HOUSTON, Oct. 21 /PRNewswire-FirstCall/ -- Weatherford International Ltd. today reported third quarter 2007 income from continuing operations of $294.9 million, or $0.85 per diluted share. Third quarter diluted earnings per share from continuing operations reflect an improvement of 27 percent over the third quarter of 2006 diluted earnings per share from continuing operations of $0.67.
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Third quarter revenues were $1,972.0 million, or 16 percent higher than the same period last year, against a backdrop of flat rig count activity.
Sequentially, the company's third quarter diluted earnings per share from continuing operations were $0.17 higher than the second quarter 2007 diluted earnings per share from continuing operations of $0.68, before non-recurring items.
In the first nine months of 2007, revenues were $5.6 billion and income from continuing operations before non-recurring items was $816.4 million, or $2.35 per diluted share. In 2006, the company reported revenues for the first nine months of $4.8 billion and income from continuing operations before non- recurring items of $633.0 million, or $1.77 per diluted share.
North America
Revenues for the quarter were $993.8 million. This is a four percent increase over the same quarter in the prior year, as compared to a three percent rig count decline. Growth in the U.S. rig count was more than offset by a 29% drop in the Canadian rig count. Sequentially, revenues increased 13 percent, as compared to a 12 percent increase in rig count. Artificial lift, directional & underbalanced drilling and wireline performed exceptionally well.
Operating income of $264.2 million was six percent lower than the same quarter in the prior year and 37 percent higher sequentially.
Latin America
Third quarter revenues of $213.6 million were 23 percent higher than the third quarter of 2006 and three percent higher than the prior quarter. This region's performance reflected the strongest sequential growth in its artificial lift, directional & underbalanced drilling and well construction service lines.
The current quarter's operating income of $45.5 million improved 63 percent as compared to the same quarter in the prior year and was flat as compared to the second quarter of 2007.
Europe/West Africa/CIS
Third quarter revenues of $308.6 million were 43 percent higher than the third quarter of 2006 and six percent higher than the prior quarter. This region improved across most product lines with the strongest growth in the artificial lift, completion, directional & underbalanced drilling, and well construction service lines.
The current quarter's operating income of $73.9 million improved 60 percent as compared to the same quarter in the prior year and seven percent higher sequentially.
Middle East/North Africa/Asia
Third quarter revenues of $455.9 million were 29 percent higher than the third quarter of 2006 and five percent higher than the prior quarter. This region's performance reflected improvements in its directional & underbalanced drilling, well construction, artificial lift and wireline service lines.
The current quarter's operating income of $103.7 million improved 46 percent as compared to the same quarter in the prior year and seven percent as compared to the prior quarter.
Discontinued Operations
The company is disposing of its non-core oil and gas development and production business. The results of operations of this business for the current and prior periods are reflected as discontinued operations, net of taxes. For the three months ended September 30, 2007, the loss per diluted share from discontinued operations was $0.01.
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 2007 third quarter results on October 22, 2007 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 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 approximately 35,500 people worldwide.
Contact: Andrew P. Becnel (713) 693-4136 Chief Financial Officer
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 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 Nine Months Ended September 30, Ended September 30, 2007 2006 2007 2006 Net Revenues: North America $993,828 $954,007 $2,883,825 $2,716,194 Latin America 213,644 173,953 626,190 514,685 Europe/West Africa/CIS 308,587 215,270 844,184 597,586 Middle East/North Africa/Asia 455,932 353,523 1,286,022 942,875 1,971,991 1,696,753 5,640,221 4,771,340 Operating Income (Expense): North America 264,183 281,484 756,349 766,173 Latin America 45,453 27,877 139,784 86,614 Europe/West Africa/CIS 73,884 46,049 197,442 125,402 Middle East/North Africa/Asia 103,692 71,134 284,163 175,254 Research and Development (43,199) (38,241) (124,413) (112,045) Equity in Earnings (Losses) 4,149 (190) 5,928 5,737 Corporate Expenses (28,573) (24,718) (79,193) (68,481) Exit Costs and Restructuring Charges - - (17,316) (2,770) 419,589 363,395 1,162,744 975,884 Other Income (Expense): Other, Net 1,282 332 (7,024) (10,417) Interest Expense, Net (50,194) (27,487) (119,258) (70,066) Income from Continuing Operations Before Income Taxes and Minority Interest 370,677 336,240 1,036,462 895,401 Provision for