- Revenues were $751 million, compared with $785 million in the first quarter of 2017;
- Revenue efficiency(1) was 97.4 percent, compared with 97.8 percent in the first quarter of 2017;
- Operating and maintenance expense was $333 million, compared with $343 million in the prior period;
- Net loss attributable to controlling interest was $1.690 billion, $4.32 per diluted share, compared with net income attributable to controlling interest of $91 million, $0.23 per diluted share, in the first quarter of 2017;
- Adjusted net income was $1 million, excluding $1.691 billion of net unfavorable items primarily related to the previously announced $1.597 billion loss on the divestiture of the jackup fleet. This compares with $4 million, $0.01 per diluted share, in the prior quarter, excluding $87 million of net favorable items;
- Adjusted Normalized EBITDA margin was $347 million or 49 percent, compared with $361 million or 48 percent in the prior quarter;
- Cash flows from operating activities were $319 million, up from $184 million in the prior quarter;
- Repurchased an aggregate principal amount of debt of $1.343 billion, including cash tender offers of $1.212 billion and open market repurchases of $131 million primarily associated with near‑dated debt; and
- Contract backlog was $10.2 billion as of the July 2017 Fleet Status Report.
ZUG, Switzerland, Aug. 02, 2017 (GLOBE NEWSWIRE) -- Transocean Ltd. (NYSE:RIG) today reported net loss attributable to controlling interest of $1.690 billion, $4.32 per diluted share, for the three months ended June 30, 2017.
Second quarter 2017 results included net unfavorable items of $1.691 billion, or $4.32 per diluted share as follows:
- $1.597 billion, $4.08 per diluted share, loss on the divestiture of the jackup fleet;
- $113 million, $0.29 per diluted share, loss on impairment of primarily the midwater floater asset group;
- $48 million, $0.12 per diluted share, loss related to the early retirement of debt; and
- $3 million associated with unfavorable litigation matters and restructuring charges.
These net unfavorable items were partially offset by:
- $70 million, $0.17 per diluted share, in discrete tax benefits.
After consideration of these net unfavorable items, second quarter 2017 adjusted net income was $1 million.
Contract drilling revenues for the three months ended June 30, 2017, decreased $33 million sequentially to $705 million due primarily to reduced activity.
Other revenues were $46 million, compared with $47 million in the prior quarter.
Operating and maintenance expense was $333 million, including $4 million in unfavorable items associated with litigation matters and restructuring charges. This compares with $343 million in the prior quarter, including $8 million in favorable items associated with litigation matters. The decrease was due to ongoing cost control initiatives and a favorable adjustment to value added taxes, partially offset by reactivation costs related to the contract preparation on the harsh environment semisubmersible Transocean Barents.
General and administrative expense was $35 million, down from $39 million in the first quarter of 2017. The decrease was due largely to the reimbursement of legal fees and other costs related to the settlement of a court case.
Depreciation expense was $219 million, down from $232 million in the first quarter of 2017. The decrease was due to the sale of the jackup fleet.
Interest expense, net of amounts capitalized, was $129 million, compared with $127 million in the prior quarter. Capitalized interest was unchanged at $30 million. Interest income was $7 million, compared with $6 million in the prior quarter.
The Effective Tax Rate(2) was 2.2 percent, up from (73.0) percent in the prior quarter. The increase was due primarily to lower pre‑tax income largely associated with the loss on sale of the jackup fleet. The Effective Tax Rate excluding discrete items(3) was 74.0 percent, compared with 82.1 percent in the previous quarter.
Cash flows from operating activities increased $135 million sequentially to $319 million due primarily to the collection of certain receivables.
Second quarter 2017 capital expenditures of $136 million were primarily related to the company’s newbuild drillships. This compares with $122 million in the previous quarter.
“We continue to safely and efficiently convert our industry leading $10.2 billion backlog into cash,” said Jeremy Thigpen, President and Chief Executive Officer. “Across our global fleet, we have now operated for 15 consecutive months without a single lost time incident. Our revenue efficiency, which is a close proxy for rig uptime, once again exceeded 97%. And, despite a sequential decline in revenue, our Adjusted Normalized EBITDA improved to 49%.”
Thigpen added: “In addition to this excellent and consistent operating performance, during the quarter, we continued to further strengthen our balance sheet, including the private offering of $410 million in senior secured notes, the divestiture of the jackup fleet for a total consideration of $1.35 billion, and a successful cash tender offer resulting in the repurchase of approximately $1.2 billion in existing notes with maturities between 2017 and 2021.”
