Other News Releases in Oil & Energy
57th Nashville Christmas Parade To Benefit Piedmont's Share the Warmth Round Up Program
Cabot Oil & Gas Responds to Pennsylvania Lawsuit
Plateau Mineral Development, Inc. Announces Status Upgrade on Pinksheets.com and Appointment of New President
Other News Releases in Earnings
Escalon(R) Reports First Quarter Fiscal 2010 Results
Electronic Game Card, Inc. Files 10-Q for Period Ending September 30, 2009
Wolverine Tube Reports 2009 Third Quarter Results
Journalists and Bloggers
Visit PR Newswire for Journalists for releases, photos, ProfNet experts, and customized feeds just for Media.
View and download archived video content distributed by MultiVu on The Digital Center.
See more news releases in: Oil & Energy, Earnings, Earnings Forecasts & Projections
Baker Hughes Announces Second Quarter Results
HOUSTON, July 27 /PRNewswire/ -- Baker Hughes Incorporated ( BHI;
EBS) today announced that net income for the second quarter 2007 was $349.6
million or $1.09 per diluted share compared to $1,395.0 million or $4.14
per diluted share for the second quarter 2006 and $374.7 million or $1.17
per diluted share for the first quarter 2007.
Operating profit, which is a non-GAAP measure comprised of income from
continuing operations excluding the impact of certain identified items, was
$349.6 million or $1.09 per diluted share for the second quarter of 2007
compared to $359.8 million or $1.07 per diluted share for the second
quarter 2006 and $374.7 million or $1.17 per diluted share for the first
quarter 2007. The operating profit for the second quarter of 2006 excludes
the pre-tax gain of $1,743.5 million ($1,035.2 million after-tax) from the
sale of our 30% interest in WesternGeco in April 2006 for $2.4 billion in
cash. There were no other items identified for exclusion in calculating
operating profit in the first or second quarter of 2007 or any other
quarter of 2006. Income from continuing operations is reconciled to
operating profit in the section titled "Reconciliation of GAAP and
Operating Profit" in this news release.
The results for the second quarter of 2007 include $9.3 million ($0.03
per diluted share) of additional taxes and related interest and penalties
associated with disallowed tax deductions, taken in previous years, arising
from the previously announced resolution of investigations with the
Securities and Exchange Commission and the Department of Justice.
Revenue for the second quarter 2007 was $2,537.5 million, up 15%
compared to $2,203.3 million for the second quarter 2006 and up 3% compared
to $2,472.8 million for the first quarter 2007.
Chad C. Deaton, Baker Hughes chairman and chief executive officer said,
"A 21% year-over-year increase in revenue in the second quarter from
outside North America was partially offset by weaker activity in Canada and
the U.S. offshore market. Net income in the quarter was impacted by lower
profit from our Drilling and Evaluation business in Canada. In response to
the weakness in Canada, we have adjusted our staffing levels, relocating
key personnel to markets which are showing better prospects for near-term
growth while preserving our ability to respond to future increases in
customer spending.
"In North America, we expect drilling to remain at or near current
levels but there are a number of factors that could drive short-term
volatility. We believe that any correction in drilling activity due to
economic or weather events will unmask the impact of the high decline rates
of U.S. natural gas production and that the market will rebalance.
"We believe that we are experiencing a multi-year expansion in oil and
gas exploration, completion and production expenditures, particularly
outside of North America. Baker Hughes will continue to invest in the
people, technology and infrastructure necessary to support this expansion.
Our company has made good progress over the past two years in our targeted
countries through the introduction of new technologies, improvement of our
reliability and execution, and implementation of our regional organization.
We are, however, not satisfied with the incremental profits we delivered in
the second quarter, and we are focused on improving our productivity and
efficiency while enhancing our ability to grow both the top and bottom
line."
During the second quarter 2007, debt decreased $7.5 million to $1,073.8
million, and cash and short-term investments decreased $76.2 million to
$839.8 million. In the second quarter 2007, the company's capital
expenditures were $276.4 million, depreciation and amortization was $126.1
million and dividend payments were $41.6 million.
During the second quarter of 2007, the company repurchased 1.2 million
shares of common stock at an average price of $82.26 per share for a total
of $98.8 million. On July 26, 2007 the company's Board of Directors
authorized a plan to repurchase $1 billion of the company's common stock in
addition to the existing stock repurchase plan. As of July 26, 2007, the
company had authorization remaining to repurchase approximately $1.212
billion of common stock.
