BHI Reports Third Quarter Results.HOUSTON--(BUSINESS WIRE)--Nov. 1, 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 September September: see month. 30, 1999 were $0.03 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 $0.20 per share (diluted) in the three months ended September 30, 1998. For the three months ended September 30, 1999, revenues were $1.208 billion, down 24% from the three months ended September 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 $14.2 million for the three months ended September 30, 1999, down 86% from $100.9 million for the three months ended September 30, 1998. In addition to the operating earnings, the quarter included a $6.2 million pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta credit ($3.9 million after tax) or $.01 per share resulting from the gain on the sale of a property in Las Colinas Las Colinas is a developed area in the Dallas suburb of Irving, Texas. Due to its central location between Dallas and Fort Worth and its proximity to DFW Airport, Las Colinas has been a viable place in the Metroplex for corporate and business relocation. , Texas. Net income for the three months ended September 30, 1999, including the impact of the unusual credit, was $13.1 million or $0.04 per share (diluted). "Although the third quarter's results reflected continued weakness in overall oilfield activity levels, we did see a bottoming and sequential One after the other in some consecutive order such as by name or number. improvement in North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. . This trend benefited our drilling-focused companies in the third quarter and is expected to impact our completions-focused companies in the fourth quarter," said Max L. Lukens, Chairman, President, and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. of Baker Hughes. "With the exception of seismic, we expect activity in the Western Hemisphere Western Hemisphere Part of Earth comprising North and South America and the surrounding waters. Longitudes 20° W and 160° E are often considered its boundaries. to continue to improve in the fourth quarter while we expect activity in the Eastern Hemisphere Eastern Hemisphere Part of the Earth east of the Atlantic Ocean. It includes Europe, Asia, Australia, and Africa. Longitudes 20° W and 160° E are often considered its boundaries. to be flat before increasing in 2000. Results from our seismic business are expected to lag the sequential improvements in revenues and profits anticipated from our other oilfield business. We are evaluating ways to further reduce costs, including adjusting our seismic capacity to match anticipated market demand." -0-
Third Quarter Results
Year over Year
(for the 3 months ended September 30, 1999 and 1998)
Revenues Operating Profit Before Tax
Segment ($ millions) ($ millions)
Sep 99 Sep 98 Sep 99 Sep 98
---------- ---------- ------- --------
Oilfield Operations $ 1,117.9 $ 1,451.2 $ 81.3 $ 160.6
Baker Process 90.2 127.7 (3.3) 2.8
Corporate and Other 0.0 6.0 (63.8) (62.5)
---------- ---------- ------- --------
Total $ 1,208.1 $ 1,584.9 $ 14.2 $ 100.9
---------- ---------- ------- --------
Sequential Quarters
(for the 3 months ended September 30, 1999 and June 30, 1999)
Revenues Operating Profit Before Tax
Segment ($ millions) ($ millions)
Sep 99 Jun 99 Sep 99 Jun 99
---------- ---------- ------- -------
Oilfield Operations $ 1,117.9 $ 1,110.8 $ 81.3 $ 95.8
Baker Process 90.2 100.2 (3.3) (2.0)
Corporate and Other 0.0 0.0 (63.8) (65.6)
---------- ---------- ------- -------
Total $ 1,208.1 $ 1,211.0 $ 14.2 $ 28.2
---------- ---------- ------- -------
Oilfield Operations Oilfield revenues decreased 23% to $1.118 billion for the three months ended September 30, 1999 from $1.451 billion in the three months ended September 30, 1998. Operating profit before tax was $81.3 million for the three months ended September 30, 1999 compared to $160.6 million for the three months ended September 30, 1998. Revenues were impacted by reduced customer spending and lower pricing, particularly in international and offshore markets. Manufacturing under-absorption, low utilization of seismic assets, and pricing -- partially offset by cost reductions -- impacted operating profits. Operating profit at 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. was particularly weak as lower pricing and low utilization of seismic assets impacted results. The decline in profitability at Western Geophysical was partially offset by improved profitability in the balance of the oilfield. The table sets forth the geographic distribution of oilfield revenue changes and the BHI rig count changes by geographic region. -0-
3 months ended
Sep 99 vs. Sep 98
Geographic Region Revenue Rigs
---------- ----------
North America -8% -11%
Latin America -39% -20%
Europe -22% -17%
Middle East -31% -20%
Asia Pacific -43% -23%
Africa -24% -42%
Outside North America -32% -22%
---------- ----------
TOTAL -23% -16%
---------- ----------
