Weatherford International Ltd.
EANS-Adhoc: Weatherford Reports First Quarter Results
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ad-hoc disclosure transmitted by euro adhoc with the aim of a Europe-wide
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announcement.
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3-month report
24.04.2012
Earnings rise approximately 20% to $0.25 in Q1 versus $0.21 in Q4, before items
GENEVA, April 24, 2012 -- Weatherford International Ltd. (NYSE and SIX: WFT)
today reported first quarter 2012 net income of $190 million, or $0.25 per
diluted share, excluding an after tax loss of $67 million. On a GAAP basis, our
net income for the first quarter of 2012 was $123 million, or $0.16 per diluted
share. The excluded after tax loss is comprised of the following items:
- Severance charges of $25 million, primarily related to executive officers;
- $2 million of costs incurred in connection with on-going investigations
by the U.S. government;
- $40 million of discrete tax items primarily related to changes in
estimates and uncertain tax positions that are not directly related to
current year operating results
end of ad-hoc-announcement
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(Logo: http://photos.prnewswire.com/prnh/19990308/WEATHERFORDLOGO)
First quarter 2012 diluted earnings per share reflect an increase of $0.18 over
the first quarter of 2011 diluted earnings per share of $0.07, before charges.
Sequentially, the company's first quarter diluted earnings per share, before
charges, were $0.04 higher than the fourth quarter of 2011.
First quarter revenues were $3,599 million, or 26 percent higher than the same
period last year, and down three percent sequentially. North America revenues
increased 29 percent compared to the first quarter of 2011 while international
revenues were up 23 percent over the same period.
Segment operating income of $554 million improved 57 percent year-over-year but
was down nine percent sequentially. Segment operating income margins of 15%
improved three percent over the same period last year and declined one percent
sequentially. Segment margin performance improved relative to the same period in
the prior year primarily due to improved operating performance and in part due
to less severe weather conditions in our Middle East/North Africa/Asia region
and the charge taken in the prior-year period for the Colombia net equity tax
enacted in the first quarter of 2011.
Corporate general and administrative expense increased $7 million sequentially
to an all time high of $64 million, primarily attributable to additional
professional service fees incurred in the first quarter.
Subject to the risks regarding forward-looking statements highlighted by the
company in this press release and its public filings, the company expects
diluted earnings per share before excluded items of approximately $0.24 to $0.26
in the second quarter of 2012. With regard to the entirety of 2012, the company
maintains a positive but measured outlook for its North American business and
expects modest revenue and operating income growth compared to 2011.
Internationally, the company anticipates continued growth and expanding margins
in its Latin America region, underpinned by improvements in Brazil, Colombia,
Mexico and Venezuela. Eastern Hemisphere is also expected to improve in 2012,
with upticks in Europe and Russia, as well as continued recovery in the Middle
East / North Africa / Asia Pacific region with positive contributions in the
second half of 2012 from the completion of unfavorable contracts and new
contracts with better terms and pricing. For 2012, we currently estimate an
effective tax rate of approximately 35 percent, although the actual rate may
vary.
North America
Revenue increased three percent sequentially and 29 percent compared to the
first quarter of 2011. Artificial Lift, Wireline and Completions posted strong
revenue growth sequentially and were partially offset by a decline in
Stimulation, Drilling Tools and Fishing which were negatively impacted by the
natural gas market. Operating income of $359 million declined by $23 million
sequentially due to a 200 basis point decline in operating margins to 21%,
driven primarily by the Stimulation, Drilling Tools and Fishing product lines in
the U.S.
Middle East/North Africa/Asia
Revenue decreased $70 million sequentially, or 10 percent, with declines in
Completions and Wireline as well as expected seasonality in China. Despite the
decline in revenue, operating income improved $14 million or 39 percent
sequentially.
Europe/SSA/FSU
Revenue declined $40 million, or seven percent, sequentially as the normal
winter seasonality in the North Sea and Russia negatively impacted the first
quarter. Operating income declined $21 million sequentially due to the lower
level of activity and a 280 basis point decline in operating margins.
