NYSE: RIG 4.61 0.41 9.76% 6:30 P.M. ET
Share Page Print Page
Back to all news articles

Transocean Inc. Reports Fourth Quarter and Full-Year 2004 Results

February 15, 2005

HOUSTON--(BUSINESS WIRE)--Feb. 15, 2005--Transocean Inc.(NYSE:RIG) today reported a net loss for the three months endedDecember 31, 2004 of $73.4 million, or $0.23 per diluted share, onrevenues of $676.9 million. The results compare to net income of $5.5million, or $0.02 per diluted share, on revenues of $591.5 million,for the corresponding three months in 2003. Net income adjusted(1) forthe gain from the December 2004 TODCO secondary offering, the non-cashcharge from the deconsolidation of TODCO relating to the tax sharingagreement between Transocean and TODCO, and losses on earlyretirements of debt was $2.1 million, or $0.01 per diluted share. Thisresult compares to net income(1) of $22.9 million, or $0.07 perdiluted share for the three months ended December 31, 2003, afteradjusting for the effect of the restructuring of certain benefit plansin Nigeria.

For the 12 months ended December 31, 2004, net income totaled$152.2 million, or $0.47 per diluted share, on revenues of $2,613.9million, compared to net income of $19.2 million, or $0.06 per dilutedshare, on revenues of $2,434.3 million for the 12 months endedDecember 31, 2003. Net income adjusted(1) for the gains from the TODCOofferings, a gain on the sale of the semisubmersible rig Sedco 602,the non-cash charge from the deconsolidation of TODCO relating to thetax sharing agreement between Transocean and TODCO, losses on earlyretirements of debt and TODCO initial public offering (IPO)-relatedcosts was $103.4 million, or $0.32 per diluted share, for the 12months ended December 31, 2004. For the 12 months ended December 31,2003, net income adjusted(1) for the restructuring of certain benefitplans in Nigeria, non-cash charges for impairment of certain assets,losses on early retirements of debt, costs related to the planned IPOof TODCO and a favorable resolution of a non-U.S. income taxliability, was $71.0 million, or $0.22 per diluted share.

Robert L. Long, President and Chief Executive Officer ofTransocean Inc., stated, \"The fourth quarter of 2004 was a challengingtime as we concentrated our efforts on completing repairs on thejackup rig Trident 20 and semisubmersible rig Jim Cunningham,commenced reactivation efforts on four semisubmersible rigs that hadbeen idle for extended periods and completed the mobilization of threeHigh-Specification Floaters and three Jackup Rigs between marketsectors. At the same time, we had success with our fleet marketingefforts as we finalized negotiations leading to term contracts onthree Fifth-Generation rigs at dayrates ranging from $190,000 to$240,000. The successful efforts have continued into 2005 as evidencedby the recent contracts for the drillship Discoverer Spirit andsemisubmersible rig Deepwater Nautilus at dayrates of $270,000 and$220,000, respectively, that are expected to commence by the end ofSeptember 2005. In our fleet of Other Floaters, we obtained contractson four previously stacked rigs and have subsequently securedadditional contracts on two of these units at improved dayrates thatexceed $100,000. In addition, our Jackup Rig fleet, which operatesinternationally, is experiencing a continued rise in dayrates withcontracts on two rigs signed during late 2004 above $70,000, animprovement from dayrates of $55,000 to $60,000 seen earlier in theyear.\"

In closing, Mr. Long stated, \"We begin 2005 with an improvingoutlook for all segments of our fleet, especially among our 13Fifth-Generation rigs, where capacity constraints are evident for thenext 12 to 24 months. As a result, the prospect for improvingutilization and dayrates among our fleet of drillships,semisubmersibles and jackups is excellent. However, our industry willexperience higher costs in 2005 relative to levels seen in the recentpast, due in part to higher personnel costs required to support theincreased level of offshore drilling activity.\"

TODCO Deconsolidation - In December 2004, Transocean Inc.completed a public offering of TODCO common stock, bringing thecompany's ownership interest in TODCO, comprised entirely of Class Acommon stock, to approximately 22% of total TODCO shares outstanding.Transocean received $258.0 million in net proceeds from this offeringand recognized a gain of $140.0 million. In conjunction with theoffering, Transocean converted its remaining shares of Class B commonstock, which had five votes per share, into shares of Class A commonstock, which have one vote per share, reducing its voting interest inTODCO to a level proportionate to its ownership interest. As a result,Transocean deconsolidated TODCO from its financial statementseffective December 17, 2004 and will account for its remaininginvestment under the equity method of accounting.

