Baker Hughes Operating Profit Up 456% From Continuing Operations.Business & Energy Editors HOUSTON--(BUSINESS WIRE)--Oct. 30, 2000 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 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. after tax from continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the for the third quarter of 2000, excluding non-operational items, was $70.6 million or $0.21 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. ); up 456% compared with $12.7 million or $0.04 per share (diluted) for the third quarter of 1999, and up 72% compared with $41.0 million or $0.12 per share (diluted) for the second quarter of 2000, which also exclude the impact of non-operational items. (See Attachment See attach a file. 3 - Impact of Non-Operational Items.) Net income for the third quarter of 2000 was $66.7 million or $0.20 per share (diluted), compared to $13.2 million or $0.04 per share (diluted) for the third quarter of 1999 and $60.9 million or $0.18 per share (diluted) for the second quarter of 2000. Results for the third quarter of 2000 include the impact of losses, net of tax, totaling $3.9 million or $0.01 per share (diluted), related to the company's holdings of Varco Varco can mean:
Atlas (ăt`ləs), in Greek mythology, a Titan; son of Iapetus and Clymene and the brother of Prometheus. . Cash earnings (after-tax af·ter-tax also af·ter·tax adj. Relating to or being that which remains after payment, especially of income taxes: after-tax profits. operating profit, excluding after-tax goodwill amortization) for the third quarter of 2000 were $0.24 per share (diluted), compared with $0.07 per share (diluted) for the third quarter of 1999, and $0.15 per share (diluted) for the second quarter of 2000. Revenue for the third quarter of 2000 was $1,273.6 million, up 14% from the $1,117.6 million reported for the third quarter of 1999 and up 8% from the $1,174.5 million reported for the second quarter of 2000. Excluding 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. , revenues were up 24% compared to the third quarter of 1999, and up 10% compared to the second quarter of 2000. Michael Michael, archangel Michael (mī`kəl) [Heb.,=who is like God?], archangel prominent in Christian, Jewish, and Muslim traditions. In the Bible and early Jewish literature, Michael is one of the angels of God's presence. E. Wiley Wiley may refer to:
adj. 1. Recurring regularly or frequently: the continual need to pay the mortgage. 2. improve performance in every division. We have increased our operational earnings in each quarter of this year. Our focus on the balance sheet, coupled with improving earnings, has also resulted in a reduction of debt in excess of $200 million during the quarter." Mr. Wiley continued, "North American North American named after North America. North American blastomycosis see North American blastomycosis. North American cattle tick see boophilusannulatus. natural gas driven exploration and production spending is expected to remain strong. While rig and manpower availability will cause the rate of revenue growth to moderate in the future, the quality of North American revenues should continue to improve as pricing increases are realized. 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. , where Baker Hughes generates approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. two-thirds of its revenues, our customers are planning increases in exploration and production spending on the order of 15-20% next year. We are positioned to benefit from the expansion of international spending in 2001." Mr. Wiley concluded, "Three of our divisions, Baker Oil Tools, Centrilift and 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. , had returns exceeding their cost of capital in the third quarter, and two others, Baker Atlas and Baker Petrolite had returns exceeding their cost of capital, excluding goodwill. Excluding Western Geophysical and E&P Solutions, in the first nine months of 2000, Baker Hughes invested $148 million in oilfield operations. In the fourth quarter, we expect to invest approximately $80 million." Other Items Oil and Gas Properties - In connection with the company's strategy to substantially exit the oil and gas exploration business, the company announced that, subsequent to September September: see month. 