GENEVA, July 20, 2010 /PRNewswire via COMTEX/ --Weatherford International Ltd. (NYSE: WFT) today reported second quarter 2010 income of $80 million, or $0.11 per diluted share, excluding an after tax loss of $0.15 per diluted share. The excluded after tax loss was comprised of an $82 million non-cash charge for a fair value adjustment to the put option issued in connection with the TNK-BP acquisition and $24 million, net of tax, for severance and investigation costs. Second quarter diluted earnings per share reflect an increase of ten percent over the second quarter of 2009 diluted earnings per share of $0.10, before severance and investigation costs.
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Second quarter revenues were $2,438 million, or 22 percent higher than the same period last year, and four percent higher than the prior quarter. Segment operating income of $308 million improved 14 percent year-over-year and 16 percent sequentially. International revenues were up seven percent versus the year ago quarter and five percent versus the prior quarter. Eastern Hemisphere revenues carried the international growth rate, increasing 16 percent versus the year ago quarter and nine percent versus the prior quarter, while Latin America revenue fell 12% compared to the year ago quarter and four percent sequentially due to lower project activity in Mexico. North America revenue increased 61 percent versus the year ago quarter and grew three percent versus the prior quarter. Stronger performance in the U.S. land market more than offset Canada's traditional seasonal decline and one month of severely reduced activity in the Gulf of Mexico.
Sequentially, the company's second quarter diluted earnings per share, before charges, were $0.04 higher than the first quarter of 2010 diluted earnings per share of $0.07, before severance, investigation costs and fair value adjustment for the put option.
Weatherford Chairman and CEO Bernard J. Duroc-Danner commented, "The second quarter was progress with the United States and Russia singled out as the highest performers. The outlook for North America appears constructive. Client feedback leads us to believe that operators are planning to accelerate activity in international markets."
North America
Revenues for the quarter were $921 million, which is a 61 percent increase over the same quarter in the prior year. Revenues were up three percent sequentially, which is the first sequential increase for the second quarter in North America since 2005.
Operating income was $129 million compared to break-even operating results for the second quarter of 2009 and was up $17 million sequentially. The current quarter's margins improved 140 basis points to 14.0%.
Middle East/North Africa/Asia
Second quarter revenues of $601 million were one percent higher than the second quarter of 2009 and six percent higher than the prior quarter. On a sequential basis, strong performances in Iraq and China were partially offset by weakness in Saudi Arabia and Libya.
The current quarter's operating income of $78 million decreased 37 percent as compared to the same quarter in the prior year and decreased six percent compared to the prior quarter.
Europe/West Africa/FSU
Second quarter revenues of $506 million were 39 percent higher than the second quarter of 2009 and 11 percent higher than the prior quarter. The year-over-year increase was largely due to our acquisition of TNK-BP's oilfield service business in the third quarter of 2009. All product lines showed sequential growth.
The current quarter's operating income of $63 million was flat compared to the same quarter in the prior year and increased 63 percent sequentially.
Latin America
Second quarter revenues of $410 million were 12 percent lower than the second quarter of 2009 and four percent lower than the prior quarter. Consistent with the prior quarter, Mexico was the largest contributor to the sequential decline in revenue due to a decrease in volumes of project-based work.
The current quarter's operating income of $38 million declined 56 percent as compared to the same quarter in the prior year and increased 22 percent compared to the prior quarter.
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 second quarter results on July 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://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 53,000 people worldwide.