Latin America
Revenue decreased eight percent, or $57 million, on a sequential basis and
increased 64 percent, or $261 million, compared to the first quarter of 2011.
Operating income fell $25 million sequentially on the decline in revenue due to
budgetary seasonality of operators in the region.
Liquidity and Net Debt
Net debt for the quarter increased $317 million primarily as a result of an
increase in working capital of $155 million and capital expenditures of
approximately $483 million, net of lost-in-hole offset by positive contributions
from operations.
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. The non-GAAP financial measures
we may present from time to time include: 1) operating income or income from
continuing operations excluding certain charges or amounts, 2) the provision for
income taxes excluding discrete items and 3) the resulting non-GAAP net income
and per share amounts. Weatherford has added and expects to include the
provision for income taxes excluding discrete items as a non-GAAP measure going
forward. We believe it will provide users of this financial information
additional meaningful comparison between current operating results and operating
results in prior periods as well as greater transparency of income taxes.
Conference Call
The company will host a conference call with financial analysts to discuss the
2012 first quarter results on April 24, 2012 at 8:30 a.m. (CDT). The company
invites investors to listen to a play back of the conference call and to access
the call transcript 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 60,000
people worldwide.
Contacts: John H. Briscoe +1.713.836.4610
Chief Financial Officer
Karen David-Green +1.713.836.7430
Vice President - Investor Relations
Forward-Looking Statements
This press release contains, and the conference call announced in this release
may include, forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. This includes statements related to
future levels of earnings, revenue, expenses, margins, capital expenditures,
changes in working capital, cash flows, tax expense, effective tax rates and net
income, as well as the prospects for the oilfield service business generally and
our business in particular. Forward-looking statements also include any
statements about the resolution of our ongoing remediation of our material
weakness in internal control over financial reporting for income taxes. It is
inherently difficult to make projections or other forward-looking statements in
a cyclical industry and given the current macroeconomic uncertainty. Such
statements are based upon the current beliefs of Weatherford's management, and
are subject to significant risks, assumptions and uncertainties. These include
the Company's inability to design or improve internal controls to address
identified issues; the impact upon operations of legal compliance matters or
internal controls review, improvement and remediation, including the detection
of wrongdoing, improper activities or circumvention of internal controls;
difficulties in controlling expenses, including costs of legal compliance
matters or internal controls review, improvement and remediation; impact of
changes in management or staff levels, the effect of global political, economic
and market conditions on the Company's projected results; the possibility that
the Company may be unable to recognize expected revenues from current and future
contracts; the effect of currency fluctuations on the Company's business; the
Company's ability to manage its workforce to control costs; the cost and
availability of raw materials, the Company's ability to manage its supply chain
and business processes; the Company's ability to commercialize new technology;
whether the Company can realize expected benefits from its redomestication of
its former Bermuda parent company; the Company's ability to realize expected
benefits from its acquisitions and dispositions; the effect of a downturn in its
industry on the Company's carrying value of its goodwill; the effect of weather
conditions on the Company's operations; the impact of oil and natural gas prices
and worldwide economic conditions on drilling activity; the effect of turmoil in
the credit markets on the Company's ability to manage risk with interest rate
and foreign exchange swaps; the outcome of pending government investigations,
including the Securities and Exchange Commission's investigation of the
circumstances surrounding the Company's material weakness in its internal
control over financial reporting of income taxes; the outcome of ongoing
litigation, including shareholder litigation related to the Company's material
weakness in its internal control over financial reporting of income taxes and
its restatement of historical financial statements; the future level of crude
oil and natural gas prices; demand for our products and services; levels of
pricing for our products and services; utilization rates of our equipment; the
effectiveness of our supply chain; weather-related disruptions and other
operational and non-operational risks that are detailed in our most recent Form
10-K and other filings with the U.S. Securities and Exchange Commission. Should
one or more of these risks or uncertainties materialize, or underlying
assumptions prove incorrect, actual results may vary materially from those
indicated in our forward-looking statements. We undertake no obligation to
correct or update any forward-looking statement, whether as a result of new
information, future events, or otherwise, except to the extent required under
federal securities laws.
