Condensed Consolidating Financial Information

9 Months Ended

Sep. 30, 2012

Condensed Consolidating Financial Information

Condensed Consolidating Financial Information

Note 19—Condensed Consolidating Financial Information

Transocean Inc., a wholly owned subsidiary of Transocean Ltd., is the issuer of certain notes and debentures, which have been guaranteed by Transocean Ltd.  Transocean Ltd. has also guaranteed borrowings under the Five-Year Revolving Credit Facility.  Transocean Ltd.’s guarantee of debt securities of Transocean Inc. is full and unconditional.  Transocean Ltd. is not subject to any significant restrictions on its ability to obtain funds by dividends, loans or capital distributions from its consolidated subsidiaries.

The following tables present condensed consolidating financial information for (a) Transocean Ltd. (the “Parent Guarantor”), (b) Transocean Inc. (the “Subsidiary Issuer”), and (c) the other direct and indirect wholly owned and partially owned subsidiaries of the Parent Guarantor (the “Other Subsidiaries”), none of which guarantee any indebtedness of the Subsidiary Issuer.  The tables also include the consolidating adjustments necessary to present the condensed financial statements on a consolidated basis.  The following condensed consolidating financial information may not necessarily be indicative of the results of operations, financial position or cash flows had the subsidiaries operated as independent entities (in millions):

	Three months ended September 30, 2012
	Parent Guarantor			Subsidiary Issuer			Other Subsidiaries			Consolidating adjustments			Consolidated
Operating revenues	$	—		$	—		$	2,446		$	(6	)	$	2,440
Cost and expenses	3			2			1,688			(6		)	1,687
Gain on disposal of assets, net	—			—			50			—			50
Operating income (loss)	(3		)	(2		)	808			—			803
Other income (expense), net
Interest expense, net	(3		)	(149		)	(13		)	—			(165		)
Equity in earnings	(375		)	(223		)	—			598			—
Other, net	—			(5		)	(3		)	—			(8		)
	(378		)	(377		)	(16		)	598			(173		)
Income (loss) from continuing operations before income tax expense	(381		)	(379		)	792			598			630
Income tax expense	—			—			104			—			104
Income (loss) from continuing operations	(381		)	(379		)	688			598			526
Loss from discontinued operations, net of tax	—			—			(909		)	—			(909		)
Net income (loss)	(381		)	(379		)	(221		)	598			(383		)
Net loss attributable to noncontrolling interest	—			—			(2		)	—			(2		)
Net income (loss) attributable to controlling interest	(381		)	(379		)	(219		)	598			(381		)
Other comprehensive income (loss) before income taxes	(3		)	7			(1		)	—			3
Income taxes related to other comprehensive income	—			—			1			—			1
Other comprehensive income (loss), net of income taxes	(3		)	7			—			—			4
Total comprehensive income (loss)	(384		)	(372		)	(221		)	598			(379		)
Total comprehensive loss attributable to noncontrolling interest	—			—			(2		)	—			(2		)
Total comprehensive income (loss) attributable to controlling interest	$	(384	)	$	(372	)	$	(219	)	$	598		$	(377	)

	Nine months ended September 30, 2012
	Parent Guarantor			Subsidiary Issuer			Other Subsidiaries			Consolidating adjustments			Consolidated
Operating revenues	$	—		$	—		$	6,935		$	(17	)	$	6,918
Cost and expenses	35			4			5,772			(17		)	5,794
Loss on impairment	—			—			(210		)	—			(210		)
Gain on disposal of assets, net	—			—			40			—			40
Operating income (loss)	(35		)	(4		)	993			—			954
Other income (expense), net
Interest expense, net	(10		)	(422		)	(68		)	—			(500		)
Equity in earnings	(630		)	(239		)	—			869			—
Other, net	—			4			(36		)	—			(32		)
	(640		)	(657		)	(104		)	869			(532		)
Income (loss) from continuing operations before income tax expense	(675		)	(661		)	889			869			422
Income tax expense	—			—			96			—			96
Income (loss) from continuing operations	(675		)	(661		)	793			869			326
Loss from discontinued operations, net of tax	—			—			(994		)	—			(994		)
Net income (loss)	(675		)	(661		)	(201		)	869			(668		)
Net income attributable to noncontrolling interest	—			—			7			—			7
Net income (loss) attributable to controlling interest	(675		)	(661		)	(208		)	869			(675		)
Other comprehensive income (loss) before income taxes	(7		)	7			2			—			2
Income taxes related to other comprehensive income	—			—			(1		)	—			(1		)
Other comprehensive income (loss), net of income taxes	(7		)	7			1			—			1
Total comprehensive income (loss)	(682		)	(654		)	(200		)	869			(667		)
Total comprehensive income attributable to noncontrolling interest	—			—			7			—			7
Total comprehensive income (loss) attributable to controlling interest	$	(682	)	$	(654	)	$	(207	)	$	869		$	(674	)

