EX-99.1 2 h74431exv99w1.htm EX-99.1 exv99w1
Exhibit 99.1
(WEATHERFORD LOGO)
News Release
Weatherford Reports Second Quarter Results
$0.11 per diluted share, before exit and restructuring charges and fair value adjustment to put
option
GENEVA, SWITZERLAND, July 20, 2010 — Weatherford International Ltd. (NYSE: WFT) today reported second quarter 2010 income of $80 million, or $0.11 per diluted share, excluding an after tax loss of $0.15 per diluted share. The excluded after tax loss was comprised of an $82 million non-cash charge for a fair value adjustment to the put option issued in connection with the TNK-BP acquisition and $24 million, net of tax, for severance and investigation costs. Second quarter diluted earnings per share reflect an increase of ten percent over the second quarter of 2009 diluted earnings per share of $0.10, before severance and investigation costs.
Second quarter revenues were $2,438 million, or 22 percent higher than the same period last year, and four percent higher than the prior quarter. Segment operating income of $308 million improved 14 percent year-over-year and 16 percent sequentially. International revenues were up seven percent versus the year ago quarter and five percent versus the prior quarter. Eastern Hemisphere revenues carried the international growth rate, increasing 16 percent versus the year ago quarter and nine percent versus the prior quarter, while Latin America revenue fell 12% compared to the year ago quarter and four percent sequentially due to lower project activity in Mexico. North America revenue increased 61 percent versus the year ago quarter and grew three percent versus the prior quarter. Stronger performance in the U.S. land market more than offset

 


 

Canada’s traditional seasonal decline and one month of severely reduced activity in the Gulf of Mexico.
Sequentially, the company’s second quarter diluted earnings per share, before charges, were $0.04 higher than the first quarter of 2010 diluted earnings per share of $0.07, before severance, investigation costs and fair value adjustment for the put option.
Weatherford Chairman and CEO Bernard J. Duroc-Danner commented, “The second quarter was progress with the United States and Russia singled out as the highest performers. The outlook for North America appears constructive. Client feedback leads us to believe that operators are planning to accelerate activity in international markets.”
North America
Revenues for the quarter were $921 million, which is a 61 percent increase over the same quarter in the prior year. Revenues were up three percent sequentially, which is the first sequential increase for the second quarter in North America since 2005.
Operating income was $129 million compared to break-even operating results for the second quarter of 2009 and was up $17 million sequentially. The current quarter’s margins improved 140 basis points to 14.0%.

 


 

Middle East/North Africa/Asia
Second quarter revenues of $601 million were one percent higher than the second quarter of 2009 and six percent higher than the prior quarter. On a sequential basis, strong performances in Iraq and China were partially offset by weakness in Saudi Arabia and Libya.
The current quarter’s operating income of $78 million decreased 37 percent as compared to the same quarter in the prior year and decreased six percent compared to the prior quarter.
Europe/West Africa/FSU
Second quarter revenues of $506 million were 39 percent higher than the second quarter of 2009 and 11 percent higher than the prior quarter. The year-over-year increase was largely due to our acquisition of TNK-BP’s oilfield service business in the third quarter of 2009. All product lines showed sequential growth.
The current quarter’s operating income of $63 million was flat compared to the same quarter in the prior year and increased 63 percent sequentially.
Latin America
Second quarter revenues of $410 million were 12 percent lower than the second quarter of 2009 and four percent lower than the prior quarter. Consistent with the prior quarter, Mexico was the largest contributor to the sequential decline in revenue due to a decrease in volumes of project-based work.
The current quarter’s operating income of $38 million declined 56 percent as compared to the same quarter in the prior year and increased 22 percent compared to the prior quarter.