Weatherford International Ltd.
Consolidated Condensed Statements of Operations
(Unaudited)
(In Millions, Except Per Share Amounts)
Three Months
Ended March 31,
2012 2011
Net Revenues:
North America $ 1,754 $ 1,360
Middle East/North
Africa/Asia 605 576
Europe/SSA/FSU 569 510
Latin America 671 410
3,599 2,856
Operating Income (Expense):
North America 359 283
Middle East/North
Africa/Asia 48 10
Europe/SSA/FSU 60 40
Latin America 87 21
Research and
Development (62) (60)
Corporate Expenses (64) (56)
Severance, Exit and
Other Adjustments (32) (21)
396 217
Other Income (Expense):
Interest Expense, Net (112) (113)
Other, Net (17) (19)
Income Before Income Taxes 267 85
Benefit (Provision) for Income
Taxes:
Provision for Operations (99) (54)
Benefit from Severance, Exit
and Other Adjustments 2 2
Benefit (Provision) for
Discrete Items (40) 6
(137) (46)
Net Income 130 39
Net Income Attributable
to Noncontrolling Interest (7) (2)
Net Income Attributable
to Weatherford $ 123 $ 37
Earnings Per Share Attributable
to Weatherford:
Basic $ 0.16 $ 0.05
Diluted $ 0.16 $ 0.05
Weighted Average Shares
Outstanding:
Basic 760 748
Diluted 766 758
Weatherford International Ltd.
Selected Income Statement Information
(Unaudited)
(In Millions)
Three Months Ended
3/31/2012 12/31/2011 9/30/2011 6/30/2011 3/31/2011
Net Revenues:
North America $ 1,754 $ 1,699 $ 1,620 $ 1,344 $ 1,360
Middle East/
North Africa/
Asia 605 675 573 617 576
Europe/SSA/FSU 569 609 588 593 510
Latin America 671 727 591 498 410
$ 3,599 $ 3,710 $ 3,372 $ 3,052 $ 2,856
Three Months Ended
3/31/2012 12/31/2011 9/30/2011 6/30/2011 3/31/2011
Operating Income
(Expense):
North America $ 359 $ 382 $ 353 $ 244 $ 283
Middle East/
North Africa/
Asia 48 35 18 34 10
Europe/SSA/FSU 60 81 86 89 40
Latin America 87 112 70 50 21
Research and
Development (62) (64) (59) (62) (60)
Corporate
Expenses (64) (57) (42) (43) (56)
Libya Reserve - (67) - - -
Severance, Exit
and Other
Adjustments (32) (26) (8) (19) (21)
$ 396 $ 396 $ 418 $ 293 $ 217
Three Months Ended
3/31/2012 12/31/2011 9/30/2011 6/30/2011 3/31/2011
Product Line
Revenues:
Formation
Evaluation
and Well
Construction
(1) $ 2,045 $ 2,075 $ 1,879 $ 1,689 $ 1,714
Completion
and
Production(2) 1,554 1,635 1,493 1,363 1,142
$ 3,599 $ 3,710 $ 3,372 $ 3,052 $ 2,856
Three Months Ended
3/31/2012 12/31/2011 9/30/2011 6/30/2011 3/31/2011
Depreciation
and
Amortization:
North America $ 95 $ 91 $ 91 $ 88 $ 88
Middle East/
North Africa/
Asia 83 82 81 83 82
Europe/SSA/FSU 63 59 59 58 56
Latin America 55 52 51 49 46
Research and
Development 2 2 2 2 2
Corporate 3 3 2 3 3
$ 301 $ 289 $ 286 $ 283 $ 277
(1) Formation Evaluation and Well Construction includes Drilling Services,
Well Construction, Integrated Drilling, Wireline and Evaluation
Services, Drilling Tools and Re-entry and Fishing
(2) Completion and Production includes Artificial Lift Systems,
Stimulation and Chemicals, Completion Systems and Pipeline and
Specialty Services
We report our financial results in accordance with generally accepted accounting
principles (GAAP). However, Weatherford's management believes that certain
non-GAAP financial measures and ratios (as defined under the SEC's Regulation G)
may provide users of this financial information additional meaningful
comparisons between current results and results in prior periods. The non-GAAP
financial measures we may present from time to time include: 1) operating income
or income from continuing operations excluding certain charges or amounts, 2)
the provision for income taxes excluding discrete items and 3) the resulting
non-GAAP net income and per share amounts. These adjusted amounts are not
measures of financial performance under GAAP. Accordingly, these amounts should
not be considered as a substitute for operating income, provision for income
taxes, net income or other data prepared and reported in accordance with GAAP.
