GENEVA, July 20 /PRNewswire-FirstCall/ — Weatherford International Ltd. (NYSE: WFT) today reported second quarter 2010 income of $80 million, or $0.11 per diluted share, excluding an after tax loss of $0.15 per diluted share. The excluded after tax loss was comprised of an $82 million non-cash charge for a fair value adjustment to the put option issued in connection with the TNK-BP acquisition and $24 million, net of tax, for severance and investigation costs. Second quarter diluted earnings per share reflect an increase of ten percent over the second quarter of 2009 diluted earnings per share of $0.10, before severance and investigation costs.
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Second quarter revenues were $2,438 million, or 22 percent higher than the same period last year, and four percent higher than the prior quarter. Segment operating income of $308 million improved 14 percent year-over-year and 16 percent sequentially. International revenues were up seven percent versus the year ago quarter and five percent versus the prior quarter. Eastern Hemisphere revenues carried the international growth rate, increasing 16 percent versus the year ago quarter and nine percent versus the prior quarter, while Latin America revenue fell 12% compared to the year ago quarter and four percent sequentially due to lower project activity in Mexico. North America revenue increased 61 percent versus the year ago quarter and grew three percent versus the prior quarter. Stronger performance in the U.S. land market more than offset Canada’s traditional seasonal decline and one month of severely reduced activity in the Gulf of Mexico.
Sequentially, the company’s second quarter diluted earnings per share, before charges, were $0.04 higher than the first quarter of 2010 diluted earnings per share of $0.07, before severance, investigation costs and fair value adjustment for the put option.
Weatherford Chairman and CEO Bernard J. Duroc-Danner commented, “The second quarter was progress with the United States and Russia singled out as the highest performers. The outlook for North America appears constructive. Client feedback leads us to believe that operators are planning to accelerate activity in international markets.”
North America
Revenues for the quarter were $921 million, which is a 61 percent increase over the same quarter in the prior year. Revenues were up three percent sequentially, which is the first sequential increase for the second quarter in North America since 2005.
Operating income was $129 million compared to break-even operating results for the second quarter of 2009 and was up $17 million sequentially. The current quarter’s margins improved 140 basis points to 14.0%.
Middle East/North Africa/Asia
Second quarter revenues of $601 million were one percent higher than the second quarter of 2009 and six percent higher than the prior quarter. On a sequential basis, strong performances in Iraq and China were partially offset by weakness in Saudi Arabia and Libya.
The current quarter’s operating income of $78 million decreased 37 percent as compared to the same quarter in the prior year and decreased six percent compared to the prior quarter.
Europe/West Africa/FSU
Second quarter revenues of $506 million were 39 percent higher than the second quarter of 2009 and 11 percent higher than the prior quarter. The year-over-year increase was largely due to our acquisition of TNK-BP’s oilfield service business in the third quarter of 2009. All product lines showed sequential growth.
The current quarter’s operating income of $63 million was flat compared to the same quarter in the prior year and increased 63 percent sequentially.
Latin America
Second quarter revenues of $410 million were 12 percent lower than the second quarter of 2009 and four percent lower than the prior quarter. Consistent with the prior quarter, Mexico was the largest contributor to the sequential decline in revenue due to a decrease in volumes of project-based work.
The current quarter’s operating income of $38 million declined 56 percent as compared to the same quarter in the prior year and increased 22 percent compared to the prior quarter.
Reclassifications and Non-GAAP
Non-GAAP performance measures and corresponding reconciliations to GAAP financial measures have been provided for meaningful comparisons between current results and results in prior operating periods.
Conference Call
The company will host a conference call with financial analysts to discuss the 2010 second quarter results on July 20, 2010 at 8:00 a.m. (CDT). The company invites investors to listen to a play back of the conference call at the company’s website, http://www.weatherford.com in the “investor relations” section.
Weatherford is a Swiss-based, multi-national oilfield service company. It is one of the largest global providers of innovative mechanical solutions, technology and services for the drilling and production sectors of the oil and gas industry. Weatherford operates in over 100 countries and employs over 53,000 people worldwide.
