GENEVA, April 20, 2010 /PRNewswire via COMTEX/ --Weatherford International Ltd. (NYSE: WFT) today reported first quarter 2010 income of $41 million, or $0.06 per diluted share, excluding an after tax loss of $0.11 per diluted share. The excluded after tax loss was comprised of a $40 million charge related to the devaluation of the Venezuelan Bolivar, a $38 million charge related to the company's supplemental executive retirement plan that was frozen on March 31, 2010 and severance and investigation costs. Included in the $0.06 result were $15 million of non-cash charges related to write-offs at a less-than-majority owned subsidiary and a fair value adjustment to the put option issued in connection with the TNK-BP acquisition. First quarter diluted earnings per share reflect a decrease of 78 percent over the first quarter of 2009 diluted earnings per share of $0.27, before severance and investigation costs.
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First quarter revenues were $2,338 million, or four percent higher than the same period last year, against a backdrop of a six percent increase in global rig count. International revenues were up two percent against a three percent increase in international rig count compared to the first quarter of 2009. Comparing the same periods, North America revenue was up six percent against a seven percent increase in rig count.
Sequentially, the company's first quarter diluted earnings per share, before charges, were $0.04 higher than the fourth quarter of 2009 diluted earnings per share of $0.02, before severance and investigation costs.
North America
Revenues for the quarter were $891 million, which is a six percent increase over the same quarter in the prior year. Sequentially, revenues were up 21 percent. Almost all product lines showed sequential growth. North America revenues are 25% below their prior peak in the third quarter of 2008. Average rig count is down the same amount over the same period.
Operating income was $112 million, which is down $11 million compared to the same quarter in the prior year and up $71 million sequentially. The current quarter's margins improved 690 basis points to 12.6%.
Middle East/North Africa/Asia
First quarter revenues of $565 million were three percent lower than the first quarter of 2009 and five percent lower than the prior quarter. On a sequential basis, strong performances in Iraq and Egypt were offset by weather related weakness in China and Australia as well as a sluggish environment in Algeria due to political factors.
The current quarter's operating income of $83 million decreased 38 percent as compared to the same quarter in the prior year and was flat compared to the prior quarter.
Latin America
First quarter revenues of $428 million were nine percent lower than the first quarter of 2009 and 31 percent lower than the prior quarter. Mexico was the largest contributor to the sequential decline in revenue due to a decrease in volumes of project-based work. Venezuelan activity also dropped off.
The current quarter's operating income of $31 million declined 66 percent as compared to the same quarter in the prior year and declined 37 percent compared to the prior quarter.
Europe/West Africa/FSU
First quarter revenues of $455 million were 23 percent higher than the first quarter of 2009 and five percent lower than the prior quarter. The year-over-year increase was driven by our acquisition of TNK-BP's oilfield service business in the third quarter of 2009. Severe weather conditions in Russia's Western Siberian fields was the largest contributor to the sequential decline in revenues.
The current quarter's operating income of $31 million declined 59 percent as compared to the same quarter in the prior year and decreased 28 percent sequentially. Hampering profitability were $15 million of non-cash charges related to write-offs at a less-than-majority owned subsidiary and a fair value adjustment to the put option issued in connection with the TNK-BP acquisition.
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 first quarter results on April 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://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 52,000 people worldwide.