See the table below for supplemental financial data and corresponding
reconciliations to GAAP financial measures for the three months ended March 31,
2012, December 31, 2011, and March 31, 2011. Non-GAAP financial measures should
be viewed in addition to, and not as an alternative to, the Company's reported
results prepared in accordance with GAAP.
Reconciliation of GAAP to Non-GAAP Financial Measures
(Unaudited)
(In Millions, Except Per Share Amounts)
Three Months Ended
March 31, December 31, March 31,
2012 2011 2011
Operating Income:
GAAP Operating Income $ 396 $ 397 $ 217
Libya Reserve - 67 -
Severance, Exit
and Other
Adjustments 32 26 21
Non-GAAP Operating Income $ 428 $ 490 $ 238
Income (Loss) Before Income
Taxes:
GAAP Income (Loss) Before
Income Taxes $ 267 $ 245 $ 85
Libya Reserve - 67 -
Severance, Exit
and Other
Adjustments 29 31 21
Non-GAAP Income (Loss)
Before Income Taxes $ 296 $ 343 $ 106
Benefit (Provision) for Income
Taxes:
GAAP Benefit (Provision) for
Income Taxes $ (137) $ (221) $ (46)
Legal Entity
Reorganization
Charges - 22 -
Severance, Exit
and Other
Adjustments (2) (7) (2)
Discrete Items (1) 40 28 (6)
Non-GAAP Benefit (Provision)
for Income Taxes $ (99) $ (178) $ (54)
Net Income (Loss) Attributable to
Weatherford:
GAAP Net Income (Loss) $ 123 $ 18 $ 37
Total Charges, net
of tax 67 (a) 141 (b) 13 (c)
Non-GAAP Net Income $ 190 $ 159 $ 50
Diluted Earnings (Loss) Per Share
Attributable to Weatherford:
GAAP Diluted Earnings (Loss)
per Share $ 0.16 $ 0.02 $ 0.05
Total Charges, net
of tax 0.09 0.19 0.02
Non-GAAP Diluted Earnings
per Share $ 0.25 $ 0.21 $ 0.07
Effective Tax Rate (2) 51.3% 90.2% 54.1%
Annual Effective Tax Rate (3) 33.4% 51.9% 50.9%
Note (a): Non-GAAP adjustments, after tax, are comprised of (i) severance,
exit and other charges of $25 million, primarily related to executive
officer severance, (ii) $2 million of costs incurred in connection with
on-going investigations by the U.S. government and (iii) $40 million of
discrete tax items primarily related to uncertain tax positions and return
to accrual adjustments.
Note (b): Non-GAAP adjustments, after tax, are comprised of (i) a $67
million charge primarily to reserve accounts receivable, inventory and
machinery and equipment in Libya (ii) $4 million in legal and professional
costs incurred in conjunction with our tax planning and reorganization
activities, as well as $23 million in withholding taxes related to these
transactions (iii) $5 million of costs incurred in connection with
on-going investigations by the U.S. government, (iv) severance, exit and
other charges of $14 million and (v) a $28 million provision for discrete
tax items primarily related to valuation allowances on deferred tax
assets.