Financial Information
Consolidated Statements of Operations
Three Months Ended
(In millions, except per ----------------------------------
share amounts) June 30, March 31,
----------------------------------
UNAUDITED 2007 2006 2007
-------- -------- -------
Revenues:
Sales $1,259.0 $1,120.6 $1,200.9
Services and rentals 1,278.5 1,082.7 1,271.9
-------- -------- --------
Total revenues 2,537.5 2,203.3 2,472.8
-------- -------- --------
Costs and Expenses:
Cost of sales 782.7 661.5 733.5
Cost of services and rentals 772.1 679.1 750.3
Research and engineering 92.6 82.0 91.6
Selling, general and administrative 353.0 292.2 337.2
-------- -------- --------
Total costs and expenses 2,000.4 1,714.8 1,912.6
-------- -------- --------
Operating income 537.1 488.5 560.2
Equity in income of affiliates 0.2 11.3 0.2
Gain on sale of interest in affiliate -- 1,743.5 --
Interest expense (16.2) (17.0) (16.8)
Interest and dividend income 10.7 24.2 11.5
-------- -------- --------
Income from continuing
operations before income taxes 531.8 2,250.5 555.1
Income taxes (182.2) (855.5) (180.4)
-------- -------- --------
Income from continuing operations 349.6 1,395.0 374.7
Income from discontinued
operations, net of tax -- -- --
-------- -------- --------
Net income $349.6 $1,395.0 $374.7
======== ======== ========
Basic earnings per share:
Income from continuing operations $1.10 $4.15 $1.17
Income from discontinued operations -- -- --
-------- -------- --------
Net income $1.10 $4.15 $1.17
======== ======== ========
Diluted earnings per share:
Income from continuing operations $1.09 $4.14 $1.17
Income from discontinued operations -- -- --
-------- -------- --------
Net income $1.09 $4.14 $1.17
======== ======== ========
Weighted average shares
outstanding, basic (thousands) 319,106 335,830 319,124
Weighted average shares
outstanding, diluted (thousands) 321,307 337,364 321,020
Depreciation and amortization
expense $126.1 $104.6 $119.8
Capital expenditures $276.4 $208.1 $262.0
Financial Information
Consolidated Statements of Operations
Six Months Ended
(In millions, except per -----------------------------------
share amounts) June 30,
-----------------------------------
UNAUDITED 2007 2006
-------- --------
Revenues:
Sales $2,459.9 $2,157.1
Services and rentals 2,550.4 2,108.2
-------- --------
Total revenues 5,010.3 4,265.3
-------- --------
Costs and Expenses:
Cost of sales 1,516.2 1,283.4
Cost of services and rentals 1,522.4 1,328.3
Research and engineering 184.2 160.4
Selling, general and administrative 690.2 564.3
-------- --------
Total costs and expenses 3,913.0 3,336.4
-------- --------
Operating income 1,097.3 928.9
Equity in income of affiliates 0.4 59.5
Gain on sale of interest in affiliate -- 1,743.5
Interest expense (33.0) (33.5)
Interest and dividend income 22.2 31.5
-------- --------
Income from continuing
operations before income taxes 1,086.9 2,729.9
Income taxes (362.6) (1,016.1)
-------- --------
Income from continuing operations 724.3 1,713.8
Income from discontinued operations,
net of tax -- 20.4
-------- --------
Net income $724.3 $1,734.2
======== ========
Basic earnings per share:
Income from continuing operations $2.27 $5.06
Income from discontinued operations -- 0.06
-------- --------
Net income $2.27 $5.12
======== ========
Diluted earnings per share:
Income from continuing operations $2.26 $5.04
Income from discontinued operation -- 0.06
-------- --------
Net income $2.26 $5.10
======== ========
Weighted average shares
outstanding, basic (thousands)
Weighted average shares
outstanding, diluted (thousands) 321,163 340,043
Depreciation and amortization expense $245.9 $204.7
Capital expenditures $538.4 $367.2
Reconciliation of GAAP and Operating Profit (1)
The following table reconciles GAAP and operating profit referenced in
this news release.