	Three months ended September 30, 2011
	Parent Guarantor			Subsidiary Issuer			Other Subsidiaries			Consolidating adjustments			Consolidated
Operating revenues	$	—		$	—		$	1,995		$	(4	)	$	1,991
Cost and expenses	10			1			1,685			(4		)	1,692
Loss on impairment	—			—			—			—			—
Loss on disposal of assets, net	—			—			(1		)	—			(1		)
Operating income (loss)	(10		)	(1		)	309			—			298
Other income (expense), net
Interest expense, net	(4		)	(125		)	(15		)	—			(144		)
Equity in earnings	(18		)	83			14			(65		)	14
Other, net	—			28			(119		)	—			(91		)
	(22		)	(14		)	(120		)	(65		)	(221		)
Income from continuing operations before income tax expense	(32		)	(15		)	189			(65		)	77
Income tax expense	—			—			93			—			93
Income from continuing operations	(32		)	(15		)	96			(65		)	(16		)
Income from discontinued operations, net of tax	—			—			(5		)	—			(5		)
Net income	(32		)	(15		)	91			(65		)	(21		)
Net income attributable to noncontrolling interest	—			—			11			—			11
Net income attributable to controlling interest	(32		)	(15		)	80			(65		)	(32		)
Other comprehensive income (loss) before income taxes	(3		)	4			(16		)	—			(15		)
Income taxes related to other comprehensive income (loss)	—			—			—			—			—
Other comprehensive income (loss), net of income taxes	(3		)	4			(16		)	—			(15		)
Total comprehensive income	(35		)	(11		)	75			(65		)	(36		)
Total comprehensive income attributable to noncontrolling interest	—			—			6			—			6
Total comprehensive income attributable to controlling interest	$	(35	)	$	(11	)	$	69		$	(65	)	$	(42	)

	Nine months ended September 30, 2011
	Parent Guarantor			Subsidiary Issuer			Other Subsidiaries			Consolidating adjustments			Consolidated
Operating revenues	$	—		$	—		$	5,985		$	(13	)	$	5,972
Cost and expenses	34			3			4,912			(13		)	4,936
Loss on impairment	—			—			—			—			—
Loss on disposal of assets, net	—			—			(1		)	—			(1		)
Operating income (loss)	(34		)	(3		)	1,072			—			1,035
Other income (expense), net
Interest expense, net	(4		)	(386		)	(26		)	—			(416		)
Equity in earnings	450			854			18			(1,304		)	18
Other, net	(1		)	(4		)	(92		)	—			(97		)
	445			464			(100		)	(1,304		)	(495		)
Income from continuing operations before income tax expense	411			461			972			(1,304		)	540
Income tax expense	—			—			211			—			211
Income from continuing operations	411			461			761			(1,304		)	329
Income from discontinued operations, net of tax	—			—			116			—			116
Net income	411			461			877			(1,304		)	445
Net income attributable to noncontrolling interest	—			—			34			—			34
Net income attributable to controlling interest	411			461			843			(1,304		)	411
Other comprehensive income (loss) before income taxes	(4		)	2			(9		)	—			(11		)
Income taxes related to other comprehensive income (loss)	—			—			(2		)	—			(2		)
Other comprehensive income (loss), net of income taxes	(4		)	2			(11		)	—			(13		)
Total comprehensive income	407			463			866			(1,304		)	432
Total comprehensive income attributable to noncontrolling interest	—			—			27						27
Total comprehensive income attributable to controlling interest	$	407		$	463		$	839		$	(1,304	)	$	405

	September 30, 2012
	Parent Guarantor		Subsidiary Issuer		Other Subsidiaries		Consolidating adjustments			Consolidated
Assets
Cash and cash equivalents	$	9	$	4,029	$	1,963	$	—		$	6,001
Other current assets	17		2,748		3,377		(1,839		)	4,303
Total current assets	26		6,777		5,340		(1,839		)	10,304
Property and equipment, net	1		—		20,458		—			20,459
Goodwill	—		—		2,987		—			2,987
Investment in affiliates	15,926		26,469		—		(42,395		)	—
Other assets	—		1,797		19,315		(19,550		)	1,562
Total assets	15,953		35,043		48,100		(63,784		)	35,312
Liabilities and equity
Debt due within one year	—		2,212		517		—			2,729
Other current liabilities	78		324		5,409		(1,839		)	3,972
Total current liabilities	78		2,536		5,926		(1,839		)	6,701
Long-term debt	568		17,192		13,178		(19,550		)	11,388
Other long-term liabilities	35		392		1,540		—			1,967
Total long-term liabilities	603		17,584		14,718		(19,550		)	13,355
Commitments and contingencies	—		—		—		—			—
Total equity	15,272		14,923		27,456		(42,395		)	15,256
Total liabilities and equity	$	15,953	$	35,043	$	48,100	$	(63,784	)	$	35,312