30, 2000, it sold its interests in its China oil and gas properties, signed an agreement to sell its 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 properties and is negotiating the sale of an additional property. The proceeds from these sales are expected to be approximately $53 million. In addition, the company will write off its remaining exploration properties. The company will record an after-tax loss of approximately $75 million in the fourth quarter as a result of these sales and asset write-offs. In taking these actions, the company will avoid one-quarter of a billion dollars in future capital expenditures over the next few years. The company will retain its interest in the OPL-230 property in Nigeria Nigeria (nījĭr`ēə), officially Federal Republic of Nigeria, republic (2006 provisional pop. 140,003,542), 356,667 sq mi (923,768 sq km), W Africa. , which currently produces approximately 25,000 barrels of oil per day. During the third quarter of 2000, the company reached the cost recovery threshold The point at which a signal (voltage, current, etc.) is perceived as valid. in its operating agreement An operating agreement is an agreement among limited liability company ("LLC") members governing the LLC's business, and Member's financial and management rights and duties. No state requires an LLC to have an Operating agreement. with the operator, which will reduce future pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta earnings to Baker Hughes by approximately $12 million per quarter at current commodity pricing levels. Baker Process - The company expects to divest To deprive or take away. Divest is usually used in reference to the relinquishment of authority, power, property, or title. If, for example, an individual is disinherited, he or she is divested of the right to inherit money. the Baker Process division early in the year 2001. Sale/Leaseback - During the third quarter, the company sold four facilities and realized 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 approximately $118 million. The disposition Act of disposing; transferring to the care or possession of another. The parting with, alienation of, or giving up of property. The final settlement of a matter and, with reference to decisions announced by a court, a judge's ruling is commonly referred to as disposition, regardless of of these facilities was accompanied ac·com·pa·ny v. ac·com·pa·nied, ac·com·pa·ny·ing, ac·com·pa·nies v.tr. 1. To be or go with as a companion. 2. by a simultaneous lease back to the company. No gain or loss was recognized on these transactions. Proceeds were used to reduce debt. Q3 Highlights Baker Hughes was recently awarded the 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 , measurement-while-drilling, wireline, coring, drill bit and completions business on the 62 well Shell Nigeria Shell Nigeria is the colloquial name for the Shell Petroleum Development Company of Nigeria Limited (SPDC). The company is a joint venture operated by Royal Dutch Shell which accounts for more than forty percent of Nigeria's total oil production (899,000 barrels per day EA and EJA EJA Elder Justice Act EJA East Journal on Approximations EJA Ergonomic Job Analysis EJA Environmental Justice Alliance field development. Baker Oil Tools recently installed a dual-zone InForce Intelligent Well System(TM) for Norsk Hydro Norsk Hydro ASA (OSE: NHY, NYSE: NHY) is a Norwegian aluminium and renewable energy company, headquartered in Oslo. Hydro is the fourth largest integrated aluminium company worldwide. It has operations in some 40 countries around the world and is active on all continents. in the Snorre Snorre can refer to either of the following:
 r`əp), 6th largest continent, c.4,000,000 sq mi (10,360,000 sq km) including adjacent islands (1992 est. pop. 512,000,000). , and has allowed
Norsk Hydro to remotely access, or close, each zone in less than five
minutes. Baker Oil Tools has also been awarded PetroBras' first
