one year at the date of purchase are classified as short-term investments.

Short-term investments, consisting of time deposits with initial maturities in excess of three months but less than one year, were included in other current assets on our consolidated balance sheets and totaled $757.3 million and $50.0 million as of December 31, 2014 and 2013, respectively. Cash flows from purchases and maturities of short-term investments were classified as investing activities in our consolidated statements of cash flows for the years ended December 31, 2014, 2013 and 2012.
    
Property and Equipment

All costs incurred in connection with the acquisition, construction, major enhancement and improvement of assets are capitalized, including allocations of interest incurred during periods that our drilling rigs are under construction or undergoing major enhancements and improvements. Repair and maintenance costs are charged to contract drilling expense in the period in which they are incurred. Upon sale or retirement of assets, the related cost and accumulated depreciation are removed from the balance sheet, and the resulting gain or loss is included in contract drilling expense, unless reclassified to discontinued operations.

Our property and equipment is depreciated on a straight-line basis, after allowing for salvage values, over the estimated useful lives of our assets. Drilling rigs and related equipment are depreciated over estimated useful lives ranging from four to 35 years.  Buildings and improvements are depreciated over estimated useful lives ranging from two to 30 years. Other equipment, including computer and communications hardware and software costs, is depreciated over estimated useful lives ranging from two to six years.
 
We evaluate the carrying value of our property and equipment for impairment when events or changes in circumstances indicate that the carrying value of such assets may not be recoverable. For property and equipment used in our operations, recoverability generally is determined by comparing the carrying value of an asset to the expected undiscounted future cash flows of the asset. If the carrying value of an asset is not recoverable, the amount of impairment loss is measured as the difference between the carrying value of the asset and its estimated fair value. Property and equipment held for sale is recorded at the lower of net book value or net realizable value.

During 2014, we recorded a pre-tax, non cash loss on impairment of long-lived assets of $2.5 billion. See "Note 3 - Property and Equipment" for additional information on these impairments.
    
If the global economy deteriorates and/or our expectation relative to future offshore drilling industry conditions decline, it is reasonably possible that additional impairment charges may occur with respect to specific individual rigs, groups of rigs, such as a specific type of drilling rig, or rigs in a certain geographic location.

Goodwill
Our business consists of three operating segments: (1) Floaters, which includes our drillships and semisubmersible rigs, (2) Jackups and (3) Other, which consists of management services on rigs owned by third-parties. Our two reportable segments, Floaters and Jackups, provide one service, contract drilling.

We test goodwill for impairment on an annual basis as of December 31 of each year or when events or changes in circumstances indicate that a potential impairment exists.  When testing goodwill for impairment, we perform a qualitative assessment to determine whether it is more-likely-than-not that the fair value of a reporting unit is less than its carrying amount.

If we conclude that the fair value of one or both of our reporting units has more-likely-than-not declined below its carrying amount after qualitatively assessing existing facts and circumstances, we perform a quantitative assessment whereby we estimate the fair value of each reporting unit.  In most instances, our calculation of the fair value of our reporting units is based on estimates of future discounted cash flows to be generated by the drilling rigs in the reporting unit.

Based on a qualitative assessment performed as of December 31, 2014, we concluded it was more-likely-than-not that the fair value of our Floater reporting unit was less than its carrying amount and performed a quantitative assessment. As a result, we concluded that our Floater reporting unit goodwill balance was impaired. See "Note 8 - Goodwill and Other Intangible Assets and Liabilities" for additional information on our goodwill.

We concluded the fair value of our Jackup reporting more-likely-than-not exceeded its carrying amount, and there was no impairment of goodwill.
 
Operating Revenues and Expenses

Substantially all of our drilling contracts ("contracts") are performed on a day rate basis, and the terms of such contracts are typically for a specific period of time or the period of time required to complete a specific task, such as drill a well. Contract revenues and expenses are recognized on a per day basis, as the work is performed. Day rate revenues are typically earned, and contract drilling expense is typically incurred, on a uniform basis over the terms of our contracts.

In connection with some contracts, we receive lump-sum fees or similar compensation for the mobilization of equipment and personnel prior to the commencement of drilling services or the demobilization of equipment and personnel upon contract completion. Fees received for the mobilization or demobilization of equipment and personnel are included in operating revenues. The costs incurred in connection with the mobilization and demobilization of equipment and personnel are included in contract drilling expense.

Mobilization fees received and costs incurred prior to commencement of drilling operations are deferred and recognized on a straight-line basis over the period that the related drilling services are performed. Demobilization fees and related costs are recognized as incurred upon contract completion. Costs associated with the mobilization of equipment and personnel to more promising market areas without contracts are expensed as incurred.

Deferred mobilization costs were included in other current assets and other assets, net, on our consolidated balance sheets and totaled $95.7 million and $66.6 million as of December 31, 2014 and 2013, respectively. Deferred mobilization revenue was included in accrued liabilities and other, and other liabilities on our consolidated balance sheets and totaled $149.4 million and $76.8 million as of December 31, 2014 and 2013, respectively.

In connection with some contracts, we receive up-front lump-sum fees or similar compensation for capital improvements to our drilling rigs. Such compensation is deferred and recognized as revenue over the period that the related drilling services are performed. The cost of such capital improvements is capitalized and depreciated over the useful life of the asset. Deferred revenue associated with capital improvements was included in accrued liabilities and other, and other liabilities on our consolidated balance sheets and totaled $428.9 million and $273.6 million as of December 31, 2014 and 2013, respectively.

We must obtain certifications from various regulatory bodies in order to operate our drilling rigs and must maintain such certifications through periodic inspections and surveys. The costs incurred in connection with maintaining such certifications, including inspections, tests, surveys and drydock, as well as remedial structural work and other compliance costs, are deferred and amortized over the corresponding certification periods. Deferred regulatory certification and compliance costs were included in other current assets and other assets, net, on our consolidated balance sheets and totaled $20.0 million and $18.3 million as of December 31, 2014 and 2013, respectively.

In certain countries in which we operate, taxes such as sales, use, value-added, gross receipts and excise may be assessed by the local government on our revenues. We generally record our tax-assessed revenue transactions on a net basis in our consolidated statement of operations.

Derivative Instruments

We use derivatives to reduce our exposure to various market risks, primarily foreign currency exchange rate risk. See "Note 5 - Derivative Instruments" for additional information on how and why we use derivatives.

All derivatives are recorded on our consolidated balance sheet at fair value. Derivatives subject to legally enforceable master netting agreements are not offset on our consolidated balance sheet. Accounting for the gains and losses resulting from changes in the fair value of derivatives depends on the use of the derivative and whether it qualifies for hedge accounting. Derivatives qualify for hedge accounting when they are formally designated as hedges and are effective in reducing the risk exposure that they are designated to hedge. Our assessment of hedge effectiveness is formally documented at hedge inception, and we review hedge effectiveness and measure any ineffectiveness throughout the designated hedge period on at least a quarterly basis.