Due to the deconsolidation of TODCO, the company recorded anon-cash charge of $167.1 million related to contingent amounts duefrom TODCO under the tax sharing agreement between Transocean andTODCO. As TODCO generates income and utilizes its pre-IPO tax assets,TODCO is required to pay Transocean for the benefit received inaccordance with the provisions of the tax sharing agreement.Transocean will recognize those amounts as other income.

Transocean Drilling Segment - Revenues for the three months endedDecember 31, 2004 improved 6% to $591.0 million, compared to revenuesof $558.7 million during the three months ended September 30, 2004.The revenue improvement was due principally to higher average dayratesand activity. The effects of the higher average dayrates and activitywere partially offset by idle time on the drillship DeepwaterMillennium, as the unit transitioned between contracts in the Gulf ofMexico, mobilizations of the drillship Deepwater Pathfinder to Nigeriaand the semisubmersible rig Transocean Rather to the North Sea, andthe warm stacking of the semisubmersible rig M.G. Hulme, Jr. inNigeria.

Operating income before general and administrative expenses(2) was$73.9 million and field operating income(2) (defined as revenues lessoperating and maintenance expense) was $177.7 million for the threemonths ended December 31, 2004. These amounts compared to operatingincome before general and administrative expenses and field operatingincome of $88.7 million and $198.2 million, respectively, for thethree months ended September 30, 2004. The fourth quarter 2004 resultswere negatively impacted by a 15% increase in operating andmaintenance expenses, to $413.3 million, compared to third quarter2004 levels. The increase was due primarily to an estimated $20million related to increased offshore activity, approximately $9million of higher costs to complete repairs on two previously damagedrigs, the jackup rig Trident 20 and semisubmersible rig JimCunningham, as well as costs totaling approximately $14 million for aperiodic survey on the semisubmersible rig Polar Pioneer andmaintenance to the jackup rig J.T. Angel prior to commencing new termcontracts. Repair and maintenance programs performed on the Trident20, Polar Pioneer and J.T. Angel were completed during the fourthquarter of 2004 and each rig has returned to service. Repairs to theJim Cunningham were completed in February 2005 and the rig hasrecommenced a drilling program in the eastern Mediterranean. Operatingand maintenance expenses in the fourth quarter of 2004 were furtherincreased by the impact of a weakening dollar and higher personnelcosts. Fleet utilization averaged 69% during the three months endedDecember 31, 2004, including 80% average utilization for the company's32 High-Specification Floaters, compared to average utilization of 67%and 81%, respectively, during the preceding quarter in 2004. Thesegment's average dayrate improved to $93,900 during the fourthquarter of 2004 compared to $91,100 in the preceding quarter of 2004,with the average dayrate for the High-Specification Floaters improvingto $149,000 during the fourth quarter of 2004 from $142,200 during thepreceding quarter of the year.

TODCO Segment - Revenues from October 1, 2004 to December 17,2004, the deconsolidation date, were $85.9 million, while operatingincome before general and administrative expenses(2) was $5.0 millionand field operating income(2) was $24.4 million.

Effective Tax Rate - The company's effective tax rate(3) for the12 months ended December 31, 2004 was 49.7%, based on adjusted incomebefore taxes as previously mentioned. Included in the company's incometax expense are additional taxes related to a valuation allowance,which resulted from the TODCO IPO, partially offset by otheradjustments to tax liabilities. The company's effective tax ratefluctuates in part because many of the jurisdictions in which thecompany operates have revenue-based tax regimes. This volatility isparticularly evident when earnings are low. Similarly, the companyexpects the rate to decrease significantly as earnings improve.