intelligent completion system contract.Baker Atlas recently used its Reservoir reservoir (rĕz`əvôr, -vwär), storage tank or wholly or partly artificial lake for storing water. Building an embankment or dam to preserve a supply of water for irrigation is an ancient practice; India and Egypt have many old and Characterization A rather long and fancy word for analyzing a system or process and measuring its "characteristics." For example, a Web characterization would yield the number of current sites on the Web, types of sites, annual growth, etc. Instrument (RCI RCI Royal Caribbean International RCI Radio Canada International RCI Rehabilitation Council of India RCI Residential Communities Initiative RCI Roof Consultants Institute RCI Remote Control Interface RCI Residential, Commercial, Industrial ) with SampleView(TM) to take 88 formation pressure measurements and 14 fluid samples on a single run for a major operator in Angola Angola (ăng-gō`lə), officially Republic of Angola (2005 est. pop. 11,191,000), including the exclave of Cabinda, 481,351 sq mi (1,246,700 sq km), SW Africa. . INTEQ's AutoTrak(TM) system has now drilled more than 2 million feet on 435 wells in 15 countries, logging more than 50 thousand operating hours. Baker Oil Tools hit an HSE HSE House HSE Health and Safety Executive HSE Helsinki School of Economics HSE Hamilton Southeastern (High School) HSE Health, Safety & Environment HSE Higher School of Economics (Moscow, Russia) milestone “Milemarker” redirects here. For the American indie rock band, see Milemarker (band). A milestone or kilometre sign is one of a series of numbered markers placed along a road at regular intervals, typically at the side of the road or in a median. in their Navigation Blvd Blvd abbr (= boulevard) → Bd . factory achieving 1 million hours without a lost time injury. Conference Call The company has scheduled a conference call to discuss the results of today's earnings announcement. The call will begin at 10:00 a.m. eastern time, 9:00 a.m. central time. To access the call, please contact the conference call operator at 630/395-0065, 15 - 20 minutes prior to the scheduled start time, and ask for the "Baker Hughes Conference Call." A replay will be available through November November: see month. 6, 2000. The number for the replay is 402/998-0879. The call and replay will also be webcast on www.bakerhughes.com. Attachments Attachment 1 - Operational Highlights Attachment 2 - Geographic Highlights Attachment 3 - Impact of Non-Operational Items Attachment 4 - Outlook
Financial Information
table of comparative results follows:
Three Months Ended
--------------------------------------------
(In millions, except
per share amounts) September 30, June 30,
---------------------------- ------------
UNAUDITED 2000 1999 2000
------------ ------------ ------------
Revenues $1,273.6 $1,117.6 $1,174.5
------------ ------------ ------------
Costs of revenues 955.7 896.4 904.7
Selling, general and
administrative 170.6 162.6 166.8
Unusual credit (1.7) (6.2) (18.4)
------------ ------------ ------------
Total costs and
expenses 1,124.6 1,052.8 1,053.1
------------ ------------ ------------
Operating income 149.0 64.8 121.4
Interest expense (42.0) (40.1) (41.9)
Interest income 0.9 1.2 0.5
Gain (loss) on
trading securities (3.1) - 10.1
------------ ------------ ------------
Income from
continuing
operations before
income taxes 104.8 25.9 90.1
Income taxes (38.1) (9.3) (29.2)
------------ ------------ ------------
Income from
continuing
operations 66.7 16.6 60.9
Income (loss) from
discontinued
operations, net
of tax - (3.4) -
------------ ------------ ------------
Net income $66.7 $13.2 $60.9
============ ============ ============
Basic earnings per
share:
Income from
continuing
operations $0.20 $0.05 $0.18
Income (loss) from
discontinued
operations - (0.01) -
------------ ------------ ------------
Net income 0.20 0.04 0.18
============ ============ ============
Diluted earnings per
share:
Income from
continuing
operations $0.20 $0.05 $0.18
Income (loss) from
discontinued
operations - (0.01) -
------------ ------------ ------------
Net income $0.20 $0.04 $0.18
============ ============ ============
Depreciation,
depletion and
amortization
expense, excluding
goodwill
amortization $149.3 $190.8 $128.9
Goodwill
amortization 11.1 11.3 11.3
------------ ------------ ------------
Total depreciation,
depletion and
amortization
expense $160.4 $202.1 $140.2
============ ============ ============
Capital expenditures $133.8 $143.4 $120.9
Shares outstanding,
basic (millions) 331.2 328.8 330.5
Shares outstanding,
diluted (millions) 333.8 331.5 332.8
Earnings before
interest expense
and taxes (EBIT)(1) $148.2 $59.8 $103.5
Earnings before
interest expense,
taxes,
depreciation,
depletion and
amortization
(EBITDA)(1) $308.6 $261.9 $243.7
(1)Computed excluding non-operational items.
