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Transocean Inc. Reports Third Quarter 2004 Results

October 26, 2004

HOUSTON--(BUSINESS WIRE)--Oct. 26, 2004--Transocean Inc.(NYSE:RIG) today reported net income for the three months endedSeptember 30, 2004 of $154.9 million, or $0.48 per diluted share, onrevenues of $651.8 million. The results compare to net income of $11.0million, or $0.03 per diluted share, on revenues of $622.9 million,for the corresponding three months in 2003. Net income adjusted(1) forthe September 2004 TODCO secondary offering was $25.5 million, or$0.08 per diluted share, for the three months ended September 30,2004. This result compares to net income of $19.0 million, or $0.06per diluted share, for the corresponding three months in 2003, afteradjusting for initial public offering (IPO)-related costs associatedwith TODCO.

For the nine months ended September 30, 2004, net income totaled$225.6 million, or $0.70 per diluted share, on revenues of $1,937.0million, compared to net income of $13.7 million, or $0.04 per dilutedshare, on revenues of $1,842.8 million during the corresponding ninemonths in 2003. Net income adjusted(1) for the TODCO offerings, thesale of semisubmersible rig Sedco 602, early retirement of debt andTODCO IPO-related costs was $101.4 million, or $0.31 per dilutedshare, for the nine months ended September 30, 2004. For the ninemonths ended September 30, 2003, net income adjusted(1) for assetimpairment charges, early retirement of debt, TODCO IPO-relatedcharges and a favorable resolution of a non-U.S. income tax liabilitywas $47.5 million, or $0.15 per diluted share.

Transocean Drilling Segment - Revenues for the three months endedSeptember 30, 2004 were $558.7 million, compared to revenues of $552.5million during the three months ended June 30, 2004. The slightimprovement was due chiefly to improved performance of the company'sHigh-Specification Floaters (semisubmersibles and drillships), as bothaverage utilization and dayrates increased from the preceding threemonths, partially offset by the Trident 20 incident, which reducedrevenues in the quarter by approximately $8 million. Revenues wouldhave been an estimated $13 million higher, absent the Norwegian laborstrike, which affected three rigs in the company's fleet. TheTransocean Arctic, which returned to work in Norway on August 30following 30 months of being idle, contributed to the improvedutilization while higher average dayrates were driven in part bycontract signings on the deepwater semisubmersible rig Cajun Expressand drillships Deepwater Pathfinder and Deepwater Millennium.Operating income before general and administrative expenses,(2)including the gain on the TODCO secondary offering, was $218.1 millionand field operating income (defined as revenue less operating andmaintenance expenses) was $198.2 million for the three months endedSeptember 30, 2004. The figures compared to operating income beforegeneral and administrative expense and field operating income of$127.2 million and $214.4 million, respectively, for the three monthsended June 30, 2004. Operating and maintenance costs during the thirdquarter of 2004 increased 6.6% from levels in the preceding quarterdue primarily to increased activity from semisubmersibles TransoceanArctic, Sedco 600 and Sovereign Explorer, as well as costs ofapproximately $7.0 million associated with repairs to the jackup rigTrident 20. Utilization of the segment's 94-rig fleet for the threemonths ended September 30, 2004 was 67%, including 81% utilizationamong the High-Specification Floaters compared to utilization of 68%for the segment and 79% for the High-Specification Floaters for thepreceding three months in 2004. Average dayrates for the segment's94-rig fleet improved to $90,700, including an average dayrate of$142,200 for the High-Specification Floaters for the three monthsended September 30, 2004 compared to average dayrates of $89,100 and$141,100, respectively, for the preceding three months in 2004.

Customer demand for offshore drilling units continues to improvein several offshore drilling regions, providing contract opportunitiesgenerally of longer durations and increasing dayrates, a trend thecompany believes should continue into 2005. This trend is mostpronounced in the company's High-Specification Floaters fleet, ascustomers address their 2005 deepwater exploration and developmentdrilling requirements with what the company believes is a preferencetoward the enhanced efficiency of Fifth-Generation units. In August,the company signed the deepwater semisubmersible rig Sedco Express toa three-year contract in Angola and has recently received a contractfor the drillship Deepwater Millennium for six months plus three,six-month options. Also, the drillship Deepwater Pathfinder willmobilize from the U.S. Gulf of Mexico to Nigeria for an anticipatedmulti-well, term project to commence during the fourth quarter of2004. One of the company's Other Deepwater units, the semisubmersiblerig Transocean Rather, is currently en route to the North Sea fromWest Africa to commence an expected drilling project during early-2005in the North Atlantic. Although the current outlook for the industry's24 Fifth-Generation Floaters is excellent, with the possibility ofdemand for these units exceeding supply during 2005, certainTransocean Fifth-Generation rigs are at risk of limited periods ofdowntime in the near-term, as they transition between contracts.Presently, the drillship Deepwater Millennium is idle in the U.S. Gulfof Mexico following completion of a contract. The rig is expected tocommence its new contract on December 1, 2004.

