From the Wires
Transocean Ltd. Reports Third Quarter 2012 Results
Nov. 4, 2012 11:00 PM
ZUG, SWITZERLAND -- (Marketwire) -- 11/04/12 -- Transocean Ltd. (NYSE: RIG) (SIX: RIGN)
- Third quarter 2012 revenues were $2.440 billion compared with $2.352 billion in the second quarter 2012;
- Operating and maintenance expenses for the third quarter were $1.338 billion, compared with $1.381 billion for the second quarter 2012. Second quarter operating and maintenance expenses exclude $750 million for estimated loss contingencies associated with the Macondo well incident;
- Third quarter 2012 net loss attributable to controlling interest was $381 million, which included $880 million of net unfavorable items primarily associated with the impairment of assets included in discontinued operations. This compares with the second quarter 2012 net loss attributable to controlling interest of $304 million, which included $621 million of net unfavorable items;
- Third quarter Annual Effective Tax Rate(3) from continuing operations was 15.2 percent compared with 28.2 percent in the second quarter 2012;
- Third quarter net loss attributable to controlling interest was $1.06 per diluted share. After adjusting for net unfavorable items, adjusted earnings from continuing operations were $499 million, or $1.37 per diluted share;
- Cash flows from operating activities were $786 million in the third quarter, compared with $459 million in the second quarter 2012;
- Revenue efficiency(1) from continuing operations was 94.3 percent in the third quarter, compared with 92.1 percent in the second quarter 2012. Third quarter 2012 Ultra-Deepwater revenue efficiency was 95.8 percent, compared with 92.2 percent in the prior quarter. Fleet utilization(2) from continuing operations was 77 percent in the third quarter, compared with 72 percent in the second quarter 2012; and
- New contracts associated with continuing operations totaling $10.2 billion were secured in the Fleet Status Report periods July 18, 2012 through October 17, 2012. Backlog from continuing operations was $29.7 billion at October 17th, a net increase of $8.3 billion.
Transocean Ltd. (NYSE: RIG) (SIX: RIGN) today reported a net loss attributable to controlling interest of $381 million, or $1.06 per diluted share, for the three months ended September 30, 2012. Third quarter 2012 results included net unfavorable items of $880 million, or $2.43 per diluted share. The results compare with a net loss attributable to controlling interest of $32 million, or $0.10 per diluted share, for the three months ended September 30, 2011. Third quarter 2011 results included net unfavorable items of $68 million, or $0.21 per diluted share, primarily associated with the company's acquisition of Aker Drilling.
Net unfavorable items, after tax, impacting the third quarter of 2012 included the following:
- $878 million, or $2.43 per diluted share, loss on impairment of assets included in discontinued operations primarily associated with exiting the standard jackup market;
- $48 million, or $0.13 per diluted share, net gain on the sale of two floaters, Discoverer 534 and Jim Cunningham;
- $30 million, or $0.08 per diluted share, loss from discontinued operations. This includes $24 million, or $0.06 per diluted share associated with the standard jackups; the remainder is primarily associated with Challenger Minerals (North Sea) Limited; and
- $20 million, or $0.05 per diluted share, loss due to discrete taxes and other items.
After adjusting for these net unfavorable items, adjusted earnings from continuing operations were $499 million, or $1.37 per diluted share. A reconciliation of the non-GAAP adjusted net income and diluted earnings per share is attached.
Operations Quarterly Review
Revenues from continuing operations for the three months ended September 30, 2012 were $2.440 billion, compared with revenues of $2.352 billion during the three months ended June 30, 2012. Contract drilling revenues increased $136 million mainly due to higher revenue efficiency(1) primarily on Ultra-Deepwater floaters, and lower out of service time. Revenue efficiency(1) from continuing operations was 94.3 percent for the third quarter, compared with 92.1 percent in the second quarter 2012. Other revenues decreased $48 million to $130 million for the third quarter 2012, compared with $178 million in the prior quarter, primarily due to decreased levels of low-margin drilling management services activity.