 


 

Reclassifications and Non-GAAP
Non-GAAP performance measures and corresponding reconciliations to GAAP financial measures have been provided for meaningful comparisons between current results and results in prior operating periods.
Conference Call
The company will host a conference call with financial analysts to discuss the 2010 second quarter results on July 20, 2010 at 8:00 a.m. (CDT). The company invites investors to listen to a play back of the conference call at the company’s website, http://www.weatherford.com in the “investor relations” section.
Weatherford is a Swiss-based, multi-national oilfield service company. It is one of the largest global providers of innovative mechanical solutions, technology and services for the drilling and production sectors of the oil and gas industry. Weatherford operates in over 100 countries and employs over 53,000 people worldwide.
# # #
         
Contact:
  Andrew P. Becnel   +41.22.816.1502 
 
  Chief Financial Officer    
 
       
Contact:
  Karen David-Green   +1.713.693.2530 
 
  Vice President — Investor Relations    
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 concerning, among other things, Weatherford’s prospects for its operations which are subject to certain risks, uncertainties and assumptions. These risks and uncertainties, which are more fully described in Weatherford International Ltd.’s reports and registration statements filed with the SEC, include the impact of oil and natural gas prices and worldwide economic conditions on drilling activity, the outcome of pending government investigations, the demand for and pricing of Weatherford’s products and services, domestic and international economic and regulatory conditions and changes in tax and other laws affecting our business. Should one or more of these risks or uncertainties materialize, or should the assumptions prove incorrect, actual results may vary materially from those currently anticipated.

 


 

Weatherford International Ltd.
Consolidated Condensed Statements of Income
(Unaudited)
(In 000’s, Except Per Share Amounts)
                                 
    Three Months     Six Months  
    Ended June 30,     Ended June 30,  
    2010     2009     2010     2009  
Net Revenues:
                               
North America
  $ 921,443     $ 571,415     $ 1,811,987     $ 1,408,768  
Middle East/North Africa/Asia
    600,777       592,908       1,165,756       1,174,854  
Europe/West Africa/FSU
    505,774       364,968       960,475       733,811  
Latin America
    410,277       465,541       838,301       933,540  
 
                       
 
    2,438,271       1,994,832       4,776,519       4,250,973  
 
                       
 
                               
Operating Income (Expense):
                               
North America
    129,361       (709 )     241,688       122,327  
Middle East/North Africa/Asia
    78,009       123,553       160,805       257,579  
Europe/West Africa/FSU
    62,834       62,614       101,362       137,557  
Latin America
    37,984       85,759       69,063       177,976  
Research and Development
    (53,530 )     (46,113 )     (102,387 )     (95,134 )
Corporate Expenses
    (42,732 )     (40,834 )     (89,852 )     (80,433 )
Revaluation of Contingent Consideration
    (81,753 )           (89,563 )      
Exit and Restructuring
    (27,309 )     (30,905 )     (71,341 )     (55,782 )
 
                       
 
    102,864       153,365       219,775       464,090  
 
                               
Other Income (Expense):
                               
Interest Expense, Net
    (95,719 )     (93,498 )     (191,058 )     (184,561 )
Devaluation of Venezuelan Bolivar
                (63,859 )      
Other, Net
    (14,186 )     (3,871 )     (23,404 )     (17,410 )
 
                       
 
                               
Income (Loss) Before Income Taxes
    (7,041 )     55,996       (58,546 )     262,119  
 
                               
Benefit (Provision) for Income Taxes:
                               
Provision for Operations
    (19,095 )     (8,829 )     (29,980 )     (44,633 )
Benefit from Devaluation of Venezuelan Bolivar
                23,973        
Benefit from Exit and Restructuring
    2,888       3,388       5,331       6,729  
 
                       
 
    (16,207 )     (5,441 )     (676 )     (37,904 )
 
                               
Net Income (Loss)
    (23,248 )     50,555       (59,222 )     224,215  
Net Income Attributable to Noncontrolling Interest
    (3,316 )     (8,574 )     (7,351 )     (17,432 )
 