Changes in the fair value of derivatives that are designated as hedges of the variability in expected future cash flows associated with existing recognized assets or liabilities or forecasted transactions ("cash flow hedges") are recorded in accumulated other comprehensive income ("AOCI").  Amounts recorded in AOCI associated with cash flow hedges are subsequently reclassified into contract drilling, depreciation or interest expense as earnings are affected by the underlying hedged forecasted transactions.

Gains and losses on a cash flow hedge, or a portion of a cash flow hedge, that no longer qualifies as effective due to an unanticipated change in the forecasted transaction are recognized currently in earnings and included in other, net, in our consolidated statement of operations based on the change in the fair value of the derivative. When a forecasted transaction is probable of not occurring, gains and losses on the derivative previously recorded in AOCI are reclassified currently into earnings and included in other, net, in our consolidated statement of operations.

We occasionally enter into derivatives that hedge the fair value of recognized assets or liabilities, but do not designate such derivatives as hedges or the derivatives otherwise do not qualify for hedge accounting. In these situations, there generally is a natural hedging relationship where changes in the fair value of the derivatives offset changes in the fair value of the underlying hedged items. Changes in the fair value of these derivatives are recognized currently in earnings in other, net, in our consolidated statement of operations.

Derivatives with asset fair values are reported in other current assets or other assets, net, on our consolidated balance sheet depending on maturity date. Derivatives with liability fair values are reported in accrued liabilities and other, or other liabilities on our consolidated balance sheet depending on maturity date.

Income Taxes

We conduct operations and earn income in numerous countries. Current income taxes are recognized for the amount of taxes payable or refundable based on the laws and income tax rates in the taxing jurisdictions in which operations are conducted and income is earned.
 
Deferred tax assets and liabilities are recognized for the anticipated future tax effects of temporary differences between the financial statement basis and the tax basis of our assets and liabilities using the enacted tax rates in effect at year-end. A valuation allowance for deferred tax assets is recorded when it is more-likely-than-not that the benefit from the deferred tax asset will not be realized. We do not offset deferred tax assets and deferred tax liabilities attributable to different tax paying jurisdictions.
    
We operate in certain jurisdictions where tax laws relating to the offshore drilling industry are not well developed and change frequently. Furthermore, we may enter into transactions with affiliates or employ other tax planning strategies that generally are subject to complex tax regulations. As a result of the foregoing, the tax liabilities and assets we recognize in our financial statements may differ from the tax positions taken, or expected to be taken, in our tax returns. Our tax positions are evaluated for recognition using a more-likely-than-not threshold, and those tax positions requiring recognition are measured as the largest amount of tax benefit that is greater than 50% likely of being realized upon effective settlement with a taxing authority that has full knowledge of all relevant information. Interest and penalties relating to income taxes are included in current income tax expense in our consolidated statement of operations.

Our drilling rigs frequently move from one taxing jurisdiction to another based on where they are contracted to perform drilling services. The movement of drilling rigs among taxing jurisdictions may involve a transfer of drilling rig ownership among our subsidiaries (“intercompany rig sale”). The pre-tax profit resulting from an intercompany rig sale is eliminated from our consolidated financial statements, and the carrying value of a rig sold in an intercompany transaction remains at historical net depreciated cost prior to the transaction. Our consolidated financial statements do not reflect the asset disposition transaction of the selling subsidiary or the asset acquisition transaction of the acquiring subsidiary. Income taxes resulting from an intercompany rig sale, as well as the tax effect of any reversing temporary differences resulting from the sale, are deferred and amortized on a straight-line basis over the remaining useful life of the rig.

In some instances, we may determine that certain temporary differences will not result in a taxable or deductible amount in future years, as it is more-likely-than-not we will commence operations and depart from a given taxing jurisdiction without such temporary differences being recovered or settled. Under these circumstances, no future tax consequences are expected and no deferred taxes are recognized in connection with such operations. We evaluate these determinations on a periodic basis and, in the event our expectations relative to future tax consequences change, the applicable deferred taxes are recognized or derecognized.
   
We do not provide deferred taxes on the undistributed earnings of certain subsidiaries because our policy and intention is to reinvest such earnings indefinitely. See "Note 9 - Income Taxes" for additional information on our deferred taxes, unrecognized tax benefits, intercompany transfers of drilling rigs and undistributed earnings.
 
Share-Based Compensation

We sponsor share-based compensation plans that provide equity compensation to our key employees, officers and non-employee directors. Share-based compensation cost is measured at fair value on the date of grant and recognized on a straight-line basis over the requisite service period (usually the vesting period). The amount of compensation cost recognized in our consolidated statement of operations is based on the awards ultimately expected to vest and, therefore, reduced for estimated forfeitures. All changes in estimated forfeitures are based on historical experience and are recognized as a cumulative adjustment to compensation cost in the period in which they occur. See "Note 7 - Benefit Plans" for additional information on our share-based compensation.

Fair Value Measurements

We measure certain of our assets and liabilities based on a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy assigns the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities ("Level 1") and the lowest priority to unobservable inputs ("Level 3").  Level 2 measurements represent inputs that are observable for similar assets or liabilities, either directly or indirectly, other than quoted prices included within Level 1.  See "Note 2 - Fair Value Measurements" for additional information on the fair value measurement of certain of our assets and liabilities.

Earnings Per Share
    
We compute basic and diluted earnings per share ("EPS") in accordance with the two-class method. Net (loss) income attributable to Ensco used in our computations of basic and diluted EPS is adjusted to exclude net income allocated to non-vested shares granted to our employees and non-employee directors. Weighted-average shares outstanding used in our computation of diluted EPS is calculated using the treasury stock method and excludes non-vested shares.
 
The following table is a reconciliation of (loss) income from continuing operations attributable to Ensco shares used in our basic and diluted EPS computations for each of the years in the three-year period ended December 31, 2014 (in millions):

 
2014
 
2013
 
2012
(Loss) income from continuing operations attributable to Ensco
$
(2,703.1
)
 
$
1,421.6

 
$
1,069.6

Income from continuing operations allocated to non-vested share awards
(7.9
)
 
(15.1
)
 
(11.2
)
(Loss) income from continuing operations attributable to Ensco shares
$
(2,711.0
)
 
$
1,406.5

 
$
1,058.4



The following table is a reconciliation of the weighted-average shares used in our basic and diluted earnings per share computations for each of the years in the three-year period ended December 31, 2014 (in millions):

 
2014
 
2013
 
2012
Weighted-average shares - basic
231.6

 
230.9

 
229.4

Potentially dilutive shares

 
.2

 
.3

Weighted-average shares - diluted
231.6

 
231.1

 
229.7



Antidilutive share options totaling 400,000, 300,000 and 400,000 for the years ended December 31, 2014, 2013 and 2012, respectively, were excluded from the computation of diluted EPS.
 
Noncontrolling Interests

Third parties hold a noncontrolling ownership interest in certain of our non-U.S. subsidiaries. Noncontrolling interests are classified as equity on our consolidated balance sheet and net income attributable to noncontrolling interests is presented separately in our consolidated statement of operations. 