Operating and maintenance expenses from continuing operations decreased $43 million to $1.338 billion for the third quarter of 2012. This compares with $1.381 billion for the second quarter of 2012, excluding $750 million for estimated loss contingencies associated with the Macondo well incident. Contract drilling expenses increased by $17 million due to annual pay raises, activity increases, professional fees, and various other items, partly offset by lower costs in the third quarter associated with rigs undergoing surveys, contract preparation or other shipyard projects. The delayed commencement of shipyard projects favorably impacted contract drilling expenses in the third quarter. Costs associated with the company's drilling management services reporting unit decreased $60 million mostly due to reduced activity.
General and administrative expenses were $69 million for the third quarter 2012, compared with $79 million in the previous quarter. The decrease was primarily due to transaction costs in the second quarter associated with the Quantum exchange of its 50 percent interest in Transocean Pacific Drilling Inc. for Transocean Ltd.'s shares.
Income Taxes
Transocean's third quarter Effective Tax Rate(4) from continuing operations was 16.5 percent, compared with 5.0 percent in the second quarter 2012. The increase in the Effective Tax Rate(4) was due to changes in estimates primarily for settlements of prior years' tax liabilities. Transocean's Annual Effective Tax Rate(3) from continuing operations for the third quarter 2012 was 15.2 percent. This compares with 28.2 percent for the prior quarter. The decrease was primarily due to changes in the blend of income that is taxed based on gross revenues versus pre-tax income and rig movements between taxing jurisdictions, among other things. Third quarter 2012 income tax expense included a favorable adjustment of $31 million, or $0.09 per diluted share, required to reflect a decrease in the Annual Effective Tax Rate(3) to 20.5 percent for the nine months ended September 30, 2012, from 24.6 percent for the first half of 2012.
Other Items
For the third quarter, interest expense, net of amounts capitalized, was $180 million, compared with $183 million in the second quarter 2012. Capitalized interest for the third quarter 2012 was $12 million, unchanged from the prior quarter. Interest income increased to $15 million in the third quarter, compared with $13 million in the second quarter 2012.
Cash flows from operating activities were $786 million for the third quarter, compared with $459 million for the second quarter 2012. Capital expenditures from total operations were $225 million for the third quarter, compared with $236 million in the second quarter of 2012.
Forward-Looking Statements
Statements included in this news release, including those regarding estimates of Transocean's goodwill or long-lived asset impairments and the estimated loss contingencies associated with the Macondo well incident, are forward-looking statements that involve certain assumptions. These statements are based on currently available competitive, financial, and economic data along with our current operating plans and involve risks and uncertainties including, but not limited to, market conditions, Transocean's results of operations, the effect and results of litigation, assessments and contingencies, and other factors detailed in "Risk Factors" and elsewhere in Transocean's filings with the Securities and Exchange Commission. Should one or more of these risks or uncertainties materialize (or the other consequences of such a development worsen), or should underlying assumptions prove incorrect, actual outcomes may vary materially from those forecasted or expected. Transocean disclaims any intention or obligation to update publicly or revise such statements, whether as a result of new information, future events or otherwise.
Conference Call Information
Transocean will conduct a teleconference call at 10:00 a.m. EST, 4:00 p.m. CET, on Monday, November 5, 2012. To participate, dial +1 719-325-4828 and refer to confirmation code 2448847 approximately five to 10 minutes prior to the scheduled start time of the call.
In addition, the conference call will be simultaneously broadcast over the Internet in a listen-only mode and can be accessed by logging onto Transocean's website at www.deepwater.com and selecting "Investor Relations." A file containing four charts that may be discussed during the conference call, titled "3Q12 Charts," has been posted to Transocean's website and can also be found by selecting "Investor Relations/Quarterly Toolkit." The conference call may also be accessed via the Internet at www.CompanyBoardroom.com by typing in Transocean's New York Stock Exchange trading symbol, "RIG."
A telephonic replay of the conference call should be available after 1:00 p.m. EST, 7:00 p.m. CET, on November 5, 2012, and can be accessed by dialing +1 719-457-0820 or +1 888-203-1112 and referring to the confirmation code 2448847. Also, a replay will be available through the Internet and can be accessed by visiting either of the above-referenced internet addresses. Both replay options will be available for approximately 30 days.