Contact:
Andrew P. Becnel
+41.22.816.1502
Chief Financial Officer
Contact:
Karen David-Green
+1.713.693.2530
Vice President – Investor Relations
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 concerning, among other things, Weatherford’s prospects for its operations which are subject to certain risks, uncertainties and assumptions. These risks and uncertainties, which are more fully described in Weatherford International Ltd.’s reports and registration statements filed with the SEC, include the impact of oil and natural gas prices and worldwide economic conditions on drilling activity, the outcome of pending government investigations, the demand for and pricing of Weatherford’s products and services, domestic and international economic and regulatory conditions and changes in tax and other laws affecting our business. Should one or more of these risks or uncertainties materialize, or should the assumptions prove incorrect, actual results may vary materially from those currently anticipated.
Weatherford International Ltd.
Consolidated Condensed Statements of Income
(Unaudited)
(In 000s, Except Per Share Amounts)
Three Months
Six Months
Ended June 30,
Ended June 30,
2010
2009
2010
2009
Net Revenues:
North America
$ 921,443
$ 571,415
$ 1,811,987
$ 1,408,768
Middle East/North Africa/Asia
600,777
592,908
1,165,756
1,174,854
Europe/West Africa/FSU
505,774
364,968
960,475
733,811
Latin America
410,277
465,541
838,301
933,540
2,438,271
1,994,832
4,776,519
4,250,973
Operating Income (Expense):
North America
129,361
(709)
241,688
122,327
Middle East/North Africa/Asia
78,009
123,553
160,805
257,579
Europe/West Africa/FSU
62,834
62,614
101,362
137,557
Latin America
37,984
85,759
69,063
177,976
Research and Development
(53,530)
(46,113)
(102,387)
(95,134)
Corporate Expenses
(42,732)
(40,834)
(89,852)
(80,433)
Revaluation of Contingent Consideration
(81,753)
-
(89,563)
-
Exit and Restructuring
(27,309)
(30,905)
(71,341)
(55,782)
102,864
153,365
219,775
464,090
Other Income (Expense):
Interest Expense, Net
(95,719)
(93,498)
(191,058)
(184,561)
Devaluation of Venezuelan Bolivar
-
-
(63,859)
-
Other, Net
(14,186)
(3,871)
(23,404)
(17,410)
Income (Loss) Before Income Taxes
(7,041)
55,996
(58,546)
262,119
Benefit (Provision) for Income Taxes:
Provision for Operations
(19,095)
(8,829)
(29,980)
(44,633)
Benefit from Devaluation of Venezuelan Bolivar
-
-
23,973
-
Benefit from Exit and Restructuring
2,888
3,388
5,331
6,729
(16,207)
(5,441)
(676)
(37,904)
Net Income (Loss)
(23,248)
50,555
(59,222)
224,215
Net Income Attributable to Noncontrolling Interest
(3,316)
(8,574)
(7,351)
(17,432)
Net Income (Loss) Attributable to Weatherford
$ (26,564)
$ 41,981
$ (66,573)
$ 206,783
Earnings (Loss) Per Share Attributable to Weatherford:
Basic
$ (0.04)
$ 0.06
$ (0.09)
$ 0.30
Diluted
$ (0.04)
$ 0.06
$ (0.09)
$ 0.29
Weighted Average Shares Outstanding:
Basic
743,209
700,424
740,537
699,375
Diluted
743,209
709,412
740,537
706,024
Weatherford International Ltd.