Non-GAAP Financial Measures
We present our operating results in accordance with accounting principles generally accepted in the U.S. (U.S. GAAP). We believe certain financial measures, such as Adjusted Net Income, EBITDA, Adjusted EBITDA and Adjusted Normalized EBITDA, which are non-GAAP measures, provide users of our financial statements with supplemental information that may be useful in evaluating our operating performance. We believe that such non-GAAP measures, when read in conjunction with our operating results presented under U.S. GAAP, can be used to better assess our performance from period to period and relative to performance of other companies in our industry, without regard to financing methods, historical cost basis or capital structure. Such non-GAAP measures should be considered as a supplement to, and not as a substitute for, financial measures prepared in accordance with U.S. GAAP.
All non-GAAP measure reconciliations to the most comparative U.S. GAAP measures are displayed in quantitative schedules on the company’s website at: www.deepwater.com.
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 44 mobile offshore drilling units consisting of 30 ultra-deepwater floaters, seven harsh environment floaters, three deepwater floaters and four midwater floaters. We also operate two high-specification jackups that were under drilling contracts when the rigs were sold, and we continue to operate these jackups until completion or novation of the drilling contracts. In addition, the company has four ultra-deepwater drillships under construction or under contract to be constructed.
For more information about Transocean, please visit: www.deepwater.com.
Conference Call Information
Transocean will conduct a teleconference starting at 9 a.m. EDT, 3 p.m. CEST, on Thursday, August 3, 2017, to discuss the results. To participate, dial +1 719-325-2440 and refer to confirmation code 6269827 approximately 10 minutes prior to the scheduled start time.
The teleconference will be simulcast in a listen-only mode over the internet and can be accessed at: www.deepwater.com, by selecting Investors, News, and Webcasts. Supplemental materials that may be referenced during the teleconference will be posted to Transocean’s website and can be found by selecting Investors, Financial Reports.
A replay of the conference call will be available after 12 p.m. EDT, 6 p.m. CEST, on August 3, 2017. The replay, which will be archived for approximately 30 days, can be accessed at +1 719-457-0820, passcode 6269827 and PIN 9876. The replay will also be available on the company’s website.
Forward-Looking Statements
The statements described in this press release that are not historical facts are 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. These statements contain words such as "possible," "intend," "will," "if," "expect," or other similar expressions. Forward-looking statements are based on management’s current expectations and assumptions, and are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. As a result, actual results could differ materially from those indicated in these forward-looking statements. Factors that could cause actual results to differ materially include, but are not limited to, estimated duration of customer contracts, contract dayrate amounts, future contract commencement dates and locations, planned shipyard projects and other out-of-service time, sales of drilling units, timing of the company’s newbuild deliveries, operating hazards and delays, risks associated with international operations, actions by customers and other third parties, the future prices of oil and gas, the intention to scrap certain drilling rigs, the results of our final accounting for the periods presented in this press release and other factors, including those and other risks discussed in the company's most recent Annual Report on Form 10-K for the year ended December 31, 2016, and in the company's other filings with the SEC, which are available free of charge on the SEC's website at: www.sec.gov. 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 results may vary materially from those indicated or expressed or implied by such forward-looking statements. All subsequent written and oral forward-looking statements attributable to the company or to persons acting on our behalf are expressly qualified in their entirety by reference to these risks and uncertainties. You should not place undue reliance on forward-looking statements. Each forward-looking statement speaks only as of the date of the particular statement, and we undertake no obligation to publicly update or revise any forward-looking statements to reflect events or circumstances that occur, or which we become aware of, after the date hereof, except as otherwise may be required by law. All non-GAAP financial measure reconciliations to the most comparative GAAP measure are displayed in quantitative schedules on the company’s website at: www.deepwater.com.
This press release, or referenced documents, do not constitute an offer to sell, or a solicitation of an offer to buy, any securities, and do not constitute an offering prospectus within the meaning of article 652a or article 1156 of the Swiss Code of Obligations. Investors must rely on their own evaluation of Transocean and its securities, including the merits and risks involved. Nothing contained herein is, or shall be relied on as, a promise or representation as to the future performance of Transocean.
Notes
(1) Revenue efficiency is defined as actual contract drilling revenues for the measurement period divided by the maximum revenue calculated for the measurement period, expressed as a percentage. Maximum revenue is defined as the greatest amount of contract drilling revenues the drilling unit could earn for the measurement period, excluding amounts related to incentive provisions. See the accompanying schedule entitled “Revenue Efficiency.”
(2) Effective Tax Rate is defined as income tax expense for continuing operations divided by income from continuing operations before income taxes. See the accompanying schedule entitled “Supplemental Effective Tax Rate Analysis.”
(3) Effective Tax Rate excluding discrete items 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 taxes), divided by income from continuing operations before income tax expense excluding gains and losses 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.”
