Record Performance; 65 Percent Increase Over Prior Year
HOUSTON, Jan. 30 /PRNewswire-FirstCall/ -- Weatherford International Ltd. (NYSE: WFT) today reported fourth quarter 2006 net income of $263.7 million from continuing operations, or $0.76 per diluted share, before non-recurring items. Fourth quarter diluted earnings per share reflected an improvement of 65 percent over the fourth quarter of 2005 diluted earnings per share of $0.46, before non-recurring items. The non-recurring items in the fourth quarter of 2006 results include a one-time exit and restructuring charge of $18.1 million after tax, and an offsetting benefit of $26.4 million related to the favorable settlement of foreign tax exposures.
Fourth quarter revenues were $1.8 billion, or 24 percent higher than the same period last year, against a backdrop of a seven percent increase in rig activity. This is the highest level of quarterly revenues in the company's history.
Sequentially, the company's fourth quarter diluted earnings per share from continuing operations improved 15 percent over the third quarter 2006 diluted earnings per share of $0.66. The fourth quarter record performance reflected worldwide gains outside of Canada across the majority of the company's product and service offerings. North American revenues were essentially flat despite a contraction of the Canadian rig count. The U.S. made up for the decline in Canadian markets. Markets outside of North America accounted for essentially all of the sequential revenue growth. Combined Eastern Hemisphere and Latin America revenues increased 15 percent sequentially.
Annual revenues were $6.6 billion and represent the highest revenue levels in the history of the company. Income from continuing operations was $889.9 million, before non-recurring items, or $2.51 per diluted share. In 2005, the company reported annual revenues of $4.3 billion, and income from continuing operations of $462.7 million, or $1.46 per diluted share, before non-recurring items.
Evaluation, Drilling & Intervention Services
Revenues for the quarter were $1.2 billion, a 26 percent increase above the same quarter in the prior year and a six percent increase from the prior quarter. Geographically, all regions, with the exception of Canada, posted sequential revenue improvements. Latin America led with 16 percent sequential growth. The Eastern Hemisphere's revenues rose 10 percent sequentially. From a product line perspective, all product lines exceeded prior quarter revenue levels with the exception of wireline, which was negatively impacted by lower activity levels in Canada.
Operating income of $320.2 million was 53 percent higher than the same quarter in the prior year and nine percent higher than the preceding quarter.
Completion & Production Systems
Fourth quarter revenues of $645.4 million were 19 percent higher than the fourth quarter of 2005 and eight percent higher than the prior quarter. Geographically, all regions, with the exception of Canada, posted sequential revenue improvements. Of particular note, the Eastern Hemisphere grew 21 percent. This division's performance reflected improvements in electric submersible pumps, sand control systems and production optimization.
The current quarter's operating income of $140.6 million improved 57 percent as compared to the same quarter in the prior year and seven percent as compared to the third quarter of 2006.
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 fourth quarter results on January 30, 2007 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 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 33,000 people worldwide.