The company's Other Floaters fleet has experienced significantunder-utilization during 2004; however, improved business conditionsare evident in certain regions like the U.K. sector of the North Seaand U.S. Gulf of Mexico. The company has recently received twocontracts and a contract extension on three of its semisubmersibles inthe U.K. sector of the North Sea and, as a result of increasedcustomer demand, is in the process of reactivating two previouslystacked semisubmersibles for drilling programs that are expected tocommence during the first quarter of 2005. The two contract signings,on the semisubmersible rigs Sedco 704 and Transocean John Shaw, are atdayrates of $91,000 and $85,000, respectively, which are evidence ofthe improving drilling environment. The company is also reviewingopportunities to reactivate one or two of its idle semisubmersibles inthe U.S. Gulf of Mexico.

Customer demand for international jackup rigs remains steady,especially in the Far East and Middle East regions, with utilizationand dayrates expected to remain firm to modestly higher through 2005.The company has completed the previously announced mobilizations ofjackup rigs Trident VI and J.T. Angel to India and Indonesia,respectively, with both units expected to commence new contractsduring the fourth quarter of 2004. Mobilization of the jackup rigShelf Explorer to Indonesia is in progress, with the rig expected tocommence a new contract by late-fourth quarter 2004.

The company remains exposed to certain events during the fourthquarter of 2004 which could reduce profitability over the final threemonths of the year. These events include the Norwegian labor strike,which has entered its 16th week, affecting the semisubmersible rigsTransocean Leader, Transocean Searcher and Polar Pioneer, and ongoingrepairs to the semisubmersible rig Jim Cunningham and jackup rigTrident 20 following operational incidents. The two rigs are expectedto be out of service for the majority of the quarter with repair, crewand other costs in the quarter estimated to be in a range of $20million to $25 million. Also, downtime will be incurred on thedrillship Deepwater Pathfinder and semisubmersible rig TransoceanRather as the units mobilize to Nigeria and the North Sea,respectively. Finally, the drillship Deepwater Millennium could beidle for approximately 45 days as it transitions between contracts.

Effective Tax Rate(3) - Tax expense for the third quarter of 2004totaled $6.3 million, or 3.9% of pretax income for the quarter. Thecompany's estimated effective tax rate for the fourth quarter and fullyear is expected to be approximately 44%. This rate includes nearly 7percentage points associated with an increase in the valuationallowance established at the time of the TODCO IPO. The estimatedeffective tax rate is subject to change and could vary significantlyfrom current expectations.

TODCO Segment - Revenues for the three months ended September 30,2004 were $93.1 million. The segment reported an operating loss beforegeneral and administrative expenses(2) of $2.4 million and fieldoperating income(2) of $20.7 million for the three months endedSeptember 30, 2004.

Liquidity - Cash flow from operations totaled $506.6 million forthe nine months ended September 30, 2004. Total debt at September 30,2004 was $3,061.4 million. Net debt(4) was $2,285.6 million atSeptember 30, 2004, down 28% from $3,184.1 million at December 31,2003. On October 25, 2004, the company completed the redemption of its$342.3 million face value, 6.75% Senior Notes due April 2005. A losson redemption of $3.3 million will be recognized in the fourth quarterof 2004.

Conference Call Information

Transocean will conduct a teleconference call at 10:00 a.m. ET onOctober 26, 2004. To participate, dial 303-262-2075 approximately fiveto 10 minutes 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. ET on October 26 and can be accessed by dialing303-590-3000 and referring to the passcode 11011131. Also, a replaywill be available through the Internet and can be accessed by visitingeither of the above-referenced Worldwide Web addresses.

TODCO, a publicly traded company in which Transocean owns amajority voting interest, will also conduct a teleconference call at9:00 a.m. ET on October 26, 2004. To participate, dial 800-967-7141approximately five to 10 minutes prior to the scheduled start time ofthe call. TODCO's conference call will be simultaneously broadcastover the Internet in a listen-only mode and can be accessed by loggingonto the TODCO website at www.theoffshoredrillingcompany.com. For moreinformation, see TODCO's website.

