Transocean Ltd. Reports Fourth Quarter and Full-Year 2010 Results
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Transocean Ltd. /
Transocean Ltd. Reports Fourth Quarter and Full-Year 2010 Results
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ZUG, SWITZERLAND--(Marketwire - February 23, 2011) - Transocean Ltd. (NYSE: RIG)
(SIX: RIGN) today reported a net loss attributable to controlling interest for
the three months ended December 31, 2010 of $799 million or $2.51 per diluted
share. The results compare to net income attributable to controlling interest of
$723 million, or $2.24 per diluted share for the three months ended December
31, 2009.
Fourth Quarter 2010
Fourth quarter 2010 results were adversely impacted by $1.017 billion of after
tax items, or $3.19 per diluted share, which include:
-- An after-tax, non-cash charge of $1.010 billion, or $3.16 per diluted
share. The charge resulted from an impairment of our Standard Jackup
asset group. Calculated based on U.S. Generally Accepted Accounting
Principles, the charge is due to a current and projected decline in
dayrates and utilization that has adversely impacted this asset group.
-- a $13 million loss on retirement of debt associated with repurchases
of a portion of our convertible senior notes, and
-- $6 million of income as a result of the TODCO tax sharing agreement
and other matters.
Fourth quarter 2010 results also included expenses associated with the Macondo
well incident of $28 million, or $25 million, after tax, or $0.08 per diluted
share. These expenses include legal and internal investigation costs,
professional fees and increased insurance premiums.
Full Year 2010
For the year ended December 31, 2010, net income attributable to controlling
interest totaled $961 million, or $2.99 per diluted share. Net income for the
year ended December 31, 2010 included after-tax charges of $854 million, or
$2.65 per diluted share, resulting primarily from the $1.010 billion impairment
of our Standard Jackups. Other charges for the full year totaled $111 million
and included litigation matters, an impairment of oil and gas properties, a loss
on the sale of two rigs and losses on the early retirement of debt and other
matters. Partially offsetting these charges was a $267 million after-tax gain
resulting from insurance recoveries associated with the loss of the Deepwater
Horizon.
Full-year 2010 results also included additional expenses associated with the
Macondo well incident of $137 million, or $116 million after tax, or $0.36 per
diluted share. These expenses include legal costs, internal investigation costs,
professional fees and increased insurance premiums.
For 2009, net income attributable to controlling interest was $3.181 billion, or
$9.84 per diluted share. Net income for the year ended December 31, 2009
included after-tax charges of $498 million, or $1.55 per diluted share,
resulting primarily from impairments of intangible assets and two rigs held for
sale, litigation matters, losses on the early retirement of debt and adjustments
associated with the GlobalSantaFe merger. These charges were partially offset by
gains on the sale of our interest in a joint venture and settlements of certain
tax matters.
Operations Quarterly Review
Revenues for the three months ended December 31, 2010 were $2.160 billion,
compared to revenues of $2.309 billion during the three months ended September
30, 2010. The $149 million decrease was primarily due to:
-- $90 million of decreased utilization, primarily from rigs that were
stacked or idled,
-- a $52 million charge related to a customer dispute in the U.S. Gulf
of Mexico,
-- $41 million from increased shipyard activity,
-- $18 million of reduced revenue on completion of the GSF Arctic IV
charter,
-- offset by $44 million due to increased drilling management services
revenue, and
-- $8 million of other net favorable variances.
Operating and maintenance expenses totaled $1.352 billion for the fourth quarter
2010, up approximately 11 percent compared to $1.213 billion for the prior
quarter. The $139 million quarter-to-quarter increase in operating and
maintenance costs was primarily due to:
-- $73 million of increased shipyard and contract preparation costs,
-- $35 million of increased costs associated with drilling management
services activity,
-- $34 million resulting from increased maintenance expense,
-- offset by $3 million of net favorable variances.
General and administrative expenses were $67 million for the fourth quarter
2010 compared to $59 million in the previous quarter. The $8 million increase
was due, in part, to increases in non-rig related insurance costs and other
miscellaneous items.
Liquidity and Interest Expense
Interest expense, net of amounts capitalized for the fourth quarter 2010, was
$152 million, compared to $142 million in the third quarter 2010, reflecting the
full quarter impact of the issuance of $2 billion of new senior notes during the
third quarter. Interest expense, for the full year 2010 net of amounts
capitalized, was $567 million, compared to $484 million for the full year 2009.
The increase in interest expense was mainly due to lower capitalized interest
expense in 2010.
Cash flow from operating activities increased to $796 million for the fourth
quarter 2010 compared to $709 million for the third quarter 2010. For the full
year 2010, cash flow from operating activities totaled $3.946 billion compared
to $5.598 billion for the full year 2009.