Analyst Contacts:
Bradley Alexander
+1 713-232-7515
Diane Vento
+1 713-232-8015
Media Contact:
Pam Easton
+1 713-232-7647
| TRANSOCEAN LTD. AND SUBSIDIARIES | |||||||||||||||||
| CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS | |||||||||||||||||
| (In millions, except share data) | |||||||||||||||||
| (Unaudited) | |||||||||||||||||
| Three months ended | Six months ended | ||||||||||||||||
| June 30, | June 30, | ||||||||||||||||
| 2017 | 2016 | 2017 | 2016 | ||||||||||||||
| Operating revenues | |||||||||||||||||
| Contract drilling revenues | $ | 705 | $ | 915 | $ | 1,443 | $ | 2,026 | |||||||||
| Other revenues | 46 | 25 | 93 | 255 | |||||||||||||
| 751 | 940 | 1,536 | 2,281 | ||||||||||||||
| Costs and expenses | |||||||||||||||||
| Operating and maintenance | 333 | 497 | 676 | 1,152 | |||||||||||||
| Depreciation | 219 | 225 | 451 | 442 | |||||||||||||
| General and administrative | 35 | 41 | 74 | 84 | |||||||||||||
| 587 | 763 | 1,201 | 1,678 | ||||||||||||||
| Loss on impairment | (113 | ) | (12 | ) | (113 | ) | (15 | ) | |||||||||
| Loss on disposal of assets, net | (1,595 | ) | (2 | ) | (1,593 | ) | (1 | ) | |||||||||
| Operating income (loss) | (1,544 | ) | 163 | (1,371 | ) | 587 | |||||||||||
| Other income (expense), net | |||||||||||||||||
| Interest income | 7 | 4 | 13 | 10 | |||||||||||||
| Interest expense, net of amounts capitalized | (129 | ) | (98 | ) | (256 | ) | (187 | ) | |||||||||
| Gain (loss) on retirement of debt | (48 | ) | 38 | (48 | ) | 38 | |||||||||||
| Other, net | (2 | ) | 3 | 1 | 2 | ||||||||||||
| (172 | ) | (53 | ) | (290 | ) | (137 | ) | ||||||||||
| Income (loss) from continuing operations before income tax expense | (1,716 | ) | 110 | (1,661 | ) | 450 | |||||||||||
| Income tax expense (benefit) | (37 | ) | 18 | (77 | ) | 116 | |||||||||||
| Income (loss) from continuing operations | (1,679 | ) | 92 | (1,584 | ) | 334 | |||||||||||
| Income from discontinued operations, net of tax | — | 1 | — | — | |||||||||||||
| Net income (loss) | (1,679 | ) | 93 | (1,584 | ) | 334 | |||||||||||
| Net income attributable to noncontrolling interest | 11 | 11 | 15 | 17 | |||||||||||||
| Net income (loss) attributable to controlling interest | $ | (1,690 | ) | $ | 82 | $ | (1,599 | ) | $ | 317 | |||||||
| Earnings (loss) per share—basic | |||||||||||||||||
| Earnings (loss) from continuing operations | $ | (4.32 | ) | $ | 0.22 | $ | (4.09 | ) | $ | 0.86 | |||||||
| Earnings (loss) from discontinued operations | — | — | — | — | |||||||||||||
| Earnings (loss) per share | $ | (4.32 | ) | $ | 0.22 | $ | (4.09 | ) | $ | 0.86 | |||||||
| Earnings (loss) per share—diluted | |||||||||||||||||
| Earnings (loss) from continuing operations | $ | (4.32 | ) | $ | 0.22 | $ | (4.09 | ) | $ | 0.86 | |||||||
| Earnings (loss) from discontinued operations | — | — | — | — | |||||||||||||
| Earnings (loss) per share | $ | (4.32 | ) | $ | 0.22 | $ | (4.09 | ) | $ | 0.86 | |||||||
| Weighted-average shares outstanding | |||||||||||||||||
| Basic | 391 | 365 | 391 | 365 | |||||||||||||
| Diluted | 391 | 365 | 391 | 365 | |||||||||||||
| TRANSOCEAN LTD. AND SUBSIDIARIES | |||||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||||
| (In millions, except share data) | |||||||||
| (Unaudited) | |||||||||
| June 30, | December 31, | ||||||||
| 2017 | 2016 | ||||||||
| Assets | |||||||||
| Cash and cash equivalents | $ | 2,471 | $ | 3,052 | |||||
| Accounts receivable, net of allowance for doubtful accounts of less than $1 at June 30, 2017 and December 31, 2016 | 624 | 898 | |||||||
| Materials and supplies, net of allowance for obsolescence of $150 and $153 at June 30, 2017 and December 31, 2016, respectively | 517 | 561 | |||||||
| Restricted cash | 537 | 466 | |||||||
