In the first half of 2002, revenues were $1.2 billion and net income was $84.1 million, or $0.66 per share. In the prior year, reported revenues were $1.1 billion and net income was $99.9 million ($0.83 per share). Net income for that period, excluding goodwill amortization net of taxes, would have been $125.3 million ($0.96 per share).
On a sequential basis, second quarter 2002 revenues increased 5 percent from the first quarter of 2002 reflecting higher activity levels throughout the Eastern Hemisphere, as well as higher revenue from new technologies, moderated by the decline in North America. Non-North American revenues, which comprised 55 percent of the company's total revenues, had sequential revenue gains of 12 percent, versus a 1 percent rig count decline. All regions contributed to the growth with the most significant improvements occurring in the Middle East/North Africa and Asia Pacific regions. North American revenues declined 4 percent sequentially, versus a 20 percent rig count decline, with a 1 percent revenues decline in the United States and Canada's seasonal revenues decline of 9 percent.
Sequentially, EBITDA declined 5 percent compared to the first quarter 2002 level due to one-time reincorporation transaction costs, higher repair and maintenance expenses, higher R&D expenses and costs associated with two manufacturing consolidations. Overall, research and development costs in the quarter totaled $18.5 million, 9 percent higher than the preceding quarter. Second quarter diluted earnings of $0.31 per share were 14 percent lower than the prior quarter's diluted earnings of $0.36 per share.
Drilling & Intervention Services
Second quarter revenues were $309.4 million, 9 percent below the prior year and 1 percent below the preceding quarter. EBITDA of $100.4 million was 20 percent below the prior year and 7 percent below the preceding quarter. The division's EBITDA margin of 32.5 percent in the second quarter declined from both the prior year quarter and the preceding quarter.
Sequentially, Drilling & Intervention Services' second quarter performance reflected the drop in overall drilling activity. In Western Hemisphere markets, Drilling & Intervention Services' revenues declined 7 percent, a less severe drop than the 18 percent rate decline in rig count. In Eastern Hemisphere markets, revenues improved 5 percent, roughly twice the rate of improvement in the rig count. New technologies contribution to revenues continued to increase, particularly in international markets.
Completion Systems
Second quarter revenues of $104.8 million were 21 percent above the prior year and 14 percent above the preceding quarter. EBITDA was $26.5 million, 37 percent and 23 percent higher than the prior year and preceding quarter, respectively. The division's quarterly EBITDA margin of 25.3 percent improved significantly from the prior year and previous quarter.
Sequentially, Completion Systems' overall strong performance was moderated somewhat by the decline in Western Hemisphere activity levels. While Western Hemisphere revenue levels were essentially flat with the level of the preceding quarter, Eastern Hemisphere revenues improved 26 percent. In addition, new technologies revenues continued to increase despite the cyclical trends.
Artificial Lift
Second quarter revenues were $179.7 million, 22 percent above last year and 11 percent above the preceding quarter. EBITDA of $32.0 million improved 13 percent above the prior year and 12 percent above the preceding quarter despite costs associated with two concurrent manufacturing consolidations. The division's EBITDA margin was 18 percent, slightly below the prior year quarter and slightly higher than the preceding quarter.
On a sequential basis, Artificial Lift Systems' revenues increased due to improving performance in North American markets related to higher well maintenance activity, as well as activity related to coal bed methane and heavy oil production. International activity was also higher than the preceding quarter.
Weatherford 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 approximately 15,000 people worldwide.
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 and the successful completion of the plan of restructuring, all of which are subject to certain risks, uncertainties and assumptions. These risks and uncertainties, which are more fully described in Weatherford International Ltd.'s and Weatherford International, Inc.'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 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 the proposed restructuring and our business. Should one or more of these risks or uncertainties materialize, or should the assumptions prove incorrect, actual results may vary in material aspects from those currently anticipated.
Weatherford International Ltd. Consolidated Condensed Statements of Income (In 000's, Except Per Share Amounts) Three Months Six Months Ended June 30, Ended June 30, 2002 2001 2002 2001 Net Revenues: Drilling and Intervention Services $309,389 $338,306 $622,738 $622,904 Completion Systems 104,804 86,857 197,116 160,969 Artificial Lift Systems 179,673 147,837 342,261 288,346 Compression Services - - - 26,939 593,866 573,000 1,162,115 1,099,158 Operating Income (Loss): Drilling and Intervention Services 62,628 90,550 133,641 165,918 Completion Systems 18,534 12,613 34,005 20,844 Artificial Lift Systems 25,959 21,365 49,122 38,020 Compression Services - - - (511) Research and Development (18,539) (12,022) (35,523) (22,258) Equity in Earnings 6,342 5,003 13,195 7,761 Corporate Expenses (1) (14,806) (9,947) (24,086) (19,666) 80,118 107,562 170,354 190,108 Other Expense: Other, Net (1,215) (233) (1,974) (414) Interest Expense, Net (20,041) (17,724) (40,997) (32,105) Income Before Income Taxes 58,862 89,605 127,383 157,589 Provision for Income Taxes (20,010) (33,169) (43,312) (57,643) Net Income $38,852 $56,436 $84,071 $99,946 Earnings Per Share: Basic $0.32 $0.50 $0.70 $0.89 Diluted (2) $0.31 $0.46 $0.66 $0.83 Weighted Average Shares Outstanding: Basic 120,033 113,670 119,597 112,105 Diluted 135,759 135,547 134,783 130,198 (1) Corporate Expenses for the three and six months ended June 30, 2002 include $4.5 million of reincorporation transaction costs. (2) Diluted earnings per share for the three and six months ended June 30, 2001 excluding goodwill amortization, net of taxes, was $0.52 and $0.96, respectively. Weatherford International Ltd. Supplemental Information (In 000's) Three Months Six Months Ended June 30, Ended June 30, 2002 2001 2002 2001 Geographic Revenues: Eastern Hemisphere $273,277 $191,344 $514,982 $334,833 United States 193,703 238,867 390,124 464,950 Canada 74,564 76,063 156,794 174,012 Latin America 52,322 66,726 100,215 125,363 $593,866 $573,000 $1,162,115 $1,099,158 Depreciation and Amortization: Drilling and Intervention Services $37,781 $34,426 $75,066 $61,945 Completion Systems 7,960 6,682 13,975 13,583 Artificial Lift Systems 6,013 6,874 11,499 13,696 Compression Services - - - 4,184 Research and Development 807 504 1,532 947 Other 745 1,733 1,268 3,032 $53,306 $50,219 $103,340 $97,387 Research and Development: Drilling and Intervention Services $5,683 $5,862 $11,757 $10,875 Completion Systems 10,866 5,115 20,139 9,503 Artificial Lift Systems 1,990 1,045 3,627 1,794 Compression Services - - - 86 $18,539 $12,022 $35,523 $22,258 Contact: Don Galletly (713) 693-4148 Lisa Rodriguez (713) 693-4746 SOURCE Weatherford International Ltd.
CONTACT: Don Galletly, +1-713-693-4148, or Lisa Rodriguez, +1-713-693-4746, both of Weatherford International