Contact: Andrew P. Becnel (713) 693-4136
Chief Financial Officer
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 Twelve Months
Ended December 31, Ended December 31,
2006 2005 2006 2005
Net Revenues:
Evaluation, Drilling &
Intervention Services $1,162,195 $920,052 $4,234,024 $2,528,745
Completion & Production
Systems 645,393 541,358 2,344,904 1,804,482
1,807,588 1,461,410 6,578,928 4,333,227
Operating Income (Expense):
Evaluation, Drilling &
Intervention Services 320,222 209,630 1,125,372 584,300
Completion & Production
Systems 140,561 89,629 479,745 268,866
Research and Development (37,384) (35,300) (149,429) (107,362)
Equity in Earnings 93 3,313 5,830 10,427
Corporate Expenses (26,625) (21,039) (95,106) (74,417)
Exit Costs and
Restructuring Charges (23,433) (16,977) (26,203) (116,972)
373,434 229,256 1,340,209 564,842
Other Income (Expense):
Debt Redemption Expense --- --- --- (4,733)
Debt Redemption Expense
of Unconsolidated
Affiliate --- --- --- (4,025)
Gain on Sale of Universal
Common Stock --- 115,456 --- 115,456
Other, Net (2,651) 6,753 (13,065) 23,787
Interest Expense, Net (32,627) (23,301) (102,921) (69,135)
Income from Continuing
Operations Before Income
Taxes and Minority
Interest 338,156 328,164 1,224,223 626,192
Provision for Income Taxes:
Provision for Operations (94,349) (65,491) (349,207) (172,968)
Tax Benefit From Exit and
Restructuring Charges 5,315 5,283 6,285 37,735
Tax Settlements 26,398 (23,933) 26,398 (23,933)
(62,636) (84,141) (316,524) (159,166)
Income from Continuing
Operations Before Minority
Interest 275,520 244,023 907,699 467,026
Minority Interest, Net of
Taxes (3,518) (273) (11,330) (817)
Income from Continuing
Operations 272,002 243,750 896,369 466,209
Income from Discontinued
Operation, Net of Taxes --- --- --- 1,211
Net Income $272,002 $243,750 $896,369 $467,420
Basic Earnings Per Share:
Income from Continuing
Operations $0.80 $0.70 $2.59 $1.55
Income from Discontinued
Operation 0.00 0.00 0.00 0.01
Net Income $0.80 $0.70 $2.59 $1.56
Diluted Earnings Per Share:
Income from Continuing
Operations $0.78 $0.69 $2.53 $1.47
Income from Discontinued
Operation 0.00 0.00 0.00 0.00
Net Income $0.78 $0.69 $2.53 $1.47
Weighted Average Shares
Outstanding:
Basic 340,747 346,874 346,123 300,336
Diluted 348,617 355,630 354,832 322,286
Weatherford International Ltd.
Selected Income Statement Information
(In 000's)
Three Months
Ended
12/31/2006 09/30/2006 06/30/2006 03/31/2006 12/31/2005
Net Revenues:
Evaluation,
Drilling
& Intervention
Services $1,162,195 $1,100,059 $965,504 $1,006,266 $920,052
Completion &
Production
Systems 645,393 596,694 573,072 529,745 541,358
$1,807,588 $1,696,753 $1,538,576 $1,536,011 $1,461,410
Operating Income
(Expense):
Evaluation,
Drilling
& Intervention
Services $320,222 $292,978 $240,959 $271,213 $209,630
Completion &
Production
Systems 140,561 131,079 115,894 92,211 89,629
Research and
Development (37,384) (38,241) (37,361) (36,443) (35,300)
Equity in
Earnings
(Losses) 93 (190) 3,293 2,634 3,313
Corporate
Expenses (26,625) (24,718) (21,507) (22,256) (21,039)
Exit Costs and
Restructuring
Charges (23,433) --- (2,770) --- (16,977)
$373,434 $360,908 $298,508 $307,359 $229,256
Supplemental Information
(In 000's)
Three Months
Ended
12/31/2006 09/30/2006 06/30/2006 03/31/2006 12/31/2005
Geographic Revenues:
Eastern
Hemisphere $639,640 $568,793 $520,186 $451,482 $478,796
United States 689,991 659,711 620,335 542,803 508,517
Canada 266,445 294,296 219,418 379,631 316,985
Latin America 211,512 173,953 178,637 162,095 157,112
$1,807,588 $1,696,753 $1,538,576 $1,536,011 $1,461,410
Depreciation and
Amortization:
Evaluation,
Drilling &
Intervention
Services $99,036 $95,963 $89,613 $90,112 $88,243
Completion &
Production
Systems 26,600 25,136 22,839 22,712 21,189
Research and
Development 1,819 1,813 1,867 1,896 1,744
Corporate 1,576 596 700 783 773
$129,031 $123,508 $115,019 $115,503 $111,949
Research and Development:
Evaluation,
Drilling &
Intervention
Services $26,290 $25,036 $23,064 $21,963 $21,612
Completion &
Production
Systems 11,094 13,205 14,297 14,480 13,688
$37,384 $38,241 $37,361 $36,443 $35,300
