66 Percent Increase Over Prior Year Second Quarter
HOUSTON, July 19 /PRNewswire-FirstCall/ -- Weatherford International Ltd. (NYSE: WFT) today reported second quarter 2006 net income of $188.6 million from continuing operations, or $0.53 per diluted share, before a non-recurring charge. Second quarter diluted earnings per share reflect an improvement of 66 percent over the second quarter of 2005 diluted earnings per share of $0.32. The non-recurring charge in the second quarter 2006 results includes severance of $1.8 million, net of tax, related to the integration of the Precision acquisition.
Second quarter revenues were $1,538.6 million, or 64 percent higher than the same period last year against a backdrop of a 14 percent increase in the rig activity.
Sequentially, the company's second quarter diluted earnings per share from continuing operations were slightly lower than the record first quarter 2006 diluted earnings per share of $0.57, due to the seasonal downturn in the Canadian market. The second quarter performance reflected worldwide gains outside of Canada across the breadth of the company's product and service offerings. Excluding the impact of the 42 percent Canadian seasonal decline, revenue improved $163 million, or 14 percent. The Eastern Hemisphere was the fastest growing region. Eastern Hemisphere's revenues increased 15 percent sequentially, as compared to a less than one percent rig count increase. The United States' revenues increased 14 percent sequentially, or nearly twice that of the regional rig count improvement. Latin American revenues increased 10 percent sequentially, as compared to a 5 percent rig count increase.
In the first six months of 2006, revenues were $3.1 billion and income from continuing operations before charges was $392.0 million, or $1.09 per diluted share. In 2005, the company reported revenues for the first six months of $1.8 billion, and income from continuing operations before charges of $181.2 million, or $0.61 per diluted share.
Evaluation, Drilling & Intervention Services
Revenues for the quarter were $965.5 million, an 88 percent increase above the prior year period and a 4 percent decline from the prior quarter. Geographically, all regions excluding Canada posted sequential revenue improvements. Middle East/North Africa led with 19 percent sequential growth. From a product line perspective, all product lines exceeded prior quarter revenue levels excluding the seasonal impact of Canada.
Operating income of $241.0 million was 97 percent higher than the same quarter in the prior year and 11 percent lower than the preceding quarter. The sequential decline was attributable to the lower contribution from Canada, which was offset in part by the improvements in the Middle East, Europe, West Africa and the United States.
Completion & Production Systems
Second quarter revenues of $573.1 million were 35 percent higher than the second quarter of 2005 and 8 percent higher than the prior quarter. Geographically, all regions, excluding Canada, posted sequential improvements of 15 percent or greater. Middle East/North Africa and Latin America led the improvements; each with a 31 percent increase. This division's performance reflected improvements in its expandables, electrical submersible pumps, production optimization and stimulation product lines.
The current quarter's operating income of $115.9 million improved 105 percent as compared to the same quarter in the prior year and 26 percent as compared to the first quarter of 2006.
Other, Net
During the second quarter, the company recorded a loss of $11.4 million of Other, Net, which was primarily a foreign currency book loss.
Reclassifications and Non-GAAP
Reclassifications have been made to the company's segments due to a change in organizational structure. All prior periods have been restated to conform to the current presentation and are included for reference. In addition, 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 2006 second quarter results on July 20, 2006 at 9:00 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 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 30,200 people worldwide.
Contact: Lisa W. Rodriguez (713) 693-4746
Chief Financial Officer
Andrew P. Becnel (713) 693-4136
Vice President - Finance
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 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
(In 000's, Except Per Share Amounts)
Three Months Six Months
Ended June 30, Ended June 30,
2006 2005 2006 2005
Net Revenues:
Evaluation, Drilling &
Intervention Services $965,504 $514,022 $1,971,770 $981,003
Completion & Production
Systems 573,072 423,273 1,102,817 813,998
1,538,576 937,295 3,074,587 1,795,001
Operating Income (Expense):
Evaluation, Drilling &
Intervention Services 240,959 122,180 512,172 231,376
Completion & Production
Systems 115,894 56,640 208,105 111,453
Research and Development (37,361) (23,903) (73,804) (44,922)
Equity in Earnings 3,293 2,822 5,927 4,123
Corporate Expenses (21,507) (17,330) (43,763) (34,219)
Exit Costs and
Restructuring Charges (2,770) --- (2,770) (2,737)
298,508 140,409 605,867 265,074
Other Income (Expense):
Debt Redemption Expense
of Unconsolidated
Affiliate --- --- --- (4,025)
Other, Net (11,371) 3,432 (13,490) 5,231
Interest Expense, Net (23,715) (14,979) (42,703) (28,637)
Income from Continuing
Operations Before Income
Taxes 263,422 128,862 549,674 237,643
Provision for Income Taxes (76,575) (34,137) (159,510) (62,483)
Income from Continuing
Operations 186,847 94,725 390,164 175,160
Income from Discontinued
Operation, Net of Taxes --- 463 --- 624
Net Income $186,847 $95,188 $390,164 $175,784
Basic Earnings Per Share:
Income from Continuing
Operations $0.54 $0.34 $1.12 $0.63
Income from Discontinued
Operation 0.00 0.00 0.00 0.01
Net Income $0.54 $0.34 $1.12 $0.64
Diluted Earnings Per Share:
Income from Continuing
Operations $0.52 $0.32 $1.09 $0.59
Income from Discontinued
Operation 0.00 0.00 0.00 0.00
Net Income $0.52 $0.32 $1.09 $0.59
Weighted Average Shares
Outstanding:
Basic 348,853 277,872 349,006 276,750
Diluted 358,433 307,026 358,164 305,584
Weatherford International Ltd.
