BHI Reports Third Quarter Operating Earnings.HOUSTON--(BUSINESS WIRE)--Nov. 2, 1998--Baker Hughes Incorporated (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 - NYSE NYSE See: New York Stock Exchange , 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. , EBS See Swiss Electronic Bourse. EBS See electronic blue sheet (EBS). ) 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 ending Sept. 30, 1998 were $0.20 per share (diluted) compared to $0.36 per share (diluted) in the same period last year before the impact of unusual and non-recurring charges in both periods. For the third quarter of 1998, revenues were $1.585 billion, up 5% from the same period last year. 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 $100.9 million, down 40% from $168.5 million for the same period last year. Financial results from both years have been restated to reflect the Aug. 10, 1998 merger of 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. and Western Atlas Western Atlas was formed in 1987 through the merger of Western Geophysical (owned by Litton Industries) and Dresser Atlas. The resulting company was a joint venture of Litton and Dresser Industries until it was spun off as a publicly traded company in 1994. Inc., which was accounted for as a pooling of interest Noun 1. pooling of interest - an accounting method used in the merging of companies; the balance sheets are added together item by item; this method is tax-free . The quarter was impacted by a pre-tax charge of $751 million ($599 million after-tax) or $1.85 per share (diluted). Components of the charge include asset write-offs and write-downs of $446 million; merger transaction related charges of $202 million; charges related to personnel reductions of $43 million; facility related charges of $23 million; and other charges of $37 million. The company expects that additional merger-related expenses will be incurred in future quarters, primarily related to items that did not qualify for recording in the September quarter. "The completion of the Baker Hughes and Western Atlas merger gives Baker Hughes the capability to provide world-class reservoir-centered products and services to our global customer base," 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. "The merger is proceeding according to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. plan, and we are already seeing the development of significant synergistic synergistic /syn·er·gis·tic/ (sin?er-jis´tik) 1. acting together. 2. enhancing the effect of another force or agent. syn·er·gis·tic adj. 1. opportunities among the Baker Hughes and Western Atlas product lines." Commenting on the current market for the company's products and services, Lukens said, "Based on ongoing discussions with our customers, I believe that the balance of 1998 and the first half of 1999 will continue to be a difficult operating environment In computing, an operating environment is the environment in which users run programs, whether in a command line interface, such as in MS-DOS or the Unix shell, or in a graphical user interface, such as in the Macintosh operating system. . As such, we have aggressively resized our business this quarter for expected future activity levels which, when combined with the merger consolidation benefits, results in a reduction of our 1999 cost base, to date, of approximately $250 million." -0-
Third Quarter Results
Revenues Operating Profit
Segment ($ millions) Before Tax
($ millions)
Sep 98 Sep 97 Sep 98 Sep 97
Oilfield Operations (1) $1,451.2 $1,378.1 $160.6 $200.7
Baker Process 127.7 127.4 2.8 13.9
Corporate & Disc Opns 6.0 6.0 (62.5) (46.1)
Total $1,584.9 $1,511.5 $100.9 $168.5
-0- (1) Oilfield Operations (Baker Hughes Oilfield Operations or BHOO) includes Baker Atlas (formerly Western Atlas Logging Services), Baker Oil Tools, Baker Petrolite, Centrilift, INTEQ, E&P Solutions (the combination of Western Atlas E&P Services and Baker Hughes Solutions), Hughes Christensen The creator of this article, or someone who has substantially contributed to it, may have a conflict of interest regarding its subject matter. It may require cleanup to comply with Wikipedia's content policies, particularly neutral point of view. and Western Geophysical Western Geophysical was a company founded in California in 1933 by Henry Salvatori for the purpose of using reflection seismology to explore for petroleum. The company prospered and was sold by Salvatori to Litton Industries in the 1960s. . Baker Hughes Oilfield Operations (BHOO) revenues increased 5% to $1.451 billion for the third quarter from $1.378 billion in the year-ago period. BHOO operating profit before tax was $160.6 million compared to $200.7 million for the same period a year ago. The revenue for the third quarter included $43 million from the acquisition of Wedge-Dialog and 3D 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. . Results were impacted by the ongoing reduction in customer spending, increased price competition in 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. primarily in directional drilling Directional drilling (sometimes known as slant drilling outside the oil industry) is the science of drilling non-vertical wells. Directional drilling can be broken down into three main groups: Oilfield Directional Drilling, Utility Installation Directional Drilling (commonly and 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. and adverse weather conditions in the Gulf of Mexico Noun 1. Gulf of Mexico - an arm of the Atlantic to the south of the United States and to the east of Mexico Golfo de Mexico Atlantic, Atlantic Ocean - the 2nd largest ocean; separates North and South America on the west from Europe and Africa on the east . The table sets forth the geographic distribution of Baker Hughes Oilfield Operations revenue changes and the BHI rig count changes by geographic region. Revenue changes in all areas surpassed rig count changes in comparison to the year ago period. -0-
Three Months Ending September 30, 1998
vs.