	December 31, 2011
	Parent Guarantor		Subsidiary Issuer		Other Subsidiaries		Consolidating adjustments			Consolidated
Assets
Cash and cash equivalents	$	3	$	2,793	$	1,221	$	—		$	4,017
Other current assets	8		784		4,476		(1,749		)	3,519
Total current assets	11		3,577		5,697		(1,749		)	7,536
Property and equipment, net	1		—		20,787		—			20,788
Goodwill	—		—		3,217		—			3,217
Investment in affiliates	16,439		27,518		—		(43,957		)	—
Other assets	—		1,368		20,799		(18,676		)	3,491
Total assets	16,451		32,463		50,500		(64,382		)	35,032
Liabilities and equity
Debt due within one year	—		1,693		494		—			2,187
Other current liabilities	294		367		4,429		(1,749		)	3,341
Total current liabilities	294		2,060		4,923		(1,749		)	5,528
Long-term debt	495		14,308		15,222		(18,676		)	11,349
Other long-term liabilities	25		439		1,948		—			2,412
Total long-term liabilities	520		14,747		17,170		(18,676		)	13,761
Commitments and contingencies
Redeemable noncontrolling interest	—		—		116		—			116
Total equity	15,637		15,656		28,291		(43,957		)	15,627
Total liabilities and equity	$	16,451	$	32,463	$	50,500	$	(64,382	)	$	35,032

	Nine months ended September 30, 2012
	Parent Guarantor			Subsidiary Issuer			Other Subsidiaries			Consolidating adjustments			Consolidated
Cash flows from operating activities	$	(58	)	$	(842	)	$	2,685		$	—		$	1,785
Cash flows from investing activities
Capital expenditures	—			—			(646		)	—			(646		)
Capital expenditures for discontinued operations	—			—			(75		)	—			(75		)
Proceeds from disposal of assets, net	—			—			189			—			189
Proceeds from disposal of discontinued operations, net	—			—			196			—			196
Investing activities with affiliates, net	(165		)	(1,986		)	(3,027		)	5,178			—
Other, net	—			24			8			—			32
Net cash used in investing activities	(165		)	(1,962		)	(3,355		)	5,178			(304		)
Cash flows from financing activities
Changes in short-term borrowings, net	—			—			(260		)	—			(260		)
Proceeds from debt	—			1,493			—			—			1,493
Repayments of debt	—			(30		)	(554		)	—			(584		)
Proceeds from restricted cash investments	—			—			298			—			298
Deposits to restricted cash investments	—			—			(158		)	—			(158		)
Distribution of qualifying additional paid-in capital	(278		)	—			—			—			(278		)
Financing activities with affiliates, net	523			2,577			2,078			(5,178		)	—
Other, net	(16		)	—			8			—			(8		)
Net cash provided by (used in) financing activities	229			4,040			1,412			(5,178		)	503
Net increase (decrease) in cash and cash equivalents	6			1,236			742			—			1,984
Cash and cash equivalents at beginning of period	3			2,793			1,221			—			4,017
Cash and cash equivalents at end of period	$	9		$	4,029		$	1,963		$	—		$	6,001

	Nine months ended September 30, 2011
	Parent Guarantor			Subsidiary Issuer			Other Subsidiaries			Consolidating adjustments			Consolidated
Cash flows from operating activities	$	(41	)	$	(397	)	$	1,660		$	—		$	1,222
Cash flows from investing activities
Capital expenditures	—			—			(633		)	—			(633		)
Capital expenditures for discontinued operations	—			—			(37		)	—			(37		)
Investment in marketable security	—			—			(199		)	—			(199		)
Proceeds from disposal of assets, net	—			—			12			—			12
Proceeds from disposal of discontinued operations, net	—			—			353			—			353
Payment for settlement of forward exchange contract, net	—			—			(78		)	—			(78		)
Investing activities with affiliates, net	(875		)	(1,333		)	(1,021		)	3,229			—
Other, net	—			(29		)	2			—			(27		)
Net cash used in investing activities	(875		)	(1,362		)	(1,601		)	3,229			(609		)
Cash flows from financing activities
Changes in short-term borrowings, net	—			58			—			—			58
Proceeds from debt	—			5			—			—			5
Repayments of debt	—			(177		)	(95		)	—			(272		)
Distribution of qualifying paid-in capital	(508		)	—			—			—			(508		)
Financing activities with affiliates, net	1,387			371			1,471			(3,229		)	—
Other, net	—			(3		)	(1		)	—			(4		)
Net cash provided by (used in) financing activities	879			254			1,375			(3,229		)	(721		)
Net increase (decrease) in cash and cash equivalents	(37		)	(1,505		)	1,434			—			(108		)
Cash and cash equivalents at beginning of period	38			2,041			1,275			—			3,354
Cash and cash equivalents at end of period	$	1		$	536		$	2,709		$	—		$	3,246