25 Percent Increase Over Prior Quarter
HOUSTON, Oct. 22 /PRNewswire-FirstCall/ -- Weatherford International Ltd. (NYSE: WFT) today reported record third quarter 2006 net income of $234.2 million from continuing operations, or $0.66 per diluted share. Third quarter diluted earnings per share reflected an improvement of 25 percent from the second quarter and 78 percent over the third quarter of 2005 diluted earnings per share of $0.37, before charges.
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Revenues for the third quarter were $1.7 billion, the highest level recorded in company history. Third quarter revenues improved 58 percent over the same period last year. Sequentially, revenues rose 10 percent, led by the continued Eastern Hemisphere growth and the seasonal recovery in Canada.
In the first nine months of 2006, revenues were $4.8 billion and income from continuing operations was $626.2 million, before the second quarter non- recurring charge, or $1.75 per diluted share. In 2005, the company reported revenues for the first nine months of $2.9 billion, and income from continuing operations before charges of $298.8 million, or $0.98 per diluted share.
Evaluation, Drilling & Intervention Services
The division's revenues for the quarter were $1,100.1 million, a 75 percent increase above the same quarter in the prior year and a 14 percent increase from the prior quarter. Geographically, Canada had the highest sequential growth at 50 percent, driven by the seasonal recovery. The Eastern Hemisphere registered a sequential 13 percent improvement, essentially driven by the Middle East region. The United States revenues rose 10 percent sequentially, bolstered by strong activity levels. On a product line basis, wireline and re-entry led the growth.
Operating income of $293.0 million was more than two times the same quarter in the prior year and 22 percent higher than the preceding quarter. Operating income margins, excluding research and development, were 26.6 percent, 380 basis points higher than the third quarter of 2005 and 160 basis points above the prior quarter.
Completion & Production Systems
The division's third quarter revenues of $596.7 million were led by a strong performance in Asia and the seasonal recovery in Canada. This division's performance reflected improvements in its engineered chemicals and progressing cavity pump product lines.
The current quarter's operating income of $131.1 million is nearly double the same quarter in the prior year and 13 percent higher as compared to the second quarter of 2006. Operating income margins improved 690 basis points since the prior year's third quarter and 180 basis points sequentially.
Share Repurchase Program
During the third quarter the company repurchased 6.3 million shares for $269.0 million as part of the current $1.0 billion Share Repurchase Program. The company has repurchased 12.1 million shares year-to-date for an aggregate price of $531.5 million.
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 2006 third quarter results on October 23, 2006 at 7:00 a.m. (CDT). The company invites investors to listen to the conference call at the company's website, http://www.weatherford.com under the "investor relations" section or by dialing (800) 237-9752 or (617) 847-8706 for international calls, passcode "Weatherford". A replay will be available until 5:00 PM (CDT) on October 31, 2006. The number for the replay is (888) 286-8010, or (617) 801-6888, passcode 74499000.
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 32,000 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 Nine Months
Ended September 30, Ended September 30,
2006 2005 2006 2005
Net Revenues:
Evaluation, Drilling &
Intervention Services $1,100,059 $627,690 $3,071,829 $1,608,693
Completion & Production
Systems 596,694 449,126 1,699,511 1,263,124
1,696,753 1,076,816 4,771,340 2,871,817
Operating Income (Expense):
Evaluation, Drilling &
Intervention Services 292,978 143,294 805,150 374,670
Completion & Production
Systems 131,079 67,784 339,184 179,237
Research and Development (38,241) (27,140) (112,045) (72,062)
Equity in Earnings
(Losses) (190) 2,991 5,737 7,114
Corporate Expenses (24,718) (19,159) (68,481) (53,378)
Exit Costs and
Restructuring Charges --- (97,258) (2,770) (99,995)
360,908 70,512 966,775 335,586
Other Income (Expense):
Debt Redemption Expense --- (4,733) --- (4,733)
Debt Redemption Expense
of Unconsolidated
Affiliate --- --- --- (4,025)
Other, Net (6,161) 10,966 (19,651) 16,197
Interest Expense, Net (27,591) (17,197) (70,294) (45,834)
Income from Continuing
Operations Before Income
Taxes 327,156 59,548 876,830 297,191
Provision for Income Taxes (92,953) (12,249) (252,463) (74,732)
Income from Continuing
Operations 234,203 47,299 624,367 222,459
Income from Discontinued
Operation, Net of Taxes --- 587 --- 1,211
Net Income $234,203 $47,886 $624,367 $223,670
Basic Earnings Per Share:
Income from Continuing
Operations $0.68 $0.16 $1.79 $0.78
Income from Discontinued
Operation 0.00 0.00 0.00 0.01
Net Income $0.68 $0.16 $1.79 $0.79
Diluted Earnings Per Share:
Income from Continuing
Operations $0.66 $0.15 $1.75 $0.74
Income from Discontinued
Operation 0.00 0.00 0.00 0.00
Net Income $0.66 $0.15 $1.75 $0.74
Weighted Average Shares
Outstanding:
Basic 345,733 300,972 347,915 284,824
Diluted 354,471 311,788 356,905 311,416
Weatherford International Ltd.
