NYSE: RIG 4.44 0.1 2.2% 11:26 A.M. ET
Share Page Print Page
Back to all news articles

Transocean Inc. Reports First Quarter 2003 Results

April 29, 2003

HOUSTON--(BUSINESS WIRE)--April 29, 2003--Transocean Inc.(NYSE:RIG) today announced that net income for the three months endedMarch 31, 2003 was $47.2 million, or $0.15 per diluted share, onrevenues of $616.0 million. The first quarter 2003 results compare toa net loss of $1,286.4 million, or $3.98 per diluted share on revenuesof $667.9 for the three months ended March 31, 2002. Results for thefirst three months of 2002 included a non-cash charge of $1,363.7million, or $4.22 per diluted share, to reflect the impairment ofgoodwill associated with the company's Gulf of Mexico Shallow andInland Water reporting unit following the January 2002 adoption ofStatement of Financial Accounting Standards 142, Goodwill and OtherIntangible Assets. Excluding the non-cash charge for impairment ofgoodwill, net income for the three months ended March 31, 2002 was$77.3 million, or $0.24 per diluted share.

Operating revenues from the company's International and U.S.Floater Contract Drilling Services business segment totaled $562.7million during the three months ended March 31, 2003, an 8% declinefrom revenues of $612.6 million recorded for the three months endedDecember 31, 2002. Operating revenues for the first quarter of 2003included $21.6 million related to costs incurred and billed tocustomers on a reimbursable basis. Prior to 2003, similar items werereflected as a reduction of operating and maintenance expense. Thedecline in segment revenues was due primarily to lower semisubmersibledayrates in the North Sea, reduced activity in Southeast Asia andplanned downtime and contract preparation on two of our deepwaterrigs. Operating income before general and administrative expense forthis segment was $144.0 million for the three months ended March 31,2003 as compared to a $2,309.8 million loss for the fourth quarter of2002, which included a non-cash charge of $2,494.1 million pertainingto the impairment of goodwill. Field operating income (defined asrevenues less operating and maintenance expenses) of $247.2 milliondeclined 16% during the three months ended March 31, 2003, compared tofield operating income of $295.8 million achieved in the fourthquarter of 2002. The reduction in field operating income was causedprimarily by declining revenues, while operating and maintenanceexpenses remained essentially unchanged from levels in the fourthquarter of 2002 due in part to the change noted above on reimbursablecosts. At April 29, 2003, the company had 58% of the remaining fleetdays in 2003 associated with this business segment committed to firmcontracts, up from 51% at January 30, 2003.

Operating revenues from the company's Gulf of Mexico Shallow andInland Water business segment were $53.3 million during the threemonths ended March 31, 2003, up 3% from levels experienced in thefourth quarter of 2002. Operating revenues for the first quarter of2003 included $4.8 million related to costs incurred and billed tocustomers on a reimbursable basis. Operating loss before general andadministrative expense for this segment was $28.5 million for thefirst quarter of 2003 compared to an operating loss of $403.5 millionfor the fourth quarter of 2002, which included a non-cash charge of$381.9 million pertaining to impairment of goodwill. A field operatingloss of $5.3 million was recorded during the first quarter of 2003,compared to field operating income of $2.3 million during the fourthquarter of 2002. The field operating loss in the first quarter of 2003was due chiefly to higher operating and maintenance expensesassociated with jackup rigs being activated for service.

Cash flow from operations was $190.8 million during the threemonths ended March 31, 2003 and cash and cash equivalents increased to$1,520.4 million, from $1,214.2 million at December 31, 2002.Long-term debt plus debt due within one year (total debt) at March 31,2003 equaled $4,619.8 million compared to total debt of $4,678.0million at December 31, 2002. Net Debt (defined as total debt lesscash and cash equivalents and swap receivables) declined to $3,099.4million at March 31, 2003, from $3,282.5 million at December 31, 2002.