Financial Information
A table of comparative results follows:
Nine Months Ended
----------------------------
(In millions, except per share amounts) September 30,
----------------------------
------------ ------------
UNAUDITED 2000 1999
------------ ------------
------------ ------------
Revenues $3,605.3 $3,442.8
------------ ------------
Costs of revenues 2,781.0 2,703.8
Selling, general and administrative 511.7 485.3
Unusual credit (20.1) (39.5)
------------ ------------
Total costs and expenses 3,272.6 3,149.6
------------ ------------
Operating income 332.7 293.2
Interest expense (126.0) (119.0)
Interest income 1.9 4.7
Gain on trading securities 14.1 -
------------ ------------
Income from continuing operations
before income taxes 222.7 178.9
Income taxes (76.7) (45.1)
------------ ------------
Income from continuing operations 146.0 133.8
Income (loss) from discontinued
operations, net of tax - (7.7)
------------ ------------
Net income $146.0 $126.1
============ ============
Basic earnings per share:
Income from continuing operations $0.44 $0.41
Income (loss) from discontinued - (0.02)
operations
------------ ------------
Net income $0.44 $0.39
============ ============
Diluted earnings per share:
Income from continuing operations $0.44 $0.41
Income (loss) from discontinued - (0.02)
operations
------------ ------------
Net income $0.44 $0.39
============ ============
Depreciation, depletion and
amortization expense, excluding
goodwill amortization $432.1 $566.6
Goodwill amortization 33.5 34.0
------------ ------------
Total depreciation, depletion
and amortization expense $465.6 $600.6
============ ============
Capital expenditures $450.2 $525.5
Shares outstanding, basic (millions) 330.5 327.8
Shares outstanding, diluted (millions) 332.4 329.5
Earnings before interest expense and
taxes (EBIT)(1) $314.5 $243.1
Earnings before interest expense,
taxes, depreciation, depletion and
amortization (EBITDA)(1) $780.1 $843.7
(1)Computed excluding non-operational items.
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. This news release and its attachments (and oral statements made regarding the subjects of this release, including on the conference call announced herein) contain forward-looking statements 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 "expect," "expected," "intends," "will" and similar expressions are intended to identify forward-looking statements. E&P Properties. Baker Hughes' expectations regarding the amount of proceeds that it will receive from sales of certain of its exploration and production properties, and the size of the after-tax loss that the company may incur To become subject to and liable for; to have liabilities imposed by act or operation of law. Expenses are incurred, for example, when the legal obligation to pay them arises. An individual incurs a liability when a money judgment is rendered against him or her by a court. as a result of the sales and the write-off Write-Off A reduction in the value of an asset or earnings by the amount of an expense or loss. Companies are able to write off certain expenses that are required to run the business, or have been incurred in the operation of the business and detract from retained revenues. of the residual value Residual value Usually refers to the value of a lessor's property at the time the lease expires. residual value The price at which a fixed asset is expected to be sold at the end of its useful life. of certain other of the properties are only its estimates of these amounts. These forecasts may be substantially different from actual results, which are affected by the following matters: the successful satisfaction or waiver The voluntary surrender of a known right; conduct supporting an inference that a particular right has been relinquished. The term waiver is used in many legal contexts. of all conditions to closing of the sale of the company's Gulf of Mexico properties to Pioneer and the completion of that sale; the negotiation of a definitive agreement to sell certain of the properties to a third party and the successful completion of the sale to that party; and the successful resolution or satisfaction of any claims of third party preferential pref·er·en·tial adj. 1. Of, relating to, or giving advantage or preference: preferential treatment. 2. rights to purchase, or bid for, the interests that the company is selling. Nigerian Project. Baker Hughes' intent to maintain its interest in its Nigerian oil and gas project is only its present intent with respect to this matter. Baker Hughes' intent to hold or divest of this project could change in the future depending on the relative value of the project or the value and viability of an offer of a third party with respect to a proposed transaction regarding the project. General Outlook. Baker Hughes' expectations regarding its outlook for its business, improved profitability and growth in the 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; drilling rig and oil and gas industry manpower availability; world economic conditions; 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; the condition of the capital and equity markets and the timing of any of the foregoing. Baker Hughes is a leading supplier of reservoir-centered products, services and systems to the worldwide oil and gas industry.