Reconciliation of GAAP and Operating Profit (1)
(for the three months ended June 30, 2006)
Profit Profit Diluted
Before After Earnings
UNAUDITED Tax Tax Tax Per Share
(In millions except
earnings per share)
Income from continuing
operations (GAAP) $2,250.5 $(855.5) $1,395.0 $4.14
--------------------------------------------------------------------------
Less certain identified items:
Gain on sale of interest in
WesternGeco 1,743.5 (708.3) 1,035.2 3.07
--------------------------------------------------------------------------
Operating results, excluding
the impact of certain
identified items $507.0 $(147.2) $359.8 $1.07
==========================================================================
(1) Operating profit before tax and operating profit after tax are
non-GAAP measures comprised of income from continuing operations
excluding the impact of certain identified items. The item in the
second quarter of 2006 related to the pre-tax gain of $1,743.5 million
($1,035.2 million after tax) from the sale of our 30% interest in
WesternGeco, our seismic joint venture with Schlumberger Limited, to
Schlumberger on April 28, 2006 for $2.4 billion in cash. There were
no other items identified for exclusion in calculating operating
profit in 2007 or any other quarter of 2006. The company believes that
operating profit is useful to investors because it is a consistent
measure of the underlying results of the company's business.
Furthermore, management uses operating profit internally as a measure
of the performance of the company's operations. Income from
continuing operations is reconciled to operating profit in this
section of this news release. Reconciliation of GAAP and operating
profit for historical periods can be found on the company's website at
http://www.bakerhughes.com/investor in the "Financial Information"
section.
Calculation of EBIT and EBITDA (non-GAAP measures) (1)
Three Months Ended
--------------------------------------
UNAUDITED June 30, March 31,
------------------- ----------
(In millions) 2007 2006 2007
-------- -------- --------
Income from continuing
operations before income taxes $531.8 $2,250.52(2) $555.1
Gain on sale of interest in
affiliate -- (1,743.5) --
-------- --------- --------
Operating income (Income from
continuing operations before
income taxes excluding gain
on sale of interest in
WesternGeco) 531.8 507.0 555.1
Interest expense 16.2 17.0 16.8
-------- --------- --------
Earnings before interest
expense and taxes (EBIT) 548.0 524.0 571.9
Depreciation and amortization
expense 126.1 104.6 119.8
-------- --------- --------
Earnings before interest
expense, taxes, depreciation
and amortization (EBITDA) 674.1 $628.6 $691.7
======== ========= ========
--------------------------------------------------------------------------
(1) EBIT and EBITDA (as defined in the calculations above) are non-GAAP
measurements. Management uses EBIT and EBITDA because it believes
that such measurements are widely accepted financial indicators used
by investors and analysts to analyze and compare companies on the
basis of operating performance and that these measurements may be used
by investors to make informed investment decisions.
(2) Includes the pre-tax gain on the sale of our interest in WesternGeco
sold to Schlumberger on April 28, 2006.
Consolidated Balance Sheets
UNAUDITED AUDITED
(In millions) June 30, 2007 December 31, 2006
=========================================================================
ASSETS
Current Assets:
Cash and cash equivalents $654.6 $750.0
Short-term investments 185.2 353.7
Accounts receivable, net 2,158.5 2,055.1
Inventories 1,698.8 1,528.8
Deferred income taxes 174.9 167.8
Other current assets 118.3 112.4
-------------------------------------------------------------------------
Total current assets 4,990.3 4,967.8
-------------------------------------------------------------------------
Property, net 2,063.1 1,800.5
Goodwill 1,350.1 1,347.0
Intangible assets, net 181.6 190.4
Other assets 414.2 400.0
-------------------------------------------------------------------------
Total assets $8,999.3 $8,705.7
=========================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $579.7 $648.8
Short-term borrowings 2.2 1.3
Accrued employee compensation 362.9 484.2
Income taxes 63.2 150.0
Other accrued liabilities 219.7 337.6
-------------------------------------------------------------------------
Total current liabilities 1,227.7 1,621.9
-------------------------------------------------------------------------
Long-term debt 1,071.6 1,073.8
Deferred income taxes and other 389.0 300.2
tax liabilities
Liabilities for pensions and 346.9 339.3
other postretirement benefits
Other liabilities 110.9 127.6
Stockholders' Equity:
Common stock 319.7 319.9
Capital in excess of stock value 1,568.4 1,600.6
Retained earnings 4,111.8 3,509.6
Accumulated other comprehensive loss (146.7) (187.2)
-------------------------------------------------------------------------
Total stockholders' equity 5,853.2 5,242.9
-------------------------------------------------------------------------
Total liabilities and
stockholders' equity $8,999.3 $8,705.7
=========================================================================
Segment Highlights
We report our operating results under two segments: Drilling and
Evaluation, and Completion and Production. In April 2006, we sold our 30%
interest in the WesternGeco seismic joint venture to Schlumberger.