                       
Net Income (Loss) Attributable to Weatherford
  $ (26,564 )   $ 41,981     $ (66,573 )   $ 206,783  
 
                       
 
                               
Earnings (Loss) Per Share Attributable to Weatherford:
                               
Basic
  $ (0.04 )   $ 0.06     $ (0.09 )   $ 0.30  
Diluted
  $ (0.04 )   $ 0.06     $ (0.09 )   $ 0.29  
 
                               
Weighted Average Shares Outstanding:
                               
Basic
    743,209       700,424       740,537       699,375  
Diluted
    743,209       709,412       740,537       706,024  

 


 

Weatherford International Ltd.
Selected Income Statement Information
(Unaudited)
(In 000’s)
                                         
    Three Months  
    Ended  
    6/30/2010     3/31/2010     12/31/2009     9/30/2009     6/30/2009  
Net Revenues:
                                       
North America
  $ 921,443     $ 890,544     $ 736,443     $ 620,496     $ 571,415  
Middle East/North Africa/Asia
    600,777       564,979       593,154       600,110       592,908  
Europe/West Africa/FSU
    505,774       454,701       478,259       404,390       364,968  
Latin America
    410,277       428,024       618,225       524,883       465,541  
 
                             
 
  $ 2,438,271     $ 2,338,248     $ 2,426,081     $ 2,149,879     $ 1,994,832  
 
                             
 
                                       
Operating Income (Expense):
                                       
North America
  $ 129,361     $ 112,327     $ 41,625     $ 33,259     $ (709 )
Middle East/North Africa/Asia
    78,009       82,796       82,452       101,943       123,553  
Europe/West Africa/FSU
    62,834       38,528       48,893       44,468       62,614  
Latin America
    37,984       31,079       49,271       54,343       85,759  
Research and Development
    (53,530 )     (48,857 )     (50,216 )     (49,300 )     (46,113 )
Corporate Expenses
    (42,732 )     (47,120 )     (48,990 )     (44,272 )     (40,834 )
Revaluation of Contingent Consideration
    (81,753 )     (7,810 )     (6,295 )     27,368        
Exit and Restructuring
    (27,309 )     (44,032 )     (26,897 )     (17,887 )     (30,905 )
 
                             
 
  $ 102,864     $ 116,911     $ 89,843     $ 149,922     $ 153,365  
 
                             
Supplemental Information
(Unaudited)

(In 000’s)
                                         
    Three Months  
    Ended  
    6/30/2010     3/31/2010     12/31/2009     9/30/2009     6/30/2009  
Depreciation and Amortization:
                                       
North America
  $ 81,040     $ 80,660     $ 83,658     $ 79,737     $ 77,253  
Middle East/North Africa/Asia
    75,139       72,290       72,739       65,771       60,921  
Europe/West Africa/FSU
    52,058       48,958       50,376       44,864       35,190  
Latin America
    44,753       42,479       42,751       43,403       35,971  
Research and Development
    2,324       2,224       1,980       1,940       2,017  
Corporate
    2,943       2,781       2,197       2,194       2,341  
 
                             
 
  $ 258,257     $ 249,392     $ 253,701     $ 237,909     $ 213,693  
 
                             

 


 

We report our financial results in accordance with generally accepted accounting principles (GAAP). However, Weatherford’s management believes that certain non-GAAP performance measures and ratios may provide users of this financial information additional meaningful comparisons between current results and results in prior operating periods. One such non-GAAP financial measure we may present from time to time is operating income or income from continuing operations excluding certain charges or amounts. This adjusted income amount is not a measure of financial performance under GAAP. Accordingly, it should not be considered as a substitute for operating income, net income or other income data prepared in accordance with GAAP. See the table below for supplemental financial data and corresponding reconciliations to GAAP financial measures for the three months ended June 30, 2010, March 31, 2010, and June 30, 2009 and for the six months ended June 30, 2010 and June 30, 2009. Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, the Company’s reported results prepared in accordance with GAAP.
Weatherford International Ltd.
Reconciliation of GAAP to Non-GAAP Financial Measures