Effective Tax Rate
Transocean's Annual Effective Tax Rate(1), which excludes various discrete
items, for the fourth quarter 2010 and the full year ended December 31, 2010 was
a benefit of 18.7 percent and an expense of 13.8 percent, respectively. The
Effective Tax Rate(2) for the fourth quarter 2010 and the full year ended
December 31, 2010 was 4.1 percent and 23.9 percent, respectively. Transocean's
Effective Tax Rate reflects the impact of changes in estimates as well as the
impact of impairments. The decline in the Annual Effective Tax Rate for the full
year 2010 was due to a tax benefit realized in the fourth quarter resulting
primarily from the relocation of certain rigs.
Conference Call Information
Transocean will conduct a teleconference call at 10:00 a.m. EST, 4:00 p.m. Swiss
time, on February 24, 2011. To participate, dial +1 719-325-2327 and refer to
confirmation code 1432993 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 to be discussed during the conference call, titled "4Q10
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. Swiss
time, on February 24, 2011, and can be accessed by dialing +1 719-457-0820 and
referring to the passcode 1432993. Also, a replay will be available through the
Internet and can be accessed by visiting either of the above-referenced
Worldwide Web addresses. Both replay options will be available for approximately
30 days.
About Transocean
Transocean is the world's largest offshore drilling contractor and the leading
provider of drilling management services worldwide. With a fleet of 138 mobile
offshore drilling units as well as one ultra-deepwater drillship and three high-
specification jackups under construction, Transocean's fleet is considered one
of the most modern and versatile in the world due to its emphasis on technically
demanding segments of the offshore drilling business. Transocean owns or
operates a contract drilling fleet of 47 High-Specification Floaters (Ultra-
Deepwater, Deepwater and Harsh-Environment semisubmersibles and drillships), 25
Midwater Floaters, nine High-Specification Jackups, 54 Standard Jackups and
other assets utilized in the support of offshore drilling activities worldwide.
(1) Annual Effective Tax Rate is defined as income tax expense excluding various
discrete items (such as changes in estimates and tax on items excluded from
income before income tax expense) divided by income before income tax expense
excluding gains on sales and similar items pursuant to the accounting standards
for income taxes and estimating the annual effective tax rate. See the
accompanying schedule entitled "Supplemental Effective Tax Rate Analysis."
(2) Effective Tax Rate is defined as income tax expense divided by income before
income taxes. See the accompanying schedule entitled "Supplemental Effective Tax
Rate Analysis."
For more information about Transocean, please visit our website at
www.deepwater.com.
TRANSOCEAN LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except per share data)
(Unaudited)
Three months ended Twelve months
ended
December 31, December 31,
2010 2009 2010 2009
Operating revenues
Contract drilling revenues $ 2,032 $ 2,546 $ 8,967 $ 10,607
Contract drilling intangible
revenues 13 44 98 281
Other revenues 115 143 511 668
2,160 2,733 9,576 11,556
Costs and expenses
Operating and maintenance 1,352 1,296 5,119 5,140
Depreciation, depletion and
amortization 394 382 1,589 1,464
General and administrative 67 46 247 209
1,813 1,724 6,955 6,813
Loss on impairment (1,010) -- (1,012) (334)
Gain (loss) on disposal of assets,
net 1 (6) 257 (9)
Operating income (662) 1,003 1,866 4,400
Other income (expense), net
Interest income 6 3 23 5
Interest expense, net of amounts
capitalized (152) (119) (567) (484)
Loss on retirement of debt (13) (12) (33) (29)
Other, net (8) 23 10 32
(167) (105) (567) (476)
Income (loss) before income tax
expense (829) 898 1,299 3,924
Income tax expense (benefit) (34) 181 311 754
Net income (loss) (795) 717 988 3,170
Net income (loss) attributable to
noncontrolling interest 4 (6) 27 (11)
Net income (loss) attributable to
controlling interest $ (799) $ 723 $ 961 $ 3,181
======== ======== ======== ========
Earnings per share
Basic $ (2.51) $ 2.24 $ 2.99 $ 9.87
Diluted $ (2.51) $ 2.24 $ 2.99 $ 9.84