Historical information on these segments from the first quarter of 2001
through the http://www.bakerhughes.com/investor in the "investor
relations/financial information" section. Operational highlights for the
three months ended June 30, 2007, June 30, 2006 and March 31, 2007 are
detailed below. All results are unaudited and shown in millions.
Comparison of Quarters -- Year over Year
(For the Three Months Ended June 30, 2007 and 2006)
-------------------------------------------------------------------------
Revenue Operating Profit
Before Tax (1)
Q2 2007 Q2 2006 Q2 2007 Q2 2006
-------------------------------------------------------------------------
Drilling and Evaluation $1,278.7 $1,118.4 $328.5 $290.1
Completion and
Production 1,258.7 1,084.9 266.9 248.2
-------------------------------------------------------------------------
Oilfield Operations 2,537.4 2,203.3 595.4 538.3
WesternGeco -- -- -- 10.8
-------------------------------------------------------------------------
Total Oilfield 2,537.4 2,203.3 595.4 549.1
-------------------------------------------------------------------------
Interest expense -- -- (16.2) (17.0)
Interest and -- -- 10.7 24.2
dividend income
Corporate and other 0.1 -- (58.1) (49.3)
-------------------------------------------------------------------------
Corporate, net
interest and other 0.1 -- (63.6) (42.1)
-------------------------------------------------------------------------
Total $2,537.5 $2,203.3 $531.8 $507.0
=========================================================================
Comparison of Quarters -- Sequential
(For the Three Months Ended June 30, 2007 and March 31, 2007)
-------------------------------------------------------------------------
Revenue Operating Profit
Before Tax (1)
Q2 2007 Q1 2007 Q2 2007 Q1 2007
-------------------------------------------------------------------------
Drilling and Evaluation $1,278.7 $1,288.5 $328.5 $366.62
Completion and
Production 1,258.7 1,184.2 266.9 246.4
-------------------------------------------------------------------------
Oilfield Operations 2,537.4 2,472.7 595.4 613.02
WesternGeco -- -- -- --
-------------------------------------------------------------------------
Total Oilfield 2,537.4 2,472.7 595.4 613.02
-------------------------------------------------------------------------
Interest expense -- -- (16.2) (16.8)
Interest and
dividend income -- -- 10.7 11.5
Corporate and other 0.1 0.1 (58.1) (52.6)
-------------------------------------------------------------------------
Corporate, net
interest and other 0.1 0.1 (63.6) (57.9)
-------------------------------------------------------------------------
Total $2,537.5 $2,472.8 $531.8 $555.1(2)
=========================================================================
(1) Operating profit before tax and operating profit after tax are
non-GAAP measures comprised of income from continuing operations
excluding the impact of certain identified items. The item in the
second quarter of 2006 related to the pre-tax gain of $1,743.5 million
($1,035.2 million after-tax) from the sale of our 30% interest in
WesternGeco, our seismic joint venture with Schlumberger, to
Schlumberger on April 28, 2006 for $2.4 billion in cash. There were
no other items identified for exclusion in calculating operating
profit in 2007 or any other quarter of 2006. The company believes
that operating profit is useful to investors because it is a
consistent measure of the underlying results of the company's
business. Furthermore, management uses operating profit internally as
a measure of the performance of the company's operations. Income from
continuing operations is reconciled to operating profit in the section
titled Reconciliation of GAAP and Operating Profit in this news
release. Reconciliation of GAAP and operating profit for historical
periods can be found on the company's website at
http://www.bakerhughes.com/investor in the "Financial Information"
section.
(2) In the first quarter of 2007 Baker Atlas increased the depreciable
lives of certain assets. The pretax impact of this change is a
reduction to cost of services and rentals of approximately $6.0
million per quarter.