(Loss) income from continuing operations attributable to Ensco for each of the years in the three-year period ended December 31, 2014 was as follows (in millions):

 
2014
 
2013
 
2012
(Loss) income from continuing operations
$
(2,689.3
)
 
$
1,430.1

 
$
1,076.1

Income from continuing operations attributable to noncontrolling interests
(13.8
)
 
(8.5
)
 
(6.5
)
(Loss) income from continuing operations attributable to Ensco
$
(2,703.1
)
 
$
1,421.6

 
$
1,069.6


    
(Loss) income from discontinued operations attributable to Ensco for each of the years in the three-year period ended December 31, 2014 was as follows (in millions):

 
2014
 
2013
 
2012
(Loss) income from discontinued operations
$
(1,199.2
)
 
$
(2.2
)
 
$
100.6

Income from discontinued operations attributable to noncontrolling interests
(.3
)
 
(1.2
)
 
(.5
)
(Loss) income from discontinued operations attributable to Ensco
$
(1,199.5
)
 
$
(3.4
)
 
$
100.1


New Accounting Pronouncements
    
In May 2014, the Financial Accounting Standards Board issued Accounting Standards Update 2014-09, Revenue from Contracts with Customers (Topic 606) ("Update 2014-09"), which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The ASU will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective on January 1, 2017. Early application is not permitted. We are currently evaluating the effect that ASU 2014-09 will have on our consolidated financial statements and related disclosures.
Noncontrolling Interests

Third parties hold a noncontrolling ownership interest in certain of our non-U.S. subsidiaries. Noncontrolling interests are classified as equity on our consolidated balance sheet and net income attributable to noncontrolling interests is presented separately in our consolidated statement of operations. 

(Loss) income from continuing operations attributable to Ensco for each of the years in the three-year period ended December 31, 2014 was as follows (in millions):

 
2014
 
2013
 
2012
(Loss) income from continuing operations
$
(2,689.3
)
 
$
1,430.1

 
$
1,076.1

Income from continuing operations attributable to noncontrolling interests
(13.8
)
 
(8.5
)
 
(6.5
)
(Loss) income from continuing operations attributable to Ensco
$
(2,703.1
)
 
$
1,421.6

 
$
1,069.6


    
(Loss) income from discontinued operations attributable to Ensco for each of the years in the three-year period ended December 31, 2014 was as follows (in millions):

 
2014
 
2013
 
2012
(Loss) income from discontinued operations
$
(1,199.2
)
 
$
(2.2
)
 
$
100.6

Income from discontinued operations attributable to noncontrolling interests
(.3
)
 
(1.2
)
 
(.5
)
(Loss) income from discontinued operations attributable to Ensco
$
(1,199.5
)
 
$
(3.4
)
 
$
100.1


Fair Value Measurements
Fair Value Measurements
FAIR VALUE MEASUREMENTS

The following fair value hierarchy table categorizes information regarding our net financial assets measured at fair value on a recurring basis as of December 31, 2014 and 2013 (in millions):

 
Quoted Prices in
Active Markets
for
Identical Assets
(Level 1)
 
Significant
Other
Observable
Inputs
  (Level 2)
 
Significant
Unobservable
Inputs
(Level 3)
 
Total
As of December 31, 2014
 

 
 

 
 

 
 

Supplemental executive retirement plan assets
$
43.2

 
$

 
$

 
$
43.2

Total financial assets
$
43.2

 
$

 
$

 
$
43.2

Derivatives, net

 
(26.3
)
 

 
(26.3
)
Total financial liabilities
$

 
$
(26.3
)
 
$

 
$
(26.3
)
As of December 31, 2013
 

 
 

 
 

 
 

Supplemental executive retirement plan assets
$
37.7

 
$

 
$

 
$
37.7

Derivatives, net

 
1.8

 

 
1.8

Total financial assets
$
37.7

 
$
1.8

 
$

 
$
39.5



Supplemental Executive Retirement Plans

Our Ensco supplemental executive retirement plans (the "SERP") are non-qualified plans that provide for eligible employees to defer a portion of their compensation for use after retirement. Assets held in the SERP were marketable securities measured at fair value on a recurring basis using Level 1 inputs and were included in other assets, net, on our consolidated balance sheets as of December 31, 2014 and 2013.  The fair value measurements of assets held in the SERP were based on quoted market prices. Net unrealized gains of $2.3 million, $6.2 million and $2.8 million from marketable securities held in our SERP were included in other, net, in our consolidated statements of operations for the years ended December 31, 2014, 2013 and 2012, respectively.
 
Derivatives

Our derivatives were measured at fair value on a recurring basis using Level 2 inputs as of December 31, 2014 and 2013.  See "Note 5 - Derivative Instruments" for additional information on our derivatives, including a description of our foreign currency hedging activities and related methodologies used to manage foreign currency exchange rate risk. The fair value measurements of our derivatives were based on market prices that are generally observable for similar assets or liabilities at commonly quoted intervals.

Other Financial Instruments

The carrying values and estimated fair values of our debt instruments as of December 31, 2014 and 2013 were as follows (in millions):
 
 
December 31, 2014
 
December 31, 2013
 
 
Carrying
Value
 
Estimated
  Fair
Value
 
Carrying
Value
 
Estimated
  Fair
Value
 
 
 
 
 
 
 
 
 
4.70% Senior notes due 2021
 
$
1,479.9

 
$
1,505.3

 
$
1,477.2

 
$
1,596.9

6.875% Senior notes due 2020
 
1,008.2

 
1,008.5

 
1,024.8

 
1,086.7

3.25% Senior notes due 2016
 
998.0

 
1,018.3

 
996.5

 
1,045.8

4.50% Senior notes due 2024
 
624.2

 
602.0

 

 

5.75% Senior notes due 2044
 
622.3

 
615.8

 

 

8.50% Senior notes due 2019
 
583.8

 
611.8

 
600.5

 
635.8

7.875% Senior notes due 2040
 
381.2

 
363.8

 
382.6

 
410.5

7.20% Debentures due 2027
 
149.2

 
171.4

 
149.1

 
178.6

4.33% MARAD bonds, including current maturities, due 2016
 
46.6

 
46.8

 
78.9

 
79.7

6.36% MARAD bonds, including current maturities, due 2015
 

 

 
25.3

 
27.1

4.65% MARAD bonds, including current maturities, due 2020
 
27.0

 
29.7

 
31.5

 
35.2

Total 
 
$
5,920.4

 
$
5,973.4

 
$
4,766.4

 
$
5,096.3


 
The estimated fair values of our senior notes and debentures were determined using quoted market prices. The estimated fair values of our U.S. Maritime Administration ("MARAD") bonds were determined using an income approach valuation model. The estimated fair values of our cash and cash equivalents, short-term investments, receivables, trade payables and other liabilities approximated their carrying values as of December 31, 2014 and 2013.

See "Note 3 - Property and Equipment" for additional information on the fair value measurement of property and equipment and "Note 8 - Goodwill and Other Intangible Assets and Liabilities" for additional information on the fair value measurement of goodwill.
Property And Equipment
Property And Equipment
PROPERTY AND EQUIPMENT

Property and equipment as of December 31, 2014 and 2013 consisted of the following (in millions):
 
 
2014
 
2013
Drilling rigs and equipment
 
$
13,253.2

 
$
15,839.0

Other
 
135.0

 
101.0

Work in progress
 
1,587.3

 
1,558.5

 
 
$
14,975.5

 
$
17,498.5


 
During 2014, drilling rigs and equipment declined $2.6 billion primarily due to a loss on impairment of $2.5 billion, depreciation expense of $537.9 million and $152.4 million classified as "held for sale" included in other current assets on our December 31, 2014 consolidated balance sheet. These declines were partially offset by ENSCO 120, ENSCO 121 and ENSCO 122, which were placed into service during 2014 and capital upgrades to the existing rig fleet.
 