Selected Income Statement Information
(In 000's)
Three Months
Ended
9/30/2006 6/30/2006 3/31/2006 12/31/2005 9/30/2005
Net Revenues:
Evaluation,
Drilling &
Intervention
Services $1,100,059 $965,504 $1,006,266 $920,052 $627,690
Completion &
Production
Systems 596,694 573,072 529,745 541,358 449,126
$1,696,753 $1,538,576 $1,536,011 $1,461,410 $1,076,816
Operating Income
(Expense):
Evaluation,
Drilling &
Intervention
Services $292,978 $240,959 $271,213 $209,630 $143,294
Completion &
Production
Systems 131,079 115,894 92,211 89,629 67,784
Research and
Development (38,241) (37,361) (36,443) (35,300) (27,140)
Equity in
Earnings
(Losses) (190) 3,293 2,634 3,313 2,991
Corporate
Expenses (24,718) (21,507) (22,256) (21,039) (19,159)
Exit Costs and
Restructuring
Charges --- (2,770) --- (16,977) (97,258)
$360,908 $298,508 $307,359 $229,256 $70,512
Supplemental Information
(In 000's)
Three Months
Ended
9/30/2006 6/30/2006 3/31/2006 12/31/2005 9/30/2005
Geographic
Revenues:
Eastern
Hemisphere $568,793 $520,186 $451,482 $478,796 $373,485
United States 659,711 620,335 542,803 508,517 410,725
Canada 294,296 219,418 379,631 316,985 188,787
Latin America 173,953 178,637 162,095 157,112 103,819
$1,696,753 $1,538,576 $1,536,011 $1,461,410 $1,076,816
Depreciation
and Amortization:
Evaluation,
Drilling &
Intervention
Services $95,963 $89,613 $90,112 $88,243 $58,988
Completion &
Production
Systems 25,136 22,839 22,712 21,189 20,982
Research and
Development 1,813 1,867 1,896 1,744 1,431
Corporate 596 700 783 773 549
$123,508 $115,019 $115,503 $111,949 $81,950
Research and
Development:
Evaluation,
Drilling &
Intervention
Services $25,036 $23,064 $21,963 $21,612 $14,624
Completion &
Production
Systems 13,205 14,297 14,480 13,688 12,516
$38,241 $37,361 $36,443 $35,300 $27,140
Selected Balance Sheet Information
(In 000's)
September 30, December 31,
2006 2005
Cash $120,292 $134,245
Accounts Receivable, Net 1,522,188 1,259,990
Inventories 1,168,952 890,121
Accounts Payable 475,029 476,363
Short-Term Borrowings and Long-Term Debt 2,204,412 1,586,837
Shareholders' Equity 5,961,622 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 September 30, 2005 and the nine months ended September 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 Three Months Nine Months
Ended Ended Ended
June 30, Sept. 30, Sept. 30, Sept. 30,
2006 2005 2006 2005
Operating Income:
GAAP Operating Income $298,508 $70,512 $966,775 $335,586
Exit costs and
restructuring charges 2,770(a) 97,258(b) 2,770(a) 99,995(c)
Non-GAAP Operating
Income $301,278 $167,770 $969,545 $435,581
Other Income
(Expense), net:
GAAP Other Income
(Expense), net $(35,086) $(10,964) $(89,945) $(38,395)
Other charges --- 4,733(b) --- 8,758(c)
Non-GAAP Other
Income (Expense), net $(35,086) $(6,231) $(89,945) $(29,637)
Income from Continuing
Operations:
GAAP Income from
Continuing
Operations $186,847 $47,299 $624,367 $222,459
Total charges, net
of tax 1,800(a) 70,251(b) 1,800(a) 76,301(c)
Non-GAAP Income from
Continuing Operations $188,647 $117,550 $626,167 $298,760
Diluted Earnings Per
Share:
GAAP Diluted
Earnings per Share $0.52 $0.15 $1.75 $0.74
Total charges 0.01(a) 0.22(b) ---(a) 0.24(c)
Non-GAAP Diluted
Earnings per Share $0.53 $0.37 $1.75 $0.98
GAAP Diluted Weighted
Average Shares 358,433 311,788 356,905 311,416
Non-GAAP Diluted
Weighted Average
Shares 358,433 323,510 356,905 311,416
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 costs and restructuring charges
associated with the acquisition of Precision and debt redemption
expense incurred with the settlement of the Zero Coupon Convertible
Debentures. On an after tax basis, these costs approximated $70.3
million, or twenty-two cents per diluted share, during the three
months ended September 30, 2005.
Note (c): These amounts represent exit costs and restructuring charges
associated with the acquisition of Precision, debt redemption expense
incurred with the settlement of the Zero Coupon Convertible Debentures
and debt restructuring costs related to our equity investment in
Universal Compression Holdings, Inc. On an after tax basis, these
costs approximated $76.3 million, or twenty-four cents per diluted
share, during the nine months ended September 30, 2005.
SOURCE Weatherford International Ltd.
CONTACT: Lisa W. Rodriguez, +1-713-693-4746, Chief Financial Officer,
or Andrew P. Becnel, +1-713-693-4136, Vice President, Finance, both for
Weatherford International Ltd.
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