Contact: Andrew P. Becnel +41.22.816.1502
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 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 000's, Except Per Share Amounts)
Three Months
Ended March 31,
---------------
2010 2009
---- ----
Net Revenues:
North America $890,544 $837,353
Middle East/North Africa/Asia 564,979 581,946
Europe/West Africa/FSU 454,701 368,843
Latin America 428,024 467,999
------- -------
2,338,248 2,256,141
--------- ---------
Operating Income (Expense):
North America 112,327 123,036
Middle East/North Africa/Asia 82,796 134,026
Europe/West Africa/FSU 30,718 74,943
Latin America 31,079 92,217
Research and Development (48,857) (49,021)
Corporate Expenses (47,120) (39,599)
Exit and Restructuring (44,032) (24,877)
------- -------
116,911 310,725
Other Income (Expense):
Interest Expense, Net (95,339) (91,063)
Devaluation of Venezuelan Bolivar (63,859) -
Other, Net (9,218) (13,539)
------ -------
Income (Loss) Before Income Taxes (51,505) 206,123
Benefit (Provision) for Income Taxes:
Benefit (Provision) for Operations (10,885) (35,804)
Benefit from Devaluation of
Venezuelan Bolivar 23,973 -
Benefit from Exit and
Restructuring 2,443 3,341
----- -----
15,531 (32,463)
Net Income (Loss) (35,974) 173,660
Net Income Attributable to
Noncontrolling Interest (4,035) (8,858)
------ ------
Net Income (Loss) Attributable to
Weatherford $(40,009) $164,802
======== ========
Earnings (Loss) Per Share Attributable to
Weatherford:
Basic $(0.05) $0.24
Diluted $(0.05) $0.23
Weighted Average Shares Outstanding:
Basic 737,865 698,327
Diluted 737,865 702,636
Weatherford International Ltd.
Selected Income Statement Information
(Unaudited)
(In 000's)
Three Months
Ended
-----
3/31/2010 12/31/2009 9/30/2009 6/30/2009 3/31/2009
--------- ---------- --------- --------- ---------
Net
Revenues:
North
America $890,544 $736,443 $620,496 $571,415 $837,353
Middle
East/
North
Africa/
Asia 564,979 593,154 600,110 592,908 581,946
Europe/
West
Africa/
FSU 454,701 478,259 404,390 364,968 368,843
Latin
America 428,024 618,225 524,883 465,541 467,999
$2,338,248 2,426,081 2,149,879 $1,994,832 $2,256,141
========== ========= ========= ========== ==========
Operating
Income
(Expense):
North
America $112,327 $41,625 $33,259 $(709) $123,036
Middle
East/
North
Africa/
Asia 82,796 82,452 101,943 123,553 134,026
Europe/
West
Africa/
FSU 30,718 42,598 71,836 62,614 74,943
Latin
America 31,079 49,271 54,343 85,759 92,217
Research
and
Development (48,857) (50,216) (49,300) (46,113) (49,021)
Corporate
Expenses (47,120) (48,990) (44,272) (40,834) (39,599)
Exit
and
Restructuring (44,032) (26,897) (17,887) (30,905) (24,877)
$116,911 $89,843 $149,922 $153,365 $310,725
======== ======= ======== ======== ========
Supplemental Information
(Unaudited)
(In 000's)
Three Months
Ended
-----
3/31/2010 12/31/2009 9/30/2009 6/30/2009 3/31/2009
--------- ---------- --------- --------- ---------
Depreciation
and
Amortization:
North
America $80,660 $83,658 $79,737 $77,253 $75,098
Middle East/
North
Africa/
Asia 72,290 72,739 65,771 60,921 57,634
Europe/West
Africa/FSU 48,958 50,376 44,864 35,190 34,678
Latin
America 42,479 42,751 43,403 35,971 30,442
Research and
Development 2,224 1,980 1,940 2,017 1,933
Corporate 2,781 2,197 2,194 2,341 1,609
----- ----- ----- ----- -----
$249,392 $253,701 $237,909 $213,693 $201,394
======== ======== ======== ======== ========
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 March 31, 2010, December 31, 2009, and March 31, 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 thousands, except per share data)
Three Months Ended
March 31, December 31, March 31,
2010 2009 2009
Operating Income:
GAAP Operating Income $116,911 $89,843 $310,725
Exit and Restructuring 44,032 26,897 24,877
