Transocean Ltd. Reports First Quarter 2009 Financial Results
ZUG,
First quarter 2009 results were adversely impacted by certain net
charges, after tax, totaling
-
$221 million of write-downs to fair market value for the GSF Arctic II and GSF Arctic IV semisubmersible rigs held for sale and -
$43 million of discrete tax items, payments associated with the merger ofTransocean andGlobalSantaFe Corporation and losses on the retirement of debt.
First quarter 2008 reported income included certain net charges,
after-tax, totaling
Operations Quarterly Review
Revenues for the three months ended
Operating and maintenance expenses for the three months ended
Depreciation, depletion and amortization totaled
General and administrative expenses decreased 5.1 percent to
Interest Expense and Liquidity
Interest expense, net of amounts capitalized, for the first quarter of
2009 totaled
During the first quarter 2009,
First quarter 2008 results are presented as adjusted for the
retrospective application of FSP APB 14-1. For the first quarter 2008,
interest expense, net of amounts capitalized, included a non-cash
increase of
As of
Cash flow from operating activities totaled
Effective Tax Rate
Transocean’s reported Effective Tax Rate(1) of 21.1 percent
for the first quarter of 2009 reflects the unfavorable impact of the
write-down of rigs to fair market value, as described above, as well as
various discrete tax items of
Conference Call Information
In addition, the conference call will be simultaneously broadcast over
the Internet in a listen-only mode and can be accessed by logging onto
Transocean’s website at www.deepwater.com
and selecting “Investor Relations/News & Events/Webcasts &
Presentations.” A file containing five charts to be discussed during the
conference call, titled “1Q09 Charts,” has been posted to Transocean’s
website and can also be found by selecting “Investor Relations/News &
Events/Webcasts & Presentations.” The conference call may also be
accessed via the Internet at www.CompanyBoardroom.com
by typing in Transocean’s
A telephonic replay of the conference call should be available after
(1) Effective Tax Rate is defined as income tax expense divided by income before income taxes. See the accompanying schedule entitled "Supplemental Effective Tax Rate Analysis."
(2) Annual Effective Tax Rate is defined as income tax expense excluding various discrete items (such as changes in estimates and tax on items excluded from income before income taxes) divided by income before income taxes excluding gains on sales and similar items pursuant to Financial Accounting Standards Board Interpretation No. 18. See the accompanying schedule entitled "Supplemental Effective Tax Rate Analysis."
TRANSOCEAN LTD. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In millions, except per share data) (Unaudited) |
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Three months ended March 31, | ||||||||
2009 | 2008 | |||||||
(As adjusted) | ||||||||
Operating revenues | ||||||||
Contract drilling revenues | $ | 2,834 | $ | 2,632 | ||||
Contract drilling intangible revenues | 104 | 224 | ||||||
Other revenues | 180 | 254 | ||||||
3,118 | 3,110 | |||||||
Costs and expenses | ||||||||
Operating and maintenance | 1,171 | 1,157 | ||||||
Depreciation, depletion and amortization | 355 | 367 | ||||||
General and administrative | 56 | 49 | ||||||
1,582 | 1,573 | |||||||
Impairment loss | (221 | ) |
- |
|||||
Gain from disposal of assets, net | 4 | 3 | ||||||
Operating income | 1,319 | 1,540 | ||||||
Other income (expense), net | ||||||||
Interest income | 1 | 13 | ||||||
Interest expense, net of amounts capitalized | (136 | ) | (177 | ) | ||||
Other, net | 6 | (8 | ) | |||||
(129 | ) | (172 | ) | |||||
Income before income taxes | 1,190 | 1,368 | ||||||
Income tax expense | 251 | 218 | ||||||
Net income | 939 | 1,150 | ||||||
Net income (loss) attributable to noncontrolling interest | (3 | ) | 1 | |||||
