Weatherford Reports Fourth Quarter Results

$0.02 per diluted share, excluding severance and investigation costs

Jan 25, 2010, 23:00 ET from Weatherford International Ltd.

GENEVA, Jan. 25 /PRNewswire-FirstCall/ -- Weatherford International Ltd. (NYSE: WFT) today reported fourth quarter 2009 income from continuing operations of $15 million, or $0.02 per diluted share, excluding an after tax loss of $0.06 for investigation and exit costs incurred in connection with the company's withdrawal from sanctioned countries, severance costs principally associated with restructuring activities and a tax provision related to a legal entity reorganization.  Fourth quarter diluted earnings per share from continuing operations reflect a decrease of 96 percent over the fourth quarter of 2008 diluted earnings per share from continuing operations of $0.53, before severance and investigation costs.  Fourth quarter results include the following items:

  • $21 million in inventory reserves and write-offs;
  • $12 million in expenses associated with business process and supply chain improvement projects, which will be ongoing for the next nine quarters;
  • An $8 million legal charge regarding settlement of a multi-year dispute;
  • $4 million of expenses incurred in connection with the completion of the company's global tax reorganization during the fourth quarter; and
  • A $3 million net gain on acquisition and divestiture activities

(Logo: http://www.newscom.com/cgi-bin/prnh/19990308/WEATHERFORDLOGO)

Fourth quarter revenues were $2,426 million, or eight percent lower than the same period last year, against a backdrop of a 29 percent decrease in global rig count.  North America was primarily responsible for the decline, with revenues decreasing 37 percent against a 40 percent decline in rig count.  International revenues were up 16 percent against an eight percent decrease in international rig count.  

Sequentially, the company's fourth quarter diluted earnings per share from continuing operations, before severance, reorganization and investigation costs, were $0.11 lower than the third quarter of 2009 diluted earnings per share from continuing operations of $0.13, before severance and investigation costs.  

For the year ended December 31, 2009, revenues were $8.8 billion, eight percent lower than 2008, and income from continuing operations before severance, reorganization and investigation costs was $364 million, or $0.50 per diluted share, a decrease of 75 percent from 2008.  In 2008, the company reported revenues for the year of $9.6 billion and income from continuing operations of $1,399 million, or $2.00 per diluted share, before non-recurring items.  The non-recurring items during 2008 were primarily for investigation and exit costs incurred in connection with the company's withdrawal from sanctioned countries, which were partially offset by a gain on the restructuring of a Qatar operation into a JV.

North America

Revenues for the quarter were $736 million, which is a 37 percent decrease over the same quarter in the prior year, as compared to a 40 percent rig count decrease.  Sequentially, revenues were up 19 percent in line with a 20 percent rig count increase.  All product lines showed sequential growth with the exception of Pipeline.

Operating income was $42 million, which is down $255 million compared to the same quarter in the prior year and up $8 million sequentially.  

Middle East/North Africa/Asia

Fourth quarter revenues of $593 million were 12 percent lower than the fourth quarter of 2008 and one percent lower than the prior quarter.  On a sequential basis, strong performances were posted in Iraq, Malaysia and China offset by weakness in Saudi Arabia, Qatar, Oman, Libya, Egypt, Indonesia and Australia.

The current quarter's operating income of $82 million decreased 49 percent as compared to the same quarter in the prior year and decreased 19 percent as compared to the prior quarter due to the continued impact of significant start-up and delay costs in several countries.

Latin America

Fourth quarter revenues of $618 million were 59 percent higher than the fourth quarter of 2008 and 18 percent higher than the prior quarter.  Mexico, Brazil, Columbia and Ecuador posted strong improvements sequentially.

The current quarter's operating income of $49 million declined 44 percent as compared to the same quarter in the prior year.  Sequentially, operating income declined nine percent as decreased activity in natural gas projects in Mexico prevented adequate fixed cost absorption.  

Europe/West Africa/FSU

Fourth quarter revenues of $478 million were 22 percent higher than the fourth quarter of 2008 and 18 percent higher than the prior quarter.  The sequential increase was driven by a full quarter of our acquisition of TNK-BP's oilfield service business and improvements in Norway, Romania, Angola and Nigeria.

The current quarter's operating income of $43 million declined 52 percent as compared to the same quarter in the prior year and decreased 41 percent sequentially.  

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 2009 fourth quarter results on January 26, 2010 at 7:30 a.m. (CST).  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 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 52,000 people worldwide.