| Other current assets | 137 | 121 | |||||||
| Total current assets | 4,286 | 5,098 | |||||||
| Property and equipment | 24,717 | 27,372 | |||||||
| Less accumulated depreciation | (5,816 | ) | (6,279 | ) | |||||
| Property and equipment, net | 18,901 | 21,093 | |||||||
| Deferred income taxes, net | 301 | 298 | |||||||
| Other assets | 359 | 400 | |||||||
| Total assets | $ | 23,847 | $ | 26,889 | |||||
| Liabilities and equity | |||||||||
| Accounts payable | $ | 173 | $ | 206 | |||||
| Accrued income taxes | 69 | 95 | |||||||
| Debt due within one year | 865 | 724 | |||||||
| Other current liabilities | 751 | 960 | |||||||
| Total current liabilities | 1,858 | 1,985 | |||||||
| Long-term debt | 6,525 | 7,740 | |||||||
| Deferred income taxes, net | 155 | 178 | |||||||
| Other long-term liabilities | 1,058 | 1,153 | |||||||
| Total long-term liabilities | 7,738 | 9,071 | |||||||
| Commitments and contingencies | |||||||||
| Redeemable noncontrolling interest | 42 | 28 | |||||||
| Shares, CHF 0.10 par value, 417,060,033 authorized, 143,783,041 conditionally authorized and 394,801,990 issued at June 30, 2017 and December 31, 2016 and 391,181,430 and 389,366,241 outstanding at June 30, 2017 and December 31, 2016, respectively | 37 | 36 | |||||||
| Additional paid-in capital | 11,011 | 10,993 | |||||||
| Retained earnings | 3,457 | 5,056 | |||||||
| Accumulated other comprehensive loss | (300 | ) | (283 | ) | |||||
| Total controlling interest shareholders’ equity | 14,205 | 15,802 | |||||||
| Noncontrolling interest | 4 | 3 | |||||||
| Total equity | 14,209 | 15,805 | |||||||
| Total liabilities and equity | $ | 23,847 | $ | 26,889 | |||||
| TRANSOCEAN LTD. AND SUBSIDIARIES | |||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||
| (In millions) | |||||||||
| (Unaudited) | |||||||||
| Six months ended | |||||||||
| June 30, | |||||||||
| 2017 | 2016 | ||||||||
| Cash flows from operating activities | |||||||||
| Net income (loss) | $ | (1,584 | ) | $ | 334 | ||||
| Adjustments to reconcile to net cash provided by operating activities: | |||||||||
| Depreciation | 451 | 442 | |||||||
| Share-based compensation expense | 21 | 23 | |||||||
| Loss on impairment | 113 | 15 | |||||||
| Loss on disposal of assets, net | 1,593 | 1 | |||||||
| (Gain) loss on retirement of debt | 48 | (38 | ) | ||||||
| Deferred income tax expense (benefit) | (39 | ) | 39 | ||||||
| Other, net | 18 | 7 | |||||||
| Changes in deferred revenues, net | (104 | ) | (26 | ) | |||||
| Changes in deferred costs, net | 28 | 52 | |||||||
| Changes in other operating assets and liabilities, net | (42 | ) | (11 | ) | |||||
| Net cash provided by operating activities | 503 | 838 | |||||||
| Cash flows from investing activities | |||||||||
| Capital expenditures | (258 | ) | (826 | ) | |||||
| Proceeds from disposal of assets, net | 329 | 15 | |||||||
| Other, net | (15 | ) | — | ||||||
| Net cash provided by (used in) investing activities | 56 | (811 | ) | ||||||
| Cash flows from financing activities | |||||||||
| Proceeds from issuance of debt, net of issue costs | 403 | — | |||||||
| Repayments of debt | (1,533 | ) | (251 | ) | |||||
| Deposits to cash accounts restricted for financing activities | (57 | ) | (24 | ) | |||||
| Proceeds from cash accounts and investments restricted for financing activities | 50 | 73 | |||||||
| Distributions to holders of noncontrolling interest | — | (16 | ) | ||||||
| Other, net | (3 | ) | 5 | ||||||
| Net cash used in financing activities | (1,140 | ) | (213 | ) | |||||
| Net decrease in cash and cash equivalents | (581 | ) | (186 | ) | |||||
| Cash and cash equivalents at beginning of period | 3,052 | 2,339 | |||||||
| Cash and cash equivalents at end of period | $ | 2,471 | $ | 2,153 | |||||