Monthly Fleet Update Information

Drilling rig status and contract information on Transocean Inc.'soffshore drilling fleet has been condensed into a report titled\"Monthly Fleet Update,\" which is available through the company'swebsite at www.deepwater.com. The report is 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.

Forward-Looking Disclaimer

Statements regarding future opportunities and outlook for thecompany, including the company's Transocean Drilling business segment,dayrates, contract duration, rig utilization, commencement dates,downtime, business conditions, reactivation of rigs, drillingactivity, contract opportunities, revenues, profitability, theduration and financial impact of a labor strike in Norway, rigmobilizations, the Jim Cunningham and Trident 20 repair time, costsand contract status, the effective tax rate, as well as any otherstatements that are not historical facts in this release, areforward-looking statements that involve certain risks, uncertaintiesand assumptions. These include but are not limited to operatinghazards and delays, risks associated with international operations,effect of strike and other labor relations issues, effect of fire,future financial results, actions by customers and other thirdparties, the future price of oil and gas and other factors detailed inthe company's most recent Form 10-K and other filings with theSecurities and Exchange Commission. Should one or more of these risksor uncertainties materialize, or should underlying assumptions proveincorrect, actual results may vary materially from those indicated.

Transocean Inc. is the world's largest offshore drillingcontractor with a fleet of 94 mobile offshore drilling units,excluding the 70-rig fleet of TODCO, a publicly traded drillingcompany in which Transocean Inc. has a majority voting interest. Thecompany's mobile offshore drilling fleet, consisting of a large numberof high-specification deepwater and harsh environment drilling units,is considered one of the most modern and versatile in the world due toits emphasis on technically demanding segments of the offshoredrilling business. The company's fleet consists of 32High-Specification Floaters (semisubmersibles and drillships), 25Other Floaters, 26 Jackup Rigs and other assets utilized in thesupport of offshore drilling activities worldwide. With a currentequity market capitalization in excess of $11 billion, TransoceanInc.'s ordinary shares are traded on the New York Stock Exchange underthe symbol \"RIG.\"

(1) Net income adjusted for certain items, a non-GAAP measure, iscomputed by subtracting from or adding to net income, a GAAP measure,items that occurred during the three and nine months ended September30, 2004 and 2003 and are considered by management to be outside thenormal course of operations. A reconciliation for the periods reportedmay be found in the accompanying schedule titled Non-GAAP FinancialMeasures and Reconciliations - Adjusted Net Income and DilutedEarnings Per Share.

(2) For a reconciliation of segment operating income beforegeneral and administrative expense to field operating income, see theaccompanying schedule titled Non-GAAP Financial Measures andReconciliations - Operating Income (Loss) Before General andAdministrative Expense to Field Operating Income (Loss) by Segment.

(3) For the analysis of the effective tax rate, see theaccompanying schedule titled Effective Tax Rate Analysis.

(4) Net Debt is a non-GAAP measure defined as total debt less cashand cash equivalents. A reconciliation for the periods reported may befound in the accompanying schedule titled Non-GAAP Financial Measuresand Reconciliations - Total Debt to Net Debt Reconciliations.