Weighted average shares outstanding
Basic 319 321 320 320
Diluted 319 322 320 321
TRANSOCEAN LTD. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In millions, except share data)
December 31,
2010 2009
Assets
Cash and cash equivalents $ 3,394 $ 1,130
Accounts receivable, net
Trade 1,811 2,330
Other 189 55
Materials and supplies, net 517 462
Deferred income taxes, net 115 104
Assets held for sale -- 186
Other current assets 169 209
Total current assets 6,195 4,476
Property and equipment 27,007 27,383
Property and equipment of consolidated variable
interest entities 2,214 1,968
Less accumulated depreciation 7,763 6,333
Property and equipment, net 21,458 23,018
Goodwill 8,132 8,134
Other assets 1,026 808
Total assets $ 36,811 $ 36,436
======== ========
Liabilities and equity
Accounts payable $ 847 $ 780
Accrued income taxes 116 240
Debt due within one year 1,917 1,568
Debt of consolidated variable interest entities due
within one year 95 300
Other current liabilities 861 730
Total current liabilities 3,836 3,618
Long-term debt 8,354 8,966
Long-term debt of consolidated variable interest
entities 855 883
Deferred income taxes, net 594 726
Other long-term liabilities 1,772 1,684
Total long-term liabilities 11,575 12,259
Commitments and contingencies
Redeemable noncontrolling interest 25 --
Shares, CHF 15.00 par value, 335,235,298
authorized,
167,617,649 conditionally authorized, 335,235,298
issued and 319,080,678 outstanding at December 31,
2010; and 502,852,947 authorized; 167,617,649
conditionally authorized, 335,235,298 issued
and 321,223,882 outstanding at December 31, 2009 4,482 4,472
Additional paid-in capital 7,504 7,407
Treasury shares, at cost, 2,863,267 and none held
at
December 31, 2010 and 2009, respectively (240) --
Retained earnings 9,969 9,008
Accumulated other comprehensive loss (332) (335)
Total controlling interest shareholders' equity 21,383 20,552
Noncontrolling interest (8) 7
Total equity 21,375 20,559
Total liabilities and equity $ 36,811 $ 36,436
======== ========
TRANSOCEAN LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
Three months Twelve months ended
ended
December 31, December 31,
2010 2009 2010 2009
Cash flows from operating
activities
Net income (loss) $ (795) $ 717 $ 988 $ 3,170
Adjustments to reconcile net income
to net cash provided by operating
activities:
Amortization of drilling contract
intangibles (13) (44) (98) (281)
Depreciation, depletion and
amortization 394 382 1,589 1,464
Share-based compensation expense 23 15 102 81
Excess tax benefit from share-based
compensation plans - 8 (1) (2)
(Gain) loss on disposal of assets,
net (1) 6 (257) 9
Loss on impairment 1,010 - 1,012 334
Loss on retirement of debt 13 12 33 29
Amortization of debt issue costs,
discounts and premiums, net 41 49 189 209
Deferred income taxes (71) (37) (145) 13
Other, net (2) (23) (1) 7
Deferred revenue, net - 97 205 169
Deferred expenses, net (24) - (79) (38)
Changes in operating assets and
liabilities 221 (7) 409 434
Net cash provided by operating
activities 796 1,175 3,946 5,598
Cash flows from investing activities
Capital expenditures (428) (857) (1,411) (3,052)
Proceeds from disposal of assets,
net 9 8 60 18
Proceeds from insurance recoveries
for loss of drilling unit - - 560 -
Proceeds from payments on notes
receivable 6 - 37 -
Proceeds from short-term investments 32 142 37 564
Purchases of short-term investments - (1) - (269)
Joint ventures and other
investments, net 1 40 (4) 45
Net cash used in investing
activities (380) (668) (721) (2,694)
Cash flows from financing activities
Change in short-term borrowings, net (62) (136) (193) (382)
Proceeds from debt - 169 2,054 514
Repayments of debt (1,599) (288) (2,565) (2,871)
Purchases of shares held in treasury - - (240) -
Financing costs - - (15) (2)
Proceeds from (taxes paid for)
share-based compensation plans, net 2 1 (1) 17
Excess tax benefit from share-based
compensation plans - (8) 1 2
Other, net 1 (1) (2) (15)
Net cash used in financing
activities (1,658) (263) (961) (2,737)
Net increase (decrease) in cash
and cash equivalents (1,242) 244 2,264 167
Cash and cash equivalents at
beginning of period 4,636 886 1,130 963
Cash and cash equivalents at end
of period $ 3,394 $ 1,130 $ 3,394 $ 1,130
======== ======== ======== ========
TRANSOCEAN LTD.