Work in progress as of December 31, 2014 primarily consisted of $820.1 million related to the construction of ENSCO DS-8, ENSCO DS-9 and ENSCO DS-10 ultra-deepwater drillships, $233.1 million related to a capital enhancement project on ENSCO 5006, $179.3 million related to the construction of ENSCO 110, ENSCO 140 and ENSCO 141 premium jackup rigs, $59.2 million related to the construction of ENSCO 123 ultra-premium harsh environment jackup rig and costs associated with various modification and enhancement projects.

Work in progress as of December 31, 2013 primarily consisted of $627.2 million related to the construction of ENSCO 120 Series ultra-premium harsh environment jackup rigs, $513.4 million related to the construction of ENSCO DS-8, ENSCO DS-9 and ENSCO D-S 10 ultra-deepwater drillships, $43.7 million related to the construction of ENSCO 110 premium jackup rig and costs associated with various modification and enhancement projects.

Impairment of Long-Lived Assets

During 2014, we recorded a pre-tax, non cash loss on impairment of long-lived assets of $2,463.1 million, of which $1,220.8 million was included in (loss) income from continuing operations and $1,242.3 million was included in (loss) income from discontinued operations, net in our consolidated statement of operations. These losses were recorded during the second and fourth quarters.

During the second quarter, demand for floaters deteriorated as a result of continued reductions in capital spending by operators in addition to delays in operators’ drilling programs. The reduction in demand, combined with the increasing supply from newbuild floater deliveries, led to a very competitive market. In general, contracting activity declined significantly, and day rates and utilization came under pressure, especially for older, less capable floaters.
In response to the adverse change in the floaters business climate, management evaluated our older, less capable floaters and committed to a plan to sell five rigs. ENSCO 5000, ENSCO 5001, ENSCO 5002, ENSCO 6000 and ENSCO 7500 were removed from our portfolio of rigs marketed for contract drilling services and actively marketed for sale. These rigs were written down to fair value, less costs to sell. We completed the sale of ENSCO 5000 in December 2014. The remaining four floaters were classified as "held for sale" on our December 31, 2014 consolidated balance sheet.
We measured the fair value of the "held for sale" rigs by applying a market approach, which was based on unobservable third-party estimated prices that would be received in exchange for the assets in an orderly transaction between market participants. We recorded a pre-tax, non-cash loss on impairment totaling $546.4 million during the second quarter associated with our "held for sale" rigs. The impairment charge was included in (loss) income from discontinued operations, net in our consolidated statement of operations for the year ended December 31, 2014.
During the fourth quarter, Brent crude oil prices declined from approximately $95 per barrel to near $55 per barrel on December 31, 2014. These declines resulted in further reductions in capital spending by operators, including the cancellation or deferral of planned drilling programs. As a result, day rates and utilization came under further pressure, especially for older, less capable rigs. The significant supply and demand imbalance will continue to be adversely impacted by future newbuild deliveries, program delays and lower capital spending by operators.
In response to the adverse change in business climate, management evaluated our aged rigs and committed to a plan to sell one additional floater and two jackups. ENSCO DS-2, ENSCO 58 and ENSCO 90 were removed from our portfolio of rigs marketed for contract drilling services. These rigs were written down to fair value, less costs to sell, during the fourth quarter and classified as "held for sale" on our December 31, 2014 consolidated balance sheet.
As of December 31, 2014, we measured the fair value of our seven "held for sale" rigs by applying a market approach, which was based on unobservable third-party estimated prices that would be received in exchange for the assets in an orderly transaction between market participants. In addition to the asset impairment recorded during the second quarter, we recorded an additional pre-tax, non-cash loss on impairment totaling $407.9 million during the fourth quarter. The impairment charge was included in (loss) income from discontinued operations, net in our consolidated statement of operations for the year ended December 31, 2014. See "Note 10 - Discontinued Operations" for additional information on our "held for sale" rigs.
On a quarterly basis, we evaluate the carrying value of our property and equipment to identify events or changes in circumstances ("triggering events") that indicate the carrying value may not be recoverable. During the second quarter, as a result of the adverse change in the floater business climate, management's decision to sell five floaters and the impairment charge incurred on the "held for sale" floaters, management concluded that a triggering event had occurred and performed an asset impairment analysis on our remaining older, less capable floaters.
Based on the analysis performed as of May 31, 2014, we recorded an additional pre-tax, non-cash loss on impairment with respect to four other floaters totaling $991.5 million, of which $288.0 million related to ENSCO DS-2 which was removed from our portfolio of rigs marketed for contract drilling services during the fourth quarter. The ENSCO DS-2 impairment charge was reclassified to (loss) income from discontinued operations, net in our consolidated statement of operations for the year ended December 31, 2014. The remaining $703.5 million impairment charge was included in loss on impairment in our consolidated statement of operations for the year ended December 31, 2014. We measured the fair value of these rigs by applying an income approach, using projected discounted cash flows. These valuations were based on unobservable inputs that require significant judgments for which there is limited information, including assumptions regarding future day rates, utilization, operating costs and capital requirements.
During the fourth quarter, as a result of the decline in commodity prices and adverse changes in the offshore drilling market, management's decision to sell an additional floater and two jackups and the impairment charge incurred on the "held for sale" rigs, management concluded that a triggering event had occurred and performed an asset impairment analysis for all floaters and jackups.
Based on the analysis performed as of December 31, 2014, we recorded an additional pre-tax, non-cash loss on impairment with respect to two older, less capable floaters and ten older, less capable jackups totaling $517.3 million. The impairment charge was included in loss on impairment in our consolidated statement of operations for the year ended December 31, 2014. We measured the fair value of these rigs by applying either an income approach, using projected discounted cash flows, or a market approach. These valuations were based on unobservable inputs that require significant judgments for which there is limited information, including assumptions regarding future day rates, utilization, operating costs and capital requirements.
Debt
Debt
DEBT

The carrying value of long-term debt as of December 31, 2014 and 2013 consisted of the following (in millions):
 
 
2014
 
2013
4.70% Senior notes due 2021
 
$
1,479.9

 
$
1,477.2

6.875% Senior notes due 2020
 
1,008.2

 
1,024.8

3.25% Senior notes due 2016
 
998.0

 
996.5

4.50% Senior notes due 2024
 
624.2

 

5.75% Senior notes due 2044
 
622.3

 

8.50% Senior notes due 2019
 
583.8

 
600.5

7.875% Senior notes due 2040
 
381.2

 
382.6

7.20% Debentures due 2027
 
149.2

 
149.1

4.33% MARAD bonds due 2016
 
46.6

 
78.9

6.36% MARAD bonds due 2015
 

 
25.3

4.65% MARAD bonds due 2020
 
27.0

 
31.5

Total debt
 
5,920.4

 
4,766.4

Less current maturities
 
(34.8
)
 
(47.5
)
Total long-term debt
 
$
5,885.6

 
$
4,718.9



 Senior Notes
 
On September 29, 2014, we issued $625.0 million aggregate principal amount of unsecured 4.50% notes due 2024 at a discount of $850,000 and $625.0 million aggregate principal amount of unsecured 5.75% notes due 2044 (collectively the “2014 Notes”) at a discount of $2.8 million in a public offering. Interest on these notes is payable semiannually in April and October of each year commencing April 1, 2015.  The 2014 Notes were issued pursuant to an Indenture between us and Deutsche Bank Trust Company Americas, as trustee (the “Trustee”), dated March 17, 2011 (the "Indenture") and a Second Supplemental Indenture between us and the Trustee, dated September 29, 2014. The net proceeds from the sale of the 2014 Notes are being used for general corporate purposes. 