Oilfield Operations
Unless otherwise noted, all comments in this section refer to Oilfield
Operations, excluding WesternGeco.
The following table details the percentage change in revenue in the
second quarter 2007 compared to the second quarter 2006 and first quarter
2007.
Comparison of Revenue
(For the Three Months Ended June 30, 2007 Compared to the
Three Months Ended June 30, 2006 and March 31, 2007)
UNAUDITED
June 30, 2006 March 31, 2007
-------------------------------------------------------------------------
Baker Atlas 19% 1%
BakerHughes Drilling Fluids 0% 1%
Hughes Christensen 4% (3)%
INTEQ 23% (2)%
-------------------------------------------------------------------------
Drilling & Evaluation Segment 14% (1)%
Baker Oil Tools 18% 6%
Baker Petrolite 11% 3%
Centrilift 20% 14%
-------------------------------------------------------------------------
Completion & Production Segment(1) 16% 6%
Oilfield Operations 15% 3%
-------------------------------------------------------------------------
(1) Includes the ProductionQuest business unit
Oilfield Operations revenue was up 15% in the second quarter of 2007
compared to the second quarter of 2006, and up 3% sequentially compared to
the first quarter of 2007. Operating profit before tax was up 11% compared
to the second quarter of 2006 and down 3% sequentially compared to the
first quarter of 2007. The quarterly year-over-year incremental pre-tax
margin (a non-GAAP measure of the change in operating profit before tax
divided by the change in revenue) was 17%. The pre-tax operating margin (a
non-GAAP measure of operating profit before tax divided by revenue) in the
second quarter of 2007 was 23% compared to 24% in the second quarter of
2006 and 25% in the first quarter of 2007.
Drilling and Evaluation
Drilling and Evaluation revenue was up 14% in the second quarter of
2007 compared to the second quarter of 2006, and down 1% sequentially
compared to the first quarter of 2007. Segment revenue was impacted by
decreases in customer activity in Canada and in the U.S. offshore compared
to both the second quarter of 2006 and the first quarter of 2007. Results
for Baker Hughes Drilling Fluids were impacted by changes in their product
mix and share losses in certain markets. At Baker Atlas, significant
increases in international revenue offset weaker wireline sales in North
America. Operating profit before tax in the second quarter of 2007 was up
13% compared to the second quarter of 2006 and down 10% sequentially
compared to the first quarter of 2007. The quarterly year-over-year
incremental pre-tax margin was 24%. The pre-tax operating margin in both
the second quarter of 2007 and 2006 was 26%, compared to 28% in the first
quarter of 2007. Segment operating profit in the second quarter of 2007 was
negatively impacted by an increase in repair and maintenance costs at INTEQ
of approximately $10.0 million compared to the first quarter of 2007.
Completion and Production
Completion and Production revenue was up 16% in the second quarter of
2007 compared to the second quarter of 2006 and up 6% sequentially compared
to the first quarter of 2007. Operating profit before tax in the second
quarter of 2007 was up 8% compared to both the second quarter of 2006 and
to the first quarter of 2007. The quarterly year-over-year incremental
pre-tax margin was 11%. The pre-tax operating margin in the second quarter
of 2007 was 21% compared to 23% in the second quarter of 2006 and 21% in
the first quarter of 2007.
Corporate and Other
Corporate and other expense was up $8.8 million in the second quarter
of 2007 compared to the second quarter of 2006 due primarily to an increase
in headcount and related expenses. Sequentially, from the first quarter of
2007, corporate and other expense was up $5.5 million due primarily to
unfavorable foreign exchange.
Geographic Highlights
Revenue by geographic area for the three months ended June 30, 2007,
March 31, 2007 and June 30, 2006, are detailed below. All results are
unaudited and shown in millions. Additional information for prior periods
beginning with the three months ended March 31, 2001 can be found on our
website at http://www.bakerhughes.com/investor in the "Financial
Information" section.
Revenue by Geography
(For the Three Months Ended June 30, 2007, March 31, 2007, and June 30, 2006)
-------------------------------------------------------------------------
Middle
Three Months Europe, East, Total
Ended North Latin Africa, Asia Oilfield
America(1) America(2) CIS(3) Pacific(4) Operations
-------------------------------------------------------------------------
June 30, 2007 $1,049.7 $237.8 $765.3 $484.6 $2,537.4
March 31, 2007 1,072.7 232.7 703.5 463.8 2,472.7
June 30, 2006 975.0 198.7 604.0 425.6 2,203.3
-------------------------------------------------------------------------
(1) United States and Canada.