Liquidity - Cash flow from operations totaled $598.5 million forthe 12 months ended December 31, 2004. During this period, Transoceanrecognized losses of $76.5 million in conjunction with the earlyretirements of debt with an aggregate principal amount of $774.8million. The company funded the retirements primarily with cash fromoperations and cash received from the TODCO offerings. Net debt(4)declined 36% over the 12 months of 2004 to $2,030.2 million from$3,184.1 million at December 31, 2003.

Conference Call Information

Transocean will conduct a teleconference call at 10:00 a.m. ET onFebruary 15. To participate, dial 303-262-2075 approximately five to10 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 February 15 and can be accessed by dialing303-590-3000 and referring to the passcode 11021711. Also, a replaywill be available through the Internet and can be accessed by visitingeither of the above-referenced Worldwide Web addresses.

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 realization of amounts due under the taxsharing agreement with TODCO, opportunities and outlook for thecompany, including the company's Transocean Drilling business segment,dayrates, utilization, rig capacity constraints, contract commencementdates, 2005 cost levels, 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 93 mobile offshore drilling units. 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 sectors of the offshore drillingbusiness. The company's fleet consists of 32 High-SpecificationFloaters (semisubmersibles and drillships), 24 Other Floaters, 26Jackup Rigs and other assets utilized in the support of offshoredrilling activities worldwide. With a current equity marketcapitalization in excess of $14 billion, Transocean Inc.'s ordinaryshares are traded on the New York Stock Exchange under the 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 periods reported and are considered bymanagement to be outside the normal course of operations. Areconciliation for the periods reported may be found in theaccompanying schedule titled Non-GAAP Financial Measures andReconciliations - Adjusted Net Income (Loss) and Diluted Earnings(Loss) 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.