Net income attributable to controlling interest | $ | 942 | $ | 1,149 | ||||
Earnings per share | ||||||||
Basic | $ | 2.94 | $ | 3.62 | ||||
Diluted | $ | 2.93 | $ | 3.58 | ||||
Weighted average shares outstanding | ||||||||
Basic | 319 | 317 | ||||||
Diluted | 320 | 321 |
TRANSOCEAN LTD. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (In millions, except share data) (Unaudited) |
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March 31, | December 31, | |||||||
2009 | 2008 | |||||||
(As adjusted) | ||||||||
ASSETS | ||||||||
Cash and cash equivalents | $ | 1,302 | $ | 963 | ||||
Short-term investments | 112 | 333 | ||||||
Accounts receivable, net of allowance for doubtful accounts of $115 and $114 at March 31, 2009 and December 31, 2008, respectively |
2,884 | 2,864 | ||||||
Materials and supplies, net of allowance for obsolescence of $54 and $49 at March 31, 2009 and December 31, 2008, respectively |
458 | 432 | ||||||
Deferred income taxes, net | 50 | 63 | ||||||
Assets held for sale | 244 | 464 | ||||||
Other current assets | 165 | 230 | ||||||
Total current assets | 5,215 | 5,349 | ||||||
Property and equipment | 26,373 | 25,836 | ||||||
Less accumulated depreciation | 5,319 | 4,975 | ||||||
Property and equipment, net | 21,054 | 20,861 | ||||||
Goodwill | 8,134 | 8,128 | ||||||
Other assets | 856 | 844 | ||||||
Total assets | $ | 35,259 | $ | 35,182 | ||||
LIABILITIES AND EQUITY | ||||||||
Accounts payable | $ | 745 | $ | 914 | ||||
Accrued income taxes | 299 | 317 | ||||||
Debt due within one year | 2,040 | 664 | ||||||
Other current liabilities | 705 | 806 | ||||||
Total current liabilities | 3,789 | 2,701 | ||||||
Long-term debt | 10,924 | 12,893 | ||||||
Deferred income taxes, net | 673 | 666 | ||||||
Other long-term liabilities | 1,753 | 1,755 | ||||||
Total long-term liabilities | 13,350 | 15,314 | ||||||
Commitments and contingencies | ||||||||
Shares, CHF 15.00 par value, 502,852,947 authorized, 167,617,649 contingently authorized, 335,235,298 issued and 320,004,924 outstanding at March 31, 2009 and 502,852,947 authorized, 167,617,649 contingently authorized, 335,235,298 issued and 319,262,113 outstanding at December 31, 2008 | 4,455 | 4,444 | ||||||
Additional paid-in capital | 7,344 | 7,313 | ||||||
Accumulated other comprehensive loss | (448 | ) | (420 | ) | ||||
Retained earnings | 6,769 | 5,827 | ||||||
Total controlling interest shareholders’ equity | 18,120 | 17,164 | ||||||
Noncontrolling interest |
- |
3 | ||||||
Total equity | 18,120 | 17,167 | ||||||
Total liabilities and equity | $ | 35,259 | $ | 35,182 |
TRANSOCEAN LTD. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In millions) (Unaudited) |
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|
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Three months ended March 31, | |||||||||
2009 | 2008 | ||||||||
(As adjusted) | |||||||||
Cash flows from operating activities | |||||||||
Net income | $ | 939 | $ | 1,150 | |||||
Adjustments to reconcile net income to net cash provided by operating activities | |||||||||
Amortization of drilling contract intangibles | (104 | ) | (224 | ) | |||||
Depreciation, depletion and amortization | 355 | 367 | |||||||
Share-based compensation expense | 19 | 22 | |||||||
Gain from disposal of assets, net | (4 | ) | (3 | ) | |||||
Impairment loss | 221 |
- |
|||||||
Amortization of debt issue costs, discounts and premiums, net | 52 | 41 | |||||||
Deferred revenue, net | (6 | ) | 18 | ||||||
Deferred expenses, net | 2 | 16 | |||||||
Deferred income taxes | 6 | (25 | ) | ||||||
Other, net | 11 | 1 | |||||||
Changes in operating assets and liabilities | (50 | ) | 119 | ||||||
Net cash provided by operating activities | 1,441 | 1,482 | |||||||
Cash flows from investing activities | |||||||||
Capital expenditures | (708 | ) | (769 | ) | |||||
Proceeds from disposal of assets, net | 8 | 254 | |||||||
Proceeds from distributions from short-term investments | 221 |
- |
|||||||