| TRANSOCEAN LTD. AND SUBSIDIARIES | ||||||||||||||||
| FLEET OPERATING STATISTICS | ||||||||||||||||
| Operating Revenues (in millions) | ||||||||||||||||
| Three months ended | Six months ended | |||||||||||||||
| June 30, | March 31, | June 30, | June 30, | June 30, | ||||||||||||
| 2017 | 2017 | 2016 | 2017 | 2016 | ||||||||||||
| Contract drilling revenues | ||||||||||||||||
| Ultra-deepwater floaters | $ | 497 | $ | 505 | $ | 553 | $ | 1,002 | $ | 1,174 | ||||||
| Harsh environment floaters | 104 | 122 | 100 | 226 | 281 | |||||||||||
| Deepwater floaters | 36 | 35 | 51 | 71 | 136 | |||||||||||
| Midwater floaters | 18 | 13 | 133 | 31 | 271 | |||||||||||
| High-specification jackups | 50 | 63 | 74 | 113 | 157 | |||||||||||
| Contract intangible revenue | — | — | 4 | — | 7 | |||||||||||
| Total contract drilling revenues | 705 | 738 | 915 | 1,443 | 2,026 | |||||||||||
| Other revenues | ||||||||||||||||
| Customer early termination fees | 40 | 37 | 9 | 77 | 218 | |||||||||||
| Customer reimbursement revenues and other | 6 | 10 | 16 | 16 | 37 | |||||||||||
| Total other revenues | 46 | 47 | 25 | 93 | 255 | |||||||||||
| Total revenues | $ | 751 | $ | 785 | $ | 940 | $ | 1,536 | $ | 2,281 | ||||||
| Average Daily Revenue (1) | ||||||||||||||||
| Three months ended | Six months ended | |||||||||||||||
| June 30, | March 31, | June 30, | June 30, | June 30, | ||||||||||||
| 2017 | 2017 | 2016 | 2017 | 2016 | ||||||||||||
| Ultra-deepwater floaters | $ | 482,200 | $ | 519,900 | $ | 500,300 | $ | 500,500 | $ | 494,900 | ||||||
| Harsh environment floaters | 262,200 | 276,700 | 343,500 | 269,900 | 452,500 | |||||||||||
| Deepwater floaters | 199,000 | 192,000 | 238,600 | 195,500 | 278,600 | |||||||||||
| Midwater floaters | 100,300 | 92,300 | 304,600 | 96,700 | 331,200 | |||||||||||
| High-specification jackups | 142,800 | 141,200 | 137,900 | 141,900 | 144,100 | |||||||||||
| Total drilling fleet | $ | 329,900 | $ | 337,700 | $ | 352,500 | $ | 333,800 | $ | 374,800 | ||||||
| Utilization (2) | |||||||||||||||||
| Three months ended | Six months ended | ||||||||||||||||
| June 30, | March 31, | June 30, | June 30, | June 30, | |||||||||||||
| 2017 | 2017 | 2016 | 2017 | 2016 | |||||||||||||
| Ultra-deepwater floaters | 38 | % | 36 | % | 43 | % | 37 | % | 46 | % | |||||||
| Harsh environment floaters | 62 | % | 70 | % | 46 | % | 66 | % | 49 | % | |||||||
| Deepwater floaters | 67 | % | 67 | % | 52 | % | 67 | % | 56 | % | |||||||
| Midwater floaters | 33 | % | 27 | % | 48 | % | 30 | % | 43 | % | |||||||
| High-specification jackups | 54 | % | 50 | % | 59 | % | 52 | % | 60 | % | |||||||
| Total drilling fleet | 44 | % | 43 | % | 47 | % | 44 | % | 49 | % | |||||||
| Revenue Efficiency (3) | ||||||||||||||||
| Three months ended | Years ended | |||||||||||||||
| June 30, | March 31, | June 30, | June 30, | June 30, | ||||||||||||
| 2017 | 2017 | 2016 | 2017 | 2016 | ||||||||||||
| Ultra-deepwater floaters | 97.1 | % | 97.8 | % | 96.6 | % | 97.5 | % | 95.4 | % | ||||||
| Harsh environment floaters | 98.4 | % | 97.0 | % | 98.3 | % | 97.6 | % | 98.5 | % | ||||||
| Deepwater floaters | 95.6 | % | 92.6 | % | 96.9 | % | 94.1 | % | 97.2 | % | ||||||
| Midwater floaters | 98.8 | % | 91.3 | % | 98.6 | % | 95.4 | % | 98.1 | % | ||||||
| High-specification jackups | 98.7 | % | 104.1 | % | 86.8 | % | 101.6 | % | 86.7 | % | ||||||
| Total drilling fleet | 97.4 | % | 97.8 | % | 96.2 | % | 97.6 | % | 95.5 | % | ||||||
| (1) Average daily revenue is defined as contract drilling revenues earned per operating day. An operating day is defined as a calendar day | ||||||||||||||||
| during which a rig is contracted to earn a dayrate during the firm contract period after commencement of operations. | ||||||||||||||||