Robert L. Long, President and Chief Executive Officer ofTransocean Inc., stated, \"Mid-water semisubmersible dayrates in theNorth Sea and activity in Southeast Asia have deteriorated and theselower levels could persist through the balance of the year. Also, theGulf of Mexico market segment for deepwater rigs continues to beover-supplied, resulting in periodic downtime on some units.Furthermore, while we have seen some signs of increased activity inour Gulf of Mexico Shallow and Inland Water business segment, therecovery to date has been limited. As a result of the uncertainty inthe market, along with scheduled shipyard and rig reactivationprograms, the previously announced labor dispute in Nigeria and ananticipated loss associated with the early retirement of debt, thecompany expects a deterioration in its financial results for thesecond quarter of 2003. Due to the number of jurisdictions where weoperate which impose taxes that are effectively based on revenuerather than on net profits, these results are expected to lead to ahigher effective tax rate. In summary, the remainder of 2003 continuesto develop as a difficult year for our business.\"

Conference Call Information

The company will conduct a teleconference call at 10:00 a.m. EDTon April 29, 2003. Individuals who wish to participate in theteleconference call should dial 212-329-1454 approximately five to 10minutes prior to the scheduled start time of the call.

In addition, the conference call will be simultaneously broadcastover the Internet in a listen-only mode and can be accessed by loggingonto the company's website at www.deepwater.com and selecting\"Investor Relations.\" It may also be accessed via the internet atwww.CompanyBoardroom.com by typing in the company's New York StockExchange trading symbol, \"RIG.\"

A telephonic replay of the conference call should be availableafter 1:00 p.m. EDT on April 29 and can be accessed by dialing303-590-3000 and referring to the passcode 533691. Also, a replay willbe available through the internet and can be accessed by visitingeither of the above-websites. Both replay options will be availablefor approximately 30 days.

Monthly Fleet Update Information

Drilling rig status and contract information on Transocean Inc.'soffshore drilling fleet has been condensed into two reports titled\"Monthly Fleet Update\" and \"Monthly Fleet Update - Jackups andBarges,\" which are available through the company's website atwww.deepwater.com. The reports are located in the \"InvestorRelations/Financial Reports\" section of the website. By subscribing tothe Transocean Financial Report Alert, you will be immediatelynotified when new postings are made to this page by an automatede-mail that will provide a link directly to the page that has beenupdated. Shareholders and other interested parties are invited to signup for this service.

Statements regarding future market conditions, dayrates, activitylevels, downtime, shipyard and rig reactivation programs, anticipatedloss associated with debt retirement, effective tax rate, financialresults, estimated contract duration, contract commencement dates andlocations, as well as any other statements that are not historicalfacts in this release or our monthly fleet update, are forward-lookingstatements that involve certain risks, uncertainties and assumptions.These include but are not limited to the future price of oil and gas,demand for rigs, operating hazards and delays, risks associated withinternational operations, actions by customers and other thirdparties, competition, risks of drilling, contract terminations orsuspensions and other factors detailed in the company's most recentForm 10-K for the year ended December 31, 2002 and other filings withthe Securities and Exchange Commission. Should one or more of theserisks or uncertainties materialize, or should underlying assumptionsprove incorrect, actual results may vary materially from thoseindicated.

Transocean Inc. is the world's largest offshore drillingcontractor with more than 170 full or partially owned and managedmobile offshore drilling units, inland drilling barges and otherassets utilized in the support of offshore drilling activitiesworldwide. The company's mobile offshore drilling fleet is consideredone of the most modern and versatile in the world with 13fifth-generation semisubmersibles and drillships, 15 other deepwatersemisubmersibles and drillships, 32 mid-water semisubmersibles anddrillships and 55 jackup drilling rigs. Transocean Inc. specializes intechnically demanding segments of the offshore drilling business,including industry-leading positions in deepwater and harshenvironment drilling services. With a current equity marketcapitalization in excess of $6 billion, the company's ordinary sharesare traded on the New York Stock Exchange under the symbol \"RIG.\"