Contact: Andrew P. Becnel +41.22.816.1502
Chief Financial Officer
Contact: Karen David-Green +1.713.693.2530
Vice President - Investor
Relations
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 000s, Except Per Share Amounts)
Three Months
Ended June 30,
--------------
2010 2009
---- ----
Net Revenues:
North America $921,443 $571,415
Middle East/North Africa/Asia 600,777 592,908
Europe/West Africa/FSU 505,774 364,968
Latin America 410,277 465,541
2,438,271 1,994,832
--------- ---------
Operating Income (Expense):
North America 129,361 (709)
Middle East/North Africa/Asia 78,009 123,553
Europe/West Africa/FSU 62,834 62,614
Latin America 37,984 85,759
Research and Development (53,530) (46,113)
Corporate Expenses (42,732) (40,834)
Revaluation of Contingent
Consideration (81,753) -
Exit and Restructuring (27,309) (30,905)
------- -------
102,864 153,365
Other Income (Expense):
Interest Expense, Net (95,719) (93,498)
Devaluation of Venezuelan Bolivar - -
Other, Net (14,186) (3,871)
------- ------
Income (Loss) Before Income Taxes (7,041) 55,996
Benefit (Provision) for Income
Taxes:
Provision for Operations (19,095) (8,829)
Benefit from Devaluation of
Venezuelan Bolivar - -
Benefit from Exit and Restructuring 2,888 3,388
----- -----
(16,207) (5,441)
Net Income (Loss) (23,248) 50,555
Net Income Attributable to
Noncontrolling Interest (3,316) (8,574)
------ ------
Net Income (Loss) Attributable to
Weatherford $(26,564) $41,981
======== =======
Earnings (Loss) Per Share
Attributable to Weatherford:
Basic $(0.04) $0.06
Diluted $(0.04) $0.06
Weighted Average Shares Outstanding:
Basic 743,209 700,424
Diluted 743,209 709,412
Six Months
Ended June 30,
--------------
2010 2009
---- ----
Net Revenues:
North America $1,811,987 $1,408,768
Middle East/North Africa/Asia 1,165,756 1,174,854
Europe/West Africa/FSU 960,475 733,811
Latin America 838,301 933,540
4,776,519 4,250,973
--------- ---------
Operating Income (Expense):
North America 241,688 122,327
Middle East/North Africa/Asia 160,805 257,579
Europe/West Africa/FSU 101,362 137,557
Latin America 69,063 177,976
Research and Development (102,387) (95,134)
Corporate Expenses (89,852) (80,433)
Revaluation of Contingent
Consideration (89,563) -
Exit and Restructuring (71,341) (55,782)
------- -------
219,775 464,090
Other Income (Expense):
Interest Expense, Net (191,058) (184,561)
Devaluation of Venezuelan Bolivar (63,859) -
Other, Net (23,404) (17,410)
------- -------
Income (Loss) Before Income Taxes (58,546) 262,119
Benefit (Provision) for Income
Taxes:
Provision for Operations (29,980) (44,633)
Benefit from Devaluation of
Venezuelan Bolivar 23,973 -
Benefit from Exit and Restructuring 5,331 6,729
----- -----
(676) (37,904)
Net Income (Loss) (59,222) 224,215
Net Income Attributable to
Noncontrolling Interest (7,351) (17,432)
------ -------
Net Income (Loss) Attributable to
Weatherford $(66,573) $206,783
======== ========
Earnings (Loss) Per Share
Attributable to Weatherford:
Basic $(0.09) $0.30
Diluted $(0.09) $0.29
Weighted Average Shares Outstanding:
Basic 740,537 699,375
Diluted 740,537 706,024
Weatherford International Ltd.
Selected Income Statement Information
(Unaudited)
(In 000s)
Three Months
Ended
-----
6/30/2010 3/31/2010 12/31/2009
--------- --------- ----------
Net Revenues:
North America $921,443 $890,544 $736,443
Middle East/North Africa/Asia 600,777 564,979 593,154
Europe/West Africa/FSU 505,774 454,701 478,259
Latin America 410,277 428,024 618,225
$2,438,271 $2,338,248 $2,426,081
========== ========== ==========
Operating Income (Expense):
North America $129,361 $112,327 $41,625
Middle East/North Africa/Asia 78,009 82,796 82,452
Europe/West Africa/FSU 62,834 38,528 48,893
Latin America 37,984 31,079 49,271
Research and Development (53,530) (48,857) (50,216)
Corporate Expenses (42,732) (47,120) (48,990)
Revaluation of Contingent
Consideration (81,753) (7,810) (6,295)
Exit and Restructuring (27,309) (44,032) (26,897)
$102,864 $116,911 $89,843
======== ======== =======
Three Months
Ended
-----
9/30/2009 6/30/2009
--------- ---------
Net Revenues:
North America $620,496 $571,415