During 2011, we issued $1.0 billion aggregate principal amount of unsecured 3.25% notes due 2016 at a discount of $7.6 million and $1.5 billion aggregate principal amount of unsecured 4.70% notes due 2021 (collectively the “2011 Notes”) at a discount of $29.6 million in a public offering. Interest on these notes is payable semiannually in March and September of each year.  The 2011 Notes were issued pursuant to the Indenture, and a supplemental indenture between us and the Trustee, dated March 17, 2011. The net proceeds from the sale of the 2011 Notes were used to fund a portion of the cash consideration payable in connection with the Pride acquisition.

Upon consummation of the Pride acquisition during 2011, we assumed the acquired company's outstanding debt comprised of $900.0 million aggregate principal amount of 6.875% senior notes due 2020$500.0 million aggregate principal amount of 8.5% senior notes due 2019 and $300.0 million aggregate principal amount of 7.875% senior notes due 2040 (the "Acquired Notes").  Under a supplemental indenture, Ensco plc has fully and unconditionally guaranteed the performance of all Pride obligations with respect to the Acquired Notes.  See "Note 15 - Guarantee of Registered Securities" for additional information on the guarantee of the Acquired Notes. 
   
We may redeem each series of the 2014 Notes in whole, at any time or in part from time to time, prior to maturity. If we elect to redeem the 2014 Notes due 2024 before the date that is three months prior to the maturity date or the 2014 Notes due 2044 before the date that is six months prior to the maturity date, we will pay an amount equal to 100% of the principal amount of the notes redeemed plus accrued and unpaid interest and a "make-whole" premium. If we elect to redeem the 2014 Notes on or after the aforementioned dates, we will pay an amount equal to 100% of the principal amount of the notes redeemed plus accrued and unpaid interest but we are not required to pay a "make-whole" premium. We may redeem each series of the 2011 Notes and the Acquired Notes, in whole or in part, at any time, at a price equal to 100% of their principal amount, plus accrued and unpaid interest and a "make-whole" premium.

The indentures governing the 2014 Notes, the 2011 Notes and the Acquired Notes contain customary events of default, including failure to pay principal or interest on such Notes when due, among others. The indentures governing the 2014 Notes, the 2011 Notes and the Acquired Notes also contain certain restrictions, including, among others, restrictions on our ability and the ability of our subsidiaries to create or incur secured indebtedness, enter into certain sale/leaseback transactions and enter into certain merger or consolidation transactions.

Debentures Due 2027

During 1997, Ensco Delaware issued $150.0 million of unsecured 7.20% Debentures due November 15, 2027 (the "Debentures") in a public offering. Interest on the Debentures is payable semiannually in May and November. We may redeem the Debentures, in whole or in part, at any time prior to maturity, at a price equal to 100% of their principal amount, plus accrued and unpaid interest and a "make-whole" premium. The Debentures are not subject to any sinking fund requirements. During 2009, in connection with the redomestication, Ensco plc entered into a supplemental indenture to unconditionally guarantee the principal and interest payments on the Debentures.

The Debentures and the indenture and the supplemental indentures pursuant to which the Debentures were issued, also contain customary events of default, including failure to pay principal or interest on the Debentures when due, among others. The indenture and the supplemental indentures contain certain restrictions, including, among others, restrictions on our ability and the ability of our subsidiaries to create or incur secured indebtedness, enter into certain sale/leaseback transactions and enter into certain merger or consolidation transactions.

MARAD Bonds Due 2016 and 2020

During 2001, a subsidiary of Ensco Delaware issued $190.0 million of 15-year bonds which are guaranteed by MARAD to provide long-term financing for ENSCO 7500. In December 2014, we fully redeemed the remaining outstanding principal of these bonds and incurred a "make-whole" payment of $600,000, and MARAD released all interests in ENSCO 7500.

During 2003, a subsidiary of Ensco Delaware issued $76.5 million of 17-year bonds which are guaranteed by MARAD to provide long-term financing for ENSCO 105. The bonds will be repaid in 34 equal semiannual principal installments of $2.3 million ending in October 2020. Interest on the bonds is payable semiannually, in April and October, at a fixed rate of 4.65%.

Ensco Delaware issued separate guaranties to MARAD, guaranteeing the performance of obligations under the bonds.  During 2010, the documents governing MARAD's guarantee commitments were amended to address certain changes arising from the redomestication and to include Ensco plc as an additional guarantor of the debt obligations of Ensco Delaware and its subsidiaries.

Upon consummation of the Pride acquisition, we assumed $151.5 million of MARAD bonds issued to provide long-term financing for ENSCO 6003 and ENSCO 6004. The bonds are guaranteed by MARAD and will be repaid in semiannual principal installments ending in 2016. Interest on the bonds is payable semiannually at a weighted average fixed rate of 4.33%.

Commercial Paper
 
We participate in a commercial paper program with four commercial paper dealers pursuant to which we may issue, on a private placement basis, unsecured commercial paper notes. During 2014, we increased the size of our program to permit the issuance of commercial paper notes in an aggregate principal amount not to exceed $2.25 billion at any time outstanding. Amounts issued under the commercial paper program are supported by the available and unused committed capacity under our credit facility. As a result, amounts issued under the commercial paper program are limited by the amount of our available and unused committed capacity under our credit facility. The proceeds of such financings may be used for capital expenditures and other general corporate purposes. The commercial paper bears interest at rates that vary based on market conditions and the ratings assigned by credit rating agencies at the time of issuance. The weighted-average interest rate on our commercial paper borrowings was 0.26% and 0.35% during 2014 and 2013, respectively.  Commercial paper maturities will vary but may not exceed 364 days from the date of issue. The commercial paper is not redeemable or subject to voluntary prepayment by us prior to maturity.  We had no amounts outstanding under our commercial paper program as of December 31, 2014 and 2013.
 
Revolving Credit Facility
 
On September 30, 2014, we entered into an amendment to the Fourth Amended and Restated Credit Agreement (the "Five-Year Credit Facility"), among Ensco, Citibank, N.A., as Administrative Agent, DNB Bank ASA, as Syndication Agent, and a syndicate of banks. This amendment extended the Five-Year Credit Facility maturity date from May 7, 2018 to September 30, 2019 and increased the total commitment of the lenders from $2.0 billion to $2.25 billion. As amended, the Five-Year Credit Facility provides for a $2.25 billion senior unsecured revolving credit facility to be used for general corporate purposes.