Selected Income Statement Information
(Unaudited)
(In 000s)
Three Months
Ended
6/30/2010
3/31/2010
12/31/2009
9/30/2009
6/30/2009
Net Revenues:
North America
$ 921,443
$ 890,544
$ 736,443
$ 620,496
$ 571,415
Middle East/North Africa/Asia
600,777
564,979
593,154
600,110
592,908
Europe/West Africa/FSU
505,774
454,701
478,259
404,390
364,968
Latin America
410,277
428,024
618,225
524,883
465,541
$ 2,438,271
$ 2,338,248
$ 2,426,081
$ 2,149,879
$ 1,994,832
Operating Income (Expense):
North America
$ 129,361
$ 112,327
$ 41,625
$ 33,259
$ (709)
Middle East/North Africa/Asia
78,009
82,796
82,452
101,943
123,553
Europe/West Africa/FSU
62,834
38,528
48,893
44,468
62,614
Latin America
37,984
31,079
49,271
54,343
85,759
Research and Development
(53,530)
(48,857)
(50,216)
(49,300)
(46,113)
Corporate Expenses
(42,732)
(47,120)
(48,990)
(44,272)
(40,834)
Revaluation of Contingent Consideration
(81,753)
(7,810)
(6,295)
27,368
-
Exit and Restructuring
(27,309)
(44,032)
(26,897)
(17,887)
(30,905)
$ 102,864
$ 116,911
$ 89,843
$ 149,922
$ 153,365
Supplemental Information
(Unaudited)
(In 000s)
Three Months
Ended
6/30/2010
3/31/2010
12/31/2009
9/30/2009
6/30/2009
Depreciation and Amortization:
North America
$ 81,040
$ 80,660
$ 83,658
$ 79,737
$ 77,253
Middle East/North Africa/Asia
75,139
72,290
72,739
65,771
60,921
Europe/West Africa/FSU
52,058
48,958
50,376
44,864
35,190
Latin America
44,753
42,479
42,751
43,403
35,971
Research and Development
2,324
2,224
1,980
1,940
2,017
Corporate
2,943
2,781
2,197
2,194
2,341
$ 258,257
$ 249,392
$ 253,701
$ 237,909
$ 213,693
We report our financial results in accordance with generally accepted accounting principles (GAAP). However, Weatherford’s management believes that certain non-GAAP performance measures and ratios may provide users of this financial information additional meaningful comparisons between current results and results in prior operating periods. One such non-GAAP financial measure we may present from time to time is operating income or income from continuing operations excluding certain charges or amounts. This adjusted income amount is not a measure of financial performance under GAAP. Accordingly, it should not be considered as a substitute for operating income, net income or other income data prepared in accordance with GAAP. See the table below for supplemental financial data and corresponding reconciliations to GAAP financial measures for the three months ended June 30, 2010, March 31, 2010, and June 30, 2009 and for the six months ended June 30, 2010 and June 30, 2009. Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, the Company’s reported results prepared in accordance with GAAP.
Weatherford International Ltd.
Reconciliation of GAAP to Non-GAAP Financial Measures
(Unaudited)
(In 000s, Except Per Share Data)
Three Months Ended
Six Months Ended
June 30,
March 31,
June 30,
June 30,
June 30,
2010
2010
2009
2010
2009
Operating Income:
GAAP Operating Income
$ 102,864
$ 116,911
$ 153,365
$ 219,775
$ 464,090
Exit and Restructuring
27,309
44,032
30,905
71,341
55,782
Revaluation of Contingent Consideration
81,753
7,810
-
89,563
-
Non-GAAP Operating Income
$ 211,926
$ 168,753
$ 184,270
$ 380,679
$ 519,872
Benefit (Provision) for Income Taxes:
GAAP Benefit (Provision) for Income Taxes
$ (16,207)
$ 15,531
$ (5,441)
$ (676)
$ (37,904)
Devaluation of Venezuelan Bolivar
-
(23,973)
-
(23,973)
-
Exit and Restructuring
(2,888)
(2,443)
(3,388)
(5,331)
(6,729)
Non-GAAP Benefit (Provision) for Income Taxes
$ (19,095)
$ (10,885)
$ (8,829)
$ (29,980)
$ (44,633)
Net Income (Loss) Attributable to Weatherford:
GAAP Net Income (Loss)
$ (26,564)
$ (40,009)
$ 41,981
$ (66,573)
$ 206,783
Total Charges, net of tax
106,174
(a)
89,285
(b)
27,517
(c)
195,459
49,053
(d)
Non-GAAP Net Income
$ 79,610
$ 49,276
$ 69,498
$ 128,886
$ 255,836
Diluted Earnings (Loss) Per Share Attributable to Weatherford:
GAAP Diluted Earnings (Loss) per Share
$ (0.04)
$ (0.05)
$ 0.06
$ (0.09)
$ 0.29
Total Charges, net of tax
0.15
(a)
0.12
(b)
0.04
(c)
0.26
0.07
(d)
Non-GAAP Diluted Earnings per Share
$ 0.11
$ 0.07
$ 0.10
$ 0.17
$ 0.36
Note (a): This amount is comprised of an $82 million charge for the revaluation of contingent consideration included as part of our acquisition of the Oilfield Services Division (“OFS”) of TNK-BP. We also incurred investigation costs in connection with on-going investigations by the U.S. government and severance charges associated with the Company’s restructuring activities.