NOT INTENDED FOR BENEFICIAL HOLDERS
Attachment 1 - Operational Highlights
Operational highlights for the three months ended September 30,
2000, the three months ended September 30, 1999 and three months ended
June 30, 1999:
Year over Year
(for the three months ended September 30, 2000 and 1999)
UNAUDITED
Revenue Operating Profit Before Tax
($ millions) ($ millions)
September September September September
2000 1999 2000 1999
---------------------------------------------------------------------
Oilfield Operations $1,273.6 $1,117.6 $167.6 $81.6
Corporate and net
interest - - (61.4) (61.9)
Non-operational
items(1) - - (1.4) 6.2
---------------------------------------------------------------------
Total $1,273.6 $1,117.6 $104.8 $25.9
---------------------------------------------------------------------
Sequential
(for the three months ended September 30, 2000 and June 30, 2000)
UNAUDITED
Revenue Operating Profit Before Tax
($ millions) ($ millions)
September June September June
2000 2000 2000 2000
---------------------------------------------------------------------
Oilfield Operations $1,273.6 $1,174.5 $167.6 $129.1
Corporate and net
interest - - (61.4) (67.5)
Non-operational
items(1) - - (1.4) 28.5
---------------------------------------------------------------------
Total $1,273.6 $1,174.5 $104.8 $90.1
---------------------------------------------------------------------
(1)See attachment 3 for a reconciliation of the impact of
non-operational items.
Oilfield Operations Revenue for the third quarter of 2000 increased 8% compared to the second quarter of 2000. Every division, excluding Western Geophysical and Baker Petrolite, also reported sequential One after the other in some consecutive order such as by name or number. increases in revenue. The largest revenue percent increases in the third quarter of 2000 compared to the second quarter of 2000 were at Baker Atlas, Baker Oil Tools, Hughes Christensen, and Centrilift, which all posted increases of 10% or more. Third quarter 2000 revenues from Western Geophysical and Baker Petrolite were flat compared to the second quarter of 2000. Oilfield operating profit before tax for the third quarter of 2000 improved 105% compared to the third quarter of 1999 and improved 30% compared to the second quarter of 2000. Every division, except INTEQ, improved operating margin Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: in the third quarter of 2000 compared to both the third quarter of 1999 and second quarter of 2000. All divisions except Western Geophysical and INTEQ had a double-digit dou·ble-dig·it adj. Being between 10 and 99 percent: double-digit inflation. operating margin in the third quarter of 2000. Comparing the third quarter of 2000 to the third quarter of 1999, the incremental Additional or increased growth, bulk, quantity, number, or value; enlarged. Incremental cost is additional or increased cost of an item or service apart from its actual cost. operating profit before tax margin was 55%, and comparing the third quarter of 2000 to the second quarter of 2000, the incremental operating profit before tax margin was 39%. Western Geophysical's third quarter 2000 operating profit increased 9% while revenues remained flat compared to the second quarter of 2000. The improvement in operating margin was a result of ongoing data processing data processing or information processing, operations (e.g., handling, merging, sorting, and computing) performed upon data in accordance with strictly defined procedures, such as recording and summarizing the financial transactions of a cost management initiatives and efficiency improvements in marine operations this year. While interest in Gulf of Mexico multi-client libraries and data processing continues to improve, international and proprietary markets remain soft. For the nine months ended September 30, 2000, Western Geophysical contributed 16% of Baker Hughes' revenue and 9% of oilfield 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 . Baker Oil Tool's third quarter of 2000 revenues increased 17% compared to the third quarter of 1999 and increased 14% compared to the second quarter of 2000. Operating margin improved in the third quarter of 2000 compared to both the second quarter of 2000 and third quarter of 1999 and was the strongest since the second quarter of 1998. Baker Oil Tools operating profits exceeded its cost of capital in the third quarter of 2000. Baker Atlas' third quarter 2000 revenues increased 38% compared to the third quarter of 1999 and increased 10% compared to the second quarter of 2000. Baker Atlas' operating margin continued to improve in the quarter as a result of ongoing price improvements, primarily in North America, and the reallocation of resources The provision of logistic resources by the military forces of one nation from those deemed "made available" under