Revenue in the third quarter of fiscal 2009 was $786.9 million, a 25% decrease from the $1.05 billion reported in the previous quarter and a 41% decrease from the $1.33 billion reported in the prior year's June quarter. Operating loss for the quarter was $42.3 million, compared to operating income of $58.0 million for the previous quarter and $206.9 million reported in the third quarter of fiscal 2008. Operating income (loss) as a percentage of revenue was (5.4)% in the third quarter of fiscal 2009, compared to 5.5% in the previous quarter and 15.6% in the comparable quarter of the prior year. Third quarter results included $10.0 million of non-cash inventory write-downs, primarily representing reserves for slow-moving or excess inventory in the current environment, and inventory whose original cost exceeds current market value; fixed asset impairment charges of approximately $7.2 million, primarily related to idle, less efficient or higher maintenance assets to be permanently retired from the existing fleet; and approximately $6.4 million of employee severance costs, as the company continues to align its workforce with customer demand.

Commenting on the results, Chairman and CEO Bill Stewart said, "Decreased demand for oil and natural gas, largely attributable to the global economic recession, led to lower drilling activity and downward pressure on pricing during our fiscal third quarter, particularly in North America. Drilling activity in the U.S., as measured by average active drilling rigs, declined 29% sequentially and 50% compared to the same period a year ago. Our Canadian operations were negatively impacted by the spring break-up period during the quarter, and many operators have been slow to resume drilling activities coming out of break-up in the current economic climate. International activity has been less impacted, with average rig count outside of North America declining 5% sequentially and 13% year-over-year.

"Despite these unfavorable market conditions, we managed to generate significant operating cash flow during the quarter, as we continue our focus on operating efficiencies, working capital management and lower capital spending. We have reduced our global workforce by approximately 20% since our peak in November 2008, and have made great strides in reducing our overall cost structure. Our financial results began to reflect the full effect of these cost reduction measures late in the third quarter, and we are encouraged by our progress to this point. We believe that the efforts we have made and the strategies we have pursued position the company to return to profitability in the fourth fiscal quarter."

During the quarter, cash and cash equivalents decreased $13.5 million to $231.3 million, as the company repaid $42.0 million of indebtedness, reducing outstanding debt to $520.4 million. Other uses of cash during the quarter included capital expenditures of $76.1 million and the payment of $14.6 million in dividends. Debt repayable within the next twelve months is approximately $21.5 million, and the Company has no borrowings outstanding under its $400 million bank credit facility.