Selected Income Statement Information
(In 000's)
Three Months Ended
6/30/06 3/31/06 12/31/05 9/30/05 6/30/05 3/31/05
Net Revenues:
Evaluation,
Drilling &
Intervention
Services $965,504 $1,006,266 $920,052 $627,690 $514,022 $466,981
Completion &
Production
Systems 573,072 529,745 541,358 449,126 423,273 390,725
$1,538,576 $1,536,011 $1,461,410 $1,076,816 $937,295 $857,706
Operating Income
(Expense):
Evaluation,
Drilling &
Intervention
Services $240,959 $271,213 $209,630 $143,294 $122,180 $109,196
Completion &
Production
Systems 115,894 92,211 89,629 67,784 56,640 54,813
Research and
Development (37,361) (36,443) (35,300) (27,140) (23,903) (21,019)
Equity in
Earnings 3,293 2,634 3,313 2,991 2,822 1,301
Corporate
Expenses (21,507) (22,256) (21,039) (19,159) (17,330) (16,889)
Exit Costs
and
Restructuring
Charges (2,770) --- (16,977) (97,258) --- (2,737)
$298,508 $307,359 $229,256 $70,512 $140,409 $124,665
Supplemental Information
(In 000's)
Three Months Ended
6/30/06 3/31/06 12/31/05 9/30/05 6/30/05 3/31/05
Geographic Revenues:
Eastern
Hemisphere $520,186 $451,482 $478,796 $373,485 $357,920 $298,347
United
States 620,335 542,803 508,517 410,725 372,247 317,720
Canada 219,418 379,631 316,985 188,787 124,459 161,265
Latin
America 178,637 162,095 157,112 103,819 82,669 80,374
$1,538,576 $1,536,011 $1,461,410 $1,076,816 $937,295 $857,706
Depreciation
and Amortization:
Evaluation,
Drilling &
Intervention
Services $89,613 $90,112 $88,243 $58,988 $48,131 $47,854
Completion &
Production
Systems 22,839 22,712 21,189 20,982 20,455 20,558
Research
and
Development 1,867 1,896 1,744 1,431 1,168 1,142
Corporate 700 783 773 549 563 568
$115,019 $115,503 $111,949 $81,950 $70,317 $70,122
Research and
Development:
Evaluation,
Drilling &
Intervention
Services $23,064 $21,963 $21,612 $14,624 $11,312 $9,361
Completion &
Production
Systems 14,297 14,480 13,688 12,516 12,591 11,658
$37,361 $36,443 $35,300 $27,140 $23,903 $21,019
Selected Balance Sheet Information
(In 000's)
June 30, December 31,
2006 2005
Cash $127,375 $134,245
Accounts Receivable, Net 1,340,699 1,259,990
Inventories 1,069,865 890,121
Accounts Payable 454,367 476,363
Short-Term Borrowings and Long-Term
Debt 1,820,195 1,586,837
Shareholders' Equity 5,964,021 5,666,817
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, 2006 and the six months ended June 30, 2006 and 2005. 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 thousands, except per share data)
Three Months
Ended Six Months Ended
June 30, June 30, June 30,
2006 2006 2005
Operating Income:
GAAP Operating Income $298,508 $605,867 $265,074
Exit costs and restructuring
charges 2,770 (a) 2,770 (a) 2,737 (b)
Non-GAAP Operating Income $301,278 $608,637 $267,811
Other Income (Expense), net:
GAAP Other Income (Expense), net $(35,086) $(56,193) $(27,431)
Exit costs and restructuring
charges --- --- 4,025 (b)
Non-GAAP Other Income (Expense),
net $(35,086) $(56,193) $(23,406)
Income from Continuing Operations:
GAAP Income from Continuing
Operations $186,847 $390,164 $175,160
Exit costs and restructuring
charges, net of tax 1,800 (a) 1,800 (a) 6,050 (b)
Non-GAAP Income from Continuing
Operations $188,647 $391,964 $181,210
Diluted Earnings Per Share:
GAAP Diluted Earnings per Share $0.52 $1.09 $0.59
Exit costs and restructuring
charges 0.01 (a) --- (a) 0.02 (b)
Non-GAAP Diluted Earnings per
Share $0.53 $1.09 $0.61
Note (a): This amount represents severance charges associated with
the integration of the Precision acquisition. On an after tax basis,
these charges approximated $1.8 million, or one cent per diluted
share, during the three months ended June 30, 2006.
Note (b): These amounts represent exit and debt restructuring costs
primarily related to our equity investment in Universal Compression
Holdings, Inc. On an after tax basis, these costs approximated $6.1
million, or two cents per diluted share, during the six months ended
June 30, 2005.
SOURCE Weatherford International Ltd.
CONTACT: Lisa W. Rodriguez, Chief Financial Officer, +1-713-693-4746, or
Andrew P. Becnel, Vice President - Finance, +1-713-693-4136, both of
Weatherford International Ltd.
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Web site: http://www.weatherford.com