Contacts:

Andrew P. Becnel

+41.22.816.1502

Chief Financial Officer

Nicholas W. Gee

+41.22.816.1510

Group Vice President- Marketing & Planning

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 outcome of pending government investigations, 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

Twelve Months

Ended December 31,

Ended December 31,

2009

2008

2009

2008

Net Revenues:

North America

$  736,443 

$ 1,177,936 

$ 2,765,707 

$ 4,460,147 

Middle East/North Africa/Asia

593,154 

675,513 

2,368,118 

2,391,520 

Europe/West Africa/FSU

478,259 

393,005 

1,616,460 

1,539,190 

Latin America

618,225 

388,172 

2,076,648 

1,209,707 

2,426,081 

2,634,626 

8,826,933 

9,600,564 

Operating Income (Expense):

North America

41,625 

296,407 

197,211 

1,125,199 

Middle East/North Africa/Asia

82,452 

163,238 

441,974 

561,012 

Europe/West Africa/FSU

42,598 

88,158 

251,991 

382,772 

Latin America

49,271 

88,720 

281,590 

277,094 

Research and Development

(50,216)

(53,564)

(194,650)

(192,659)

Corporate Expenses

(48,990)

(35,355)

(173,695)

(135,012)

Exit and Restructuring

(26,897)

(16,253)

(100,566)

(39,857)

89,843 

531,351 

703,855 

1,978,549 

Other Income (Expense):

Interest Expense, Net

(91,902)

(67,956)

(366,748)

(243,679)

Other, Net

(9,177)

(31,930)

(37,633)

(44,956)

Income (Loss) from Continuing Operations

Before Income Taxes

(11,236)

431,465 

299,474 

1,689,914 

Benefit (Provision) for Income Taxes:

Benefit (Provision) for Operations

2,710 

(74,321)

(10,157)

(296,117)

Provision for Tax Reorganization

(24,190)

(24,190)

Benefit from Exit and Restructuring

5,466 

14,798 

7,306 

(16,014)

(74,321)

(19,549)

(288,811)

Income (Loss) from Continuing Operations, Net of Taxes

(27,250)

357,144 

279,925 

1,401,103 

Loss from Discontinued Operation, Net of Taxes

(12,928)

Net Income (Loss)

(27,250)

357,144 

279,925 

1,388,175 

Net Income Attributable to Noncontrolling Interest

(3,141)

(9,026)

(26,159)

(34,272)

Net Income (Loss) Attributable to Weatherford

$    (30,391)

$    348,118 

$    253,766 

$ 1,353,903 

Basic Earnings (Loss) Per Share Attributable to Weatherford:

Income (Loss) from Continuing Operations

$      (0.04)

$          0.51 

$          0.35 

$          2.00 

Loss from Discontinued Operation

(0.02)

Net Income (Loss)

$      (0.04)

$          0.51 

$          0.35 

$          1.98 

Diluted Earnings (Loss) Per Share Attributable to Weatherford:

Income (Loss) from Continuing Operations

$      (0.04)

$          0.50 

$          0.35 

$          1.96 

Loss from Discontinued Operation

(0.02)

Net Income (Loss)

$      (0.04)

$          0.50 

$          0.35 

$          1.94 

Amounts Attributable to Weatherford Common Shareholders:

Income (Loss) from Continuing Operations, Net of Taxes

$    (30,391)

$    348,118 

$    253,766 

$ 1,366,831 

Loss from Discontinued Operation, Net of Taxes

(12,928)

Net Income (Loss)

$    (30,391)

$    348,118 

$    253,766 

$ 1,353,903 

Weighted Average Shares Outstanding:

Basic

737,059 

686,222 

714,981 

682,704 

Diluted

737,059 

692,414 

723,449 

698,178 

Weatherford International Ltd.

Selected Income Statement Information

(Unaudited)

(In 000's)

Three Months

Ended

12/31/2009

9/30/2009

6/30/2009

3/31/2009

12/31/2008

Net Revenues:

North America

$            736,443 

$       620,496 

$       571,415 

$       837,353 

$           1,177,936 

Middle East/North Africa/Asia

593,154 

600,110 

592,908 

581,946 

675,513 

Europe/West Africa/FSU

478,259 

404,390 

364,968 

368,843 

393,005 

Latin America

618,225 

524,883 

465,541 

467,999 

388,172 

$         2,426,081 

$    2,149,879 

$    1,994,832 

$    2,256,141 

$           2,634,626 

Operating Income (Expense):

North America

$              41,625 

$         33,259 

$            (709)

$       123,036 

$              296,407 

Middle East/North Africa/Asia

82,452 

101,943 

123,553 

134,026 

163,238 

Europe/West Africa/FSU

42,598 

71,836 

62,614 

74,943 

88,158 

Latin America

49,271 

54,343 

85,759 

92,217 

88,720 

Research and Development

(50,216)