(2) Mexico, Central America and South America.
(3) Europe, Africa, Russia and the Caspian area, excluding Egypt.
(4) Middle East and Asia Pacific, including Egypt.
North America revenue increased 8% in the second quarter of 2007
compared to the second quarter of 2006 and decreased 2% sequentially
compared to the first quarter of 2007. Activity in North America was
impacted by significant declines in drilling activity in Canada, where the
rig count was down 51% for the second quarter of 2007 compared to the
second quarter of 2006 and down 72% compared to the first quarter of 2007,
and the U.S. offshore, where the rig count was down 20% for the second
quarter of 2007 compared to the second quarter of 2006 and down 7% compared
to the first quarter of 2007 Latin America revenue increased 20% in the
second quarter of 2007 compared to the second quarter of 2006 and increased
2% compared to the first quarter of 2007. Europe, Africa, and CIS revenue
increased 27% in the second quarter of 2007 compared to the second quarter
of 2006, and increased 9% sequentially compared to the first quarter of
2007 with strong revenue from the UK, Norway and Russia. Middle East and
Asia Pacific revenue increased 14% in the second quarter of 2007 compared
to the second quarter of 2006 and increased 5% sequentially compared to the
first quarter of 2007.
Outlook
The following statements are based on current expectations. These
statements are forward-looking, and actual results may differ materially.
Factors affecting these forward-looking statements are detailed below under
the section titled "Forward-Looking Statements" in this news release. These
statements do not include the potential impact of any expected stock
repurchases, acquisition, disposition, merger, joint venture, or other
transaction or event that could occur in the future.
-- Outside North America revenue for the year 2007 is expected to be up
between 19% and 21% compared to the year 2006.
-- Corporate and other expenses, excluding interest expense and interest
and dividend income, are expected to be between $235 million and $255
million for the year 2007.
-- Capital spending is expected to be between $1.1 billion and $1.2
billion for the year 2007.
-- Depreciation and amortization expense is expected to be between $500
million and $530 million for the year 2007.
-- The tax rate on operating results for the year 2007 is expected to be
between 32.5% and 33.5% reflecting the charge associated with the
disallowed tax deductions disclosed in this news release. The tax rate
for the second half of 2007 is expected to be between 32% and 33%.
Conference Call
The company has scheduled a conference call to discuss the results of
today's earnings announcement. The call will begin at 8:30 a.m. Eastern
time, 7:30 a.m. Central time, on Friday, July 27, 2007. To access the call,
which is open to the public, please contact the conference call operator at
(800) 374-2469, or (706) 634-7270 for international callers, 20 minutes
prior to the scheduled start time, and ask for the "Baker Hughes Conference
Call." A replay will be available through Friday, August 10, 2007. The
number for the replay is (800) 642-1687, or (706) 645-9291 for
international callers, and the access code is 3783622. The call and replay
will also be web cast on http://www.bakerhughes.com/investor.
Forward-Looking Statements
This news release (and oral statements made regarding the subjects of
this release, including on the conference call announced herein) contain
forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended, (each a "Forward-Looking Statement"). The
words "anticipate," "believe," "ensure," "expect," "if," "intend,"
"estimate," "project," "forecasts," "predict," "outlook," "aim," "will,"
"could," "should," "would," "may," "probable," "likely," and similar
expressions, and the negative thereof, are intended to identify
forward-looking statements. There are many risks and uncertainties that
could cause actual results to differ materially from our forward-looking
statements. These forward-looking-statements are also affected by the risk
factors described in the company's Annual Report on Form 10-K for the year
ended December 31, 2006; the Company's subsequent quarterly reports on Form
10-Q; and those set forth from time to time in our other filings with the
Securities and Exchange Commission ("SEC"). The documents are available
through the company's website at http://www.bakerhughes.com/investor or
through the SEC's Electronic Data Gathering and Analysis Retrieval System
(EDGAR) at http://www.sec.gov. We undertake no obligation to publicly
update or revise any forward-looking statement.