Advances under the Five-Year Credit Facility bear interest at Base Rate or LIBOR plus an applicable margin rate (currently 0.125% per annum for Base Rate advances and 1.125% per annum for LIBOR advances) depending on our credit rating. Amounts repaid may be re-borrowed during the term of the Five-Year Credit Facility. We are required to pay a quarterly commitment fee (currently 0.125% per annum) on the undrawn portion of the $2.25 billion commitment which is also based on our credit rating. In addition to other customary restrictive covenants, the Five-Year Credit Facility requires us to maintain a total debt to total capitalization ratio of less than or equal to 50%. We have the right, subject to receipt of commitments from new or existing lenders, to increase the commitments under the Five-Year Credit Facility to an aggregate amount of up to $2.75 billion. We had no amounts outstanding under the Five-Year Credit Facility as of December 31, 2014 and 2013.

Maturities

The aggregate maturities of our debt, excluding net unamortized premiums of $247.9 million, as of December 31, 2014 were as follows (in millions):
2015
 
$
34.8

2016
 
1,019.7

2017
 
4.5

2018
 
4.5

2019
 
504.5

Thereafter
 
4,104.5

Total
 
$
5,672.5


    
Interest expense totaled $161.4 million, $158.8 million and $123.6 million for the years ended December 31, 2014, 2013 and 2012, respectively, which was net of interest amounts capitalized of $78.2 million, $67.7 million and $105.8 million in connection with our newbuild rig construction and other capital projects.
Derivative Instruments
Derivative Instruments
DERIVATIVE INSTRUMENTS
   
We use derivatives to reduce our exposure to various market risks, primarily foreign currency exchange rate risk. We maintain a foreign currency exchange rate risk management strategy that utilizes derivatives to reduce our exposure to unanticipated fluctuations in earnings and cash flows caused by changes in foreign currency exchange rates. We mitigate our credit risk relating to the counterparties of our derivatives by transacting with multiple, high-quality financial institutions, thereby limiting exposure to individual counterparties, and by entering into International Swaps and Derivatives Association, Inc. (“ISDA”) Master Agreements, which include provisions for a legally enforceable master netting agreement, with almost all of our derivative counterparties. See "Note 14 - Supplemental Financial Information" for additional information on the mitigation of credit risk relating to counterparties of our derivatives. We do not enter into derivatives for trading or other speculative purposes.
 
All derivatives were recorded on our consolidated balance sheets at fair value. Derivatives subject to legally enforceable master netting agreements were not offset on our consolidated balance sheets. Accounting for the gains and losses resulting from changes in the fair value of derivatives depends on the use of the derivative and whether it qualifies for hedge accounting. See "Note 1 - Description of the Business and Summary of Significant Accounting Policies" for additional information on our accounting policy for derivatives and "Note 2 - Fair Value Measurements" for additional information on the fair value measurement of our derivatives.
 
As of December 31, 2014 and 2013, our consolidated balance sheets included net foreign currency derivative liabilities of $26.3 million and net assets of $1.8 million, respectively.  All of our derivatives mature during the next 18 months.  

Derivatives recorded at fair value on our consolidated balance sheets as of December 31, 2014 and 2013 consisted of the following (in millions):
 
Derivative Assets
 
Derivative Liabilities
 
2014
 
2013
 
2014
 
2013
Derivatives Designated as Hedging Instruments
 

 
 

 
 

 
 

Foreign currency forward contracts - current(1)
$
.4

 
$
9.1

 
$
17.2

 
$
9.8

Foreign currency forward contracts - non-current(2)
.1

 
1.2

 
2.9

 
.6

 
.5

 
10.3

 
20.1

 
10.4

Derivatives not Designated as Hedging Instruments
 

 
 

 
 

 
 

Foreign currency forward contracts - current(1)
.2

 
2.5

 
6.9

 
.6

 
.2

 
2.5

 
6.9

 
.6

Total
$
.7

 
$
12.8

 
$
27.0

 
$
11.0


(1) 
Derivative assets and liabilities that have maturity dates equal to or less than 12 months from the respective balance sheet dates were included in other current assets and accrued liabilities and other, respectively, on our consolidated balance sheets. 

(2) 
Derivative assets and liabilities that have maturity dates greater than 12 months from the respective balance sheet dates were included in other assets, net, and other liabilities, respectively, on our consolidated balance sheets.

We utilize cash flow hedges to hedge forecasted foreign currency denominated transactions, primarily to reduce our exposure to foreign currency exchange rate risk associated with contract drilling expenses and capital expenditures denominated in various currencies.  As of December 31, 2014, we had cash flow hedges outstanding to exchange an aggregate $373.1 million for various foreign currencies, including $194.3 million for British pounds, $81.2 million for Brazilian reais, $35.5 million for Euros, $28.5 million for Singapore dollars, $20.1 million for Australian dollars and $13.5 million for other currencies.

Gains and losses, net of tax, on derivatives designated as cash flow hedges included in our consolidated statements of operations and comprehensive income for each of the years in the three-year period ended December 31, 2014 were as follows (in millions):
 
(Loss) Gain Recognized in Other Comprehensive
Income ("OCI")
on Derivatives
  (Effective Portion)  
 
(Loss) Gain
Reclassified from
 AOCI into Income
(Effective Portion)(1)
 
Loss Recognized
in Income on
Derivatives (Ineffective
Portion and Amount
Excluded from
Effectiveness Testing)(2)
 
2014
 
2013
 
2012
 
2014
 
2013
 
2012
 
2014
 
2013
 
2012
Interest rate lock contracts(3) 
$

 
$

 
$

 
$
(.4
)
 
$
(.4
)
 
$
(.5
)
 
$

 
$

 
$

Foreign currency forward contracts(4)
(11.7
)
 
(5.8
)
 
8.7

 
1.3

 
(1.6
)
 
.5

 
(.7
)
 
(.3
)
 
(.3
)
Total
$
(11.7
)
 
$
(5.8
)
 
$
8.7

 
$
.9

 
$
(2.0
)
 
$

 
$
(.7
)
 
$
(.3
)
 
$
(.3
)
 
(1)
Changes in the fair value of cash flow hedges are recorded in AOCI.  Amounts recorded in AOCI associated with cash flow hedges are subsequently reclassified into contract drilling, depreciation or interest expense as earnings are affected by the underlying hedged forecasted transaction.

(2) 
Gains and losses recognized in income for ineffectiveness and amounts excluded from effectiveness testing were included in other, net, in our consolidated statements of operations.

(3) 
Losses on interest rate lock derivatives reclassified from AOCI into income (effective portion) were included in interest expense, net in our consolidated statements of operations.

(4) 
During the year ended December 31, 2014, $400,000 of gains were reclassified from AOCI into contract drilling expense and $900,000 of gains were reclassified from AOCI into depreciation expense in our consolidated statement of operations. During the year ended December 31, 2013, $2.5 million of losses were reclassified from AOCI into contract drilling expense and $900,000 of gains were reclassified from AOCI into depreciation expense in our consolidated statement of operations.