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 and years ended December 31, 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 Year Ended
December 31, December 31, December 31, December 31,
2006 2005 2006 2005
Operating Income:
GAAP Operating
Income $373,434 $229,256 $1,340,209 $564,842
Exit costs and
restructuring
charges 23,433 [a] 16,977 [b] 26,203 [c] 116,972 [d]
Non-GAAP
Operating Income $396,867 $246,233 $1,366,412 $681,814
Other Income
(Expense), net:
GAAP Other Income
(Expense), net $(35,278) $98,908 $(115,986) $61,350
Gain on sale of
Universal common
stock --- (115,456) [b] --- (115,456)[d]
Other charges --- --- --- 8,758 [d]
Non-GAAP Other Income
(Expense), net $(35,278) $(16,548) $(115,986) $(45,348)
Provision for Income
Taxes:
GAAP Provision for
Income Taxes $(62,636) $(84,141) $(316,524) $(159,166)
Tax impact of
charges (5,315) [a] (5,283) [b] (6,285) [c] (37,735)[d]
Other charges
(benefit) (26,398) [a] 23,933 [b] (26,398) [c] 23,933 [d]
Non-GAAP
Provision for
Income Taxes $(94,349) $(65,491) $(349,207) $(172,968)
Income from Continuing
Operations:
GAAP Income from
Continuing
Operations $272,002 $243,750 $896,369 $466,209
Total charges
(gains), net of
tax (8,280) [a] (79,829) [b] (6,480) [c] (3,528)[d]
Non-GAAP Income
from Continuing
Operations $263,722 $163,921 $889,889 $462,681
Diluted Earnings
Per Share from
Continuing Operations:
GAAP Diluted Earnings
per Share from
Continuing Operations $0.78 $0.69 $2.53 $1.47
Total charges
(gains) (0.02) [a] (0.23) [b] (0.02) [c] (0.01)[d]
Non-GAAP Diluted
Earnings per Share
from Continuing
Operations $0.76 $0.46 $2.51 $1.46
Note [a]: This amount represents severance and other charges associated
with the Company's current quarter exit and restructuring activities. On
an after tax basis, these charges approximated $18.1 million during the
three months ended December 31, 2006. In addition, the Company realized a
tax benefit of $26.4 million related to the favorable settlement of
certain foreign tax exposures. On an after tax basis, these items
resulted in an effect of two cents per diluted share.
Note [b]: Represents a gain recognized on the sale of shares of Universal
Compression Holdings, Inc., with no related income tax effects. This gain
was partially offset by exit costs, restructuring charges and tax expense
associated with the acquisition of Precision and related activities. On an
after tax basis, the net gain approximated $79.8 million, or twenty-three
cents per diluted share, during the three months ended December 31, 2005.
Note [c]: This amount represents severance and other charges associated
with the Company's current quarter exit and restructuring activities and
the integration of the Precision acquisition. On an after tax basis,
these charges approximated $19.9 million during the year ended
December 31, 2006. In addition, the Company realized a tax benefit of
$26.4 million related to the favorable settlement of certain foreign tax
exposures. On an after tax basis, these items resulted in an effect of
two cents per diluted share.
Note [d]: Represents a gain recognized on the sale of shares of Universal
Compression Holdings, Inc., with no related income tax effects. This gain
was partially offset by exit costs, restructuring charges and tax expense
associated with the acquisition of Precision and related activities, debt
redemption expense incurred with the settlement of the Zero Coupon
Convertible Debentures, and debt restructuring costs related to our
investment in Universal Compression Holdings, Inc. On an after tax basis,
the net gain approximated $3.5 million, or one cent per diluted share,
during the year ended December 31, 2005.
SOURCE Weatherford International Ltd.
-0- 01/30/2007
/CONTACT: Andrew P. Becnel, Chief Financial Officer of Weatherford
International Ltd., +1-713-693-4136/
/Photo: http://www.newscom.com/cgi-bin/prnh/19990308/WEATHERFORDLOGO
PRN Photo Desk, photodesk@prnewswire.com /
/Web site: http://www.weatherford.com /
(WFT)
CO: Weatherford International Ltd.
ST: Texas
IN: OIL
SU: ERN CCA
MA-CT
-- DATU017 --
4935 01/30/2007 06:00 EST http://www.prnewswire.com