                   TRANSOCEAN INC. AND SUBSIDIARIES            CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS                 (In millions, except per share data)                              (Unaudited)                                Three Months Ended  Nine Months Ended                                  September 30,       September 30,                                ------------------ -------------------                                   2004     2003      2004      2003                                --------- -------- --------- ---------Operating Revenues Contract drilling revenues       $607.1   $597.0  $1,789.5  $1,759.2 Other revenues                     44.7     25.9     147.5      83.6                                   651.8    622.9   1,937.0   1,842.8Costs and Expenses  Operating and maintenance        432.9    403.0   1,251.5   1,203.6  Depreciation                     133.9    126.8     398.4     381.1  General and administrative        15.2     21.2      44.3      50.0  Impairment loss on long-lived   assets                              -        -         -      16.8  Gain from sale of assets, net     (1.3)    (0.9)    (28.9)     (2.9)  Gain from TODCO offerings       (129.4)       -    (168.8)        -                                   451.3    550.1   1,496.5   1,648.6Operating Income                   200.5     72.8     440.5     194.2Other Income (Expense), net  Equity in earnings of joint   ventures                          1.7      1.9       7.7       7.3  Interest income                    2.5      3.0       6.5      15.7  Interest expense                 (42.6)   (49.0)   (132.6)   (154.4)  Loss on retirement of debt           -        -     (28.1)    (15.7)  Impairment loss on note   receivable from related party       -        -         -     (21.3)  Other, net                         0.1     (0.2)      0.4      (3.5)                                   (38.3)   (44.3)   (146.1)   (171.9)Income Before Income Taxes and Minority Interest                 162.2     28.5     294.4      22.3Income Tax Expense                   6.3     17.3      74.2       8.3Minority Interest                    1.0      0.2      (5.4)      0.3Net Income                        $154.9    $11.0    $225.6     $13.7Earnings Per Share  Basic and Diluted                $0.48    $0.03     $0.70     $0.04Weighted Average Shares Outstanding   Basic                           320.9    319.9     320.7     319.8   Diluted                         325.3    321.1     324.5     321.4                   TRANSOCEAN INC. AND SUBSIDIARIES                 CONDENSED CONSOLIDATED BALANCE SHEETS                   (In millions, except share data)                                           September 30, December 31,                                           ------------- -------------                                               2004          2003                                           ------------- -------------                                            (Unaudited)                       ASSETSCash and Cash Equivalents                        $775.8        $474.0Accounts Receivable, net   Trade                                          483.9         435.3   Other                                           19.7          45.0Materials and Supplies, net                       150.1         152.0Deferred Income Taxes                              35.6          41.0Other Current Assets                               41.7          31.6   Total Current Assets                         1,506.8       1,178.9Property and Equipment                         10,672.3      10,673.0Less Accumulated Depreciation                   2,988.9       2,663.4   Property and Equipment, net                  7,683.4       8,009.6Goodwill                                        2,257.1       2,230.8Investments in and Advances to Joint Ventures                                           4.1           5.5Deferred Income Taxes, net                         30.0          28.2Other Assets                                      222.6         209.6   Total Assets                               $11,704.0     $11,662.6       LIABILITIES AND SHAREHOLDERS' EQUITYAccounts Payable                                 $180.2        $146.1Accrued Income Taxes                               48.3          57.2Debt Due Within One Year                          386.7          45.8Other Current Liabilities                         295.8         262.0   Total Current Liabilities                      911.0         511.1Long-Term Debt                                  2,674.7       3,612.3Deferred Income Taxes                              85.5          42.8Other Long-Term Liabilities                       320.5         299.4   Total Long-Term Liabilities                  3,080.7       3,954.5Commitments and ContingenciesMinority Interest                                 263.7           4.4Preference 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, 321,071,783 and 319,926,500 shares issued and outstanding at September 30, 2004 and December 31, 2003, respectively                3.2           3.2Additional Paid-in Capital                     10,673.9      10,643.8Accumulated Other Comprehensive Loss              (19.9)        (20.2)Retained Deficit                               (3,208.6)     (3,434.2)   Total Shareholders' Equity                   7,448.6       7,192.6   Total Liabilities and Shareholders'    Equity                                    $11,704.0     $11,662.6                   TRANSOCEAN INC. AND SUBSIDIARIES            CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS                             (In millions)                              (Unaudited)                                       Three Months     Nine Months                                           Ended           Ended                                       September 30,   September 30,                                      --------------- ----------------                                        2004    2003    2004     2003                                      ------- ------- ------- --------Cash Flows from Operating Activities  Net income                          $154.9   $11.0  $225.6    $13.7  Adjustments to reconcile net income   to net cash provided by operating   activities   Depreciation                        133.9   126.8   398.4    381.1   Stock-based compensation expense      4.2     1.4    17.7      4.3   Deferred income taxes                (7.6)   19.1    20.4    (40.4)   Equity in earnings of joint    