| (2) Rig utilization is defined as the total number of operating days divided by the total number of available rig calendar days in the | ||||||||||||||||
| measurement period, expressed as a percentage. | ||||||||||||||||
| (3) Revenue efficiency is defined as actual contract drilling revenues for the measurement period divided by the maximum revenue calculation | ||||||||||||||||
| for the measurement period, expressed as a percentage. Maximum revenue is defined as the greatest amount of contract drilling revenues | ||||||||||||||||
| the drilling unit could earn for the measurement period, excluding amounts related to incentive provisions. | ||||||||||||||||
| | ||||||||||||||||
| TRANSOCEAN LTD. AND SUBSIDIARIES | |||||||||||||
| NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS | |||||||||||||
| ADJUSTED NET INCOME AND ADJUSTED DILUTED EARNINGS PER SHARE | |||||||||||||
| (In millions, except per share data) | |||||||||||||
| YTD | QTD | QTD | |||||||||||
| 06/30/17 | 06/30/17 | 03/31/17 | |||||||||||
| Adjusted Net Income | |||||||||||||
| Net income (loss) attributable to controlling interest, as reported | $ | (1,599 | ) | $ | (1,690 | ) | $ | 91 | |||||
| Add back (subtract): | |||||||||||||
| Litigation matters | (7 | ) | 1 | (8 | ) | ||||||||
| Restructuring charges | 2 | 2 | — | ||||||||||
| Loss on impairment of assets | 113 | 113 | — | ||||||||||
| (Gain) loss on disposal of assets, net | 1,595 | 1,597 | (2 | ) | |||||||||
| Loss on retirement of debt | 48 | 48 | — | ||||||||||
| Discrete tax items and other, net | (147 | ) | (70 | ) | (77 | ) | |||||||
| Net income, as adjusted | $ | 5 | $ | 1 | $ | 4 | |||||||
| Adjusted Diluted Earnings Per Share: | |||||||||||||
| Diluted earnings (loss) per share, as reported | $ | (4.09 | ) | $ | (4.32 | ) | $ | 0.23 | |||||
| Add back (subtract): | |||||||||||||
| Litigation matters | (0.02 | ) | — | (0.02 | ) | ||||||||
| Restructuring charges | — | — | — | ||||||||||
| Loss on impairment of assets | 0.29 | 0.29 | — | ||||||||||
| Loss on disposal of assets, net | 4.08 | 4.08 | — | ||||||||||
| Loss on retirement of debt | 0.12 | 0.12 | — | ||||||||||
| Discrete tax items and other, net | (0.37 | ) | (0.17 | ) | (0.20 | ) | |||||||
| Diluted earnings per share, as adjusted | $ | 0.01 | $ | — | $ | 0.01 | |||||||
| YTD | QTD | YTD | QTD | YTD | QTD | QTD | |||||||||||||||||||||||
| 12/31/16 | 12/31/16 | 09/30/16 | 09/30/16 | 06/30/16 | 06/30/16 | 03/31/16 | |||||||||||||||||||||||
| Adjusted Net Income | |||||||||||||||||||||||||||||
| Net income attributable to controlling interest, as reported | $ | 778 | $ | 243 | $ | 535 | $ | 218 | $ | 317 | $ | 82 | $ | 235 | |||||||||||||||
| Add back (subtract): | |||||||||||||||||||||||||||||
| Litigation matters | (28 | ) | (28 | ) | — | — | — | — | — | ||||||||||||||||||||
| Restructuring charges | 26 | 11 | 15 | 4 | 11 | 7 | 4 | ||||||||||||||||||||||
| Loss on impairment of assets | 91 | 66 | 25 | 11 | 14 | 12 | 2 | ||||||||||||||||||||||
| Gain on disposal of assets, net | (13 | ) | (5 | ) | (8 | ) | (3 | ) | (5 | ) | (4 | ) | (1 | ) | |||||||||||||||
| Gain on retirement of debt | (148 | ) | — | (148 | ) | (110 | ) | (38 | ) | (38 | ) | — | |||||||||||||||||
| (Income) loss from discontinued operations | — | — | — | — | — | (1 | ) | 1 | |||||||||||||||||||||
| Discrete tax items and other, net | (50 | ) | (26 | ) | (24 | ) | (32 | ) | 8 | 7 | 1 | ||||||||||||||||||
| Net income, as adjusted | $ | 656 | $ | 261 | $ | 395 | $ | 88 | $ | 307 | $ | 65 | $ | 242 | |||||||||||||||
| Adjusted Diluted Earnings Per Share: | |||||||||||||||||||||||||||||
| Diluted earnings per share, as reported | $ | 2.08 | $ | 0.64 | $ | 1.44 | $ | 0.59 | $ | 0.86 | $ | 0.22 | $ | 0.64 | |||||||||||||||
