Baker Hughes earnings increase 52% in strong fourth quarter; net income rises 67% for fiscal year 1996 on modest industry growth.HOUSTON--(BUSINESS WIRE)--Nov. 13, 1996--Baker Hughes Incorporated (BHI-NYSE, PSE PSE 1. pale soft exudative pork. 2. portosystemic encephalopathy. , and EBS See Swiss Electronic Bourse. EBS See electronic blue sheet (EBS). ) reported strong earnings improvement for the fourth quarter and the fiscal year ended September 30, 1996. On a per share basis, earnings increased 52 percent to $0.38 for the quarter compared to $0.25 in the fourth quarter last year. For the full year, operational earnings per share were $1.23, up 56 percent from $0.79 last year. Net income rose 56 percent to $55.5 million for the quarter on revenues of $822.4 million, which were up 16 percent from the same period last year. For the year, net income increased 67 percent to $176.4 million on revenues of $3.0 billion, up 15 percent from fiscal year 1995. For each of the four quarters of fiscal 1996, we increased our earnings per share by more than 50 percent, said Max L. Lukens, 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. 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. . The Company took full advantage of market opportunities through growth in key geographic regions and through new product introductions. While worldwide drilling activity increased just 3 percent for the year, our revenues grew 15 percent and our operating margins Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: gained two percentage points. Oilfield Highlights Baker Hughes oilfield revenues increased 17 percent for the quarter, to $706.9 million from $605.7 million in the prior year period. For the fiscal year, oilfield revenues increased by 15 percent to $2,639.9 million. Profit before tax grew 33 percent for the quarter to $100.9 million and 32 percent for the fiscal year to $352.4 million, resulting in profit before tax margins of 14.3 percent and 13.4 percent, respectively. These record results were driven by strong growth in key geographic markets, new product introductions, the application of advanced technologies, and continued growth in the integrated solutions market. Our oilfield operations performed strongly during the quarter, said Mr. Lukens. All five of our operating divisions reported increased revenues, increased profits and expanded margins. Our largest division, Baker Hughes INTEQ Baker Hughes INTEQ is among the world's leading oilfield drilling service companies. INTEQ was formed from the legacy companies of Eastman Christensen, Teleco MWD, Milchem and EXLOG, which were acquired by Baker Hughes Incorporated in the late 1980s. posted a 22 percent revenue increase due to activity increases in its key markets of 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 , Venezuela, the North Sea and West Africa West Africa A region of western Africa between the Sahara Desert and the Gulf of Guinea. It was largely controlled by colonial powers until the 20th century. West African adj. & n. . Favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. customer response to new product technologies also contributed to this growth. Regional And Technology Updates 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. , new Baker Hughes technologies continued to create value for customers, enabling them to reduce finding and development costs. Hughes Christensens 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. new STARTM slim hole drill bits set a world record for footage drilled by tricone bits. One steel tooth STAR bit drilled 25,202 feet, nearly doubling the previous steel tooth bit record and exceeding the previous insert bit record of 23,057 feet. In the Gulf of Mexico where activity was up 5 percent compared to the prior year quarter, oilfield revenues increased 25 percent paced by new product introductions. Baker Oil Tools electronic actuated ac·tu·ate tr.v. ac·tu·at·ed, ac·tu·at·ing, ac·tu·ates 1. To put into motion or action; activate: electrical relays that actuate the elevator's movements. 