ventures                            (1.7)   (1.9)   (7.7)    (7.3)   Net (gain)/loss from disposal of    assets                               1.4     4.4   (23.6)    12.2   Gain from TODCO offerings          (129.4)      -  (168.8)       -   Loss on retirement of debt              -       -    28.1     15.7   Impairment loss on long-lived    assets                                 -       -       -     16.8   Impairment loss on note receivable    from related party                     -       -       -     21.3   Amortization of debt-related    discounts/premiums, fair value    adjustments and issue costs, net    (5.1)   (8.2)  (17.6)   (16.1)   Deferred income, net                  1.0    (5.3)   15.1     (6.9)   Deferred expenses, net               (5.8)   (5.1)  (18.5)    (2.4)   Other long-term liabilities          (1.5)    0.2     5.4     13.7   Other, net                            3.7     6.7    (0.6)    11.8 Changes in operating assets and  liabilities     Accounts receivable                 8.6   (44.0)  (23.2)     7.6     Accounts payable and other      current liabilities               61.0    48.2    61.1     46.6     Income taxes receivable/payable,      net                                3.4    (8.0)    5.4      1.6     Other current assets                5.0    14.3   (10.6)    (9.0)Net Cash Provided by Operating Activities                            226.0   159.6   506.6    464.3Cash Flows from Investing Activities Capital expenditures                  (45.1)  (22.4)  (99.8)   (72.6) Note issued to related party, net of  repayments                               -     1.1       -    (44.2) Proceeds from disposal of assets, net   4.3     0.9    46.3      4.1 Deepwater Drilling II L.L.C.'s cash  acquired, net of cash paid               -       -       -     18.1 Proceeds from TODCO offerings         269.9       -   425.6        - Joint ventures and other investments,  net                                    4.3     0.5     9.0      2.7Net Cash Provided by (Used in) Investing Activities                  233.4   (19.9)  381.1    (91.9)Cash Flows from Financing Activities Repayments on revolving credit  agreements                               -       -  (200.0)       - Repayments on other debt instruments  (11.8)  (48.0) (407.0)  (967.2) Cash from termination of interest  rate swaps                               -       -       -    173.5 Net proceeds from issuance of  ordinary shares under  stock-based compensation plans         5.0     0.6    20.0     12.3 Other, net                              1.1       -     1.1      1.1Net Cash Used in Financing Activities   (5.7)  (47.4) (585.9)  (780.3)Net Increase (Decrease) in Cash and Cash Equivalents                      453.7    92.3   301.8   (407.9)Cash and Cash Equivalents at Beginning of Period                             322.1   714.0   474.0  1,214.2Cash and Cash Equivalents at End of Period                               $775.8  $806.3  $775.8   $806.3                            Transocean Inc.                      Fleet Operating Statistics                            Operating Revenues ($ Millions) (1)                     -------------------------------------------------                                                    Nine Months Ended                          Three Months Ended          September 30,                     ----------------------------- -------------------Transocean Drilling  Sept. 30, June 30,  Sept. 30, Segment:              2004      2004      2003      2004      2003                     --------- --------- --------- --------- ---------Contract Drilling Revenues  High-Specification   Floaters:    Fifth-Generation     Deepwater     Floaters          $192.8    $189.0    $188.7    $590.3    $532.9    Other Deepwater     Floaters          $112.5    $103.3    $113.2    $323.9    $335.4    Other High-     Specification     Floaters           $34.2     $31.5     $32.1     $96.3     $96.6  Total High-   Specification   Floaters            $339.5    $323.8    $334.0  $1,010.5    $964.9  Other Floaters        $67.0     $66.3     $74.3    $196.0    $238.8  Jackups              $101.4    $106.6    $110.4    $309.5    $342.3  Other Rigs            $20.1     $19.9     $24.2     $64.1     $59.5Subtotal               $528.0    $516.6    $542.9  $1,580.1  $1,605.5Other Revenues  Client Reimbursable   Revenues             $17.6     $21.4     $20.0     $55.6     $64.6  Integrated Services   and Other            $13.1     $14.5      $1.5     $53.7      $5.5Subtotal                $30.7     $35.9     $21.5    $109.3     $70.1Segment Total          $558.7    $552.5    $564.4  $1,689.4  $1,675.6TODCO SegmentContract Drilling Revenues               $79.1     $68.3     $54.1    $209.4    $153.7Other Revenues  Client Reimbursable   Revenues              $5.6      $5.6      $4.4     $16.2     $13.5  Delta Towing and   Other                 $8.4      $6.8        $-     $22.0        $-Subtotal                $14.0     $12.4      $4.4     $38.2     $13.5Segment Total           $93.1     $80.7     $58.5    $247.6    $167.2Total Company          $651.8    $633.2    $622.9  $1,937.0  $1,842.8                                 Average Dayrates  (1)(2)                     -------------------------------------------------                                                    Nine Months Ended                          Three Months Ended          September 30,                     ----------------------------- -------------------Transocean Drilling   Sept. 30, June 30, Sept. 30, Segment:              2004      2004      2003      2004      2003                     --------- --------- --------- --------- ---------  High-Specification   Floaters:    Fifth-Generation     Deepwater     Floaters        $193,400  $177,800  $176,600  $187,600  $181,600    Other Deepwater     Floaters        $103,900  $107,800  $112,500  $104,200  $112,600    Other High-     Specification     Floaters        $111,200  $115,500  $117,200  $113,800  $118,300  Total High-   Specification   Floaters          $142,200  $141,100  $142,200  $142,300  $143,400  Other Floaters      $65,400   $65,000   $60,600   $64,400   $64,100  Jackups             $52,500   $52,700   $54,400   $52,200   $56,200  Other Rigs          $41,900   $43,300   $48,800   $43,200   $44,700Segment Total         $90,700   $89,100   $89,000   $90,000   $89,800TODCO Segment         $27,800   $26,200   $19,300   $26,600   $18,400Total Drilling Fleet  $70,100   $69,600   $67,000   $70,400   $67,100                                       