| Add back (subtract): | |||||||||||||||||||||||||||||
| Litigation matters | (0.08 | ) | (0.07 | ) | — | — | — | — | — | ||||||||||||||||||||
| Restructuring charges | 0.07 | 0.03 | 0.04 | 0.01 | 0.03 | 0.02 | 0.01 | ||||||||||||||||||||||
| Loss on impairment of assets | 0.25 | 0.16 | 0.06 | 0.03 | 0.04 | 0.03 | — | ||||||||||||||||||||||
| Gain on disposal of assets, net | (0.04 | ) | (0.01 | ) | (0.02 | ) | (0.01 | ) | (0.01 | ) | (0.01 | ) | — | ||||||||||||||||
| Gain on retirement of debt | (0.40 | ) | — | (0.40 | ) | (0.30 | ) | (0.11 | ) | (0.11 | ) | — | |||||||||||||||||
| (Income) loss from discontinued operations | — | — | — | — | — | — | — | ||||||||||||||||||||||
| Discrete tax items and other, net | (0.12 | ) | (0.06 | ) | (0.06 | ) | (0.08 | ) | 0.02 | 0.02 | — | ||||||||||||||||||
| Diluted earnings per share, as adjusted | $ | 1.76 | $ | 0.69 | $ | 1.06 | $ | 0.24 | $ | 0.83 | $ | 0.17 | $ | 0.65 | |||||||||||||||
| TRANSOCEAN LTD. AND SUBSIDIARIES | ||||||||||||
| NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS | ||||||||||||
| EARNINGS BEFORE INTEREST, TAXES AND DEPRECIATION AND RELATED MARGINS | ||||||||||||
| (In millions, except percentages) | ||||||||||||
| YTD | QTD | QTD | ||||||||||
| 06/30/17 | 06/30/17 | 03/31/17 | ||||||||||
| Operating revenues | $ | 1,536 | $ | 751 | $ | 785 | ||||||
| Drilling contract termination fees | (77 | ) | (40 | ) | (37 | ) | ||||||
| Adjusted Normalized Revenues | $ | 1,459 | $ | 711 | $ | 748 | ||||||
| Net income (loss) | $ | (1,584 | ) | $ | (1,679 | ) | $ | 95 | ||||
| Interest expense, net of interest income | 243 | 122 | 121 | |||||||||
| Income tax expense (benefit) | (77 | ) | (37 | ) | (40 | ) | ||||||
| Depreciation expense | 451 | 219 | 232 | |||||||||
| EBITDA | (967 | ) | (1,375 | ) | 408 | |||||||
| Litigation matters | (6 | ) | 2 | (8 | ) | |||||||
| Restructuring charges | 2 | 2 | — | |||||||||
| Loss on impairment of assets | 113 | 113 | — | |||||||||
| (Gain) loss on disposal of assets, net | 1,595 | 1,597 | (2 | ) | ||||||||
| Loss on retirement of debt | 48 | 48 | — | |||||||||
| Adjusted EBITDA | 785 | 387 | 398 | |||||||||
| Drilling contract termination fees | (77 | ) | (40 | ) | (37 | ) | ||||||
| Adjusted Normalized EBITDA | $ | 708 | $ | 347 | $ | 361 | ||||||
| EBITDA margin | (63 | )% | (183 | )% | 52 | % | ||||||
| Adjusted EBITDA margin | 51 | % | 52 | % | 51 | % | ||||||
| Adjusted Normalized EBITDA margin | 49 | % | 49 | % | 48 | % | ||||||
| YTD | QTD | YTD | QTD | YTD | QTD | QTD | ||||||||||||||||||||||
| 12/31/16 | 12/31/16 | 09/30/16 | 09/30/16 | 06/30/16 | 06/30/16 | 03/31/16 | ||||||||||||||||||||||
| Operating revenues | $ | 4,161 | $ | 974 | $ | 3,187 | $ | 906 | $ | 2,281 | $ | 940 | $ | 1,341 | ||||||||||||||
| Drilling contract termination fees | (396 | ) | (169 | ) | (227 | ) | (9 | ) | (218 | ) | (9 | ) | (209 | ) | ||||||||||||||
| Adjusted Normalized Revenues | $ | 3,765 | $ | 805 | $ | 2,960 | $ | 897 | $ | 2,063 | $ | 931 | $ | 1,132 | ||||||||||||||
| Net income | $ | 827 | $ | 257 | $ | 570 | $ | 236 | $ | 334 | $ | 93 | $ | 241 | ||||||||||||||
| Interest expense, net of interest income | 389 | 108 | 281 | 104 | 177 | 94 | 83 | |||||||||||||||||||||
| Income tax expense (benefit) | 107 | (15 | ) | 122 | 6 | 116 | 18 | 98 | ||||||||||||||||||||
| Depreciation expense | 893 | 226 | 667 | 225 | 442 | 225 | 217 | |||||||||||||||||||||
| EBITDA | 2,216 | 576 | 1,640 | 571 | 1,069 | 430 | 639 | |||||||||||||||||||||
| Restructuring charges | 28 | 11 | 17 | 4 | 13 | 8 | 5 | |||||||||||||||||||||
| Litigation matters | (30 | ) | (30 | ) | — | — | — | — | — | |||||||||||||||||||
| Loss on impairment of assets | 93 | 67 | 26 | 11 | 15 | 12 | 3 | |||||||||||||||||||||