2. intelligent completion system, EDGETM, made its eleventh In music or music theory an eleventh is the note eleven scale degrees from the root of a chord and also the interval between the root and the eleventh. Since there are only seven degrees in a diatonic scale the eleventh degree is the same as the subdominant and the interval successful run in the Gulf of Mexico. This technology is especially applicable in deepwater, extended reach and horizontal wells where conventional completion techniques require considerable time. Deployment times for these smart systems have averaged less than two hours. By contrast, installing packers using conventional completion methods can take as long as 48 hours. The EDGE system is poised to capture a large market share position in these demanding wells where rig related costs exceed $100,000 per day. In 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. where drilling activity was up 2 percent compared to the prior year quarter, oilfield revenues increased 16 percent led by gains in Brazil, Trinidad and Venezuela. On an 11-well horizontal re- entry program in Venezuela, Baker Hughes INTEQ is providing an integrated package including prospect selection and reservoir engineering Reservoir engineering is a branch of petroleum engineering, typically concerned with maximizing the economic recovery of hydrocarbons from the subsurface. Of particular interest to reservoir engineers is generating accurate reserves estimates for use in financial reporting as well as drilling and completion technology. Re-entries drilled to date have improved oil production by 150 percent. In Europe, revenues rose 26 percent on a 4 percent increase in drilling activity with the strongest gains achieved in Norway and the United Kingdom. In Norway, Baker Hughes INTEQ upgraded its NaviGatorT reservoir navigation system A GPS-based electronic system in a car or truck that provides a real time map of the vehicle's current location as well as step-by-step directions to a programmed destination. See GPS and vehicle tracking. with a Navi-DrillR Ultra Series The Ultra Series (ウルトラシリーズ motor section. This new combination tripled drilling rates in a geosteering application on a long horizontal well. In Italy, the new MPRT MPRT Moving Picture Response Time MPRT Mission Planning Rehearsal Tool MPRT Massive Polygon Rendering Technology measurement-while-drilling system exceeded customer expectations for resistivity logging Resistivity logging is a method of characterizing the rock or sediment in a borehole by measuring its electrical resistivity. Resistivity is a fundamental material property which represents how strongly a material opposes the flow of electric current. and has been selected to replace wireline technology in several demanding applications. In Africa, revenues jumped 75 percent compared to the year ago quarter on a 23 percent increase in activity. The largest gains were in the West African West Africa A region of western Africa between the Sahara Desert and the Gulf of Guinea. It was largely controlled by colonial powers until the 20th century. West African adj. & n. countries of Cameroon, Nigeria and Congo. Integrated Solutions In fiscal 1996 Baker Hughes continued its industry-leading pace in the integrated solutions business. Worldwide integrated solutions revenues grew by 45 percent to $400 million for the fiscal year. Europe was the most active region where revenues more than doubled from the prior year to $185 million. Revenues in Latin America more than tripled compared to last year, at $42 million. Based on this success, the company has formed a new division, Baker Hughes Solutions, to pursue growth opportunities in integrated solutions, project management and reservoir engineering. Baker Hughes Process Equipment Company Baker Hughes Process Equipment Company closed the year with revenues of $352.8 million, up 10 percent from fiscal 1995. Growth resulted mainly from expansion in Latin America and the Asia Pacific region. Mr. Lukens said, Our process operations experienced solid growth during the year and I remain optimistic op·ti·mist n. 1. One who usually expects a favorable outcome. 2. A believer in philosophical optimism. op about 1997. We will continue our successful expansion into international markets and will take full advantage of the technologies, distribution and synergy The enhanced result of two or more people, groups or organizations working together. In other words, one and one equals three! It comes from the Greek "synergia," which means joint work and cooperative action. associated with our recent acquisitions. Industry Trends Should Continue We believe the resurgence re·sur·gence n. 1. A continuing after interruption; a renewal. 