BHI Reports Second Quarter Results.HOUSTON--(BUSINESS WIRE)--Aug. 2, 1999-- Baker Hughes Baker Hughes NYSE: BHI is the world's third-largest oilfield services company behind Schlumberger & Halliburton, its main competitors. Baker Hughes provides the world's oil & gas industry with products and services for drilling, formation evaluation, completion and production. Incorporated (NYSE NYSE See: New York Stock Exchange :BHI BHI Baker Hughes Incorporated BHI Brain Heart Infusion (agar) BHI Better Hearing Institute BHI British Horological Institute (UK) BHI Boots Healthcare International BHI Branch If Higher )(PCX (1) A bitmapped graphics file format that handles monochrome, 2-bit, 4-bit, 8-bit and 24-bit color and uses RLE to achieve compression ratios of approximately 1.1:1 to 1.5:1. Images with large blocks of solid colors compress best under the RLE method. See PC Paintbrush. :BHI)(EBS See Swiss Electronic Bourse. EBS See electronic blue sheet (EBS). :BHI) announced today that its operating earnings Operating Earnings Profits after subtracting expenses such as marketing, cost of goods sold, administration and general operating costs from revenue. Notes: Tax and interest expenses are not subtracted - operating earnings are synonymous with EBIT (earnings before for the three months ended June June: see month. 30, 1999 were $0.06 per share (diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. ) compared to $0.36 per share (diluted) in the three months ended June 30, 1998. For the three months ended June 30, 1999, revenues were $1.211 billion, down 27% from the three months ended June 30, 1998. Operating profit Operating profit (or loss) Revenue from a firm's regular activities less costs and expenses and before income deductions. operating profit See operating income. before tax was $28.2 million for the three months ended June 30, 1999, down 84% from $180.5 million for the three months ended June 30, 1998. Net income for the three months ended June 30, 1999, including the impact of non-operational items, was $67.0 million or $0.20 per share (diluted), compared to $118.1 million or $0.36 per share (diluted) for the three months ended June 30, 1998. "The second quarter's results were impacted by sharply reduced customer spending, lower rig and geophysical ge·o·phys·ics n. (used with a sing. verb) The physics of the earth and its environment, including the physics of fields such as meteorology, oceanography, and seismology. activity, and significant pricing pressures," said Max L. Lukens, President, CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. and Chairman of Baker Hughes. "We expect revenue and profits to bottom in the September September: see month. quarter but improve over the next six months as activity and customer spending begin to recover. "During the next two quarters, we expect our drilling-related product lines to recover first followed by the completion, production and seismic segments of our business. North American North American named after North America. North American blastomycosis see North American blastomycosis. North American cattle tick see boophilusannulatus. activity, particularly gas-directed drilling, is expected to continue to improve in the third quarter. Outside of North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. we expect activity to stabilize stabilize See peg. in the third quarter before increasing early next year. "I want to thank the employees of Baker Hughes for their ongoing support and contributions as we move through the next quarter. Their talents and commitment provide the foundation upon which we continue to build a stronger, more valuable enterprise for all our shareholders."
Second Quarter Results
Year over Year
(for the 3 months ended June 30, 1999 and 1998)
-----------------------------------------------
Operating Profit
Revenues Before Tax
Segment ($ millions) ($ millions)
------- ---------------------------------------------
Jun 99 Jun 98 Jun 99 Jun 98
---------------------------------------------
Oilfield Operations $1,110.8 $1,526.0 $95.8 $224.1
Baker Process 100.2 127.5 (2.0) 9.5
Corporate and Other 0.0 6.2 (65.6) (53.1)
---------------------------------------------
Total $1,211.0 $1,659.7 $28.2 $180.5
---------------------------------------------
Sequential Quarters
(for the 3 months ended June 30, 1999
and March 31, 1999)
--------------------------------------
Operating Profit
Revenues Before Tax
Segment ($ millions) ($ millions)
------- -------------------------------------------------
Jun 99 Mar 99 Jun 99 Mar 99
-------------------------------------------------
Oilfield Operations $1,110.8 $1,214.5 $95.8 $127.8
Baker Process 100.2 110.7 (2.0) .2
Corporate and Other 0.0 0.0 (65.6) (62.3)
-------------------------------------------------
Total $1,211.0 $1,325.2 $28.2 $65.7
-------------------------------------------------
Oilfield Operations Oilfield revenues decreased 27% to $1.111 billion for the three months ended June 30, 1999 from $1.526 billion in the three months ended June 30, 1998. Operating profit before tax was $95.8 million for the three months ended June 30, 1999 compared to $224.1 million for the three months ended June 30, 1998. Revenues were impacted by reduced customer spending and lower pricing, particularly in seismic services, drilling systems, wireline logging Wireline Logging consists of measuring and recording the physical properties of the rocks in oil wells. "Logging" consists of introducing sensors in a borehole via a "wireline", an electromechanical cable. , drilling fluids Noun 1. drilling fluid - a mixture of clays and chemicals and water; pumped down the drill pipe to lubricate and cool the drilling bit and to flush out the cuttings and to strengthen the sides of the hole drilling mud and drill bits. Operating profits were impacted by manufacturing under-absorption, low utilization utilization, n 1. the extent to which a given group uses a particular service in a specified period. Although usually expressed as the number of services used per year per 100 or per 1000 persons eligible for the service, utilization rates may be of seismic assets, and pricing, partially offset by cost reductions. The table sets forth the geographic geographic /geo·graph·ic/ (je?o-graf´ik) in pathology, of or referring to a pattern that is well demarcated, resembling outlines on a map. geographic pertaining to geography. distribution of oilfield revenue changes and the BHI rig count changes by geographic region.