Sequentially, oilfield revenue was up 1% in the third quarter from the second quarter of 1999. North American North American named after North America. North American blastomycosis see North American blastomycosis. North American cattle tick see boophilusannulatus. revenues were up 8% driven by drilling for gas in Canada Canada (kăn`ədə), independent nation (2001 pop. 30,007,094), 3,851,787 sq mi (9,976,128 sq km), N North America. Canada occupies all of North America N of the United States (and E of Alaska) except for Greenland and the French islands of and shallow gas on land in the US. Outside of North America sequential revenue fell 5% reflecting the weakness in drilling activity. North American revenues comprised 44% of oilfield revenues in the third quarter. Baker Process Baker Process revenues were $90.2 million for the three months ended September 30, 1999, down 29% compared to results from the three months ended September 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 $3.3 million was posted for the three months ended September 30, 1999, compared to a $2.8 million profit for the three months ended September 30, 1998. Results were impacted by the ongoing weakness in global mineral related markets, weak aftermarket Aftermarket See: Secondary market. aftermarket See secondary market. shipments and losses in Baker Process' oil and gas unit on particular orders, which shipped in the third quarter. The oil and gas unit has been completely restructured and the company expects the Baker Process division to return to profitability by the end of the year. Corporate and Other Corporate expenses, including interest expense, were $63.8 million for the three months ended September 30, 1999 compared to $62.5 million for the three months ended September 30, 1998. Increased expenses from Project Renaissance were partially offset by modestly lower net interest expense. Organizational Announcement The Company announced that John R. Russell Russell, English noble family. It first appeared prominently in the reign of Henry VIII when John Russell, 1st earl of Bedford, 1486?–1555, rose to military and diplomatic importance. , former President and CEO of 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., and former President of Baker Hughes Incorporated resigned as a Director of Baker Hughes effective November November: see month. 1, 1999. Non-Operational Item Reported earnings per share of $0.04 for the three months ending September 30, 1999 includes a gain from the September sale of a property located in Las Colinas, Texas. The Company received net proceeds Net Proceeds The amount received after all costs are deducted from the sale of a piece of property or security. Notes: In the case of an investor selling a security, net proceeds represent the proceeds from the sale minus any trading costs (i.e. commissions). of $19.9 million in cash, and recognized a pre-tax unusual credit of $6.2 million or $3.9 million after tax. -0-
Impact of Non-Operational Item
Profit Profit Earnings
before tax Tax after tax per share
For the 3 months ended
September 30, 1999: (millions) (millions) (millions) ($/share)
As reported earnings $20.4 $(7.3) $13.1 $0.04
Less:
Net gain on the sale of
Las Colinas property resulting
in an unusual credit (6.2) 2.3 (3.9) (0.01)
----- ----- ----- -----
Operational earnings $14.2 $(5.0) $ 9.2 $0.03
----- ----- ----- -----
Financial Results
A table of comparative results follows:
(In millions, except per share amounts)
UNAUDITED Three Months Ended Nine Months Ended
September 30, September 30,
1999 1998 1999 1998
-------- -------- -------- --------
Revenues $1,208.1 $1,584.9 $3,744.3 $4,892.7
-------- -------- -------- --------
Costs of revenues 978.6 1,539.4 2,978.5 4,047.3
Selling, general and
administrative 176.8 278.8 527.3 658.2
Unusual charge (credit) (6.2) 175.3 (39.6) 175.3
-------- -------- -------- --------
Total costs and expenses 1,149.2 1,993.5 3,466.2 4,880.8
-------- -------- -------- --------
Operating income (loss) 58.9 (408.6) 278.1 11.9
Interest expense (42.0) (40.5) (124.9) (108.5)
Interest income 3.5 1.0 9.8 3.0
Merger related costs (201.9) (201.9)
-------- -------- -------- --------
Income (loss) before
income taxes 20.4 (650.0) 163.0 (295.5)
Income taxes (7.3) 115.5 (40.2) (8.1)
-------- -------- -------- --------
Net income (loss) $ 13.1 $ (534.5) $ 122.8 $ (303.6)
-------- -------- -------- --------
Basic EPS $ .04 $ (1.65)$ .37 $ (.95)
Diluted EPS $ .04 $ (1.65)$ .37 $ (.95)
-------- -------- -------- --------
Depreciation, depletion and
amortization expense $ 205.4 $ 205.3 $ 609.2 $ 556.9
Capital expenditures $ 144.9 $ 313.1 $ 531.5 $ 973.7
Earnings before interest
expense and taxes (EBIT)(1) $ 56.2 $ 141.4 $ 233.0 $ 563.9
Earnings before interest
expense, taxes, depreciation,
depletion and amortization
(EBITDA)(1) $ 261.6 $ 346.7 $ 842.2 $1,120.8
(1) Computed excluding non-operational items.
Reconciliation of the Numerators and Denominators
of the Basic and Diluted EPS Computations
For The Three Months Ended
September 30, 1999 September 30, 1998
(In millions) Income Shares Income Shares
(numerator) (denominator) (numerator) (denominator)
Basic EPS $13.1 328.8 $(534.5) 323.0
Effect of dilutive
securities:
Stock plans 2.7
----- ----- ------- -----
Diluted EPS $13.1 331.5 $(534.5) 323.0
----- ----- ------- -----
For The Nine Months Ended
September 30, 1999 September 30, 1998
(In millions) Income Shares Income Shares
(numerator) (denominator) (numerator) (denominator)
Basic EPS $122.8 327.8 $(303.6) 319.4
Effect of dilutive
securities:
Stock plans 1.7
------ ----- ------- -----
Diluted EPS $122.8 329.5 $(303.6) 319.4
------ ----- ------- -----
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," "continue," "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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