2. A restoration to use, acceptance, activity, or vigor; a revival. in exploration and development will continue, Mr. Lukens said. Growing worldwide demand for oil should drive the need for more drilling, even at oil prices of $17 to $21 per barrel. We expect that our customers plan to spend more on their E&P programs through 1997. Baker Hughes is well positioned to gain share in this expanding market. The Companys outlook is subject to various risk factors, as more fully described in the 1995 Baker Hughes Incorporated Annual Report to Shareholders. -0- (In thousands of dollars, except per share amounts) Three Months Ended September 30, 1996 1995 ------- ------- REVENUES: Sales $559,594 $486,683 Services and rentals 262,765 222,851 Total revenues 822,359 709,534 COSTS AND EXPENSES: Cost of sales 328,227 273,365 Cost of services and rentals 131,112 122,978 Research and engineering 22,561 21,844 Marketing and field service 177,793 156,476 General and administrative 54,479 51,365 Amortization of goodwill and other intangibles 7,334 7,395 Unusual charge ------- -------- Total costs and expenses 721,506 633,423 Operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. 100,853 76,111 Interest expense (12,223) (16,624) Interest income 756 1,185 Gain on sale of Varco stock -- -- Income before income taxes and cumulative effect of accounting change 89,386 60,672 Income taxes (33,866) (25,162) Income before cumulative effect of accounting change 55,520 35,510 Cumulative effect of accounting change - Postemployment benefits (net of $7,861 income tax benefit) -- -- Net income $ 55,520 $ 35,510 Per share of Common Stock: Income before cumulative effect of accounting change (1) .38 .25 Cumulative effect of account change -- -- Net income (1) $ .38 $ .25 Average Shares Outstanding During Period (In thousands) 144,385 141,689 Depreciation expense $ 28,484 $ 27,374 Capital expenditures $ 50,561 $ 42,247 Year Ended September 30, 1996 1995 ------- ------- REVENUES: Sales $2,046,850 $1,805,108 Services and rentals 980,880 832,356 Total revenues 3,027,730 2,637,464 COSTS AND EXPENSES: Cost of sales 1,186,843 1,045,672 Cost of services and rentals 496,026 418,342 Research and engineering 87,033 83,546 Marketing and field service 682,092 601,228 General and administrative 199,894 202,903 Amortization of goodwill and other intangibles 29,552 29,884 Unusual charge 39,611 -- --------- --------- Total costs and expenses 2,721,051 2,381,575 Operating income 306,679 255,889 Interest expense (55,528) (55,595) Interest income 3,421 4,806 Gain on sale of Varco stock 44,295 -- Income before income taxes and cumulative effect of accounting change 298,867 205,100 Income taxes (122,517) (85,117) Income before cumulative effect of accounting change 176,350 119,983 Cumulative effect of accounting change - Postemployment benefits (net of $7,861 income tax benefit) -- (14,598) Net income $ 176,350 $ 105,385 Per share of Common Stock: Income before cumulative effect of accounting change (1) 1.23 .67 Cumulative effect of account change -- (.10) Net income (1) $ 1.23 $ .57 Average Shares Outstanding During Period (In thousands) 143,256 141,215 Depreciation expense $ 115,920 $ 114,170 Capital expenditures $ 182,157 $ 138,876 (1) During the quarter ended June 30, 1995, the Company repurchased shares of its convertible preferred stock Convertible Preferred Stock Preferred stock that includes an option for the holder to convert the preferred shares into a fixed number of common shares, usually anytime after a predetermined date. Also known as "convertible preferred shares". previously issued to Sonat, Inc. for $167.0 million. The estimated fair market value of the shares of convertible preferred stock was $149.4 million at the date of issuance.. The repurchase re·pur·chase tr.v. re·pur·chased, re·pur·chas·ing, re·pur·chas·es To buy (something) again. n. The act of buying something that one previously sold or owned. Noun 1. price in excess of this amount ($17.6 million) has been deducted de·duct v. de·duct·ed, de·duct·ing, de·ducts v.tr. 1. To take away (a quantity) from another; subtract. 2. To derive by deduction; deduce. v.intr. from net income in arriving at net income per share of common stock Net income per share of common stock See: Earnings per share for the year ended September 30, 1995. In addition, the per share amount for the year ended September 30, 1995 has been adjusted for dividends on the preferred stock Stock shares that have preferential rights to dividends or to amounts distributable on liquidation, or to both, ahead of common shareholders. Preferred stock is given preference over common stock. Holders of preferred stock receive dividends at a fixed annual rate. of $8.0 million. -0- Baker Hughes is a leading provider of products and services for the oil, gas and process industries. CONTACT: Baker Hughes Incorporated Scott B. Gill, 713/439-8666 |
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