About Transocean
Transocean is a leading international provider of offshore contract drilling services for oil and gas wells. The company specializes in technically demanding sectors of the global offshore drilling business with a particular focus on deepwater and harsh environment drilling services, and believes that it operates one of the most versatile offshore drilling fleets in the world.
Transocean owns or has partial ownership interests in, and operates a fleet of 115 mobile offshore drilling units consisting of 48 High-Specification Floaters (Ultra-Deepwater, Deepwater and Harsh-Environment drilling rigs), 25 Midwater Floaters, nine High-Specification Jackups, 32 Standard Jackups and one swamp barge. Included in the 115 drilling units, the company has 32 Standard Jackups and one swamp barge classified as discontinued operations. In addition, we have six Ultra-Deepwater Drillships and three High-Specification Jackups under construction.
For more information about Transocean, please visit the website at www.deepwater.com.
Notes
(1) Revenue efficiency is defined as actual revenue divided by the highest amount of total revenue which could have been earned during the relevant period(s). See the accompanying schedule entitled "Revenue Efficiency."
(2) 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 for all drilling rigs in the company's fleet. See the accompanying schedule entitled "Utilization."
(3) Annual Effective Tax Rate is defined as income tax expense from continuing operations excluding various discrete items (such as changes in estimates and tax on items excluded from income before income tax expense) divided by income from continuing operations before income tax expense excluding gains on sales and similar items pursuant to the accounting standards for income taxes. See the accompanying schedule entitled "Supplemental Effective Tax Rate Analysis."
(4) Effective Tax Rate is defined as income tax expense from continuing operations divided by income from continuing operations before income taxes. See the accompanying schedule entitled "Supplemental Effective Tax Rate Analysis."
TRANSOCEAN LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except per share data)
(Unaudited)
Three months ended Nine months ended
September 30, September 30,
-------------------- --------------------
2012 2011 2012 2011
--------- --------- --------- ---------
Operating revenues
Contract drilling revenues $ 2,310 $ 1,827 $ 6,498 $ 5,396
Other revenues 130 164 420 576
--------- --------- --------- ---------
2,440 1,991 6,918 5,972
--------- --------- --------- ---------
Costs and expenses
Operating and maintenance 1,338 1,344 4,731 3,915
Depreciation and amortization 280 281 846 821
General and administrative 69 67 217 200
--------- --------- --------- ---------
1,687 1,692 5,794 4,936
--------- --------- --------- ---------
Loss on impairment - - (210) -
Gain (loss) on disposal of
assets, net 50 (1) 40 (1)
--------- --------- --------- ---------
Operating income 803 298 954 1,035
--------- --------- --------- ---------
Other income (expense), net
Interest income 15 7 43 27
Interest expense, net of
amounts capitalized (180) (151) (543) (443)
Other, net (8) (77) (32) (79)
--------- --------- --------- ---------
(173) (221) (532) (495)
--------- --------- --------- ---------
Income from continuing
operations before income tax
expense 630 77 422 540
Income tax expense 104 93 96 211
--------- --------- --------- ---------
Income (loss) from continuing
operations 526 (16) 326 329
Income (loss) from discontinued
operations, net of tax (909) (5) (994) 116
--------- --------- --------- ---------
Net income (loss) (383) (21) (668) 445
Net income (loss) attributable
to noncontrolling interest (2) 11 7 34
--------- --------- --------- ---------
Net income (loss) attributable
to controlling interest $ (381) $ (32) $ (675) $ 411
========= ========= ========= =========
Earnings (loss) per share-basic
Earnings (loss) from
continuing operations $ 1.47 $ (0.08) $ 0.90 $ 0.92
Earnings (loss) from