3 months ended
Jun 99 vs. Jun 98
--------------------
Geographic Region Revenue Rigs
North America -27% -40%
Latin America -40% -29%
Europe -15% -15%
Middle East -29% -16%
Asia Pacific -39% -21%
Africa -4% -52%
Outside North America -28% -25%
TOTAL -27% -34%
Sequentially se·quen·tial adj. 1. Forming or characterized by a sequence, as of units or musical notes. 2. Sequent. se·quen , oilfield revenue was down 9% in the second quarter from the first quarter of 1999 with Western Hemisphere Western Hemisphere Part of Earth comprising North and South America and the surrounding waters. Longitudes 20° W and 160° E are often considered its boundaries. revenues down 10% and Eastern Hemisphere Eastern Hemisphere Part of the Earth east of the Atlantic Ocean. It includes Europe, Asia, Australia, and Africa. Longitudes 20° W and 160° E are often considered its boundaries. revenues down 7%. Baker Process Baker Process revenues were $100.2 million for the three months ended June 30, 1999, down 21.4% compared to results from the three months ended June 30, 1998. An operating loss operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. before tax of $2.0 million was posted for the three months ended June 30, 1999, compared to a $9.5 million profit for the three months ended June 30, 1998. Ongoing economic weakness in the global mineral related markets due to historically low commodity prices has resulted in the deferral deferral - Waiting for quiet on the Ethernet. of exploration and production expenditures, pressure to reduce prices and margin erosion erosion (ĭrō`zhən), general term for the processes by which the surface of the earth is constantly being worn away. The principal agents are gravity, running water, near-shore waves, ice (mostly glaciers), and wind. . Cost overruns Noun 1. cost overrun - excess of cost over budget; "the cost overrun necessitated an additional allocation of funds in the budget" cost - the total spent for goods or services including money and time and labor on a major oil and gas systems project contributed to the loss. Corporate and Other Corporate expenses, including interest expense, were $65.6 million for the three months ended June 30, 1999 compared to $53.1 million for the three months ended June 30, 1998. Increased spending on Project Renaissance Renaissance (rĕnəsäns`, –zäns`) [Fr.,=rebirth], term used to describe the development of Western civilization that marked the transition from medieval to modern times. and increased interest expense were contributing factors. Non-Operational Items Reported earnings per share of $0.20 for the three months ending June 30, 1999 reflect three unusual items: -- In June 1999, the sale of a property in Houston, Texas “Houston” redirects here. For other uses, see Houston (disambiguation). Houston (pronounced /'hjuːstən/) is the largest city in the state of Texas and the , was completed resulting in a net gain of $33.4 million. -- Also in June 1999, an agreement was reached with the Internal Revenue Service settling the 1994 and 1995 U.S. income tax returns. This resulted in a tax benefit of $19.9 million, less related interest expense of $1.8 million. -- During 1998, the Company sold its interest in a joint venture and recorded a write-down Write-Down Reducing the book value of an asset because it is overvalued compared to the market value. Notes: This is usually reflected in the company's income statement as an expense, thereby reducing net income. to the estimated fair value of the assets received. During the quarter ended June 30, 1999, certain net assets obtained as part of the consideration from the sale were sold, and certain remaining assets relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc these operations were written down to their estimated net realizable value Net realizable value (NRV) is a commonly used method of evaluating an asset's worth in the field of inventory accounting. NRV is part of GAAP rules that apply to valuing inventory, so as to not overstate or understate the value of inventory goods. . The net gain from these items totaled $15.3 million.