Joint ventures and other investments, net |
- |
(3 | ) | ||||||
Net cash used in investing activities | (479 | ) | (518 | ) | |||||
Cash flows from financing activities | |||||||||
Change in short-term borrowings, net | (24 | ) | (4 | ) | |||||
Proceeds from debt | 88 | 1,976 | |||||||
Repayments of debt | (600 | ) | (2,633 | ) | |||||
Payments for repurchase of convertible senior notes | (102 | ) |
- |
||||||
Payments for exercise of warrants, net |
- |
(4 | ) | ||||||
Proceeds from share-based compensation plans, net | 17 | 27 | |||||||
Other, net | (2 | ) |
- |
||||||
Net cash used in financing activities | (623 | ) | (638 | ) | |||||
Net increase in cash and cash equivalents | 339 | 326 | |||||||
Cash and cash equivalents at beginning of period | 963 | 1,241 | |||||||
Cash and cash equivalents at end of period | $ | 1,302 | $ | 1,567 |
TRANSOCEAN LTD. FLEET OPERATING STATISTICS |
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Operating Revenues ($ Millions)(1) |
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Three months ended | ||||||||||||
March 31,
2009 |
December 31,
2008 |
March 31,
2008 |
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Contract Drilling Revenues | ||||||||||||
High-Specification Floaters: | ||||||||||||
Ultra-Deepwater Floaters | $ | 702 | $ | 673 | $ | 608 | ||||||
Deepwater Floaters | 413 | 331 | 325 | |||||||||
Harsh Environment Floaters | 158 | 164 | 150 | |||||||||
Total High-Specification Floaters | 1,273 | 1,168 | 1,083 | |||||||||
Midwater Floaters | 708 | 797 | 675 | |||||||||
High-Specification Jackups | 151 | 146 | 157 | |||||||||
Standard Jackups | 689 | 709 | 711 | |||||||||
Other Rigs | 13 | 10 | 6 | |||||||||
Subtotal | 2,834 | 2,830 | 2,632 | |||||||||
Contract Intangible Revenue | 104 | 133 | 224 | |||||||||
Other Revenues | ||||||||||||
Client Reimbursable Revenues | 50 | 51 | 48 | |||||||||
Integrated Services and Other | 53 | 49 | 43 | |||||||||
Drilling Management Services | 70 | 194 | 139 | |||||||||
Oil and Gas Properties | 7 | 13 | 24 | |||||||||
Subtotal | 180 | 307 | 254 | |||||||||
Total Company | $ | 3,118 | $ | 3,270 | $ | 3,110 | ||||||
Average Dayrates(1) |
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Three months ended | ||||||||||||
March 31,
2009 |
December 31,
2008 |
March 31,
2008 |
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High-Specification Floaters: | ||||||||||||
Ultra-Deepwater Floaters | $ | 451,000 | $ | 423,600 | $ | 380,800 | ||||||
Deepwater Floaters | $ | 336,900 | $ | 299,000 | $ | 284,100 | ||||||
Harsh Environment Floaters | $ | 351,100 | $ | 358,900 | $ | 344,000 | ||||||
Total High-Specification Floaters | $ | 393,800 | $ | 370,500 | $ | 340,900 | ||||||
Midwater Floaters | $ | 314,700 | $ | 329,200 | $ | 292,300 | ||||||
High-Specification Jackups | $ | 169,500 | $ | 169,100 | $ | 173,800 | ||||||
Standard Jackups | $ | 156,400 | $ | 156,100 | $ | 146,200 | ||||||
Other Rigs | $ | 46,700 | $ | 37,800 | $ | 21,200 | ||||||
Total Drilling Fleet | $ | 256,500 | $ | 251,500 | $ | 228,400 | ||||||
Utilization(1) |
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Three months ended |
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March 31,
2009 |
December 31,
2008 |
March 31,
2008 |
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High-Specification Floaters: | ||||||||||||
Ultra-Deepwater Floaters | 96 | % | 96 | % | 98 | % | ||||||
Deepwater Floaters | 85 | % | 75 | % | 79 | % | ||||||
Harsh Environment Floaters | 100 | % | 100 | % | 96 | % | ||||||
Total High-Specification Floaters | 92 | % | 88 | % | 90 | % | ||||||
Midwater Floaters | 89 | % | 92 | % | 88 | % | ||||||
High-Specification Jackups | 99 | % | 94 | % | 99 | % | ||||||
Standard Jackups | 89 | % | 90 | % | 93 | % | ||||||
Other Rigs | 99 | % | 99 | % | 100 | % | ||||||
Total Drilling Fleet | 91 | % | 90 | % | 91 | % |