We have net assets and liabilities denominated in numerous foreign currencies and use various methods to manage our exposure to foreign currency exchange rate risk. We predominantly structure our drilling contracts in U.S. dollars, which significantly reduces the portion of our cash flows and assets denominated in foreign currencies. We occasionally enter into derivatives that hedge the fair value of recognized foreign currency denominated assets or liabilities but do not designate such derivatives as hedging instruments. In these situations, a natural hedging relationship generally exists whereby changes in the fair value of the derivatives offset changes in the fair value of the underlying hedged items. As of December 31, 2014, we held derivatives not designated as hedging instruments to exchange an aggregate $207.5 million for various foreign currencies, including $98.9 million for Euros, $36.1 million for British pounds, $31.1 million for Swiss francs, $10.3 million for Indonesian Rupiah, $8.6 million for Brazilian reais and $22.5 million for other currencies.

Net losses of $24.8 million and net gains of $3.6 million and $1.5 million associated with our derivatives not designated as hedging instruments were included in other, net, in our consolidated statements of operations for the years ended December 31, 2014, 2013 and 2012, respectively.

As of December 31, 2014, the estimated amount of net losses associated with derivatives, net of tax, that will be reclassified to earnings during the next 12 months was as follows (in millions):
Net unrealized losses to be reclassified to contract drilling expense
 
$
(9.4
)
Net realized gains to be reclassified to depreciation expense
 
.9

Net realized losses to be reclassified to interest expense
 
(.4
)
Net losses to be reclassified to earnings
 
$
(8.9
)
Shareholders' Equity
Shareholders' Equity
SHAREHOLDERS' EQUITY
 
Activity in our various shareholders' equity accounts for each of the years in the three-year period ended December 31, 2014 was as follows (in millions):
 
 Shares 
 
 
Par Value 
 
 
Additional
Paid-in
Capital

 
Retained
Earnings

 
AOCI 
 
 
Treasury
Shares  

 
Noncontrolling
Interest

BALANCE, December 31, 2011
235.9

 
$
23.7

 
$
5,253.0

 
$
5,613.1

 
$
8.6

 
$
(19.1
)
 
$
5.2

Net income

 

 

 
1,169.7

 

 

 
7.0

Dividends paid

 

 

 
(348.1
)
 

 

 

Distributions to noncontrolling interests

 

 

 

 

 

 
(6.5
)
Shares issued under share-based compensation plans, net
1.8

 
.2

 
35.3

 

 

 
(.1
)
 

Equity issuance costs

 

 
66.7

 

 

 

 

Tax deficiency from share-based compensation

 

 
(1.0
)
 

 

 

 

Repurchase of shares

 

 

 

 

 
(11.8
)
 

Share-based compensation cost

 

 
44.7

 

 

 

 

Net other comprehensive income

 

 

 

 
11.5

 

 

BALANCE, December 31, 2012
237.7

 
23.9

 
5,398.7

 
6,434.7

 
20.1

 
(31.0
)
 
5.7

Net income

 

 

 
1,418.2

 

 

 
9.7

Dividends paid

 

 

 
(525.6
)
 

 

 

Distributions to noncontrolling interests

 

 

 

 

 

 
(8.1
)
Shares issued in connection with share-based compensation plans, net
1.9

 
.2

 
21.8

 

 

 
(.1
)
 

Tax benefit from share-based compensation

 

 
.1

 

 

 

 

Repurchase of shares

 

 

 

 

 
(14.1
)
 

Share-based compensation cost

 

 
46.6

 

 

 

 

Net other comprehensive loss

 

 

 

 
(1.9
)
 

 

BALANCE, December 31, 2013
239.6

 
24.1

 
5,467.2

 
7,327.3

 
18.2

 
(45.2
)
 
7.3

Net (loss) income

 

 

 
(3,902.6
)
 

 

 
14.1

Dividends paid

 

 

 
(704.3
)
 

 

 

Distributions to noncontrolling interests

 

 

 

 

 

 
(13.5
)
Shares issued in connection with share-based compensation plans, net
1.1

 
.1

 
.4

 

 

 
(.1
)
 

Tax benefit from share-based compensation

 

 
1.2

 

 

 

 

Repurchase of shares

 

 

 

 

 
(13.7
)
 

Share-based compensation cost

 

 
48.7

 

 

 

 

Net other comprehensive loss

 

 

 

 
(6.3
)
 

 

BALANCE, December 31, 2014
240.7

 
$
24.2

 
$
5,517.5

 
$
2,720.4

 
$
11.9

 
$
(59.0
)
 
$
7.9



During 2013, our shareholders approved a new share repurchase program. Subject to certain provisions under English law, including the requirement of Ensco plc to have sufficient distributable reserves, we may purchase up to a maximum of $2.0 billion in the aggregate under the program, but in no case more than 35.0 million shares. The program terminates during 2018. As of December 31, 2014, there had been no share repurchases under this program.
Benefit Plans
Benefit Plans
BENEFIT PLANS
 
Our shareholders approved the 2012 Long-Term Incentive Plan (the “2012 LTIP”) effective January 1, 2012, to provide for the issuance of non-vested share awards, share option awards and performance awards (collectively "awards"). Under the 2012 LTIP, 14.0 million shares were reserved for issuance as awards to officers, non-employee directors and key employees who are in a position to contribute materially to our growth, development and long-term success. As of December 31, 2014, there were 7.7 million shares available for issuance as awards under the 2012 LTIP. Awards may be satisfied by newly issued shares, including shares held by a subsidiary or affiliated entity, or by delivery of shares held in an affiliated employee benefit trust at the Company's discretion.

Non-Vested Share Awards
 
Grants of non-vested share awards generally vest at rates of 20% or 33% per year, as determined by a committee or subcommittee of the Board of Directors at the time of grant. Our non-vested share awards have voting and dividend rights effective on the date of grant. Compensation expense is measured using the market value of our shares on the date of grant and is recognized on a straight-line basis over the requisite service period (usually the vesting period).

The following table summarizes non-vested share award related compensation expense recognized during each of the years in the three-year period ended December 31, 2014 (in millions):
 
2014
 
2013
 
2012
Contract drilling
$
20.9

 
$
21.3

 
$
17.1

General and administrative
20.7

 
21.6

 
24.8

Non-vested share award related compensation expense included in operating expenses
41.6

 
42.9

 
41.9

Tax benefit
(5.1
)
 
(5.4
)
 
(7.0
)
Total non-vested share award related compensation expense included in net income
$
36.5

 
$
37.5

 
$
34.9



The following table summarizes the value of non-vested share awards granted and vested during each of the years in the three-year period ended December 31, 2014:
 
2014
 
2013
 
2012
Weighted-average grant-date fair value of
  non-vested share awards granted (per share)
$
51.22

 
$
59.79

 
$
48.32

Total fair value of non-vested share awards
  vested during the period (in millions)
$
46.2

 
$
49.6

 
$
42.5


    
The following table summarizes non-vested share award activity for the year ended December 31, 2014 (shares in thousands): 
 
Shares
 
Weighted-Average
Grant-Date
Fair Value
Non-vested share awards as of December 31, 2013
2,496

 
$
52.95

Granted
1,242

 
51.22

Vested
(898
)
 
51.07

Forfeited
(199
)
 
53.80

Non-vested share awards as of December 31, 2014
2,641

 
$
52.86



As of December 31, 2014, there was $100.7 million of total unrecognized compensation cost related to non-vested share awards, which is expected to be recognized over a weighted-average period of 2.1 years.