Impact of Non-Operational Items
---------------------------------
Profit Profit Earnings
before tax Tax after tax per share
(millions) (millions) (millions) ($/share)
---------- ---------- ---------- ----------
As reported earnings $76.9 $9.9 $67.0 $0.20
less: (33.4) 12.3 (21.1) (0.06)
Net gain on the sale of a
Houston property resulting
in an unusual credit
IRS Settlement of FY94 and
FY95 audits reflected in
income taxes (18.1) (18.1) (0.05)
Net gain on the sale of
certain net assets related
to a joint venture
reflected in SG&A
expenses (15.3) 5.8 (9.5) (0.03)
======== ====== ======= =======
Operational earnings $28.2 $9.9 $18.3 $0.06
======== ====== ======= =======
Financial Results
A table of comparative results follows:
(In millions, except per share amounts)
UNAUDITED Three Months Ended Six Months Ended
June 30, June 30,
1999 1998 1999 1998
--------- --------- --------- ---------
Revenues $1,211.0 $1,659.7 $2,536.2 $3,307.8
--------- --------- --------- ---------
Costs of revenues 964.0 1,264.9 1,999.9 2,507.9
Selling, general and
administrative 164.3 177.7 350.5 379.4
Unusual credit (33.4) (33.4)
--------- --------- --------- ---------
Total costs and expenses 1,094.9 1,442.6 2,317.0 2,887.3
--------- --------- --------- ---------
Operating income 116.1 217.1 219.2 420.5
Interest expense (41.9) (37.0) (82.9) (67.9)
Interest income 2.7 .4 6.3 2.0
--------- --------- --------- ---------
Income before income taxes 76.9 180.5 142.6 354.6
Income taxes (9.9) (62.4) (32.9) (123.6)
--------- --------- --------- ---------
Net income $67.0 $118.1 $109.7 $231.0
--------- --------- --------- ---------
Basic EPS $.20 $.37 $.33 $.73
Diluted EPS $.20 $.36 $.33 $.71
========= ======== ======== =========
Depreciation, depletion and
amortization expense $200.5 $191.7 $403.8 $351.6
Capital expenditures $164.0 $354.8 $386.6 $660.6
Earnings before interest
expense and taxes
(EBIT)(a) $70.1 $217.5 $176.8 $422.5
Earnings before interest
expense, taxes,
depreciation, depletion
and amortization
(EBITDA)(a) $270.6 $409.2 $580.6 $774.1
(a) Computed excluding non-operational items.
Reconciliation of the Numerators and Denominators of the
Basic and Diluted EPS Computations
For The Three Months Ended
June 30, 1999 June 30, 1998
(In millions) Income Shares Income Shares
(numerator) (denominator) (numerator) (denominator)
--------------------------------------------------
Basic EPS $67.0 327.5 $118.1 317.9
Effect of dilutive
securities:
Stock plans 2.1 5.3
Liquid Yield Option
Notes 1.6 7.2
--------------------------------------------------
Diluted EPS $67.0 329.6 $119.7 330.4
==================================================
For The Six Months Ended
June 30, 1999 June 30, 1998
(In millions) Income Shares Income Shares
(numerator) (denominator) (numerator) (denominator)
--------------------------------------------------
Basic EPS $109.7 327.4 $231.0 317.4
Effect of dilutive
securities:
Stock plans 1.2 5.0
Liquid Yield Option Notes 3.2 7.2
--------------------------------------------------
Diluted EPS $109.7 328.6 $234.2 329.6
==================================================
Baker Hughes Incorporated
Segment Information
Oilfield Operations Process PBT Disc Opns PBT
--------------------------------------------------------------
Revenue PBT Margin Revenue PBT Margin Revenue PBT Margin
--------------------------------------------------------------
Mar-96 $ 964.6 $118.7 12.3% $79.2 $6.5 8.2% $10.0 $0.8 8.0%
Jun-96 1,027.6 138.9 13.5% 92.2 7.3 7.9% 8.5 0.9 10.6%
Sep-96 1,069.5 154.1 14.4% 107.7 12.6 11.7% 7.7 0.2 2.6%
Dec-96 1,112.4 143.9 12.9% 90.2 6.9 7.6% 8.0 1.0 12.5%
--------------------------------------------------------------
Mar-97 $1,139.8 $145.7 12.8% $82.9 $8.4 10.1% $7.5 $0.4 5.3%
Jun-97 1,243.8 169.1 13.6% 85.6 7.1 8.3% 6.4 0.2 3.1%
Sep-97 1,378.1 200.7 14.6% 127.4 13.9 10.9% 6.0 (1.0) -16.7%
Dec-97 1,441.6 218.4 15.1% 124.1 9.0 7.3% 7.1 0.3 4.2%
--------------------------------------------------------------