(Unaudited)
(In 000’s, Except Per Share Data)
                                         
    Three Months Ended     Six Months Ended  
    June 30,     March 31,     June 30,     June 30,     June 30,  
    2010     2010     2009     2010     2009  
Operating Income:
                                       
GAAP Operating Income
  $ 102,864     $ 116,911     $ 153,365     $ 219,775     $ 464,090  
Exit and Restructuring
    27,309       44,032       30,905       71,341       55,782  
Revaluation of Contingent Consideration
    81,753       7,810             89,563        
 
                             
Non-GAAP Operating Income
  $ 211,926     $ 168,753     $ 184,270     $ 380,679     $ 519,872  
 
                             
 
                                       
Benefit (Provision) for Income Taxes:
                                       
GAAP Benefit (Provision) for Income Taxes
  $ (16,207 )   $ 15,531     $ (5,441 )   $ (676 )   $ (37,904 )
Devaluation of Venezuelan Bolivar
          (23,973 )           (23,973 )      
Exit and Restructuring
    (2,888 )     (2,443 )     (3,388 )     (5,331 )     (6,729 )
 
                             
Non-GAAP Benefit (Provision) for Income Taxes
  $ (19,095 )   $ (10,885 )   $ (8,829 )   $ (29,980 )   $ (44,633 )
 
                             
 
                                       
Net Income (Loss) Attributable to Weatherford:
                                       
GAAP Net Income (Loss)
  $ (26,564 )   $ (40,009 )   $ 41,981     $ (66,573 )   $ 206,783  
Total Charges, net of tax
    106,174  (a)     89,285  (b)     27,517  (c)     195,459       49,053  (d)
 
                             
Non-GAAP Net Income
  $ 79,610     $ 49,276     $ 69,498     $ 128,886     $ 255,836  
 
                             
 
                                       
Diluted Earnings (Loss) Per Share Attributable to Weatherford:
                                       
GAAP Diluted Earnings (Loss) per Share
  $ (0.04 )   $ (0.05 )   $ 0.06     $ (0.09 )   $ 0.29  
Total Charges, net of tax
    0.15  (a)     0.12  (b)     0.04  (c)     0.26       0.07  (d)
 
                             
Non-GAAP Diluted Earnings per Share
  $ 0.11     $ 0.07     $ 0.10     $ 0.17     $ 0.36  
 
                             
 
Note (a):   This amount is comprised of an $82 million charge for the revaluation of contingent consideration included as part of our acquisition of the Oilfield Services Division (“OFS”) of TNK-BP. We also incurred investigation costs in connection with on-going investigations by the U.S. government and severance charges associated with the Company’s restructuring activities.
 
Note (b):   This amount is primarily comprised of a $38 million charge, net of tax, related to our supplemental executive retirement plan that was frozen on March 31, 2010 and a $40 million charge, net of tax, related to the devaluation of the Venezuelan Bolivar. In addition, we incurred a charge of $8 million for the revaluation of contingent consideration included as part of our OFS acqusition. We also incurred investigation costs in connection with on-going investigations by the U.S. government and severance charges and facility closure costs associated with the Company’s restructuring activities.
 
Note (c):   This amount represents investigation costs incurred in connection with on-going investigations by the U.S. government and costs related to the Company’s withdrawal from sanctioned countries. Also included are severance charges associated with the Company’s reorganization activities.
 
Note (d):   This amount represents investigation costs incurred in connection with on-going investigations by the U.S. government and costs related to the Company’s withdrawal from sanctioned countries. Also included are severance charges associated with the Company’s reorganization activities.