Non-GAAP Operating Income $160,943 $116,740 $335,602
Benefit (Provision) for Income Taxes:
GAAP Benefit (Provision)
for Income Taxes $15,531 ($16,014) ($32,463)
Tax Reorganization Charges - 24,190 -
Devaluation of Venezuelan Bolivar (23,973) - -
Exit and Restructuring (2,443) (5,466) (3,341)
Non-GAAP Benefit (Provision) for
Income Taxes ($10,885) $2,710 ($35,804)
Net Income (Loss) Attributable
to Weatherford:
GAAP Net Income (Loss) ($40,009) ($30,391) $164,802
Total Charges, net of tax 81,475(a) 45,621(b) 21,536(c)
Non-GAAP Net Income $41,466 $15,230 $186,338
Diluted Earnings (Loss) Per
Share Attributable to Weatherford:
GAAP Diluted Earnings (Loss)
per Share ($0.05) ($0.04) $0.23
Total Charges, net of tax 0.11(a) 0.06(b) 0.04(c)
Non-GAAP Diluted Earnings per Share $0.06 $0.02 $0.27
Note (a): 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. 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 (b): This amount represents investigation costs incurred in
connection with on-going investigations by the U.S. government. Also
included are severance charges and facility closure costs associated with
the Company's restructuring activities. In addition, the Company incurred
a tax charge of $24.2 million as a result of a tax reorganization
initiative completed during the fourth quarter of 2009.
Note (c): This amount represents investigation costs incurred in
connection with on-going investigations by the U.S. government. Also
included are severance charges associated with the Company's
reorganization activities.
Weatherford International Ltd.
Consolidated Condensed Balance Sheet
(Unaudited)
(In 000's)
December
March 31, 31,
2010 2009
---- ----
Current Assets:
Cash and Cash Equivalents $207,099 $252,519
Accounts Receivable, Net 2,655,677 2,504,876
Inventories 2,316,155 2,239,762
Other Current Assets 1,148,774 1,143,449
--------- ---------
6,327,705 6,140,606
--------- ---------
Long-Term Assets:
Property, Plant and Equipment, Net 6,883,744 6,991,579
Goodwill 4,141,362 4,156,105
Other Intangibles, Net 761,716 778,786
Equity Investments 538,621 542,667
Other Assets 304,611 256,440
------- -------
12,630,054 12,725,577
---------- ----------
Total Assets $18,957,759 $18,866,183
=========== ===========
Current Liabilities:
Short-term Borrowings and Current Portion of
Long-term Debt $991,440 $869,581
Accounts Payable 1,121,175 1,002,359
Other Current Liabilities 840,863 924,948
------- -------
2,953,478 2,796,888
--------- ---------
Long-term Liabilities:
Long-term Debt 5,844,610 5,847,258
Other Liabilities 383,547 423,333
------- -------
6,228,157 6,270,591
--------- ---------
Total Liabilities 9,181,635 9,067,479
--------- ---------
Shareholders' Equity:
Weatherford Shareholders' Equity 9,699,161 9,719,672
Noncontrolling Interest 76,963 79,032
------ ------
Total Shareholders' Equity 9,776,124 9,798,704
--------- ---------
Total Liabilities and Shareholders' Equity $18,957,759 $18,866,183
=========== ===========
Weatherford International Ltd.
Net Debt
(Unaudited)
(In 000's)
Net Debt at January 1, 2010 $(6,464,320)
Operating Income 116,911
Depreciation and Amortization 249,392
Exit and Restructuring 44,032
Capital Expenditures (231,087)
Increase in Working Capital (189,020)
Income Taxes Paid (90,735)
Interest Paid (139,597)
Acquisitions and Divestitures of Assets
and Businesses, Net 41,211
Other 34,262
------
Net Debt at March 31, 2010 $(6,628,951)
===========
March 31, December 31,
Components of Net Debt 2010 2009
---- ---
Cash $207,099 $252,519
Short-term Borrowings and Current
Portion of Long-Term Debt (991,440) (869,581)
Long-term Debt (5,844,610) (5,847,258)
---------- ----------
Net Debt $(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.