                   TRANSOCEAN INC. AND SUBSIDIARIES                 CONSOLIDATED STATEMENTS OF OPERATIONS                 (In millions, except per share data)                               Three Months Ended  Twelve Months Ended                                  December 31,        December 31,                               ------------------- -------------------                                 2004      2003      2004      2003                               --------- --------- --------- ---------Operating Revenues Contract drilling revenues      $626.9    $569.3  $2,416.4  $2,328.5 Other revenues                    50.0      22.2     197.5     105.8                                  676.9     591.5   2,613.9   2,434.3Costs and Expenses Operating and maintenance        474.8     406.8   1,726.3   1,610.4 Depreciation                     126.2     127.1     524.6     508.2 General and administrative        22.7      15.3      67.0      65.3 Impairment loss on long-lived  assets                              -      (0.3)        -      16.5 Gain from sale of assets, net     (3.0)     (2.9)    (31.9)     (5.8)                                  620.7     546.0   2,286.0   2,194.6Operating Income                   56.2      45.5     327.9     239.7Other Income (Expense), net Equity in earnings (losses) of  joint ventures                    1.5      (2.2)      9.2       5.1 Interest income                    2.8       3.1       9.3      18.8 Interest expense                 (39.1)    (47.6)   (171.7)   (202.0) Gain from TODCO offerings        140.0         -     308.8         - Non-cash TODCO tax sharing  agreement charge               (167.1)        -    (167.1)        - Loss on retirement of debt       (48.4)        -     (76.5)    (15.7) Impairment loss on note  receivable from related party       -         -         -     (21.3) Other, net                           -       0.5       0.4      (3.0)                                 (110.3)    (46.2)    (87.6)   (218.1)Income (Loss) Before Income Taxes, Minority Interest and Cumulative Effect of a Change in Accounting Principle          (54.1)     (0.7)    240.3      21.6Income Tax Expense (Benefit)       17.1      (5.3)     91.3       3.0Minority Interest                   2.2      (0.1)     (3.2)      0.2Income (Loss) Before Cumulative Effect of a Change in Accounting Principle             (73.4)      4.7     152.2      18.4Cumulative Effect of a Change in Accounting Principle              -       0.8         -       0.8Net Income (Loss)                $(73.4)     $5.5    $152.2     $19.2Earnings Per Share Basic and Diluted               $(0.23)    $0.02     $0.47     $0.06Weighted Average Shares Outstanding  Basic                           321.2     319.9     320.9     319.8  Diluted                         321.2     321.3     325.2     321.4                   TRANSOCEAN INC. AND SUBSIDIARIES                      CONSOLIDATED BALANCE SHEETS                   (In millions, except share data)                                                     December 31,                                                 ---------------------                                                    2004       2003                                                 ---------- ----------                                ASSETSCash and Cash Equivalents                           $451.3     $474.0Accounts Receivable, net   Trade                                             426.5      435.3   Other                                              15.5       45.0Materials and Supplies, net                          144.7      152.0Deferred Income Taxes                                 19.0       41.0Other Current Assets                                  52.1       31.6   Total Current Assets                            1,109.1    1,178.9Property and Equipment                             9,732.9   10,673.0Less Accumulated Depreciation                      2,727.7    2,663.4   Property and Equipment, net                     7,005.2    8,009.6Goodwill                                           2,251.9    2,230.8Investments in and Advances to Joint Ventures        109.2        5.5Deferred Income Taxes, net                            43.8       28.2Other Assets                                         239.1      209.6     Total Assets                                $10,758.3  $11,662.6                 LIABILITIES AND SHAREHOLDERS' EQUITYAccounts Payable                                    $180.8     $146.1Accrued Income Taxes                                  17.1       57.2Debt Due Within One Year                              19.4       45.8Other Current Liabilities                            213.0      262.0   Total Current Liabilities                         430.3      511.1Long-Term Debt                                     2,462.1    3,612.3Deferred Income Taxes                                124.1       42.8Other Long-Term Liabilities                          345.2      299.4   Total Long-Term Liabilities                     2,931.4    3,954.5Commitments and ContingenciesMinority Interest                                      4.0        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, 321,533,998 and 319,926,500 