discontinued operations (2.53) (0.02) (2.80) 0.36
--------- --------- --------- ---------
Earnings (loss) per share $ (1.06) $ (0.10) $ (1.90) $ 1.28
========= ========= ========= =========
Earnings (loss) per share-
diluted
Earnings (loss) from
continuing operations $ 1.47 $ (0.08) $ 0.90 $ 0.92
Earnings (loss) from
discontinued operations (2.53) (0.02) (2.80) 0.36
--------- --------- --------- ---------
Earnings (loss) per share $ (1.06) $ (0.10) $ (1.90) $ 1.28
========= ========= ========= =========
Weighted-average shares
outstanding
Basic 359 320 354 320
Diluted 359 320 354 320
TRANSOCEAN LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions, except share data)
(Unaudited)
September 30, December 31,
2012 2011
------------- -------------
Assets
Cash and cash equivalents $ 6,001 $ 4,017
Accounts receivable, net of allowance for
doubtful accounts of $28 at September 30,
2012 and December 31, 2011 2,163 2,176
Materials and supplies, net of allowance for
obsolescence of $71 and $59 at September 30,
2012 and December 31, 2011, respectively 597 529
Deferred income taxes, net 169 142
Assets held for sale 930 26
Other current assets 444 646
------------- -------------
Total current assets 10,304 7,536
------------- -------------
Property and equipment 26,567 24,833
Property and equipment of consolidated
variable interest entities 817 2,252
Less accumulated depreciation 6,925 6,297
------------- -------------
Property and equipment, net 20,459 20,788
------------- -------------
Goodwill 2,987 3,217
Other assets 1,562 3,491
------------- -------------
Total assets $ 35,312 $ 35,032
============= =============
Liabilities and equity
Accounts payable $ 876 $ 880
Accrued income taxes 257 86
Debt due within one year 2,701 1,942
Debt of consolidated variable interest
entities due within one year 28 245
Other current liabilities 2,839 2,375
------------- -------------
Total current liabilities 6,701 5,528
------------- -------------
Long-term debt 11,211 10,756
Long-term debt of consolidated variable
interest entities 177 593
Deferred income taxes, net 450 514
Other long-term liabilities 1,517 1,898
------------- -------------
Total long-term liabilities 13,355 13,761
------------- -------------
Commitments and contingencies
Redeemable noncontrolling interest - 116
Shares, CHF 15.00 par value, 402,282,355
authorized, 167,617,649 conditionally
authorized, and 373,830,649 and 365,135,298
issued at September 30, 2012 and December 31,
2011, respectively; 359,418,883 and
349,805,793 outstanding at September 30, 2012
and December 31, 2011, respectively 5,129 4,982
Additional paid-in capital 7,496 7,211
Treasury shares, at cost, 2,863,267 held at
September 30, 2012 and December 31, 2011 (240) (240)
Retained earnings 3,399 4,180
Accumulated other comprehensive loss (512) (496)
------------- -------------
Total controlling interest shareholders'
equity 15,272 15,637
------------- -------------
Noncontrolling interest (16) (10)
------------- -------------
Total equity 15,256 15,627
------------- -------------
Total liabilities and equity $ 35,312 $ 35,032
============= =============
TRANSOCEAN LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)
Three months ended Nine months ended
September 30, September 30,
-------------------- --------------------
2012 2011 2012 2011
--------- --------- --------- ---------
Cash flows from operating
activities
Net income (loss) $ (383) $ (21) $ (668) $ 445
Adjustments to reconcile to
net cash provided by
operating activities
Amortization of drilling
contract intangibles (9) (12) (32) (32)
Depreciation and
amortization 280 281 846 821
Depreciation and
amortization of assets in
discontinued operations 48 80 182 258
Share-based compensation
expense 24 20 72 74
Loss on impairment - - 210 -
Loss on impairment of assets
in discontinued operations 878 7 913 32
(Gain) loss on disposal of
assets, net (50) 1 (40) 1
(Gain) loss on disposal of
assets in discontinued
operations, net 1 1 (70) (175)
Amortization of debt issue
costs, discounts and
premiums, net 17 33 52 95