Mar-98 $1,517.2 $223.1 14.7% $123.3 $10.0 8.1% $7.7 $(0.2) -2.6%
Jun-98 1,526.0 224.1 14.7% 127.4 9.5 7.5% 6.2 - 0.0%
Sep-98 1,451.2 160.6 11.1% 127.7 2.8 2.2% 6.0 0.2 3.3%
Dec-98 1,307.5 135.6 10.4% 111.7 1.8 1.6% - -
--------------------------------------------------------------
Mar-99 $1,214.5 $127.8 10.5% $110.7 $0.2 0.2% $ - $ -
Jun-99 1,110.8 95.8 8.6% 100.2 (2.0) -2.0% - -
Sep-99
Dec-99
--------------------------------------------------------------
1996 $4,174.1 $555.6 13.3% $369.3 $33.3 9.0% $34.2 $2.9 8.5%
--------------------------------------------------------------
1997 5,203.3 733.9 14.1% 420.0 38.4 9.1% 27.0 (0.1) -0.4%
--------------------------------------------------------------
1998 5,801.9 743.4 12.8% 490.1 24.1 4.9% 19.9 0.0 0.0%
--------------------------------------------------------------
Total
-----------------------
Corporate Revenue PBT Margin
-----------------------------------
Mar-96 $(36.6) $1,053.8 $89.4 8.5%
Jun-96 (39.4) 1,128.3 107.7 9.5%
Sep-96 (40.6) 1,184.9 126.3 10.7%
Dec-96 (35.4) 1,210.6 116.4 9.6%
-----------------------------------
Mar-97 $(34.7) $1,230.2 $119.8 9.7%
Jun-97 (36.1) 1,335.8 140.3 10.5%
Sep-97 (45.2) 1,511.5 168.4 11.1%
Dec-97 (48.5) 1,572.8 179.2 11.4%
-----------------------------------
Mar-98 $(58.8) $1,648.2 $174.1 10.6%
Jun-98 (53.2) 1,659.6 180.4 10.9%
Sep-98 (62.6) 1,584.9 101.0 6.4%
Dec-98 (65.4) 1,419.2 72.0 5.1%
-----------------------------------
Mar-99 $(62.3) $1,325.2 $65.7 5.0%
Jun-99 (65.6) 1,211.0 28.2 2.3%
Sep-99
Dec-99
-----------------------------------
1996 $(152.0) $4,577.6 $439.8 9.6%
-----------------------------------
1997 (164.5) 5,650.3 607.7 10.8%
-----------------------------------
1998 (240.0) 6,311.9 527.5 8.4%
-----------------------------------
Forward Looking Statements This press release contains forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. within the meaning of Section 27A of the Securities Act of 1933, as amended a·mend v. a·mend·ed, a·mend·ing, a·mends v.tr. 1. To change for the better; improve: amended the earlier proposal so as to make it more comprehensive. 2. , and Section 21E of the Securities Exchange Act of 1934, as amended. The words "improve", "expect", and "expected" and similar expressions are intended to identify forward-looking statements. Baker Hughes' expectations regarding its outlook for its business and the oil and gas industry are only its forecasts regarding these matters. These forecasts may be substantially different from actual results, which are affected by the following factors: the effect of competition; the level of petroleum industry exploration and production expenditures; world economic conditions, including (without limitations) the ability of Asian countries Noun 1. Asian country - any one of the nations occupying the Asian continent Asian nation country, land, state - the territory occupied by a nation; "he returned to the land of his birth"; "he visited several European countries" to grow their respective economies; price of, and the demand for, crude oil and natural gas; drilling activity; weather; the legislative environment in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. and other countries; OPEC OPEC: see Organization of Petroleum Exporting Countries. OPEC in full Organization of the Petroleum Exporting Countries Multinational organization established in 1960 to coordinate the petroleum production and export policies of its policy; conflict in the Middle East and other major petroleum-producing or consuming regions, the development of technology that lowers overall finding and development costs and the condition of the capital and equity markets. Baker Hughes is a leading supplier of reservoir-centered products, services and systems to the worldwide oil and gas industry, and is a leading supplier of separation technologies to the worldwide process industries. NOT INTENDED FOR BENEFICIAL HOLDERS |
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