Note (c): This after tax amount is comprised of (i) a $9 million charge
associated with terminating a corporate consulting contract, (ii) $8
million for severance costs, (iii) investigation costs in connection with
on-going investigations by the U.S. government and (iv) a $6 million
benefit for discrete tax items.
Note (1): Discrete Items are income tax provisions (benefits) related
primarily to our changes in estimates as we file tax returns, settle
disputes with tax authorities or became aware of other events and include
changes in (a) deferred taxes, (b) valuation allowance on deferred taxes,
(c) uncertain tax positions and (d) other tax liabilities. Management
believes that excluding these items from the GAAP provision for income
taxes provides a non-GAAP measure of tax that provides additional
meaningful information about the income tax related to current and prior
period operating results and management expectations of income taxes for
the current year.
Note (2): Effective Tax Rate is GAAP provision for income taxes divided by
GAAP income before income taxes.
Note (3): Annual Effective Tax Rate is the Non-GAAP provision for income
taxes divided by Non-GAAP income before income taxes.
Weatherford International Ltd.
Consolidated Condensed Balance Sheet
(Unaudited)
(In Millions)
March 31, December 31,
2012 2011
Current Assets:
Cash and Cash
Equivalents $ 339 $ 371
Accounts Receivable, Net 3,358 3,235
Inventories 3,303 3,158
Other Current Assets 1,053 935
8,053 7,699
Long-Term Assets:
Property, Plant and
Equipment, Net 7,585 7,283
Goodwill 4,445 4,422
Other Intangibles, Net 706 711
Equity Investments 634 616
Other Assets 450 454
13,820 13,486
Total Assets $ 21,873 $ 21,185
Current Liabilities:
Short-term Borrowings
and Current Portion of
Long-term Debt $ 1,902 $ 1,320
Accounts Payable 1,679 1,567
Other Current
Liabilities 1,251 1,326
4,832 4,213
Long-term Liabilities:
Long-term Debt 5,989 6,286
Other Liabilities 1,119 1,133
7,108 7,419
Total Liabilities 11,940 11,632
Shareholders' Equity:
Weatherford
Shareholders' Equity 9,912 9,532
Noncontrolling Interests 21 21
Total Shareholders' Equity 9,933 9,553
Total Liabilities and Shareholders' Equity $ 21,873 $ 21,185
Weatherford International Ltd.
Net Debt
(Unaudited)
(In Millions)
Change in Net Debt for the Three Months
Ended March 31, 2012:
Net Debt at December 31, 2011 $ (7,235)
Operating Income 396
Depreciation and
Amortization 301
Severance, Exit and Other
Adjustments 32
Capital Expenditures (514)
Increase in Working
Capital (180)
Income Taxes Paid (98)
Interest Paid (180)
Acquisitions and
Divestitures of Assets and
Businesses, Net (12)
Foreign Currency Contract
Settlements (28)
Other (34)
Net Debt at March 31, 2012 $ (7,552)
March 31, December 31,
Components of Net Debt 2012 2011
Cash $ 339 $ 371
Short-term Borrowings and
Current Portion of
Long-Term Debt (1,902) (1,320)
Long-term Debt (5,989) (6,286)
Net Debt $ (7,552) $ (7,235)
"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.
SOURCE Weatherford International Ltd.
Further inquiry note:
Contacts: John H. Briscoe, Chief Financial Officer, +1.713.836.4610; Karen
David-Green, Vice President - Investor Relations, +1.713.836.7430
end of announcement euro adhoc
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issuer: Weatherford International Ltd.
Rue Jean-Francois Bartholoni 4-6
CH-1204 Geneva
phone: +41.22.816.1500
FAX: +41.22.816.1599
mail: karen.david-green@weatherford.com
WWW: http://www.weatherford.com
sector: Oil & Gas - Upstream activities
ISIN: CH0038838394
indexes:
stockmarkets: Main Standard: SIX Swiss Exchange, stock market: New York, Euronext
Paris
language: English