Income Taxes: Provision for Operations (70,429) (94,022) (223,172) (257,398) Tax Charges and Benefit From Exit and Restructuring Charges - - (43,906) 970 (70,429) (94,022) (267,078) (256,428) Income from Continuing Operations Before Minority Interest 300,248 242,218 769,384 638,973 Minority Interest, Net of Taxes (5,324) (6,076) (14,161) (7,812) Income from Continuing Operations $294,924 $236,142 $755,223 $631,161 Loss from Discontinued Operation, Net of Taxes (2,211) (1,939) (15,628) (6,794) Net Income $292,713 $234,203 $739,595 $624,367 Basic Earnings Per Share: Income from Continuing Operations $0.87 $0.68 $2.23 $1.81 Loss from Discontinued Operation (0.00) (0.00) (0.05) (0.02) Net Income $0.87 $0.68 $2.18 $1.79 Diluted Earnings Per Share: Income from Continuing Operations $0.85 $0.67 $2.17 $1.77 Loss from Discontinued Operation (0.01) (0.01) (0.04) (0.02) Net Income $0.84 $0.66 $2.13 $1.75 Weighted Average Shares Outstanding: Basic 338,176 345,733 338,506 347,915 Diluted 348,248 354,471 347,458 356,905 Weatherford International Ltd. Selected Income Statement Information (Unaudited) (In 000's) Three Months Ended 9/30/2007 6/30/2007 3/31/2007 12/31/2006 9/30/2006 Net Revenues: North America $993,828 $883,364 $1,006,633 $956,436 $954,007 Latin America 213,644 206,604 205,942 211,512 173,953 Europe/West Africa/CIS 308,587 290,639 244,958 229,757 215,270 Middle East/ North Africa/ Asia 455,932 435,338 394,752 409,883 353,523 $1,971,991 $1,815,945 $1,852,285 $1,807,588 $1,696,753 Operating Income (Expense): North America $264,183 $192,268 $299,898 $274,007 $281,484 Latin America 45,453 45,742 48,589 46,413 27,877 Europe/West Africa/CIS 73,884 68,801 54,757 47,646 46,049 Middle East/ North Africa/ Asia 103,692 96,998 83,473 98,086 71,134 Research and Development (43,199) (40,700) (40,514) (37,384) (38,241) Equity in Earnings (Losses) 4,149 989 790 93 (190) Corporate Expenses (28,573) (23,525) (27,095) (26,625) (24,718) Exit Costs and Restructuring Charges - (13,132) (4,184) (23,433) - $419,589 $327,441 $415,714 $378,803 $363,395 Supplemental Information (Unaudited) (In 000's) Three Months Ended 9/30/2007 6/30/2007 3/31/2007 12/31/2006 9/30/2006 Depreciation and Amortization: North America $74,047 $66,959 $61,764 $58,475 $58,102 Latin America 18,880 17,118 16,739 17,307 16,856 Europe/West Africa/CIS 22,926 20,936 18,235 17,259 16,460 Middle East/North Africa/Asia 40,983 36,951 36,167 32,549 29,653 Research and Development 1,678 1,669 1,620 1,819 1,813 Corporate 463 909 990 1,576 596 $158,977 $144,542 $135,515 $128,985 $123,480
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 nine months ended September 30, 2007 and 2006, and the three months ended June 30, 2007. We did not report non-GAAP financial measures for the three months ended September 30, 2007 and 2006. 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 thousands, except per share data) Three Months Nine Months Ended Ended June 30, September 30, September 30, 2007 2007 2006 Operating Income: GAAP Operating Income $327,441 $1,162,744 $975,884 Exit costs and restructuring charges 13,132 (a) 17,316 (b) 2,770 ( c ) Non-GAAP Operating Income $340,573 $1,180,060 $978,654 Provision for Income Taxes: GAAP Provision for Income Taxes $(105,271) $(267,078) $(256,428) Tax impact of charges (4,574)(a) (6,094)(b) (970)( c ) Other charge 50,000 (a) 50,000 (b) - ( c ) Non-GAAP Provision for Income Taxes $(59,845) $(223,172) $(257,398) Income from Continuing Operations: GAAP Income from Continuing Operations $176,480 $755,223 $631,161 Total charges, net of tax 58,558 (a) 61,222 (b) 1,800 ( c ) Non-GAAP Income from Continuing Operations $235,038 $816,445 $632,961 Diluted Earnings Per Share From Continuing Operations: GAAP Diluted Earnings per Share From Continuing Operations $0.51 $2.17 $1.77 Total charges, net of tax 0.17 (a) 0.18 (b) - ( c ) Non-GAAP Diluted Earnings per Share From Continuing Operations $0.68 $2.35 $1.77 Note (a): This amount represents severance charges associated with the Company's restructuring activities. On an after tax basis, these charges approximated $8.6 million during the three months ended June 30, 2007. In addition, the Company incurred a tax charge of $50.0 million for withholding taxes required to be paid on a distribution made by the Company to one of its foreign subsidiaries. On an after tax basis, these items resulted in an effect of seventeen cents per diluted share for the three months ended June 30, 2007. Note (b): This amount represents severance charges associated with the Company's restructuring activities. On an after tax basis, these charges approximated $11.2 million during the nine months ended September 30, 2007. In addition, the Company incurred a tax charge of $50.0 million for withholding taxes required to be paid on a distribution made by the Company to one of its foreign subsidiaries. On an after tax basis, these items resulted in an effect of eighteen cents per diluted share for the nine months ended September 30, 2007. Note ( c ): This amount represents severance charges associated with the Company's restructuring activities. On an after tax basis, these charges approximated $1.8 million.