Middle East/North Africa/Asia 600,110 592,908
Europe/West Africa/FSU 404,390 364,968
Latin America 524,883 465,541
$2,149,879 $1,994,832
========== ==========
Operating Income (Expense):
North America $33,259 $(709)
Middle East/North Africa/Asia 101,943 123,553
Europe/West Africa/FSU 44,468 62,614
Latin America 54,343 85,759
Research and Development (49,300) (46,113)
Corporate Expenses (44,272) (40,834)
Revaluation of Contingent
Consideration 27,368 -
Exit and Restructuring (17,887) (30,905)
$149,922 $153,365
======== ========
Supplemental Information
(Unaudited)
(In 000s)
Three Months
Ended
6/30/2010 3/31/2010 12/31/2009
--------- --------- ----------
Depreciation and Amortization:
North America $81,040 $80,660 $83,658
Middle East/North Africa/Asia 75,139 72,290 72,739
Europe/West Africa/FSU 52,058 48,958 50,376
Latin America 44,753 42,479 42,751
Research and Development 2,324 2,224 1,980
Corporate 2,943 2,781 2,197
----- ----- -----
$258,257 $249,392 $253,701
======== ======== ========
Three Months
Ended
9/30/2009 6/30/2009
--------- ---------
Depreciation and Amortization:
North America $79,737 $77,253
Middle East/North Africa/
Asia 65,771 60,921
Europe/West Africa/FSU 44,864 35,190
Latin America 43,403 35,971
Research and Development 1,940 2,017
Corporate 2,194 2,341
----- -----
$237,909 $213,693
======== ========
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, 2010, March 31, 2010, and June 30, 2009 and for the six
months ended June 30, 2010 and June 30, 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 000s, Except Per Share Data)
Three Months Ended
------------------
June 30, March 31, June 30,
2010 2010 2009
---- ---- ----
Operating Income:
GAAP Operating Income $102,864 $116,911 $153,365
Exit and Restructuring 27,309 44,032 30,905
Revaluation of
Contingent
Consideration 81,753 7,810 -
------ ----- ---
Non-GAAP Operating
Income $211,926 $168,753 $184,270
======== ======== ========
Benefit (Provision) for
Income Taxes:
GAAP Benefit
(Provision) for Income
Taxes $(16,207) $15,531 $(5,441)
Devaluation of
Venezuelan Bolivar - (23,973) -
Exit and Restructuring (2,888) (2,443) (3,388)
------ ------ ------
Non-GAAP Benefit
(Provision) for Income
Taxes $(19,095) $(10,885) $(8,829)
======== ======== =======
Net Income (Loss)
Attributable to
Weatherford:
GAAP Net Income (Loss) $(26,564) $(40,009) $41,981
Total Charges, net of
tax 106,174 (a) 89,285 (b) 27,517 (c)
------- ------ ------
Non-GAAP Net Income $79,610 $49,276 $69,498
======= ======= =======
Diluted Earnings (Loss)
Per Share Attributable
to Weatherford:
GAAP Diluted Earnings
(Loss) per Share $(0.04) $(0.05) $0.06
Total Charges, net of
tax 0.15 (a) 0.12 (b) 0.04 (c)
---- ---- ----
Non-GAAP Diluted
Earnings per Share $0.11 $0.07 $0.10
===== ===== =====
Six Months Ended
----------------
June 30, June 30,
2010 2009
---- ----
Operating Income:
GAAP Operating Income $219,775 $464,090
Exit and Restructuring 71,341 55,782
Revaluation of Contingent Consideration 89,563 -
------ ---
Non-GAAP Operating Income $380,679 $519,872
======== ========
Benefit (Provision) for Income Taxes:
GAAP Benefit (Provision) for Income
Taxes $(676) $(37,904)
Devaluation of Venezuelan Bolivar (23,973) -
Exit and Restructuring (5,331) (6,729)
------ ------
Non-GAAP Benefit (Provision) for Income
Taxes $(29,980) $(44,633)
======== ========
Net Income (Loss) Attributable to
Weatherford:
GAAP Net Income (Loss) $(66,573) $206,783
Total Charges, net of tax 195,459 49,053 (d)
------- ------
Non-GAAP Net Income $128,886 $255,836
======== ========
Diluted Earnings (Loss) Per Share
Attributable to Weatherford:
GAAP Diluted Earnings (Loss) per Share $(0.09) $0.29
Total Charges, net of tax 0.26 0.07 (d)
---- ----
Non-GAAP Diluted Earnings per Share $0.17 $0.36
===== =====
Note (a): This amount is comprised of an $82 million charge for the
revaluation of contingent consideration included as part of our
acquisition of the Oilfield Services Division ("OFS") of
TNK-BP. We also incurred investigation costs in connection with on-
going investigations by the U.S. government and severance charges
associated with the Company's restructuring
activities.