Utilization (1)(2)                         ---------------------------------------------                                                     Nine Months Ended                            Three Months Ended          September 30,                         --------------------------- -----------------Transocean Drilling      Sept. 30, June 30, Sept. 30, Segment:                  2004      2004     2003      2004    2003                         --------- -------- --------- -------- -------  High-Specification   Floaters:    Fifth-Generation     Deepwater Floaters    83%       90%       97%       88%       94%    Other Deepwater     Floaters              78%       70%       73%       76%       73%    Other High-     Specification     Floaters              84%       75%       74%       77%       75%  Total High-   Specification   Floaters                81%       79%       82%       81%       81%  Other Floaters           45%       45%       51%       44%       51%  Jackups                  81%       85%       85%       83%       86%  Other Rigs               47%       46%       49%       49%       42%Segment Total              67%       68%       71%       68%       69%TODCO Segment              44%       41%       44%       41%       41%Total Drilling Fleet       57%       56%       59%       56%       57%(1) Certain reclassifications have been made to prior periods to    conform to current quarter presentation.(2) Average dayrates are defined as contract drilling revenue earned    per revenue earning day in the period and utilization is defined    as the total actual number of revenue earning days in the period    as a percentage of the total number of calendar days in the    period.                   Transocean Inc. and Subsidiaries                      Effective Tax Rate Analysis                           (in US$ millions)                                     Three Months Ended                         -----------------------------------------                         September 30,   June 30,   September 30,                             2004         2004          2003                         ------------- ------------ --------------Income before Income Taxes and Minority Interest                      $162.2        $65.7          $28.5  Add back (subtract):    TODCO IPO date stock     option vesting                 -            -              -    Transocean IPO date     stock option     vesting                        -            -              -    Nigeria benefit plan     restructuring                  -            -           (2.0)    Impairment loss on     note receivable     from related party             -            -              -    Impairment loss on     long-lived assets              -            -              -    Loss on retirement     of debt                        -            -              -    IPO-related costs               -            -            8.0    Gain on sale of     Sedco 602                      -        (21.6)             -    Gain on TODCO     offerings                 (129.4)           -              -                         ------------- ------------ --------------Adjusted Income before Income Taxes and Minority Interest              $32.8        $44.1          $34.5Income Tax Expense               $6.3        $19.9          $17.3  Add back (subtract):    Valuation allowance     related to TODCO     offerings                   13.7            -              -    Other                        (0.9)           -              -    Changes in estimates     of prior years     taxes                        5.5(1)         -              -    Nigeria benefit plan     restructuring                  -            -            0.1    Impairment loss on     note receivable     from related party             -            -              -    Impairment loss on     long-lived assets              -            -              -    Loss on retirement     of debt                        -            -              -                         ------------- ------------ --------------Adjusted Income Tax Expense                        $24.6(2)     $19.9(2)       $17.4(2)Effective Tax Rate                3.9%        30.3%          60.7%Effective Tax Rate Adjusted                        75.1%        45.1%          50.4%                                            Nine Months Ended                                       ---------------------------                                              September 30,                                           2004          2003                                       -------------- ------------Income before Income Taxes and Minority Interest                                     $294.4        $22.3  Add back (subtract):    TODCO IPO date stock option vesting          5.6            -    Transocean IPO date stock option     vesting                                     1.5            -    Nigeria benefit plan restructuring             -          0.6    Impairment loss on note receivable     from related party                            -         21.3    Impairment loss on long-lived     assets                                        -         16.8    Loss on retirement of debt                  28.1         15.7    IPO-related costs                              -          8.0    Gain on sale of Sedco 602                  (21.6)           -    Gain on TODCO offerings                   (168.8)           -                                       -------------- ------------Adjusted Income before Income Taxes and Minority Interest                            $139.2        $84.7Income Tax Expense                             $74.2         $8.3  Add back (subtract):    Valuation allowance related to     TODCO offerings                           (17.3)           -    Other                                       (0.9)           -    Changes in estimates of prior years     taxes                                       5.5         14.6    Nigeria benefit plan restructuring             -            -    Impairment loss on note receivable     from related party                            -          7.5    Impairment loss on long-lived     assets                                        -          4.0    Loss on retirement of debt                     -          1.9                                       -------------- ------------Adjusted Income Tax Expense                    $61.5        $36.3Effective Tax Rate                              25.2%        37.2%Effective Tax Rate Adjusted                     44.2%(3)     42.8%(1) Our estimates of prior year taxes change as we file tax returns,    settle disputes with tax authorities or become aware of other    events.