Share Option Awards

Share option awards ("options") granted to officers and employees generally become exercisable in 25% increments over a four-year period or 33% increments over a three-year period and, to the extent not exercised, expire on the seventh anniversary of the date of grant. Options granted to non-employee directors are immediately exercisable and, to the extent not exercised, expire on the seventh anniversary of the date of grant. The exercise price of options granted under the 2012 LTIP equals the market value of the underlying shares on the date of grant. As of December 31, 2014, options granted to purchase 472,000 shares with a weighted average exercise price of $41.09 were outstanding under the 2012 LTIP and predecessor or acquired plans. No options have been granted since 2011, and there were no unrecognized compensation costs related to options as of December 31, 2014.

Performance Awards

Under the 2012 LTIP, performance awards may be issued to our senior executive officers. Performance awards granted prior to 2013 are payable in Ensco shares, cash or a combination thereof upon attainment of specified performance goals based on relative total shareholder return ("TSR") and absolute and relative return on capital employed ("ROCE"). Performance awards granted during 2013 and 2014 are payable in Ensco shares upon attainment of specified performance goals based on relative TSR and relative ROCE. The performance goals are determined by a committee or subcommittee of the Board of Directors.

Performance awards generally vest at the end of a three-year measurement period based on attainment of performance goals. Our performance awards granted prior to 2013 are classified as liability awards with compensation expense measured based on the estimated probability of attainment of the specified performance goals and recognized on a straight-line basis over the requisite service period. The estimated probable outcome of attainment of the specified performance goals is based on historical experience, and any subsequent changes in this estimate are recognized as a cumulative adjustment to compensation cost in the period in which the change in estimate occurs.

Our performance awards granted during 2013 and 2014 are classified as equity awards with compensation expense recognized on a straight-line basis over the requisite service period. The estimated probable outcome of attainment of the specified performance goals is based on historical experience, and any subsequent changes in this estimate for the relative ROCE performance goal are recognized as a cumulative adjustment to compensation cost in the period in which the change in estimate occurs.

The aggregate grant-date fair value of performance awards granted during 2014, 2013 and 2012 totaled $7.4 million, $8.2 million and $7.2 million, respectively. The aggregate fair value of performance awards vested during 2014, 2013 and 2012 totaled $6.9 million, $7.4 million and $5.3 million, respectively, all of which was paid in cash.

During the years ended December 31, 2014, 2013 and 2012, we recognized $3.4 million, $6.6 million and $9.7 million of compensation expense for performance awards, respectively, which was included in general and administrative expense in our consolidated statements of operations.  As of December 31, 2014, there was $5.0 million of total unrecognized compensation cost related to unvested performance awards, which is expected to be recognized over a weighted-average period of 1.9 years.

Savings Plans

We have profit sharing plans (the "Ensco Savings Plan," the "Ensco Multinational Savings Plan" and the "Ensco Limited Retirement Plan"), which cover eligible employees, as defined within each plan.  The Ensco Savings Plan includes a 401(k) savings plan feature which allows eligible employees to make tax deferred contributions to the plan.  The Ensco Limited Retirement Plan also allows eligible employees to make tax deferred contributions to the plan. Contributions made to the Ensco Multinational Savings Plan may or may not qualify for tax deferral based on each plan participant's local tax requirements.
 
We generally make matching cash contributions to the plans.  We match 100% of the amount contributed by the employee up to a maximum of 5% of eligible salary. Matching contributions totaled $20.7 million, $21.1 million and $16.5 million for the years ended December 31, 2014, 2013 and 2012, respectively.  Profit sharing contributions made into the plans require approval of the Board of Directors and are generally paid in cash.  We recorded profit sharing contribution provisions of $30.7 million, $55.3 million and $45.1 million for the years ended December 31, 2014, 2013 and 2012, respectively.  Matching contributions and profit sharing contributions become vested in 33% increments upon completion of each initial year of service with all contributions becoming fully vested subsequent to achievement of three or more years of service.  We have 1.0 million shares reserved for issuance as matching contributions under the Ensco Savings Plan.
Goodwill and Other Intangible Assets and Liabilities
Goodwill and Other Intangible Assets and Liabilities
GOODWILL AND OTHER INTANGIBLE ASSETS AND LIABILITIES

Goodwill

The carrying amount of goodwill as of December 31, 2014 is detailed below by reporting unit (in millions):
 
December 31, 2014
 
December 31, 2013
 
Gross Carrying Amount
 
Accumulated Impairment Losses
 
Net Carrying Amount
 
Gross Carrying Amount
 
Accumulated Impairment Losses
 
Net Carrying Amount
Floaters
 
 
 
 
 
 
 
 
 
 
 
Balance, beginning of period
$
3,081.4

 
$

 
$
3,081.4

 
$
3,081.4

 
$

 
$
3,081.4

Loss on impairment

 
(2,997.9
)
 
(2,997.9
)
 

 

 

Balance, end of period
$
3,081.4

 
$
(2,997.9
)
 
$
83.5

 
$
3,081.4

 
$

 
$
3,081.4

 
 
 
 
 
 
 
 
 
 
 
 
Jackups
 
 
 
 
 
 
 
 
 
 
 
Balance, beginning of period
$
192.6

 
$

 
$
192.6

 
$
192.6

 
$

 
$
192.6

Loss on impairment

 

 

 

 

 

Balance, end of period
$
192.6

 
$

 
$
192.6

 
$
192.6

 
$

 
$
192.6



Impairment of Goodwill

Our business consists of three operating segments: (1) Floaters, which includes our drillships and semisubmersible rigs, (2) Jackups and (3) Other, which consists of management services on rigs owned by third-parties. Our two reportable segments, Floaters and Jackups, provide one service, contract drilling.
We test goodwill for impairment on an annual basis or when events or changes in circumstances indicate that a potential impairment exists.  During the second quarter, demand for floaters deteriorated as a result of a continued reduction in capital spending by operators in addition to announced delays in operators’ drilling programs. The reduction in demand, combined with increasing supply from newbuild floater deliveries, led to a very competitive market. In general, contracting activity for floaters declined significantly and day rates and utilization came under pressure, especially for older, less capable floaters.
Management considered the adverse change in the floater business climate, the commitment to a plan to sell five floaters in May 2014, and the impairment charge on the "held for sale" floaters during the second quarter and concluded that a triggering event had occurred. We performed an interim goodwill impairment test to evaluate the recoverability of the Floaters reporting unit goodwill balance of $3.1 billion as of May 31, 2014. Based on the valuation performed, the Floaters reporting unit estimated fair value exceeded the carrying value by approximately 7%; therefore, we concluded that the goodwill balance was not impaired.