Deferred income taxes (61) (6) (104) 30
Other, net 12 79 47 85
Changes in deferred revenue,
net (64) (36) (69) 7
Changes in deferred
expenses, net 51 18 30 (66)
Changes in operating assets
and liabilities 42 47 416 (353)
--------- --------- --------- ---------
Net cash provided by operating
activities 786 492 1,785 1,222
--------- --------- --------- ---------
Cash flows from investing
activities
Capital expenditures (201) (124) (646) (633)
Capital expenditures for
discontinued operations (24) (13) (75) (37)
Investment in marketable
security - (199) - (199)
Proceeds from disposal of
assets, net 178 4 189 12
Proceeds from disposal of
assets in discontinued
operations, net 5 84 196 353
Payment for settlement of
forward exchange contract - (78) - (78)
Other, net 7 6 32 (27)
--------- --------- --------- ---------
Net cash used in investing
activities (35) (320) (304) (609)
--------- --------- --------- ---------
Cash flows from financing
activities
Changes in short-term
borrowings, net - 2 (260) 58
Proceeds from debt 1,493 - 1,493 5
Repayments of debt (264) (23) (584) (272)
Proceeds from restricted cash
investments 106 - 298 -
Deposits to restricted cash
investments (42) - (158) -
Distribution of qualifying
additional paid-in capital - (254) (278) (508)
Other, net (7) - (8) (4)
--------- --------- --------- ---------
Net cash provided by (used in)
financing activities 1,286 (275) 503 (721)
--------- --------- --------- ---------
Net increase (decrease) in cash
and cash equivalents 2,037 (103) 1,984 (108)
Cash and cash equivalents at
beginning of period 3,964 3,349 4,017 3,354
--------- --------- --------- ---------
Cash and cash equivalents at end
of period $ 6,001 $ 3,246 $ 6,001 $ 3,246
========= ========= ========= =========
TRANSOCEAN LTD. AND SUBSIDIARIES
FLEET OPERATING STATISTICS
Operating Revenues (in millions) (1)
------------------------------------------------------
Nine months ended
Three months ended September 30,
------------------------------------ -----------------
September 30, June 30, September 30,
2012 2012 2011 2012 2011
------------- -------- ------------- -------- --------
Contract Drilling
Revenues
High-Specification
Floaters:
Ultra Deepwater
Floaters $ 1,213 $ 1,141 $ 1,030 $ 3,446 $ 2,878
Deepwater
Floaters 306 327 185 876 716
Harsh Environment
Floaters 247 264 190 766 522
------------- -------- ------------- -------- --------
Total High-
Specification
Floaters 1,766 1,732 1,405 5,088 4,116
Midwater Floaters 424 338 352 1,108 1,129
High-Specification
Jackups 110 93 58 270 119
------------- -------- ------------- -------- --------
Total Contract
Drilling Revenues -
continuing
operations 2,300 2,163 1,815 6,466 5,364
------------- -------- ------------- -------- --------
Contract Intangible
Revenue 10 11 12 32 32
Other Revenues
Client Reimbursable
Revenues 46 34 39 123 107
Integrated Services
and Other - 6 13 6 42
Drilling Management
Services 84 138 112 291 427
------------- -------- ------------- -------- --------
Total Other Revenues 130 178 164 420 576
------------- -------- ------------- -------- --------
Total Revenue from
continuing
operations 2,440 2,352 1,991 6,918 5,972
------------- -------- ------------- -------- --------
Discontinued
operations:
Standard Jackups 245 209 237 654 710
Other Rigs 7 7 6 21 20
Client Reimbursable
Revenues 6 7 5 18 15
------------- -------- ------------- -------- --------
Total discontinued
operations 258 223 248 693 745
------------- -------- ------------- -------- --------
------------- -------- ------------- -------- --------
Total Company $ 2,698 $ 2,575 $ 2,239 $ 7,611 $ 6,717
============= ======== ============= ======== ========
Average Daily Revenue (1)
------------------------------------------------------
Nine months ended
Three months ended September 30,
------------------------------------ -----------------
September 30, June 30, September 30,
2012 2012 2011 2012 2011
------------- -------- ------------- -------- --------
Continuing
operations:
High-Specification
Floaters:
Ultra Deepwater