                   TRANSOCEAN INC. AND SUBSIDIARIES            CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS                 (In millions, except per share data)                              (Unaudited)                                                  Three Months Ended                                                        March 31,                                                  --------------------                                                    2003      2002                                                  --------- ----------Operating Revenues Contract Drilling Revenues                         $589.6     $667.9 Client Reimbursable Revenues                         26.4          -                                                     616.0      667.9Costs and Expenses  Operating and maintenance                          374.1      381.0  Depreciation                                       126.8      125.6  General and administrative                          13.9       19.8  Impairment loss on long-lived assets                 1.0        1.1  Gain from sale of assets, net                       (1.4)      (1.9)                                                     514.4      525.6Operating Income                                     101.6      142.3Other Income (Expense), net  Equity in earnings of joint ventures                 3.6        1.9  Interest income                                      6.9        4.2  Interest expense                                   (52.6)     (55.9)  Other, net                                          (0.6)      (0.7)                                                     (42.7)     (50.5)Income Before Income Taxes, Minority Interest and Cumulative Effect of a Change in Accounting Principle                                            58.9       91.8Income Tax Expense                                    11.8       13.8Minority Interest                                     (0.1)       0.7Net Income Before Cumulative Effect of a Change in Accounting Principle                                 47.2       77.3Cumulative Effect of  a Change in Accounting Principle                                               -   (1,363.7)Net Income (Loss)                                    $47.2  $(1,286.4)Basic Earnings (Loss) Per Share  Income Before Cumulative Effect of a Change in   Accounting Principle                              $0.15      $0.24  Loss on Cumulative Effect of a Change in   Accounting Principle                                  -      (4.27)   Net Income (Loss)                                 $0.15     $(4.03)Diluted Earnings (Loss) Per Share  Income Before Cumulative Effect of a Change in   Accounting Principle                              $0.15      $0.24  Loss on Cumulative Effect of a Change in   Accounting Principle                                  -      (4.22)   Net Income (Loss)                                 $0.15     $(3.98)Weighted Average Shares Outstanding  Basic                                              319.7      319.1  Diluted                                            321.6      323.1                   TRANSOCEAN INC. AND SUBSIDIARIES                 CONDENSED CONSOLIDATED BALANCE SHEETS                   (In millions, except share data)                                               March 31,  December 31,                                              ----------- ------------                                                 2003        2002                                              ----------- ------------                                              (Unaudited)                                ASSETSCash and Cash Equivalents                       $1,520.4     $1,214.2Accounts Receivable   Trade                                           417.3        437.6   Other                                            64.4         61.7Materials and Supplies                             157.1        155.8Deferred Income Taxes                               17.1         21.9Other Current Assets                                53.7         20.5Total Current Assets                             2,230.0      1,911.7Property and Equipment                          10,201.6     10,198.0Less Accumulated Depreciation                    2,290.2      2,168.2Property and Equipment, net                      7,911.4      8,029.8Goodwill, net                                    2,190.6      2,218.2Investments in and Advances to Joint Ventures      110.7        108.5Deferred Income Taxes                               26.2         26.2Other Assets                                       193.5        370.7   Total Assets                                $12,662.4    $12,665.1                 LIABILITIES AND SHAREHOLDERS' EQUITYAccounts Payable                                  $132.6       $134.1Accrued Income Taxes                                18.8         59.5Debt Due Within One Year                         1,051.7      1,048.1Other Current Liabilities                          295.2        262.2   Total Current Liabilities                     1,498.3      1,503.9Long-Term Debt                                   3,568.1      3,629.9Deferred Income Taxes                              102.4        107.2Other Long-Term Liabilities                        291.9        282.7   Total Long-Term Liabilities                   3,962.4      4,019.8Commitments and ContingenciesPreference Shares, $0.10 par value; 50,000,000 shares authorized, none issued and outstanding                                       -            -Ordinary Shares, $0.01 par value; 800,000,000 shares authorized, 319,768,212 and 319,219,072 shares issued and outstanding at March 31, 2003 and December 31, 2002, respectively                                        3.2          3.2Additional Paid-in Capital                      10,635.8     10,623.1Accumulated Other Comprehensive Loss               (31.1)       (31.5)Retained Deficit                                (3,406.2)    (3,453.4)   Total Shareholders' Equity                    7,201.7      7,141.4   Total Liabilities and Shareholders' Equity  $12,662.4    $12,665.1                   TRANSOCEAN INC. AND SUBSIDIARIES            CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS                             (In millions)                              (Unaudited)                                                  Three Months Ended                                                        March 31,                                                  --------------------                                                    2003      2002                                                  --------- ----------Cash Flows from Operating Activities   Net income (loss)                                 $47.2  $(1,286.4)   Adjustments to reconcile net income (loss) to      net cash provided by operating activities    Depreciation                                     126.8      125.6    Impairment loss on goodwill                          -    1,363.7    Stock-based compensation expense                   1.5        0.2    Deferred income taxes                             27.6      (23.3)    Equity in earnings of joint ventures              (3.6)      (1.9)    Net gain from disposal of assets                  (0.7)         -    Impairment loss on long-lived assets               1.0        1.1    Amortization of debt-related discounts/     premiums, fair value adjustments     and issue costs, net                             (1.8)       1.3    Deferred income, net                               7.0       (5.4)    Deferred expenses, net                            (4.8)       7.4    Other, net                                         5.8        5.0    Changes in operating assets and liabilities       Accounts receivable                            17.6       (8.9)       Accounts payable and other current        liabilities                                   42.4       (4.6)       Income taxes receivable/payable, net          (40.7)      15.8       Other current assets                          (34.5)     (27.6)Net Cash Provided by Operating Activities            190.8      162.0Cash Flows from Investing Activities Capital expenditures                                (24.4)     (47.7) Proceeds from disposal of assets, net                 2.2       43.4 Joint ventures and other investments, net             1.4       (3.6)Net Cash Used in Investing Activities                (20.8)      (7.9)Cash Flows from Financing Activities Repayments under commercial paper program               -     (326.4) Repayments on other debt instruments                (47.8)     (85.0) Cash from termination of interest rate swaps        173.5          - Net proceeds from issuance of ordinary shares  under stock-based compensation plans                10.9        9.1 Dividends paid                                          -       (9.6) Financing costs                                         -       (8.2) Other, net                                           (0.4)       0.7Net Cash Provided by (Used in) Financing Activities                                          136.2     (419.4)Net Increase (Decrease) in Cash and Cash Equivalents                                         306.2     (265.3)Cash and Cash Equivalents at Beginning of Period   1,214.2      853.4Cash and Cash Equivalents at End of Period        $1,520.4     $588.1                            Transocean Inc.                      Fleet Operating Statistics                                     Operating Revenues ($Millions)(1)                                     ---------------------------------                                            Three Months Ended                                     ---------------------------------International and U.S. Floater       March 31, December 31, March 31, Contract Drilling Services Segment:    2003       2002        2002                                     --------- ------------ ----------Contract Drilling Revenues    Deepwater:        5th Generation                 $175.7       $182.6     $149.5        Other Deepwater                $116.2       $159.0     $133.9    Total Deepwater                    $291.9       $341.6     $283.4    Mid-Water                          $115.1       $137.5     $190.7    Jackups - Non-U.S.                 $115.3       $114.5     $124.1    Other Rigs                          $18.8        $19.0      $25.0Subtotal                               $541.1       $612.6     $632.2    Client Reimbursables                $21.6            -          -Segment Total                          $562.7       $612.6     $623.2Gulf of Mexico Shallow and Inland Water Segment:Contract Drilling Revenues    Jackups and Submersibles            $18.7        $20.8      $13.4    Inland Barges                       $23.0        $24.8      $21.7    Other                                $6.8         $6.4       $9.6Subtotal                                $48.5        $52.0      $44.7    Client Reimbursables                 $4.8            -          -Segment Total                           $53.3        $52.0      $44.7Total Company                          $616.0       $664.6     $667.9                                         Average Dayrates (1) (2)                                     ---------------------------------                                            Three Months Ended                                     ---------------------------------International and U.S. Floater       March 31,  December 31, March 31, Contract Drilling Services Segment:    2003        2002        2002                                     ---------- ------------ ---------    Deepwater:        5th Generation                $183,800     $188,700  $185,800        Other Deepwater               $113,600     $120,400  $120,800    Total Deepwater                   $147,500     $149,300  $148,100    Mid-Water                          $77,200      $84,400   $81,500    Jackups - Non-U.S.                 $56,900      $57,700   $58,700    Other Rigs                         $43,200      $36,200   $42,500Segment Total                          $91,600      $96,100   $90,100Gulf of Mexico Shallow and Inland Water Segment:    Jackups and Submersibles           $20,100      $21,900   $22,200    Inland Barges                      $17,600      $19,600   $19,200    Other Rigs                         $18,100      $18,700   $17,500Segment Total                          $18,500      $20,300   $19,600Total Mobile Offshore Drilling Fleet   $69,100      $74,300   $72,500                                            Utilization (1) (2)                                     ---------------------------------                                            Three Months Ended                                     ---------------------------------International and U.S. Floater       March 31, December 31, March 31, Contract Drilling Services Segment:    2003       2002        2002                                     --------- ------------ ----------    Deepwater:        5th Generation                     97%          96%        81%        Other Deepwater                    76%          96%        82%    Total Deepwater                        85%          96%        82%    Mid-Water                              53%          57%        81%    Jackups - Non-U.S.                     87%          83%        90%    Other Rigs                             36%          48%        61%Segment Total                              69%          74%        82%Gulf of Mexico Shallow and Inland Water Segment:    Jackups and Submersibles               32%          33%        22%    Inland Barges                          47%          44%        40%    Other Rigs                             32%          29%        55%Segment Total                              38%          37%        35%Total Mobile Offshore Drilling Fleet       55%          58%        61%(1) Certain reclassifications have been made to prior periods to    conform to current quarter presentation.(2) Average dayrates are defined as contract drilling revenue    earned per revenue earning day and utilization is defined    as the percentage of revenue earning days to days available.    Effective January 1, 2003, the calculation of average dayrates    and utilization has changed to include all active assets.    Prior periods have been restated to reflect the change.                   Transocean Inc. and Subsidiaries           Non-GAAP Financial Measures and Reconciliations                          (in US$ millions)                                                For the Quarter Ended                                               -----------------------                                               March 31,  December 31,                                                 2003        2002                                               ---------- ------------Operating Income (Loss) Before General and Administrative Expenses to Field Operating Income (Loss) by Segment ReconciliationInternational and U.S. Floater ContractDrilling Services Segment  Operating income (loss) before general and   administrative expense                         $144.0    $(2,309.8)  Add back: Depreciation                           103.6        103.1            Impairment loss on long-lived             assets                                  1.0      2,502.4            (Gain) loss from sale of assets,             net                                    (1.4)         0.1                                               ---------- ------------  Field operating income                          $247.2       $295.8                                               ---------- ------------Gulf of Mexico Shallow and Inland WaterSegment  Operating loss before general and   administrative expense                         $(28.5)     $(403.5)  Add back: Depreciation                            23.2         23.1            Impairment loss on long-lived             assets                                    -        383.0            (Gain) loss from sale of assets,             net                                       -         (0.3)                                               ---------- ------------  Field operating income (loss)                    $(5.3)        $2.3                                               ---------- ------------                                                        As of                                               -----------------------                                               March 31,  December 31,                                                 2003        2002                                               ---------- ------------Total Debt to Net Debt ReconciliationTotal Debt                                      $4,619.8     $4,678.0  Less:     Cash and cash equivalents            1,520.4      1,214.2            Swap Receivables                           -        181.3                                               ---------- ------------Net Debt                                        $3,099.4     $3,282.5                                               ---------- ------------Total Capital  Total Shareholders' Equity                    $7,201.7     $7,141.4  Add Back: Total Debt                           4,619.8      4,678.0                                               ---------- ------------Total Capital                                  $11,821.5    $11,819.4                                               ---------- ------------Total Capital to Tangible Capital Reconciliation   Total Shareholders' Equity                   $7,201.7     $7,141.4  Add Back: Net Debt (see calculation above)     3,099.4      3,282.5  Less:     Goodwill, net                       (2,190.6)    (2,218.2)                                               ---------- ------------Tangible Capital                                $8,110.5     $8,205.7                                               ---------- ------------Debt/Total Capital                                  39.1%        39.6%Net Debt/Tangible Capital                           38.2%        40.0%

CONTACT:
Transocean Inc.
Analyst Contact:
Jeffrey L. Chastain, 713/232-7551
Media Contact:
Guy A. Cantwell, 713/232-7647

SOURCE: Transocean Inc.