shares issued and outstanding at December 31, 2004 and 2003, respectively                           3.2        3.2Additional Paid-in Capital                        10,695.8   10,643.8Accumulated Other Comprehensive Loss                 (24.4)     (20.2)Retained Deficit                                  (3,282.0)  (3,434.2)   Total Shareholders' Equity                      7,392.6    7,192.6   Total Liabilities and Shareholders' Equity    $10,758.3  $11,662.6                   TRANSOCEAN INC. AND SUBSIDIARIES                 CONSOLIDATED STATEMENTS OF CASH FLOWS                             (In millions)                                Three Months Ended Twelve Months Ended                                   December 31,       December 31,                                ------------------ -------------------                                   2004     2003      2004      2003                                --------- -------- --------- ---------Cash Flows from Operating Activities  Net income (loss)               $(73.4)    $5.5    $152.2     $19.2  Adjustments to reconcile net   income (loss) to net cash   provided by operating   activities    Depreciation                   126.2    127.1     524.6     508.2    Stock-based compensation     expense                         7.6      2.0      25.3       6.3    Deferred income taxes           (2.3)   (58.1)     18.1     (98.5)    Equity in (earnings) losses     of joint ventures              (1.5)     2.2      (9.2)     (5.1)    Net (gain) loss from     disposal of assets              4.4      1.2     (19.2)     13.4    Gain from TODCO offerings     (140.0)       -    (308.8)        -    Non-cash TODCO tax sharing     agreement charge              167.1        -     167.1         -    Loss on retirement of debt      48.4        -      76.5      15.7    Impairment loss on long-     lived assets                      -     (0.3)        -      16.5    Impairment loss on note     receivable from related     party                             -        -         -      21.3    Amortization of debt-related     discounts/premiums, fair     value adjustments and issue     costs, net                     (3.6)    (8.2)    (21.2)    (24.3)    Deferred income, net            22.7     11.3      37.8       4.4    Deferred expenses, net          (3.5)   (30.8)    (22.0)    (33.2)    Tax benefit from exercise of     stock options                   5.9      0.3       5.9       0.3    Other long-term liabilities      4.8     (2.9)     10.2      10.8    Other, net                      (5.5)    (3.0)     (6.1)      8.8 Changes in operating assets and  liabilities      Accounts receivable           (6.1)    12.2     (29.3)     19.8      Accounts payable and other       current liabilities         (54.8)   (40.1)      6.3       6.5      Income taxes       receivable/payable, net      (4.2)    26.2       1.2      27.8      Other current assets           5.3     16.5      (5.3)      7.5Net Cash Provided by Operating Activities                         97.5     61.1     604.1     525.4Cash Flows from Investing Activities Capital expenditures              (27.2)  (421.2)   (127.0)   (493.8) Note issued to related party          -        -         -     (46.1) Payments received from note  issued to related party              -     44.2         -      46.1 Proceeds from disposal of  assets, net                        4.1      4.3      50.4       8.4 Deepwater Drilling II L.L.C.'s  cash acquired, net of cash  paid                                 -        -         -      18.1 Deepwater Drilling L.L.C.'s  cash acquired                        -     18.6         -      18.6 Proceeds from TODCO offerings     258.0        -     683.6         - Reduction of cash from the  deconsolidation of TODCO         (68.6)       -     (68.6)        - Joint ventures and other  investments, net                   1.4      0.6      10.4       3.3Net Cash Provided by (Used in) Investing Activities              167.7   (353.5)    548.8    (445.4)Cash Flows from Financing Activities Borrowings (repayments) on  revolving credit agreement       (50.0)   250.0    (250.0)    250.0 Repayments on other debt  instruments                     (550.0)  (285.5)   (957.0) (1,252.7) Cash from termination of  interest rate swaps                  -        -         -     173.5 Net proceeds from issuance of  ordinary shares under  stock-based compensation  plans                             10.4      0.5      30.4      12.8 Financing costs                       -     (4.9)        -      (4.9) Other, net                         (0.1)       -       1.0       1.1Net Cash Used in Financing Activities                       (589.7)   (39.9) (1,175.6)   (820.2)Net Decrease in Cash and Cash Equivalents                      (324.5)  (332.3)    (22.7)   (740.2)Cash and Cash Equivalents at Beginning of Period               775.8    806.3     474.0   1,214.2Cash and Cash Equivalents at End of Period                        $451.3   $474.0    $451.3    $474.0                            Transocean Inc.                      