Floaters $ 539,300 $537,000 $ 524,800 $537,100 $504,000
Deepwater
Floaters 372,600 379,200 343,500 370,800 382,400
Harsh Environment
Floaters 439,600 433,200 433,800 449,500 423,100
------------- -------- ------------- -------- --------
Total High-
Specification
Floaters 486,200 481,600 478,000 485,400 466,800
Midwater Floaters 284,800 295,800 287,400 285,100 310,600
High-Specification
Jackups 156,700 141,500 115,000 139,900 112,500
------------- -------- ------------- -------- --------
Total continuing
operations: 395,100 401,000 388,800 396,700 397,200
------------- -------- ------------- -------- --------
Discontinued
operations
Standard Jackups 92,800 90,800 101,100 91,900 107,000
Other Rigs 75,000 77,800 73,800 75,400 74,500
------------- -------- ------------- -------- --------
Total discontinued
operations 92,200 90,300 100,100 91,300 105,700
------------- -------- ------------- -------- --------
------------- -------- ------------- -------- --------
Total Drilling Fleet $ 298,300 $305,400 $ 289,800 $301,500 $298,100
============= ======== ============= ======== ========
(1) Average daily revenue is defined as contract drilling revenue earned per
revenue earning day in the period. A revenue earning day is defined as a
day for which a rig earns dayrate after commencement of operations.
TRANSOCEAN LTD. AND SUBSIDIARIES
FLEET OPERATING STATISTICS (continued)
Utilization (2)
------------------------------------------------------
Nine months ended
Three months ended September 30,
------------------------------------ -----------------
September 30, June 30, September 30,
2012 2012 2011 2012 2011
------------- -------- ------------- -------- --------
Continuing
operations:
High-Specification
Floaters:
Ultra Deepwater
Floaters 91% 87% 79% 87% 79%
Deepwater
Floaters 61% 59% 37% 55% 43%
Harsh Environment
Floaters 87% 96% 95% 89% 90%
------------- -------- ------------- -------- --------
Total High-
Specification
Floaters 81% 79% 67% 77% 68%
Midwater Floaters 65% 52% 55% 58% 56%
High-Specification
Jackups 84% 83% 66% 82% 50%
------------- -------- ------------- -------- --------
Total continuing
operations 77% 72% 63% 72% 63%
------------- -------- ------------- -------- --------
Discontinued
Operations:
Standard Jackups 66% 56% 49% 57% 46%
Other Rigs 100% 100% 100% 99% 60%
------------- -------- ------------- -------- --------
Total discontinued
operations 67% 57% 50% 58% 46%
------------- -------- ------------- -------- --------
------------- -------- ------------- -------- --------
Total Drilling Fleet 73% 66% 58% 67% 56%
============= ======== ============= ======== ========
(2) 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 for all drilling rigs in our fleet.
Revenue Efficiency(3)
Trailing Five Quarters and Historical Data
-------------------------------------------------------
3Q 2012 2Q 2012 1Q 2012 4Q 2011 3Q 2011 FY 2011 FY 2010
------- ------- ------- ------- ------- ------- -------
Ultra Deepwater 95.8% 92.2% 89.4% 89.5% 86.4% 87.7% 88.6%
Deepwater 93.5% 92.1% 83.2% 88.1% 87.7% 89.4% 90.3%
Harsh Environment
Floaters 95.5% 98.1% 97.8% 98.0% 94.4% 97.4% 96.0%
Midwater Floaters 89.7% 87.4% 90.8% 94.2% 90.8% 92.6% 92.5%
High Specification
Jackups 97.3% 94.5% 92.5% 93.4% 96.8% 94.8% 94.6%
------- ------- ------- ------- ------- ------- -------
Total continuing
operations 94.3% 92.1% 89.9% 91.3% 88.5% 90.1% 90.8%
------- ------- ------- ------- ------- ------- -------
Standard Jackups 95.4% 97.4% 97.9% 96.6% 98.3% 97.8% 97.4%
Others 99.1% 99.4% 97.3% 98.6% 99.5% 98.7% 98.4%
------- ------- ------- ------- ------- ------- -------
Total discontinued
operations 95.5% 97.5% 97.9% 96.6% 98.3% 97.8% 97.4%
------- ------- ------- ------- ------- ------- -------
------- ------- ------- ------- ------- ------- -------
Total Fleet 94.5% 92.5% 90.6% 91.9% 89.5% 90.9% 91.7%
======= ======= ======= ======= ======= ======= =======
(3) Revenue efficiency is defined as actual revenue divided by the highest
amount of total revenue which could have been earned during the relevant
period(s).