the terms incorporated in appropriate NATO documents, to the military forces of another nation or nations as directed by the appropriate military authority. to more profitable operations. Hughes Christensen's third quarter 2000 revenues increased 42% compared to the third quarter of 1999 and increased 15% compared to the second quarter of 2000. Operating margin improved in the third quarter of 2000 compared to both the second quarter of 2000 and third quarter of 1999 and was the strongest since the third quarter of 1998. Hughes Christensen's operating profits exceeded its cost of capital in the third quarter of 2000 for the fourth consecutive quarter. Centrilift's third quarter 2000 revenues increased 39% compared to the third quarter of 1999 and increased 18% compared to the second quarter of 2000. Operating margin improved in the third quarter of 2000 compared to both the second quarter of 2000 and third quarter of 1999 and was the strongest ever. Centrilift's operating profits exceeded its cost of capital in the third quarter of 2000 for the fourth consecutive quarter. Baker Petrolite's third quarter 2000 revenues increased 11% compared to the third quarter of 1999. Seasonal declines in non-oilfield product lines resulted in flat third quarter revenues compared to the second quarter of 2000. The third quarter 2000 operating margin was flat compared to the third quarter of 1999 and the second quarter of 2000. INTEQ's third quarter of 2000 revenues increased 15% compared to the third quarter of 1999 and increased 8% compared to the second quarter of 2000. INTEQ's third quarter of 2000 operating margin was down slightly compared to the third quarter of 1999 and the second quarter of 2000. As INTEQ builds on strong performances in the Gulf of Mexico and the North Sea, and works to manage costs in the rest of the world, it is expected to obtain its goal of a double-digit operating margin in the first or second quarter of 2001. Corporate Expense Corporate expense, including net interest expense, was $61.4 million for the third quarter of 2000, compared to $61.9 million for third quarter of 1999 and $67.5 million for second quarter of 2000. The decrease in corporate expense for the third quarter of 2000 quarter compared to the second quarter of 2000 was primarily related to a slight decrease in net interest expense, reduced Project Renaissance costs and increases in net foreign exchange gains, offset by increases in incentive and other compensation expenses.
Attachment 2 - Geographic Highlights
The table sets forth the geographic distribution of oilfield
revenue changes and the BHI rig count changes by geographic region.
-------------------------- Three Months Ended
UNAUDITED September 00 vs.
----------------
September 99
Geographic Region % Change in % Change in
Revenue Rigs
--------------------------- ------------- --------------
North America 13% 46%
Latin America 17% 34%
Europe -4% 17%
Middle East 28% 18%
Asia Pacific -8% 15%
Africa 48% 24%
Outside North America 15% 23%
Worldwide Total 14% 37%
--------------------------- ------------- --------------
Revenue by geographic area reflects the strength of the recovery in North America, which accounted for 44% of Baker Hughes' revenue in the third quarter of 2000. Revenue from North America, Latin America Latin America, the Spanish-speaking, Portuguese-speaking, and French-speaking countries (except Canada) of North America, South America, Central America, and the West Indies. , the Middle East and Africa showed improvement in year over year quarter comparisons while the Europe and Asia Pacific regions declined in the year over year periods. Both Western 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 improved 14% in the third quarter of 2000 compared to the third quarter of 1999. Excluding Western Geophysical, revenues from the Western and Eastern Hemisphere increased 31% and 16%, respectively, for the third quarter of 2000 compared to the third quarter of 1999. Sequentially se·quen·tial adj. 1. Forming or characterized by a sequence, as of units or musical notes. 2. Sequent. se·quen , comparing results for the third quarter of 2000 to the second quarter of 2000, 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 improved 8% due to increased revenues in all regions. Eastern Hemisphere revenues improved 9% for the third quarter of 2000 compared to the second quarter of 2000 as revenues increased in all regions except Asia Pacific, where revenues were flat. Excluding Western Geophysical, both Western and Eastern Hemisphere revenues improved 10% in the third quarter of 2000 compared to the second quarter of 2000.
Attachment 3 - Impact of Non-Operational Items
The following schedules detail the non-recurring items the company
recognized in the three-month periods ended September 30, 2000,
June 30, 2000 and September 30, 1999.