Fleet Operating Statistics                            Operating Revenues ($ Millions) (1)                     -------------------------------------------------                                                   Twelve Months Ended                          Three Months Ended          December 31,                     ----------------------------- -------------------Transocean Drilling  Dec. 31,  Sept. 30, Dec. 31, Segment:              2004      2004      2003       2004      2003                     --------- --------- --------- --------- ---------Contract Drilling Revenues  High-Specification   Floaters:      Fifth-Generation       Deepwater       Floaters        $190.7    $192.8    $187.5    $781.0    $720.4      Other Deepwater       Floaters        $114.2    $112.5     $96.9    $438.1    $432.3      Other High-       Specification       Floaters         $45.7     $34.2     $31.9    $142.0    $128.5  Total High-   Specification   Floaters            $350.6    $339.5    $316.3  $1,361.1  $1,281.2    Other Floaters      $71.6     $67.0     $67.9    $267.6    $306.7    Jackups            $108.1    $101.4    $104.6    $417.6    $446.9    Other Rigs          $23.7     $20.1     $24.4     $87.8     $83.9Subtotal               $554.0    $528.0    $513.2  $2,134.1  $2,118.7Other Revenues  Client Reimbursable   Revenues             $18.2     $17.6     $18.1     $73.8     $82.7  Integrated Services   and Other            $18.8     $13.1     $(0.2)    $72.5      $5.3Subtotal                $37.0     $30.7     $17.9    $146.3     $88.0Segment Total          $591.0    $558.7    $531.1  $2,280.4  $2,206.7TODCO Segment (3)Contract Drilling Revenues               $72.9     $79.1     $56.1    $282.3    $209.8Other Revenues  Client Reimbursable   Revenues              $5.7      $5.6      $4.3     $21.9     $17.8  Delta Towing and   Other                 $7.3      $8.4        $-     $29.3        $-Subtotal                $13.0     $14.0      $4.3     $51.2     $17.8Segment Total           $85.9     $93.1     $60.4    $333.5    $227.6Total Company          $676.9    $651.8    $591.5  $2,613.9  $2,434.3                                   Average Dayrates (2)                     -------------------------------------------------                                                   Twelve Months Ended                          Three Months Ended          December 31,                     ----------------------------- -------------------Transocean Drilling  Dec. 31,  Sept. 30, Dec. 31, Segment:              2004      2004      2003       2004      2003                     --------- --------- --------- --------- ---------  High-Specification   Floaters:      Fifth-Generation       Deepwater       Floaters      $180,100  $193,400  $186,500  $185,700  $182,800      Other Deepwater       Floaters      $119,400  $103,900  $101,400  $107,800  $109,900      Other High-       Specification       Floaters      $135,700  $111,200  $117,900  $120,000  $118,200  Total High-   Specification   Floaters          $149,000  $142,200  $141,800  $144,000  $143,000  Other Floaters      $64,000   $65,400   $60,600   $64,300   $63,300  Jackups             $55,800   $52,500   $53,700   $53,100   $55,600  Other Rigs          $48,100   $44,700   $45,200   $45,100   $44,900Segment Total         $93,900   $91,100   $87,900   $91,100   $89,400TODCO Segment (3)     $28,600   $27,300   $21,500   $26,900   $19,200Total Drilling Fleet  $74,200   $69,800   $67,400   $71,300   $67,200                                     Utilization (2)                    --------------------------------------------------                                                  Twelve Months Ended                         Three Months Ended           December 31,                    ----------------------------- --------------------Transocean Drilling  Dec. 31,  Sept. 30,  Dec. 31, Segment:              2004      2004      2003      2004      2003                     --------- --------- --------- --------- ---------  High-Specification   Floaters:      Fifth-Generation       Deepwater       Floaters            89%       83%       91%       88%       93%      Other       Deepwater       Floaters            69%       78%       69%       74%       72%      Other High-       Specification       Floaters            92%       84%       74%       81%       74%  Total High-   Specification   Floaters                80%       81%       78%       81%       80%  Other Floaters           50%       45%       47%       45%       50%  Jackups                  81%       81%       81%       83%       85%  Other Rigs               54%       44%       53%       50%       45%Segment Total              69%       67%       68%       68%       69%TODCO Segment (3)          47%       45%       40%       43%       41%Total Drilling Fleet       61%      58 %       56%       58%       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.(3) TODCO was deconsolidated effective December 17, 2004 in connection    with the December offering and conversion of the remaining Class B    shares to Class A shares. Statistics are representative of the    TODCO segment through December 16, 2004 for the three and twelve    months ended December 31, 2004.                   