Three Months Ending September 30, 1997
Geographic Region BHOO Revenue Change Rig Count Change
North America -7% -28%
Latin America +17% -15%
Europe +10% -14%
Middle East +11% 0%
Asia Pacific +17% -8%
Africa +25% -16%
Outside North America +14% -10%
TOTAL +5% -21%
-0- Baker Process revenues of $128 million in the September quarter were flat when compared to results from the same period last year. Operating profit before tax was $2.8 million for the quarter, down $11.1 million from the same period last year. Ongoing weakness in economic activity 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 capital expenditures, pressure to reduce prices and margin erosion. Corporate expenses, including interest expense, were $62.5 million as compared to $46.1 million in the year ago period. The increase was due to an increase in interest expense, from $24.8 million to $40.5 million, due to higher debt levels. Organizational Announcement The company announced that John R. Russell, formerly president and CEO of Western Atlas Inc., and president of Baker Hughes Incorporated following the merger with Western Atlas Inc., was retiring as president of the company but will continue to serve as a Director. Max L. Lukens will assume the duties of president, in addition to his current duties of chairman of the board and CEO. -0-
Financial Results
A table of comparative results follows:
(In millions, except per share amounts)
Three Months Ended Nine Months Ended
September 30, September 30,
1998 1997 1998 1997
REVENUES:
Sales $ 737.5 $ 760.8 $ 2,296.1 $ 1,915.0
Services and rentals 847.4 750.6 2,596.6 2,162.4
Total revenues 1,584.9 1,511.4 4,892.7 4,077.4
COSTS AND EXPENSES:
Costs of sales 593.4 501.8 1,576.2 1,236.5
Costs of services
and rentals 831.4 529.2 2,111.5 1,564.3
Selling, general
and administrative 393.4 309.9 1,017.8 803.1
Unusual charge 175.3 52.1 175.3 52.1
Acquired in-process
research and development -- 118.0 -- 118.0
Total costs and expenses 1,993.5 1,511.0 4,880.8 3,774.0
Operating income (loss) (408.6) .4 11.9 303.4
Interest expense (40.5) (24.8) (108.5) (69.6)
Interest income 1.0 0.8 3.0 2.7
Merger related costs (201.9) -- (201.9) --
Spin-off related costs -- -- -- (8.4)
Income (loss) from
continuing operations
before income taxes (650.0) (23.6) (295.5) 228.1
Income taxes 115.5 (32.0) (8.1) (110.5)
Income (loss) from
continuing operations (534.5) (55.6) (303.6) 117.6
Discontinued operations -- 14.1 -- (157.8)
Net income (loss) $ (534.5) $ (41.5) $ (303.6) $ (40.2)
Basic EPS
Continuing operations $ (1.65) $ (.18) $ (.95) $ .39
Discontinued operations -- .05 -- (.52)
Net income (loss) $ (1.65) $ (.13) $ (.95) $ (.13)
Diluted EPS
Continuing operations $ (1.65) $ (.18) $ (.95) $ .39
Discontinued operations -- .05 -- (.52)
Net income (loss) $ (1.65) $ (.13) $ (.95) $ (.13)
Depreciation,
depletion and
amortization expense $ 205.3 $ 170.0 $ 556.9 $ 428.8
Capital expenditures $ 242.9 $ 296.8 $ 861.6 $ 804.7
Shares used in computing
net earnings per share
Basic EPS 323.0 313.8 319.4 300.2
Diluted EPS 323.0 313.8 319.4 304.2
-0- Forward Looking Statements This news release contains "forward-looking" statements within the meanings of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. 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. are indicated by words such as "believe", "will" and "should". See page 13 of the Joint Proxy Statement/Prospectus of Baker Hughes and Western Atlas describing factors, risks and uncertainties that relate to the forward-looking statements. 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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