TRANSOCEAN LTD. AND SUBSIDIARIES
SUPPLEMENTAL EFFECTIVE TAX RATE ANALYSIS
(In US$ millions, except percentages)
Three months ended Nine months ended
------------------------------ ----------------------
September June September September September
30, 30, 30, 30, 30,
2012 2012 2011 2012 2011
---------- ------ ---------- ---------- ----------
Income (loss) from
continuing
operations before
income taxes $ 630 $ (321) $ 77 $ 422 $ 540
Add back
(subtract):
Litigation matters 8 750 - 758 -
Acquisition costs - - 5 1 5
Gain on disposal
of other assets,
net (51) - - (51) -
Loss on impairment
of goodwill and
other assets - - - 210 -
Loss on redeemed
noncontrolling
interest - 14 - 25 -
Loss on forward
exchange contract - - 78 - 78
Gain on sale of
equity method
investment - - (13) - (13)
Other, net (1) - - (2) 6
---------- ------ ---------- ---------- ----------
Adjusted income from
continuing
operations before
income taxes 586 443 147 1,363 616
Income tax (benefit)
expense from
continuing
operations 104 (16) 93 96 211
Add back
(subtract):
Litigation
matters 2 - - 2 -
Gain on disposal
of other assets (3) - - (3) -
Loss on
impairment - - - 30 -
Changes in
estimates (1) (14) 141 7 154 (23)
Other, net - - - - 2
---------- ------ ---------- ---------- ----------
Adjusted income tax
expense from
continuing
operations (2) $ 89 $ 125 $ 100 $ 279 $ 190
========== ====== ========== ========== ==========
Effective Tax Rate
(3) 16.5% 5.0% 120.8% 22.7% 39.1%
Annual Effective Tax
Rate (4) 15.2% 28.2% 68.0% 20.5% 30.8%
(1) Our estimates change as we file tax returns, settle disputes with tax
authorities or become aware of other events and include changes in (a)
deferred taxes, (b) valuation allowances on deferred taxes and (c) other
tax liabilities.
(2) The three and nine months ended September 30, 2012 includes $(31)
million of additional tax expense (benefit) reflecting the catch-up effect
of an increase (decrease) in the annual effective tax rate from the
previous quarter estimate.
(3) Effective Tax Rate is income tax expense divided by income before
income taxes.
(4) Annual Effective Tax Rate is income tax expense excluding various
discrete items (such as changes in estimates and tax on items excluded
from income before income taxes) divided by income before income taxes
excluding gains and losses on sales and similar items pursuant to the
accounting standards for income taxes and estimating the annual effective
tax rate.