(2) The three months ended September 30, 2004, June 30, 2004 and    September 30, 2003 include $10.1 million, $4.6 million and $2.6    million, respectively, of additional tax expense reflecting the    catch-up effect of the increase in the annual effective tax rate.(3) Includes 6.9 percentage points associated with an increase in the    valuation allowance established at the time of the TODCO IPO                   Transocean Inc. and Subsidiaries           Non-GAAP Financial Measures and Reconciliations          Adjusted Net Income and Diluted Earnings Per Share                          (in US$ millions)                                         Three Months Ended                              ----------------------------------------                              September 30,   June 30,   September 30,                                  2004         2004          2003                              ------------- ------------ -------------Adjusted Net IncomeNet income as reported              $154.9        $48.0         $11.0  Add back (subtract):    After-tax gain from sale     of Sedco 602                        -        (21.6)            -    After-tax gain from TODCO     Offerings                      (129.4)           -             -    Tax valuation allowance     related to TODCO IPO                -            -             -    After-tax loss on     retirement of debt                  -            -             -    Stock option vesting     resulting from the TODCO     IPO                                 -            -             -    After-tax IPO costs                  -            -           8.0    After-tax impairment loss     on long-lived assets                -            -             -    After-tax impairment loss     on note receivable from     related party                       -            -             -    Favorable resolution of a     non-U.S. income tax     liability                           -            -             -                              ------------- ------------ -------------Net income as adjusted               $25.5        $26.4         $19.0                              ------------- ------------ -------------Diluted Earnings Per Share:Net income as reported               $0.48        $0.15         $0.03  Add back (subtract):    After-tax gain from sale     of Sedco 602                        -        (0.07)            -    After-tax gain from TODCO     Offerings                       (0.40)           -             -    Tax valuation allowance     related to TODCO IPO                -            -             -    After-tax loss on     retirement of debt                  -            -             -    Stock option vesting     resulting from the TODCO     IPO                                 -            -             -    After-tax IPO costs                  -            -          0.03    After-tax impairment loss     on long-lived assets                -            -             -    After-tax impairment loss     on note receivable from     related party                       -            -             -    Favorable resolution of a     non-U.S. income tax     liability                           -            -             -                              ------------- ------------ -------------Net income as adjusted               $0.08        $0.08         $0.06                              ------------- ------------ -------------                                                Nine Months Ended                                           ---------------------------                                                  September 30,                                               2004          2003                                           ------------- -------------Adjusted Net IncomeNet income as reported                           $225.6         $13.7  Add back (subtract):    After-tax gain from sale of Sedco 602         (21.6)            -    After-tax gain from TODCO Offerings          (168.8)            -    Tax valuation allowance related to     TODCO IPO                                     31.0             -    After-tax loss on retirement of debt           28.1          13.8    Stock option vesting resulting from the     TODCO IPO                                      7.1             -    After-tax IPO costs                               -           8.0    After-tax impairment loss on long-lived     assets                                           -          12.8    After-tax impairment loss on note     receivable from related party                    -          13.8    Favorable resolution of a non-U.S.     income tax liability                             -         (14.6)                                           ------------- -------------Net income as adjusted                           $101.4         $47.5                                           ------------- -------------Diluted Earnings Per Share:Net income as reported                            $0.70         $0.04  Add back (subtract):    After-tax gain from sale of Sedco 602         (0.07)            -    After-tax gain from TODCO Offerings           (0.52)            -    Tax valuation allowance related to     TODCO IPO                                     0.09             -    After-tax loss on retirement of debt           0.09          0.04    Stock option vesting resulting from the     TODCO IPO                                     0.02             -    After-tax IPO costs                               -          0.03    After-tax impairment loss on long-lived     assets                                           -          0.04    After-tax impairment loss on note     receivable from related party                    -          0.04    Favorable resolution of a non-U.S.     income tax liability                             -         (0.04)                                           ------------- -------------Net income as adjusted                            $0.31         $0.15                                           ------------- -------------                   Transocean Inc. and Subsidiaries            Non-GAAP Financial Measures and Reconciliations   Operating Income (Loss) Before General and Administrative Expense              to Field Operating Income (Loss) by Segment                           (in US$ millions)                                         