FLEET OPERATING STATISTICS
Operating Revenues ($ Millions) (1)
Twelve months
Three months ended ended December
31,
December September
December
31, 2010 30, 2010 31, 2009 2010 2009
Contract Drilling
Revenues
High-Specification
Floaters:
Ultra Deepwater
Floaters $ 740 $ 720 $ 890 $ 3,171 $ 2,997
Deepwater Floaters 339 350 449 1,461 1,731
Harsh Environment
Floaters 155 178 155 674 613
Total High-
Specification 1,234 1,248 1,494 5,306 5,341
Floaters
Midwater Floaters 477 572 537 2,093 2,507
High-Specification
Jackups 56 78 86 320 469
Standard Jackups 259 298 422 1,222 2,257
Other Rigs 6 8 7 26 33
Subtotal 2,032 2,204 2,546 8,967 10,607
Contract Intangible
Revenue 13 23 44 98 281
Other Revenues
Client Reimbursable
Revenues 34 40 46 152 194
Integrated Services
and Other 15 10 48 68 206
Drilling Management
Services 57 25 41 261 239
Oil and Gas 9 7 8 30 29
Properties
Subtotal 115 82 143 511 668
Total Company $ 2,160 $ 2,309 $ 2,733 $ 9,576 $ 11,556
Average Daily Revenue (1)
Twelve months ended
Three months ended December 31,
December September December
31, 2010 30, 2010 31, 2009 2010 2009
High-Specification
Floaters:
Ultra Deepwater
Floaters $435,900 $422,800 $486,200 $457,300 $462,700
Deepwater Floaters $395,600 $365,600 $346,600 $384,900 $344,900
Harsh Environment
Floaters $366,800 $414,100 $405,800 $401,900 $378,000
Total High-
Specification Floaters $414,500 $403,900 $425,900 $427,600 $407,200
Midwater Floaters $298,500 $328,400 $325,100 $319,600 $322,800
High-Specification
Jackups $162,600 $138,100 $175,100 $152,000 $166,300
Standard Jackups $110,600 $113,200 $147,300 $118,700 $152,600
Other Rigs $ 73,000 $ 72,900 $ 72,300 $ 72,700 $ 54,700
Total Drilling Fleet $276,600 $271,200 $295,700 $282,700 $271,400
Utilization (1)
Twelve months ended
Three months ended December 31,
December September December
31, 2010 30, 2010 31, 2009 2010 2009
High-Specification
Floaters:
Ultra Deepwater
Floaters 76% 77% 91% 79% 92%
Deepwater Floaters 58% 65% 88% 65% 86%
Harsh Environment
Floaters 92% 93% 83% 92% 89%
Total High-
Specification Floaters 71% 75% 89% 76% 89%
Midwater Floaters 68% 73% 69% 69% 79%
High-Specification
Jackups 38% 61% 53% 58% 77%
Standard Jackups 46% 52% 57% 51% 74%
Other Rigs 48% 50% 50% 49% 66%
Total Drilling Fleet 58% 64% 69% 63% 80%
(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. 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.
Transocean Ltd. and Subsidiaries
Supplemental Effective Tax Rate Analysis
(In millions)
Three months ended Twelve months
ended
Dec 31, Sept 30, Dec 31, Dec 31, Dec 31,
2010 2010 2009 2010 2009
--
Income before income
taxes $ (829) $ 497 $ 898 $ 1,299 $ 3,924
Add back (subtract):
Litigation matters 1 14 (24) 27 108
Gain on loss of
Deepwater Horizon - - - (267) -
(Gain) Loss on
disposal of other
assets, net - - - 14 (2)
Loss on impairment of
other assets, net 1,010 - - 1,012 334
Loss of impairment of
oil and gas
properties - - - 21 -
GSF merger related
costs and other, net (8) - 4 (2) 5
(Gain) loss on
retirement of debt 13 22 12 33 29
Gain on sale of
interests in joint
ventures - - (34) - (30)
Adjusted income before
income taxes 187 533 856 2,137 4,368
Income tax expense (34) 118 181 311 754
Add back (subtract):
Loss of impairment of
oil and gas properties - - - 7 -
Loss on impairment of
other assets, net - - 18 - 18
GSF merger related
costs - - - 1 2
Tax effect of the
Patient Proctection
and Affordable
Care Act - - - (2) -
Changes in
estimates (1) (1) (7) (50) (21) (74)
Adjusted income tax
expense (2) $ (35) $ 111 $ 149 $ 296 $ 700
======== ======== ======== ======== ========
Effective Tax Rate (3) 4.1% 23.8% 20.1% 23.9% 19.2%
Annual Effective Tax
Rate (4) -18.7% 20.8% 17.4% 13.8% 16.0%
(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 months ended December 31, 2010 includes ($61) 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.
Analyst Contact:
Gregory S. Panagos
+1 713-232-7551
Media Contact:
Guy A. Cantwell
+1 713-232-7647
--- End of Message ---
Transocean Ltd.
Chemin de Blandonnet 10 Vernier Switzerland
ISIN: CH0048265513;
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originality of the information contained therein.
Source: Transocean Ltd. via Thomson Reuters ONE
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