| Gain on disposal of assets, net | (13 | ) | (5 | ) | (8 | ) | (3 | ) | (5 | ) | (4 | ) | (1 | ) | ||||||||||||||
| Gain on retirement of debt | (148 | ) | — | (148 | ) | (110 | ) | (38 | ) | (38 | ) | — | ||||||||||||||||
| (Income) loss from discontinued operations, net of tax | — | — | — | — | — | (1 | ) | 1 | ||||||||||||||||||||
| Adjusted EBITDA | 2,146 | 619 | 1,527 | 473 | 1,054 | 407 | 647 | |||||||||||||||||||||
| Drilling contract termination fees | (396 | ) | (169 | ) | (227 | ) | (9 | ) | (218 | ) | (9 | ) | (209 | ) | ||||||||||||||
| Adjusted Normalized EBITDA | $ | 1,750 | $ | 450 | $ | 1,300 | $ | 464 | $ | 836 | $ | 398 | $ | 438 | ||||||||||||||
| EBITDA margin | 53 | % | 59 | % | 51 | % | 63 | % | 47 | % | 46 | % | 48 | % | ||||||||||||||
| Adjusted EBITDA margin | 52 | % | 64 | % | 48 | % | 52 | % | 46 | % | 43 | % | 48 | % | ||||||||||||||
| Adjusted Normalized EBITDA margin | 46 | % | 56 | % | 44 | % | 52 | % | 41 | % | 43 | % | 39 | % | ||||||||||||||
| TRANSOCEAN LTD. AND SUBSIDIARIES | |||||||||||||||||||||
| SUPPLEMENTAL EFFECTIVE TAX RATE ANALYSIS | |||||||||||||||||||||
| (In millions, except tax rates) | |||||||||||||||||||||
| Three months ended | Year ended | ||||||||||||||||||||
| June 30, | March 31, | June 30, | June 30, | June 30, | |||||||||||||||||
| 2017 | 2017 | 2016 | 2017 | 2016 | |||||||||||||||||
| Income (loss) from continuing operations before income taxes | $ | (1,716 | ) | $ | 55 | $ | 110 | $ | (1,661 | ) | $ | 450 | |||||||||
| Add back (subtract): | |||||||||||||||||||||
| Litigation matters | 2 | (8 | ) | — | (6 | ) | — | ||||||||||||||
| Restructuring charges | 2 | — | 8 | 2 | 13 | ||||||||||||||||
| Loss on impairment of assets | 113 | — | 12 | 113 | 15 | ||||||||||||||||
| (Gain) loss on disposal of assets, net | 1,597 | (2 | ) | (4 | ) | 1,595 | (5 | ) | |||||||||||||
| (Gain) loss on retirement of debt | 48 | — | (38 | ) | 48 | (38 | ) | ||||||||||||||
| Adjusted income from continuing operations before income taxes | 46 | 45 | 88 | 91 | 435 | ||||||||||||||||
| Income tax expense (benefit) from continuing operations | (37 | ) | (40 | ) | 18 | (77 | ) | 116 | |||||||||||||
| Add back (subtract): | |||||||||||||||||||||
| Litigation matters | 1 | — | — | 1 | — | ||||||||||||||||
| Restructuring charges | — | — | 1 | — | 2 | ||||||||||||||||
| Loss on impairment of assets | — | — | — | — | 1 | ||||||||||||||||
| Changes in estimates (1) | 70 | 77 | (7 | ) | 147 | (8 | ) | ||||||||||||||
| Adjusted income tax expense from continuing operations (2) | $ | 34 | $ | 37 | $ | 12 | $ | 71 | $ | 111 | |||||||||||
| Effective Tax Rate (3) | 2.2 | % | (73.0 | ) | % | 16.9 | % | 4.7 | % | 26.1 | % | ||||||||||
| Effective Tax Rate, excluding discrete items (4) | 74.0 | % | 82.1 | % | 14.1 | % | 78.0 | % | 25.7 | % | |||||||||||
| (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 six months ended June 30, 2017 includes $(2) 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) Our effective tax rate is calculated as income tax expense for continuing operations divided by income from continuing operations before | |||||||||||||||||||||
| income taxes. | |||||||||||||||||||||
| (4) Our effective tax rate, excluding discrete items, is calculated as income tax expense for continuing operations, excluding various discrete | |||||||||||||||||||||
| items (such as changes in estimates and tax on items excluded from income before income taxes), divided by income from continuing | |||||||||||||||||||||
| operations before income tax expense, excluding gains and losses on sales and similar items pursuant to the accounting standards for | |||||||||||||||||||||
| income taxes and estimating the annual effective tax rate. | |||||||||||||||||||||