Three Months Ended                              ----------------------------------------                              September 30,   June 30,   September 30,                                  2004         2004          2003                              ------------- ------------ -------------Transocean Drilling Segment  Operating revenue                 $558.7       $552.5        $564.4  Operating and maintenance   expense                           360.5        338.1         342.4  Depreciation                       110.0        109.1         103.9  Impairment loss on long-   lived assets                          -            -             -  Gain from sale of assets,   net                                (0.5)       (21.9)         (0.8)  Gain from TODCO Offerings         (129.4)           -             -                              ------------- ------------ -------------Operating income before general and administrative expense                             218.1        127.2         118.9Add back:     Depreciation           110.0        109.1         103.9              Impairment loss               on long-lived               assets                    -            -             -              Gain from sale               of assets, net         (0.5)       (21.9)         (0.8)              Gain from TODCO               Offerings            (129.4)           -             -                              ------------- ------------ -------------Field operating income              $198.2       $214.4        $222.0                              ------------- ------------ -------------TODCO Segment  Operating revenue                  $93.1        $80.7         $58.5  Operating and maintenance   expense(a)                         72.4         68.1          60.6  Depreciation                        23.9         23.9          22.9  Impairment loss on long-   lived assets                          -            -             -  Gain from sale of assets,   net                                (0.8)        (1.9)         (0.1)                              ------------- ------------ -------------Operating loss before general and administrative expense           (2.4)        (9.4)        (24.9)Add back:     Depreciation            23.9         23.9          22.9              Impairment loss               on long-lived               assets                    -            -             -              Gain from sale               of assets, net         (0.8)        (1.9)         (0.1)                              ------------- ------------ -------------Field operating income (loss)        $20.7        $12.6         $(2.1)                              ------------- ------------ -------------                                                Nine Months Ended                                            --------------------------                                                  September 30,                                                2004         2003                                            ------------- ------------Transocean Drilling Segment  Operating revenue                             $1,689.4     $1,675.6  Operating and maintenance expense              1,031.8      1,013.8  Depreciation                                     326.4        311.9  Impairment loss on long-lived assets                 -          5.2  Gain from sale of assets, net                    (23.5)        (2.4)  Gain from TODCO Offerings                       (168.8)           -                                            ------------- ------------Operating income before general and administrative expense                            523.5        347.1Add back:     Depreciation                         326.4        311.9              Impairment loss on long-lived               assets                                  -          5.2              Gain from sale of assets, net        (23.5)        (2.4)              Gain from TODCO Offerings           (168.8)           -                                            ------------- ------------Field operating income                            $657.6       $661.8                                            ------------- ------------TODCO Segment  Operating revenue                               $247.6       $167.2  Operating and maintenance expense(a)             219.7        189.8  Depreciation                                      72.0         69.2  Impairment loss on long-lived assets                 -         11.6  Gain from sale of assets, net                     (5.4)        (0.5)                                            ------------- ------------Operating loss before general and administrative expense                            (38.7)      (102.9)Add back:     Depreciation                          72.0         69.2              Impairment loss on long-lived               assets                                  -         11.6              Gain from sale of assets, net         (5.4)        (0.5)                                            ------------- ------------Field operating income (loss)                      $27.9       $(22.6)                                            ------------- ------------(a) Q3 04, Q2 04, Q3 03, YTD Q3 04, and YTD Q3 03 include $6.9    million, $7.1 million, $3.9 million, $26.3 million, and $11.2    million, respectively, of operating and maintenance expense that    TODCO classifies as general and administrative expense.                   Transocean Inc. and Subsidiaries            Non-GAAP Financial Measures and Reconciliations                Total Debt to Net Debt Reconciliations                           (in US$ millions)                                            As of           As of                                        -------------- ---------------                                           9/30/04        12/31/03                                        -------------- ---------------Total Debt to Net Debt ReconciliationTotal Debt                                   $3,061.4        $3,658.1Deduct: Cash and Cash Equivalents               775.8           474.0                                        -------------- ---------------Net Debt                                     $2,285.6        $3,184.1                                        -------------- ---------------
    CONTACT: Transocean Inc., Houston             Analyst Contact:             Jeffrey L. Chastain, 713-232-7551             or             Media Contact:             Guy A. Cantwell, 713-232-7647    SOURCE: Transocean Inc.