Transocean Inc. and Subsidiaries           Non-GAAP Financial Measures and Reconciliations   Adjusted Net Income (Loss) and Diluted Earnings (Loss) Per Share                          (in US$ millions)                                Three Months Ended      Twelve Months                                                             Ended                            --------------------------- --------------                            Dec. 31, Sept. 30, Dec. 31,    Dec. 31,                             2004      2004     2003     2004   2003                            -------- --------- -------- ------- ------Adjusted Net Income (Loss)Net income (loss) as reported                    $(73.4)   $154.9     $5.5  $152.2  $19.2 Add back (subtract):  After-tax non-cash TODCO   tax sharing agreement   charge                     167.1         -        -   167.1      -  After-tax gain from TODCO   offerings                 (140.0)   (129.4)       -  (308.8)     -  After-tax loss on   retirement of debt          48.4         -        -    76.5   13.8  After-tax gain from sale   of Sedco 602                   -         -        -   (21.7)     -  Tax valuation allowance   related to TODCO IPO           -         -        -    31.0      -  Stock option vesting   resulting from the TODCO   IPO                            -         -        -     7.1      -  After-tax restructuring   of Nigeria benefit plans       -         -     17.4       -   17.4  After-tax IPO costs             -         -        -       -    8.8  After-tax impairment loss   on long-lived assets           -         -        -       -   12.6  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         $2.1     $25.5    $22.9  $103.4  $71.0                            -------- --------- -------- ------- ------Diluted Earnings (Loss) Per Share:Net income (loss) as reported                    $(0.23)    $0.48    $0.02   $0.47  $0.06 Add back (subtract):  After-tax non-cash TODCO   tax sharing agreement   charge                      0.52         -        -    0.51      -  After-tax gain from TODCO   offerings                  (0.43)    (0.40)       -   (0.95)     -  After-tax loss on   retirement of debt          0.15         -        -    0.24   0.04  After-tax gain from sale   of Sedco 602                   -         -        -   (0.07)     -  Tax valuation allowance   related to TODCO IPO           -         -        -    0.10      -  Stock option vesting   resulting from the TODCO   IPO                            -         -        -    0.02      -  After-tax restructuring   of Nigeria benefit plans       -         -     0.05       -   0.05  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        $0.01     $0.08    $0.07   $0.32  $0.22                            -------- --------- -------- ------- ------                   Transocean Inc. and Subsidiaries           Non-GAAP Financial Measures and Reconciliations  Operating Income (Loss) Before General and Administrative Expense             to Field Operating Income (Loss) by Segment                          (in US$ millions)                           Three Months Ended          Years Ended                       --------------------------- -------------------                       Dec. 31, Sept. 30, Dec. 31,      Dec. 31,                        2004      2004     2003      2004      2003                       -------- --------- -------- --------- ---------Transocean Drilling Segment  Operating revenue     $591.0    $558.7   $531.1  $2,280.4  $2,206.7  Operating and   maintenance expense   413.3     360.5    354.1   1,445.1   1,367.9  Depreciation           106.2     110.0    104.1     432.6     416.0  Impairment loss on   long-lived assets         -         -        -         -       5.2  Gain from sale of   assets, net            (2.4)     (0.5)    (2.5)    (25.9)     (4.9)                       -------- --------- -------- --------- --------- Operating income  before general and  administrative  expense                 73.9      88.7     75.4     428.6     422.5 Add  back:  Depreciation    106.2     110.0    104.1     432.6     416.0         Impairment          loss on          long-lived          assets             -         -        -         -       5.2         Gain from          sale of          assets, net     (2.4)     (0.5)    (2.5)    (25.9)     (4.9)                       -------- --------- -------- --------- --------- Field operating  income                $177.7    $198.2   $177.0    $835.3    $838.8                       -------- --------- -------- --------- ---------TODCO Segment (1)  Operating revenue      $85.9     $93.1    $60.4    $333.5    $227.6  Operating and   maintenance expense   (2)                    61.5      72.4     52.7     281.2     242.5  Depreciation            20.0      23.9     23.0      92.0      92.2  Impairment loss on   long-lived assets         -         -     (0.3)        -      11.3  Gain from sale of   assets, net            (0.6)     (0.8)    (0.4)     (6.0)     (0.9)                       -------- --------- -------- --------- --------- Operating income  (loss) before  general and  administrative  expense                  5.0      (2.4)   (14.6)    (33.7)   (117.5) Add  back:  Depreciation     20.0      23.9     23.0      92.0      92.2         Impairment          loss on          long-lived          assets             -         -     (0.3)        -      11.3         Gain from          sale of          assets, net     (0.6)     (0.8)    (0.4)     (6.0)     (0.9)                       -------- --------- -------- --------- --------- Field operating  income (loss)          $24.4     $20.7     $7.7     $52.3    $(14.9)                       -------- --------- -------- --------- ---------(1) Amounts are representative of TODCO's results through December 16,    2004. TODCO was deconsolidated effective December 17, 2004 in    connection with the December offering and conversion of the    Company's remaining Class B shares to Class A shares.