Impact of Non-Operational Items for the Three Months
Ended September 30, 2000
UNAUDITED
Diluted
Profit Profit earnings
before tax Tax after tax per share
(millions) (millions) (millions) ($/share)
-------------------------------------------------------------------
As reported income from
continuing operations
(including impact of
non-operational item) $104.8 $(38.1) $66.7 $0.20
Add:
Sale of Norward
product line of Baker
Atlas (1.7) 3.6 1.9 0.00
Loss on trading
securities 3.1 (1.1) 2.0 0.01
-------------------------------------------------------------------
Operating results,
excluding impact of
non-operational item $106.2 $(35.6) $70.6 $0.21
-------------------------------------------------------------------
Impact of Non-Operational Items for the Three Months
Ended June 30, 2000
UNAUDITED
Diluted
Profit Profit earnings
before tax Tax after tax per share
(millions) (millions) (millions) ($/share)
-------------------------------------------------------------------
As reported income from
continuing operations
(including impact of
non-operational item) $90.1 $(29.2) $60.9 $0.18
Less:
Sale of MPD unit of
Hughes Christensen
resulting in an
unusual credit (5.9) 2.1 (3.8) (0.01)
Net adjustments to
nonrecurring charge
accruals from prior
years (12.5) 3.0 (9.5) (0.03)
Gain on trading
securities (10.1) 3.5 (6.6) (0.02)
-------------------------------------------------------------------
Operating results,
excluding impact of
non-operational item $61.6 $(20.6) $41.0 $0.12
-------------------------------------------------------------------
Impact of Non-Operational Items for the Three Months
Ended September 30, 1999
UNAUDITED
Diluted
Profit Profit earnings
before tax Tax after tax per share
(millions) (millions) (millions) ($/share)
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As reported income from
continuing operations
(including impact of
non-operational item) $25.9 $(9.3) $16.6 $0.05
Less:
Net gain on the sale
of the Las Colinas
property resulting in
an unusual credit (6.2) 2.3 (3.9) (0.01)
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Operating results,
excluding impact of
non-operational item $19.7 $(7.0) $12.7 $0.04
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Attachment 4 - Outlook The following statements are based on current expectations. These statements are forward-looking for·ward-look·ing adj. Concerned with or making provision for the future: forward-looking educators; a forward-looking corporate plan. Adj. 1. , and actual results may differ materially. Factors affecting these forward-looking statements are detailed above under "Forward-Looking Statements" in the press release. These statements do not include the potential impact of any acquisition, disposition, merger or joint venture that could occur in the future. The company expects revenue for the fourth quarter of 2000 to be up three to five percent from third quarter revenue of $1.273.6 million. The Baker Hughes rig count is expected to increase six to nine percent sequentially over the same period. The company expects the ratio of incremental profit before tax (PBT PBT Provider Backbone Transport (networking technology adding determinism to ethernet) PBT Polybutylene Terephthalate PBT Profit Before Tax PBT Paper Based Test (education) ) to incremental revenue to be between 30% and 40% sequentially. The tax rate on operating results, excluding the impact of non-operational items, for the 12 months ended December December: see month. 31, 2000 is expected to be approximately 33.5%. In addition to factors listed in "Forward-Looking Statements - Outlook," changes in tax law may also affect the company's expectation regarding its tax rate. Capital Spending capital spending Spending for long-term assets such as factories, equipment, machinery, and buildings that permits the production of more goods and services in future years. is expected to be approximately $640 million for the twelve months ended December 31, 2000. The company's expectation regarding its level of capital expenditures is only its forecast regarding this matter. This forecast may be substantially different from actual results. In addition to the factors described in "Forward-Looking Statements-Outlook," the following factors could affect levels of capital expenditures: the accuracy of the company's estimates regarding its spending requirements; the occurrence of any unanticipated acquisition or research and development opportunities; changes in the company's strategic direction; and the need to replace any unanticipated losses in capital assets capital assets n. equipment, property, and funds owned by a business. (See: capital, capital account) . Depreciation, Depletion depletion n. when a natural resource (particularly oil) is being used up. The annual amount of depletion may, ironically, provide a tax deduction for the company exploiting the resource because if the resource they are exploiting runs out, they will no longer be able and Amortization is expected to be between $630 and $650 million for the twelve months ending December 31, 2000. In addition to factors listed in "Forward-Looking Statements - Outlook," the company's forecasts for Depreciation, Depletion and Amortization are dependent on the company's projections for sales of multi-client seismic data. |
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