Note (b): 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. In addition, we incurred a charge of $8 million
for the revaluation of contingent consideration included as
part of our OFS acquisition. 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 (c): This amount represents investigation costs incurred in
connection with on-going investigations by the U.S. government and
costs related to the Company's withdrawal from
sanctioned countries. Also included are severance charges associated
with the Company's reorganization activities.
Note (d): This amount represents investigation costs incurred in
connection with on-going investigations by the U.S. government and
costs related to the Company's withdrawal from
sanctioned countries. Also included are severance charges associated
with the Company's reorganization activities.
Weatherford International Ltd.
Consolidated Condensed Balance Sheet
(Unaudited)
(In 000s)
June 30, December 31,
2010 2009
---- ----
Current Assets:
Cash and Cash Equivalents $222,783 $252,519
Accounts Receivable, Net 2,471,078 2,504,876
Inventories 2,371,489 2,239,762
Other Current Assets 1,253,261 1,143,449
6,318,611 6,140,606
--------- ---------
Long-Term Assets:
Property, Plant and Equipment, Net 6,774,500 6,991,579
Goodwill 4,128,966 4,156,105
Other Intangibles, Net 749,654 778,786
Equity Investments 539,817 542,667
Other Assets 303,179 256,440
12,496,116 12,725,577
---------- ----------
Total Assets $18,814,727 $18,866,183
=========== ===========
Current Liabilities:
Short-term Borrowings and Current Portion of
Long-term Debt $628,108 $869,581
Accounts Payable 1,127,875 1,002,359
Other Current Liabilities 994,757 924,948
2,750,740 2,796,888
--------- ---------
Long-term Liabilities:
Long-term Debt 6,005,472 5,847,258
Other Liabilities 383,871 423,333
6,389,343 6,270,591
--------- ---------
Total Liabilities 9,140,083 9,067,479
--------- ---------
Shareholders' Equity:
Weatherford Shareholders' Equity 9,603,780 9,719,672
Noncontrolling Interest 70,864 79,032
------ ------
Total Shareholders' Equity 9,674,644 9,798,704
--------- ---------
Total Liabilities and Shareholders' Equity $18,814,727 $18,866,183
=========== ===========
Weatherford International Ltd.
Net Debt
(Unaudited)
(In 000s)
Change in Net Debt for the
Three Months Ended June 30,
2010:
Net Debt at March 31, 2010 $(6,628,951)
Operating Income 102,864
Depreciation and
Amortization 258,257
Exit and Restructuring 27,309
Revaluation of Contingent
Consideration 81,753
Capital Expenditures (217,664)
(Increase) Decrease in
Working Capital 92,668
Income Taxes Paid (133,382)
Interest Paid (70,023)
Acquisitions and
Divestitures of Assets and
Businesses, Net 40,649
Other 35,723
------
Net Debt at June 30, 2010 $(6,410,797)
===========
Change in Net Debt for the
Six Months Ended June 30,
2010:
Net Debt at December 31,
2009 $(6,464,320)
Operating Income 219,775
Depreciation and
Amortization 507,649
Exit and Restructuring 71,341
Revaluation of Contingent
Consideration 89,563
Capital Expenditures (448,751)
(Increase) Decrease in
Working Capital (96,352)
Income Taxes Paid (224,117)
Interest Paid (209,620)
Acquisitions and
Divestitures of Assets and
Businesses, Net 81,860
Other 62,175
------
Net Debt at June 30, 2010 $(6,410,797)
===========
June 30, March 31, December 31,
Components of Net Debt 2010 2010 2009
---- ---- ----
Cash $222,783 $207,099 $252,519
Short-term Borrowings and
Current Portion of Long-
Term Debt (628,108) (991,440) (869,581)
Long-term Debt (6,005,472) (5,844,610) (5,847,258)
---------- ---------- ----------
Net Debt $(6,410,797) $(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.