(2) Q4 04, Q3 04, Q4 03, YTD Q4 04 and YTD Q4 03 include $6.0 million,    $6.9 million, $3.7 million, $32.3 million and $14.9 million,    respectively, of operating and maintenance expense that TODCO    classifies as general and administrative expense.                   Transocean Inc. and Subsidiaries           Non-GAAP Financial Measures and Reconciliations                Total Debt to Net Debt Reconciliations                          (in US$ millions)                                                  As of       As of                                               ----------- -----------                                                 12/31/04    12/31/03                                               ----------- -----------Total Debt to Net Debt ReconciliationTotal Debt                                       $2,481.5    $3,658.1Deduct: Cash and Cash Equivalents                   451.3       474.0                                               ----------- -----------Net Debt                                         $2,030.2    $3,184.1                   Transocean Inc. and Subsidiaries                     Effective Tax Rate Analysis                          (in US$ millions)                               Three Months Ended        Year Ended                          ---------------------------- ---------------                           Dec. 31, Sept. 30, Dec. 31,    Dec. 31,                            2004      2004     2003     2004    2003                          --------- --------- -------- ------- -------Income before Income Taxes and Minority Interest                   $(54.1)   $162.2    $(0.7) $240.3   $21.6  Add back (subtract):   Stock option vesting    resulting from the    TODCO IPO                    -         -        -     7.1       -   Nigeria benefit plan    restructuring                -         -     17.1            17.7   Impairment loss on    note receivable from    related party                -         -        -               -   Impairment loss on    long-lived assets            -         -     (0.3)           37.8   Loss on retirement of    debt                      48.4         -        -    76.5    15.7   IPO-related costs             -         -      0.8             8.8   Gain on sale of Sedco    602                       (0.1)        -        -   (21.7)      -   Gain on TODCO    offerings               (140.0)   (129.4)       -  (308.8)      -   Non-cash TODCO tax    sharing agreement    charge                   167.1         -        -   167.1       -                          --------- --------- -------- ------- -------Adjusted Income before Income Taxes and Minority Interest           $21.3     $32.8    $16.9  $160.5  $101.6Income Tax Expense           $17.1      $6.3    $(5.3)  $91.3    $3.0  Add back (subtract):   Valuation allowance    related to TODCO    offerings                (15.1)     13.7        -   (32.4)      -   Other                      (0.2)     (0.9)       -    (1.1)      -   Changes in estimates    (1)                       16.4       5.5        -    21.9       -   Nigeria benefit plan    restructuring                -         -     (0.6)      -    (0.6)   Impairment loss on    note receivable from    related party                -         -        -       -       -   Impairment loss on    long-lived assets            -         -     (0.1)      -    11.4   Loss on retirement of    debt                         -                  -       -     1.9   Favorable resolution    of a non-U.S. tax    liability                    -         -        -       -    14.6                          --------- --------- -------- ------- -------Adjusted Income Tax Expense (2)                 $18.2     $24.6    $(6.0)  $79.7   $30.3Effective Tax Rate           -31.6%      3.9%   757.1%   38.0%   13.9%Effective Tax Rate Adjusted                     85.4%     75.1%   -35.5%   49.7%   29.8%(1) Our estimates change as we file tax returns, settle disputes with    tax authorities or become aware of other events.(2) The three months ended December 31, 2004, September 30, 2004 and    December 31, 2003 include $(3.3) million, $10.1 million and    $(11.0) million, respectively, of additional tax expense (benefit)    reflecting the catch-up effect of an increase (decrease) in the    annual effective tax rate.
    CONTACT: Transocean Inc., Houston             Analyst Contact:             Jeffrey L. Chastain, 713-232-7551             or             Media Contact:             Guy A. Cantwell, 713-232-7647    SOURCE: Transocean Inc.