Our expectations regarding our business outlook, including changes in
revenue, pricing, expenses, capital spending, backlogs, profitability, tax
rates, strategies for our operations, oil and natural gas market
conditions, market share and contract terms, costs and availability of
resources, economic and regulatory conditions, legal and regulatory
matters, and environmental matters are only our forecasts regarding these
matters.
These forecasts may be substantially different from actual results,
which are affected by the following risk factors and the timing of any of
those risk factors:
Oil and gas market conditions -- the level of petroleum industry
exploration and production expenditures; drilling rig and oil and natural
gas industry manpower and equipment availability; the price of, and the
demand for, crude oil and natural gas; drilling activity; excess productive
capacity; seasonal and other adverse weather conditions that affect the
demand for energy; severe weather conditions, such as hurricanes, that
affect exploration and production activities; OPEC policy and the adherence
by OPEC nations to their OPEC production quotas; war, military action,
terrorist activities or extended period of international conflict,
particularly involving the U.S., Middle East or other major
petroleum-producing or consuming regions; labor disruptions, civil unrest
or security conditions where we operate; expropriation of assets by
governmental action.
Pricing, market share and contract terms -- our ability to implement
and affect price increases for our products and services; the effect of the
level and sources of our profitability on our tax rate; the ability of our
competitors to capture market share; our ability to retain or increase our
market share; changes in our strategic direction; the effect of industry
capacity relative to demand for the markets in which we participate; our
ability to negotiate acceptable terms and conditions with our customers,
especially national oil companies; our ability to manage warranty claims
and improve performance and quality; our ability to effectively manage our
commercial agents.
Costs and availability of resources -- our ability to manage the rising
costs and availability of sufficient raw materials and components
(especially steel alloys, copper, carbide, and chemicals); our ability to
manage compliance related costs; our ability to recruit, train and retain
the skilled and diverse workforce necessary to meet our business needs;
manufacturing capacity and subcontracting capacity at forecasted costs to
meet our revenue goals; the availability of essential electronic components
used in our products; the effect of competition, particularly our ability
to introduce new technology on a forecasted schedule and at forecasted
costs; potential impairment of long-lived assets; the accuracy of our
estimates regarding our capital spending requirements; unanticipated
changes in the levels of our capital expenditures; the need to replace any
unanticipated losses in capital assets; the development of technology by us
or our competitors that lowers overall finding and development costs;
labor-related actions, including strikes, slowdowns and facility
occupations.
Litigation and changes in laws or regulatory conditions -- the
potential for unexpected litigation or proceedings; the legislative,
regulatory and business environment in the U.S. and other countries in
which we operate; costs and changes in processes and operations related to
the activities of the monitor appointed in connection with previously
reported settlements with the SEC and Department of Justice ("DOJ");
outcome of government and legal proceedings as well as costs arising from
compliance and ongoing or additional investigations in any of the countries
where the company does business; new laws, regulations and policies that
could have a significant impact on the future operations and conduct of all
businesses; changes in export control laws or exchange control laws;
restrictions on doing business in countries subject to sanctions; financial
impact of exiting certain countries; changes in laws in Russia or other
countries identified by management for immediate focus; changes in
accounting standards; changes in tax laws or tax rates in the jurisdictions
in which we operate; resolution of tax assessments or audits by various tax
authorities; additional taxes being incurred as a result of any resolution
with the SEC and DOJ; ability to fully utilize our tax loss carryforwards
and tax credits.
Economic conditions -- worldwide economic growth; the effect that high
energy prices may have on worldwide economic growth and demand for
hydrocarbons; foreign currency exchange fluctuations and changes in the
capital markets in international locations where we operate; the condition
of the capital and equity markets in general; our ability to estimate the
size of and changes in the worldwide oil and natural gas industry. Changes
in the price of our stock may affect the results and timing of our stock
repurchase program.
Environmental matters -- unexpected, adverse outcomes or material
increases in liability with respect to environmental remediation sites
where we have been named as a potentially responsible party; the discovery
of new environmental remediation sites; changes in environmental
regulations; the discharge of hazardous materials or hydrocarbons into the
environment.
Baker Hughes is a leading provider of drilling, formation evaluation,
completion and production products and services to the worldwide oil
and gas
industry.
****
NOT INTENDED FOR BENEFICIAL HOLDERS
Contact:
Gary R. Flaharty (713) 439-8039
H. Gene Shiels (713) 439-8822
SOURCE Baker Hughes Incorporated