TRANSOCEAN LTD. AND SUBSIDIARIES
Non-GAAP Financial Measures and Reconciliations
Adjusted Net Income and Diluted Earnings Per Share
(in US$ millions, except per share data)
YTD QTR YTD QTR QTR
Adjusted Net Income 09/30/12 09/30/12 06/30/12 06/30/12 03/31/12
-------- -------- -------- -------- --------
Net income (loss)
attributable to
controlling interest, as
reported $ (675) $ (381) $ (294) $ (304) $ 10
Add back (subtract):
Litigation matters 756 6 750 750 -
Loss on impairment of
goodwill and other
assets 180 - 180 - 180
Gain on disposal of
assets, net (48) (48) - - -
Loss on redeemed
noncontrolling
interest 25 - 25 14 11
Loss on impairment of
discontinued
operations 911 878 33 12 21
(Gain) loss on sale of
discontinued
operations (70) - (70) (72) 2
Loss from discontinued
operations 152 30 122 58 64
Discrete tax items and
other, net (154) 14 (168) (141) (27)
-------- -------- -------- -------- --------
Net income, as adjusted $ 1,077 $ 499 $ 578 $ 317 $ 261
======== ======== ======== ======== ========
Diluted Earnings Per Share
Diluted earnings (loss)
per share, as reported $ (1.90) $ (1.06) $ (0.83) $ (0.85) $ 0.03
Add back (subtract):
Litigation matters 2.12 0.02 2.12 2.09 -
Loss on impairment of
goodwill and other
assets 0.50 - 0.51 - 0.51
Gain on disposal of
assets, net (0.13) (0.13) - - -
Loss on redeemed
noncontrolling
interest 0.07 - 0.07 0.04 0.03
Loss on impairment of
discontinued
operations 2.56 2.43 0.09 0.03 0.06
(Gain) loss on sale of
discontinued
operations (0.19) - (0.20) (0.20) 0.01
Loss from discontinued
operations 0.42 0.08 0.34 0.16 0.18
Discrete tax items and
other, net (0.44) 0.03 (0.47) (0.39) (0.08)
-------- -------- -------- -------- --------
Diluted earnings per
share, as adjusted $ 3.01 $ 1.37 $ 1.63 $ 0.88 $ 0.74
======== ======== ======== ======== ========
Adjusted Net YTD QTR YTD QTR YTD QTR QTR
Income 12/31/11 12/31/11 09/30/11 09/30/11 06/30/11 06/30/11 03/31/11
-------- -------- -------- -------- -------- -------- --------
Net income
(loss)
attributable
to
controlling
interest, as
reported $(5,754) $(6,165) $ 411 $ (32) $ 443 $ 124 $ 319
Add back
(subtract):
Litigation
matters 1,000 1,000 - - - - -
Acquisition
costs 22 17 5 5 - - -
Loss on
impairment
of
goodwill
and other
assets 5,201 5,201 - - - - -
Gain on
disposal
of assets,
net (13) - (13) (13) - - -
Loss on
marketable
security 13 13 - - - - -
Loss on
forward
exchange
contract 78 - 78 78 - - -
Loss on
impairment
of
discontinued
operations 34 4 30 5 25 25 -
(Gain) loss
on sale of
discontinued
operations (201) (24) (177) - (177) 1 (178)
Loss from
discontinued
operations 86 55 31 - 31 11 20
Discrete
tax items
and other,
net 16 (10) 26 (7) 33 14 19
------- ------- ------- ------- ------- -------- -------
Net income,
as adjusted $ 482 $ 91 $ 391 $ 36 $ 355 $ 175 $ 180
======= ======= ======= ======= ======= ======== =======
Diluted
Earnings Per
Share
Diluted
earnings
(loss) per
share, as
reported $(17.88) $(18.76) $ 1.28 $ (0.10) $ 1.38 $ 0.38 $ 0.99
Add back
(subtract):
Litigation
matters 3.11 3.04 - - - - -
Acquisition
costs 0.07 0.05 0.02 0.02 - - -
Loss on
impairment
of
goodwill
and other
assets 16.15 15.83 - - - - -
Gain on
disposal
of assets,
net (0.04) - (0.04) (0.04) - - -
Loss on
marketable
security 0.04 0.04 - - - - -
Loss on
forward
exchange
contract 0.24 - 0.24 0.24 - - -
Loss on
impairment
of
discontinued
operations 0.11 0.01 0.09 0.02 0.08 0.08 -
(Gain) loss
on sale of
discontinued
operations (0.62) (0.07) (0.53) - (0.54) - (0.55)
Loss from
discontinued
operations 0.27 0.17 0.09 - 0.10 0.04 0.06
Discrete
tax items
and other,
net 0.04 (0.03) 0.07 (0.03) 0.09 0.05 0.06
------- ------- ------- ------- ------- -------- -------
Diluted
earnings per
share, as
adjusted $ 1.49 $ 0.28 $ 1.22 $ 0.11 $ 1.11 $ 0.55 $ 0.56
======= ======= ======= ======= ======= ======== =======
Note: 2010 has been removed pending restatement for discontinued
operations.
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