(1) | Average daily revenue is defined as contract drilling revenue earned per revenue earning day in the period. A revenue earning day is defined as a day for which a rig earns dayrate after commencement of operations. Utilization is defined as the total actual number of revenue earning days in the period as a percentage of the total number of calendar days in the period for all drilling rigs in our fleet. |
Transocean Ltd. and Subsidiaries | |||||||||||
Non-GAAP Financial Measures and Reconciliations | |||||||||||
Operating Income Before General and Administrative Expense | |||||||||||
to Field Operating Income | |||||||||||
(In millions) | |||||||||||
Three months ended | |||||||||||
Mar. 31, | Dec. 31, | Mar. 31, | |||||||||
2009 | 2008 | 2008 | |||||||||
Operating revenue | $ | 3,118 | $ | 3,270 | $ | 3,110 | |||||
Operating and maintenance expense | 1,171 | 1,408 | 1,157 | ||||||||
Depreciation, depletion and amortization | 355 | 396 | 367 | ||||||||
Impairment loss | 221 | 320 | - | ||||||||
(Gain) loss from disposal of assets, net | 4 | 3 | (3 | ) | |||||||
Operating income before general and administrative expense | 1,367 | 1,143 | 1,589 | ||||||||
Add back (subtract): | |||||||||||
Depreciation, depletion and amortization | 355 | 396 | 367 | ||||||||
Impairment loss | 221 | 320 | - | ||||||||
(Gain) loss from disposal of assets, net | 4 | 3 | (3 | ) | |||||||
Field operating income | $ | 1,947 |
|
$ | 1,862 | $ | 1,953 |
Transocean Ltd. and Subsidiaries | ||||||||||||||
Supplemental Effective Tax Rate Analysis | ||||||||||||||
(In millions) | ||||||||||||||
Three months ended | ||||||||||||||
Mar. 31, | Dec. 31, | Mar. 31, | ||||||||||||
2009 | 2008 | 2008 | ||||||||||||
(As adjusted) | ||||||||||||||
Income before income taxes | $ | 1,190 | $ | 963 | $ | 1,368 | ||||||||
Add back (subtract): | ||||||||||||||
Impairment loss | 221 | 326 | - | |||||||||||
Change to estimated useful lives of certain GSF rigs | - | 46 | - | |||||||||||
Sedco 712 bad debt provision | - | 23 | - | |||||||||||
Inventory obsolescence provision | - | 21 | - | |||||||||||
GSF Merger related costs | 6 | 2 | - | |||||||||||
Contract termination fee - Transocean Nordic | - | (17 | ) | - | ||||||||||
Income from TODCO tax sharing agreement | - | (4 | ) | - | ||||||||||
Loss on retirement of debt | 2 | - | - | |||||||||||
Adjusted income before income taxes | 1,419 | 1,360 | 1,368 | |||||||||||
Income tax expense | 251 | 210 | 218 | |||||||||||
Add back (subtract): | ||||||||||||||
GSF Merger related costs | 1 | - | - | |||||||||||
Impairment loss | - | 17 | - | |||||||||||
Sedco 712 bad debt provision | - | 6 | - | |||||||||||
Materials and supplies obsolescence provision | - | 3 | - | |||||||||||
Changes in estimates (1) | (37 | ) | (14 | ) | (27 | ) | ||||||||
Adjusted income tax expense (2) | $ | 215 | $ | 222 | $ | 191 | ||||||||
Effective Tax Rate (3) | 21.1 | % | 21.8 | % | 15.9 | % | ||||||||
Annual Effective Tax Rate (4) | 15.2 | % | 16.3 | % | 14.0 | % | ||||||||
(1) |
|
Our estimates change as we file tax returns, settle disputes with tax authorities or become aware of other events and include changes in deferred taxes valuation allowances on deferred taxes and other tax liabilities. | ||||||||||||
(2) |
|
The three months ended Dec. 31, 2008 include $28 million of additional tax expense (benefit) reflecting the catch-up effect of an increase (decrease) in the annual effective tax rate from the previous quarter estimate. | ||||||||||||
(3) |
|
Effective Tax Rate is income tax expense divided by income before income taxes. | ||||||||||||
(4) |
|
Annual Effective Tax Rate is income tax expense excluding various discrete items (such as changes in estimates and tax on items excluded from income before income taxes) divided by income before income taxes excluding gains on sales and similar items pursuant to Financial Accounting Standards Board Interpretation No. 18. |
Source:
Transocean Ltd.
Analyst Contact:
Gregory S. Panagos,
713-232-7551
or
Media Contact:
Guy A. Cantwell,
713-232-7647