Financial performance during 2004 was hindered by continued softness in the offshore platform rig market which kept rig utilizations at an average of 48 percent for 2004. More importantly , total revenues and revenue per day declined due to changes in the natur e of contract terms on several of the Company’s rigs. During 2003, contracts for two of the Company’s newest rigs terminated and were renegotiated at lower dayrates just prior to the end of the year. Additionally two other rigs that were working at full dayrates during 2003 were changed to standb status, thereby reducing total  revenues and profitability. These specific transactions, coupled with an  overall softening in the market, caused average rig revenue and margin per rig day to decline during 2004. COMPARISON OF THE YEARS ENDED SEPTEMBER 30, 2004 AND 2003 Operating statistics of per day revenue, expense and margin do not include reimbursements of “out-of-pocket” expenses and exclude the effects of management contracts and currency r evaluation expense. Included in international operations revenue and margin per day calculations for fiscal 2004 is an insurance gain of $1.7  million. Without the insurance gain, the revenue per day and mar gin per day would have been $19,616 and $5,338, respectively. 2004 2003 % Change INTERNATIONAL OPERATIONS (in thousands, except operating statistics) Revenues $150,698 $109,812 37.2% Direct operating expenses 113,988 81,461 39.9 General and administrative expense 2,144 3,110 (31.1) Depreciation 20,530 20,092 2.2 Operating profit $ 14,036 $ 5,149 172.6 Operating Statistics: Activity days 6,266 4,515 38.8% Average rig revenue per day $  19,884 $ 19,603 1.4 Average rig expense per day $  14,278 $ 14,140 1.0 Average rig margin per day $  5,606 $  5,463 2.6 Number of owned rigs at end of period 32 32 – Rig utilization 54% 39% 38.5 37 04-HP-876_newMDA.qxd 12/15/04 3:04 PM Page 36