 


 

Weatherford International Ltd.
Consolidated Condensed Balance Sheet
(Unaudited)

(In 000’s)
                 
    June 30,     December 31,  
    2010     2009  
Current Assets:
               
Cash and Cash Equivalents
  $ 222,783     $ 252,519  
Accounts Receivable, Net
    2,471,078       2,504,876  
Inventories
    2,371,489       2,239,762  
Other Current Assets
    1,253,261       1,143,449  
 
           
 
    6,318,611       6,140,606  
 
           
 
               
Long-Term Assets:
               
Property, Plant and Equipment, Net
    6,774,500       6,991,579  
Goodwill
    4,128,966       4,156,105  
Other Intangibles, Net
    749,654       778,786  
Equity Investments
    539,817       542,667  
Other Assets
    303,179       256,440  
 
           
 
    12,496,116       12,725,577  
 
           
 
               
Total Assets
  $ 18,814,727     $ 18,866,183  
 
           
 
               
Current Liabilities:
               
Short-term Borrowings and Current Portion of Long-term Debt
  $ 628,108     $ 869,581  
Accounts Payable
    1,127,875       1,002,359  
Other Current Liabilities
    994,757       924,948  
 
           
 
    2,750,740       2,796,888  
 
           
 
               
Long-term Liabilities:
               
Long-term Debt
    6,005,472       5,847,258  
Other Liabilities
    383,871       423,333  
 
           
 
    6,389,343       6,270,591  
 
           
 
               
Total Liabilities
    9,140,083       9,067,479  
 
           
 
               
Shareholders’ Equity:
               
Weatherford Shareholders’ Equity
    9,603,780       9,719,672  
Noncontrolling Interest
    70,864       79,032  
 
           
Total Shareholders’ Equity
    9,674,644       9,798,704  
 
           
 
               
Total Liabilities and Shareholders’ Equity
  $ 18,814,727     $ 18,866,183  
 
           

 


 

Weatherford International Ltd.
Net Debt
(Unaudited)

(In 000’s)
         
Change in Net Debt for the Three Months Ended June 30, 2010:
       
 
Net Debt at March 31, 2010
  $ (6,628,951 )
Operating Income
    102,864  
Depreciation and Amortization
    258,257  
Exit and Restructuring
    27,309  
Revaluation of Contingent Consideration
    81,753  
Capital Expenditures
    (217,664 )
(Increase) Decrease in Working Capital
    92,668  
Income Taxes Paid
    (133,382 )
Interest Paid
    (70,023 )
Acquisitions and Divestitures of Assets and Businesses, Net
    40,649  
Other
    35,723  
 
     
Net Debt at June 30, 2010
  $ (6,410,797 )
 
     
Change in Net Debt for the Six Months Ended June 30, 2010:
         
Net Debt at December 31, 2009
  $ (6,464,320 )
Operating Income
    219,775  
Depreciation and Amortization
    507,649  
Exit and Restructuring
    71,341  
Revaluation of Contingent Consideration
    89,563  
Capital Expenditures
    (448,751 )
(Increase) Decrease in Working Capital
    (96,352 )
Income Taxes Paid
    (224,117 )
Interest Paid
    (209,620 )
Acquisitions and Divestitures of Assets and Businesses, Net
    81,860  
Other
    62,175  
 
     
Net Debt at June 30, 2010
  $ (6,410,797 )
 
     
                         
    June 30,     March 31,     December 31,  
    2010     2010     2009  
Components of Net Debt
                       
Cash
  $ 222,783     $ 207,099     $ 252,519  
Short-term Borrowings and Current Portion of Long-Term Debt
    (628,108 )     (991,440 )     (869,581 )
Long-term Debt
    (6,005,472 )     (5,844,610 )     (5,847,258 )
 
                 
Net Debt
  $ (6,410,797 )   $ (6,628,951 )   $ (6,464,320 )
 
                 
“Net Debt” is debt less cash. Management believes that Net Debt provides useful information regarding the level of Weatherford indebtedness by reflecting cash that could be used to repay debt.
Working capital is defined as accounts receivable plus inventory less accounts payable.