(49,300)

(46,113)

(49,021)

(53,564)

Corporate Expenses

(48,990)

(44,272)

(40,834)

(39,599)

(35,355)

Exit and Restructuring

(26,897)

(17,887)

(30,905)

(24,877)

(16,253)

$              89,843 

$       149,922 

$       153,365 

$       310,725 

$              531,351 

Supplemental Information

(Unaudited)

(In 000's)

Three Months

Ended

12/31/2009

9/30/2009

6/30/2009

3/31/2009

12/31/2008

Depreciation and Amortization:

North America

$   83,658

$   79,737

$   77,253

$   75,098

$   80,555

Middle East/North Africa/Asia

72,739

65,771

60,921

57,634

55,587

Europe/West Africa/FSU

50,376

44,864

35,190

34,678

33,825

Latin America

42,751

43,403

35,971

30,442

30,331

Research and Development

1,980

1,940

2,017

1,933

1,931

Corporate

2,197

2,194

2,341

1,609

1,449

$ 253,701

$ 237,909

$ 213,693

$ 201,394

$ 203,678

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 three months ended December 31, 2009, September 30, 2009, and December 31, 2008 and for the years ended December 31, 2009 and December 31, 2008.  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 Ended

Year Ended

December 31,

September 30,

December 31,

December 31,

December 31,

2009

2009

2008

2009

2008

Operating Income:

GAAP Operating Income

$89,843 

$149,922 

$531,351 

$703,855 

$1,978,549 

Exit and Restructuring

26,897 

(a)

17,887 

(b)

16,253 

(c)

100,566 

(d)

39,857 

(e)

Non-GAAP Operating Income

$116,740 

$167,809 

$547,604 

$804,421 

$2,018,406 

Benefit (Provision) for Income Taxes:

GAAP Benefit (Provision) for Income Taxes

$(16,014) 

$34,369 

$(74,321)

$(19,549) 

$ (288,811)

Tax Reorganization Charges

24,190 

(a)

24,190 

(d)

Tax impact of Exit and Restructuring

(5,466)

(a)

(2,603)

(b)

(c)

(14,798)

(d)

(7,306)

(e)

Non-GAAP Benefit (Provision) for Income Taxes

$2,710

$31,766 

$(74,321)

$(10,157) 

$ (296,117)

Income from Continuing Operations Attributable to Weatherford:

GAAP Income from Continuing Operations

$(30,391)

$77,374 

$348,118 

$253,766

$1,366,831 

Total Charges, net of tax

45,621 

(a)

15,284 

(b)

16,253 

(c)

109,958 

(d)

32,551 

(e)

Non-GAAP Income from Continuing Operations

$15,230 

$92,658 

$364,371 

$363,724

$1,399,382 

Diluted Earnings Per Share From Continuing Operations Attributable to Weatherford:

GAAP Diluted Earnings per Share From

$ (0.04)

$0.11 

$0.50 

$0.35 

$1.96 

Continuing Operations

Total Charges, net of tax

0.06 

(a)

0.02 

(b)

0.03 

(c)

0.15 

(d)

0.04 

(e)

Non-GAAP Diluted Earnings per Share  

From Continuing Operations

$0.02

$0.13 

$0.53 

$0.50 

$2.00 

Note (a):  This amount represents investigation costs incurred in connection with on-going investigations by the U.S. government.  Also included are severance charges and facility closure costs associated with the Company's restructuring activities.  In addition, the Company incurred a tax charge of $24.2 million as a result of a tax reorganization initiative completed during the fourth quarter of 2009.

Note (b): This amount represents investigation costs incurred in connection with on-going investigations by the U.S. government.  Also included are severance charges and facility closure costs associated with the Company's restructuring activities.

Note (c): This amount represents investigation costs incurred in connection with on-going investigations by the U.S. government and costs related to the Company's withdrawal from sanctioned countries.  

Note (d):  This amount represents investigation costs incurred in connection with on-going investigations by the U.S. government and costs related to the Company's withdrawal from sanctioned countries.  Also included are severance charges and facility closure costs associated with the Company's restructuring activities.  In addition, the Company incurred a tax charge of $24.2 million as a result of a tax reorganization initiative completed during the fourth quarter of 2009.

Note (e):  This amount represents investigation costs incurred in conjunction with on-going investigations by the U.S. government and costs related to the Company's withdrawal from sanctioned countries, partially offset by a gain on the restructuring of a Qatar operation into a JV.  Also included are severance charges associated with the Company's restructuring activities.

SOURCE Weatherford International Ltd.



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