Note (b): This amount is primarily comprised of a $38 million charge, net of tax, related to our supplemental executive retirement plan that was frozen on March 31, 2010 and a $40 million charge, net of tax, related to the devaluation of the Venezuelan Bolivar. In addition, we incurred a charge of $8 million for the revaluation of contingent consideration included as part of our OFS acquisition. We also incurred investigation costs in connection with on-going investigations by the U.S. government and severance charges and facility closure costs associated with the Company’s restructuring activities.
Note (c): This amount represents investigation costs incurred in connection with on-going investigations by the U.S. government and costs related to the Company’s withdrawal from sanctioned countries. Also included are severance charges associated with the Company’s reorganization activities.
Note (d): This amount represents investigation costs incurred in connection with on-going investigations by the U.S. government and costs related to the Company’s withdrawal from sanctioned countries. Also included are severance charges associated with the Company’s reorganization activities.
Weatherford International Ltd.
Consolidated Condensed Balance Sheet
(Unaudited)
(In 000s)
June 30,
December 31,
2010
2009
Current Assets:
Cash and Cash Equivalents
$ 222,783
$ 252,519
Accounts Receivable, Net
2,471,078
2,504,876
Inventories
2,371,489
2,239,762
Other Current Assets
1,253,261
1,143,449
6,318,611
6,140,606
Long-Term Assets:
Property, Plant and Equipment, Net
6,774,500
6,991,579
Goodwill
4,128,966
4,156,105
Other Intangibles, Net
749,654
778,786
Equity Investments
539,817
542,667
Other Assets
303,179
256,440
12,496,116
12,725,577
Total Assets
$ 18,814,727
$ 18,866,183
Current Liabilities:
Short-term Borrowings and Current Portion of Long-term Debt
$ 628,108
$ 869,581
Accounts Payable
1,127,875
1,002,359
Other Current Liabilities
994,757
924,948
2,750,740
2,796,888
Long-term Liabilities:
Long-term Debt
6,005,472
5,847,258
Other Liabilities
383,871
423,333
6,389,343
6,270,591
Total Liabilities
9,140,083
9,067,479
Shareholders’ Equity:
Weatherford Shareholders’ Equity
9,603,780
9,719,672
Noncontrolling Interest
70,864
79,032
Total Shareholders’ Equity
9,674,644
9,798,704
Total Liabilities and Shareholders’ Equity
$ 18,814,727
$ 18,866,183
Weatherford International Ltd.
Net Debt
(Unaudited)
(In 000s)
Change in Net Debt for the Three Months Ended June 30, 2010:
Net Debt at March 31, 2010
$ (6,628,951)
Operating Income
102,864
Depreciation and Amortization
258,257
Exit and Restructuring
27,309
Revaluation of Contingent Consideration
81,753
Capital Expenditures
(217,664)
(Increase) Decrease in Working Capital
92,668
Income Taxes Paid
(133,382)
Interest Paid
(70,023)
Acquisitions and Divestitures of Assets and Businesses, Net
40,649
Other
35,723
Net Debt at June 30, 2010
$ (6,410,797)
Change in Net Debt for the Six Months Ended June 30, 2010:
Net Debt at December 31, 2009
$ (6,464,320)
Operating Income
219,775
Depreciation and Amortization
507,649
Exit and Restructuring
71,341
Revaluation of Contingent Consideration
89,563
Capital Expenditures
(448,751)
(Increase) Decrease in Working Capital
(96,352)
Income Taxes Paid
(224,117)
Interest Paid
(209,620)
Acquisitions and Divestitures of Assets and Businesses, Net
81,860
Other
62,175
Net Debt at June 30, 2010
$ (6,410,797)
June 30,
March 31,
December 31,
Components of Net Debt
2010
2010
2009
Cash
$ 222,783
$ 207,099
$ 252,519
Short-term Borrowings and Current Portion of Long-Term Debt
(628,108)
(991,440)
(869,581)
Long-term Debt
(6,005,472)
(5,844,610)
(5,847,258)
Net Debt
$ (6,410,797)
$ (6,628,951)
$ (6,464,320)
“Net Debt” is debt less cash. Management believes that Net Debt provides useful information regarding the level of
Weatherford indebtedness by reflecting cash that could be used to repay debt.
Working capital is defined as accounts receivable plus inventory less accounts payable.
SOURCE Weatherford International Ltd.
